Donald Trump’s First Year as President


As I gear up to enter the 2018 Nebraska Republican Primary for U.S. Senate, see here  and here, I am focusing on what I consider to be the overwhelmingly most critical and urgent issue facing our country: our rapidly growing national debt, now 77% of GDP (for the public part on which we pay interest), and steadily getting much worse. Nevertheless, just over a year ago an unexpected political earthquake shook the country as Donald Trump was elected President.  As I become a candidate myself for national office, I need to make clear what I think about Mr. Trump.  I will start out by saying that I did not vote for him because of his sleazy behavior towards women.
I will try to be objective about his accomplishments in office, both positive and negative.
On the positive side:

  • He is standing tough on North Korea, working with the U.N., China and other Asian countries to impose strong sanctions on the North Korean economy. He is upgrading U.S. missile defense, as a smart precaution against a North Korean attack on the U.S.

  • He has worked with many other countries to eliminate the ISIS physical caliphate.
  • He has cajoled NATO members into contributing an additional $12 billion towards our collective security.
  • The economy is now growing at a 3% annual rate thanks (at least in part) to his efforts at regulatory reform.

However, on the negative side:

  • The new tax law, which he signed, is likely to kick off higher inflation with the trillion dollar artificial stimulus from increased debt. This will lead to much higher interest rates which will make our huge debt far more costly.
  • His noxious tweets undermine his presidency, by overshadowing his achievements. His personal popularity has dropped from 46% right after the election to 35% today.

Conclusion. The best way for a member of Congress (or candidate for same) to respond to President Trump’s erratic behavior is by being objective, agreeing with him if possible and not hesitating to call him out when necessary. This is what I will try to do.

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How Will America Solve Its Biggest Problems?


As I repeat over and over again, our two biggest national problems, in my opinion, are slow economic growth (only 2.1% annual increases in GDP for the past seven years) and massive public debt (now 74% of GDP, the highest it has been since right after WWII).
Capture11Are these problems being addressed by our political system?

  • Our 2016 presidential race is clearly touching on them to some extent. The “Sandernistas” think that the Obama economic policies are not progressive enough and need to be doubled down on. Middle-income “Trumpsters” are revolting against the stagnant and falling wage growth of the past fifteen years.
  • The political scientist James Piereson thinks that the Democratic-welfare regime, in place since 1932, has now run its course and will necessarily be superseded by America’s Fourth Revolution which is imminent.
  • The social scientist Yuval Levin thinks that our “Fractured Republic” can heal itself peacefully if the left is willing to accept a less centralized, more federalist, governmental approach to solving economic and fiscal problems and the right is willing to accept that modern America is highly diverse and individualistic and where a significant degree of cultural fracturing, family breakdown and estrangement from tradition are inevitable.

My own opinion is that our huge and rapidly growing public debt (on which we pay interest) is unsustainable and will lead to another crisis much worse than the Great Recession of 2008-2009 unless it is curtailed. Without an adequate response in the meantime, the new crisis will occur when interest rates inevitably rise significantly and therefore lead to huge increases in interest payments on our larger and larger accumulated debt.
To avoid such a calamity we need to do a much better job of controlling federal spending.  It would also help to speed up economic growth in order to increase tax revenue.  Furthermore, faster growth would create more jobs and better paying jobs.  This would take much of the steam out of the appeal of populist candidates such as Bernie Sanders and Donald Trump.
I can’t foresee exactly how we will be forced to change course but it’s going to happen fairly soon.

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The Bush Deficits vs the Obama Deficits


As I like to remind readers, I am a fiscal conservative and a social moderate.  I started writing this blog in November 2012, after running unsuccessfully in a Republican congressional primary in May of that year.  I am appalled by our reckless fiscal policies in recent years.  We simply have to get federal spending in much better alignment with tax revenue and do this in a relatively short period of time.
Both political parties are responsible for our current predicament.  Nevertheless, we need to have the best factual information available to help us get back on track.  Today I compare the Bush deficits with the Obama deficits.  The most objective way to do this, in my opinion, is to divide the transition budget years, 2001 and 2009, between the incoming and outgoing presidents.  In other words, October, November and December of the year 2000 are assigned to President Clinton and the last nine months of the 2001 budget year, i.e. January 2001 – September 2001, are assigned to President Bush.  Likewise for the 2009 budget year, when Bush was leaving office and President Obama was coming in.
CaptureA good source for such detailed budget information is the website of David Manuel, “an online repository of financial and political information that is often searched for but is generally hard to find.”
Here is what I’ve come up with:

President Bush

  • 2001 budget year (last 9 months)                $129.6 (billion) surplus
  • 2002 budget year                                         $157.8 (billion) deficit
  • 2003 budget year                                         $377.6 (billion) deficit
  • 2004 budget year                                         $413   (billion) deficit
  • 2005 budget year                                         $318   (billion) deficit
  • 2006 budget year                                         $248   (billion) deficit
  • 2007 budget year                                         $161   (billion) deficit
  • 2008 budget year                                         $459   (billion) deficit
  • 2009 budget year (first 3 months)                $332.5 (billion) deficit
  •                                                                   $2,337.3 (billion) deficit TOTAL

President Obama

  • 2009 budget year (last 9 months)               $1080.5 (billion) deficit
  • 2010 budget year                                        $1294  (billion) deficit
  • 2011 budget year                                        $1299  (billion) deficit
  • 2012 budget year                                        $1100  (billion) deficit
  • 2013 budget year                                         $ 683  (billion) deficit
  • 2014 budget year                                         $ 483   (billion) deficit
  • 2015 budget year (CBO estimate)               $ 468   (billion) deficit
  • 2016 budget year (CBO estimate)               $ 467   (billion) deficit
  • 2017 budget year (first 3 months, CBO)      $ 163     (billion) deficit
  •                                                                   $7,037.5   (billion) deficit TOTAL  

These totals represent, of course, the amounts that were added (Bush) or will be added (Obama) to the national debt during their terms of office.  George Bush made little, if any, effort to control deficit spending.  But the Obama debt is three times as bad as the Bush debt.  Getting the debt under control is by far our biggest and most urgent national problem.  By failing to take our debt seriously, both Bush and Obama have been huge failures as president!

Privatize Veteran’s Health Care

The current Veterans Administration waitlist scandal is an unfortunate symptom of a much bigger problem, namely the very high and rapidly increasing cost of providing healthcare to our nation’s veterans.  Especially at a time of huge budget deficits and exploding national debt, all branches of government, including our VA system, must operate more efficiently.
CaptureAs we celebrate Memorial Day and the 70th anniversary of the Normandy Invasion in WWII, this is a good time to contemplate a major restructuring of the VA.  As pointed out two days ago in the Wall Street Journal, “VA’s Budget, and Rolls, Have Boomed”, not only has the number of VA healthcare patient visits increased dramatically from 3.4 million in 2000 to 5.6 million in 2012, but the average annual expenditure per patient has also risen by 62% over the same time period.
The purpose of having a separate healthcare system for veterans is to give them better care than they would otherwise receive.  But the scarcity of resources means that their healthcare is being effectively rationed with longer waiting times.
The situation for veteran’s healthcare is a harbinger of what awaits us for our big government entitlement problems: Social Security, Medicare and Medicaid.  For the sake of all recipients, present and future, the rapidly growing costs of these programs must be contained.  There are lots of possible ways to do this.  Our national leaders simply need to take the problem seriously and insist on action.
At the same time it makes no sense to maintain a separate health care system for our nation’s 22 million veterans, only 7% of our total population.  The VA has lots of other responsibilities to take care of anyway: providing life-insurance, mortgage, and housing programs, managing cemeteries, and providing job training, for example.  Veteran’s healthcare could and should be privatized with a voucher system administered by the VA.  It will save billions of dollars for taxpayers and provide better, and timelier, healthcare for our nation’s veterans.

The Government We Deserve II. How Do We Make It Better?


“When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free.”
Edward Gibbon, 1737 – 1794, The Decline and Fall of the Roman Empire

In my last blog, “The Government We Deserve,” I reported on a new book “Dead Men Ruling” by Eugene Steuerle, which shows how “Dead and retired policymakers have put America on a budget path in which spending will grow faster than any conceivable growth in revenues.”
CaptureOur country is clearly in a huge predicament.  We can get out of this jam by:

  • Restoring Balance: our legislators should only appropriate spending for one year at a time.
  • Investing in our future: i) opportunity is a more optimistic goal than adequacy ii) policies to assure adequacy often reduce opportunity by creating negative incentives    (e.g. food stamps, disability programs, housing vouchers) iii) means-tested programs are often anti-family (i.e. discourage marriage)
  • Building a Better Government: our main goal today should be to restore fiscal freedom by allowing future generations to create the government they need and want. i)   constrain the automatic growth in big federal tax subsidy, health and retirement      programs ii) reorient government towards investment, children, opportunity and leanness

“Both parties talk the talk about deficit reduction but fail to see that the deficit is but a symptom of a much broader disease – the extent to which both have tried to legislate far too much of what future government should look like.”
Here are the kinds of fixes which are needed:

  • Eschew Constitutional Fixes (i.e. a balanced budget amendment, term limits).
  • Require Presidents to propose budgets which balance over a business cycle.
  • A True Grand Compromise (end automatic growth of entitlements, generate revenues needed to pay current bills).

As Mr. Steuerle says, “If the obstacles to progress are considerable, the payoffs are enormous.”

The Government We Deserve


“As for the future, your task is not to foresee it, but to enable it.”
Antoine de Saint-Exupery, 1900 – 1944

An important new book, “Dead Men Ruling,” by the Urban Institute’s C. Eugene Steuerle, has just been published.  Here is the flavor of its message:
Capture“Dead and retired policymakers have put America on a budget path in which spending will grow faster than any conceivable growth in revenues. … The same policy makers also cut taxes so much below spending that they created huge deficits, which have now compounded the problem with additional debt.”
“Both sides have largely achieved their central policy goals – liberals have expanded social welfare programs, conservatives have delivered lower taxes.  Both now cling tenaciously to their victories.”
In short, “our central problem is the loss of fiscal freedom.” There are “four deadly economic consequences of this disease:

  • rising and unsustainable levels of debt,
  • shrinking ability of policymakers to fight recession or address other emergencies,
  • a budget that invests ever less in our future and is now a blueprint for a declining nation, and
  • a broken government, as reflected in antiquated tax and social welfare systems.”

In addition there are “three deadly political consequences:

  • a decline of ‘fiscal democracy’ depriving current and future voters of the right to control their own budget,
  • a classic ‘prisoner’s dilemma’ where both left and right leaning elected officials conclude that they will suffer politically if they lead efforts to impose either spending cuts or tax hikes, and
  • rising hurdles to changing our fiscal course because, to do anything new, requires reneging on past promises of rising benefits and low taxes, that voters have come to expect.”

In other words the U.S. is in a very difficult predicament.  Mr. Steuerle thinks it will take a major “fiscal turning point” to escape from the present danger.  Both sides will have to make big concessions in order for us to get out of this jam.  But how is this possibly ever going to happen?  More next time!

The Growth Deficit


I am a fiscal conservative, as well as a social moderate, which means that I don’t fit very easily into a standard mold.  I am non-doctrinaire, non-ideological and mostly nonpartisan.  I vote for candidates from both major parties as well as independents.  I prefer a balanced government with neither party in complete control.
My most direct sources of information on fiscal and economic issues are the Wall Street Journal and the New York Times, both of which I read assiduously on a daily basis.  When these two newspapers disagree on a particular issue, then I usually decide that the truth lies somewhere in between.
CaptureOur biggest national problem right now, in my opinion, is the stagnant economy.  In today’s WSJ, the lead editorial, “The Growth Deficit”, clearly describes how bad the situation is.  Since the Great Recession ended in June 2009, our rate of GDP growth has averaged 2.2% per year.  This compares with a 4.1% annual rate of growth for all post-1960 recovery periods.
Such a slow rate of growth causes all sorts of problems.  First of all, it explains why our unemployment rate is still so high at 6.7% after five years of recovery.  This means that between 15 and 20 million people are still unemployed or underemployed.  Such a large human toll means a huge increase in government welfare expenses for food stamps, unemployment insurance, etc.  Higher unemployment also means less tax revenue collected by the federal government.  This translates into much larger deficit spending, adding to the already massive national debt.
There are lots of things which can be done to increase growth, for example:

  • Lowering tax rates on individuals to put more money in the hands of the 2/3 of Americans who do not itemize deductions on their tax returns. They’ll spend this extra income and create more demand! Pay for this by closing loopholes and deductions, which are used primarily by the wealthy. Besides stimulating the economy, this will simultaneously address increasing income inequality.
  • Lowering tax rates on corporations to encourage multinationals to bring their foreign profits back home for reinvestment or paying dividends. Again, balanced by eliminating deductions enjoyed by privileged corporations.
  • Relax regulatory burdens on small businesses where most new jobs are created.
  • Reform immigration procedures by boosting the number of H1-B visas to attract more highly skilled, and entrepreneurial, foreign workers.
  • Grant trade promotion authority to the President to speed up new trade agreements.

We should be clamoring for our national leaders to be acting on these fronts.  A strong economy is the very backbone of our success as a nation!