Trump And Turnbull

Australia and the US are having the similar challenges on the right. Remember that down under the conservative party is correctly identified as liberal and that the Aussies use a parliamentary system with two houses.  Here is Jo Nova:

The issue: Is it better to vote for the lesser of two evils and hope a Turnbull-led party can be reformed after a win, or is it better to think long term, take the medicine and rebuild in opposition — and is there a realistic third choice?

We are unconvinced that losing is good.  Political parties usually make faulty analysis of both winning and losing.  There is a big difference in a parliamentary system where the leader controls both the legislative and executive.  The Donald would only control the latter.  On the other hand, if Turnbull wins he is not term limited and can get more done because he controls the legislature.

Our take is that Turnbull is a bigger danger in Australia than The Donald is in the USA.  We are completely unconvinced by NeverTrump.  We are not familiar with the choices in Australia but we see losing to win in the future as a purer conservative party as always a dangerous gamble.  It is all about risk preferences.  We are risk averse.

Trump In The General

David French and the never Trumpsters are back at it on NRO:

So, yes, the options are all bad — in the short term. But broaden your view beyond the race against Hillary, and the choice becomes easier: Will you sacrifice your integrity, your moral fiber, and your intellect for the sake of a single election cycle? A person who spends the next several months defending the indefensible, trying to make sense of the senseless, and excusing the inexcusable stands to do permanent damage to his reputation and the reputation of the movement he represents.

We are not with them.  Mark Steyn matches our take with the exception that we think Cruz still has a chance to be the nominee:

Cronyism and populism advance to the Super Bowl. Deal with it. They’re the only two teams left. Pick yours.

We pick The Donald over Herself.  We are not excited about The Donald and not donating to the Republican Party in this go-around.  We are not sacrificing:
Our integrity
Our moral fiber
Our intellect

Never Trump represents the authoritarian right and it is not a pretty thing.  We are not doing any of the things French suggests we are.  It is a vote where we are not happy about the choices.  We will probably have a choice between Herself and The Donald and think that The Donald is a better choice.  We are not arguing that he is a good choice or that we support most of his positions.  If, in the general election, we vote for anyone other than the GOP nominee then we vote for Herself.  We think that is the wrong choice both short-term and long-term.  Vote for Herself if you think she is better than the Donald.  Don’t wimp out and go third party.

Put another way: Nixon was a better choice than McGovern.  We are glad we supported Tricky Dick despite his flaws.  The GOP recovered in four years.

GOP Nominee

We have three thoughts on the recent events in the race for the GOP nomination.

First, what about Carly and Ted?  We love it but we hope it isn’t too late.  Carly is a perfect match for Ted, especially in the battle against Herself.  Carly brings personality, management skills, and the right chromosomes to the election.  She has been our choice for VP for some time.

Second, Governor Walker versus Daniels and Pence in Indiana.  As noted in PowerLine, Scott Walker did the right thing and exhibited leadership in Wisconsin while Daniels and Pence have been AWOL in Indiana.  Unless things change in Indiana we need to remember these actions when ’20 and ’24 come around.

Third, Boehner’s comments on Cruz where Ted was called the Devil incarnate amongst other things.  It seems to be just what Ted needed.  Boehner is the especially hated part of the GOP establishment.  He hates Ted and is buddies with The Donald.  As has been noted, this would seem to be exactly the endorsement that Ted needs to become the anti-establishment choice.

It still looks like The Donald versus Herself but the second item shows that leadership matters, the first item shows that Cruz is trying, and the third item suggests some reason to think that Ted has some ammunition to create some momentum.

Military Uses

Today on Big Bang Theory one of the stories was a comment by Penny’s ex that the guidance system being developed by Sheldon, Raj, Howard, and Leonard might have military uses.  Then the ex says something like I thought you guys were smart.

It is great news for the guys, more buyers, and great news generally because we will have it and our adversaries will not.  Yet the guys are on the stupid side of the moral issue.  They want to stop unilaterally so we don’t have it.  That is getting close to evil.  Other folks will be pursuing technological advantages.  For example, it was to our and the world’s great benefit that the US created and used the first atom bomb.  It is critical that we maintain our technological lead on the battlefield.

We hope that these smart guys can figure out who the good guys are.

Sample Of One

Peter Spiliakos at NRO’s Postmodern Conservative addresses what he sees as the problem in Ted Cruz and the Invisible Plan.  In our sample of one we found it the opposite of convincing.  Spiliakos says:

Ask those people what Trump wants to do. Don’t ask them about their opinion of Trump. Ask them what actual government actions the Trump wants. They will give you answers.

Two points and a sidebar: First we follow the news fairly closely and have no idea what The Donald wants to do.  He has made a big show on immigration but seems to really be an open borders guy.  Perhaps following less closely leads to more certainty.

Sidebar: As the NYT reports back on March 15, Trump had a six-to-one (or $1.585 billion) advantage over Cruz in free media.  So yes, folks have been exposed to much more Trump media.  End sidebar.

Secondly, how important are well documented, specific (seriously, for The Donald?) plans to the average voter?  How did that work out for Mitt?  What did Obama have for specifics?  Candidates are driven by their story.  Mitt’s success was painted as his problem.  One of the things that might drive The Donald’s success is that he is feisty.  Mitt and the rest of the governors were not.  We think that the last candidate has a big impact on the electorate’s choice of the next candidate.  In ’08 and ’12, the GOP candidates were seen as too nice to Obama.  Hence, The Donald.

In short, Cruz has problems but we are not convinced that lack of specificity is a serious one.  Of course we liked the governors who are now out of the race better than Cruz.  And yes, samples of one are highly suspect.

No-Confidence

The University of Wisconsin (UW) Madison Faculty Senate is preparing to have a vote of no confidence on Ray Cross, the UW System President.  For newcomers, the System President oversees all UW campuses including Madison.  Most campuses have a chancellor, Rebecca Blank in Madison’s case, as CEO.  The issue, according to the Capital Times, is implementing the recent changes in tenure policy approved by the state:

[T]he draft no-confidence resolution focuses on the revision and passage of the UW-Madison campus tenure policy earlier this month without adequate involvement of campus representatives.

 The faculty leadership seem to think it is a lost cause.  David Vanness the President of the Madison chapter of the American Association of University Professors (AAUP).  AAUP is a nation-wide organization for faculty.  Here is a Capital Times quote from him:

Vanness acknowledged the limited effectiveness a successful no-confidence vote might have.  “Indeed, it is likely that President Cross and the Board of Regents will gain substantial public support from the governor and state legislative leadership for ‘standing up to the faculty,’” he told colleagues.

We know that the vote is a political activity and everybody is trying to spin it.  That said, it is unclear to us how a vote of no-confidence can help the Madison faculty.  It is unlikely that Cross will take any action based on the vote.  It is likely that the vote would buoy the opposition as the faculty leadership acknowledge.
Faculty are our own worst enemy.  We can complain about the mess the electorate have made of the presidential nominations but faculty cause our own problems all the time.  We seem to conspire to make ourselves look bad.  In Wisconsin, Missouri, Ohio and many other circumstances our actions and inactions make us look like spoiled children.  We really should be smarter than that since we are the smart folk.

Not Just Brazil

The quote from the WSJ starts with an interesting phrase describing Cardoso.  We assume he is a former leftist and is still an intellectual.

Henrique Cardoso, a former leftist intellectual who sought to reduce the size of Brazil’s government while president from 1995 to 2002. “But you need another springboard for progress, that doesn’t exclude the state but that accepts markets. This just doesn’t sink in in Brazil.”

It is not just Brazil that forgets to accept markets.  With The Donald, Herself, and The Bernie as the presidential final four it is clear that the acceptance of markets is on the wane in the US.  The US hasn’t quite reached the level of corruption that our friends from South American have but it is perhaps a president away.  It would be wonderful if the acceptance of markets would wax.

Tax Reform

[There could be two of these but it said publication failed.]

Because of Patriots Day, some of you in Maine and Massachusetts have an extra day to file your taxes this year.  It is a good time to think about tax reform.  The questions you need to answer include the following:

Territorial versus world-wide tax
Alternative Minimum Tax (AMT)
Revenue Neutral including spending changes
Value-Added Tax
Corporate Income Tax
Individual Income Tax
Payroll Tax (currently FICA)
Various: Carbon Tax, Gas Tax, Death Tax, Tariffs

The Graetz plan has been touted by Reihan Salam as a comprehensive model.  We generally agree and have a few suggestions and comments to go with it.

We think one easy answer is Territorial but that is controversial because the US currently one of the few countries that taxes on world-wide income.  These policies lead to less investment in the US whereas a territorial system is investment neutral.   We don’t think that Graetz addresses this although the PowerPoint we reviewed may not have been comprehensive.  We think he should.

We think the other easy answer is to eliminate the AMT.  It was originally set up to tax millionaires, from Wikipedia it was 155 households (although later it says 21):

A predecessor “minimum tax” was enacted by the Tax Reform Act of 1969[16] and went into effect in 1970. Treasury Secretary Joseph Barr prompted the enactment action with an announcement that 155 high-income households had not paid a dime of federal income taxes.

but it now is close to four million taxpayers paying $44 billion.  This seems easy to eliminate unless you worry about revenue neutrality and the deficit.  We say eliminate this complexity and get the revenue elsewhere.  It is one of the many points Graetz is right on: He eliminates the AMT but is deficit neutral.

What level of spending and/or deficit do you wish?  You can be a starve the beast fan but we don’t see that as working.  We see the need for net revenue positive changes along with Entitlement changes to reduce the annual deficit.  The Graetz plan is deficit neutral.  We would love to see some major reductions in the federal government but don’t see that as likely.  Look at the last four candidates for presidential nominations.  There is only one that might not want to expand the federal government.  Our preference is to reduce the deficit even if the reductions in the early years are modest.  We believe in the growth fairy. We believe there are government policies that on average lead to more growth just as recent policies have led to less growth.  These tax reforms would be one of them.  More growth has great benefits for our descendants and future tax revenues.

Value-added taxes (VAT) are controversial with conservatives whereas liberals tend to like all taxes.  On the one hand it can be an invisible tax that could be easily increased by government.  On the other hand taxing consumption makes much more sense than taxing income and consumption is much, much less complex.  We could easily choose to eliminate all the other taxes and go to VAT.  We are convinced given the current tax system that VAT plus an income tax starting at $100,000 for couples as advocated by on several occasions in slightly different formats by Michael Graetz.  We think much of what Graetz says makes sense.  We agree that we need some income tax to go with the VAT.

Since low income folks tend to consume a high percentage of income and pay little or nothing for personal income taxes, what should we do about them getting a big tax increase?  Graetz protects them by expanding refundable child credits and reducing payroll taxes for low income individuals.  The impact of these changes cause the after-tax income of the lowest quintile to go up the most of any quintile while the second quintile is essentially unchanged.  This makes sense to us: don’t hurt the poor and provide them more opportunities at the same time.  You are not required to do this but if you don’t do you think it will be supported.

Our preference is to eliminate the corporate income tax but we agree that it would be a hard sell and difficult to replace all of it.  Rather the 15% rate proposed by Graetz is such a vast improvement that we are convinced that a package like Graetz has created would be the way to go.

For individual income tax, Graetz starts at $100,000 for a couple and has three rates: 14, 27, and 31% starting at $600,000.  It is a good start.

Payroll tax is the main tax for most Americans.  Although the income tax collects more revenue, most of income tax revenue comes from the top 5% and very little comes from the bottom 50%.  There are some reasons for payroll tax relief especially with the addition of the VAT.  Graetz gives them some by giving a credit of up to $1,530 for workers making from $10,000 to $40,000.  it keeps the impact on income of the bottom quintile positive.

What to do about the Carbon Tax, Gas Tax, Death Tax, and Tariffs?  We are are against the Death Tax and all tariffs.  Don’t forget that gas already went up by 13% (well, since taxes were moved around perhaps not) because of the VAT.   Our proposal is that we end the federal gas tax, 28.4 cents, and replace it with a carbon tax so that those coal powered electric cars feel the pinch too.  We are not holding out for the elimination of all tariffs but we’d really like to do away with the death tax.  So we would create a carbon tax to replace the gas tax.  Because there is lots more carbon than gas, we could tax it at half the rate and and use the surplus to eliminate other taxes.

Adding a carbon tax and VAT is dangerous.  Frankly, if you don’t take a risk somewhere then you can’t get far on tax reform.  Sensible tax reform won’t be a dead loss but it doesn’t pay for itself.  Given our history, the US is in a challenging deficit position.   Any real proposal needs to be at least deficit neutral.  Lower rates for corporations and individuals are crucial to the future but so is the deficit.  At this time we must work on both immediately.