Bringing Your Kid to Work Has Its Risks

The first televised Presidential debates between Richard Nixon and John F. Kennedy have been analyzed extensively by historians, and the consensus seems to be

that people who listened to the radio were more likely to vote for Nixon while people who watched the debates on television were more likely to vote for Kennedy. One of the explanations to this phenomena was presidential candidates physical appearances during the debates with Kennedy appearing better on television than Nixon.

As further proof that video is more impactful than audio, watch Rep. John Rose' (R-TN) speech on the House floor with his six-year-old son Guy seated behind him. Mute the sound in order to appreciate more fully why Guy dominated the show.

A child on the House floor while @repjohnrose delivers remarks. pic.twitter.com/HeNY5nNNEI

— CSPAN (@cspan) June 3, 2024

The Academy Oversteps and Begins to Pay the Price

Bill Ackman, 57, is a hedge-fund billionaire who made his fortune by taking unconventional short and long positions.

He always gives interesting business-related interviews on CNBC, and that, frankly, was the extent of my knowledge about him.

Until he took issue with the December 5th performance of Harvard then-President Claudine Gay before Congress on the subject of anti-semitism and free speech at Harvard, his alma mater.

The scales had fallen from his eyes:

Twenty-four hours after Hamas attacked Israel, Mr. Ackman “saw students supporting terrorists—Harvard students, no less.” With astonishment that hardened into outrage, Mr. Ackman witnessed 34 student groups at his alma mater “come out to say that Israel is solely responsible for the most heinous acts we’ve seen in modern history.”

Harvard wasn’t the only American campus where students railed against Israel and at Jewish classmates. But Harvard was the place to which Mr. Ackman, an “absolutely loyal alum in all respects,” had given $50 million over the years. “I lecture at the university multiple times a year,” he says, adding that he’s on the dean’s advisory board. Observing the protests, and the Harvard administration’s refusal to curb them, he mounted a mutiny of donors, calling on them to help drive Harvard’s president, Claudine Gay, from her job. He feared that her continued presence at the helm would lead angry donors to stop giving. “I am personally aware of more than a billion dollars of terminated donations from a small group of Harvard’s most generous Jewish and non-Jewish alumni,” he wrote on Dec. 10.

Ms. Gay’s resignation on Jan. 2 was a result of her maladministration as well as of convincing accusations of plagiarism in her academic writings.

After reviewing Claudine Gay's, as well as MIT President Sally Kornbluth's and Penn President Liz Magill's, testimony before Congress, Mr. Ackman came to believe that their tepid response to student groups' calls for genocide against Jews was attributable to the DEI (diversity, equity, and inclusion) practices that have pervaded campuses nationwide. On January 2nd he tweeted: [bold added]

Under DEI, one’s degree of oppression is determined based upon where one resides on a so-called intersectional pyramid of oppression where whites, Jews, and Asians are deemed oppressors, and a subset of people of color, LGBTQ people, and/or women are deemed to be oppressed. Under this ideology which is the philosophical underpinning of DEI as advanced by Ibram X. Kendi and others, one is either an anti-racist or a racist. There is no such thing as being “not racist.”

Under DEI’s ideology, any policy, program, educational system, economic system, grading system, admission policy, (and even climate change due its disparate impact on geographies and the people that live there), etc. that leads to unequal outcomes among people of different skin colors is deemed racist.

As a result, according to DEI, capitalism is racist, Advanced Placement exams are racist, IQ tests are racist, corporations are racist, or in other words, any merit-based program, system, or organization which has or generates outcomes for different races that are at variance with the proportion these different races represent in the population at large is by definition racist under DEI’s ideology.

In order to be deemed anti-racist, one must personally take action to reverse any unequal outcomes in society. The DEI movement, which has permeated many universities, corporations, and state, local and federal governments, is designed to be the anti-racist engine to transform society from its currently structurally racist state to an anti-racist one.

Claudine Gay's resignation on January 2nd was only the first battle in what may well turn out to be a long cultural war between wokeness and traditional values. Claudine Gay not only was criticized for her actions as Harvard President but for alleged instances of plagiarism on her scholarly work.

Neri Oxman (WSJ photo)

The Business Insider then accused Bill Ackman's wife, Neri Oxman, for plagiarism on her 2010 doctoral dissertation at MIT. Ms. Oxman apologized.

Bill Ackman, convinced that the source of the Business Insider report was someone(s) at MIT, vowed to develop AI tools to examine a broad swath of MIT dissertations and publications for plagiarism.

Circling back to the three-presidents testimony before Congress on December 5th, MIT President Kornbluth is the only one of the three who still holds office, Penn's Liz Magill having resigned on December 9th. It would be surprising if she lasts out the year.

After the break is the text of Bill Ackman's January 2nd tweet.


 

There's a New Villain in Town

Gahan Wilson's character===>Matt Gaetz?

The removal of Kevin McCarthy as Speaker of the House has caused universal opprobrium to fall upon the head of Matt Gaetz (R-FL). Although his politics are anathema to them, Democrats gleefully went along with Mr. McCarthy's ouster by the eight Gaetz-led Republicans, and most Republicans denounced the action. Republican operative Karl Rove's reaction was typical: [bold added]

The Floridian is an egotistical nihilist. He wants to burn things down, including the party to which he belongs, so that he gets more attention. He has no governing vision. He denies the reality of what’s possible with a bare GOP margin in the House and Democratic control of the Senate and White House. Mr. Gaetz is all about himself, focusing on cable-TV appearances, social-media posts, and urgent email appeals for campaign funds in one of the safest Republican districts.

He and the rest of his gang are parasites. Though some required millions from House GOP coffers to get elected, none have raised much of anything for the party’s effort to keep the majority. Now they’ve helped defenestrate its most effective congressional fundraiser. It’s all about them, not the team. And oh yes, Mr. Gaetz is fundraising off the vote, saying the rest of House Republicans are “RINOs” who “grovel and bend the knee for the lobbyists and special interests.”

It’s evident Mr. Gaetz had no plan except to remove Mr. McCarthy and acted on no discernible principle. He tried to hide his contempt for Mr. McCarthy behind supposedly substantive objections to his speakership, but they don’t hold water. Mr. Gaetz is no spending purist—he didn’t go on a jihad against President Trump when he added $6.7 trillion to the national debt.

Karl Rove has never described any Democrat with such vitriol, which is understandable since Matt Gaetz' actions may well cause Republicans to lose the House in 2024.

I'm reserving judgment on Matt Gaetz, however.
1) Anyone who is so disliked by everyone must have something going for himself.
2) It's highly doubtful that the House is indeed "in chaos" if everyone has been told to go home for the weekend to think about their next move.
3) Is Matt Gaetz, 41, really like a naive teenager who demolishes something without a vision for the aftermath? Is he that stupid? (Could be.)
4) OTOH, the House of Representatives' main focus, regardless of who leads it, since 2017 seems to be the impeachment of the President of the opposite party, when everyone knows with 100% certainty that the impeachments will go nowhere in the Senate.

Let's wait and see.

Justice Breyer to Retire

(WSJ photo)

Justice Stephen Breyer will retire, according to NBC News:

Justice Stephen Breyer will step down from the Supreme Court at the end of the current term, according to people familiar with his thinking...

Biden promised on the campaign trail to nominate a Black woman to the court. In the wake of Breyer’s announcement, there was an outpouring of statements calling for him to follow through.

The progressive group Demand Justice hired a truck last year to drive around Washington with the sign: "Breyer Retire. It’s time for a Black woman Supreme Court justice."

Justice Breyer, 83, has yet to make an official announcement.

The current SC term ends in late June or early July.

Although only a simple majority in the Senate is necessary to confirm a future nominee, the Democrats won't have any room for error. Digging through a nominee's personal life back to her high school days is now an acceptable practice, and any behavioral or verbal misstep will be grist for the hearings. Depending on what turns up, Senators may have difficulty justifying their vote to their constituents, especially if they're up for re-election in 2022.

In any case, replacing a Supreme Court nominee increases the likelihood of nothing important getting through Congress in 2022.

Peggy Noonan: What Democrats Ought to Do

(WSJ graphic)

WSJ columnist Peggy Noonan starts with the pandemic, segues to economics, and finishes (where else?) with politics. She imagines what an idealized Democratic politician would say (in other columns she role-plays Republicans):

in what really would have been the most consequential political statement of 2021—did anybody stand up and say,

“My friends, big ambition is admirable but we don’t have the margins. We don’t have FDR’s House and Senate, our control is razor thin. The path for us is easy does it, day by day, smaller bills and plenty of outreach to Republicans, whose increasingly populist base doesn’t mind spending as long as it doesn’t seem insane.

The progressives won’t like it, the Squad will hate it, but we can use them as a foil, as a useful illustration of what we’re not. We’ll use their criticism to underscore our centrism. We don’t need them. All we need to be popular is

a) not to be Donald Trump,

b) to provide steady leadership that delivers modest but regular improvements, and

c) to do this in a way that leaves people saying, ‘My God, someone made Washington work again.’ That’s the path.”

Did anyone inside say that?

Is there still time to change tack?

Peggy Noonan is asking if President Biden, Speaker Pelosi, or any grey eminences of the Democratic Party will admit their mistakes, moderate their rhetoric and policies, and possibly avoid losses in the mid-term elections. Such an admission would require strength of character, and based on what we have seen so far, I would not bet on a 2022 outcome different from what the prognosticators have stated.

Character is destiny.

Gooder and Harder

Unfortunately for Republicans, land area
does not translate into political power
(graphic from San Joaquin Valley Sun)

The 2020 census reduced the number of California representatives in Washington from 53 to 52. The redistricting process has resulted in the Democrats gaining one seat while the Republicans will lose two. [bold added]

Overall, outside experts analyze the map as favorable to Democrats. Several swing Democratic seats now lean more left, based on voting data, including the one represented by Rep. Josh Harder, D-Turlock (Stanislaus County), whose district shifted several times over the weeks of drawing as the commission grappled with how to draw San Joaquin County. Many close Republican-held seats also will swing left, including those of Reps. David Valadao of Hanford (Kings County) and Mike Garcia of Santa Clarita (Los Angeles County). Redistricting expert Paul Mitchell predicts the map favors 43 Democrats and nine Republicans. The current split is 42-11.

Of course, in the one-party State, the same Democratic dominance is reflected at the State and Local level.

I like the policies that brought us more crime, more homelessness, higher taxes, filthy cities, water and housing shortages, and productive young workers fleeing the state along with the billionaires. As an old, retired unproductive guy, I'm staying and loving the next ten years.

It's a New World, Willie

Democratic Party elder Willie Brown has a practical take on the influence of the Squad (the four progressive House Democrats Ayanna Pressley, D-Mass.; Alexandria Ocasio-Cortez, D-N.Y.; Ilhan Omar, D-Minn., and Rashida Tlaib, D-Mich.):

Reps. Rashida Tlaib, Ilhan Omar, Alexandria
Ocasio-Cortez and Ayanna Pressley (NY Post)

All the talk about dissension among House Democrats is a bit overblown.

There are 235 Democrats in the House. Speaker Nancy Pelosi has only four really rebellious members, “the squad” led by hero-of-the-left Alexandria Ocasio-Cortez of New York.

When I was Assembly speaker I had five rebels on my hands, and they actually organized to try to get rid of me. They didn’t succeed, because when you come right down to it, five people out of 50 ain’t a majority.

I’m sure Pelosi’s four rebels will find that out soon enough.

I'm not confident that Willie's right about the Squad's power. Non-stop media coverage can change perceptions of influence, and more influence translates into more power in the new world of social media.

SOTU: Interesting, For Once

(UPI photo)

For the record I thought that President Trump's State of the Union speech was pretty good.

(I'm trying to separate judgment of his "speechifying" from my views on his policies, a separation which is difficult. Political partisans always say the speech was good or bad depending on whether their guy is in office, but I didn't vote for him or his Democratic opponent).

Ladies in white (Vox photo)

The SOTU wasn't boring to these ears because it brought attention to positive information that I had forgotten or never did know. Good news is generally given little coverage anyway, and that tendency is more pronounced with this President. I didn't mind his chest-thumping about the growing economy, higher wages, low unemployment, especially among minorities, booming energy production, and tax and regulatory reform.

He acknowledged thorny topics (tariffs, the border) by stating his position, but at least he didn't avoid controversy as some politicians are wont to do. He didn't talk about fighting global warming climate change, the number one priority of the opposition.

But the main reason that the SOTU was of interest was the potential for drama. While the government was "shut down" in January, Speaker Nancy Pelosi had disinvited the President from having the address in the House chambers. Would President Trump deliver red meat to his base? Would the House Democrats show how much they loathed him?

Everyone behaved civilly, so, like the Academy Awards, we were left to comment on what the women wore.

For the record I don't care what their politics are, when women dress up I like it.

Thanks, Willie, But It Didn't Work

Former SF-Mayor and Assembly Speaker Willie Brown has advice for Republicans. (Appreciate that his tone is not snarky or insincere, as is much of the "advice" given by partisans to their opponents.) [bold added]

Willie Brown (OC Register)

It’s clear that Republicans’ slip in California relevance has turned into an all-out slide. The midterm results show that Republicans are being hurt as young adults and other progressively inclined people fan out from the Bay Area and Los Angeles into onetime GOP territory like Orange County and Central Valley cities.

Add in the toxicity of President Trump, and you have a party that is clearly in need of major retooling if it ever again hopes to be a factor on the state level.

Republicans could start by getting rid of the Tea Party and Freedom Caucus types who have made the GOP platform so distasteful to new voters.

But if they really want to make a comeback, the GOP should turn the party over to women. Not only would they give the party a better public face, they would inject a better balance on social issues.

Well, the Republicans did try the woman strategy; they had a textbook candidate in Korean-American Young Kim:

Young Kim (CNN)

Kim was considered by many to have an edge going into the race because of her name recognition and long history as a district staffer for [ex-Representative Ed] Royce, who had endorsed her....Kim broke with Trump on several of his policies, including family separation at the border and curtailing family-sponsored visas. Nearly a third of the district’s residents are Asian American, and a third are Latino.

If ever there was a seat that Republicans should have taken it was the seat held by Ed Royce(R) in the formerly conservative bastion of Orange County.

Democrat Gil Cisneros was the eventual winner, overcoming Young Kim's lead with provisional and mail-in ballots days after the election.

Don't Hold It Up for Me

Because both House and Senate versions of the new tax law eliminate the deduction for state and local taxes (SALT), the tax on long-term capital gains will go up for individuals in high-tax states:[bold added]

New York City residents, for instance, pay a top income-tax rate of 12.7%—8.8% to the state and 3.9% to the city. In California the top rate is 13.3%. Absent the deduction, then, New York City and California investors in the top bracket would pay a total—federal, state and local taxes—of 36.5% and 37.1%, respectively, on their capital gains.

The top federal rate on ordinary income is 39.6%, so deducting state and local taxes reduces their burden by that proportion for high earners. In theory that should lower the total capital-gains tax to 31.5% in New York City and 31.8% in California. In practice the figures are somewhat higher, since other provisions of the federal tax code—the alternative minimum tax and the Pease phase-outs of deductions—reduce the value of the SALT deduction for high-income taxpayers. But every investor who itemizes and lives in a state that taxes capital gains would face some increase under the GOP plans.

Higher taxes on capital gains cause taxpayers to be hesitant to take gains at the margin---from personal experience and that of acquaintances I believe this effect on behavior for certain individuals to be noticeable----and result in capital being being "locked in", i.e., appreciated assets are held onto longer.

The lock-in of capital gains reduces the mobility of private capital—and, more important, its flow to the new, small and rapidly growing companies that create the most jobs.

(Business Insider graph)

Two comments:

1) Despite the authors' claims, the lock-in effect on capital markets cannot be large. Two-thirds of equity investors (see chart) don't pay taxes; mutual funds, hedge funds, international, and other institutional investors are legally exempt or can afford the expertise to structure around taxes. Of the remaining third, i.e., households, only a small percentage reside in high-tax states. Only a subset of this subset are in such a high bracket that State taxes are the deciding factor against a capital asset sale.

2) Possible estate-tax repeal, and even high estate-tax exemptions, are a much more powerful inducement to hold onto appreciated assets than the lack of a SALT deduction. If a well-off taxpayer can afford to live the rest of her life without selling her home or her Alphabet stock, those assets will be "stepped up" to Fair Market Value at her death. There won't be much, if any estate tax because of changes to the law, and her heirs will pay much less income tax because the stepped-up basis will have shrunk the gains dramatically when it comes time for them to sell the assets.

BTW, your humble blogger lives in high-tax California and is sitting on some assets (hey, I mean that figuratively) that have grown fatter in recent years; I won't sell them unless it's an unexpected emergency, so go ahead and pass the d*** law already, Republicans, don't hold it up for me.

Unfair to the Enquirer

Guilty reading pleasure: My former landlady always
picked up the current copy at the supermarket.

South Carolina representative Trent Gowdy (R) on the "Trump dossier": [bold added]

"I want to know whether the nation's premier law enforcement agency relied on a document that looks like the National Enquirer prepared it."

Hey, Trent, you're being unfair to the Enquirer.

ABC news, 2010: National Enquirer Now Legit, According to Pulitzer Prize Board

The National Enquirer is now legit, according to the Pulitzer Prize Board.

The body behind journalism's most prestigious award conceded Thursday that the self-proclaimed tabloid can compete with mainstream news outlets for its prizes. Because it broke the story about former presidential candidate John Edwards's mistress and love child, the Enquirer's staff is eligible for the Pulitzer in two categories: "Investigative Reporting" and "National News Reporting."

Of course, the National Enquirer raising its standards is only one possible explanation of how the supermarket tabloid is becoming like the rest of the industry.

If You Seed, You Won't Have to Cede

Newly elected Rep. Karen Handel and husband Steve (WSJ)

People who have a life may not know that there was a special election on Tuesday for a House district in Georgia. (President Trump named Representative Mick Mulvaney to be White House budget director, and the election determined who would serve out Mr. Mulvaney's term.)

Normally few outside the state would care about the race, but the Democrats nationalized the election by making it a referendum on Donald Trump. With party pride at stake, the total amount spent--$31 million for Democrat Jon Ossoff and $23 million for Republican Karen Handel--dwarfed that of any previous House race.

Ms. Handel won with 53% of the vote.

Continued losing--they are zero for five in special elections since November--has made some Democrats crazy. No, they are not blaming the Russians again. Instead, it's bad weather: [bold added]

At DeKalb-Peachtree Airport, which sits in the state’s 5th District but is close to a heavily Democratic part of the 6th District, 4.58 inches of rain fell between noon and 4 p.m. Eastern Time — almost as much as typically falls in the entire month of June. But in Cobb County, home to more Republican voters, far less rain has fallen. As of 4 p.m. at Dobbins Air Force Base in Marietta, just 0.86 inches of rain had fallen.

Democrats can even out any advantage Republicans have with the Meteorologist-in-the-sky because they are the party of science. They can use cloud seeding to cause the rain to fall on Republican neighborhoods and lower Republican turnout. If Democrats seed, they won't have to cede (elections).

Meanwhile, in the land of the non-scientists they believe that God "sendeth rain on the just and on the unjust" alike. (Matt 5:45) Rubes!

Reasoned Reactions from the WSJ

James Comey and NSA Head Michael Rogers (WaPo photo)

The Wall Street Journal is one of the few national publications that aren't rankly partisan. Witness the variety of reactions to l'affaire Comey.

From the news summary of the former FBI Director's testimony before the Senate Intelligence Committee: [bold added]

Former FBI Director James Comey told senators Thursday that he felt President Donald Trump had directed him to drop an investigation into a former adviser, and that after his firing he leaked accounts of his conversations with the president in hopes of sparking the appointment of a special counsel.

His comments came in a highly anticipated hearing before the Senate Intelligence Committee that included Mr. Comey’s testimony that he believed that he was receiving an order when Mr. Trump said he “hoped” he would be able to end the Federal Bureau of Investigation’s inquiry into former national security adviser Mike Flynn.

Mr. Comey declined to offer his opinion on whether he thought Mr. Trump was trying to obstruct justice, but he said that issue is something that the recently appointed special counsel would examine. He also confirmed he told Mr. Trump that he wasn’t under investigation as part of the FBI’s probe into Russia’s alleged interference in the 2016 presidential election.

On balance the testimony appears to help more than hurt President Trump. Mr. Trump is not under investigation for the alleged Russian election hacking; he has displayed ignorance about Washington's protocols and unwritten rules.

Peggy Noonan: The president has no understanding of the norms, rules and traditions of his job.

Presidents don’t lean on FBI chiefs in this way. It is at odds with traditional boundaries, understandings and protocols. It was embarrassing to read. It was the move of a naïf who’s a cynic—I know how the big boys play. Actually it’s not how the big boys play, it’s how someone who learns about government by binge-watching “House of Cards” would play. It was bumptious with the special bumptiousness of those who think themselves savvy.

...inappropriate does not mean illegal...

he harmed the president by documenting, again and persuasively, that Mr. Trump does not understand the norms, rules and traditions of his job.

WSJ lead editorial on Friday: The former FBI director should have resigned if he believes what he now says. [bold added]

James Comey’s first post-FBI appearance in front of the Senate on Thursday turned out to be a political anticlimax, with no major revelations about the alleged Trump-Russia nexus or the President’s supposed attempt to derail the investigation. But nearly three hours of testimony did expose the methods of the highly political former FBI director.

...Mr. Comey is no Jack Ryan. He’s a government official motivated by political self-interest who should have resigned if he believed what he now says he did. That he failed to act at the time suggests his motive now is more revenge than truth-telling.

Kimberley Strassel: What his Thursday testimony made clear is how much he [Comey] has damaged the country.

Mr. Comey could have spared us this by simply stating, as he acknowledged Thursday, that Mr. Trump wasn’t under investigation. One could argue he had a duty to explain, given that he’d taken the unusual step of confirming the probe, and given the leaks from his FBI and the flood of fake news that resulted. But no. James Comey judged that (in this case, at least) it would be improper to speak out. So we’ve had all Russia all the time.

...When he was fired, he leaked to the media, through a “close friend,” highly selective bits of his privileged communications with the president. And then he stayed silent and let the speculation rage. Thus, for the past month the nation has been mired in a new scandal, fueled by half-leaks. Thank you, yet again, Mr. Comey.

Takeaway: The President was never under investigation for colluding with Russia. So what has the wall-to-wall media coverage been about for the past six months?

Coverage is Not Care

A few thoughts on the American Health Care Act (HR 1628, plus amendments) that was passed by the House last Thursday:

1) Senate Republicans are composing their own bill. Assuming it passes (a big if under the Senate's complex procedures), the House and Senate will have to reconcile their respective versions. There is zero chance that HR 1628 will be sent to President Trump in its present form. (As a matter of academic interest, see WSJ analysis if the House bill does become law.)

2) House Democrats mocked their Republican counterparts, suggesting that the latter would be thrown out of office in 2018 by the vote repealing supposedly popular Obamacare. Be careful, Dems, losers who believe they have no life after November, 2018 may ram the whole conservative agenda down your throats in the next 18 months.

3) House Republicans were divided over both how and how much to fund hard-to-insure people with pre-existing conditions, but the Senate Republicans' thorniest issue seems to be over Medicaid expansion.

20 million Americans gained health insurance after Obamacare was passed. Most were added under Medicaid. Politifact:

[Senator Rand] Paul said the vast majority of people that got insurance under Obamacare got it through Medicaid. About 20 million people gained coverage and about 14.5 million of those were under Medicaid or CHIP. But a sizeable fraction of that 14.5 million were eligible before the Affordable Care Act took effect. One estimate said about a quarter of them were previously eligible. Another estimate put it as high as half.

There is some guess work behind all the reports. Medicaid might account for slightly more than half of those who gained coverage. Most people wouldn’t say that amounts to the vast majority, but it is likely still the majority.

The numbers tell the story: if Obamacare is great coverage, then Medicaid (Medi-Cal in California), with more than half the Obamacare additions, must also be great. In 2012 the Mercury News detailed why many doctors do not accept Medi-Cal patients. In a 2015 follow-up editorial the Mercury News said the problem is getting worse:

But it’s becoming increasingly clear that the influx of 2.7 million Californians to the Medi-Cal roles [sic] is putting a strain on the state’s medical system....It’s not hard to discern why so many California doctors are loath to treat Medi-Cal patients. The paltry $16 reimbursement rate for a primary care visit makes it difficult for physicians to justify the appointment.

12 million Californians, about 30% of the population, are covered under Medi-Cal. They are putatively "covered," but are they getting health care?

Unforced Error

Though my politics are more in tune with Republicans than Democrats, I'm under no illusions about the wisdom, intelligence, or character of some Republican members. One of the first items that the House Republican majority put on the agenda was to "reduce the power of an independent ethics office":

Republicans had voted 119-74 in a secret House GOP Caucus meeting Monday night to hobble the Office of Congressional Ethics as part of new rules to govern the incoming Congress.

Not everyone who voted in favor of this item was motivated by venality (the Office had a history of tying up Members with spurious claims by activist groups, as well as investigating legitimate accusations), but surely there are more important things to do in the first hundred days.

It took a tweet from the President-elect to shame the Republicans to remove the provision.

With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it

— Donald J. Trump (@realDonaldTrump) January 3, 2017

The un-politician seems to have more political sense than those with many years of experience.

The Most Important Issue

For what it's worth, Barron's predicts a Democratic Senate and a Republican House after the November elections. A split Congress will ensure that the new President, whoever it turns out to be, will have to compromise with the opposition.

There’s opportunity for either Clinton or Trump to find areas for compromise with Congress, including a tax holiday on the foreign profits of U.S. companies and a bump up in the “carried interest” rate that private-equity firms and hedge funds pay on their profits. And regardless of who is elected, it’s unlikely we will have higher individual tax rates. At the same time, the legislative gridlock that has characterized most of the Obama administration should loosen a bit with either candidate in the White House.

Barron's doesn't mention the ramifications of the election on the Supreme Court, which currently has an unfilled seat due to the death of Justice Scalia on February 13th. If both the Presidency and Senate are in Democratic hands, as Barron's predicts, the Supreme Court is very likely to take a leftward tilt (some will say more leftward) for many years.

Immigration, trade, guns, and terrorism may command the headlines, but the direction of the Supreme Court may be the important issue of the campaign.

Tax and Spend

Federal taxes and receipts have grown ten-fold since the
mid-1970's per the Office of Management and Budget

In last month's State of the Union address the President called for the taxing of educational savings accounts (529 plans) (withdrawals exceeding invested amounts would be taxed as ordinary income). The resulting protests from many quarters, including his own party, forced him to back off.

Now the President is calling for the current U.S. taxation of foreign subsidiaries of U.S. companies. These subsidiaries generally do not pay U.S. taxes until the profits are sent back to the U.S. parent.

There are policy arguments for and against the President's position, but the larger picture is:

a) For the past 40 years Federal spending has ratcheted up inexorably, regardless of which party controls the White House;

b) Under President Obama estimated 2015 Federal tax receipts of $3.1 trillion will be 50% higher than 2009 (give him credit for an improving economy).

c) These historically high receipts still are not enough to fund the President's vision of government.

d) If this corporate-tax increase fails (or even if it's partially enacted), look for the President to submit other revenue proposals. Whatever tax increase Congress agrees to, it won't be enough.

[Update - 2/13/2015: First Time Ever: Federal Tax Revenues Top $1 Trillion Thru January; Gov't Still Runs $194B Deficit.]

A Great Year

One week ago rumors circulated that the Federal Reserve would announce the cessation of its five-year easy money, aka quantitative easing, program. The financial markets fell.

The feared cutback turned out to be not very severe; bond-buying will "taper" from $85 billion per month to $75 billion. The markets resumed their climb, some to new highs. Last week's short-term budget deal and today's Fed announcement brought a measure of certainty to government fiscal and monetary policy, respectively.

It's refreshing to see grown-up behavior (finally) in evidence at the Congress and Federal Reserve. One only hopes that in the New Year we will see it in the Executive Branch, which lurches to and fro trying to put out fires of its own making.

YTD chart updated to 12/23/2013: if you had money in the market, it's been a great year.

A Crisis That Isn't

Sooner or later one of these governance "crises" will have dire consequences, but your humble observer doubts that the impending October 1st shutdown of the Federal government will have different results from the sequester, the 2012 debt limit kerfuffle, or the 2012 U.S. Treasury downgrade. Some people, such as government employees, will be affected, but the rest of the country will probably just shake its collective head and hope that the stalemate does not go on too long.

While there has been no government shutdown since 1996, there were 17 separate events in the previous 20 years so clearly the markets would not be too inconvenienced by a brief hiatus. Analysis by Rabobank found that the previous events had very little impact on bond yields. The famous 1995 shutdown did not make a dent in a roaring equity bull market.

Undoubtedly the House Republicans will take most of the blame for the shutdown, but I can't fault them too much for their desperate and seemingly futile attempt to stem the tide of big government. Increased government control over medical care, education, and banking seems to have made the problems in those areas worse; the proposed solutions always involve more spending, prosecuting the "crimes" of the people working in those sectors, and more regulation and more laws.

Someday lenders will stop lending, taxpayers will stop paying taxes, and government services will be shut down in earnest, but the good news is that it won't be this October 1st. © 2013 Stephen Yuen

We Don't Appreciate Them

Former Secretary of Education and conservative commentator Bill Bennett is the latest to rail against Congress' exempting itself from Obamacare:

Imagine the horror when these elected officials, who make $174,000 a year, realized that not only must they and their staffers be subject to inferior-quality health exchanges like the millions of ordinary Americans, but they might also have to shell out thousands of dollars for increased premiums if they exceed the subsidy income cutoff. [snip]

Heaven forbid Congress suffer the same fate as private companies like UPS, which recently had to cut health-care benefits entirely for employees' spouses; or labor unions, like the 40,000 International Longshore and Warehouse Union workers who recently left the AFL-CIO citing as one factor ObamaCare's tax on their "Cadillac" health-care plans.

It's also a shame that Congress and its staffers must pay income taxes, serve on juries, and abide the traffic laws. Let's hope that they're working on exempting themselves from those, too. The poor dears work so hard for us, and we don't appreciate them enough. © 2013 Stephen Yuen