Democrats: Work with Republicans on Healthcare

Posted on November 20, 2016 by tonyj126

My wife is a doctor in a specialty with a lot of subspecialties. In order to ensure that the contracted hospitals receive complete subspecialty coverage every day of the year, vacations are chosen using “pods” of doctors with similar skills, and selections are made six months at a time. My wife is a nice person, and when the other doctors in her pod requested to reserve several of the most popular vacation weeks, she agreed and took the leftovers. So now, we’re not traveling during our preferred times, but rather during times that interfere with other obligations. I’m going to miss our church’s annual meeting and I’m the new treasurer, plus I will not be able to volunteer as a camp counselor in June. I can’t really complain, however – I will be on vacation after all.

You may wonder what this has to do with healthcare in the U.S. Part of me wanted to say, “They can’t do that. They can’t reserve the best vacation weeks. Say ‘No,’ even though we don’t have anything scheduled.” She didn’t – she’s a nice person, as I’ve said. So now, I’m hoping that we get the choice vacation picks for the second half of 2017, because my wife made the sacrifice for the first half.

Similarly, healthcare is a means for a potential reward for the Democratic Party in 2020. Since its inception, the Affordable Care Act (ACA) has been the target of republicans, and President-elect Trump campaigned on its repeal and replacement. Trump’s plan is not yet very detailed, but that released by House Republicans in June can give us an idea of what may be coming.

Both the House Republicans and Mr. Trump have said that they want to keep two of the most popular options: insurance companies will not be allowed to deny coverage based on pre-existing medical conditions and children will be eligible to remain on their parents’ plans through the age of 26. Both are expensive provisions for insurance companies as they guarantee insurance companies cover more sick and fewer healthy people.

Should President Trump and the republican controlled Congress decide to weaken the ACA, 16-20 million Americans will lose their health insurance coverage. Their big idea to reduce costs is to allow insurance companies to sell across state lines, but I doubt this will make much of a difference to most people. In rural areas, there are likely to be many – sometimes hundreds – of miles between hospital systems. Those hospitals have little incentive to negotiate low prices for patients covered by insurance companies because they don’t have competition. If you increase competition from two to five insurance companies within that rural area, it shouldn’t make a difference because there is still little incentive for the single hospital in 300 square miles to negotiate lower prices. Competition between insurance companies isn’t the issue.

Urban areas already have plenty of competition because there are so many more potential customers. The highest insurance premium increases for 2017 occurred in the rural areas, not the urban ones. There was still a substantial premium increase overall because fewer healthy people have chosen to obtain coverage than the insurance companies originally anticipated. Keep in mind that the average annual increase is significantly lower during the Affordable Care Act era than it was for the prior decade.

Competition between medical providers doesn’t work as you would expect from a supply and demand relationship either. Studies have shown that when the number of ophthalmologists in a given area increases, the eligibility requirements for Lasik surgery decrease. People with much better eyesight have surgery in order to avoid occasional eyeglass use when another eye doctor moves to town. The market solution does not necessarily work in the medical field.

The Affordable Care Act is actually a good start toward universal health insurance coverage in the United States. I doubt there has ever been a major program implemented in any large country which has worked completely as intended from the beginning. They all need to be tweaked. Social Security, for example, began with a much lower contribution rate than exists today. It required tweaking because of changes in life expectancy and the ratio of retired to working individuals.

An NPR story a few days ago highlighted how people feel in coal country – in this case, Uniontown, PA. One woman said that she hopes President Trump will quickly repeal Obamacare when he takes office because it is ridiculous how much her daughter pays for health insurance. This was not addressed in the story, but a repeal would most probably mean that her daughter would either have a much higher premium and/or deductible, or would lose her insurance altogether. Insurance companies have a mission to make money – even the nonprofits – and they can make the most money if they cover fewer high cost users of medical services. Women and children use more medical services than men.

So we have a situation in which republicans have to try and make good on their pledge to repeal Obamacare, or risk losing their next reelection bids. We have a president-to-be who has also promised repeal. The replacement plans include provisions to make insurance more expensive, less available and to privatize Medicaid, although not labeled as such (“Empowering States and Increasing Flexibility”). Since Medicaid’s administrative costs are about half those of private sector insurers, many people will lose coverage under a privatization plan. Finally, the likely income tax cuts for high income individuals will significantly reduce federal revenue, and in order to slow a ballooning federal deficit, Medicare and Medicaid payments will probably be among the programs cut.

(There’s good research that shows tax cuts for the top 10% earners do not stimulate the economy in the two years following the cut. Long term investment could be helped by such a cut, but every economic organization that has evaluated Mr. Trump’s tax plan concluded it would cause a recession, so long term investment is unlikely.)

So all democrats have to do is nothing. If they let the republicans enact their tax and healthcare plans, tens of millions will lose their health insurance and the country will fall into recession. With such a situation leading up to the 2020 election, they are certain to retake the presidency and Senate, and possibly the House.

But it would be devastating for the American people, and the democrats should not allow it to happen.

Democrats should work with the republicans to craft an improvement to the Affordable Care Act that will be the next step toward universal quality healthcare. It can’t be called that, of course, but the ACA is actually a good starting point. The republicans will have to make it look like a repeal and replacement. They have already laid the groundwork to keep portions of it, and that can be expanded to keep more items that work. Even if the end product is 80% of the ACA, let the republicans take credit. That is probably the best way to ensure that the “Democrats Serve The Public” bumper sticker rings true. And, it may also mean a return to bipartisan cooperation, which the last election suggests may be sorely needed.

Posted in Economics, Healthcare, U.S. Politics, Uncategorized | Leave a comment

The New, New Jim Crow

Posted on November 13, 2016 by tonyj126

I’ve been thinking about writing on this topic for quite a while, but a post by John Scalzi (http://whatever.scalzi.com/2016/11/10/the-cinemax-theory-of-racism/) gave me the push I needed.

First of all, I offer my apologies to Michelle Alexander who wrote The New Jim Crow. I, as a 50+ year old white male who undoubtedly has benefited from the disparity in how society treats people based on race, have little right to talk about problems experienced by African-Americans. Nonetheless, I hope my message may reach a few extra people and inform them of the connections I lay out below. Also, I hope some of those people will read Ms. Alexander’s book for a more in-depth analysis. (One more apology – I’m sorry I swiped your book title.)

In my opinion, the New, New Jim Crow is what some – perhaps many – of Trump’s supporters want to see as a result of their votes. They want to return to the good old days, and for a portion of Trump’s voters, that means a time of white privilege.

When has there not been a period of white privilege? Well, pretty much never. But the systems that have enshrined that privilege have reached a critical point and soon, there may be no system in place. I believe that situation may be a strong reason for Tuesday’s presidential election results.

Per Ms. Alexander, the first system that enshrined white privilege was indentured servitude in which poor blacks and poor whites were both held down by wealthy white land owners. That was a privilege experienced by those who had both white skin and substantial funds. Indentured servitude was followed by slavery and then Jim Crow laws which restricted African-Americans’ abilities to vote, earn a living wage, or live as truly free citizens of the United States. Slavery was ended by President Lincoln’s Emancipation Proclamation, and the southern states’ Jim Crow laws and voting restrictions were slowly ended by federal laws and court decisions.

In The New Jim Crow, Ms. Alexander explains that mass incarceration was the next system to enshrine white privilege. The war on drugs – a never-ending program that severely punishes those who need help (see Johann Hari’s Chasing the Scream) – gave police and prosecutors the tools to pick and choose whom to arrest and charge with felonies. Perhaps for racist reasons, or perhaps because African-Americans and Hispanic-Americans were much less likely to receive adequate legal advice, persons of color have suffered disproportionately.

Even though more whites are stopped for marijuana possession, for example, people of color are charged and convicted at a much higher rate. That disparity is even more extreme with respect to felony convictions or plea bargains in which the person pleads guilty or no contest to a felony. Poor legal representation is one reason that a much higher percentage of African-American and Hispanic-Americans carry around felony convictions than white offenders, but it also has to do with which defendants the District Attorneys’ feel they can convict, and thus keep their conviction records high.

Those felony convictions and mass incarceration of people of color are the current white privilege system. A felony conviction means that a person is not eligible for public housing, financial assistance for college, and in most cases, employment. A much higher percentage of felonies in African-American and Hispanic-American communities means that white people have advantages in all those areas – jobs, education, and housing. It goes beyond that. Communities of color with high felony conviction rates are also those communities with poor economic prospects. That affects school funding and so the next generation of African- and Hispanic-Americans is also harmed by the decades-long policy of mass incarceration.

This system of enshrining white privilege is now under attack. People as diverse as President Obama and Newt Gingrich want to end mass incarceration, although their reasoning may differ. For some of his supporters, Mr. Trump’s slogan to “Make America Great Again” meant that the candidate would continue the mass incarceration system, and consequently, keep white privilege alive and thriving. There was no clearer message to those voters than Mr. Trump’s insistence that the highly racist policy of Stop and Frisk should be put back into full use.

Additionally, Mr. Trump’s highly publicized and often repeated anti-immigration and anti-Muslim positions would slow non-white competition for jobs and government services. The candidate would not only shore up the current system of mass incarceration, but he would add another layer of protection with the anti-immigration policies. In short, candidate Donald Trump was the poster child for white privilege.

I heard a fair number of interviews with both Trump and Clinton supporters, and I was often baffled by the Trump ones. The economy is in the 88th month of a recovery, and a Trump supporter is making significantly more than he used to earn at the closed down factory, but he states that we need change. What change? Head back into recession? Reduce your salary? Lower the value of your home or retirement savings? It just didn’t make sense.

But then again, if what you really mean by, “It’s time for change” is that you want to stop judicial reform from weakening the mass incarceration system, then it does make sense. It’s not change from the growing economy, or change from historically low crime rate, or change from the record high stock market that’s the issue. It is change from the change that has begun in the mass incarceration program. It is change from the potential weakening of white privilege.

Those Trump supporters cast their votes to stop change, not to ensure it.

Posted in Economics, Education, Make America Great Series, U.S. Politics, Uncategorized | Leave a comment

Most Americans May Actually Want Higher Taxes, but Don’t Realize It

Posted on November 3, 2016 by tonyj126

To be more precise, they really just want to feel more secure, and they don’t realize that a strong central government can provide that security. Libertarians definitely don’t feel this way, nor do many of those who refer to the Civil War as the War for States Rights or the War of Northern Aggression. Still, if you break down the reasons why so many people are so upset at the current state of the affairs in the U.S., you will see that their fears and anger could be addressed with some beefed up government programs.

I know – those are fighting words these days.

Donald Trump’s promise to make America great again – especially when he talks about bringing back the manufacturing jobs of the 1960’s to 1990’s – is a message to return to a time when people could feel more secure in their jobs and private lives. Except during times of recession, most workers – white male ones, at least – could find a job fairly easily, and that job was good enough to allow them to support their families and give their children a good shot at having a better life than they had. During the good times, women and non-white workers could also find decent jobs, although there were certainly more obstacles for them in the workplace.

And why were there so many good jobs during that period? Much of it was the result of government spending, and the stimulus that it provided to the economy. The 1960’s through 1980’s brought us Cold War defense spending and the Space Race. All that federal spending, and the geographically diversified nature of military and space programs, created many secure jobs around the country, and those jobs generated many more.

The 1990’s were a bit different. The collapse of the Soviet Union in 1991 gave us the Peace Dividend. War was much less likely and we (the West) won. That felt good, and what did we do with that good feeling? We went shopping! Defense spending dropped substantially as a percentage of gross domestic product (GDP) during the decade following the Soviet Union’s collapse, and that might have been a drag on the economy, but it was offset by consumer spending which shot up by more than 40%. Traditionally, when we feel good about our lives and our futures in the United States, we buy stuff. And considering about two-thirds of the economic engine is driven by personal consumption, the economy kept improving and we kept feeling good about it.

We Americans don’t feel very good these days. The Great Recession had a devastating effect on so many families, and while we are now in the 88th month of the recovery, most of the news seems to be bad. Don’t get me wrong – it’s not the economists who are saying bad things about the economy, it’s the politicians and the media outlets which have something to gain from making people feel insecure. Donald Trump’s slogan sounds positive – Make America Great Again – but his messages are overwhelmingly negative. He has said how bad the economy, military, border security, and trade policies are, and many times each day, he emphasizes the negative. If Donald Trump can convince enough voters that things are horrible, he may be elected president because people will want change. He has a vested interest in making Americans feel bad.

Mr. Trump wasn’t the first. Other politicians – primarily republican – have been practicing this strategy during the entire presidential term of Barack Obama. In fact, it began before President Obama was even sworn in, at a meeting of republican House and Senate leaders in late 2008 in which leaked video showed the plan. The republican leaders decided to obstruct as many Obama initiatives as possible, and to publically state how bad things were, in order to set the stage for an Obama defeat in 2012.

While that electoral defeat did not occur in 2012, the negative messages stuck and the American people still feel that the country is doing poorly. It’s ironic really. The rise of Donald Trump on the wave of people who feel that Washington can’t get anything accomplished is a direct result of that republican congressional strategy outlined in late 2008. Talk about poetic justice.

Finally, conservative media – both main stream news programs, and opinion shows & websites – have a vested interest in convincing the American people that things are bad. The vast majority of their consumers believe that taxes should be low or nonexistent – some because they have high incomes, but also many who are convinced that they can handle money better than Washington – and these media outlets attempt to steer elections toward candidates who promise to lower taxes.

So here’s the controversial part – I think the American people want higher taxes and the federal programs that they would generate. Why?

People feel insecure. They feel terrorists will kill them in their homes or at the coffee shop. They think that they may lose their jobs, and then their houses, and perhaps their families. They believe the government has screwed them over with free trade deals and defective border security, and they are going to hunker down until things get better. During the past decade – a period which included the Great Recession – personal consumption has increased by less than 16%. (Cutting out the recession, the extrapolated increase is about 19% per decade.) Recall that the increase during 1992-2001 was over 40%. The negative messages have sunk deep into the American psyche and today’s spending is significantly affected, although there is a demographic component caused by so many retired and retiring Baby Boomers.

Who should be taxed? That’s an easy one – the top 5-10% earners and multi-national corporations.

Let’s start with business taxes. We should reduce the tax rate and cut out tax advantages (loopholes) which allow large businesses with lots of lawyers and accountants to avoid paying taxes. It isn’t just Donald Trump who uses the tax code to avoid paying federal income taxes; General Electric, Inc. is probably the king of tax evasion. From 2008 to 2013, GE made $33.9 billion and had an effective corporate U.S. tax rate of -9%. They got a net refund from the IRS during that period of $2.9 billion. A simpler tax code with a lower tax rate means that GE would pay taxes, and that smaller businesses would have their tax burden reduced. That’s a win-win, I think – unless you’re a multi-national corporation.

With respect to individual income taxes, data show that tax increases on the top 10% don’t impact the economy in the two years following the increase, but there is a substantial drag on the economy when taxes are increased on the bottom 90%. A tax increase on the top 10% would keep the economy growing but allow the government to reduce the deficit and fully fund programs that would help people in the bottom 90% feel more secure.

When governments don’t have the funds to do the job well, shortcuts are taken and most people experience the negative effects – they feel less secure. It’s ironic that part of Donald Trump’s appeal to the less educated working class voter is his extravagant lifestyle. It’s a little like mattress ads. If the ad shows a beautiful woman on a mattress, men’s subconscious thoughts go to, “If I buy that mattress, I can get a beautiful woman like that.” Women, on the other hand, subconsciously think, “I can be that beautiful if I buy that mattress.” For Donald Trump, many are thinking, “If Donald Trump becomes president, I can live like he does.” It doesn’t make sense, but that’s your subconscious for you – it’s magical thinking.

I believe a strong federal government with a mandate to help their citizens succeed with reasonable tax policy, drug treatment programs, job training, healthcare for all, assistance when in trouble, road improvements, etc. would make people feel more secure. The people would probably be much happier. But, then again, maybe not.

Surveys have shown that Denmark is the happiest country in the world, and it’s not necessarily because of a strong central government and the programs they provide. No, Denmark is the happiest country because Danes tend to have low expectations, so they’re much more likely to be pleasantly surprised than disappointed with any given situation. I would not describe the average American as one with low expectations, so happiness may be out of the picture, but at least they would feel more secure with strong programs which meet their needs.

Posted in Economics, U.S. Politics, Uncategorized | Leave a comment

Are Trump & Putin Fomenting Revolution?

Posted on October 14, 2016 by tonyj126

As I was listening to the news, with all the drama of this strange presidential election and the Russian hacking, I was transported back to my college days. Specifically, I recall those all-night games of Risk we would play on weekend nights, and I remember the winning strategy. I’m starting to wonder if Donald Trump and Vladimir Putin are employing it in the U.S. today.

The best way I found to win at Risk – and years later, at Starcraft – was to build strong defenses and let your opponents weaken each other in battle to the point of vulnerability. Then your greatly superior force could leave your base and wipe out all opponents. In a way, that is what the United States did in both World Wars because we joined the fight after years of conflict. The difference from the game of Risk is that we picked a side; otherwise, we might have taken over most of Europe, North Africa and more territory in the Pacific.

No, we chose a side; we fought with the British and French, and when we had to, the Russians. Alright, it was the Soviets at that time, but most of them were Russian, and they had suffered greatly – and we didn’t trust them very much. They didn’t trust us either, of course. Both countries were right to be wary. The U.S. and the Soviet Union invented impressive ways to wipe each other off the face of the earth, and both came awfully close to launching those nuclear weapons. From the experience I gained playing Risk, I can assure you that whichever inhabitants of the world remain after such a cataclysmic event, they would have absolutely no problem taking over the wastelands formally known as the United States and the Soviet Union.

And now we have Trump and Putin, and I wonder about their plans. Let’s start with Putin. Along with most analysts, I assumed that Russia was hacking Democratic Party institutions and local and state voter databases as a kind of “Screw You!” The Russian economy is suffering under the combined effect of low oil prices and U.S.-led sanctions, but Putin’s popularity is very high with the Russian people. That popularity spikes any time Putin acts aggressive, especially with the annexation of Crimea and the invasion of Eastern Ukraine.

Because of the Russian Air Force’s apparent indifference to the suffering and death of Syrian civilians of all ages, Putin can become more popular at home by reporting to his people that mighty Russia is saving the world from terrorism, while the U.S. looks weak with their precision bombing. U.S. ordinance doesn’t destroy whole multi-story buildings like the Russian bombs do, so the people back home in Moscow and St. Petersburg, conclude that Russia is great and Putin is amazing. You might say he’s Huuuuuuge at home!

Of course, the Russian people only see the news Putin and the military want them to see. Russia is a country with a very poor score in the press freedom department – on a scale of 0 (best) to 100 (worst), the country gets an 83 from www.freedomhouse.org. It is not safe to be a journalist in Russia, and that may mean harassment, threats, imprisonment, or murder. Putin can tell his story and he can keep others from telling theirs.

And that brings us to Mr. Trump. Is it any wonder he is so enamored with Putin?

Russia’s gross domestic product dropped 35% from 2014 to 2015, and it’s only 7.4% of the U.S. GDP. In fact, the states of California, Texas and New York each have higher gross domestic product than the entire country of Russia. This economically diminished country, however, has a leader who can do anything he wants, and has very high approval ratings. He can imprison and kill journalists who write unflattering things about him. He can take over territory in a neighboring country for the heck of it. He can order troops into Ukraine, shoot down a civilian airliner, and lie about it in the face of overwhelming evidence. He can bomb the hell out of Aleppo without worrying about the civilians on the ground. Of course he’s Trump’s hero.

Donald Trump wants that same power in the U.S. – and he may think it comes with the job as president – but this week’s polls make that victory look out of reach. But that’s where Putin can help. It is widely known that the Russian military/government is responsible for the hacked emails from Hilary Clinton’s campaign manager, the head of the DNC, and other Democratic Party entities. Wikileaks is releasing some of these Russian-provided emails each day in order to harm Clinton’s chances of winning in November, and the Russian-Wikileaks releases will probably continue all the way to election day. Not only that, Russia could create explosive fake emails that could have a significant impact in lowering voter turnout or depressing Clinton’s totals. I think the public will swallow the lies hook, line and sinker because we’re being conditioned by these regular Wikileaks dumps.

So, Putin could possibly sway the American voter to choose Donald Trump with this targeted campaign, but even if that does not work, Trump may have an additional upside from the Russian interference. Donald Trump has repeatedly stated that the election may be stolen from him. Every unflattering news story about him is portrayed as an attack on Trump by Clinton and her surrogates, the mainstream media.

It doesn’t appear to matter what Donald Trump says or does, his core followers will stick with him. That is approximately 43% of the electorate, or roughly 56-60 million voters. A good portion of those voters are choosing Trump for economic reasons. The rich would get richer under Trump’s proposed tax cuts and regulation reform, but many – perhaps 10-15 million followers – may consider armed revolt against a federal government led by Hilary Clinton. That is a very scary scenario.

And we now should ask why would Trump and Putin want an armed revolt in the United States? Well, the answer for Putin is easy – it’s the game of Risk strategy. There’s no better way to weaken a country than to have it fall into a bloody civil war. If the U.S. were to attack itself from within, Russia would be in a much better position in the world.

But why would Trump want such conflict, and his words seemed designed to drive his followers in that direction? Money. Just as Donald Trump cheered the housing crisis eight years ago so he could buy discounted real estate, major armed combat between Americans would certainly have a depressing impact on housing prices, so he would again be able to find bargains. He also has enough money to keep himself and his family safe during the turmoil, just as I once parked myself in my heavily fortified Australia on the Risk board.

There’s another way to lose at Risk of course. That is to piss off your friends so much with your strategy that they form an alliance at the beginning of the next game and wipe you out in 15 minutes. And that may be a lesson for Mr. Trump. Be careful of how you inflame the mob, if any forms. You may find after a while that they return to attack the mouth that formed them.

Posted in Economics, U.S. Politics, Uncategorized | Leave a comment

Economic Refugee Votes May Impact the Election

Posted on October 7, 2016 by tonyj126

In the United States, our experience with economic refugees is typically from news reports, and the most memorable example in recent years would be the large number of children crossing the southern border in 2014 and 2015. In Europe, it’s the many people attempting to cross the Mediterranean from Northern Africa, generally in overcrowded, barely seaworthy boats.

An economic refugee is a person who leaves his or her homeland to seek better job prospects, usually in a wealthier country. Economic refugees are not fleeing wars or gang violence, but rather poverty and often the corruption which keeps so much of the population in poverty. Many of the children who entered the U.S. illegally in 2014 and 2015, were fleeing gang violence. The rest were economic refugees. Of course, there are many other people from all around the world who manage to illegally enter a more prosperous country, or overstay their visas, in order to have a better economic future for themselves and their children. They are also economic refugees.

But these people can’t legally vote in the U.S., so some of you may be wondering if this post is about voter fraud. It is not.

The economic refugees to which I refer are Puerto Ricans; they are fleeing economic strife on the island. Puerto Rico is embroiled in a bankruptcy crisis and Congress agreed to help restructure the island’s $70 billion in debt, but under strict rules overseen by a federally appointed control board. The board must approve all fiscal plans and economic policies, and has the power to overturn any noncompliant Puerto Rican laws. The control board can only be terminated after Puerto Rico produces balanced or surplus budgets for four consecutive years. As a result, services on the island have been cut, and life has gotten more difficult for its inhabitants, so a large number of Puerto Ricans are moving to the mainland.

Many are settling in swing-state Florida – largely in Central Florida – and both republicans and democrats are working hard to get them registered to vote prior to next week’s registration deadline. It is a smart idea for each party to introduce the new mainland residents to the voting process in Florida because in just a few years, Puerto Ricans and their descendants are expected to outnumber Cuban-Americans in the state. While Puerto Rico can help choose the presidential candidates via primaries, the island’s residents have no say in the general election for president. That changes once they move to the mainland.

So who will the Puerto Ricans support for president? A poll which was conducted by Latino Decisions for the liberal Center for American Progress Action Fund and released Wednesday, October 5, provides a good hint. With a margin of error of +/- 4.4%, the poll shows:

  1. Voters with Puerto Rican heritage: 74% for Clinton and 17% for Trump.
  2. Clinton’s support is a bit higher with island-born voters than with mainland-born voters.
  3. 84% will definitely vote; 14% will likely vote; 2% will definitely not vote.

The poll results do not look good for Mr. Trump. Voters with Puerto Rican heritage make up 27% of Florida’s Hispanic voters, while Cuban-Americans make up about 31%. Cuban-Americans have historically voted republican, but that may also change this year – at least for the presidential election.

Mr. Trump’s derogatory language about people of Hispanic origin (he did say “Mexico” during his campaign announcement, but it seems to have taken on a wider interpretation), and the report that his company may have violated the Cuban trade embargo in 1998 are working against him. That violation was 10 years before Fidel Castro turned over power to his brother, and well before any thaw in U.S.-Cuban relations.

For these reasons, fivethirtyeight.com estimates that Florida is now leaning in Ms. Clinton’s direction (65.9% chance of going to Clinton). Because they believe Florida is the most important state in tipping the election toward either candidate, those behind the website now feel Ms. Clinton’s chance of winning the presidency have increased to 78.8%. That is 24% higher than just ten days ago.

The first presidential debate has a lot to do with that change, but so do Mr. Trump’s income tax issues and the economic refugees from Puerto Rico.

During both the first presidential debate and the vice presidential debate, Trump/Pence talked about ending the refugee resettlement program because of the chance a terrorist may slip through. Prior to the debates, Donald Trump, Jr. compared Syrian refugees to poisoned skittles. (By the way, he used a copyrighted image without permission, and the British photographer had once been a refugee.) The Trump campaign spends a lot of effort trying to make the American people afraid of refugees.

They may have been right to be afraid of refugees, but rather than refugees from primarily Islamic countries, it is the ones from Puerto Rico that are a threat to Trump. Those U.S. citizens, who would not be able to vote for president had they stayed on the island, will likely swing Florida and the U.S. to elect Clinton/Kaine.

Posted in Economics, U.S. Politics, Uncategorized | Leave a comment

Is Donald Trump Trying to Throw This Election?

Posted on October 5, 2016 by tonyj126

Much of this information was in yesterday’s post, but I thought it needed a more prominent presentation. This was somewhat of a surprise revelation that grew out of the reverse engineering idea. We’ll blame it on the creative process.

It seems to me that the most important thing to Donald Trump is the value of the Trump brand, and the respect and privilege that he and his family derive from that brand. The Trump brand has been built with:

  1. Bravado
  2. Business Savvy
  3. Extravagance
  4. Beauty (buildings and wives), and
  5. Reality Entertainment Stardom.

The Trump brand’s value increases when Donald trump acts in the ways that helped build the brand in the first place. It’s more valuable when Mr. Trump:

  1. Tells the world how smart he is and how good he is at everything he does,
  2. Reminds the public how great a businessman he is,
  3. Shows off his wealth and brags about his extravagant lifestyle,
  4. Rides down the Trump Tower escalator with Melania during his presidential campaign announcement, and
  5. When he acts like a reality TV star.

The brand benefitted from Donald Trump’s reality TV-type political campaign during the Republican primary, in which what he said and how he said it mattered so much more than the facts. And it worked. I hadn’t given Donald Trump much thought prior to the primaries, and I have no interest in reality television, but I am interested in politics, so Trump’s strategy hooked me. The Trump brand gained followers.

But now, the Trump brand has reached a turning point. It is being tarnished – its value decreased – by unflattering revelations about its leader. The brand’s value is negatively impacted by:

  1. The apparent fact that neither he nor the company pays federal income taxes,
  2. His unwillingness to release his tax returns (Have you noticed how the media language has changed from, “He says he’ll release his returns following the audit” to “He refuses to release his tax returns?”),
  3. The huge business loss reported in 1995 suggesting he may be such a good businessman after all,
  4. His defense of using tax loopholes that are available only to real estate professionals to avoid paying income taxes which he calls smart, but others have labeled un-American,
  5. The belief growing in the country that Trump’s promises have little meaning because he makes so many false statements which can be easily checked (70.1% Mostly False, False or Pants on Fire per PolitiFact),
  6. The disbelief that he really will look out for the little guy should he become president.

So, the Trump brand is beginning to suffer and it will not likely improve should Mr. Trump win the election in November because:

  1. His tax plan cuts taxes by 10.2-16% for the top one percent, but by about 1% overall, which likely means a tax increase for lower to middle income taxpayers. Data show that tax cuts for the wealthy do not stimulate the economy in the two years following the cut, but tax breaks for lower and middle income Americans has a substantial impact. His tax plan would balloon the debt and cost millions of jobs. The little guy will probably suffer during a Trump presidency.
  2. There is no way to predict and stop every terrorist attack on soft targets, but many people believe that rhetoric fuels the anger that causes some homegrown terrorist to become radicalized. People will die in soft target attacks no matter who is president, but perhaps a bit more under Trump because of his demeaning language directed at Muslims.
  3. Trump’s immigration policy will probably end up being very similar to Obama’s first term policy – large numbers of deportations of undocumented immigrants with felony convictions and of recent arrivals. Mexico will not pay for a border wall, and the rate of attempted Mexican illegal border crossings is down 79% from their peak in 2000. Whatever a President Trump would do on immigration would certainly not live up to his promises.

There are many more examples, but you probably get the idea. Since the president is such a public figure, most failures are assigned to him or her, and for a President Trump, that would devalue the Trump brand.

So, perhaps Mr. Trump’s rather bazaar behavior in the past week has been a calculate strategy. He needs to lose the election without being labeled a loser. How?

  1. Make calculated attacks on certain people like ex-Miss Universe Machado so he will lose some supporters and eventually the election,
  2. Blame the loss on the system (“It’s rigged against me.” or “Funny things were happening on election day.”), so he is not a “loser,” but rather the fighter who will bounce back stronger than ever from this cheap shot,

If Ms. Clinton wins the election, Donald Trump will then have the opportunity to increase the Trump brand value because he will not be president. Examples:

  1. When the economy grows at 2.5%, Trump will claim that it would be growing at 5% if he had won.
  2. When a homegrown terrorist attack occurs, Trump will be able to say that it never would have happened under his watch.
  3. When the national debt grows each year because taxes have been cut substantially since 2001, but spending has not, he can claim that his tax plan would have produced a budget surplus by now.

And on and on. There will be many chances for Donald Trump to say, “I told you so. You should have elected me.” And the Trump brand will become more valuable.

If this is actually Donald Trump’s strategy, it’s genius, and he is actually a good businessman. Maybe we’ll know in a couple decades when Melania writes her tell-all autobiography.

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How Donald Trump Reverse Engineered the Presidential Race

Posted on October 4, 2016 by tonyj126

Do you know how you feel good when a story makes you laugh out loud? You can be alone in your car on a highway full of desperate souls returning from a day at the office. You’re driving along with a big grin on your face, and every so often you let out a pleased laugh which must look odd to the other drivers because they can’t hear you or the story. Some probably change lanes to put some distance between you and them. Let’s face it; you are breaking the post-work commuter rules, so you might be dangerous.

This is one of those stories for me: https://themoth.org/stories/data-mining-for-dates.

I’m going to do something unwise now that you have found this post. I’m going to tell you to click on the link and listen to the story, then come back. I know I’ll lose some of you, but I’m going to give out spoilers below, and I don’t want to ruin the story.

————————————————————————–

Thanks for coming back – wasn’t that worth it? Of course, some of you came back because you’re trying to figure out what on earth that story could have in common with Donald Trump.

I see a parallel between Chris McKinlay’s dating success after he reverse engineered OKCupid and Donald Trump’s success in the republican primary by essentially doing the same thing. Donald Trump reverse engineered the Republican electorate by exploiting a vulnerability in the party’s code. In this case, the code is not a computer program, but rather the direction the party was moving in order to improve its long-term viability.

The Republican Party realized that recent demographic changes, and those that are predicted, would spell trouble for the party without some significant changes. With non-white populations growing at a substantially faster rate than white ones, the Republican Party would need to get some of those non-whites to vote for them if they have any hope of electoral success in a decade or two. As a result of this analysis, the party made subtle shifts toward inclusion, while hoping to keep from angering the traditional Republican voter – older and whiter, and more male than female.

The way Donald Trump reverse engineered this presidential race, and especially the republican primary, was to emphasize the “reverse” part of the term. He promised to turn back time, so to speak. He promised to kick out or refuse to let in non-whites. He promised to bring back the type of jobs that white people held thirty years ago. He promised to stimulate the economy to grow at unprecedented rates by giving the rich a huge tax cut. He promised to make America great again. That would be “great again” for white people – non-whites didn’t have it very good in the “good old days.”

Chris McKinlay’s OKCupid project was different in one major way. Okay, two ways – he did extensive research and achieved scientifically-based results. Chris identified the group to which he felt the highest degree of affinity, and wrote an algorithm to identify which OKCupid questions he could answer truthfully to improve his chances of matching with members of that group.

There is a reason I bolded the word “truthfully.” I do not feel Donald Trump is truthful in his statements. PolitiFact reports that 70.1% of Trump’s claims are mostly false, false or “Pants on Fire,” versus 27.4% of Clinton’s. It does not appear that even his supporters believe his statements anymore. His comments that should rock the financial markets have no effect, and when asked pointed questions about Trump’s statements, his supporters seem more likely to tell the reporters that change is the reason they’re voting for Mr. Trump, not his promises.

There is one other parallel I see between Mr. McKinlay and Mr. Trump. Because of McKinlay’s high match percentages with his first dates from OKCupid, he had a difficult time getting them to accept his declaration that it wasn’t going to work out. He had to resort to extreme measures to shake them off. One of my laugh-out-loud moments was when he described how he would put on eyeliner then deny it to reduce the number of messages he got requesting a second date.

I see that extreme behavior in Mr. Trump and get the feeling that he really doesn’t want to win the election. In fact, we’ve hit a turning point where moving forward may damage the Trump Brand. That damage comes from his income tax situation. We already know that he reported a $916 million loss on his 1995 tax returns, and that gives the impression that he is not as good a businessman as he claims to be. We can also reasonably assume that he hasn’t paid federal income taxes for up to eighteen years from that one loss, and perhaps longer from other losses. That tarnishes the brand for many people because they are not entitled to use the same loopholes as Mr. Trump.

Additionally, if the business claims the Trump Brand is enhanced (value added) by the extravagant lifestyle enjoyed by the Trump family, they will probably consider those expenses to be business expenses, and not income received by Mr. Trump or his family. That means that they can spend tens of millions of dollars each year and none of the Trumps would have ordinary income to report. Thus, the Trumps would not be subject to individual income tax – federal, state or local – and this action could generate additional annual business losses to keep from paying any federal income tax in any year. I would assume that many taxpayers would not be happy with this arrangement because, once again, it will not be made available to them.

So, with potential damage to the Trump Brand happening now as a result of the presidential campaign, Mr. Trump may wish to shake off enough supporters to ensure he doesn’t win the election. Several commentators, and of course Hilary Clinton, have called Mr. Trump unhinged, or something similar, in recent weeks, and his behavior has indeed seemed odd. The middle of the night tweet attacks on Ms. Machado and his identifying vets who suffer from PTSD as “not as strong” look to me like Chris McKinlay’s eyeliner strategy. It appears as if Trump wants to lose in November.

And here’s the ironic part. If that is true, and Mr. Trump can get through the rest of this campaign while protecting the Trump Brand from additional harm, he can greatly improve the brand’s value as a private citizen simply by repeating how much better things would have been under his leadership. And in that way, he would actually be the great businessman he claims to be.

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The Winds of Change Fill Trump’s Sails

Posted on September 29, 2016 by tonyj126

The Trump faithful are really faithful. Not all are for Donald Trump as opposed to against Hilary Clinton, but still they seem to be unshakable in their support for the republican presidential candidate. They stick with him regardless of what he says and does, and they’ll gladly vote early and often in unscientific internet “polls” to give the candidate more material to confuse the electorate. To a logical person – me – the truth is the most important factor in how I feel about a person. If you are caught in lie after lie, wouldn’t that shake your supporters’ trust, and wouldn’t some of them abandon you? Yes, if the truth matters to you; but no, if change is your most important concern.

During the first presidential debate on Monday, Donald Trump said that there is a stock market bubble that will burst when the Federal Reserve raises interest rates, and that those rates have been kept artificially low by the Chair in order to make President Obama look good. I expected some negative reaction in the stock market on Tuesday, but there was none. Or rather, Trump’s statement was ignored and the market rose because of the consensus that Clinton won the debate, and her chances of becoming the president increased. Investors don’t like change, especially when the economy has been growing for six or seven years.

That was a revelation for me. Because Donald Trump tells so many untruths (the New York Times has begun calling them lies), his proclamations carry little weight. The stock market didn’t react negatively because those who own enough stocks to move the market didn’t believe his bubble statement. And why should they? The fact checkers quickly identified the 51 things he said during the debate which were not true, and they provided links to videos or tweets which proved their points. To use the tag line to the television show The X-Files, the truth is out there, and it was a lot easier to find than what Mulder and Scully had to go through.

So what’s going on? Why does proof of his lies not convince his supporters that he is untrustworthy?

Well, in the simplest terms, the truth doesn’t matter that much. To quote one woman from Columbus, Ohio, shown in a clip on The Daily Show with Trevor Noah, “I am voting for the conservative party, and if this jackass just happens to be leading this mule train, so be it.”

So, for many of Trump’s supporters, truth doesn’t matter, change does. When he says that he will build a wall and Mexico will pay for it, they are probably thinking, “I doubt that, but at least we will have a chance for a conservative Supreme Court justice.”

When he says that cutting taxes for the rich will create good jobs for the middle class, they may think, “The rich have gotten much richer over the last sixteen years and the good jobs have been disappearing, but perhaps things will be different under Trump because he is successful in business.”

When Clinton points out that Trump’s business success is often built on the backs of the little guy and small businesses because he underpays or doesn’t pay them, his supporters could be thinking, “But this time he says he will be making good deals for the American people, so he won’t crap all over us like he did with those others.” (I may be paraphrasing there.)

When Trump said during the debate that he is smart to avoid paying federal income taxes, his supporters could be thinking, “I wish I was smart enough to not pay taxes. He really is a genius because the government is not good at spending taxpayer money, so they shouldn’t have any to spend.”

When Trump repeatedly said during the debate, “I didn’t say that,” and there were lots of video and tweets to prove he did, perhaps his supporters thought, “Ah, Donald.” And then they brushed off the lies – at least he is not Hilary Clinton.

This big question for Mr. Trump is whether “change” trumps “truth” with enough of the electorate to win the election. The answer is “Maybe.” There appears to be such a strong force for change blowing through the country that he could get enough college educated, suburban voters to win the election. Even for the highly educated, the desire for change exercises a strong pull. This is true in successful communities with good jobs and in struggling communities with fewer prospects.

Why?

I have speculated that we humans have a built-in need for conflict, and perhaps war. Much of the world is experiencing some form of this conflict. Ultranationalist political parties are gaining ground in many European states, and the favorable reaction to Donald Trump’s immigration rhetoric shows the people’s willingness to draw “Us” versus “Them” lines. Perhaps the predisposition toward conflict is genetic. More of the weak (physically, emotionally, less able to roll with the punches) are killed off in war than the strong, so the species is better off after a war ends.

It is basic “Survival of the Fittest” thinking, but we are talking about killing people off, and there will be news coverage. Let’s not forget about that four-year old boy in Aleppo, Syria, whose photo taken in an ambulance after he was pulled from bombed out rubble went viral. It’s a bit harder to make an “Us” versus “Them” argument, when “Them” are traumatized four-year olds. That is why Donald Trump said that the vast majority of Syrian refugees are men in their 20s and 30s – another untrue claim. That’s a “Them” we feel better about killing off.

So, the logical money is on a Clinton victory, but Trump’s sails are filled with the winds of change, and logic may mean squat this year. Trump is sailing through choppy waters to be sure, but those waters have been stirred up by the many things he says which insult or degrade people and make the electorate uncomfortable. And yet, he is still close to the lead. The other thing that makes for choppy water – strong winds. So while it’s certainly a bumpy journey, those winds of change could propel Trump into the White House.

Posted in U.S. Politics, Uncategorized | Leave a comment

People Don’t Take Trump Seriously

Posted on September 27, 2016 by tonyj126

The stock market closes in 75 minutes and the S&P 500 is up 0.65% on the day after a major party presidential candidate – with a legitimate shot at winning the election – said that there is a stock market bubble being propped up by the head of the Federal Reserve playing politics in order to make President Obama look good. By the way, that’s the Chairperson who will still be in that position when the next president takes the oath of office in January. Her term as chair ends in February 2018, and her term on the Board ends January 31, 2024.

If it were anyone other than Donald Trump making that accusation, the stock market should have reacted badly. Because Trump has said so many things which aren’t true, this statement just gets brushed aside.

This should worry the Trump campaign insiders and supporters much more than a lackluster performance in the debate last night. He’s not likely to win over the college educated voters he needs to win the presidency if nobody takes him seriously.

Posted in Economics, U.S. Politics, Uncategorized | Leave a comment

Clinton v. Trump – The First Debate

Posted on September 27, 2016 by tonyj126

I like to watch college basketball, especially during the NCAA tournament known as March Madness. I don’t like games in which the highly favored team pummels the underdog, but I really enjoy close games and games in which the underdog shocks the heavy favorite. As long as the favorite isn’t my team, of course.

With that propensity to root for the disadvantaged, I wondered if I might identify with one of the presidential candidates as the underdog and find myself pulling for him or her during last night’s debate. The underdog wasn’t a given – there were much higher expectations for Clinton than for Trump, so in a way, basketball is the wrong analogy. Since this was a handicapped event, bowling is a better comparison – except that I don’t watch bowling.

Still, I did not watch the debate as I would watch a sporting event. I had my computer and a pile of papers so I could get some work done during the debate, but half-way through reconciling the checking account, I put everything aside and just watched. After it ended, I read the fact-checking analysis at two different sites (NPR and the Washington Post), checked what www.fivethirtyeight.com had to say, and watched several videos on Fox News’ website. Then I followed the links included in the fact-checks and read economic analyses, so I didn’t get to bed until around 1:30 am.

Then I has a little trouble falling asleep because this is not a game – it is a really important election.

I have told friends that the country can survive four years of a bad president, and that we would not be moving to Canada or do anything drastic. I will probably sell some stocks and keep a little extra cash around, but that’s another story. For me, the economy is the most important issue and I have now made up my mind which presidential candidate has better ideas for economic prosperity in the United States.

Here are the economic points that convinced me Hilary Clinton would be fiscally more responsible for the country’s economy:

  1. Trump: “Thousands of jobs leaving Michigan,leaving Ohio, they’re all leaving.”
    • U.S. unemployment rate is 4.9%, Michigan’s is 4.5% and Ohio’s is 4.7%. 10.5 million private sector jobs have been created during Pres. Obama’s time in office.
    • Job creation per year for each president since 1976:
      • Clinton: 2.9 million
      • Carter: 2.6 million
      • Reagan: 2.0 million
      • Obama: 1.3 million (through January)
      • Bush (41st): 659,000
      • Bush (43rd): 160,000
  1. Trump: “Under my plan I will be reducing taxes tremendously….”
    • Per the right-leaning Tax Foundation, Trump’s plan would reduce federal revenue by $4.4 to $5.9 trillion over the next decade, but potential higher growth could mean that the debt will increase by less than that – $2.6 to $3.9 trillion (still a lot).
    • The Committee for a Responsible Federal Budget estimates that the Trump plan would add $5.3 trillion to the national debt over the next decade, while Clinton’s plan would add $200 billion versus current tax and spending laws.
    • After-tax income would increase 10.2-16% for the Top 1% earners, but remain flat to 1.9% growth for the bottom 80%. With the reduced tax rate, Trump would pocket an additional $71-$111 million on his self-reported $694 million income.
    • According to the economic working paper “Tax Cuts for Whom? Heterogeneous Effects of Income Tax Changes on Growth and Employment” by Owen M. Zidar, tax cuts for the top 10% earners have statically no effect on growth and employment over the two years following the cut, but tax cuts for the bottom 90% have a large effect.
  2. Trump: “Our energy policies are a disaster. Our country is losing so much in terms of energy, in terms of paying off our debt.
    • The U.S. has been the world’s largest natural gas producer since 2011 and largest oil producer since 2013.
  3. Trump: “NAFTA is the worst trade deal maybe ever signed anywhere but certainly ever signed in this country.”
    • Manufacturing jobs increased 3% to 17.3 million between when NAFTA took effect on January 1, 1994 and the end of Bill Clinton’s term in January 2000.
    • “NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest,” according to the nonpartisan Congressional Research Service.
  4. Trump: “Now look, we have the worst revival of an economy since the Great Depression.”
    • This has been a slower than usual recovery, but it has also been the longest recovery since the Great Depression. I personally like this steady recovery because there isn’t a bubble to burst and devastate the economy and people again.
    • Private sector employers have added 15.1 million jobs since the bottom of the recession in 2010.
  5. Trump: “And believe me: We’re in a bubble right now. And the only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down. We are in a big, fat, ugly bubble. And we better be awfully careful.”
    • Since his main message is how bad things are in the country, I don’t understand what bubble he believes currently exists. He mentions the stock market after he mentions the bubble and indicates that it’s the only thing that looks good. This doesn’t appear to make sense.
  6. Trump, referring to his income tax return: “And — as soon as the audit’s finished, it will be released.”
    • The IRS commissioner has stated that there is no restriction that prevents disclosure while the audit is ongoing.
    • Richard Nixon released his tax returns in 1973 while they were under audit.
    • There is good reason for candidates to release their income tax returns as they can identify potential conflicts of interest.
    • Every candidate for more than 40 years has released his or her returns.
  7. Trump: “When we have a country that’s doing so badly, that’s being ripped off by every single country in the world, it’s the kind of thinking that our country needs, because everybody — Lester, we have a trade deficit with all of the countries that we do business with, of almost $800 billion a year. You know what that is? That means, who’s negotiating these trade deals?”
    • The pro-trade Peterson Institute for International Economics estimates that 4 million jobs could be lost and the economy could slip into recession if Trump’s threat of high tariffs on goods from China and Mexico leads to a trade war.
  8. Trump: “…it is about time that this country had somebody running it that has an idea about money.”
    • Without Trump’s tax returns to review, the information available on the Trump businesses are primarily legal filings which show largely poor money handling skills (bankruptcies, lawsuits, underpayment or nonpayment for products and services received).
    • Trump: “But you will learn more about Donald Trump by going down to the federal elections where I filed a one hundred and four page, essentially financial statement of sorts, the forms that they have.”
      • I may be biased by the fact that he won’t release his tax returns, but I don’t trust the information in his campaign’s disclosure.
  9. Clinton: “You even went and suggested that you would try tonegotiate down the national debt of the United States.”
    • Trump denied ever saying that, but the fact-checkers had the proof that Clinton’s statement was true.
    • This is a very dangerous thing for a presidential leader to say because, if it is believed by the debt ratings companies, the U.S. could end up paying much higher interest rates on the national debt.
    • This statement is in character with Trump’s business dealings, namely, underpaying or not paying for services and goods provided.
  10. Trump: “… had we taken the oil — and we should have taken the oil — ISIS would not have been able to form either, because the oil was their primary source of income.”
    • Trump appears to be suggesting that U.S. troops should have fought the armies of Iraq and Syria to control the oil fields and pipelines as part of the U.S. withdraw from the combat mission in Iraq.
    • This would have been very costly and required an occupying force in two Middle Eastern countries to prevent a future terrorist organization from acquiring an income source. It makes no sense, and if that is the proposed strategy, there are many other countries that should be invaded and occupied.
  11. Trump: “Just to go down the list, we defend Japan, we defend Germany, we defend South Korea, we defend Saudi Arabia, we defend countries. They do not pay us.”
    • In 2014, South Korea paid the U.S. $866.6 million for our military presence and Japan’s budget shows $4 billion for base-related expenses.
  12. Trump: “I mean, can you imagine, we’re defending Saudi Arabia? And with all of the money they have, we’re defending them, and they’re not paying?
    • Saudi Arabia has purchased more than $90 billion worth of weapons during the Obama administration.

As with so many others, I have framed this argument in the negative. I highlighted Trump’s economic negatives rather than Clinton’s economic positives. Sorry about that, but there’s a reason.

Economies rise and economies fall, and one or two bad decisions can tip the balance. From what I heard last night, I worry that Trump may not just tip the balance, but overturn and step on it. Clinton, on the other hand, has a policy similar to President Obama’s, and that has generated steady, non-bubble economic growth for six years. I may be boring, but I will vote for steady improvement over wild claims.

Posted in Economics, U.S. Politics, Uncategorized | Leave a comment