Re-evaluation

It is always interesting when I discover that I have completely misjudged a person or a situation or a group.

Years ago I heard about the Cato Institute, founded in 1979 by one of the much-reviled (by the liberal press) Koch brothers. I wrote it off, without any further research, as another one of those far-right think tanks and never gave it any attention thereafter.

Yesterday I got a letter from them soliciting memberships. I almost threw it out as junk mail without reading it, but since I was housebound with a bit of an intestinal bug and bored, I read it – and it was an eye opener for me!

The Cato Institute is not right-wing as I thought, nor is it left-wing; it is libertarian and equally critical (for good reason) of both political parties. Now I have never thought of myself as a libertarian, but when I read their positions on issues I find I agree with almost all of them:

·         They have been worried for decades about the growing federal debt (the very subject of my last few posts) and even have a website about the issue.

·         They have been a strong supporter of gay rights from the beginning, as a Constitutional matter, and even filed amicus briefs with the Supreme Court in support of some of some of the gay rights issues.

·         They are worried about the bloated size of the federal government (whose spending now accounts for 40% of the nations GDP)

·         They think climate change is real, but that the issue has become a religion to some, and that the proposed remediation policies are founded more on ideology than on science or economics.

·         They are in favor of strong gun control. As they point out, there is no way Americans are going to give up their guns (we have more than one gun per person in this country), so we had better have good gun control.

·         They are worried about the increasing militarization of local police forces, the growth of a paramilitary police, and about the need for criminal justice reform

·         They are worried about the endless wars we are involved with in the Middle East.

·         They think Trump’s focus on illegal immigrants is a diversion from the real problems that need to be addressed, since illegal immigration has actually been falling since 2007.

·         They support school choice, which most Democratic-leaning teacher unions violently oppose.

Now I can see why big government liberals vilify the Cato Institute, but in fact I find I agree with most or all of these positions. So I guess I will have to start paying attention to their books and policy papers. Who knew I was a libertarian?

Priorities VII – Summary

Well, what are we to make of the preceding posts about priorities? Here is my summary:

1.      The United States is living well beyond its means – more than half a trillion dollars a year above its means. Every federal program and federal agency has its supporters who will argue that killing it would be unfair, short-sighted, mean-spirited, and disastrous to the (choose one: economy, environment, the elderly, the young, the disabled, etc).  And they might even be right. But however worthy the causes, at our current tax rates we simply can’t afford what we are spending.

2.      If we continue to run deficits and grow the federal debt there will come an accounting, perhaps not in my lifetime (I’m old) but certainly in the lifetime of my children and grandchildren.  It may come slowly, being resolved by painful hyperinflation that eventually makes US bonds worthless, along with everyone’s savings. It may come quickly, if suddenly one day the world loses confidence in America’s fiscal position and the Federal Reserve finds it can’t roll over the debt because no one is willing to buy US bonds at the weekly auction at a reasonable interest rate.  But it will come.

3.      The solution is obvious, but probably unattainable given the way American politics works. The solution would be (a) to cut back federal expenditures to support only the most essential things – the things that keep the nation safe and the economy strong, and (b) raise taxes across the board by 20% or more, so we can pay down the debt a bit, and (c) find some mechanism to force Congress to spend the extra revenue on paying down the debt instead of spending it on popular vote-getting new programs.

Think of these things the next time some media pundit laments a Trump proposal to cut the budget for some federal agency, or the next time Trump proposes to spend a lot more money on something like a border wall.  This is not a Republican or Democratic problem, or a liberal or conservative problem; this transcends political parties. Both are guilty of leading the gullible America voters to this untenable situation, and both are equally unrealistic and irresponsible when in power. Hillary Clinton would have been no better at addressing this problem; indeed she might have been worse if Obama’s administration was any indication.

The only people who seem to have a realistic outlook on the problem are the few budget hawks in Congress, many in the Tea Party movement. It is a promising development that Trump appointed one of these, Rep. Mick Mulvaney (Rep. South Carolina), to run the OMB (Office of Budget and Management).  But there is certainly not a majority in Congress, in either party, for being responsible and undertaking the difficult and politically painful task of reducing the federal deficit and the national debt.  And Trump’s current tax reduction proposals, popular as they may be with voters and businesses, look like they will make the problem worse, not better.

But of all the issues that face America these days, I think perhaps the single most important one is getting our fiscal house in order and our addiction to debt-financed government programs under control.  And few are paying attention to it.

Priorities VII - Reducing the National Debt

The national federal debt now stands at $19.9 trillion (not counting state and local debt). The 2016 GDP (Gross National Product – the value of all goods and services created in the entire nation in 2016) was $18.56 trillion, so our national federal debt is now 107% of our GDP, well into the danger zone by most economists’ estimates. More than that, if we continue on the current deficit path we will be at 150% of GDP within a decade – that’s the range Greece is in now, and we can all see the fiscal troubles that nation has. Clearly we need to reduce it.

And by the way, the government “rolls over” the debt constantly.  That is, Treasury bonds are sold with maturities ranging from 90 days to 30 years. When these come due, the Treasury sells new bonds to pay off the old bonds, not something your average bank would allow an individual to do. The risk is that if someday buyers lose confidence in the fiscal integrity of the United States and  don’t show up to buy new bonds, we would suddenly owe back the face value of the old bonds, with nothing to pay it off with.

Where should the federal debt be? Ideally of course we would pay it all off so that we would have the maximum borrowing capacity the next time we have a financial meltdown (and there will be next times; bet on it!). But that ideal is almost certainly politically unattainable. This chart shows the recent history of the national debt as a percentage of the GDP, including the sharp increase first under President Bush and then almost doubling again under President Obama:

Suppose we aim to reduce the national debt to around 60% of GDP, or about $11.1 trillion, which is the average size of the debt relative to GDP from 1940 through 2015. And suppose we aim to do that over a reasonable period, say 20 years. That means we have to (a) immediately reduce the annual federal deficit to zero (stop borrowing half a trillion dollars a year), and (b) pay back just over half a trillion dollars a year for the next 20 years. 

Remember from part I of this series of posts that ALL discretionary spending (ie – everything except interest on the national debt and the mandatory spending – mostly Social Security and Medicare) currently amounts to $1.11 trillion, of which about $600 billion is military, and of which about $550 billion is borrowed each year.

In essence to get back to a reasonable federal debt level we would have to cut the federal budget by a bit more than a trillion dollars a year, half to reduce borrowing to zero and half for our payback schedule over 20 years. Congress will never do that of course, but it does give a clear indication of how bad a state we are in.  And it does suggest that there are lots of “nice to have” things that we simply can’t afford unless we are willing to pay substantially higher taxes.

Of course neither political party is about to either raise our taxes substantially, nor cut almost all discretionary spending. President Trump’s draft 2017 budget sharply reduces funding for most federal agencies, and lots of people in both parties whose special interests would be hurt are calling it irresponsible.

Well, it is irresponsible, but not for the reasons they think – it is irresponsible because it doesn’t cut nearly enough, as the analysis above shows. But it probably cuts about as much as is politically possible at present, and even these cuts may not survive Congress. Of course if Trump’s economic policies do manage to lift economic growth from the anemic 2% of the Obama years up into the 3½-4% range, tax revenues would go up and the problem would get somewhat easier - unless, of course, Congress just can’t resist spending the additional tax revenue instead of paying off the debt, a likely outcome.

No one is quite sure of the original source of this quote, and it exists in a number of different variations, but it certainly applies today:

“A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.”

Priorities VI – Medicare

The other big dog in the federal “mandatory spending” budget is Medicare, on which the government spends a bit more than $632 billion per year, or about 15% of the federal budget, to help cover the medical costs of about 55 million Americans  65 or older or on disability.

About 38% of Medicare costs are covered by a 2.9% payroll tax (1.45% each from employee and employer, except for incomes above $200,000, which pay a 2.35% employee tax) on workers.  Another 13% of Medicare costs are covered by the small premium ($134) each beneficiary pays each year for part (again slightly higher for higher income people).  So roughly half of the Medicare costs are paid for employees, employers, and beneficiaries, with some minor 1-2% contributions from other sources like states.

So what Medicare really costs the taxpayers over and above any payroll taxes or premiums (ie – what comes from “general revenue” and borrowing), is in the neighborhood of $309 billion per year, or about half of what we put into the world’s most expensive military.

Of course the US health care system is a shambles, and so we all pay too much for health care.  Average US per capita health care costs are just over $9000, about double the average for other developed countries.  The next highest in 2016 was Switzerland, at $6,787 per person. Yet several different organizations rank the US last in health care quality among the top 10 developed countries. Part of this is due to our pay-for-service model, which encourages doctors and hospitals to maximize the chargeable services they prescribe. Part of it is due to the skyrocketing cost of malpractice insurance, driven by the ambulance-chasing law firms that encourage people to sue at the slightest problem. And part of it is due to the incentive structure of Medicare which provides little incentive for users to shop around for better prices, and so little incentive for doctors and hospitals to restrain costs.

Congress, as usual, hasn’t helped. Wealthy pharmaceutical corporations and insurance companies have bought favorable legislation with their campaign donations, so that insurance plans can’t be sold across state lines, Medicare is prohibited from negotiating lower drug prices, and US citizens are supposedly forbidden from ordering drugs from other countries, where the same drug from the same company may be priced at 20-25% of the price charged in the US.

We could of course charge higher premiums and increase the Medicare deductible to reduce the cost, but that really doesn’t address the underlying problem – the completely dysfunctional US health care market.  Medicare keeps threatening to reduce what they pay doctors, but (a) we already have a shortage of doctors in this country, so reducing what they make isn’t the right incentive, and (b) many doctors are simply opting out of serving Medicare patients because the Medicare payments already don’t cover their costs. My neighbor, who is a GP, tells me that Medicare has structured their pricing so that he would have to see 5 Medicare patients an hour (12 minutes a patient) just to cover his office costs and staff. As he says, what doctor can give good medical care at 12 minutes a patient?

So unlike Social Security, there really isn’t an easy fix for Medicare, and the problem will grow steady worse, and the costs will grow steadily higher as the population ages. The only thing that would work is a complete realignment of the health care system, and that will be hard because there are so many vested interests in the system the way it runs now.

Priorities V – Social Security

Social Security and Medicare payments, the major American social safety net programs, account for most of the $2.45 trillion each year in mandatory spending – spending required by law. Let’s examine these in more detail.

The original theory of Social Security was as a pay-as-you-go system. Workers would put money in, and that would provide funds to pay out to retirees. In 1945 there were 41 workers paying in for each retiree receiving payouts, and the system ran a surplus. By 1960, with an aging population, that ratio had dropped precipitously to 5.1 workers per beneficiary, and now it stands at about 2.9 workers per beneficiary, and is estimated to be at about 2 workers per retiree by 2030. The system was stable at about 3 workers per retiree, but now we take in less in payroll taxes than we pay out each year.

By the way, the Social Security Trustees annual report in all its detail is available for reading or download here. 

In 1983 President Reagan, foreseeing problems in Social Security with the approaching wave of baby boomer retirements, increased the payroll tax that supported Social Security by enough to produce a surplus that would sustain Social Security for another 30 years. The surplus in the Social Security Trust Fund was, by law, require to be invested in government bonds, and as of the 2016 Trustee’s Report should support the system through 2034.  In theory there are about $2.8 trillion in the Trust Fund as of last year. Actually, there are two such funds, the Old Age and Survivors Insurance (OASI) Trust Fund to the Disability Insurance (DI) Trust Fund, but we will treat them as one.

Unfortunately that pot of money was just too tempting for Congress, and both parties have essentially raided it in ensuing years to fund tax cuts, wars in the Middle East and vote-getting social programs. Putting it in government bonds makes it sound respectable, and makes it look for accounting and political purposes like the Trust Fund has actual money in it, but in effect Congress took the money and replaced it with paper IOUs (government bonds) which can only be redeemed out of current income or current borrowing, so in effect there really isn’t any surplus real money stored up for Social Security.

So for practical purposes, Social Security is now again a pay-as-you-go system, and the system is currently projected to run a real deficit of around $84 billion per year through 2019. I say “real deficit” because politicians like to include the interest on the Trust Fund bonds as income to the program, so that it will look like it is running a surplus. But of course interest on the Trust Fund bonds also comes out of taxpayer money or government borrowing, so it really isn’t income to the Trust Fund except for accounting and political purposes.

So the real cost these days of Social Security is the approximately $84 billion per year deficit – the difference between what the government takes in in payroll taxes and what it pays out in Social Security checks each year. And we can just ignore the Trust Fund as a political accounting fiction – it is really just government bonds we will have to pay back (or default on) someday.

On the scale of other things the government spends money on, $84 billion per year to keep Social Security going isn’t too bad.  But it would be even better if the program were permanently self-funded. An increase of about 10-12% in the payroll tax, indexing the payroll tax to inflation and/or eliminating the cap on income taxed for Social Security could easily cover the current deficit, if Congress could get its act together enough to make the change.  Beyond 2019 of course, if the ratio of workers to retirees really drops to 2 or less as currently projected, larger increases in the payroll tax will be necessary.

Of course Social Security is supposed to be only a supplement to a retiree’s own savings and pensions, not a complete retirement package in itself. So tax laws that would encourage more saving for retirement, and encourage more companies to provide more generous and more portable (across jobs) pension plans would also help the problem.

Priorities IV – Infrastructure

I included infrastructure repair and improvement as one of my high priority categories for federal funding in part I of this series of posts. Infrastructure – roads, bridges, railway lines, seaports, airports, power and water and sewer systems, communication lines, and the like – are the framework that supports the entire economy. It is what allows efficient movement of raw materials to factories and finished products to markets, provides the energy and communication businesses need to run, and the facilities to move people around as they need to.

Building and repairing infrastructure is a joint local, state and federal obligation. We have neglected the American infrastructure for decades, largely because infrastructure work doesn’t generate many votes either at the local level or nationally, so it has been an easy thing to underfund so as to divert funds for things that attract more voters.

How bad are things? We built our last major airport (Denver International) in 1995, more than 20 years ago.  By comparison, China is building 66 new major airports over the next five years. An engineering survey in 2016 found 58,000 bridges in the US which are structurally deficient (ie – falling apart). Globally, the U.S. ranks 19th — behind Spain, Portugal and Oman — in the quality of its infrastructure, according to the World Economic Forum’s Global Competitiveness Report. The American Society for Civil Engineers (ASCE), in its annual Infrastructure Report Card, gave the U.S. a D+, saying we need to invest some $3.6 trillion by 2020 to upgrade our infrastructure.

We have been spending about 1.5% of our GDP on infrastructure maintenance in the past few years. Most of this comes from state and local funds, but during the economic downturn of the past decade states and local authorities have had to cut back, especially since many cannot run deficits by law (something the federal government could stand to have imposed on it). Many states and cities are also in financial trouble because they have accumulated huge pension obligations for their public workers, and so simply don’t have funds for infrastructure work.

Once again the argument for including infrastructure repair and upgrading in my list of top priorities for federal funding is economic – the economy drives and funds everything else we want.  Poor infrastructure costs the economy, so it is a high priority to attend to it.

Priorities III – Science

In part I of this series I included federal support of science among my highest priority items – things the federal government absolutely ought to fund each year. Why science?

Technological advances are what is fueling much of America’s prosperity these days, and science is what drives technological advances. The federal government doesn’t actually put much finding into science – something around $150 billion per year (about 3.5% of the federal spending), split roughly evenly between defense and non-defense science. Defense R&D is mostly applied science.

There is a difference between basic science and applied science. The first deals with trying to understand nature, while the second deals with using that knowledge to try to develop commercial or military applications. In general governments have proven to be terrible at picking winners and losers in applied science, as the Obama administration showed once again with its failed attempts to fund development of solar panels. Private enterprise is much better at this – they are more realistic and less ideology-driven than government in their assessments of feasibility and likely success, and also more efficient at using the funds. And in fact much of the military R&D is actually done by private corporations. So applied science is better left to private enterprise, though there are a few quasi-government organizations, like the National Institutes of Health, that are the exception.

But basic science is the feedstock for economic growth. It returns more economic growth for dollars invested than just about any other government program. But private corporations have little or no incentive to do basic science – the money is to be made in applied science; using science to produce new or improved products that have a profitable market in the near-term.  So it makes sense for the federal government to support basic science as a way to ensure the long-term health of the economy, and therefore the long-term health of the tax revenues needed to pay for everything else.

That is why it is high on my proposed priority list.

Priorities II – The Military

The inescapable conclusion of my previous post is that we as a nation simply can’t afford everything we are currently funding unless voters will accept a hefty tax increase of at least 20-25%, or elimination of all tax breaks (including popular things like home mortgage deductions, and medical deductions).  And I suggested a list of things which I proposed were the top priorities we had to fund or ought to fund, mostly to keep the economy strong so that tax receipts would stay strong.

The most controversial of those priorities, at least among some people, will be the military, on whom we spend a little over half a trillion dollars (just under $600 billion) annually. If we spent nothing at all on the military we could – just about – cover the other current discretionary spending without borrowing each year.

Now there are certainly valid but highly technical debates about HOW we spend that $600 billion. For example, are aircraft carriers really essential for the navy or are they just expensive targets these days for Russian VA-111 Shkval supercavitating torpedoes and Chinese Dong-Feng 21 carrier-killer anti-ship cruise missiles? Are we better off with fewer very capable but very expensive manned F-35 fighters or with many more inexpensive unmanned drone fighters and cruise missiles? These are interesting and worthwhile debates, but I would argue that whatever the outcome of these debates we as a nation HAVE to spend to have a strong military, and the cost - however we apportion it – is likely to be more or less what we are spending now.

Could we do it for less? Sure, we could probably cut $50-100 billion or so a year out of the budget if anyone could figure out a way to prevent members of Congress from keeping open military bases in their district that the Pentagon says they don’t need, or getting contracts in their districts for weapons that the Pentagon hasn’t asked for, or get the military procurement system under control so that new weapons systems don’t always overrun their budgets by a factor of two or three or more.  Lots of luck on that!

First, why do we need a strong military:

1.      A strong military is like an insurance policy. The primary purpose of a strong military is to avoid having to go to war; to encourage potential opponents to estimate that they could not win a war with us, so don’t bother trying. As Plato said centuries ago and history has proven time and time again, “If you want peace, prepare for war”. And unless the military is strong enough to deter aggression the money spent on it is wasted. Yes, it is expensive to maintain a strong military, but far, far more expensive to have to fight a war and incalculably more expensive to lose that war.

2.      Our economy is highly dependent on control of the sea, and that requires a strong navy. In 2016 ship traffic carried $1.5 trillion in US cargo to and from our worldwide trading partners, and much of that cargo was components or raw materials needed by US manufacturing, or outgoing trade with foreign markets that support US companies. More than half of the world’s ship cargo passes through the South China Sea, a major choke point that would be easy for an opponent with enough naval power to close off.  Disruption of this sea trade would decimate the US and the world economy, just as Germany nearly drove Britain to bankruptcy and starvation during World War II by disrupting their sea trade.

3.      Optimists might argue that we have no obvious opponents, so why spend so much on the military. How trustworthy is that estimate? China, already with the second largest navy in the world, is building warships as fast as it can, aiming for a 350 ship navy by 2020 (we have 274 deployable warships right now), even while it makes claims on the whole South South China Sea and builds fortified islands there. Russia is far behind us in military power, but has quite enough to be troublesome on its own borders, and of course is a nuclear power. And then we have North Korea, madly building nuclear weapons and developing long range missiles. I think the optimists are a bit unrealistic.

Second, why it is so expensive:

1.      As Secretary of Defense Donald Rumsfeld correctly noted,  “…you go to war with the army you have, not the army you might want or wish to have at a later time “.  In the days of horses and marching armies wars used to be slow-motion affairs, with time to mobilize and train and arm troops.  Not today. Wars occur quickly, and require enormous stocks of munitions and supplies. Today a military that isn’t ready and constantly trained for immediate use is a military that is of no use. But it is expensive to maintain and constantly train a standing army, navy and air force.

2.      Many people don’t understand how expensive it is to maintain forward positions – troops in Europe and Asia, ships and aircraft deployed around the world where they can get to trouble spots in time. For example, it takes about 4-4½ ships just to keep one ship on station somewhere. The rest are in transit to or from the station, or in maintenance, or in training.

3.      Many people don’t understand that building today’s complex weapon systems - ships, aircraft, etc – involves tens of thousands of skills and specialized facilities (shipyards, aircraft factories, etc).  Stop building them for a few years and those skills and facilities are gone and might take a generation or more to recover with new hires and new factories/shipyards. More than that, today’s complex weapons require highly trained people to operate them, and the constant training to keep them proficient wears out the equipment, which then needs to be constantly replenished and replaced.

So I would argue that military spending is one of the essential things the government needs to do, not just for the nation’s safety, though that is important too, but to safeguard the American economy, and the world economy America is dependent on. And given the way Congress works and the inefficiency of the government, it will probably cost about what we are now spending.  In fact, we probably need to boost the spending for a few years to replace all the munitions we have used and equipment we have worn out in our fruitless Middle East wars over the past decade.

Priorities I – Getting Real

Like many other people, I am unhappy that the Trump administration proposes to reduce or eliminate federal funding for things like the Arts and National Parks, among other things. But it has gotten me thinking about priorities. For decades now the US government has been spending more than it takes in, so that by now we have a national debt of more than $20 TRILLION dollars, more that the entire yearly GDP of the whole nation, and future obligations (Medicare, Social Security, Government pensions, etc) are estimated at about $127 TRILLION, far more than we can ever hope to pay out.  Steins Law applies here; "If something cannot go on forever, it will stop."

Clearly as a nation we have been spending well beyond our means. There are lots of “nice to haves”, including the Arts and National Parks, but can we really afford them?  It seems to me the way to answer that question is to rank government activities in some sort of priority order, and then go down the list until we run out of annual receipts.  Anything below that line, however nice it would be, simply doesn’t get funded, unless we, the voters, are willing to accept tax increases high enough to move the cutoff line further down.

Let’s start by taking stock of where we are. There is a good site here that provides the figures. Here is the distribution of Federal spending for 2015:

 The first thing that just pops out is that REQUIRED spending (Blue Interest on Federal Debt and green Mandatory spending) dominates.  In 2015 the Federal government took in $3.18 trillion dollars in taxes and fees, 81% of it from income taxes and payroll taxes and 11% from corporate taxes.  How much does that cover?

$229 billion (6%) goes to pay interest on the national debt.

$2.45 trillion (64.6%) goes for mandatory spending. Social Security accounts for about half of that (48.5%) and Medicare most of the rest (38.4%).

That leaves half a trillion dollars ($527 billion to be more accurate) in income to cover $1.11 trillion in discretionary spending, which includes the military (about $600 billion, or 53.7% of discretionary spending), and we haven’t even allocated any money to pay back the debt.

Clearly something has to give. We can’t keep spending more than we take in forever. One solution, of course, would be to raise taxes enough (about 20%) to cover the deficit,  Or we could eliminate all tax breaks (worth about $1.22 trillion), which would more than cover the discretionary spending and even put a little aside to begin to pay back the debt.

So now let’s rank spending in priority order. Everyone will have their own priority order no doubt, depending their passions, their politics and their ideology. But let me suggest an order for at least the top of the list – the most important stuff the government ought to or has to fund  - that most of us might agree on.  As I have argued before, the economy is the engine that drives and funds everything else, so it gets top billing in my list. Here is my suggested starting priority list:

1.      Debt obligations - interest on the debt and pay down the debt. We must do this.

2.      Infrastructure repair and updates – essential to the economy

3.      Basic science – essential to the economy (~3.5% of discretionary spending)

4.      Transportation – essential to the economy (~2.7% of discretionary spending)

5.      Social Security – but reduce payments and increase payroll taxes

6.      Medicare – but reduce payments and increase contributions

7.      Military – (a) to keep us safe, not from terrorists but from full-scale war, and (b) to preserve the economy.  I’ll talk more about this in part II of these blogs.

That’s it. Those 7 things, more or less, will eat up all the current annual federal receipts, and at that it includes touching the political third rail of Social Security and Medicare. Pretty much anything else is a “nice to have but we can’t afford it” unless people are willing to pay a lot more taxes.

That is reality.

Who reads fake news?

The BBC website this morning has a fascinating article entitled The rise of left-wing, anti-Trump fake news. The observation that fake news is not just a right-wing phenomena doesn't surprise me, but the fact that it is appears to be largely the college educated on the left wing, and the high income earners on the right wing, that attend to fake news is unexpected.  One might have expected it would be the more uneducated who were the more susceptible.  Perhaps the "deplorables" have a better sense of reality after all  than the rest of us.

Dilbert

Talk about spinning the news…

Kansas just held a special election for the 4^th Congressional district to elect a replacement for Republican Congressman Mike Pompeo, whom Trump appointed to head the CIA.  The Democrats mounted a fierce campaign to try to win the seat as a demonstration of how unpopular the Trump administration was. They failed; Republican Ron Estes won by 7 points. Any rational observer would see the Democrats failed. 

But not the New York Times, who promptly printed an article entitled A Republican Wins in Kansas. It’s Still a Loss for the G.O.P.

Their logic? Trump won the district by 27 points; Estes won it by only 7 points. So that shows how poorly the Trump administration in particular, and the GOP in general, is doing.  It is amazing to what extremes the liberal media will go to try to support the narrative they seem to have to believe in. Well, if I were a Republican I would be delighted. An opponent who can’t see reality is an opponent who is far easier to defeat.  And right now Democrats can’t seem to see reality.

Two pernicious cultural movements in America

Understanding history and current affairs is a signal-to-noise problem. There are always fundamental shifts taking place in the culture that will shape the future, but they are usually largely masked by a great deal of day-to-day noise, ephemeral fads, political battles, hyped news, and the like. I spend a great deal of time trying my best to discern the fundamental shifts through the fog of the daily noise of life.  And by the way, this whole election and its aftermath - important and emotional as it seems to many people right now – is really just noise in the long term, as were similar upsets, now largely forgotten, when Reagan was elected, when Roosevelt was elected, etc, etc.

The fundamental shifts that seem to me to be important for the future direction of American culture include the encroachment of automation and the resulting changes in the labor market, the effects of worldwide interconnectedness (the internet, cell phones, etc), the demographic changes producing an older population, and the rise of China as an economic powerhouse, just as examples.

Of all of these, there are two movements in American culture which I think are pernicious and a threat in the long run to national survival:

The first is the emergence of a victim-centered culture, or as one writer named it, the grievance culture. The essence of this culture is the assumption that whatever is wrong with one’s life is someone else’s fault, and that they therefore owe recompense for it. We see it everywhere. Lawyers put up billboards advertising their services for litigation to those involved in auto accidents (in my youth such lawyers were called “ambulance chasers”, and it was a derogatory term). African-American leaders demand payment to themselves for indignities visited upon slave ancestors many generations back. Doctors go out of business because their liability insurance rates are unsupportable – patients sue them because medical procedures, always chancy by their very nature, didn’t turn out the way they expected.

Certainly there are real grievances in the world. Prejudice based on gender, on race, on sexual preference, on religion, on politics, etc is alive and well. Corporations and bureaucracies on occasion do terrible injustices. There are careless and incompetent doctors in the world. All of these are valid reasons to try to change the culture. But they are not valid reasons to assume that any misfortune in life is someone else’s fault.  Life is uncertain, unfair, and probabilistic in nature. We all – even the wealthy of us – are born with disadvantages. We all – even the privileged among us – have bad things happen to us.  The measure of our character is how well we handle the misadventures of life – how much responsibility we take for our own condition.  Women do rise to be CEOs of major corporations, despite the glass ceiling. Blacks do rise to be president, despite the prejudice. Poor people do rise to become wealthy, despite the economic disadvantage.

The essence of American culture through most of our nation’s history has been the Horatio Alger story – poor boy works hard and succeeds.  The essence of American culture though most of our history has been embodied in the hearty settler family, fending for themselves in a wilderness, facing off hostile Indians, uncertain weather, and wild bears. Yes, these were in many ways myths, but they expressed the expectations of the culture – that people were responsible for their own condition.  We are losing that, to be replaced with the expectation of a sort of childlike dependence on others, on the system, on government, to make up for whatever ills happen to befall us in life. That attitude will, I think, seriously harm our culture and our nation in the long run

The second pernicious cultural movement is the rise of identity politics, of attempts, for political advantage, to divide Americans into distinct “tribes” – women, blacks, Hispanics, Asians, etc., and set them against each other in zero-sum political games. America is a nation of immigrants, and the great success of America has been to accept a wide variety of peoples from around the world  and weld them within a generation or two into a common culture and a common nation – something Europeans have not done so well and far East nations haven’t even tried yet. As Theodor Roosevelt said in a speech 1915:

There is no room in this country for hyphenated Americanism. When I refer to hyphenated Americans, I do not refer to naturalized Americans. Some of the very best Americans I have ever known were naturalized Americans, Americans born abroad. But a hyphenated American is not an American at all … The one absolutely certain way of bringing this nation to ruin, of preventing all possibility of its continuing to be a nation at all, would be to permit it to become a tangle of squabbling nationalities, an intricate knot of German-Americans, Irish-Americans, English-Americans, French-Americans, Scandinavian-Americans or Italian-Americans, each preserving its separate nationality, each at heart feeling more sympathy with Europeans of that nationality, than with the other citizens of the American Republic … There is no such thing as a hyphenated American who is a good American. The only man who is a good American is the man who is an American and nothing else.

More recently, Whoopi Goldberg expressed the same sentiment last year in an interview:

I can’t keep up with it. I went from being colored to being a negro to being black to African-American. I figured I would land on American……You know what uh-uh! This is my country. My mother, my grandmother, my great-grand folks, we busted ass to be here. I’m an American. I’m not an African-American. I’m not a chick-American. I’m an American!...... Any time you hyphenate American, any time you put something in front of it, it’s like you’re not a real American. Well, I’m a whole lot of all-American. This is my country and I’m an American.

The attempt to divide people with identity politics – a staple for example of Hillary Clinton’s failed presidential campaign – is an existential threat to the nation. One only has to look at European countries that have within them ghettos of disaffected immigrants who don’t feel part of the nation they live in to see the problems it causes.

The Obama legacy

Obama supporters would like to think that President Obama left a legacy to be proud of, and certainly a better legacy than they anticipate will follow President Trump. How realistic is that?  Let’s look at President Obama’s tenure:

He was proudest of ObamaCare, a bill that was driven through Congress hurriedly with hardball politics without a single Republican vote.  Critics predicted that it was fiscally unsupportable. Where is it now?

·         We were promised that under ObamaCare we could keep our current plans and our current doctors if we wanted to. That clearly didn’t happen, and subsequently Obama admitted to the press that he knew it wouldn’t happen.

·         Of 23 non-profit State Insurance Cooperatives initially funded by taxpayer money under ObamaCare, only 7 remain, at a loss to date of $1.7 billion in taxpayer money. And several of the 7 remaining are expected to fail this year.

·         We were promised that insurance rates would fall under ObamaCare. That certainly didn’t happen. The average increase across the nation this year is estimated at 22%. Over the eight Obama years studies show that insurance premiums rose on average about 50% across the nation.

·         Major insurance companies (Humana, Aetna, United Healthcare) have withdrawn from all or most of ObamaCare because they are losing money – too many sick people vs healthy people signed up -  just as critics predicted.

·         Obama promised that ObamaCare would insure 32 million people who didn’t have health care insurance. The actual number in 2017 turns out to be a little more than 10 million, almost 90% of them subsidized by taxpayer funds. As I have mentioned before, he could have simply subsidized them in the first place and not disrupted everyone else’s plans.

Hardly a legacy to be proud of.

When Obama took office, the national debt stood at $10.6 trillion. When he left office it stood at $19.9 trillion, so it almost doubled under Obama’s administration. The US GDP (Gross Domestic Product) in 2016 is estimated at $18.6 trillion, so in essence the national debt now stands at more than the entire nation’s output in a year.  When third world nations have this sort of balance they are considered to be in deep, deep financial trouble.

Hardly a legacy to be proud of.

Obama drew his red line in Syria at the use of chemical weapons against civilians. When Assad crossed that red line he did nothing. Then he acceded to a Russian plan to have all of Assad’s chemical weapons removed from the country, and assured the world it had been done.  Then last week Assad’s forces used Sarin gas against a rebel village -  so much for Obama’s promise that all the chemical weapons had been removed.  He was clearly suckered by Putin and Assad, or at least by Assad.

Hardly a legacy to be proud of.

He negotiated the Paris Agreement to attack climate change. It certainly got a lot of press and spin, and the greens loved it. But in fact the agreement has no teeth – no enforcement mechanism and no penalties for not meeting its goals, just like previous agreements in this area.  So in fact it is really nothing but a set of promises by politicians, and we all know what they are worth.

In fact both the US and China have more than met their goals thus far, but not because of any agreement; simply because economics drove improvement.  The Chinese needed to deal with the terrible level of coal-derived smog in their cities.  In the US fracking technology made natural gas cheaper than coal, and so drove a movement of power stations away from coal, which produces more greenhouse gas.

Not much of a legacy here, despite the spin

North Korea now has working nuclear weapons, and working short and intermediate-range missiles, and is working hard on long-range ballistic missiles. Most of these advances came during the Obama administration, and Obama appears to have done nothing to try to slow the progress. If he did things behind the scenes they certainly didn’t work. He certainly didn’t seem to get China to do anything to help restrain North Korea, and it is not clear that he even tried.

Hardly a legacy to be proud of.

So I’m at a loss to see much of an Obama legacy to be proud of here.  He did on occasion avoid doing stupid things, especially in the Middle East – I guess that counts for something. On the other hand American influence and soft power around the world fell noticeably, and he was outmaneuvered by Russian President Putin a number of times.

To be fair, lots of events are simply beyond the President’s control.  So I don’t necessarily blame him for many of the things he didn’t manage to fix.  But on the other hand a legacy is built on doing things that make a difference to the nation in the long run, and I don’t see much of that in the Obama legacy. Diehard liberals may see things differently (they may need to in order to avoid cognitive dissonance), but as an independent I'm not that impressed.

The point that is being missed about the Syrian gas attack.

The New York Times and CNN and the rest of the liberal press, as usual, are either too enthralled in their own anti-Trump pro-Obama narrative to see the obvious questions, or simply unwilling to explore issues that might embarrass them or impugn the Obama legacy.

President Assad of Syria clearly had and probably still has nerve gas. Several independent international agencies have confirmed that it was Sarin nerve gas that was dropped on a rebel village by a Syrian government plane flying from the airbase that President Trump just attacked.

Here are the questions that the news OUGHT to be asking:

President Obama assured the world that all of Assad’s biological weapons and nerve gas stocks were destroyed and/or removed from the country, under the agreement brokered by Russian President Putin. Was Obama just suckered by Assad and Putin (which is bad enough), or did he in fact know that his statement wasn’t true (even worse)?  There are some stories that the intelligence community knew or at least suspected that Assad still had stocks of these weapons. Are they true, and if so, did Obama know, and if not, why didn’t he know?

Did President Putin know Assad still had these stocks?  If so, he really suckered Obama.  If not, he was played by Assad.  He comes out looking bad either way.

The loudest spokesperson for how sure the administration was that the stocks had been eliminated was Susan Rice. Did she lie? Or did she – the president’s National Security Advisor – not know what the intelligence community knew?  The latter seems unlikely, so if she lied to the public about this, how much trust can we put in her current statement that she didn’t leak any of the names of Trump campaign people that she unmasked in the intelligence reports she admits to have read?

These are the sorts of question a news organization with some integrity would be asking. What can we conclude from the fact that the major news organizations are not asking these questions?

So here’s the Democrat’s problem

We are coming up on the end of the first 100 days of the Trump administration, and the Democrats have a real problem. Far from imploding (though CNN has tried its best to make it look like that), Trump has actually moved ahead smartly to fulfill the very campaign promises that got him elected.  He has eliminated many of the Obama executive orders that conservatives and businesses didn’t like, he has toughened our immigration policy (with the result that there has been a drastic drop in illegal immigrants across our southern border since January), and he will today get his first Supreme Court nominee approved. And the stock market and the economy have both improved markedly. It is true that his first attempt at repealing ObamaCare failed, but that may just be a tactical setback. Already the Tea Party Freedom Caucus, seeing that they can’t get it all their own way, has softened its opposition. And if he does nothing, ObamaCare is in a fiscal death spiral anyway, despite the valiant attempts by its supporters to claim otherwise.

And last night he showed, with the missile attack on the Syrian airbase in response to the Syrian nerve gas attack on a rebel village a few days ago, that unlike Obama, he is willing to back up his red lines. That will strengthen his support among voters, as well as strengthening his hand in dealing with people like the North Koreans or the Chinese.

Liberals have spent this time getting outraged and hyperventilating over one thing after another, and pursuing one conspiracy theory after another, mostly to do with Russian interference in the election (apparently Obama administration interference, or DNC interference,  or media interference doesn’t bother them). They have been almost childish in their response. What they have not done is get organized to try to win back some seats in local or state or national legislatures, which is the necessary first step to getting back into power. In fact what was most noticeable about the Democrat’s futile effort to filibuster Neal Gorsuch’s nomination was that they were rudderless and leaderless, responding almost mindlessly to their most extreme hyper liberal base. I see no sign of any strong leadership emerging yet, nor any sign yet of serious strategic thinking and planning.

Liberals clearly hoped that Trump would simply fail spectacularly in office and their liberal candidates could walk in next election and pick up the pieces. That isn’t going to happen. They are going to have to work, and work hard, to get back in power. They are going to have to talk with - not talk at - people they don’t agree with in order to win them back over.  They are going to have to rethink some of their more left-wing positions and reshape them enough to be acceptable to more people. They are going to have to stop being emotionally outraged (as good as it makes them feel)  and start thinking tactically. And they are going to have to wean themselves off their fascination with the wealthy Hollywood and Wall Street set and get back on friendly terms with their historical base – the working class. And it’s not clear to me that they are willing, or perhaps even capable, of doing that.

This worries me, because I actually support many – perhaps even most – liberal causes. Not the far-left socialist ideas, which appealing as they sound are simply unworkable and unrealistic. But certainly the more centrists goals – eliminate gender and racial discrimination, equal opportunity (opportunity, not outcome) for all, protection of the environment, job security, etc, etc. But the way things are going so far it will be a long time, if ever, before Democrats regain enough political power to defend these causes effectively.

I hope I am wrong.  Bill Clinton managed to revitalize the Democrats last time they were in the wilderness, and perhaps someone like him (and Hillary certainly isn’t the one!) will eventually emerge to get the Democrats off their childish whining jag and back to serious politics. I hope so.

The road to hell…

Remember the old adage that ”the road to hell is paved with good intentions”? American democracy is in terrible shape right now, riven by unremitting partisanship, and it is mostly due to things people naively thought were good ideas.

Item: In the “good old days” members of Congress lived pretty much full time in Washington, because travelling back to their home districts was expensive and time consuming for all but the few from nearby East Coast towns and cities. So they lived most of the time in Washington, often were neighbors, attended the same Washington parties, and socialized together and became friends, whatever their political party. In the 1940s and 1950s, after a vigorous debate in the Senate, many members of both parties would gather in Senate majority leader Sam Rayburn’s office to drink Bourbon together. (When my grandfather, a Republican in politics, died most of the local Democratic Party turned out for his funeral – they were all good friends of his).

With the advent of fast and cheap air travel, many – perhaps most – members of Congress no longer live and socialize in Washington. They now travel back to their home districts on Thursday, returning on Monday. That means they are more available to their constituents on the weekends, which many thought would be a good thing.  But it also means they now socialize less, if at all, with other members of Congress, and in particular, with those of the opposite party. So there are no longer those bonds of friendship to foster respect and bipartisan comity.  

Item: In the “good old days” members of Congress would retire behind closed doors (those “smoke-filled rooms” that political activists decried as so evil) and negotiate compromises to their differences. Then along came the movement for “open democracy” – let’s get those sneaky deals out of the smoke-filled rooms and into the public light. Sounds like a reasonable idea, doesn’t it?

But what is the result? Members of Congress now have to negotiate in public, and any sign of compromise on either side promptly brings a flood of emails (orchestrated by whatever pressure groups opposes it) from constituents. Result? Compromise is out the window and we get today’s partisan stalemates.  The essence of politics IS compromise – is finding a middle ground that gives all sides something. So cutting off compromise cuts off effective politics, which is where we are now.

Item: In the “good old days” candidates for office were usually selected by local party leaders, who usually, among other things, looked for suitable “electable” candidates. It was a system that was certainly open to abuses, but by and large it worked.  Then along came the movement for direct democracy and open primaries, which certainly on the face of it sounds like a good idea. But in fact far fewer people vote in primaries than vote in general elections, and those that do tend to be those that care most – the most partisan, the most extreme.  The result: we now get far more extreme right or extreme left candidates than we used to, feeding the increasing partisan divide in politics.

More than that, the extremes on both sides can now impose single-issue “purity tests” on primary candidates.  That got us the unruly Tea Party on the right, and fear of primary defeats seems to be driving many of the Democrats in Congress to equally extreme positions, like this really dumb filibuster threat against Trump’s Supreme Court nominee.

Item: In “the good old days” most Congressional districts contained a mix of voters – different parties, different races, different economic classes, etc, etc. That meant candidates had to have broad appeal, and pay attention to the concern of all the groups.  Then politicians began to gerrymander districts to “increase minority participation”.  The theory was that if one gerrymandered a district with, say, a majority of Hispanics or blacks, that would increase the chances a Hispanic or black would get elected and therefore increase Hispanic or black leverage in the political process. Of course gerrymandering wasn’t new; it had been around since the early 1800s. But this argument gave it a liberal moral justification.

The result? Both parties have now gerrymandered so many Congressional districts that most House seats are a safe seat for one party or the other, and the office holders don’t have to pay much attention to any but the dominate political voices in their district. As of this year, about 205 Republican and 173 Democratic seats in the House are considered “safe”.  And of course the economic and political segregation of the nation – with liberals in the costal big cities and conservatives in rural and small towns in mid-America, has exacerbated the problem. All this also feeds the growing partisan divider in the nation.

All four of these changes were made for the most part with the best of intentions (though politicians certainly saw other advantages to gerrymandering). Yet all four have contributed significantly to bringing us to today’s dismal political state. “The road to hell…..”

Talk about hypocracy....

As I mentioned before, I'm not particularly happy with the Trump administration, but I must say that the Democrats – politicians and media alike – have reached a new high in hypocrisy this week.

Exhibit A: Democratic outrage at the possibility (now almost certainty) that the Republicans will invoke  the “nuclear option” and change the Senate rules to eliminate the filibuster of Supreme Court nominee Neil Gorsuch, even though it was the Democrats themselves, under Senate Majority Leader Harry Reid who on Nov 21, 2013 used the very same nuclear option against the Republicans, and it was Democratic Vice Presidential candidate Tim Kaine who  boasted on TV on Oct 28, 2016 that the Democrats would use it when Hillary was elected to get their candidate approved.

Exhibit B: The liberal media’s public outrage at Trump’s claim that the Obama administration used the intelligence agencies as political weapons against his campaign, followed in the past few days by the sudden media silence and downplaying of the whole issue now that it has been revealed that Susan Rice, President Obama’s National Security advisor, asked for access to the names of Trump’s campaign team (normally, pursuant to US law, US citizens names are masked or "blacked out" in any reports circulated)  that showed up in intelligence reports, and then made that information available to the press in leaks..

I certainly understand that the liberals are upset that they lost the election (though it was their own fault for backing such a flawed candidate), and politics has always been a dirty business, but I must say that this unremitting liberal Democratic attack on the Trump administration, including even the suborning of the intelligence community, is more vicious and dirtier than even the obstructionism of the Republicans against Obama’s policies, and that was pretty bad.