Archive

February 8th, 2017

Hey, Republicans - where's the deficit dudgeon?

    Republicans finally control Washington and are licking their chops about what they can achieve: tax cuts, ending regulations, a stronger defense.

    But they are strangely silent on a centerpiece of their policy rhetoric during Barack Obama's presidency: federal budget deficits.

    Consider the dire warnings they sounded before their man made it to the White House on campaign promises of lower taxes and big spending programs. Senate Republican Leader Mitch McConnell liked to say that deficits are so dangerous that tax reform had to be "revenue neutral." House Speaker Paul Ryan trotted out plans to balance the federal budget in 10 years. Texas Senator Ted Cruz thundered that the government, like the ordinary American family, has to stop living on credit.

    Here are three predictions to bank on even in today's crazy-quilt political world: 1) If Congress passes a tax reform plan, it not only won't be revenue neutral, it will lose trillions; 2) The budget won't be balanced in 10 years, and 3) The government, like many Americans, will keep using its credit card.

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Cancel dinner plans and send 'nerd prom' to the history books

    Once merely embarrassing and ridiculous, the annual White House correspondents' dinner is poised to tip over into journalistic self-abasement.

    It's time to stick a silver-plated fork in it.

    The so-called nerd prom is a glitzy party - now a week-long blitz of related parties - in which Washington, Hollywood and New York media types schmooze it up with the public officials that some of them are supposed to cover, while looking over their shoulders to see whether Helen Mirren is really looking as fabulous as everyone says.

    "The main purpose of the evening," John Oliver once said, "seems to be providing photos of glamorous celebrities completely unaware of who they're standing next to."

    The dinner has long been criticized for its cringe-inducing "optics" - as journalists cozy up to celebrities and heartily applaud politicians, usually including the president.

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AME bishops sound a battle cry against the Trump administration

    Has anything like this ever occurred with a newly elected president? Less than two weeks after Donald Trump's inauguration, the Council of Bishops of the African Methodist Episcopal Church, "the first protestant denomination formed on American soil," has called upon its more than 1 million members in 39 countries, including the United States, to do all they can to see that a host of decisions and actions by the Trump administration, described by the bishops as "clearly demonic acts," "do not last." The bishops are calling for concerted grass-roots action, including bringing pressure on Congress.

    In a Jan. 31 Episcopal Statement, the bishops said that they didn't come to their decision quickly. They watched with dismay, they said, as presidential candidate Trump showed insensitivity and callous disregard for the rights and well-being of countless Americans. They were troubled to see him go around the country expressing views and policy positions that threatened to divide and polarize the nation.

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Trump's very brief crusade to lower drug prices

    Amid all the kerfuffle in the past week over immigration bans, the Supreme Court, Iran and Arnold Schwarzenegger's TV ratings, little attention was paid to an extraordinary meeting at the White House at which President Donald Trump reneged on a campaign promise and sold out millions of "forgotten" Americans to giant drug companies.

    It was almost exactly a year ago that Trump, campaigning in New Hampshire, said it was crazy that the federal government, effectively the world's largest buyer of prescription drugs, was not allowed to negotiate directly with the drug companies to get lower prices, boasting that he could save taxpayers $300 billion a year on Medicare "on Day One."

    At a news conference the week before his inauguration, Trump doubled down on his promise to reduce prices, declaring that drug companies were "getting away with murder." And on Tuesday, he summoned drug company chief executives to the White House to do to them what he had done to carmakers and aerospace executives, shaming them into creating jobs and lowering prices.

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Free Melania — From Our Expectations

    Now, stacked on the Trump tower of petrifying things we have to worry about — war with Iran, war with China, war with Mexico, war with Islam, war with koala bears — there is yet another looming disaster.

    The East Wing is perilously behind in planning for the Easter Egg Roll. Is the White House dropping the ball — or rather, the ovoid?

    As our omnipresent new president hijacked our reality, the first lady vanished, sparking headlines for nary a glimpse in D.C. since the inaugural.

    Just as there is a gush of leaks from the resistance in the federal government about President Donald Trump’s erratic and impulsive behavior, there are whispers about Melania’s elusive and sphinx-like behavior.

    The New York Times’ Julie Hirschfeld Davis wrote about the anguish of anonymous D.C. sources who fear the annual egg roll and other “elaborate White House events that are among the heaviest tasks for first ladies” are languishing in the deserted East Wing, as are unanswered requests for White House tours.

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Canada, Leading the Free World

    President Donald Trump’s harsh travel ban reflects a global pattern: All around the world, countries are slamming the doors shut.

    One great exception: Canada. It may now be the finest example of the values of the Statue of Liberty.

    This isn’t just because Canadian leaders are particularly enlightened, although there’s some of that. It’s mostly because the Canadian people themselves remain astonishingly hospitable, with many groups clamoring for more Syrian refugees.

    “Thank you, Canada,” Omar al-Omar, a Syrian who was shot at age 15 as the war started, said to me at a center here where refugees are getting lessons in English and in Canadian habits, such as excruciating politeness. “I’m very happy. I feel welcome.”

    “I’m sad Arab countries aren’t doing enough for refugees,” Omar added. “I’m really happy Canada does what others don’t.”

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You won't believe what's driving the economy

    Do humans act largely rationally, or can stories and rumors throw an entire economy off course? Lately, economists are increasingly recognizing that narratives matter.

    In the early 1920s, the U.S. suffered a brutally sharp economic contraction, in which inflation turned rapidly to deflation and stock price-to-earnings ratios dropped to 50-year lows. The economists Milton Friedman and Anna Schwartz, in their book "Monetary History of the United States," blamed an inexperienced Federal Reserve, which had abruptly increased its discount rate by 1 percentage point.

    In a recent speech, Yale University economist Robert Shiller offered a different explanation. Rumors were circulating that the Communist revolution in Russia would soon spread to America, and newspapers were warning that the profiteering associated with World War I would soon give way to a decline in prices. It's thus plausible, Shiller argues, that these and other narratives spread economic uncertainty, discouraging consumer spending and business investment.

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Wisdom of the crowd and madness of the masses

    Social scientists have always been fascinated by crowds. From guessing the weight of a cow to identifying which company built the faulty part in the space shuttle Challenger disaster, the many have often been able to outguess the expert few. Crowd wisdom is often cited as the justification for the idea of efficient asset markets -- many investors, each weighing in with their buying and selling decisions, should combine to produce the optimal forecast of what a stock or a bond is really worth. Or so the story goes.

    But there's danger in relying on crowds to make decisions. Under certain circumstances, group wisdom can break down and become madness. A classic example of this is when Reddit users tried to identify the Boston Marathon bomber, and ended up accusing the wrong guy. Many believe that asset-market bubbles are also examples of crowds gone mad.

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Why do so many Americans believe that Islam is a political ideology, not a religion?

    For many Americans, last week's executive order on immigration was a clear case of religious discrimination since it singles out Muslim-majority countries and gives preferential treatment to non-Muslim refugees from those countries.

    The implication seems to be that, in keeping with President Donald Trump's campaign promises, the United States will sort people at the border based on faith.

    For other Americans, the executive order might not seem like a case of religious discrimination - not because the policy doesn't differentiate between Muslims and non-Muslims, but because they are skeptical that Islam is actually a religion at all.

    Google Islam, religion and politics, and it's easy to find websites like PoliticalIslam.com, which claims to use "statistical methods" to prove that "Islam is far more of a political system than a religion."

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We're about to find out if businesses are waking up to the dangers of Trump

    I did an interview with Adi Ignatius, the editor of the Harvard Business Review, where I got a chance to spell out my views on the role of business leaders in influencing public policy. It is a complex issue given CEO's obligations to their shareholders, desires to be effective, fears of retaliation and much else.

    Just before the inauguration I expressed strongly the fear that American business leaders in Davos were legitimating the excessively problematic policy approaches of the new president.

    Events since the inauguration have confirmed my fears. Policy has gone further in threatening an open global system and provoking key partners than I expected. It has undercut Statue of Liberty values and the rule of law more than I anticipated. Especially in foreign policy, words are deeds. It takes decades for a nation to build credibility and trust that can be sacrificed in a matter of hours.

    There are signs that quite a few business leaders are waking up to the dangers to their companies inherent in current trends. So maybe the business community, whose approval the administration craves, will start to pressure the administration rather than simply cheering on tax cuts and deregulation.

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