The Donald Trump presidency rests on three pillars: Stupidity, Lies and Racism. Like being in a never ending pinball machine, with Trump in office, the United States ricochets from one disaster to the next.

Stupid is as stupid does

Sometimes we just need to recognize the obvious. If we see a bird that looks like a duck, quacks like a duck, flies like a duck and walks like a duck, then it obviously is a duck. Likewise, if someone constantly says and does stupid things, then that person is obviously stupid. Following this logic, Donald Trump is stupid. Worse, he surrounds himself with stupid. Even worse, after ten years of electing Tea Party stupid, we have Congressional stupid to support presidential stupid.

Many people claim that Trump is unpredictable. These people have not paid attention to his modus operandi. Simply ask yourself, what is the stupidest thing anyone could do under a given set of circumstances and you can predict Trump’s actions.

Some examples

With polar ice caps melting at far faster rates than predicted, ocean levels rising and global warming contributing to unprecedented flooding, what is the STUPIDEST thing Trump could do in setting out the country’s future energy policy? Obviously, the answer would be to promote more coal-burning power plants and require power plants using cleaner, safer (and cheaper) energy to subsidize the more expensive coal powered plants.

Ask yourself, “What is the STUPIDEST thing Trump could do before negotiating nuclear disarmament with North Korea?” The answer of course is to break the nuclear accord signed with Iran after the Iranians destroyed their nukes, over 500 centrifuges that would have allowed them to quickly replace the destroyed nuclear bombs and followed the agreement explicitly.

What is the STUPIDEST thing Trump could possibly do if he wanted to end the FBI investigation of his presidential campaign’s collusion with Russians?  That’s simple, go on national television and do an interview with Lester Holt and brag that the real reason you just fired the FBI director was that he wouldn’t end the Russian investigation.

What is the STUPIDEST thing Trump could possibly do if he wanted to keep an international trade embargo and other sanctions on North Korea to force them to dismantle their nuclear weapons? The answer is to hold a summit with the North Korean leader and walk out with absolutely no concrete plan for nuclear disarmament. Then, proclaim to the world that North Korea is no longer a nuclear threat. Forget about political oppression, slave labor camps and murdering his own uncle, Kim Jong Un, “loves his people”.

What is the STUPIDEST thing Trump could possibly do when negotiating trade issues with the Canadian prime minister? Lie and claim the US has a trade deficit with Canada and then claim the Canadians burned down the White House during the War of 1812. Then, go to a Republican fund raiser and brag about lying to the Canadian prime minister. Then, after the G-7 Meeting in Montreal, complain that Justin Trudeau, the Canadian Prime Minister didn’t treat you with enough respect. By the way, it was the British that burned down the White House during the War of 1812.

What are the STUPIDEST things Trump could possibly do if he wanted to keep fuel prices low in the US? The answer is to end the nuclear agreement with Iran, end trade with them, and for good measure, send a letter to heads of state of oil producing Gulf nations telling them they wouldn’t last a week without US help.

What is the STUPIDEST possible thing Trump could do if he wanted to keep up the facade that he is “draining the swamp” of special interests and lobbyists setting our country’s agenda? Send his political appointees to the World Health Organization meeting and try to scuttle the science backed research recommendations to encourage mother’s to feed their babies breast milk. The US delegation, supporting the milk formula industry, threatened Ecuador, the country sponsoring the breast milk resolution, with losing military and financial aid if they went through with introducing the legislation. Russia saved the day by being the resolution’s sponsor. Since Russia has the videotapes and photos of Trump’s romp with Russian prostitutes after the 2013 Miss Universe Pageant, the US delegation obviously couldn’t threaten them. https://www.nytimes.com/2018/07/08/health/world-health-breastfeeding-ecuador-trump.htm

What is the STUPIDEST thing Trump could possibly say about Russian interference in the 2016 election that has been confirmed by the CIA, NSA, FBI, House Intelligence Committee and the Senate Intelligence Committee?  “I asked him again, “Trump said after what he described as several brief, informal chats with Putin in Danang, Vietnam, where they were attending a regional conference. “You can only ask so many times . . . He said he absolutely did not meddle in our election. He did not do what they are saying he did. I really believe that when he tells me that, he means it . . . I think he’s very insulted, if you want to know the truth.”

In light of the fact that multiple studies published in peer-reviewed scientific journals show that 97 percent or more of actively publishing climate scientists agree: Climate-warming trends over the past century are extremely likely due to human activities. In addition, most of the leading scientific organizations worldwide have issued public statements endorsing this position, what is the STUPIDEST thing Trump could say?  “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.”

What is the STUPIDEST possible thing Trump could do concerning all his legal troubles? Hire Rudy Giuliani as his lead lawyer.

This list is nowhere near inclusive of Trump’s stupid statements and actions. He continues to add more everyday. Frugal Ron apologizes if he missed your favorite example of Trump’s idiotism.

Mystery solved

Frugal Ron has been trying for two years to understand how someone who surrounds himself with loyalists of limited intellect and who doesn’t understand how to use data or research could possibly be a billionaire. A recent article https://www.washingtonpost.com/outlook/trump-lied-to-me-about-his-wealth-to-get-onto-the-forbes-400-here-are-the-tapes/2018/04/20/ac762b08-4287-11e8-8569-26fda6b404c7_story.html?noredirect=on&utm_term=.8dd3a16e8d6b by Johnathon Greenberg, who started the original Forbes magazine lists of the world’s wealthiest people, explained the mystery. Trump lied.

As Greenberg writes, “Eventually, nearly every one of Trump’s pronouncements about his wealth unraveled.”

Greenberg was able to cut through many of Trump’s lies about his wealth, but couldn’t fathom the full extent of his lies. “But Trump was so competent in conning me that, until 35 years later, I did not know I’d been conned. Instead, I have gone through my career in national media with a misinformed sense of satisfaction that, as a perceptive young journalist, I called Trump on his lies and gave Forbes readers who used the Rich List as a barometer of private wealth a more accurate picture of his finances than the one he was selling. The joke was on me — and everyone else. Trump’s fabrications provided the basis for a vastly inflated wealth assessment for the Forbes 400 that would give him cachet for decades as a triumphant businessman.”

You read it here first. If Trump’s tax returns are ever leaked, my prediction is that we will find the reason he has been hiding them are that he has huge interest payments to some sleazy Russian and/or Ukrainian  oligarchs. If we divide these interest payments by even loan shark interest rates, my further prediction is that Donald Trump is much closer to being broke than to being a multi-billionaire.

Moving on, the cost of stupid

Donald Trump takes a great deal of  credit for the low unemployment rate the US currently enjoys, However, Figure 1 shows unemployment rates on the same trajectory they have been on since 2010 and the end of the Obama Administration in January 2017.

Figure 1

Also, looking at the data in Figure 1 from the early part of the George W. Bush presidency, starting in 2001, it is obvious that unemployment dropped during the false prosperity from 2003 to 2007. This was the result of Bush’s tax cuts for the rich and out of control government spending increases. Obviously, the Piper was paid in 2008 with the worst recession since the Great Depression.

As history repeats itself, we clearly see trends emanating from Trump’s out of control spending increases and 2018 tax giveaway to the rich in the federal budget deficit. When Barack Obama left office, Federal Government Net Savings were -$714.0 billion. After just five quarters of Donald Trump’s borrow and spend policies, the Federal Government Net Savings are -$910.0 billion. This is the biggest deficit in our country’s history in a non-recession year. Remember this huge deficit is only after six months of Trump’s tax give away to the rich. Expect the federal spending deficit to go higher as the numbers reflect a full year of Trump’s tax giveaway and ultra-liberal spending increases.

In earlier columns, Frugal Ron has predicted the current Republican effort to buy prosperity will result in another crash and burn for our economy. The question isn’t if this will happen , but when.

Predicting the “when” is very difficult. The Ronald Reagan and George Bush recessions happened relatively shortly after debt went out of control due to their exorbitant spending and ridiculous tax cuts. George W. Bush got four years of fake prosperity, but his recession was much more severe than his predecessor’s.

Trump’s incredibly stupid trade war

Our government spending deficit is entwined with our country’s trade balance. This is where Trump’s stupidity affects all of us.

Trump continually blames other countries and “unfair trade agreements” for our trade deficits. This is just plain stupid, stupid, stupid.

A rule of economics that Trump hasn’t come to terms with is that a country’s Current Account = Capital Account. In other words, a country’s net savings always equals that country’s Merchandise & Trade Balance.

While Trump wastes time foolishly proclaiming our trade deficits are due to unfair trade agreements, our trade deficit is exploding.  This is mostly fueled by Trump’s huge government spending deficit that impacts our country’s net savings. When Obama left office, our Merchandise & Trade Balance was -$487.4 billion. Five quarters later, the trade deficit is now -$569.0 billion, the highest since the fourth quarter of 2008 when George W. Bush left office. Why has the trade deficit grown? From the figures above, our annual federal budget deficit has grown by $196 billion since the end of the Obama presidency. This has negatively affected our country’s Capital Account (net savings). As our federal budget deficit continues to grow, one of two things will happen. Either the trade deficit will continue to explode or the country will slide into a recession.

It gets worse…

While Trump’s policies make our products less competitive internationally and he exports even more jobs, that isn’t the worst of it. Trump is a big government liberal who believes government needs to pick the winners and losers in our economy. When he puts tariffs on steel products coming into the country, that doesn’t affect our overall trade balance. All else staying the same, we continue a -$569 trade deficit.

What does happen is that we will import less steel and make domestic steel providers richer because of the drop in competition. They didn’t become richer because they improved their productivity or developed more creative products. They became richer because the government made them that way. On the other hand, domestic users of steel, such as auto manufacturers, have to compete with products made in other countries with steel that isn’t charged a tariff. These companies are the losers from the government imposed tariffs.

If they market internationally and the countries they export to happen to put countervailing tariffs on their products to reciprocate for the tariffs the US enacted, these companies are hit with a double whammy. This is why Harley Davidson will move manufacturing out of the US for the motorcycles they sell internationally.

Avoid idiots in glass houses

Trump continually talks about other country’s unfair trade practices. For example, Canada’s milk quota system has been a disaster for Canada’s dairy producers and consumers. It survives only because Canada negotiated World Trade Organization restrictions on dairy imports. The program is a perfect example of how a powerful lobby is able to use trade restrictions to reward a few at the expense of many.

However, because of Canada’s relatively small population and because of the quota system, their per capita dairy consumption is low, Canada’s dairy import restrictions have a small impact on world milk prices.

Contrast this with the US sugar program that keeps sugar prices in the world’s largest market roughly three times international prices and all but locks out imports.  A number of year’s ago some creative importers tried to circumvent the US quotas by importing tea that contained 85% sugar and 15% tea and then separating it in the US. It worked for awhile.

Another dandy example of a market distorting policy benefitting the few and costing the many is a part of the NAFTA Agreement that requires all goods produced in Mexico to be transported into the US on a US owned truck. No matter how new and safe a Mexican semi is and how experienced the driver is, they can’t deliver goods into the US. At considerable cost and loss of efficiency, they have to be off loaded onto a US truck.

While the Canadian dairy program has a pin prick impact on international dairy prices, the US’s Price Loss Coverage Program (PLC) is like a sledge-hammer on other countries’ commodity prices during years of abundant supplies.  If the market average price for corn drops to $2.50 a bushel, US producers get a government check for the difference between the Reference Price of $3.40 per bushel and the $2.50 market price times all the corn they produce. Next year, US producers make planting decisions based on a $3.40 minimum price while the rest of the world ‘s farmers hope the price doesn’t go below $2.50.

Unfortunately, the last attempt at an international agreement to eliminate more trade barriers broke down because then President George W. Bush refused to negotiate eliminating market distorting US agricultural programs.

While almost all countries have trade distorting practices, the trade agreements Trump vilifies eliminated thousands of them. Furthermore, only a complete idiot would criticize other countries’ trade distorting practices considering the indefensible ones we have.

We’re trying to accomplish what?

It is difficult to understand what Trump is trying to accomplish with his trade wars. He claims China and the European Union have unacceptably high trade surpluses with the US. He wants to renegotiate trade agreements,. However, our trade deficit is due to our own national savings deficit.  No country can sign a trade agreement with us specifying a certain level of trade surplus or deficit because even we can’t control our own savings deficit. The world’s worst negotiator doesn’t leave his adversaries any viable options.

Some days Trump and his advisors claim they want to stop China from stealing our trade secrets. Obviously, none of these people have ever applied for a US patent. Before a patent is granted, all applications go through a review process. During this period, all formulas, drawings and whatever makes the product unique are released to the public. If anyone can prove they developed and marketed a like product in the past, they can stop the patent.

The more important point is that we make the product’s trade secrets open to the public. This is why whenever a US patent application reaches the review stage, the applicant will apply for patents in every country they hope to market the product. Someone else can review the patent, copy it and market it in any country the original developer fails to patent it in. Also in the US, a developer can copy a patent, make some changes and if the second developer can prove the new product is a “significant improvement”, apply for their own US patent and market their new product here.

Trade and inflation

A result of bad government is inflation. During Trump’s disastrous presidency, signs of inflation are everywhere. Average US regular unleaded gas prices, (according to the American Automobile Association) are $2.87 per gallon. A year ago they were $2.26. JP Morgan announces the June 14, 2018 Prime Interest Rate is 5.00 percent. When Obama left office, it was 3.75 percent. General Motors announced that due to Trump’s tariffs, new car prices would rise thousands of dollars.

The list goes on and on. Because of inflation, people will make inefficient buying decisions. If someone thinks they need a new car within a couple years, they will buy it now instead, given the expectation that the automobile will be more expensive when they need it.

Inflation erodes the value of savings that frugal people accumulated over their lifetimes. It also makes the $1.3 trillion of US treasury bond debt that China owns less valuable since it will be paid off with inflated dollars. The Chinese have been very explicit to past US administrations that they will not let this happen.

Pay attention to what might happen if the Chinese finally lose patience with Trump. If they decide to quit buying more treasury bills and help finance his $trillion deficits, this could have a major impact on interest rates. If they decide to start cashing in their T-bills, and other countries follow suit, this could set off a financial meltdown.

The lies

The second pillar of Trump’s presidency are his lies. On May 31, 2018 the Washington Post reported its latest tally of Donald Trump’s false and misleading statements since taking office was at 3,251. That is averaging more than 6.5 lies per day.

Unfortunately, the pace of lies is picking up. In Trump’s first 100 days in office, he averaged a mere 4.9 lies per day. However, in May 2018, he averaged eight false claims per day, including a then record 35 in one speech in Nashville, Tennessee on May 29. The Washington Post’s Fact Checker reviewed all the claims Trump made in his Montana rally last week and found that 76 percent were false or suspect. Trump is a prolific liar, not a good liar. If he was a good liar, he wouldn’t gotten caught 3,251 times.

The bottom line is that Donald Trump is a perpetual liar that can’t be trusted. Everything he says must be assumed to be a lie.

Immigration, first some logic

The US has an aging population and a declining birth rate. This is a recipe for economic disaster. The solution is to welcome all the immigrants we can conceivably get, regardless of their skin color, sexual orientation or religion.

In 1970, there were about 3.1 taxpayers for every Social Security recipient. That is now down to 2.9 taxpayers to every recipient. By 2035, the ratio is expected to be around 2.1 taxpayers to every recipient.  According to a Social Security Administration study, between 2011 and 2032, it is estimated the number of people eligible for old age benefits will increase by 65 percent while the number of people paying Social Security taxes will increase by 18 percent.

If you want a real world example of what can happen with an aging and declining population, Japan is ahead of us with an even more aging population and a longer history of declining birth rates. Japan’s economy is in a long-term stagnation — the country’s GDP has been among the G7’s lowest over the past 20 years, coming second only to Italy. We don’t want to follow the Japanese model.

We don’t have an immigration problem in this country, we have a race problem.

Racism

While the Trump presidency stands on the three pillars of stupidity, lies and racism, it is truly racism that drives Trump and his supporters. As long as Trump works to make America white (and Christian) again, his supporters don’t care about his stupidity, how many lies he tells or how immoral he is.

To Trump and his rabid supporters, there was absolutely nothing wrong with separating parents from their children at the border. Locking the traumatized children in cages, hauling them to all corners of the country and not telling their parents where they were was perfectly acceptable.

All of these migrants have brown skin. For Trump and his supporters, it isn’t like they are real people that have feelings for their children like white people would have.

Trump made the point himself at the meeting where he made his “shit hole countries” remark. In the same meeting he asked why we couldn’t get more people from countries like Norway. I would bet every nickel I have that if a boat load of blond haired, blue eyed illegal immigrants from Norway tried to get into the US, those children wouldn’t have been torn away from their parents.

Trump categorizes families fleeing violence or simply wanting a better life in the US as drug dealers, murderers, rapists and animals. He has the audacity to claim, “When Mexico sends its people, they’re not sending their best. They’re not sending you. They’re not sending you. They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.”

Never to let the truth interfere with a good lie, Trump has no proof the Mexican government is sending us anybody. The people that are immigrating are making their own decisions based on the same conditions generations of immigrants before them made. They want a better life.

Most people judge Trump’s immorality based on his three unsuccessful marriages, his affairs with playmates, porn stars and Russian prostitutes and the 19 women that have accused him of sexual assault. However, bad as these are, they pale in comparison to the immorality he showed in tearing families apart.

While reasonable people can disagree on tax and spending policies and still be friends, basic humanity is different. I find it extremely difficult to have any respect for anyone that supports Trump’s separating children from their parents and locking the children in cages. Shame on the United States and all of us for allowing this to happen.

The white nigger

Imagine a racist teaching their child, “Now Junior, you must hate all black people because they constantly lie and have no morals . They are stupid and are constantly in trouble with the law. Worse, they won’t take responsibility, they always claim they didn’t do anything wrong and the cops are prejudiced against them.  And, they live off hard-working tax payers like us with all sorts of scams.”

And Junior says, “But Mommy, that’s Donald Trump!”

These are hard times for racists. Having to defend a low life liar like Donald Trump while condemning a successful, honest, articulate, faithfully married class act like Barack Obama is not easy.

It is interesting watching Trump’s apologists and supporters. they don’t bother defending Trump’s stupidity, lies, immorality or racism. They attempt to make the point that President Barack Obama was worse. One banner on social media proclaimed “OBAMA LIED 19 TIMES ABOUT BEING ABLE TO KEEP YOUR OWN DOCTOR!”

Personally, I don’t know anyone that had to switch doctors because of Obamacare, but this is beside the point. If we start the week on Sunday morning, 19 lies won’t even get Trump through Tuesday.

And then there is the big scandal right around the corner that is going to bring Obama down. Turns out Trump’s claim that Obama had Trump Tower’s phones bugged was just another Trump lie. Some of Trump’s aides were making suspicious contacts with Russians and the FBI got a court order to tap their personal cell phones. The other Trump lie about Obama planting a spy in the Trump campaign was equally scurrilous. When other Trump campaign workers were also making suspicious contacts with Russia, the FBI had one of their long time informants make contact with the Trump campaign employees to figure out what they were up to. Thanks to the House Republicans for blowing the informant’s cover.

It is impossible for Trump’s racist followers to accept that Obama kept from being investigated the good old-fashioned way. He didn’t break any laws.

If the truth doesn’t work, the Trump loyalist just out right lie. Since most of these folks claim they are good God-fearing Christians, we can surmise that the Commandment about bearing false witness doesn’t apply when you are lying about a black guy.

My favorite though is that Barack Obama is a Communist. Just a few points:

When  Obama’s predecessor George W. Bush took office, the US had a budget surplus of $152 billion. When Bush left office, the budget had an annual deficit of $781 billion. When Obama left office, the deficit was down slightly to $738 billion. Which one is the Communist destroying our country?

When Bush assumed the presidency, thee US Merchandise and Trade Balance was -$404 billion. When Bush left office, it was $686 billion. When Obama left office the Merchandise and Trade Balance was down to -$461 billion. Which one is the Communist destroying our country?

During Bush’s term in office, the S&P 500 Stock Index dropped 35 percent. During Obama’s term, it went up 163 percent. Which one is the Communist destroying our country?

During Bush’s term in office, the unemployment rate went up  47 percent. During Obama’s term, it went down 55 percent. Which one is the Communist destroying our country?

During Bush’s presidency,  annual federal government spending went up 74 percent. During Obama’s term, it went up only 24 percent. Which one is the Communist destroying our country?

Both Bush and Obama kept inflation at record low rates during their two terms in office.

And last but not least, during Bush’s term, per capita annual health care costs rose 63 percent. During Obama’s term, these costs went up 31 percent. In addition, 27 million previously uninsured people had health insurance at the end of Obama’s term. Oh, but for the good old days when we had a Communist out to destroy our country as president!

Wrapping up…

Our leadership void in this county is deeper than just the presidency. We have a Republican controlled Congress that has abdicated their oath to the Constitution and to the people. Instead they pledge their loyalty to their party’s excuse for a president. There is a simple solution, reasonable people must turn out and reshape Congress and their priorities next November.

While we are struggling through the worst leadership crisis in our country’s history, there is one bright spot. Barack Obama and Donald Trump have done more to destroy racial stereotypes and done more damage to the racist cause than anyone can imagine. We might not see changes in the current generation, but for younger people, the truth is obvious.

Not only do we live in an era of fake news, we live in an era of fake logic. Out of control spenders that gleefully give the rich giant tax cuts financed by foreign borrowing are hailed as conservatives. A bigoted president with a record of over a thousand lies in his first year in office that has had three marriages, has 19 women accusing him of sexual misconduct, supports a perverted pedophile for the Senate and defends a wife beater is hailed as a great Christian by his supporters. So, if you are wondering if down is really the new up and up is the new down, perhaps it is time for a reality check with real data.

Conservatives spend less!

I realize the above subtitle is an amazing assertion. Figure 1 clearly points out, there are some spending consistencies related to political party affiliation. Republicans Reagan and George W. Bush came close to doubling federal government spending in their eight year terms.  They increased the budget at roughly 250% of the rate of the Democrats. George H.W. Bush increased the rate of spending more in four years than either Clinton or Obama did in eight years!

Figure 1.

This trend of the conservative party continues with the Republican who presently occupies the White House. Even though US defense spending under Obama was larger than the next six largest defense spending countries combined, Donald Trump proposes increasing that by another $195 billion over the next two years.

Breaking campaign promises, Trump proposes big cuts to Medicare and Medicaid. Yup, take money away from the sick and old people. That seems to be the Republican Christian thing to do. Gotta teach those old people responsibility.

Trump proposes spending $1.2 trillion over the next 30 years to upgrade our nuclear arsenal. Yet, North Korea has proven time and again that it doesn’t make any difference how big a nuclear arsenal you have, the real difference is how you use it. On August 8, 2017, Trump stated, “North Korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen.” North Korean threats have continued, along with more nuclear and missile tests. North Korea called Trump’s bluff.

North Korea has maybe one or two missiles with nuclear warheads capable of hitting the US. Yet, they made Trump look like a drunken polka dancer playing to their tune. The US now has over 4,000 active nuclear warheads. How many more do we need to waste money on to deter the rational and pragmatic leaders Russia and China have?

Conservatives borrow less!

Yes siree! Those Republicans are a frugal bunch indeed! The only thing they seem to enjoy more than spending is borrowing. While they used to accuse Democrats of tax and spend, Republicans’ motto is “Borrow and Spend”.

Figure 2.

And, things could have been worse. If George H.W. Bush hadn’t weaned himself of the Republican “deficits don’t matter” Kool Aid and implemented a tax hike in 1990, we could have been put through the same debt induced economic crash his son visited upon us 17 years later.

The amazing story is the turnaround Bill Clinton did during his presidency where we actually paid off debt. Of course, George W. Bush reversed that foolish practice with predictable results.

The present  resident of the White House proposes increasing the federal debt by another $194 billion next year and $7 trillion over the next ten years. Yes, in this up is really down world, his supporters actually call him a conservative.

When Congressman Paul Ryan goes through his spiel about how our present safety net programs are economically unsustainable, it would be fun to ask him how fiscally sustainable it is to elect Republicans?

Trade Balances and Foreign Borrowing

A country’s trade balance always equals its net national savings. More technically correct is to say a country’s current account and capital account are always equal.

Figure3.

The US had a -$738 billion net government savings during Obama’s last year in office. This huge negative balance overwhelms our private savings giving us an overall negative net national savings or Capital Account Balance. Currency markets aren’t controlled by anything other than market forces. A big savings deficit means the dollar increases in value making imports cheaper and our exports more expensive. This continues until our trade balance equals our net national savings. Cut off trade with a country like Mexico that we have a big trade deficit with and the deficit just moves to other trading partners.

Figure 3 actually illustrates two things. First is the size of our trade balance and second, how much we borrow from other countries to finance our budget deficit. The net national savings value is also on the Bureau of Economic Analysis site in Table 5.1 Savings and Investment, Line 35.

During the Clinton years, we actually had federal budget surpluses, yet we still had a negative net national savings and trade balances. During those years, consumers added lots of debt. We had a booming economy that attracted foreign investment. This accounted for our savings deficit. Also, we had too much money chasing too few goods. This would normally be a recipe for runaway inflation. Fortunately, foreign trade (imports) were the cure for that problem.

The important point is that the Clinton trade and savings deficits were market driven. A truly conservative government got out-of-the-way of the credit and other markets.

Trump’s proposed huge budget deficits will logically give us a larger net national savings deficit. This will make imports cheaper in the US and make exports (such as agricultural products) more expensive to buyers outside the US as our trade deficit matches the savings deficit. All the trade negotiations and trade delegations that we waste time on won’t affect the driving factor that our Current Account will equal our Capital Account.

Stock Markets Love Republicans!

Well, not really. Republicans continually believe they can buy prosperity. Anyone can figure out from the data above that Republicans use huge tax cuts for the rich along with out of control spending increases to finance a false prosperity like we have now. After several years, the Piper must be paid.

Figure 4.

Ronald Reagan came into office in 1981 and his stock market crash came in 1987. The markets recovered by the time he left office. George W. Bush took office in 2001 and we had a false prosperity until 2008 when the markets crashed and stayed that way into Obama’s presidency.

This contrasted with Clinton and Obama whose limited spending increases coincided with drama free market increases. Especially Clinton, who got the government out of the market’s way by balancing the federal budget and provided the conditions for real economic growth.

We are once again living in a false economy fuelled by foreign borrowing. History indicates that recent stock market gyrations are just that. Since we are following the George W. Bush script of huge tax cuts with out of control spending, the real crash may be a few years off.

One of the real hoots I get is reading social media posts that describe Obama as a socialist and a communist! Lots of African along with Central and South American leaders have fit one of those descriptions. None of those socialists/communists presided over a 163% increase in their stock markets, held government spending increases lower than any of their predecessors and kept inflation at the lowest levels ever recorded. Yup, Obama was a unique president!

Employment

Figure 5.

The interesting thing about this table is that Reagan’s presidency looks pretty good. But, after you add George H.W. Bush’s term in, twelve years of borrow and spend economics leaves you about where things were when Reagan succeeded Jimmy Carter.

Buying prosperity looks good in the short term but Obama and especially Clinton’s true conservatism wins out in the longer haul. If only Republicans could quit criticizing them long enough to learn from the Democrats and mimic their successes.

Healthcare

Figure 6.

Figure 5 really doesn’t need much explanation. Obamacare added 27 million uninsured people in what is one of the greatest legislative accomplishments in my lifetime.

Economic Growth

Figure 7.

One of the Federal Reserve Presidents, Janet Mester, stated last November, “Government needs policies that increase immigration, not reduce it.” Perhaps she was looking at the data in Figure 7 and how it correlates to Figure 6. Arguably, some of the Clinton GDP growth can be attributed to the large increase in immigrants. The much slower growth during the Obama years might also be blamed on the slowdown in immigration.

Figure 8.

If we want more economic growth, logically, we want more people. With an aging Baby Boomer population leaving the workforce, the most obvious source is immigrants.

Summary

After writing this article, I ask myself why I spent as much time as I did on it. Quite frankly, I don’t expect it will have any impact on Trump supporters. Hopefully, in a world where we are inundated with false hoods, it will provide some fodder for rational people.

After the last election, I wrote in a post that we are two worlds living in one nation. This is even more accurate today.

Since then, I’ve tried to listen a lot. What I have learned is that one of the world’s in our nation differentiates themselves by their ignorance. The strange thing is this is an ignorance of choice.

These folks simply refuse to recognize news organizations with decades and centuries long reputations for accuracy. An article that fails to portray their hero as anything but a great Christian valiantly trying to save the nation after eight years of Obama rule makes that news organization only worthy of their scorn. Even when forced to acknowledge facts, their loyalty never wavers. Trump’s supporters don’t give a rat’s behind about the facts and data in this article. All they care about is that he hates the same people they do as much as they do.

What this reminds me of is a WWII documentary filmed toward the end of the war where a near starving German woman wearing rags in a burned out relic of her city staring down the gun barrel of a US soldier was still proclaiming her loyalty to Hitler.

Hitler’s based his power on appealing to German nationalism and focusing hatred on Jews and any other non-German ethnic group. They, of course, were the cause of all Germany’s problems. For Donald Trump, the same nationalism and racism comes through loud and clear. What I’ve learned from my social media forays is that his supporters have a vitriolic hatred of Blacks, Hispanics and Arabs that meters down to anyone that isn’t white and practicing the same form of Christianity they are. Of course, they aren’t racists (by their own measurements).

Are there similarities? Hitler didn’t have to shut down the media, his supporters did. Hitler borrowed wherever he could to finance his military buildup. He loved military parades and Trump is planning a giant one in Washington this year. Hitler never admitted a mistake. Both shared the same disdain for the truth. Trump wants more money and support for the police.

The most disgusting and despicable comments I’ve ever heard a US president make are Donald Trump’s wanting to know why we allowed people from shithole country’s like Africa, Haiti and El Salvador to come into the US and not allow more immigration from places like Norway. This is my litmus test. Anyone still supporting Trump after those remarks is either a racist or condones racism. I have no use for either.

The scariest part is how the Nazis, oh excuse me, the Republicans rally to Trump’s defense and try to delegitimize the world’s most respected law enforcement agency in their blind loyalty to head off his possible indictment. The summary here is simply this. We need to stand up to this bigotry and hatred of facts. Facts may not impact Trump loyalists, but there is hope for their kids.  Rationale people need to unite in the next elections. Roughly 38-40 percent of voters are die-hard Trump supporters. Every one of them will vote. Staying on the sidelines is not an option.

Republicans have been a dominating election winning machine.  Using a combination of gerrymandered districts, voter suppression laws and a message that resonates with bigots, they have majorities in both the House and Senate and also hold the Presidency. Sadly for the Republicans, never have so many accomplished so little.

Republicans won the presidency with the promise of bringing jobs back to the US. Yet, according to the latest quarterly report, here we are with the biggest quarterly trade deficit since George W. Bush was in office. (Source: Bureau of Economic Analysis, Table 1.1, U.S. International Transactions, Line 30). After failing to overhaul the health care system, Republicans  moved on to adding $1,0 trillion in additional deficits over the next ten years with their tax cut plan. A reasonable person might ask,”What in the heck is going on here?” There are three  reasons for this unprecedented incompetence.

The first reason…

First is Donald Trump. in an earlier column written after his electoral victory , Frugal Ron wrote “Never before has such an unqualified and ill prepared president assumed office”. He’s been all of that and more.

Soon to be Ex-Secretary of State Rex Tillerson describes Trump as a “f____ing moron”. Although a bit course for this website, Frugal Ron finds himself at a loss to produce a more accurate, concise and eloquent description.

Besides being a moron, Trump’s biggest liability to Republicans is his inability to keep his word.  He’ll reach a deal and turn around a few days later and demand financing for his wall or some other moronic idea and halt the legislative process.

On international trade, Trump claimed he could eliminate our perpetual trade deficit by renegotiating unfair trade agreements. Not having the intellectual capability to understand that a nation’s Merchandise and Trade Balance equals a country’s Net Savings is a major limitation for Trump.

The second reason…

Although Trump is a huge liability to Republicans, the second and bigger reason for their failure to govern is an out of touch Republican establishment This includes everything from the Republican Congressional leadership, the majority of Republican office holders and  their major donors.

Republican orthodoxy calls for ending government programs and cutting taxes for the rich. Making the Affordable Care Act their first target was a huge mistake. Perhaps the most successful government program in the last 50 years, Obamacare had slashed the rate of health care increases, added 20 million more people to the ranks of insured and did all this for about the same government cost as the previous hodge podge of programs.

Polling by Hart Research Group found that 54% of Americans wanted the Affordable Care Act (Obamacare) kept and fixed and only 40% want the law repealed and replaced. Faced with these numbers, what would you expect Republicans to do? Of course, they went full steam ahead to undo Obamacare.

No sane person would possibly think that pricing health insurance out of reach for 20-30 million US citizens (depending on which version of Republican dogma was being voted on) is a good thing. Besides the people priced out of the health insurance market, millions more will have to forego saving or spending money to support other parts of the economy because their health insurance costs skyrocketed.

There was a time, before Ronald Reagan, when Republicans were actually conservatives. Back then, Republicans refused to vote for bills until the repercussions of the repercussions of a specific bill were discussed and addressed. No more.

Without a thought, today’s reckless Republicans plunge ahead to jeopardize the entire healthcare industry that represents 18% of the US’s GDP. Do these fools expect the 20-30 million people that would have lost their health insurance because of Republican legislation  will all magically enjoy perfect health and never get injured or pregnant? It probably never occurred to these Republican zealots that if  people can’t afford insurance, maybe they won’t be able to pay five figure and higher medical bills if they do wind up in the hospital? I never heard one Republican in favor of repealing Obamacare  describe where the money to cover the uninsured’s medical cost was going to come from.  Before Obamacare, 30% of these costs were absorbed by Medicaid. However, Republican plans call for cutting back those funds also.

Republicans seem to be the only people with IQs over 70 that can’t grasp that if the healthcare industry is treating 20-30 million more patients that aren’t providing an insurance income flow and can’t pay for their treatment, many hospitals and clinics will close. Consequently, even wealthy Republicans will die because healthcare is too far away.

Out of touch takes on new meaning when you look at how Republicans intended to spend their ill gotten domestic savings. Savings from shutting down after school programs that allow working parents to keep their jobs while their children are safe, meals on wheels and a myriad of other programs that keep seniors alive were to go for defense spending increases. Never mind that current defense spending is higher than the next six highest defense spending countries in the world COMBINED. Other savings were pegged to go for tax cuts for the wealthy. Never mind that today’s wealth is the most concentrated in our country’s history.

The third reason…

The third reason Republicans can’t govern is because of a very small minority of their members  that throw wrenches into the party plans. While most Republicans live in their private fantasy land, a very small minority see things much more clearly. Perhaps unwilling to repeat the same mistakes when lemming like Republicans followed President George W. Bush down the path to a calamitous war and a devastating recession, Senators McCain, Collins and Murkowski stood up to the Republican establishment and their twittering president.

Republicans lie

Making governing more difficult, Republicans seem to pick up from their president. They flat-out lie when describing the tax cuts for the rich and their effects on the rest of us.

Perhaps pictures work better than words, although I expect even these will not sway Trump supporters. The proposed Republican tax cut will increase federal budget deficits an average of $100 billion per year over the next ten years over present levels.

Table 1

Sources: Bureau of Economic Analysis, Table 3.2 and Table 1.1.5 and Department of Labor, Quarterly Census of Employment and Wages.

Republicans claim the tax cuts will increase jobs. History tells us this simply won’t happen. The red line is the annual federal budget balance as a percent of Gross Domestic Product(GDP). The federal budget is expressed as a percent of our nation’s total economic output to eliminate inflation’s impact. Notice how job creation mimics the budget deficit. President George W. Bush’s tax cuts and huge spending increases ballooned the deficit and President Barack Obama’s even bigger tax cuts devastated job creation. As the deficit became a smaller percent of the economy, job creation increased.

Who were the winners of the Bush/Obama tax cuts? Only the rich people who got the cuts. (Note, the Quarterly Census of Employment and Wages only measures full time jobs, not part time.)

Table 2

Sources: Bureau of Economic Analysis, Table 3.2 and Table 1.1.5

Republicans also argue that their tax cuts and associated bigger deficits will lead to more economic growth. The red line is identical to Table 1. Again, the annual percent change in GDP (economic) growth mostly mirrors the federal budget balance.

An interesting point is that after the initial Bush tax cuts in 2001, GDP grew. This is the effect of Republicans using high government spending increases combined with tax cuts paid for with government borrowing to buy prosperity. It simply doesn’t work. The Piper was paid in 2008 when the country was plunged into the deepest economic downturn in a generation.

History tends to repeat it self for those who don’t pay attention to it. Clearly, most Republicans don’t pay attention to history.

The blame game

While this column singles out most Republicans for this mess, they aren’t the real problem. If anything, Republicans are consistent. They get elected, they pass big tax cuts for the rich using the same tired trickle down economic arguments over and over, they spend money like crazy, run up huge deficits that send our net national savings (Capital Account) spiraling into an abyss, causing our Merchandise and Trade Balance (Current Account) to go into an equally huge deficit and then the whole economy goes into another boom to bust recession.

This scenario happened with Reagan and both Bush’s and will repeat itself again. Most anyone should have been able to figure this out long ago. And, this leads us to the real culprits of this mess, anyone who voted for these misfits. We didn’t get a moron for president by accident and we aren’t getting an incompetent Republican Congress more interested in following dogma and their financial backer’s wishes by accident.  There’s a lesson to be learned here.

Donald Trump and his supporters actions and words after the deadly riots in Charlottesburg, Virginia illuminated their racism for the world to see.  Yet, the real story is bigger than their racism. It is that their philosophy is all about conformity and conformity to their standards.

To fit into Trump’s America, you not only need to be white and Christian, but also heterosexual. To Trump supporters, Mexicans threaten our safety and jobs, Muslims are terrorists, we need more police to enforce law and order in cities because of black people’s propensity to commit crimes, Gays are a threat to our children and transgenders are a threat to little girls using the restroom, And, of course, all these groups threaten our American culture (whatever that is) because they are “different”.

As with almost everything else, Republicans don’t let peer-reviewed scientific research get in the way of what they “know” is the truth. The reality is that terrorism is committed almost exclusively by native-born citizens and not immigrants. Crime rates for immigrants are lower than for native-born Americans. Toddlers with guns kill many more US citizens annually than Muslim terrorists do.

In their quest for conformity, Republicans demand transgenders accept the gender listed on their birth certificates. Gays, well we “know” their sinful lifestyles are  their choice, so they must give up their same-sex attractions. Muslims, Hindus and other heathens must give their hearts to Jesus to become real Americans. African-Americans are crap out of luck in this era of conformity. They can probably find some level of acceptance if they dress, act and sound like former Republican presidential candidate Ben Carson.

The point here is that Donald Trump supporters are terrified that their culture is under attack by people who are different. Perhaps, if they had more confidence in their culture, they wouldn’t be so paranoid.

The symbolism (actually racism)

Trump supporters aversion to facts complicates meaningful discussions. Instead, they have shifted the argument to one about symbolism. The symbolism in this case are glorified statues of Confederate generals and leaders long overdue for removal.

Trump supporters claim removing these statues is an attempt to re-write history. This is absurd. Over 50,000 books and pamphlets have been written about the Civil War. Not one has been or will be re-written as the statues are taken down. Countless textbooks contain information on the Civil War. None of these are being re-written.

History tells us is that none of these generals or Confederate political leaders ever deserved any type of statue or immortalization. First of all, all the Confederate generals were traitors.They all were active officers in the US Army before joining the Confederacy and had signed the following oath:

“I, _____, appointed a _____ in the Army of the United States, do solemnly swear, or affirm, that I will bear true allegiance to the United States of America, and that I will serve them honestly and faithfully against all their enemies or opposers whatsoever, and observe and obey the orders of the President of the United States, and the orders of the officers appointed over me, according to the rules and articles for the government of the Armies of the United States.”

Confederate officers broke their oaths and deserted their posts. Worse, not only did they refuse to defend the United States of America, they fought against the nation they swore to protect. There is no better definition of a traitor.

Second, Generals Lee, in particular was an incompetent military leader. Although he won some early battles before the Union identified  their top generals, when crunch time came, Lee’s recklessness, overconfidence and  poor judgement came to the forefront.

If you have any doubts, make a trip to the Gettysburg Battlefield. Great generals deserving immortalization don’t order 15,000 troops to march three-quarters of a mile across open fields punctuated by fences to attack a dug in force on high ground. Standing on top of Little Round Top, where Union forces turned the area below them into a killing field, one realizes that Lee cost the Confederacy the war with his blunder.

On July 4, 1863, the day after Lee’s Gettysburg debacle, Vicksburg, Mississippi fell to Union forces commanded by General Ulysses Grant, This victory gave the Union full control of the Mississippi River, effectively splitting the Confederacy into two.

Lee knew his efforts to win the Civil War and preserve slavery were lost, but he kept the carnage going for almost two more years. Even after General Sherman took Atlanta in September of 1864 and Savannah in November, Lee kept the war going.  His soldiers figured this out and the “brave and proud wearers of the Gray” deserted in such droves that even Lee admitted the desertions made it impossible to field an effective army.

Third, another myth about General Lee was his gallantry and honor. Yet, Lee’s chain of command of all Confederate forces included the Rebel prison camp in Andersonville, Georgia.

Robert H. Kellogg, sergeant major in the 16th Regiment Connecticut Volunteers, described his entry as a prisoner into the prison camp, May 2, 1864:

“As we entered the place, a spectacle met our eyes that almost froze our blood with horror, and made our hearts fail within us. Before us were forms that had once been active and erect;—stalwart men, now nothing but mere walking skeletons, covered with filth and vermin. Many of our men, in the heat and intensity of their feeling, exclaimed with earnestness. “Can this be hell?” “God protect us!” and all thought that he alone could bring them out alive from so terrible a place. In the center of the whole was a swamp, occupying about three or four acres of the narrowed limits, and a part of this marshy place had been used by the prisoners as a sink, and excrement covered the ground, the scent arising from which was suffocating. The ground allotted to our ninety was near the edge of this plague-spot, and how we were to live through the warm summer weather in the midst of such fearful surroundings, was more than we cared to think of just then.”

Of the about 45,000 Union prisoners that entered Andersonville, almost 13,000 died. Most died due to disease brought on by starvation and no shelter from the Georgia sun and rain. So much for Confederate gallantry and honor.

While Trump supporters claim that Confederate memories are not being properly honored, it is worthwhile looking back in history to see how other unsuccessful rebellion leaders were treated.

Typically, they were beheaded, their heads were jammed onto a stake and left to rot in public view. Another variation was hanging, again leaving their carcasses to rot in public view. Even in the enlightened 20th Century, 50 years after the Civil War, results were similar. After the British put down the 1916 Easter rebellion in Ireland, they had a one day court-martial for the rebel leaders and executed them the next day.

So, did these Confederate traitors ever deserve statues built-in their honor?  Not hardly. If they had resigned their commissions to fight for a just cause like ending slavery, history might look at them differently. But, to knowingly lead thousands of men to their slaughter in a vain attempt to defend and preserve an unforgivable sin like human servitude, may their souls and statues rot in Hell together.

More than symbolism

As repulsive as it is for black families to go to a public park overshadowed by a statue of a general who sought to keep their ancestors, them and their future generations  in slavery, that’s not what Black Lives Matter and their supporters are focused on. There are bigger issues here for them.

An article in Vanity Fair,  https://www.vanityfair.com/news/2016/07/data-police-racial-bias,  cites 18 academic studies , legal rulings and media investigations chronicalling police brutality to blacks. Two of those studies are summarized below.

A study by a University of California, Davis professor found “evidence of a significant bias in the killing of unarmed black Americans relative to unarmed white Americans, in that the probability of being black, unarmed, and shot by police is about 3.49 times the probability of being white, unarmed, and shot by police on average.” Additionally, the analysis found that “there is no relationship between county-level racial bias in police shootings and crime rates (even race-specific crime rates), meaning that the racial bias observed in police shootings in this data set is not explainable as a response to local-level crime rates.”

An independent analysis of Washington Post data on police killings found that, “when factoring in threat level, black Americans who are fatally shot by police are, in fact, less likely to be posing an imminent lethal threat to the officers at the moment they are killed than white Americans fatally shot by police.” According to one of the report’s authors, “The only thing that was significant in predicting whether someone shot and killed by police was unarmed was whether or not they were black. . . . Crime variables did not matter in terms of predicting whether the person killed was unarmed.”

Further, Department of Justice investigations in Baltimore, Maryland; Ferguson, Missouri and Cleveland, Ohio all found a “pattern and practice” of discrimination against African-Americans that targeted them disproportionately for traffic stops, use of force, and jail sentences.

Yes, there is racism in the United States. Black people have every right to call it out and try to bring about change. Along with them, other minorities, Gays, Transgenders and everyone else threatened by the Trump Administration needs to make their voices heard. Most important, they need to vote.

The enemy

Frugal Ron’s mother often told him while he was growing up that Negroes were all lazy, shiftless and always carried knives to cut up the white people they robbed. Frugal Ron figured because he was much less racist than his parents and his children are even more color blind, that eventually racism would die away. Charlottesburg ended that dream.

Most of the violent Nazi and white supremacists in pictures are young. Hate is reinventing itself. Worse, Donald Trump, because of the office he holds, gives legitimacy to their prejudice and racism.

To the 39% of voters, including the 80% of Republicans ,who still support Donald Trump after his Charlottesburg fiasco, I genuinely offer you my sympathy. You’ve closed your eyes and souls to the beauty and diversity different cultures and religions bring to the United States. Your dark vision of our country  runs completely contrary to reality. Most pointedly, although you love to blame Barack Obama and liberals for all your problems, your miserable bigoted lives are all on you.

Progressive taxation is the concept that the wealthiest among us should pay the most taxes. This makes sense since the rich have the most to gain from a strong national defence to protect their way of life, a strong police force and criminal justice system to protect their wealth and a world-class education system  providing the skilled workers they need to keep their companies growing.

In 2010, some states elected Republican governors and legislators that disagreed with the idea of progressive taxation. These people believed that if their states cut taxes for the rich, that these people would turn around and create more jobs. “Trickle down” for the masses, so to speak. In 2017, Republicans want to apply these tax cuts across the entire U.S. in hopes of creating many more jobs and stimulating the economy.

Republicans like to call states “laboratories for democracy”. Logically, we should look at the data from these laboratories before jettisoning progressive taxation. We should also apply lessons learned by the states.

For this analysis, four states were picked. In addition, United States data is also included and used as a benchmark. California and Kansas are chosen because they took diametrically different directions from 2011 forward in addressing their futures. California implemented the country’s biggest tax increase and Kansas implemented the country’s biggest tax cut. Minnesota and Wisconsin are included because they are adjacent and similar in many ways. However, their elected representatives followed completely different tax policies.

Information on individual taxpayer rates used below are found at http://www.tax-rates.org/. State income tax estimates used below utilize 2016 tax rates. The numbers provide a consistent means of comparison between states.

California

• In 2012, voted to raise taxes on people making over $1 million annually, bringing the top tax rate to 13.3 percent, the highest in the U.S. This means that all income over $1 million for a single person are  taxed at a13.3 percent rate.
• An individual making $30,000 annually or a couple making twice that will pay $594 in state income tax.
• An individual or couple making $1,500,000 annually will pay $175,562 in state income tax
• California’s sales tax rate is 7.5 percent and can be as high as 9.75 percent

Kansas

• The most dedicated adherent to the tax cut philosophy is Kansas Governor Sam Brownback. With the aid of his Republican legislature, he passed huge tax cuts that were signed into law in May, 2012. They were implemented in 2013.
• Brownback promised that state tax revenues would grow and replace the lost revenue from tax cuts. He also predicted a surge in hiring as new businesses moved to Kansas and established businesses flourished and expanded. None of these happened.
• Because of continued tax revenue shortfalls and Kansas burning through their financial reserves, bond rating agencies continually downgraded Kansas’s credit rating.
• Brownback blamed the revenue problems on lower agricultural and oil prices. Numerous studies have shown this is not true.
• Because of tax revenue shortfalls, school funding formulas were changed and some schools simply shut down early when they ran out of money.
• After finding the state with a $900 million budget shortfall, the Republican led Legislature passed veto proof tax revisions in 2017 rolling back earlier tax cuts.
• An individual making $30,000 annually will pay $854 in state income tax.
• An individual making $1,500,000 annually will pay $68,474 in state income tax.
• Kansas’s sales tax is 6.5 percent.

Minnesota

• Minnesota Governor Mark Dayton (D), raised the tax rates in 2011 on singles making over $150,000 annually and couples making over $300,000 to  generate $500 million in extra revenue to fund schools and infrastructure.
• An individual making $30,000 annually will pay $1,065 in state income taxes.
• An individual making $1,500,000 will pay $142,571 in state income taxes.
• Since the tax increases were implemented, Minnesota has had continual budget surpluses.
• Minnesota’s sales tax is 6.875 percent and can be as high as 8.375 percent.

Wisconsin

• According to an April 2017 Brief published by the Public Interest Institute, “Over the course of six years and three biennial budgets, a wide variety of changes to Wisconsin tax laws have generated a total taxpayer savings of $4.756 billion, the LFB [Legislative Fiscal Bureau] estimates.” http://www.limitedgovernment.org/brief24-12.html
• Besides the aforementioned tax cuts, according to the Wisconsin Budget Project, “The Manufacturing and Agriculture Credit, which lawmakers passed in 2011, nearly wipes out income taxes for manufacturers and agricultural producers — at a very steep price. The tax credit reduces state income tax revenues by $284 million a year in fiscal year 2017 and in subsequent years.” The Manufacturing and Agriculture Credit (MAC) provides tax credits to companies and individuals that purchase eligible equipment. The average tax credit for individuals with annual incomes over $1 million is $27,632. A very small percentage of these tax credits went to agricultural producers with manufacturers receiving the great majority.
• Wisconsin Governor Scott Walker (R) proclaimed that between lowering taxes and “getting government out of the way of employers, who will then help Wisconsin create 250,000 jobs by 2015, and as we create those new jobs, we will be able to add 10,000 new businesses.” As of December 2016, the latest period data  is available, Wisconsin has still not added the 250,000 jobs Walker promised.
• An individual making $30,000 annually will pay $927 in state income taxes.
• An individual making $1,500,000 will pay $110,266 in state income taxes.
• Wisconsin’s sales tax rate is 5.5 percent and can be as high as 6.0 percent.

The results

All of the above states elected new governors in 2010 and began implementing new policies in 2011 when they assumed office. Because of this, the following analysis compares performance to 2010, the year before they took office. Three measures are used to analyze what has happened in the above states. Job growth, measured using the Quarterly Census of Employment and Wages compiled by the Bureau of Economic Analysis, is the most accurate measure of full-time jobs added to the economy.

A second measure is the change in wages, again using the very accurate Quarterly Census of Employment and Wages. The third measure is Gross Domestic Product, which analyzes total economic output.

Frugal Ron acknowledges some  shortcomings in this analysis. The period being studied is short. Added to that, the 2016 data is marked “Preliminary”. Rather than trying to measure correlations and determine statistical significance, consider this an observational study and look at trends.

Job Growth

Figure 1

Many factors impact job growth in a state. Figure 1 tells us in no uncertain terms that lowering taxes DOES NOT positively outweigh those other factors.

California, with its mega tax increases and in spite of previously being a high tax state is pulling away from the rest of the country insofar as adding jobs is concerned. Minnesota, the maroon line,  is almost perfectly aligned with the U.S job growth.

The states that sacrificed their education systems, their roads and infrastructure for the holy grail of having low taxes for the rich have the poorest job gains to show for it. While the differences between Minnesota and Wisconsin are relatively small (compared to Kansas and California), the difference is widening. There is no evidence that the rich, after getting their taxes cut,  turn around and create jobs.

Figure 2

Figure 2 illustrates Kansas’s problem dramatically. While Figure 1 is cumulative , Figure 2  illustrates how the wheels are falling off the bus in Kansas and highlights why the Republican led Legislature had to step in with some fiscal discipline.

People want their children to have a better life than they have. The secret to attaining this goal is education. When schools are in as much trouble as the ones in Kansas are, their students will have trouble competing in a global economy. this is not the environment that draws companies to relocate or expand in Kansas.

Wages

Figure 3

The Wage graph shows many of the same trends one sees in Figure 1. California and Kansas are widely separated. Minnesota is outpacing Wisconsin again.  One of the interesting takeaways from this graph are how closely the states and the U.S. average were in 2014 and how dramatically they have separated as their divergent tax policies take affect. Over the last two years, the gap has widened considerably with the states that invested in their schools taking a big lead.

Both California and Minnesota went out of their ways to tax rich people at high rates, yet their average wage increases are outstripping Wisconsin and especially Kansas. Clearly, companies that pay high wages have not flocked to Kansas and Wisconsin. Even though someone making over $1.5 million annually could save over $10,000 by moving to Kansas, this isn’t enough enticement to get them to actually do it.

Gross Domestic Product (GDP)

Figure 4

GDP is a big picture look at an economy. If our Congress and president had any common sense at all, they would be copying California’s progressive tax and spending policies instead of Kansas’s.

Frugal Ron has reached the breaking point of hearing Republicans complain about President Obama’s economic policies and results while in the same breath lauding Wisconsin Governor Scott Walker policies. Pay attention to results people! If Walker’s policies worked, shouldn’t Wisconsin’s redline in the above three graphs be far above the U.S.’s black line?

Logic and Republicans

Kansas and Wisconsin made tax cuts benefiting businesses and high income individuals. Clearly they did not work. The degree of failure was proportional to the level of tax cuts each state made. Governors in both  states made unrealistic promises that raised expectations and actually magnified their failures.

Without a doubt, there is no logical reason to pursue tax cuts nationally with any expectation that they will better the lives of anyone but the rich. Adding in the recent experience of President Bill Clinton raising taxes on the wealthy, balancing the federal budget and bringing on the greatest and longest economic growth in our history with President George W. Bush and his tax cuts and resulting deficit bringing about the worst economic downturn since the Great Depression and all we can do is shake our heads in disbelief at Republican attempts to repeat their disasters.

Yet,  this madness of ignoring data and logic are Republican trademarks. From ignoring the impact of fossil fuels on climate change to ignoring data on increasing birth control access’ impact on lowering abortion numbers, Republicans rejoice in their blissful ignorance.  In their protective group think cocoon, anyone explaining the science of carbon dating is part of the attack on Christianity. Republicans may not be stupid but that doesn’t stop them from acting that way.

It is time to make some fact based decisions about drugs. The War On Drugs is every bit the failure Prohibition was. Want some heroin? If you live in a rural or urban setting, it is available. That brings us to the five reasons we need to rethink our strategy on illegal drugs,

• Hypocrisy runs rampant in the selection of which drugs are illegal.
• Everything we thought we knew about addiction has been turned upside down.
• The War On Drugs created an economic system where African-Americans especially are incentivized into becoming criminals.
• Sentencing disparities contribute to the breakdown of black families and to distrust of our criminal justice system.
• And last but certainly not least, the US’s insatiable appetite for illicit drugs and our War On Drugs has killed thousands, devastated economies and destabilized the justice system in Mexico and other Central American countries.

It is time to admit a costly mistake and move on.

Dangerous drugs, there is some confusion here…

Cocaine usage was blamed for about 6,500 deaths in 2015 according to National Institute for Health data. Cocaine is illegal in all 50 states.

The Center for Disease Control estimates that excessive alcohol use is responsible for 88,000 deaths in the US each year, shortening the lives of those who died by an average of 30 years. Further, excessive drinking was responsible for 1 in 10 deaths of adults aged 20-64 years. Alcohol is legal in all 50 states.

According to the US Drug Enforcement Administration drug sheet, no deaths from marijuana overdose have ever been recorded. This could be because the lethal dose for marijuana is 1,000 times higher than the effective dose, or the dose required to have a noticeable effect.  In contrast, alcohol can become lethal at only 10 times the effective dose. Marijuana is legal in only a handful of states.

According to the Center for Disease Control, cigarette smoking causes about one in five deaths in the US annually. Tobacco causes more than 480,000 deaths annually in the US (including deaths from secondhand smoke). Tobacco is legal in all 50 states.

The National Institute for Health estimates the number of deaths from heroin overdoses at over 12,000 annually. This is a 6.2 fold increase from 2002 to 2015. Heroin is illegal in all states.

The National Institute for Health also estimates that almost 18,000  US citizens died in 2015 from Prescription Opioid Painkillers. These painkillers (with a prescription) are legal in all 50 states.

Methamphetamine, also known as Meth,  is responsible for 19,500 deaths per year in the US. Meth is illegal in all 50 states.

Most addictive?

Duffy’s NAPA Valley Rehab is a drug rehabilitation center in north central California. They have put together a ranking of the ten most addictive drugs along with a dependency ranking. http://www.duffysrehab.com/blog/articles/10-most-addictive-drugs-in-the-world/

Drug                                       Dependency Ranking

1. Heroin                                   2.89
2. Crack cocaine                   2.82
3. Nicotine                               2.82
4. Methadone                         2.68
5. Methamphetamine        2.24
6. Alcohol                                  2.13
7. Cocaine                                 2.13
8. Amphetamines                 1.82
9. Benzodiazepines              1.89
10. GHB (Designer drugs)   1.71

If you are looking for marijuana, you won’t find it on the above list. Also, nicotine and crack cocaine are tied with the second highest Dependence Rankings. Alcohol and cocaine are also tied in sixth place.

Many people perceive heroin having an almost unbreakable dependency. This is not correct. During the late part of the US’s ill-fated involvement in Vietnam,  soldiers deployed in Vietnam accessed extremely high-grade heroin at a very low price. Consequently, we brought thousands of heroin addicts back to the US. in the late 1970’s.  There were all sorts of dire predictions of rampant heroin addiction in the US. Fortunately, it just didn’t happen.

An economics professor I had used the concept of “mutual exclusivity” to explain what transpired. In this case, it is almost impossible to be a heroin addict while holding a job and caring for a family. Mutual exclusivity means something has to go, either the heroin or having a job and family. For the majority of these returning soldiers, it was the heroin that went.

Addictive personalities and non-randomness

Many people believe we need to keep illicit drugs illegal because if a person tries a drug like heroin, they will immediately become addicted. This simply isn’t true!

There is a predisposition to being addicted and this includes people with addictive personalities. According to studies, about 10-15% of the population falls into this category. The difference between those with addictive personalities and the rest of the population is the difference between abusing and using.

While most of the population can enjoy a drink now and again, someone with an addictive personality will want to enjoy 10 or more drinks. Many people  enjoy going to church once a week. Someone with an addictive personality will want to go every day. And, while most people can enjoy cocaine on an occasional basis, someone with an addictive personality will need it every day.

Getting back to the War On Drugs, someone with an addictive personality will go to any lengths and pay almost any price to feed their addiction. Trying to make drugs more difficult to obtain by imposing longer prison sentences on sellers and stepping up border enforcement are a waste of time. Much more cost-effective to treat the individual addictions.

It is also important to recognize that having an addictive personality is not random in the population. People in the lowest income brackets (who can least afford it), are almost three times more likely to be cocaine or marijuana addicts than those in the highest brackets. Although not as dramatic, they are also much more likely to be addicted to nicotine and alcohol.

This also begs the question, are these people poor because of their addictions or are they addicted because of their economic state? For the majority, drugs are a way to escape their reality. According to  Stanton Peele, Seven Tools to Beat Addiction (2004), “Addiction is an intense involvement people fall into for solace when they cannot find better gratifications in the rest of their lives.”

Besides socio-economic status, some other predictors of addictive personality are youth, lower intelligence, mental health issues, pathological gambling and  compulsive sexual behavior. Again, the point to re-emphasize is that a person that tries cocaine has roughly the same chance of addiction as if they tried alcohol. The determinant of their reaction is if they have an addictive personality.  http://suburra.com/blog/2011/10/05/addictive-personality/

Perverse economic stimulants create drug dealers

Imagine yourself as a poor African-American kid living in a run down, segregated neighborhood.  While many white kids at your school started out way ahead of you because their parents made the time to read to them at early ages and provided them with a range of travel and activities. In other words, school has never been easy for you.

Now, in middle school, you have two different alternatives for your life. One alternative is to escape the ghetto and become a teacher. You’ll work harder than you ever dreamed at school to turn your grades around. Consequently, you’ll probably be abandoned by your friends for acting white. If you actually graduate from high school, get accepted at a college and manage to survive all the forms to get financial aid, you’ll more than likely move from the only world you’ve ever known into a white college town.  If you beat the odds (again) and  graduate from college, you’ll maybe make $35,000 a year and pay taxes on that.

Or, you can say screw it to school, start selling drugs now, dropout at 16 and become a full-time drug dealer.  You’ll make more money in a week than the teacher makes all year. Move up the hierarchy and you have unlimited earnings. Flashy cars, cool clothes, sex and prestige, all there for the taking.

These are the perverse incentives the War On Drugs created. Throw one kid in jail or kill another one in a shootout and you have a dozen more minority kids without other great choices wanting to take their places.  In areas with little hope, the opportunity to make unlimited money in a discrimination free industry stifles incentive to succeed legally.

The color of justice

The U.S. has the highest incarceration rate in the world, dwarfing the rate of nearly every other nation, according to the International Centre for Prison Studies.  Many of these inmates are in jail because of drug crimes.  A study published in The Journal of Law and Economics, vol. XLIV (April 2001), authored by David B. Mustard at the University of Georgia found, “An individual sentenced in the same district court, who commits the same offense, and has the same criminal history and offense level as another person receives a different sentence on the basis of race, ethnicity, or gender. The percentage difference is greatest for those convicted of drug trafficking, where blacks are assigned sentences 13.7 percent longer than whites.”

Longer drug sentences for blacks undermines faith in our criminal justice system. This is another byproduct of the War On Drugs.

Far more important, drug laws remove the most ambitious black men from their communities. This has a severe destabilizing impact on their families and communities.

Undermine other governments

The US’s insatiable demand for drugs internationalizes our War On Drugs. Mexico’s War On Drugs, waged at our behest, has resulted in over 160,000 deaths and about a 19% drop in their GDP. It has almost completely eliminated Mexicans faith in the integrity of their criminal justice system.

One of the most basic human rights is safety, If Mexican families can’t feel safe in their homes, they will leave and guess where they are going to go?  We will never be able to build a wall high enough or thick enough to keep them out. If the US wants a secure border with Mexico, the best thing we can do is to legalize all illicit drugs and make Mexico a safer place to live.

Summing-up

There is also a philosophical argument for legalizing drugs. Those of us who are true conservatives believe in laissez-faire, which simply means that if what you are doing doesn’t adversely affect anyone else, government has no right to regulate your activities.

So, if you and your partner want to use cocaine at a local nightspot, that should be your right. However, there are limitations. If your senses are altered by the cocaine and you decide to drive home, you have now become a danger to everybody else on or near the roadways you intend to use. That is a problem.

The differentiation is pretty simple. Use whatever drug you want, don’t bother anyone else and that is just fine. Endanger the safety of others and expect the full force of the law applied to you.

While the United States suffers through one of the darkest leadership crises in our history, the chance for meaningful drug law reforms on the federal level are non-existent. However, it is time to start meaningful discussion, ask tough questions and educate ourselves.

While rational people celebrate the Republican failure to replace Obamacare, it is worth a trip back in time when Frugal Ron got it right and accurately predicted the mess Republicans would have replacing the Affordable Care Act (ACA).

In 2015, the U.S. Supreme Court was preparing to rule on the constitutionality of the ACA. If the Court had struck down Obamacare, Republicans who controlled both the House and Senate, would have been forced to come up with a replacement. On March 14, 2015, Frugal Ron published “The Supreme Court and Obamacare”. Some quotes from this prescient article predicted what would happen if Republicans had to re-write a health care law instead of just complaining …“Republicans seem under the illusion the Affordable Care Act will simply go away. We’ll go back to pre Obamacare and all will be well with the world. Unfortunately, this scenario is naïve at best and blatantly stupid at worst .”

“The insurance industry won’t allow efforts to re-engineer the Affordable Care Act without the insurance mandate. The insurance mandate is the requirement that everyone must have health insurance or they will have a penalty fee added to their taxes.  One Obamacare criticism is that not enough people have signed up to keep the system solvent. Take away or weaken the health insurance mandate and the problem is exasperated. Under intense time pressure from all directions, Republicans would be forced to re-write the Affordable Care Act to include the federal exchanges and with no other substantive changes.” Or, as happened recently, simply leave Obamacare in place.

What happened?

The Republican plan to replace Obamacare unravelled for a number of reasons. Even many Trump supporters figured out their health insurance costs were going up dramatically without the ACA subsidies. Furthermore, the subsidies were immediate relief where with the Republican plan, they would have to wait a year to get the tax credits.

Ultimately, the argument boiled down to how this was going to affect the middle class and the working poor. The Congressional Budget Office projections found that the Republican’s American Health Care Act  would dramatically increase individual’s health insurance costs while lowering federal spending minimally.  Frugal Ron  hit another home run in October, 2013 with “A True Conservative’s endorsement of Obamacare”.

“Without Obamacare, costs borne by people with health insurance will become more onerous. For individuals, the logical decision for a young, healthy person is to not buy health insurance. Odds are, they won’t need to use it. If something catastrophic happens, they’ll get treatment and if worse comes to worse, they’ll declare bankruptcy. This raises insurance premiums even higher and the next year more healthy young people opt to take their chances without health insurance.”

“How big a problem is this? An Employment Policies Institute study found 43% of the uninsured – about 20 million people – earn more than 2.5 times the federal poverty level, or $55,125 for a family of four. The authors – who include June O’Neill, the GOP-appointed head of the Congressional Budget Office from 1995 to 1999 – write “because most people at that income level are able to get insurance, (they) thus may be classified as ‘voluntarily’ uninsured.””

What Frugal Ron missed

While Frugal Ron basks in the sunlight of his accurate prediction about the nightmare Republicans would have if it ever came to replacing Obamacare, he gets a heavy dose of humility for predicting a Republican Congress would give Trump everything he wanted.

In an August 1, 2016 posting titled “A Donald Trump Presidency”, Frugal Ron wrote, “If Trump wins the presidency, it is logical to assume Republicans will maintain control of the House and Senate. Because of his electoral mandate, Congress will give him pretty much of what he demands.”

Thankfully, enough Republican Congressmen are showing resolve, independence and some common sense to wreck Trump’s agenda. The cause is certainly aided by the ultra right-wing Freedom Caucus, who seem to hate anything that helps U.S. citizens lead more productive and enjoyable lives.

For many elected Republicans, the bottom line was simply job survival. Women’s’ marches of hundreds of thousands and belligerent town hall meetings where Republican members of Congress had to do the impossible of defending their American Health Care Act all contributed to the bill’s downfall. It certainly didn’t help the Republican cause that according to a Quinnipiac University poll, only 17 percent of voters wanted Obamacare replaced. https://poll.qu.edu/national/release-detail?ReleaseID=2443. In another poll by Hart Research, 68 percent of respondents wanted to keep what works of Obamacare and fix the rest.

What next?

President Donald Trump predicts, “ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!” Hopefully, President Trump will hold his breath waiting for the Obamacare explosion.

The Congressional Budget Office and the Kaiser Family Foundation (KFF) are considered the most accurate sources of unbiased health cost information. The Congressional Budget Office projected that Annual Average Benchmark Premiums would be $5,200 in 2016. The KFF estimates the average annual premium in 2016 was $4,583. http://kff.org/health-reform/perspective/how-aca-marketplace-premiums-measure-up-to-expectations/  This is important because  if Obamacare is to meet its goal of having no effect on the federal budget (compared to before the law’s enactment), average premiums need to be at or below the Congressional Budget Office’s  projection.

While the The Affordable Care Act has successfully kept health care cost increases low, it is flawed.  It is too easy for citizens to either pay a tax penalty or claim an exemption to avoid buying insurance. There are 14 different exemptions enabling people to  avoid buying insurance. In addition, the tax penalty for not buying health insurance is too low. This results in 20 million US citizens without health care insurance. Both of these problems need a fix to maintain a large pool of insured healthy people.

The weak mandate requiring everyone have approved health insurance drives up the cost of insurance dramatically in thin, mostly rural, markets. Right wing Republicans argue that by removing the mandate completely,  that costs will go down. This is completely illogical.

Summing-up, Frugal Ron got it right, Republicans didn’t

After seven years of listening to Rep.(R) Paul Ryan and other Republicans complaining about the Affordable Care Act, it is fun watching them twist in the wind while trying to  put together a replacement bill. They claim to be on the verge of passing a  bill in the House. But even if they do this,  it will experience a quick death in the Senate.

Republicans can’t seem to escape their dogma. Never before has a party with the presidency and solid majorities in the House and Senate blundered so badly and accomplished so little in their first 100 days in office.

No wonder they are such failures. Trump and his minions try to end extremely popular veteran and elderly programs along with Obamacare. Republicans try to use the savings to fund tax cuts for the rich, build walls and enact Executive Orders to cut off the lifeblood of our economic growth (immigrants) and enact out of control defense spending increases. Past administrations blamed gridlock on opposing parties controlling Congress. Donald Trump and Republicans only have their own incompetence to blame for their lack of accomplishment.