The Donald: 2017

There has been much discussion about evaluating or re-evaluating The Donald because of the things that have happened during the first year of his presidency.  Kevin Williamson at NRO finds it the year of lost opportunities.  Kevin concludes:

That 2017 has been a year of lost opportunities is an important failure for Republicans, who are likely to accomplish even less in 2018, when the prospect of congressional elections held in the shadow of Trump’s unpopularity will brighten the already visible yellow streak running down the back of Republican Washington.

Jonah Goldberg at NRO concludes that the accomplishments should not be attributed to The Donald.  He says:

To listen to Trump’s cheerleaders, the biggest obstacle to conservative victories is the party establishment, when in reality it looks more like it’s running the show.

Ramesh Ponnuru at NRO is much more positive.  He thinks The Donald has been a success on policy matters but hasn’t always made wise choices: Ramesh starts:

Gorsuch confirmed, ISIS defeated, taxes cut: The Trump administration has compiled a solid record of accomplishment in its first year, one that compares well with the records of many of its predecessors.

Daniel Henninger at the WSJ is close to Ramesh.  He says:

The two Trump presidencies exist as parallel universes. One is inhabited by Trump of Twitter, a character out of Rabelais’s novel “The Very Horrific Life of Great Gargantua.” Much of the American population is appalled by Trump of Twitter, who lives in a dark and deeply personal pool of feuds and fulminations. His first-year approval rating floated below 40%, while voters in Virginia and Alabama rejected his candidates, and him.

Existing alongside is a universe of solid, tangible economic success. Reporting on the season’s strong holiday retail sales, this newspaper noted that consumer confidence is at a 17-year high, with unemployment at a 17-year low—a time-frame that turns the Obama presidency into a forgotten memory.

We think it is simple.  The Donald has had an excellent first year.  Except for HW, and we could debate that, he has had the best first year since WWII.  So yes, Truman’s first year was better.

Deregulation is a big accomplishment for The Donald that is mentioned but didn’t make it in the quotes.  In addition we think he has done something that has not been mentioned that has long term importance.  He has not been reluctant to nominate “controversial” folks.  Over the past 40 years the press has made it difficult on GOP nominations.  Our explanation is that folks that are within one standard deviation to the right of center are acceptable but folks that are within three standard deviations to the left of center are acceptable.

Sidebar: Go to Wikipedia and normal distribution and click on standard deviation and coverage for background.  What it implies is that 34% of the folks to the right of center are acceptable but 49.8% to the left of center are.  We are not suggesting that there is any data to suggest that this is the exact ratios but we are convinced that it is a reasonable approximation.  End Sidebar.

We are glad to see the back of some of The Donald’s nominees but people like Betsy De Vos and Nikki Haley have been good and driven the left and the press wild.  See this hit piece on Betsy from the Washington Post.

We think The Donald’s nominees will help to dull the yellow streak that Kevin sees and will give next GOP president more leeway on appointments.   We make few predictions about the future but The Donald has one good year in the books.  With 2018 being an election year there will be even more challenges upcoming.

 

 

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Tax Cut Complaints

The WSJ is good about bringing in opposing views on its opinion page.  Recently Alan Blinder had a headline of: Almost Everything Is Wrong With The New Tax Law.  We were curious as we have supported it.  We first checked to see his background: Professor of economics at Princeton and former vice chairman of the Federal Reserve.  The first qualification makes us nervous about his seriousness but it is probably worth reading.

If you are trying to convince the unconvinced then you start with your best shot.  Here is how Alan starts with specifics after saying it offers mere crumbs to the middle class:

Further, once the phase-outs occur at the end of 2025, even most of the crumbs disappear. The Tax Policy Center estimates that the share of tax cuts accruing to the top 0.1% of taxpayers will rise from 8% in 2018 to an astounding 60% in 2027 if Congress doesn’t extend the expiring cuts. [Emphasis added]

So, Alan is telling us they should extend the tax cuts.  We agree.  In addition he slays his “mere crumbs” argument.  The top 0.1% of tax payers get 8% of the benefits in 2018.  We can’t find an exact figure for the percentage of tax paid by the top 0.1% but we estimate it at 19%.

Sidebar: The top 1% paid 38.1% of income taxes in 2012.  Comparing the top 0.1% taxable income versus the top 1% in table 3 shows it to be about half.   Another table shows that the tax rates for the top 0.1% are slightly lower than the top 1%.  So 38 percent multiplied by a half is a reasonable approximation.  End Sidebar.

So folks the super-rich folks paying 18% of taxes get 8% of the benefits.  We would have liked to see the tax cut be more pro growth but Alan winning the argument against himself.  Next he goes for the trickle down slur and then he complains about process.  In between he brings up a real issue: The deficit.  We agree.  It needs to be fixed.  Part of the fix is increasing economic growth through tax policy and regulation reductions.  Another part is reforming entitlements.  We expect Alan’s support as entitlements will come up soon.

Alan convinces that we should continue to support the new tax bill and the provisions should be extended.  It is not perfect but it is a good start.

 

 

 

 

Facebook Irony

One of our friends reposted a Facebook item recently.  One of the reasons we started this blog was to be able to respond to foolish things on Facebook because it is too cluttered with political stuff.  We are sure there have been more foolish things but it is hard to imagine something more ironic.  Here it is:

Imagine instead of $1.5 Trillion Tax Bill, they had produced a $1.5 Trillion infrastructure bill.  Take about creating jobs!

Of course The Donald’s Immediate Predecessor (TDIP) did sign a $1.8 Trillion spending bill.  A supporter said:

“This is a bill that protects America, rebuilds it and invests in the future,” she said. “I think it’s a great bill; it’s a result of bipartisan effort [imagine that]. Let’s vote for it, and may the Force be with us.”

The result for TDIP:

With unemployment hovering near 10 percent nearly two years after President Obama signed his economic stimulus package, Mr. Obama is acknowledging that, despite his campaign promises, “there’s no such thing as shovel-ready projects.”

If TDIP can recognize it then everyone should.  Now we will wait for two years as the press gives the president the benefit of the doubt before starting to evaluate the tax cut.  That’s more irony in case you weren’t sure.

Marginal Tax Rates

Yea! Tax reform has passed.  It is mostly about the business side but the GOP has ended up with a reasonable bill on the personal side as well.  Of course the problem is that all the Democrats voted against reducing individual and business taxes so they need to try to explain their position. Jibran Khan (spell check does not like his first name!) has a useful summary over at NRO.

But is is easy to mess up.  Jim Geraghty’s Morning Jolt has this:

Looking at this chart, if you’re married and your joint taxable income is between $400,000 and $416,000 [actually $416,700], your tax rate is changing from 33 percent to 35 percent. (Quick, get your taxable income down to $399,000! Your tax rate will drop to 32 percent!)

Perhaps Jim is being sarcastic but the table isn’t really very useful unless you have an arithmetic addiction like your humble scribe.  Tax rates are marginal so the couple in Jim’s example would pay two percent more on $16,000 of their income or $320 but they would save money on almost every other dollar of taxable income except for the first $18,650.  Situations will vary because the new law changes the computation of taxable income but in the situation that Jim described the couple’s tax would be lowered by $15,558 under the new law.  Remember, tax rates are always marginal.

Essentially ever individual will pay lower taxes under tax reform.  Here is a CATO study that gussies up the results to allocate corporate tax benefits to individuals.  Because there are changes to rates and deductions there might be a few exceptions.  There won’t be many and anybody who says otherwise is misinformed.  And folks will continue to be confused about marginal rates and average rates.

What’s Happened To Democrats?

It now appears that the tax bill is going to pass on a strict party line vote.  The Democrats have provided a few minor parliamentary issues but it appears it will pass shortly.  The Editors of WSJ asks what has happened to the pro-growth Democrats over the past decades?  Here is a brief tidbit:

How has the party of the [John F.] Kennedy tax cuts of the 1960s and the co-writers of the Reagan reform in the 1980s become implacably opposed to pro-growth tax policy?

 It is a really good question.  Their answer is that it is part ideology and they connect that to their obsession with income inequality.  Another part is that there aren’t any pro-business Democrats. A third part is that they want to work in a future Democratic administration and they need to support the party.  Related to that they see the Democrats as all in on fighting the Congressional election in 2018 and the presidential on in 2020.  The Editors point out that the Democrats could have negotiated something like a carbon tax that MWG supports.
One minor comment on the Editors: there are lots of pro-business Democrats but there are few or no pro-market Democrats.  Democratic support of the Import-Export bank is evidence of that.
Two important questions that we have is how do the Democrats intend to fight income inequality and what is the appropriate Gini coefficient or some other measure of the goal.  Will that use higher corporate taxes?  Will they use higher individual taxes.  Will they increase the estate tax?  Will their motto be: A falling tide keeps all boats in the harbor?
We would like to see the Democrats of our youth and middle age return.  Has the party gone to far to come back?

Accurate (!) Facebook Analysis

We saw this on Facebook today:

When 75% of Americans oppose a tax bill but the government tries to pass it anyway, we are no longer a democracy.

For Facebook this is pretty accurate.  Well, we don’t know if 75% actually oppose the bill and there are problems with the democracy part.  As the discussion with Ben Franklin goes:

Well, Doctor [Ben], what have we got—a Republic or a Monarchy?”

“A Republic, if you can keep it.”

So to be precise it isn’t true that we are no longer a democracy.  It is true that we are not now a democracy because the USA has never been a democracy.  We are a republic.  We hope we can keep it.  Now we need to work on the nomination process for president in each party.

A Great Phrase

Here is Sam Altman discussing how China has become more open than San Francisco.  He starts out:

Earlier this year, I noticed something in China that really surprised me.  I realized I felt more comfortable discussing controversial ideas in Beijing than in San Francisco.  I didn’t feel completely comfortable—this was China, after all—just more comfortable than at home. [Emphasis added]

Sam has put it nicely.  China isn’t free as the bold phrase makes clear but San Francisco is worse.  It is like picking The Donald over Herself.  Then he comes up with the sentence we all hope to write.  We need to set it up with another:

Political correctness (PC) often comes from a good place—I think we should all be willing to make accommodations to treat others well.  But too often it ends up being used as a club for something orthogonal to protecting actual victims.

We don’t find the often in the first sentence convincing and the second sentence shows how PC can be the opposite of accommodations but the second sentence is sublime.  It makes a great point in a pithy manner.

We have been working on a piece about how leftist nasty has infected conservative writers.  We know there are reasonable leftists out there but that the nasty on both sides can drown the analysis.  It is nice to find one like Sam.