Tasteless 9/11 Comment, Corporate Tax Rates, and Canadian Softwood Lumber

As I get used to raising a newborn while going to work full-time, I'm just slowly edging my way back into blogging.  I apologize for the slow-down!  But here we go.  Emphases added mine throughout.

While I try to stay focused on "the issues" here rather than President Trump's various utterances, I had to record this one for posterity, because holy mackerel:

President Trump bragged in a new interview that he’d drawn CBS higher ratings than the calamitous terror attack that killed almost 3,000 people in his home city.

...

“On any, on air, (‘Face the Nation’ host John) Dickerson had 5.2 million people. It’s the highest for ‘Face the Nation’ or as I call it, ‘Deface the Nation,’” Trump said. “It’s the highest for ‘Deface the Nation’ since the World Trade Center. Since the World Trade Center came down. It’s a tremendous advantage.” (NY Daily News)

With that kind of messaging, he's sure to get his ginormous corporate tax break through a GOP-controlled Congress.  This should cost the government about $2 trillion in dough.

But maybe it would all be worth it if the tax cut were to generate economic growth?  Let's take a look at how that's worked out in US history.

It's hard to spot the correlation, but if you look at the peaks and troughs of GDP growth, you can see that, roughly, as corporate tax rates go down, GDP goes down with it.  I'm not saying that's causation; might be correlation.  Still, hard to make the case that cutting the corporate tax rate has ever made economic growth soar, or even occur.

(That graphic comes by way of the Economic Policy Institute, obviously, which concludes their report with the following: "In other words, there is no apparent association between the statutory corporate tax rate and economic growth.")

Well then!  So, the government will be out $2 trillion with likely nothing to show for it. 

But maybe we'll have a trade war with Canada!  Apparently Canada has been "dumping" lumber on the US - logging being subsidized so as to decrease the eventual market price in America.  Sounds like subsidized American farmers with their unfair advantage over Africa to me. 

I'm actually all in favor of a legit 20% import tax on Canadian softwood lumber.  To hell with "dumpers", wherever they may be found.  As long as logging is done in a sustainable way (always an open question), let's go American loggers!

Ah, but this is Donald Trump we're talking about here.  He's talking about a 20% tariff on Canadian softwood.  But he's been talking about a lot of various tariffs for a while now.  And where are those tariffs exactly?

Despite the fact that most Americans appear to support a border adjustment tax - not a tariff per se but the closest thing to one policymakers have actually advanced - Donald Trump is cool to the idea.  Meanwhile, we're still waiting for punitive tariffs proper to actually materialize.

Could it be that protectionism is a good talking point for the Trump wing of the GOP, but that they're not actually sincere about protectionism in the slightest? I wonder.

But I bet we'll get that corporate tax break that we all voted for.

Democrat National Strategy

Democrats recently lost two close races in very red districts - one in Kansas, one in Georgia.  The Dem who came close in Kansas came close despite near-total neglect from the Democratic National Committee.

Now an eminently electable Democrat, Rob Quist, is running for a Congressional seat in Montana.

Montana routinely votes Red in Presidential contests, but frequently votes Blue for Congress or Governor.   Montana is not an unconquerable Republican bastion.  In fact, by many metrics, Rob Quist should easily be able to best his Republican opponent, the vulnerable Greg Gianforte (originally from New Jersey).  And yet the national Democratic party leadership is putting little into Mr. Quist's race, on the grounds that Montana is a red state and therefore isn't worth contesting.

Let's imagine you're an Oakland A's fan (as many of my best friends are.  Go A's, unless you're playing the Mets, in which case, get crushed.).  Your team hasn't been very good for a long while (WHOOPS, MY BAD! See "Update" below.  I should say: your team hasn't been very good for two years now.).

Let's say the A's hire a new manager who takes this approach: when the A's are playing the Cubs, the Indians, the Dodgers, and other very good teams, his players are to stand down.  To not bother swinging the bat.  Why injure their arms?  They can try to bunt, but no serious attempts to hit the ball should be made.  Similarly defensive plays.  Wouldn't want to sprain anything.  Best to concede those games and prevent injury for the games the A's can win, like the Angels and Padres maybe.

As an A's fan, would you not be completely up in arms until this loser manager was shown the door?  Any team can win.  Didn't the Cubs just win a World Series?!? The Cubs!!!

And yet, when Democrat opinion leaders assert that races such as Quist's in Montana are unwinnable and, hence, a waste of resources, a wide swath of Democrat voters tend to agree.  Why waste money there?  We'll never win in Montana of all places.  Let alone Kansas!  Better to be more "strategic".

Time to wake up and smell the ballgame, folks.  Democrats must contend every single seat.  If you are a party leader, THAT IS YOUR JOB.  Republicans seem to understandable this principle.  We still have Republicans upstate and out on Long Island in dyed-deep-blue New York.

The premise that these races are unwinnable is hot rubbish.

Go A's, and go Rob Quist.

This guy is unelectable in Montana??! His opponent is originally from NEW JERSEY!

 

UPDATE: Sloppy writing on my part! I've been told that the A's have actually been an above-par team for a long time running.  Certain close friends of mine who are A's fans had sold me on the premise that this team is always bad, but I should have done my research.  A reader writes: "To correct the analogy, the A's have actually been a +.500 team more of the last 20 years than anyone except the Cardinals and the Yanks. They had two back-to-back losing seasons for the first time in a while (2015-2016), but that followed three trips to the post-season (2012-2014). Also, tanking is something they probably should have done a few years, but of all the slimy things Billy Beane is, he's not a tanker, and thus we are perpetually tortured with the prospect that the current batch of misfit toys might be the winning one.  Your team for this example would be the Marlins or the Twins." I'm personally not updating this to reflect the Marlins, because as a Mets fan, I wish the Marlins and their fanbase nothing but the absolute worst, forever.

Greece

A reader asked me to comment on the latest with Greece, which has dropped out of the news of late, replaced by Brexit and whatnot.  It's worth touching base with this modern day Morality Tale of Indebtedness.

As you may recall, Greece was hit hard following the global economic crisis of 2007-2008.  Investors feared that due to its relatively profligate spending, Greece would never be able to honor its existing debt.  This led to a debt crisis for poor Greece, which subsequently launched a program of "austerity," i.e., cuts to spending (especially social spending such as pensions, etc.) and increases in taxes.

You'd think that this "belt tightening" would resolve the economic crisis, but you'd be wrong.  It made the debt crisis far, far worse.  It's a funny thing - when you take away people's pensions and raise their taxes, they have less money to spend! When they have less money to spend, the economy contracts! When the economy contracts, less tax revenue is generated to repay creditors!

This isn't rocket science, but "belt tightening" just sounds so "responsible" that people continue to insist, all evidence to the contrary, that it works.

In the case of Greece, belt tightening d/b/a austerity hasn't worked in the slightest.  Greece has required three separate bailouts just to continue paying back existing loans.  Unemployment is above 25%.  The country's birthrate is in rapid decline as people decide they simply can't afford to take time off from work (if they have work) to have children, and perhaps can't afford to raise children at all. 

A German operator, Fraport, just took over 14 regional airports in Greece pursuant to the privatization terms imposed by the bailouts.  If Greece is selling off its airports just to pay off creditors in the short term, how will it generate the economic growth in the long term to allow it to pay off all that accrued debt?  Greece is also selling off stakes in its petroleum and telecom companies.  The more Greek assets sold now, of course, the fewer sources of income Greece will have in the future.

The leftist Syriza government has left its leftist credentials at the door, doing its best to sell bailout terms to the Greek people.  Growth forecasts are being projected downwards.  Greece is so depressed, only the communists bother to show up and protest these days.

Despite the intense austerity of this past decade, Greek debt hovers at around 180% of Greece's GDP.  For a country that issues its own currency and can radically devalue that currency, attracting international investors, that might not be the end of the world.  For a country married to the unnaturally strong (for Greece if not for Germany) Euro, it's an unbearable burden.

It's been a decade of this nonsense now, and yet, "Grexit" does not seem to be contemplated only vaguely, despite the fact that "Brexit" makes clear that you can part ways with Europe and do more or less fine economically.  Donald Trump has suggested that Greece should skedaddle from Europe, though it's hard to take anything he says seriously on account of his flip-flopping.

And, sadly, that's the latest from Greece.  I wish I had better, more interesting news; that a corner had been turned, that things were looking up.  But they're not.  Just more suffering for the Greeks, with no guarantee Greece's creditors even get their money back in the end.  And yet people continue to insist that just a few more pro market tweaks will get Greece back on the right track.  (Will people ever get the memo that privatizations, by and large, sound great and have a terrible track record?  They will if they read The Shock Doctrine but I worry that most folks will simply never smell this particular coffee.)

If I have a drinking problem and you take the bottle away from me, kudos to you.  If I have a drinking problem and you take the bottle away from me, and then kick me out of my house and get me fired from my job to teach me some kind of lesson about responsibility, you are a sadist.  

If Europe wants to keep Greece on the Euro, they really have no option but to totally forgive Greece's debt.  But, of course, if they're doing that, they're essentially saying to investors "your money is not guaranteed by Europe."  That doesn't seem unreasonable to me - business is business, and not every investment works out.  Sometimes you lose money.  But it seems unreasonable to the powers that be in Europe, and even to the ostensibly leftist leaders in Greece.  It is funny, since the 21st century dawned, how creditors always seem to get their money back, come hell or high water, though, while those in debt get the strong-arm.  You wonder what the world would look like if this were not necessarily the case.

As he typically does, Dean Baker says it best (emphases added mine):

Less spending in an economy means less demand. When the government reduces its spending, as it has in a big way in Greece, this means less money going to hire workers, pay contractors, or to pay for pensions. The same story applies with taxes. When the Greek government increased its taxes, it pulled money out of consumers' pockets leaving them with less money to spend.

Due to the shrinking of Greece's economy, even though the government hugely cut spending and raised taxes, the country still faces the budget deficit. This is because unemployed people are not paying taxes, nor are businesses that are losing money. Similarly, the inability to get a job causes formerly employed people to get unemployment benefits and for many older workers to retire early and start drawing their pensions.

This backdrop is important. Germany and other countries are not lending money to the Greeks to support their profligate lifestyles, they are lending money to Greece to allow the country to get through the austerity that its creditors have imposed on the country. If Greece's economy was allowed to grow, then it would not be facing a budget deficit.

This gets to the heart of both the economics and the morality of the situation. Germans and others in northern Europe may hate the idea of their hard-earned euros going to "lazy" Greeks and other southern Europeans. But it is only because of the economic policies of the northern Europeans that the southerners are running deficits.

Oh, meanwhile, given the border shutdowns in northern Europe, which is composed of well-off countries that could actually afford to house a large number of migrants, where do you think migrants fleeing Syria and elsewhere are piling up?  

The Chemical Attack on Khan Sheikhoun

On Tuesday, April 4th, there was a chemical attack on Khan Sheikhoun in Syria, a town held by rebels in the ongoing hellhole quagmire that is Syrian today.  President Bashar al-Assad has denied that Syria was responsible for the attack.  Many have wondered why in God's name Assad would take such an action.  It seems so implausible that some have suggested that, perhaps, he's being sincere, and didn't launch the attack at all.

Why, when the civil war seemed to be trending his way - with America and Russia finally teaming up, after a fashion, to help crush ISIS, leaving Assad to rule the remains of Syria - would Assad take such an inflammatory action?  After all, it's fine to kill your own citizens en masse with conventional firearms and ordnance, but not to kill them with chemical weapons.  That's gauche!  (And not for bad reasons, honestly).

Could the attack have been staged by the "Deep State", the "intelligence community" here in the United States to keep a perpetual war going?  I've some interesting theorizing in this regard.  Some folks who regard all 9/11 "truthers" as absolute nutters are, in this case, willing to entertain the premise that the chemical attack was staged.  It seems to me that you should pick your poison.  Either you're a conspiracy theorist or you aren't.  There have been plenty of real, honest-to-goodness conspiracies in history, and American history to boot.  Being a conspiracy theorist is always derided, and often the deriding is done by people who are quick to comment but can't actually be bothered to pick up a magazine or book and do some reading on the subject.

Still, I have to go with the anti-conspiratorial side with regard to this chemical attack, for several reasons, prime among them that Assad's own explanation regarding the chemical attack on Khan Sheikhoun strains credibility:

Vilified by accusations of using a chemical bomb, Syria’s president intensified his counterpropaganda campaign on Thursday, suggesting that child actors had staged death scenes to malign him and that American warplanes had bombed a terrorist warehouse full of poison gases, killing hundreds of people.

...

“We don’t know whether those dead children were killed in Khan Sheikhoun,” Mr. Assad told Agence France-Presse in the television interview from Damascus, which was recorded on Wednesday. “Were they dead at all?” (NY Times)

(emphasis added mine)

"Child actors" doesn't pass the smell test.  So, let's assume for the sake of argument that Assad did it, that he used sarin gas to attack rebels rather than other means.  Why?

This Guardian article suggests a possible line of reasoning that makes sense but is hard to grasp at first pass.  I'm going to try to sum it up for you because I think it's a completely fascinating analysis.

So, to reiterate: to date, since Donald Trump came to town, the consensus shaping  up for Assad had been that Russia, America, and Turkey were all more or less burying the hatchet and making ISIS their top priority, with Assad to be left more or less alone, the "victor" by dint of being the last man standing in this bloody, destructive civil war.  The Sunni Arab Gulf states (Qatar, United Arab Emirates and Saudi Arabia) which had been the prime backers of anti-Assad rebels were slowly backing out; all that was left to Assad was to mop up.  Why use sarin in this instance, as opposed to some more conventional form of killing?

Well, first of all, the shock factor of employing such a unique form of mass murder has its appeal if your goal is to break the psyche of your opponent in particular.  Using sarin, long considered a no-go for warfare in the modern era, says "I am willing to use ANY method to crush you."  That's the conventional explanation, and maybe that's all this boils down to.

Could there be more to it than that?  A sarin attack has a few other benefits for Assad beyond simple terror.  Given the new-ness of the Trump era, it might make sense for Assad to test the limits of what he can and cannot get away with.  If sarin flies, great!  Then Assad has presumably set the tone for an anything-goes era as long as Trump is President.

But what if sarin doesn't fly? What if America retaliates, as it did?  Well, here's where things get trickier.

Assad has long been a de facto agent of Iran.  Recently he's cozied up to Russia, but Syria has long been in Iran's "orbit".  It is perhaps not so easy for Assad to break with Iran.  And here comes this relative new, still-feeling-its-sea-legs Russia/America working alliance in Syria.  Even if that alliance leaves Assad around, it does so at the expense of Iran, which now has to contend with Russia and America occupying the patron saint role for Assad that Iran previously provided.

This has implications all over the region.  America and Iran are contending through proxies in not only Syria, but in Iraq and Yemen as well.

Russia has made clear that any attempt to reconquer ISIS-held Raqqa must be cleared and coordinated by Syria and Russia.  Therefore, if you can turn America against Syria - with an inflammatory sarin gas attack, for instance - you can break the Russia/America alliance and leave Iran's influence intact.

If this twisted logic was responsible for a chemical attack by Assad, it appears to be working.  Emphases added mine:

Russia’s approach in Syria is not in sync with that of Damascus and Tehran, even if they all work for the same goal – the preservation of the regime. Moscow’s outreach to some rebel forces, to Turkey and to the US goes counter to the Iranian-led approach before the Russian intervention in September 2015. At least some Syrian and Iranian circles see risks in the US-Russian understanding in Syria and the potential to force a settlement on them in the future. Instead of separating Russia from Iran, the US action brings them closer and increases the distance between Russia and the US. Russia already announced it was suspending a “deconfliction” agreement with the US to avoid air accidents in Syria. (Guardian)

So it's a possibility.  And yet, despite Assad's ridiculous protestations concerning "child actors," it's also possible Assad really didn't launch the chemical attacks!  Britain's former ambassador to Syria here points out the parallels to the absurd "weapons of mass destruction" claims made in advance of the invasion of Iraq.

Frequently in this blog I have a strong opinion I can back up with fact, that I state unequivocally in the attempt to convince you to hold that opinion as well.  When it comes to the attack on Khan Sheikhoun, I'd simply be lying if I told you what to believe.  I'm inclined to think Assad launched the attacks because he thought he could get away with them - the "test the waters" thesis.  But if this turned out to be some CIA, etc. "false flag" operation?  That wouldn't surprise me either.

Let me conclude for now on a side note, a little stroll down memory lane: Winston Churchill's love of chemical weapons, which he used against Bolsheviks and hoped to used against Indians as well.  That lovable scamp!

A U.S. soldier stands in front of a mass grave for the victims of the Halabja gas attack in Iraq

The Public Service Loan Forgiveness Program

Always read the Business Section, kiddos.  Beyond the outrages we all expect - Steve Bannon et al. being insanely wealthy for instance, the Russia / Wiretapping talk being a bunch of total hoo-hah, and so forth - there are often overlooked, genuine, honest-to-goodness outrages hiding in plain sight.

For instance, the Department of Education may be invalidating claims submitted under the Public Service Loan Forgiveness Program, effectively destroying the personal finances of anyone who's signed up for public service under the assumption that their student loans would be forgiven.

The bulk of this blog post is derived from this NYT article and this Forbes article.  (For the record, the Forbes article takes a much more generous view of what is likely to happen to the people getting the shaft from the Dept. of Education than I do.)

What is the Public Service Loan Forgiveness Program?  It is a program created on a bipartisan basis in 2007 - the end of the W. Bush years - that allows you to have your student debt forgiven if you meet the following criteria: (1) you work in public service, i.e., at a job that pays far less than its private sector equivalent, for ten years or longer, and (2) you make 120 eligible on-time payments.

In other words, it isn't a "get out of jail free" card for student debt - you must take a lower-paying job than you would otherwise for an entire decade of your life, and furthermore, you must make payments that entire time.

But if you do that, your student debt is forgiven!  If it sounds like a tremendous win-win for both public service and for countless young professionals who can, with their student loan forgiven, following ten years of public service, leave public service for the private sector (and an accompanying larger paycheck), with their old public service roles filled by a new generation of Americans benefitting from the Public Service Loan Forgiveness Program, that's because... drum roll please... it is a win-win!!!

Staggeringly, 25 percent of the nation's workforce may qualify for the program.  But have you ever heard of it?  I had barely heard of it myself.  It's certainly not something that's talked about very often, and unsurprisingly, less than 553,000 people have taken advantage of it.

Those 553,000 people may be in the process of getting totally screwed over by the Dept. of Education, however, which has recently taken to reversing the certifications issued to participate in the program - leaving people who deliberately chose lower-paying public service jobs over higher-paying private sector jobs for years on end with a sudden new burden of debt they had not been counting on.

The Department of Education has issued no reason as to why certifications issued to student debt holders under the program are now being reversed (emphases added mine):

[Jaime Rudert, now plaintiff in a suit against the Dept. of Education] submitted the certification form in 2012 and received a letter from [FedLoan Servicing, administrator of the Pubic Service Loan Forgiveness Program] affirming that his work as a lawyer at Vietnam Veterans of America, a nonprofit aid group, qualified him for the forgiveness program. But in 2016, after submitting his latest annual recertification note to FedLoan, he got a denial note.

The decision was retroactive, he was told. None of his previous work for the group would be considered valid for the loan forgiveness program.

What changed? Mr. Rudert said he did not know. After filing a complaint with the Consumer Financial Protection Bureau, he received a reply from FedLoan saying that his application “had initially been approved in error.” He has not been told what the error was, and has not found any way to appeal the decision. (NY Times)

Who is responsible for this turn of events?  Someone at FedLoan?  Someone higher up at the Department of Education?

Even if the program were to never expand to include the one in four Americans it might benefit, there's still more than half a million people getting screwed here to the tune of many, many thousands of dollars.  Their whole lives' financial planning has been thrown a serious and unexpected curveball, as a result not of a market downturn or natural disaster, but an outright lie. 

Lest you think this is a story of screwing over 553,000 lawyers (those shysters!), rest assured:

The program generally covers people with federal student loans who work for 10 years at a government or nonprofit organization, a diverse group that includes public school employees, museum workers, doctors at public hospitals and firefighters. (NY Times)

The chicanery of the Dept. of Education may not issue from a directive from President Trump himself.  I am not advancing that claim.  However, it's happening on his watch and therefore it's his problem.  He'll either deal with it or not.  I would put money on "not," but I'd love to be proven wrong about that.

For now, speaking as someone who worked many years with public-sector attorneys who were earning about as much money as I earn as a secretary in the private sector, my heart goes out to any young well-meaning kid who is getting the shaft as the result of this turn of affairs.  And firefighters!  Good lord.  This country, sometimes.

On another subject, and to close this post out, there's a fine little Krugman vs. Baker spat right now, concerning trade.  I think Baker wins this round.  Both posts are short, and worth your time.  There's one thing Donald Trump is, rhetoric-wise, right on about, and that is that "free trade" has produced a handful of winners and plenty of working-class losers.  It's just a shame that is he is, as many of us suspected from the get-go, all talk and no walk.

p.s.: don't forget the Consumer Financial Protection Bureau.