Fostering Terrorism, Selling Arms to Dictators and Screwing the Poor

This was a bizarre week in U.S. politics, and it wasn’t because of Donald Trump’s tweets. Two things happened that gave us more insight into who Donald Trump really is: Trump went on his first foreign tour, and his administration released its 2018 proposed budget.

In Riyadh, Saudi Arabia, we witnessed Trump declaring war on “radical Islamist terrorism.” In the ridiculous extravagance of the Saudi Royal palace, Trump could be seen cozying up to the self-same autocrats and dictators who repress their own people, deny women rights, bomb civilians in Yemen and Iraq and support Wahhabi Islam, a fundamentalist strain that does more to foster terrorism than combat it.

Meanwhile, the avowed enemy, Iran, was holding what, by most accounts, was free and fair elections. So much for America being a beacon of democracy around the globe.

The real purpose of the trip was revealed when Trump, while in Riyadh, signed a $100 billion-plus arms sale agreement with the Saudis.  At least the President is being transparent.

While Trump was in Saudi Arabia doing the bidding of U.S. arms manufacturers, his administration back at home was releasing its blueprint for the 2018 federal budget. In a nutshell, the budget is another bonanza for the armaments industry with defense spending rising more than 10% while domestic discretionary spending is slashed. Many of the largest cuts are to programs, such as Medicare, that are intended to aid the poor and disadvantaged.

In addition, Trump’s budget proposal contains still more tax cuts for the rich, paid for by a presumed rebound in economic growth from 2% to  3% annually – a level not seen consistently since the 1990’s. The rebound assumes all those tax cuts he’s recommending will “trickle down” to the ordinary working people Trump claims to represent. More supply-side B.S.

Here again, the underlying strategy is pretty obvious: Let Congress fight over where and how to cut the budget, divert people’s attention and take the heat while more tax cuts for the rich slip through amidst the clamor and chaos of a dysfunctional Congressional budget process.

Note to Donald Trump : The American people are not as stupid as you think they are.

Here We Go Again – More Supply-Side B.S.

Supply-Side B.S.

Donald Trump’s tax plan, unveiled Wednesday, calls for massive tax cuts for corporations and the wealthy (i.e. “small business”). He also threw a bone to the “middle class” in the form of increasing the standard deduction from $12,700 to $24,000 for a married couple.

All justified in the name of jobs and economic growth. Economist and New York Times columnist Paul Krugman has famously labelled the economic growth argument for tax cuts as “Voodoo Economics.” We think Krugman is being too kind. Our name for supply side economics can’t be printed, but the initials “B.S.” more accurately reflect our view.

As Krugman has pointed out on numerous occasions, there is no evidence that tax cuts stimulate significant economic growth. In fact, history has proven the opposite to be true: in periods when tax rates were high relative to today’s rates, economic growth was more robust than during periods of lower rates.

In the two decades after W.W. II, for example, personal income tax rates averaged more than 80% for the highest earners, and yet economic growth was robust, averaging more than 4%. In contrast, during the administrations of Ronald Reagan and George W. Bush, personal income tax rates were slashed, but economic growth fell to 3.5% and 2.1% respectively.

Today, the top rate for personal income is 39.6% for married filers earning more than $466,950 a year, while growth is averaging an anemic 1.5%. Trump, for his part, wants to cut the top rate to 35%. The last thing we need is yet more of the failed policies of the past.

What’s wrong with the supply side theory? It sounds good, and it has popular political appeal (which is why Republicans have used the argument so successfully to justify tax cuts) but it doesn’t stand even a common sense smell test. It smells like, well, B.S.

Cutting taxes on corporations and the wealthy may stimulate marginal investment, or, just as likely, more profits will be redistributed to shareholders in the form of dividends and increased capital gains. And, oh by the way, those dividends and cap gains are taxed at a top rate of 20% – a much lower rate than ordinary income, a double bonanza for the rich.

To make matters worse, Trump has proposed eliminating the “estate tax” on accumulated wealth (currently levied on estates valued at over $5.45 million for an individual and $10.9 million for a married couple). Triple bonanza!

“Supply side” economics is simply code language for redistributing income to the wealthy, including Donald Trump and most of his appointees.

If you really want to stimulate the economy, you should invest for growth – in job training and education; in infrastructure including clean power, roads, bridges, mass transit and high speed rail, the things that actually make our economy run. That is what we did in the period after W.W. II, when we educated veterans on the GI bill and built the interstate highway system, among other initiatives, and it worked.

To fund this investment without blowing up the deficit, yes, we would have to raise taxes. But maybe it is past time raise the rates on “unearned” income, such as dividends and cap gains, so the wealthy actually pay their fair share.

To Slow Global Warming, We Need a Carbon Tax

Trump Environmental Regulations

Over the past two weeks, Donald Trump proposed slashing the budget of the Environmental Protection Agency (EPA) and began the process of gutting environmental regulations.

Among the regulations he would roll back are Obama-era restrictions on coal-burning power plants, limits on hydraulic fracking and a moratorium on the leasing of public lands for coal mining.

Trump has also proposed doing away with a requirement that Federal agencies consider the “social cost” of carbon when evaluating energy-related policies.

The latter issue is particularly relevant in Trump’s case.

It is no accident that Trump’s Secretary of State, Rex Tillerson, is the former CEO of ExxonMobil.   Trump is essentially proposing to give the industry a free ride to exploit resources for private gain while the general public is forced to eat the “social costs” of energy extraction including global warming and environmental degradation.

His claim that rolling back environmental regulations will “create jobs” is a diversion. What those regulations are really doing, and why Trump is gutting them, is they hurt the profits of the energy companies.

Gutting environmental regulations may create a few additional jobs in the very short run. But in the medium to long term, it will actually do just the opposite, making the U.S. less competitive in an emerging and rapidly growing international clean energy industry.

Energy companies (and by extension consumers of fossil fuels) should pay the full cost of energy extraction, including the cost to slow global warming and clean our air, rivers and streams. The best and most efficient way to do that is “carbon tax” on power plants and other emissions.

A carbon tax would be so efficient and economically productive, according to the NY Times, that even many Republicans support the concept.

Proceeds could be used to stimulate economic growth by investing in clean energy technology, retraining displaced workers in industries such as coal mining, and building environmentally friendly infrastructure such as mass transit.

As an initial step, we should raise the Federal gasoline tax, a form of carbon tax. The gas tax has been 18 cents for more than two decades. Why? Because the U.S. Congress is so dysfunctional it can’t get its act together to raise the tax in line with inflation — even as gas prices have plummeted in recent years.

Clean energy is the future. The U.S. needs stronger environmental regulations, not weaker ones. We need an Administration that doesn’t pander to the energy industry to maximize its short-term profits and shift costs onto the general public. And we need a tax on carbon emissions to create the incentives needed to slow global warming, clean the environment and grow our economy.

It Is Not Rocket Science: Here’s How To Fix Obamacare

What’s wrong with Obamacare?  Is it rising premiums and lack of choice, as some Republicans would have you believe?  Or is it that insurance companies don’t like the increased transparency and competition that comes with health care exchanges?

Or, as Libertarians such as Ron Paul argue, is Obamacare just another expensive “entitlement” program that fosters a culture of dependency on government handouts?

To be sure, rising health care costs are a problem.  But that was the case long before Obamacare, and the recent Republican proposal is likely to make matters worse, not better.  Simply providing tax credits, as Republicans propose, does virtually nothing to constrain costs or improve quality of care.

Instead, the way the Republican plan controls costs is to pay individuals a fixed amount based on age.  This approach effectively cuts benefits and disproportionately hurts the poor and middle class.

What is really going on is Republicans (and some Democrats) appear most concerned about protecting insurance companies from competition – and from the government using its leverage to negotiate prices.  Others seem to want to limit health care subsidies in order to constrain the size and scope of government and avoid higher taxes – even if that means most Americans will not have access to decent, affordable health care.

It is not rocket science: To fix Obamacare, we should provide everyone with a Medicare buy-in option with subsidies scaled to age and income.  Government would continue to negotiate prices directly (or through subcontractors) with health care providers.

Medicare has the advantage of a network infrastructure already in place.  Providers are accustomed to using it.  It is efficient and cost effective and the quality of care, as many Medicare participants will attest, is excellent.

A similar proposal was debated when Obamacare was first introduced, but dropped because it was considered unlikely to pass at the time.

However, now is the time to act.  Democrats must push back hard on Republican orthodoxy that big government is universally bad.   Not only is single payer health care efficient and cost effective, it is good for the economy.  Providing health care to employees is a major cost of doing business, and lower overall costs have the potential to make American business more competitive.

Moreover, under a Medicare buy-in approach, individuals could still be given the option of using credits to buy directly from the insurance companies (although it would likely be more expensive), or purchase supplemental or “Cadillac” coverage.

By almost every major measure, costs are lower and overall health outcomes better in countries, such as Canada and the Netherlands, that offer single payer, universal health care.

What’s not to like about quality health care at affordable prices for all Americans – along with additional options for those who want it and can afford it?

Well, for one thing, insurance companies likely won’t make as much money.  And members of Congress would probably see a sharp reduction in campaign contributions from the insurance lobby.

It comes down to this:  high quality, affordable health care for all Americans v. bigger profits for insurance companies.

We’ll let you know how that works out.

This is Democracy. We, the People, Decide

On Wednesday, January 25, Donald Trump signed an executive order withholding Federal aid to “Sanctuary” cities such as Philadelphia.  The next day, as Republicans met in Philadelphia to set their legislative agenda for the upcoming year, the people of Philadelphia, protesting in the shadow of William Penn atop City Hall, took to the streets to protest the President’s order, and The Democratic View as there (see video below).   Philadelphia was founded by Quakers as a Sanctuary City.  It will always be one.  The President can’t unilaterally renege on the founding principles of this great country.

This is democracy.  We, the People, decide.

Now Let’s Get to Work: Reflections on the Women’s March

Women's March in New York

By Mary Noland

It was women of all ages, colors, and sexual orientation.  People came from everywhere and wanted to know where you were from.

Mary_MarchOnWasnington2The signs were homemade.  They were great.  One read: “One Step Forward for One Man, a Giant Leap Back for Mankind”.

There were four generations of one family from Maine. The marchers looked out for each other even when squeezed into a tiny space near Independence Ave.  A very short, seventy year-old mother was looking for her equally short fifty year-old daughter, and we all pitched in to help them find each other.

Unfortunately, the media let Trump distract attention from the overwhelming success of the March.  The size was clear: half a million in Washington, a quarter million in NYC, and four- plus million worldwide.

All were marching peacefully, now and for the long haul, for women’s right to equal pay for equal work, reproductive freedom, LBGT rights, and respect and economic justice for all.

I marched against the Vietnam War, worked for civil rights, and most vigorously for women’s rights in the 1970’s.  Part of me couldn’t believe that some of the signs at the March on Washington – “Protect our Reproductive Rights” – reflected words we wrote on signs some 45 years ago.

But there was a much stronger part of me that knew we were marching for this generation, for the wonderful young women in our lives, for my ”strong smart respectful and kind” granddaughter, Little Rosie, and her Mom, our loving daughter in law.

And we will continue to march for as long as necessary to protect their right to live in a decent, caring world.

The media needs to stop being distracted by Donald Trump’s ridiculous tweets and cover the real people, out in the streets, peacefully marching to protect their rights and those of their children and grandchildren.

A foreign reporter, French I think, was doing so much better on the Mall.  She tried to explain to her audience the principles of freedom and equality for which all these folks were marching. She said the marchers held these principles sacred.

We did. It was a great March. Now let’s get to work.

Memo to Donald Trump: Want to Fix Our Crumbling Inner City Neighborhoods? Here’s How.

Philadelphia Mural Arts

Relocating Federal workers to inner city neighborhoods is one way to help revitalize those neighborhoods and stimulate much needed investment. Federal tax credits would also help …

America has one of the highest poverty rates in the industrialized world.  It is a living tragedy and a national disgrace, as TDV wrote recently.  Much of the poverty is located in rural areas, including Appalachia, the deep South and Southwest.  But many big cities also have high poverty rates, including Philadelphia, which ranks among the most poverty stricken urban areas in the country.

And yet in Philadelphia and other big cities it sometimes feels like a Tale of Two Cities.   Millennials are moving back and downtown and surrounding neighborhoods are booming.  Travel outside the downtown areas, however, and you will still find sections of the city that time forgot, with vacant houses, potholed streets and dilapidated buildings.

Donald Trump has called for increased investment in our inner cities, labelling them “ghettos” and  a “disaster.” He has also been roundly criticized, and rightly so, for overstating how bad things really are.

In many urban neighborhoods, there is a resilience and vibrancy that is easy to miss if you don’t get out of your car.  The “drug bazaars” of old are largely gone; crime is down, and commercial areas are coming back in many areas.

But Trump is right about one thing:  the infrastructure of many urban neighborhoods is in bad shape and now is a good time to invest, to build on the progress that has been made in reducing crime and revitalizing commercial districts.

But we need to throw out the old playbooks, think more creatively, and develop more comprehensive approaches.  These include, in addition to rebuilding infrastructure, attracting business, fixing the often broken school systems and providing quality support services including low and moderate income housing, job training and child care.

A good way to start the ball rolling is to move government agencies into those neighborhoods.  Such an approach provides an economic anchor that can be used to better deliver services while attracting additional investment and jobs.

One model is the Sharswood / Blumberg Transformation Plan in North Philadelphia where the Philadelphia Housing Authority intends to locate it headquarters, anchoring a revitalizing commercial district including low and moderate income housing and rehabilitated public schools.

But why limit it to just local agencies? How  about moving Federal agencies to our inner cities?  Such as approach was recently proposed by Fred Kupiec, a resident scholar at the American Enterprise Institute, writing in the Wall Street Journal:

Many towns and cities across America would welcome the economic development and stability that accompanies a well-paid federal-agency workforce like the FBI or the Labor Department. The expense of managing the federal government should be used to spread wealth beyond the nation’s capital and revitalize the economies of America’s ailing cities.

The Federal government should also provide tax credits to those who build affordable housing in our inner cities.  The burden for providing credits to stimulate investment in our inner cities falls too heavily on local governments whose budget is already strained by a diminished tax base and high demand for services.

Let’s hope Donald Trump keeps his word.  Our inner cities can use the help, and it is long past time for the Federal government to do its bit.

Book Review: Will the American Working Class Rise Again?

Sleeping Giant by Tamara Draut

For too many people in this country, the American Dream is a distant memory, something their parents aspired to, but which is now beyond their reach. Today, if you are working man or woman, you often find yourself toiling long hours for low pay in near poverty.  Even the college educated are finding it increasingly difficult to make ends meet as they leave school and enter the work world with extremely high debt burdens and facing an anemic job market.

What do you do about it? In “Sleeping Giant: How the New Working Class Will Transform America” Tamara Draut provides some useful historical perspective.  Draut is Vice President for Policy and Research at Demos, a progressive “think tank” that advocates for political and economic equality.

Her book, published in the Spring of 2016, just as the presidential election was heating up, recounts a history in which big business launched a counter attack on the liberal activism of the late 1960’s and 1970’s by setting up think tanks and Super Pacs and flooding Washington, DC with high-paid lobbyists

The union movement was eviscerated starting in 1947 with the passage of the Taft-Hartley Act. The law banned Communists from union leadership positions; established the principle of “right to work;” allowed workers to “opt out” of paying dues; banned secondary boycotts and sympathy strikes, and gave employers the power to hold anti-union meetings in the workplace. In later years, deindustrialization combined with the rise of the service sector made it increasingly difficult for unions to organize.

Meanwhile, what labor protections remained on the books have (and continue to be) largely unenforced.  Draut recounts how big companies in the ever expanding service sector routinely exploit employees by hiring mostly part timers and not paying benefits. Other companies require “on demand” scheduling and encourage off-the- books work to meet unrealistic production quotas.

The decline of the unions was abetted, according to Draut, by a Democratic Party which, beginning in the late 1970’s and early 1980’s, began appealing more to college educated whites on high-brow issues such as environmental justice, largely turning its attention away from bread and butter economic concerns of working class voters.

For their part, Republicans cleverly exploited the division by appealing to racism and anti-immigrant prejudice, particularly in the South. The rift caused an historic realignment of the political parties with many working class whites and union members switching their allegiance to the Republican Party.

Draut’s book is well written and thoroughly researched. It contains many personal antidotes illustrating how misguided policies can affect the lives of ordinary Americans struggling to make ends meet. She also offers a number of familiar, common sense policy proposals including raising the minimum wage, revitalizing the nation’s infrastructure and reforming the electoral process.

At times, however, the book seems a little starry-eyed about the potential role of working class Americans and the resurgence of the unions to help turn things around and bring about change. The “Sleeping Giant” (i.e., the working class) awoke alright, but in doing so it seemingly reignited the politics of division and despair, scapegoating immigrants and people of color and electing Donald Trump.

To really bring about change in this country, Progressives must rally Americans of all classes and income groups who understand that an economy that rewards wealth and depresses wages for ordinary Americans is ultimately doomed to fail, and everyone loses, rich and poor alike.

Is the Democratic Party up to the task? Can it reform itself? Can it educate and motivate voters on the inherent dangers of economic injustice, broaden its appeal, transcend class and racial divisions and effect positive change?

Can we tear down the wall of big money donations, entitlement and privilege that so characterizes today’s Democratic Party? Bernie Sanders started to show us the way. He may not have succeeded this time, but he blazed a trail.

This was an election so profoundly negative in tone and substance that tears at the very fabric of American Democracy.  At its core, Draut’s book is a much needed antidote to the post -election blues. It reminds us that after more a half century of struggle, we are in this for the long haul, and that there’s hope for a better future.

Time to Reform a Tax System that Favors the Wealthy

It turns out Donald Trump has carried forward more than $900  million in business losses on his personal income taxes in 1995 and may not have paid taxes for up to 18 years, according to reporting by the New York Times.

What’s outrageous is not that Trump took advantage of existing tax law; it’s that a law allowing him to avoid hundreds of millions in taxes even exists to begin with.

Other provisions of our regressive tax code provide similar benefits to the wealthy and large corporations:

  • The owners of real estate can “depreciate” assets even if those assets are actually increasing in value;
  • Corporations can stash huge amounts of revenues overseas to avoid taxes, and
  • The incomes of hedge fund managers and other professional investors are taxed at lower “capital gains” rates than rates paid by hard working Americans on “ordinary” income.

These are just a few examples of a tax system riddled with loopholes that favor the rich.    But perhaps the most egregious provision of all is that dividend and capital gains rates top out at 20% whereas taxes on ordinary incomes go as high at 39.6%.

As a matter of basic fairness and common sense, the incentive (e.g. lower rates) should be on encouraging people to work hard, improve their lives and get ahead.

Instead, in today’s system, we discourage labor through high tax rates, but give huge breaks to people who invest in real estate or churn paper assets for a living.

In addition, since the Great Recession starting in 2008, an almost exclusive emphasis on monetary policy through the Federal Reserve Bank, including buying bonds and keeping interest rates low, has served primarily to inflate asset values while wages have stagnated for ordinary Americans.

These policies not only favor the wealthy.  They can lead to asset bubbles and put our entire economy at risk.

There is very little that comes out of “Lying Donald’s” mouth that remotely resembles the truth.  But Trump is “right on” in this respect –  the system is rigged and nowhere is that more evident than in our regressive tax system.

Democrats need to stand up and fight for tax fairness.  That starts not just with closing loopholes of the kind Donald Trump has used to avoid taxes.  It also means increasing the top rates on dividends and capital gains so the wealthy pay their fair share.

Has the Party of the People Become the Party of the Elite?

2016 Presidential Election Map

Once upon a time, the Democratic Party was the “Party of the People” and Republicans represented the well-to-do. Over time, that seems to have changed, probably starting with the election of Ronald Reagan in 1980 with the help of so-called “Reagan Democrats.”

2016electiontableToday, the shift in party alignments is evident in the polling numbers. As shown in the accompanying table, in states where Clinton is leading, the median household income is $64,634; in states where Trump is leading, median household incomes are significantly lower – $52,382.

Just as troubling for Democrats, perhaps, is that in “Toss Up” states, the demographics appear to favor Trump. Household incomes, the percentage of minority voters and educational attainment levels in Toss Up states more closely track to those states in which Trump, rather than Clinton, is ahead in the polls.

This is going to be a close election. The numbers suggest that to win Democrats are going to have to broaden their appeal to the very “People” the Party has left behind over decades of rightward drift.

A good place to start would be in the presidential debates beginning tonight. It would be nice to see Hillary Clinton step up to the podium and, instead of playing Trump’s game of negativity and fear mongering, reach out to people of all income levels and project of vision of how she is going to revive the economy so it works for everyone, not just a privileged elite.