The Crisis of our State of the Union

Trump’s State of the Union deserves a full response.

It was bad enough to sit through the deceptions and lies in the description of the national economy—where very small actual gains (smallest annual reduction in unemployment in any three-year period since the 2008 crash; worst real wage growth at low unemployment in at least 40 years) were bought at enormously high cost (1.4T tax cut that went directly to Wall Street through artificial earnings and stock buybacks; nothing for infrastructure, education, opioid epidemic, etc.).

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However, all of that is just the beginning.  Many commentators have made that point (although many talking-head economists have done the country a disservice by exaggerating the benefits and ignoring the costs).

The real issue is that you would never guess that we live in crucial times for this country and the world.  You might expect that now I’m going to talk about climate change.   But even that is only a piece of it.  Only in the “I don’t have to care” world of today’s Republican Party is the State of the Union grounds for applause.

We are presiding over the demise of America’s promise in irresponsibility, incompetence, and simple vanity.  Let’s go down a list.

  1. Climate change

On climate change there can be no question of the urgency and magnitude of the challenge.  Science has given us a carbon budget we have to meet. The administration denies all of it and works systematically to undermine world progress.  As we’ve noted before, if we act today we have the elements of victory—but we also have ample evidence it’s a near thing.

Inaction on this subject is a grave risk to ourselves, our children, and the rest of humanity.

  1. World economic order

The elephant hiding in plain sight is the growth of the Chinese economy.  We are in the process of being supplanted as the world’s largest economy, and the room for growth there is enormous—China is already our equal by some measures, but their per-capita income still ranks only as 108th!  The world is preparing a new international order, and we’re in danger of missing the boat.

We have a chance to define notions of trade that open markets everywhere and embrace standards for wages and working conditions, environmental concerns (including climate change), and human rights.  In some sense this is a necessary complement to what’s needed for climate change.  However we are losing leverage for that enterprise every day.

We’ve taken the position (without exaggeration) that God has chosen us to rule, so we should abolish all international norms that might constrain our behavior.  With the growth of China that’s a losing game.  Even today we were unable to dictate to China in our trade war, and it’s China—not us—that’s the biggest foreign market for European cars.  We’re not going to be calling the shots forever, and without rules it’s their game.  In this Trump is not defending the US interest against the Chinese, he’s defending his personal dictatorial power against the interest of the country.  We have a very limited window to take back the promise.

  1. Technology

There will always be changes in technology, but the pace of change has reached the point where we have to keep up or lose.  This affects all aspects of our success as a country:  our national income, the jobs of our workers, the strength of our military.

Instead of recognizing that reality we’ve got our head in the sand.  Some examples:

– We’ve done everything possible to discredit scientists and science generally for climate change and environment protection.

– We’ve disbanded scientific advisory councils in government.

– We’ve had multiple State of the Union addresses where the only mention of education was vocational.

– We’ve killed net neutrality, thereby sacrificing new enterprises to the interests of the phone companies.

– On 5G and AI the government has come late to the party, without real plans.  For 5G in particular we’re actually asking our allies just to wait until we’ve figured out some alternative to Huawei.  This is worse than a failure of planning—5G applications are what’s most important, and waiting is punting that stage of technology back to the Chinese.

– More generally there’s simply no understanding of the importance of government in funding exploratory research—for technologies before the stage where private companies can run with them.  The tax cuts included a targeted punishment for major research universities.

– Finally the current rampant xenophobia flies in the face of the past and current contributions of foreigners to our technological strength.  We must continue to be the destination of choice for entrepreneurs looking to realize their visions.

We are simply ignoring the technological challenges and what has made us successful.  God only helps those who help themselves.

  1. Nuclear proliferation

This may seem a more limited issue, but that’s only because it hasn’t hit yet.  There are still only a limited number of players, largely under control.  But we’re doing everything possible to change that.

We’ve not only presented the world with the contrast in our treatments of North Korea and Iran, we’ve argued specifically for nations to do what it takes for their own defense.  We’ve eschewed the sort of international cooperation necessary to prevent new entrants.  And we’ve given Saudi Arabia nuclear material and technology without asking any questions at all.

The only reason we were less worried about this in the past was that world leaders had all recognized the nature of the threat.   We’re no longer keeping our eyes on the ball.  Nuclear technology gets ever easier.  As more entrants join the nuclear club, it gets harder to control their behavior and prevent the further sale of nuclear technology to third-parties of whatever ilk.  The North Koreans have done it before.

The clock is ticking.

  1. National ideals

It’s shocking how shallow the support for democracy has turned out to be.  In Sinclair Lewis’ “It Can’t Happen Here” many people had to die for the dictators to take over.  The reality was much easier.

Democracy is not a luxury.  It is key to what made this country what it is.  We were never perfect, but we were much more a country “of the people, by the people, for the people” than had ever existed before.

We’re losing all of that right down the line:

– We’ve reversed our progress in expanding suffrage, and are now looking for reasons to block people from voting.  The Citizens United ruling put rich people and corporations in control of elections.  Deliberate voter suppression by state governments is stated Republican policy.

– Support for public education is declining, and funding is still below 2008 levels.

– Upward mobility is now below that of most other developed countries.

– The religious right is in charge of what happens to women’s bodies.

– We’ve lost the social cohesion needed for big national efforts.  The President no longer even pretends to represent the nation—he’s a warlord who delivers spoils for his supporters.

There are plenty of historical examples of how hard it is to reclaim democracy once it’s gone.  If we’re going to have the strength of a country by and for the people, things had better change fast.

 

We live in a crucial time.  On one hand we could even see massive destruction of humanity; on the other we could see an unprecedented level of international cooperation as a precursor to a very prosperous and peaceful world.

One thing we can’t do is ignore the reality of our time.  We can’t afford the “I don’t have to care” puffery of this criminally fictitious State of the Union.

Regulation

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“Boeing 737-8 MAX at BFI (N8702L)” by wilco737 is licensed under CC BY-NC-SA 2.0

I was struck by an article in today’s NY Times about a new scandal around the Boeing 737 MAX.  Apparently there was another Boeing 737 crash in 2009 where similar issues (for an earlier 737 version) were hushed up under US pressure.

The scandal was shocking enough, but what provoked this piece was the discussion of cultural issues at Boeing—specifically the attitude toward the FAA.   There were many quotes from emails talking about regulators as barriers to be overcome by any means necessary.  If you believe the project manager emails, there was no recognition of any legitimate concern at all.

That’s horrifying.  It’s a serious problem with Boeing’s culture. However, it’s important to recognize that the situation is not unique.  The relationship of a regulator with the regulated company is always adversarial and difficult.  The issue goes beyond Boeing.

I worked for some years for telephone companies, at Bell Labs and later at GTE.  We were a regulated utility.  The role of the regulator was less critical—what was at stake was service quality and cost—but they did have a significant influence on what happened.  We didn’t regard them as hostile exactly, but overall the culture was that we provided good service more despite them than because of them.  From the inside that’s what happens.  Even at a working level, you see your side of the picture.  And phone companies are anything but angels.

That’s precisely why regulation is important.  You can’t let the regulated companies tell you in all sincerity that the regulators are idiots and the process is nuts.  They always will.

At the EPA and elsewhere we’ve now decided that the only people worth listening to are the regulated.  We’re all passengers on a 737 MAX.

On Climate—We Have to Beat Trump or Nothing Else Matters

Our piece on Inslee’s climate proposals included a video clip from MIT professor Henry Jacoby on the international side of climate change.  That clip deserves more than a passing reference, because its implications go far.  In its own way this is truth-telling for a story that has been largely ignored

 

Just to repeat the obvious, there is only one atmosphere.  All the carbon dioxide from everyone gets mixed up.  Since we represent about 15% of the world CO2 production, we only control 15% of what happens to us.  We can feel good or bad about how well we’re doing with our 15%, but the other 85% comes from everyone else.

For that other 85% it should be emphasized that there is no world government to deal with it.  The only way to make progress is for all of the world’s nations to unite on a process that makes sense, on a national basis, for each country involved.  That was the achievement of the Paris Agreement—there is no other mechanism for going forward.  (We’ve talked elsewhere about justice and economic impact.)  US withdrawal means we will be stuck with consequences of that other 85%, regardless of what we as individuals or cities or states can do.  Let’s see what that means.

US involvement created the Paris Agreement after decades of international squabbling.  Obama’s active intervention also raised Chinese consciousness to stop their rapid increase in CO2 production—as seen in the following chart:

s11_2018_Projections

The Paris Agreement is not a single step, but a process.  The path to success involves regular revisions of national targets according to a succession of 5-yearly updates.  The next such update is in 2020.

Progress won’t happen by itself.  It only works if everyone keeps on-track—and US withdrawal undermines it all.   Now that we’re out, the Germans and the Japanese are replacing nuclear plants with coal, and the Chinese (while retreating from fossil fuels in their own country) are pushing coal and oil elsewhere with their Belt and Road initiative.  With the US committed to (and encouraging) cheating, the 2020 updates are in jeopardy, and there is a real question if the poor countries of the world will be in any position to deal with the 75% of CO2 emissions reductions that Professor Jacoby notes must come from the developing world.  Rich countries like us are only going escape the consequences of climate change if they can get back in the game to make progress with poorer ones.

As long as Trump is the US President, we are giving up on what happens with most of the sources of the CO2 in our atmosphere.  That means, regardless of what we do for ourselves, we are committed to a national disaster.

So it’s important to keep things in perspective.  It’s good for the US to commit the effort necessary to meet our climate objectives.   But we should not delude ourselves about what controls our destiny.  The highest priority for climate action is to defeat Trump.  Between now and the election there is no other climate priority that comes close.

Warren’s Medical Plan Competes with Climate Action

Nursing Stock Images NIH

“Patient Talking With Doctor” by NIHClinicalCenter is licensed under CC BY 2.0

There is nothing complicated about this conclusion, but we ought to be clear about it.

Warren got herself boxed-in on medical care.  She repeatedly said she wouldn’t raise medical “costs” for the middle class, but other candidates and the press accused her of using “costs” as a smokescreen to hide taxes.  That forced her hand—to defend herself she had to make medical care free, a position quite different from where she started.  The middle class would pay neither premiums nor taxes.

That meant coming up with an awful lot of money.  The Warren proposal is a highly optimistic exercise in finding taxes and cost-savings to make it fly.  As opposed to all the other proposals—which involve some form of participant contribution—this one takes all the participant payments from general tax funds.  And it needs so much money you have to say that the well is now largely dry.

That has consequences for everything else.  For climate this is particularly sensitive, because there is every reason to believe that current cost estimates are decidedly on the low side.  What’s more, the costs included in the Inslee climate plan (which Warren now supports in principle) come to $9T over ten years, whereas the taxes from Warren’s own climate plan only cover $3T.   The rest is yet to be done.

Healthcare is too expensive to expect it just to fit it in.  It’s fantasy to believe it doesn’t matter.

 

Inslee’s Plan in the Green New Deal

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Inslee’s 200-page climate plan is the most detailed document any candidate has put together to address climate change.  Elizabeth Warren has said she will adopt it as is.  Many people would like to view it as a first fleshing out of the Green New Deal.

As such, it is important to recognize what the Inslee document does and doesn’t do.  Here are a few points.  (For context, this note builds upon our other recent points on climate change.)

  1. Inslee’s document is very good at documenting areas of government action necessary to address climate change.

– Undoing Trump’s many areas of damage within the executive—environmental planning and regulations of all kinds

– Reestablishing links to international organizations—the Paris Agreement and many others

– Identifying topics to be included in a plan—electric grid, carbon pricing, protecting affected workers

  1. However that is different from a plan of action.  Two issues:

– There isn’t yet a concrete plan for the core electric grid and power sources

This is completely controllable and in the critical path for everything else.

It is a strategic necessity—our generation’s interstate highway system.

It has to be planned nationally, with roles determined for renewable sources.

It will push the envelope on technology.  The Chinese are already deploying the highest capacity links ever.  Management and control software may be our strength.

– Inslee covers many topics, but doesn’t systematically prioritize sectors or work.  The following chart is key:

consumption-by-source-and-sector

                Where is lowest-hanging fruit both initially and as we go?

               What are technological and other barriers to success?

               What sequences of steps will be necessary?

               How does carbon pricing fit in?  What do we do about carbon capture?

  1. Transition costs are greatly underestimated.

– Inslee talks about protecting unionized coal and oil workers from loss of income.

– Far more affected people will be outside that core:  automobile mechanics, manufacturing value chains, service stations, etc.

– Most American car manufacturers risk being left behind—today’s cheap electric cars use South Korean technology.

– We will also—for the same reasons—need to protect workers losing jobs from other technology changes, such as AI.

  1. International aid requirements are also greatly underestimated.  This chart shows the problem:

s11_2018_Projections

– Many “All others” countries will be unable to do it alone—we will have to contribute.  That’s not just for them; it’s our atmosphere too!

– Inslee focuses on investment, but we will also need to provide financial aid and active assistance.

– MIT Professor Henry Jacoby gives a broader summary of this little-discussed truth:

 

 

  1. Inslee doesn’t cover everything in the Green New Deal.

– No claim to provide jobs for everyone (mostly high-skill jobs)

– Many claims but little detail about aid to “front-line communities”

– Minimizes management challenges of a huge undertaking—e.g. preventing corruption

  1. The technology picture is fanciful.

– We do need to develop new technologies or be left behind

– We’re not going to be world-dominant in everything—we’re not the only ones trying.

– We’re also not going to bring back the good old days of manufacturing—not any more than we did with iPhones.   Most climate jobs will be in deploying technology.

– Market opportunities are enormous, and we can expect success in our areas of strength.   But employment and equality of opportunity are part of a bigger story.  Fighting climate change by itself won’t bring nirvana.

  1. Inslee’s tariff and sector protection story is exactly what we’re forbidding the Chinese to do.

– When we need worldwide cooperation, the last things we need are trade wars and tariffs!

– Rules for fair trade have got to worked out in the WTO as part of the Paris Agreement process

– We have to accept the reality of fair competition—whether we’ve paid for the research or not.  That’s a necessity for climate and ultimately beneficial economically.

  1. Inslee’s document—like Green New Deal itself—declares an unnecessary culture war.

– We’re deploying new energy sources to replace fossil fuels.

– For the most part, we’re changing how things work, not what they do.

– The transition will involve everyone, but it’s not a culture or lifestyle question.  People will continue to drive (electric) Chevy Suburbans.

  1. We still need a program of initial major steps.  This should include items such as:

– Blue ribbon team on electric grid and power sources with dated deliverables

– Specifics on carbon pricing (why not just take CCL?—it’s progressive)

– Commit to supporting all people hurt by technology transition (& try to scope it)

– Spend real money on test systems to productize carbon capture

– Get serious about what will be needed (by year) to completely change transportation.

– Business roundtable to address application needs

– Back to a leadership role in moving forward on Paris Agreement commitments.

– Fix WTO rules to be consistent with Paris objectives.

– Better understand what will be needed from us (and others) for third-world countries do their part.

– Organize to make the most of climate jobs for the whole population.

Some Points on Climate

This touches a number of recent climate issues—some new, some familiar.

Background

  1. The primary issue for climate change is alternative energy sources.

We’re not repealing the industrial revolution.

This shouldn’t be a partisan or a lifestyle issue

We need good science and the will to fight entrenched special interests

  1. Conservation is important for now but not the main focus

Alternative energy will do the job if we do ours.

Chevy Suburbans are not the issue—we just need to power them differently

 “Respect for nature” by primitive peoples is irrelevant (but coming from all directions!)

  1. This is a fundamentally international problem where what we do for the rest of the world is as important as what we do domestically.  We will need to spend money on parts of the world who can’t.

s11_2018_Projections

  1. The fossil fuel companies have an evil influence on progress, but outrage at what they knew 50 years ago is a distraction.

Oil isn’t unclean—we just went too far with it.

The Carter era thought the world was running out of oil in less than 50 years

               The key issue is influence of fossil fuel companies now.

  1. Conversions of coal power plants to gas are still important—they buy time

We’re up against a carbon budget limit—any saving buys time

Progress is still rapid for alternative energy technologies—even electric cars aren’t ready for everyone yet.

Coal plants, especially new ones, continue to be a problem.

  1. We should stop calling a carbon pricing a tax.

We need to stop the huge fossil fuel subsidy—$1 T per year in the US—that comes from using the atmosphere as a free carbon dump.

We need a plan to make the population whole—and earn the trust we will do it

History and politics

  1. Obama actually did quite a lot for climate

International unanimity (after many years of failure)

A process to do more in the future

Turning China around (look at China’s line on the emissions chart above)

               Seed funding for Tesla and subsidies for electric cars

Note—the US was the primary beneficiary of the Paris Agreement.  We’re not being told to stop emitting at twice the rate of anyone else!

s12_Top_FF_Emitters_percapita

  1. Trump’s effect on progress is far worse than acknowledged

Reversed progress on all environmental issues in the US

Broke international unanimity—okay for everyone including China, Japan, and Germany to backslide with coal power plants

Legitimized attacks on climate action everywhere (Australia)

Continues to block any international cooperation on any issue

Going forward

  1. The single most important action is to defeat Trump

He is a roadblock to progress by anyone’s definition.

Any of the Democratic candidates would be good—no one has a real plan yet anyway

  1. The Green New Deal delivers a necessary coalition for progress

Makes clear that the new world is a good place to be.

Unites all constituencies

Must eventually add carbon pricing.

Not yet a plan

  1. The youth climate movement is helpful but a little worrisome

Non-partisanship makes it easy to co-opt—speakers at rallies dismiss all establishment parties.

               Trump was (in part) elected by young people who thought voting didn’t matter.

  1. If we can get past Trump, then we all need to get serious about a real plan

consumption-by-source-and-sector

Needs to address our current usage

Make sure it happens–what to fix when and by whom

               Minimize the hurt (particularly for the disadvantaged)

Recognize full international responsibilities

Don’t expect climate efforts to fix everything.  Broader issues include:

Easing workforce disruptions from technology, globalization, etc. (not just from climate)

Education

Infrastructure (much more than climate)

Jobs and wages (unions, minimum wage, role of the public sector)

Racism and sexism (need rules for everywhere)

Inequality overall (need a tax plan)

Other environmental issues will still be there to be solved

The Nightmare World of Our Making

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“presidential Twitter” by osipovva is licensed under CC BY 2.0

The first Democratic debate began with a question to Warren about the economy: “Since most Americans think the economy is doing fine, why do you need all those plans for change?”  She responded by pointing out that the “great” economy was primarily benefiting only a lucky few.

Even that, however, understates the issue.  It’s not just that unemployment rates don’t tell the whole story about what it means to be working for a living.  It’s that there is so much run amok with the direction of the country that the unemployment rate doesn’t begin to stand-in for the strength of the economy or the well-being of the country overall.

For that we need to pull together many strands and formulate a picture what it would mean to have four more years of Trump—the kind of world we are making.  This note attempts to make a start.  We can be explicit about many things.  Our path of decline was clear from early on, but now we have more specifics.  We should leave no doubt about the risks we run.

In doing this, one goal is to avoid what I felt was a problem with the Clinton campaign.  Trump kept talking about change, but we didn’t get across the danger in those changes: what they would mean for ordinary daily life, for the environment, for the courts, for democracy in America.  Who’s to say if that would have made a difference, but many people were certainly surprised by what they got.  If nothing else, it would have called out the risk of non-voting.

What follows is an outline with a few supporting points and references.  As noted this is a start.

More unprecedented floods, hurricanes, temperatures, etc.

By leaving the Paris agreement we broke the international unanimity that was the best chance for progress.

               Each lost year is time we won’t get back

Disdain for science and technology in government

Non-support of research and education

Ignoring climate change technologies

Choosing big, established companies over innovators (Net Neutrality)

Xenophobia and racism encourage entrepreneurs to go elsewhere

=> Lower standard of living

=> Real threat to our military security

  • Nuclear proliferation and risk of nuclear terrorism

Encouraging nuclear proliferation by statements and actions (N. Korea vs Iran)

More players means more chance of theft or sale

Belligerence normalizes nuclear weapons

Bulletin of the Atomic Scientist sees highest risk of catastrophe ever

  • Back to the 19th century on woman’s rights

Roes vs Wade hangs by the thread of Roberts’ desire for Court legitimacy.

One more Supreme Court vacancy, and we all live in Alabama.

  • Erosion of opportunities for middle class life

Education—weakening of public education and more generations in debt

Attacks on unions

Healthcare at issue—ACA hobbled with no other proposal in view

Continued declines in good jobs for people without degrees

No recognition of the problems created by technology change

Cutting the safety net—If you don’t succeed you’re a loser

Conflicts stoked between races, ethnic groups, cultures

No interest in racial justice—to the detriment of all

Cruel and intentionally divisive Immigration policy

Major hit to both security and prosperity

Trade wars instead of alliances and international norms

New arms race already announced

Policy rooted in weakness—from fighting on all fronts

Conflict as the first choice— “Trade wars are easy.”

Other wars too?

  • Weakened environmental and other standards

Air and water

Workplace safety

Food safety

  • Bubble economy based on debt

Good times prolonged by deficit-funded stimulus

Proven recipe for cycles of boom and bust (back to the 19th century here too)

No Republican history of help during downturns

  • Undermining of democracy in the US

Increasing government by fiat (“executive order”)

Restriction of voting rights

Politicization of the Justice Department

=> Democracy is not a luxury—it made us what we are.

 

Questions for Democrats

consumption-by-source-and-sectorI’m concerned about what seems to be a kind of giddiness in the Democratic Party.  Winning control of the house was a major accomplishment, and there does seem to be a shift in national attitudes toward the liberal agenda.  But I’m worried that the feeling that everything is now possible is getting ahead of what it will take to make it so.

I’ll start with Green New Deal and Medicare For All.  In both cases there’s a lot that’s good.  We’ve succeeded in focusing attention on key problem areas that urgently need to be addressed.  But in both cases there is so much room for interpretation that it’s hard to see what will come out.  And I don’t understand what the decision process is going to be.

Climate change and healthcare are both highly technical issues.  We’ve talked here before about what it will take to put together a true national plan to address climate change.  (The chart at the start has to be addressed point-by-point.)  The current GND bill doesn’t claim to do anything like that and adds a number of other issues into the mix.  Part of that is good—for the first time we’ve succeeded in presenting action on climate change as a step forward for everyone, not as distasteful but necessary medicine.   At the same time, though, we now have a number of competing objectives for whatever will come out as plan.

However attractive those objectives may be, there is a lot more in GND than anyone will deliver.  Fighting climate change will create many jobs, but will not—by itself—solve unemployment.  If we start fighting about whose jobs get created, climate will suffer.  It’s okay that part of the planning process is political, but that can’t be the main thing.  Roosevelt had a brain trust of people driving the original New Deal.   We need something like that here, and we also need a broad-based process for contributions to the plan.  It’s not enough to let the Presidential candidates or other players chime in with soundbites.  This is a real test for our ability to govern.

Healthcare makes me nervous for similar reasons.   Medicare for All sounds very specific, but one hopes it’s not.   A literal Medical for All solution would not be a simple change and would force a premature answer to a problem that deserves careful study.   Virtually every developed country other than us has implemented some form of universal healthcare, and there is quite a lot of variety in the solutions.   We have every opportunity to make a careful and successful choice for both the overall plan and the sequence of steps to get there.

I don’t see enough of that happening.  Thus far there seems to be more concern about how to relate to Medicare than about how other countries have achieved universal coverage.  Positions of Presidential candidates seem like shots in the dark.  We should be careful to avoid making the transition harder than it has to be, we should avoid fighting battles we don’t have to, and we should certainly make sure to keep the ACA surtax!

A third and final topic is international affairs.   What’s worrisome about that one is that there is no way of avoiding competing objectives.   One of the biggest mistakes of the current administration is its zero-sum approach to the rest of the world.   We’re trying to “win” international affairs by making sure everyone else loses.  Such belligerence may sound great—defending America—but it’s a wrong model.  The world has learned the hard way that economic nationalism is self-defeating.   We need rules of engagement so that nations can participate in building shared prosperity.  The world has a real chance to succeed at that, but it’s not a given.

In particular it’s not easy for us and not easy now.  The drastic changes in the world economy are calling out for nationalism and trade wars.   “The worst thing about globalization is everything that can be blamed on it.”  Better trade rules will help some of it, as will a better safety net.  But the problems won’t go away.  Not only are we going to have to say no to tariffs (still popular despite a cost of $900,000 a job), but we may also have to spend serious money outside the US to help poorer countries fight climate change.  The only way forward is to recognize how interconnected we all are.  That applies to Trump’s Devil’s bargain with dictators too.

Both the country and the world need us to get this right.