– At war with each other
– Run for and by billionaires
– Bingeing on debt in good times with no thought of the future
– Bullying valued over rule of law
– Denial of our historic strengths (E Pluribus Unum)
– Contempt for the unfortunate
– A President who thinks he’s king and almost is
On the economy: We’ve embarked on an unprecedented binge of deficit-financed stimulus in good times. In just the past fiscal year the deficit ballooned by an extra $300 B, far more than foreseen. That’s a great stimulus for the election, but it will be a long, cold winter.
Erratic tariff policy is already causing layoffs and market swings, with the major impact delayed until after the election. George Bush’s 2002 steel tariffs cost 200,000 jobs; this time effects will go much wider. And there is no pot of gold from these trade wars.
Finally we’re setting ourselves up for the very considerable economic consequences of ignoring climate change.
On personal welfare: Last year’s attack on ACA showed no commitment to do anything serious about healthcare—other than remove the progressive tax that funds it.
The huge business tax cuts have produced no wage increases beyond inflation (and no jump in business investment either). Further those tax cuts have left no room for education, infrastructure, or social services, leading to recent plans to cut Medicare and Social Security.
Supreme Court justices were chosen to fight unions and satisfy the moral pretensions of the evangelical right. Roe v Wade is only the beginning.
On freedom: We’ve had ongoing and increasingly brutal attacks on truth and the media. Trump’s attempts to control the FBI have not succeeded, but by all accounts a win in the mid-terms means replacing Sessions with a more obliging alternative. We’re reached the stage where we actually have to worry about the Justice Department!
On democracy: It needs to be emphasized that the Kavanaugh appointment completes Trump’s control of government. With a committed majority on the Court and capitulation by Republicans in both Houses of Congress, there is effectively no check on what he does. We haven’t had time yet to understand how bad this is going to be. Even Constitutional limits only work if the Court will enforce them. Without a Democratic majority in the House, there is nothing protecting the nation from whatever comes into his head—trade wars, real wars, silencing of opposition, personal vendettas, whatever.
Our founding fathers chose democracy for a good reason. They knew all about one-man rule. Democracy is inherently fragile, but that’s what made us what we are. We need to preserve it. VOTE.
Newspapers are filled with discussions of our political divisions and whether we can ever return to unity and shared national values. Many of those discussions are quite philosophical. This one is not.
The first thing to note is that divisiveness is hardly surprising when the two strongest political forces in the country are actively inciting it:
– The mainstream Republican Party is at this point inseparably intertwined with the Koch organization for both money and organization. There is no secret about the Koch organization’s objective. They want to return to a world where their ultra-rich members run the country, pay minimal taxes, and do anything they want. Consequently they want minimal government with defense and very little else—no regulation, only basic education, no social services. Since those are not necessarily popular positions, the Kochs have been systematic about divide and conquer, using the Tea Party and later Trump as front men to stoke culture wars. Pence, Pompeo, Gorsuch, and Kavanaugh are examples of Koch people. These are the people behind the scenes in the famous NYTimes op-ed piece.
– Trump is a populist front for the Kochs, but with his own objectives as well. For Trump divisiveness is the name of the game. It’s his people against the enemy with a siege mentality to build loyalty among the followers.
The conclusion from this is that the polarization of attitudes is not entirely—or even primarily—a matter of differing philosophies. What you have on one side are the self-serving programs of the Koch organization, together with justifications their think tanks have concocted to sell them. On the other side is a set of attitudes—starting with democracy and including even an immigration proposal—many of which were shared by both parties until the Koch people bought the Republicans.
As noted, Trump and the Tea Party are populist fronts. Contrary to what you read every day, the Tea Party was not a spontaneous movement; it was created and funded by the Koch organization. Its prominence, and the prominence of its message were only possible because of the level of funding. The Tea Party presaged Trump in the “true-believer” attitudes of the members. The Kochs had studied techniques of the communist party (of all things) to understand how to sell the message of secular paradise.
Trump is a step beyond. For one thing he has brought the cult of personality to the cult of secular paradise. For another he has added his own program to the program of the Kochs. In so doing, he has become a complete mask for what is going on. His tariff program—no matter how ill-conceived—really sounds populist, and his culture war persona is impeccable. He’s always in the news. The Kochs were undoubtedly delighted to see their tax program go through as his achievement.
If Trump really does make himself a dictator the Kochs may get more than they bargained for (and we get to live with it), but for now—despite tariffs, racism, and scapegoating—he’s their guy.
So going back to the question of divisiveness, where exactly do we stand? Support for the Koch-Trump program is of two sorts: there are those who really do benefit (some level of rich), and there are Trump’s true believers. Many articles have remarked on the strength of the reciprocal love that binds the latter group with Trump. Not an easy thing to address.
Why did these people buy in from the beginning? Lots of reasons have been presented: economic factors, racism, cultural conflicts, or simple non-homogeneity of the population. While there is plenty of evidence for the non-economic reasons, it makes sense to focus on the economic ones to start with, because those create an environment where the other evils can flourish. People fighting over scraps are unlikely to play nice. It’s true that polarization is self-sustaining once it starts, but addressing people’s concrete problems always has to be a first step.
One thing going for change is that the ideology of private sector salvation has now had a chance to show its true colors. The tax cuts did not get turned into bonanzas for employees; instead they got turned into this dramatic and revealing chart:
Furthermore healthcare was a fiasco, and even climate change is emerging as a threat. The tariffs only sound good—more people buy and build cars than make steel.
The only way any of that matters is if the Democrats do take the House. If that happens, the Democrats have a chance to show that they can produce solid programs for real problems. Healthcare was well-chosen if we can get our act together and really do it. The opioid crisis is still untouched. It would be nice to produce a jobs program that can get people out of Walmart. The Republicans have tried to poison opportunities with the tax cuts, but we’ll have to figure a way out. The ACA tax might be a model.
So the message is that the way back from divisiveness may be more ordinary than it seems. Stop calling people names and figure out ways to make visible progress. That may even lead to forced cooperation between parties. Even if nothing gets implemented, it will be clear what could be.
And someday there may even be justice for the Republican Party’s prolonging the pain of the 2008 crash, so they could deliver the Koch tax cuts!
You can’t turn around today without someone talking about how great the economy is. Low unemployment and low inflation. What could be better?
In fact you don’t have to look far to know something’s wrong. For once this is less a matter of lies than of myopia. We’re living in an artificially-created bubble, and while we don’t know exactly when it will end, this is never-never land. We’ll go through it step-by-step:
– The bubble
We incurred $985 B of deficit this fiscal year as short-term stimulus to an economy already at full employment. That’s a monumental $300 B over last year—in good times. As in every other such case, the tax cuts are NOT paying for themselves. During the year we had a small reduction in unemployment from 4. 1% to 3.7%, but at no faster rate than last year and with no increase in inflation-adjusted wages (one-time bonuses from the tax cuts were negligible in the statistics). You might ask why we would do such a thing—$1 T is a lot of money—but one thing the deficit certainly delivers is that much more economic activity in an election year. The same people who starved recovery from the 2008 crisis to help with the 2016 election gave themselves a big boost for this one.
You might also ask how long we can continue doing it, and the following budget chart makes that unmistakably clear:
We’re running up unimaginable deficits in good times, with consequences we’ll talk about in a minute. And the chart actually understates the situation. The underlying figures come from a CBO report written in April, when their estimate of the 2018 deficit was $805 B. With a final 2018 deficit of $985 B, the situation now looks considerably worse. The CBO report said that we would reach deficit = $1T by 2020 and then reach the sinister milestone of debt = total GDP by 2028. With the current deficit, we have reached the $1 T value in 1/3 the time, so that second milestone looms sooner now too.
The stock market is a similar case. The corporate tax cuts went directly to company bottom lines, raising price/earning ratios and stock values. What’s more corporations turned around and used all that money for stock buybacks, increasing demand for stocks and further enhancing stock prices.
None of this is sustainable.
– The deficit
Much discussion of deficits seems theoretical, but the consequences of our current deficits are real. Republicans are already talking about cuts to Medicare and Social Security as counterpart to last year’s tax cuts. Just imagine now we’ve reached a downturn in the economy—not even necessarily as bad as 2008. We’ll have the massive deficit-induced debts shown in the prior chart, and now—on top of that—tax receipts that have just collapsed with the economy. In that case we’re not talking about changes around the edges of Medicare and Social Security, we’re talking about no money for it and “taking the hard choices we just have to do.” That means dramatic change in what it means to be living in this country.
Further (as noted in the CBO report) the deficit is a time bomb. As interest rates rise in good times, the yearly cost of financing the deficit rises accordingly. We’re already talking about deficit finance costs higher than the defense budget. And it will just continue up, eating into available money for healthcare, education, opioid crisis even before a downturn. There are good reasons not to incur deficits in good times!
– Our economy
With all Trump’s talk about the private sector and relief from regulation you might think that the country has been liberated from misguided government meddling with private enterprise. But you’d be wrong. The current executive-imposed tariffs and trade wars constitute the most extreme government intervention in the economy within memory.
The steel tariffs hit anyone building anything out of steel—basically forcing export-directed activities off shore. The new USMCA regulations have already caused layoffs at Ford (and the touted benefits to labor are so far from clear that the unions can only wait and see). The trade war with China disrupts values chains of any corporations not sufficiently well-connected to get exemptions. The government is choosing winners and losers in the economy based on impulse (coal and steel sound good) or lobbying (the Apple watch). And established companies have been winning out over newer, innovative ones (net neutrality) any time the issue comes up.
All of that, together with xenophobia and lack of support for education, augurs poorly for the state of our economy going forward. And we’re even waging economic war with the largest, most rapidly growing economy in the world—in the name of protectionism!
– Our population
Since the subject is the economy, we’re talking here about the related topics of personal and national economic success. It is of course a truism that the world economy is changing. Good jobs, and the jobs that maintain our national standard of living, are changing. Very many of them require more and different training. (One list of the top ten growing job categories is given here.) Economists going back to Adam Smith have recognized the responsibility of government to educate the population.
However with the tax cuts we took a very different tack, essentially trusting private sector prosperity to raise all boats. There is no evidence that works. The tax cuts went primarily to stock buybacks (see the mind-boggling level of buybacks below), leaving issues such as education (including the student loans crisis), infrastructure, and healthcare up for grabs.
For now, protectionism is the solution to job retraining, consequences of automation are unaddressed, and instead of preparing people for good jobs we’re busy fantasizing about the past.
– Climate Change
Climate change belongs on this list, because inaction will just make the economic effects worse. Climate change may have morphed into a partisan issue, but nature isn’t fooled.
Consequences will be in many forms—severe weather, changes of temperature and rainfall, sea-level rise. Turning around today’s carbon-based economies takes time, so if we don’t start acting now, we’re talking many trillions of dollars of expenses for repair and to forestall truly disastrous consequences. The recent IPCC report found more serious effects than previously recognized by 2040. As the following chart shows, the US currently generates twice the per-capita CO2 of any other major player, so we have a long way to go.
For now we are doing worse than nothing. Climate change is an issue where international unity of purpose is extremely important, because cheaters—with cheap coal—can prosper. We have not only endorsed coal for ourselves but actively encouraged cheating. Further our departure from the Paris Agreement process—and in particular our disavowal of the whole idea of rich countries helping poorer ones act in our common interest—leads directly to dangers such as Brazil abandoning protection for the Amazon.
Ignoring climate change means more damaging effects of warming, and more drastic (and expensive) action in the end. Furthermore, as a purely economic issue, by denying the issue we are sidelining our own companies’ participation in this necessary multi-trillion-dollar enterprise. The day will soon come (we’re now talking just 20 years to get off coal, oil, and gas) when this moves to page 1 of the news, and stays there.
Our never-never land economy is good only so long as we keep our eyes closed. But if we don’t open them soon, we won’t recognize what we’ll find later.
This subject is too painful to talk about but too painful to leave alone. A few points:
– The fundamental danger of the Kavanaugh appointment was of course clear from the start—it was clear from the moment that Kennedy announced his retirement. One way or another we were going to get a Supreme Court majority for authoritarian control of the country. Since the Supreme Court enforces the Constitution, this is the fox in the hen house.
– The Kavanaugh hearing made matters worse in two ways. The idea that law-giving on abortion and contraception might be determined by a perpetrator of sexual assault was bad enough, but additionally we were given the spectacle of Kavanaugh’s unhinged rant about liberal conspiracies with the implied threat (now soon to be realized) of revenge. The final act, with Collins presenting the Party’s carefully-crafted whitewash of the whole affair, was an apotheosis of hypocrisy.
– The press has thus far, as usual, attempted to normalize the situation. The word “conservative” is a handy tool in this effort. As if these people represented an ordinary, conservative political wing rather than a takeover of the country to subvert democracy for the foreseeable future! Even the focus on Roe v Wade has this effect, by making it sound like the problem is limited to a few specific issues.
Instead this takeover of the court will pervade all aspects of society. Here are a few more examples of what may be in store:
That’s what’s looming for the not-so-distant future. It doesn’t change our immediate goals, as the mid-term elections are now more important than ever. But it will be a tough battle, and the unprincipled savagery of today’s Republican Party has been vividly on display.
on the outside 