Friday, August 19, 2016

The Company You Keep

It is becoming apparent that Donald Trump has very little chance of being elected in November. It’s hard to call his actions missteps when his latest revamping of his campaign staff seems to indicate a belief on his part that his problems stem from too much restraint in the name of unifying the party. Perhaps it was the publication last week of two open letters from the Republican Establishment that led Mr Trump to conclude that he should stop trying to please the Establishment wing of the party if this was the thanks he would get. In this letter, Republican legislators and campaign officials appealed to Reince Priebus, head of the Republican National Committee, to stop all financial support of the Trump campaign, and instead devote all financial support to Senate and House races. The signees believe that Trump may cost the Republicans their current majorities in both the House and the Senate. By contrast, this letter from former Republican national security officials does not seek any result beyond making sure that Donald Trump does not become president. What both letters share, however, is a firm resolve to disown the Trump phenomenon, to say that voters should not judge the Party by its current nominee. So it is worth asking if voters should in fact make this linkage.

The letter to Priebus is the least credible in this respect. It is saying, “Don’t let the American people blame us for Trump”, but the Republicans in the Senate are still saying by their refusal to even hold hearings for Supreme Court nominee Merrick Garland that they are holding out in the hopes that Donald Trump can be elected and name a replacement. Mitch McConnell and others stated early in the process that they wanted the American people to decide in November who should be the next Justice; that statement has backfired badly, and become an implicit endorsement of Trump. The letter from the national security experts is on firmer ground, because its signees do not hold and are not seeking office. Still, they have been promoters of the Republican brand for many years, and Donald Trump did not arise from a vacuum.

Donald Trump represents what might be called a “political breakout”. In the stock market, a stock or index can reach a certain price level several times, only to fall back again. That price is referred to as the resistance point. There is eventually a final push, and the price “breaks out”, usually hitting price levels far above the previous resistance point. This is illustrated in the chart above. A breakout does not have to measure the actual value of a stock; instead it is a measure of mass psychology, a final squashing of the doubters, however strong their arguments. The politics of fear have been practiced by the Republican Party since at least 1968, with Nixon’s appeals for law and order. In subsequent elections, various Republican standard bearers invoked welfare queens and Willie Horton in the name of faux patriotism. This in turn fueled the rise of the Tea Party, along with financing from the Koch brothers and others, and the building of a media machine that spread deliberate misinformation designed to spark anger and fear. All of this was done in the belief that the Republican Establishment, our letter writers, could control and use the forces of negativity they were cultivating. This is the year that the Establishment found out they were wrong. Trump has broken through their resistance, and he controls them.

I think the letter writers really do believe what they have written and signed their names to. They are sincerely shocked and appalled by Trump’s excesses. They genuinely fear the harm his candidacy could do to his fellow Republicans. But they created this situation over the course of many years. Trump has gathered the angry mob, but they were the ones who stoked that anger, carefully they thought, for all this time. Trump has taken all this negative energy and harnessed it. Our letter writers belatedly recognize the danger, but they have not accepted their responsibility for it yet. That will be a job for voters in November.

Thursday, August 11, 2016

Trickling Down With Trump

On Monday, Donald Trump unveiled his economic plan. It contained no actual numbers, so it wasn’t so much a plan as a theory. He sprinkled his comments with jabs at Hillary Clinton which could be, and were, fact checked, and Trump was shown to be dishonest once again. But the big lie in his speech was the theory he was touting, and that went unchallenged. The theory was the one that has been the mantra of establishment Republicans since Ronald Reagan: that massive tax cuts for wealthy individuals and corporations create jobs. In fact, the experiment has been tried, and it failed miserably. We don’t have to refute this with more theory when we have actual evidence. With just a little thought, we can find the fatal flaw in this theory. And it is also fair to talk about unintended consequences.

The United States had eight years of huge tax cuts of the sort Trump wants when George W Bush was president, and they gave us the weakest economic recovery in American history. The stimulus that was supposed to follow from this never happened, so we also saw a vast increase in the federal deficit. Pundits on the right will sometimes point out that we can’t know what the deficit might have looked like if we had not also been at war, but Trump gives me no confidence in that regard. Job growth was anemic, which made the 2007-2008 collapse far more painful than it needed to be. To understand why, you need to realize that trickle economics assumes that companies do not hire because they can not afford to. Why else would tax cuts stimulate the economy? But this assumption makes no sense. We have seen companies post record profits and sit on hordes of cash, but where are the jobs? And what happens to the money, if it does not prod hiring? One thing that happens is an increase in mergers and corporate takeovers. These actually cost the economy jobs.

Another is an increase in speculative investing. This is what wealthy individuals do with their tax cuts when they are supposed to be creating jobs. The Bush cuts created a new, lower tax rate for capital gains. Before, capital gains were taxed at the same rate as regular income, but Bush created a new rate that was about half the rate for earned income. A capital gain is the profit you make when you sell an investment for more than you bought it for. So now, when you calculated the risk of an investment, you could figure in the reduced tax rate. The new capital gains rate meant that it now made more sense than before to buy oil and gas futures as investments. This has meant that everyone pays a price at the pump that is inflated by the purchases of speculators. But the capital gains tax cut also made junk mortgage investments more attractive, thereby making the 2008 financial crisis worse. Trump, in his speech, also targeted what he called excessive regulations, so he would restore the conditions that made the 2008 crisis so serious. In particular, he made his billions in real estate, so he can be expected to work hard to remove any and all regulations on the real estate industry. Liar loans and other abuses in the mortgage industry that led to the financial crisis are all good for Trump’s business.

It is only fair to ask what does create jobs. Before Ronald Reagan sold the nation trickle down religion, it was widely understood that the real reason companies hire is that they expect to sell more stuff. That means good marketing and good new products, but it also requires a large number of consumers with spendable cash. This is why, in actual case histories, minimum wage increases generally lead to increases in hiring. So do boosts to programs like Food Stamps and Social Security. In theory, Universal Health Care in the United States would cost jobs in the insurance industry, but those losses would be more than offset by increases in consumer spending. Companies would also see a sharp reduction in their labor costs, since they would no longer have to provide medical benefits. Donald Trump wants to take this country in the opposite direction, and we have seen before where that would take us.

Saturday, August 6, 2016

Be Careful What You Wish For

In this bizarre campaign season, I am seeing a lot of talk about third parties. Nearly half of all registered voters are now registered as independents, and fantasies are being spun that these voters somehow represent a unified bloc that only awaits a hero for them to rally behind. Could it be Jill Stein? Gary Johnson? Bernie Sanders, if only he had been willing to try? Progressives who are dreaming this way have not thought through what a viable progressive third party could mean. In any case, most registered independents will actually vote for one or the other of the major parties, but do not want their registrations to commit them to either party in advance. Having said all that, we may be witnessing the birth of a viable third party this year, but not the one progressives are talking about.

Let’s suppose that a group of people had done the years of hard work it would take, starting from the ground up, and actually built a viable progressive third party in time for this year’s election. Let’s call it the Progressive Party. To be viable, they would have started years ago by running in very local races, and grown organically to the point where they now had members of both the Senate and the House, and they were able to stage primaries and caucuses in all fifty states and hold a national nominating convention. So now, the Progressive Party presents to the country their first candidate for president of the United States, who I will call John Doe. For those who are bitter that Bernie Sanders did not win the Democratic nomination, and who refuse to vote for Hillary Clinton, Doe is their dream candidate. Roughly 13 million people voted in the primaries for Sanders, and that sounds like a lot of people. But it is only about 10% of the total turnout in the last two presidential elections, so it is not enough to elect anyone, even with three candidates on the ballot. Knowing that, many of those 13 million voters would stay with the Democrats and vote for Clinton, especially since the Progressive Party, in the eyes of a majority of the public, is brand new. So, generously now, Doe is going to receive about 5% of the vote. That’s a great start, something to build on to be sure, but nowhere near a win. The vast majority of those votes come from the Democrats, so it becomes more likely that Trump wins. In trying to build a progressive third party, there would be an initial cost of Republican victories that could have been Democratic ones. This year, we face an extraordinary election, and the risk is simply too great. I would like to see someone build a viable third party like this, but we might have to sacrifice a few elections before this model would yield a John Doe who could actually win the presidency.

But, historically, this is not the model for how American third parties have arisen. It may well be that a scenario like the one I just outlined has kept any grass roots party from achieving the critical mass necessary to become a viable third party. That transitional phase where the growing pains of a new party cost an established party a series of elections is just too great a price to pay. Instead, third parties in our history have arisen from schisms within existing parties. In 1824, the Whigs and the Democrats arose from a split in the Democratic-Republican Party. In the 1850s, a split in the Whigs over the issue of slavery yielded the Republican Party. In both cases, a viable third party arose at the expense of one of the two previous parties, one of which soon vanished.

The modern Republican Party has been hijacked by far right wing extremists, and the Trump nomination represents their greatest victory to date. Old school Republicans remember a party that collaborated with Democrats to actually govern the country, but that doesn’t happen now. For some years now, moderate Republicans have been leaving either the Party or the government, as the extreme wing has made it harder for them to hold off far right challenges in their primaries. In the primary season just passed, there was more of a hope than an effort to promote an establishment candidate who could withstand the rise of Donald Trump. The Party no longer had an attractive moderate candidate for old school Republicans to rally around. So now there are important Republicans who fear that Trump is headed for a defeat in November of historic proportions. They fear that his campaign could produce such in bad taste for voters that the Republicans could also lose control of one or both houses of Congress. And so we are seeing every day now a story about another Republican who has announced that he is leaving the party, rather than risk being associated in any way with the Republican candidate for president. Especially if Trump does lose by a landslide in November, we could be seeing a split in the Republican Party, and the birth of a new third party. This would be a center-right party, more like what the Republicans were like in the 1960s. Some moderates who left the Republicans could easily swell the ranks of this new party, as could people like Jim Webb, who previously left the Republican Party to become a conservative Democrat. They would be able to offer a slate of candidates with name recognition who could start winning elections immediately.

If this third party comes to be, it would push the current Republican Party far to the right, as its remaining more rational members would join the new party. Initially, the Democrats could be the big beneficiaries of this, as the conservative vote is split. But I think, as happened in our history, this new party would quickly supplant the old Republicans, who might live on as a fringe party on the far right, but would never again enjoy the power they have now. In this scenario, The Democratic Party, by virtue of losing some of its most conservative members to the new party, would become somewhat more progressive. But , while this altered Democratic Party would be more welcoming for progressive candidates, those who seek an alternative to the current Democrats would keep looking.

Monday, August 1, 2016

Do the Math

Politics, in the end, is a branch of mathematics. The candidates must decide how to attract voters and donations to their causes. These calculations involve millions of voters and dollars. But much smaller numbers can be just as important.The political math I have been thinking about lately involves the numbers one and two.

One is the size of a possible Democratic majority in the Senate. It could be that close, so every seat will be essential. I live in New Jersey. We do not elect a Senator this year, but we are also a solid blue state. I can usually vote my conscience. But, to gain a Democratic majority this year, not everyone will have that luxury. It might come down to what happens in Indiana, for example. Evan Bayh is nobody’s idea of a progressive, although his voting record is better than I would have expected. But a victory for him is a progressive victory. To see why, you first have to understand that Indiana is not going to elect a true progressive to the Senate. Remember, this is a state that thinks having Mike Pence for their governor is a good idea. But if a Bayh victory means the Democrats control the Senate, the Democrats would gain the chairmanships of all of the Senate committees. Surely some of those chairpersons would be progressives. Beyond that though, a Democratic Senate would mean that Clinton could nominate a more progressive judge to the Supreme Court than she would if the Republicans retained control. A Democratic Judiciary Committee chairman would allow this nomination to get out of committee to be voted on by the full Senate.

Two is the number of terms a president can serve since the ratification of the 22nd amendment in 1951. Lately I have been seeing a lot of posts advocating term limits for the House and Senate. A recent one also called for cutting the lifetime pensions for Congressmen from the current level of, if I remember correctly, $117,000 a year. Two assumptions are involved in this. One is that $117,000 is a lot of money. To most members of Congress, it is not. The majority of members of both the house and Senate are millionaires. More to the point, many parlay their government experience and connections into high paying lobbying positions when they leave congress. Cutting the pension would only create a greater incentive to do so. The second assumption term limit advocates make is that outgoing legislators would be replaced by better people. That’s just silly. If that were possible, the person you wanted replaced would not have been elected in the first place. Term limits are also a blunt instrument, forcing out both good and bad people. Again, I live in New Jersey, and we had the good fortune to have as our Senator Frank Lautenberg. Lautenberg was elected to five terms, and he had one of the most progressive records in the Senate over that time. It does no good for me to sit in New Jersey and call for term limits as a way to remove Mitch McConnell from his Senate seat in Kentucky. It is up to progressives in Kentucky to mobilize and work for McConnell’s defeat. Otherwise, whoever replaced McConnell might not have the power that his long service has brought, but he or she would be no better otherwise. In the House, term limits are a particularly bad idea. A person could only serve for a total of four years, all of which would be spent campaigning for that lobbyist job. A much better way to counter the power of entrenched legislators is to be in the habit of casting meaningful votes in Congressional election years. Progressives have been terrible at this recently; we were almost invisible in the 2010 and 2014 elections, allowing Republicans to gain and extend their majorities in those years.

Related to this last point, and also a matter of numbers, is the balance of power in the House of Representatives. Most experts predict that the Democrats will not be able to take the House this year, because there are too many safe Republican districts. These are the result of gerrymandering. We can deplore it all we like, but we as progressive voters must learn to do more. Gerrymandering happens when redistricting is done every ten years. At that time, each state draws its districts to favor the party that controls the state house and state legislature. These posts are decided in odd-year elections, and we progressives have been almost completely absent in these elections. In 2015, Bernie Sanders was calling for his political revolution, but his supporters did not show up to vote. The Tea Party never makes that mistake. They made a point at first of always voting, even when the available Republican was not conservative enough for them. Over time, they were able to take over the process, and elect the candidates they wanted. As a result, their electees controlled the redistricting process in much of the country in 2010. We have only until 2020, when the next redistricting happens, to try to reverse this trend.

All of these political equations yield the same result. We must vote meaningfully. As things stand, that means supporting some candidates who are not perfect. But as we become the likely voters that are the pollsters’ sole concern, we will start to have more candidates we can feel good about. In the meantime, we must understand that our votes for the least bad candidate in one place can empower a better candidate somewhere else. They can also create more chances to get better candidates elected. To unseat those who have gained the power to block action on our issues, we must do the hard work of actually winning an election against the odds. Even if Bernie Sanders had actually won the nomination and the presidency, that would not have been enough to solve these equations. That will take time, commitment, and patience.