On this blog, I discuss important national issues, often connected with fiscal and economic policy.  Lately, I have spent a lot of time discussing the policies, pro and con, of President Donald Trump.

My last post discussed the possibility of a wealth tax, as opposed to an income tax, and why that is not a good idea.  Today, I discuss a related issue, how to address poverty in the United States.

Consider:

• The definition of poverty. In 2024 the official poverty rate in the U.S. was 10.6% for a total of 35.9 million people. For example, the poverty threshold for a family of four (two adults, two children) was $31,200.  For a single individual, it was $15,060.
• How can poverty be reduced? The customary advice for anyone to avoid poverty is to 1) graduate from high school, 2) get and hold a full-time job, and 3) don’t have children before getting married.  What society in general can do to reduce poverty is to provide a strong educational system at all levels, ensure access to affordable and basic healthcare, and create a dynamic economic system to make sure that there are well-paying jobs at different income levels.
• Ameliorating the poverty that does exist. While attempting to move people up the income scale, society should also try to lessen its negative effects on the poverty that does exist.  This can be done with temporary assistance for needy families (TANF), food stamps (SNAP), temporary housing vouchers, and additional income for working adults (EITC).
• What won’t help: reducing inequality between different income groups. It is a simple fact of life that real median incomes for different groups won’t grow at the same rates over any extended period of time. This is clearly evident in the attached chart.  In this chart, the lowest several income groups have grown much more slowly than the highest income group. This does not contribute to the poverty that exists in the lowest group. Society should try to raise up the people on the bottom, rather than trying to reduce incomes for people higher up on the income ladder.

  

Conclusion.  Society should take all reasonable steps to reduce the national poverty rate as well as ameliorate the effects of poverty on those who are unfortunate enough to be poor.  But attempting to reduce income (or wealth) inequality amongst the general population, is not only a bad idea in general, it won’t help one bit to reduce the overall poverty level.

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On this blog, I discuss important national issues, especially fiscal and economic matters.  Lately, I have been especially comparing the strengths and weaknesses of the Trump and Biden agendas.

Today, I will discuss the idea of taxing wealth, in addition to income.  Senator Bernie Sanders of Vermont supports doing this.  I have no intrinsic opposition to making the ultra-wealthy pay higher taxes.  Billionaires, for example, could easily afford a 1% or 2% annual tax on their great wealth.  The problem, in my view, is the difficulty of implementing a wealth tax.  Consider:

• Firstly, how is wealth defined? If wealth consists solely of stock market holdings, then it could, for example, be measured by stock market values on the last day of the year.  But how about financial holdings not invested in the stock market, such as in private companies?  Or wealth held by ownership of real estate, or even in art collections?  Establishing a fair evaluation of such forms of wealth would be highly subjective and subject to extensive litigation.  And the existence of a wealth tax would encourage the very wealthy to attempt to hide their wealth in tax shelters, which are already a problem even without a wealth tax.

  

• Secondly, a wealth tax would be unconstitutional. The Sixteenth Amendment to the Constitution authorizes the taxing of income, “from whatever source derived,” which does not include wealth itself.  Of course, the Constitution could be amended to authorize the taxing of wealth.  But this requires the votes of two-thirds of both the House and the Senate, unlikely in our closely divided Congress, when most Republicans would surely be in opposition.  And, even in the unlikely event that such an Amendment were proposed by Congress, it is unlikely to be ratified by three-fourths (38) of the states.  As I have previously discussed, 25 states have effective trifecta control (both legislative branches and the governorship) by the Republicans and only 15 by the Democrats.  Again, this means that it would be virtually impossible for a Constitutional Amendment taxing wealth to be ratified by the required 38 states.

  

• Thirdly, our annual spending deficits are running at about $2 trillion and must be greatly reduced.  But this can and should be done primarily by cutting federal spending.  Annual spending was about $5 trillion a year before COVID and has now ballooned to over $7 trillion.  Taking recent inflation into account, it needs to be cut back to the vicinity of $6 trillion.  Debt is the big problem, not inequality.

Conclusion.   I have no intrinsic problem with making the wealthy pay greater taxes, but a direct tax on wealth, as opposed to income, will not work.   Firstly, it is inherently difficult to measure wealth in an objective manner.  Secondly, a wealth tax would be unconstitutional.   Thirdly, our real problem is debt, not inequality.

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On this blog, I discuss important national issues, often dealing with economic and fiscal matters.  With the murder of Charlie Kirk, conservative leader of Turning Point U.S.A., several days ago, I change my tone today.

Mr. Kirk was the embodiment of civil discourse.  He wanted to debate issues, not defame his political adversaries.  How should we all as individuals respond to this tragedy?

• Clearly, we should try to follow the example that Charlie has set. We should continue to express our views as clearly and forcefully as we can, but without disparaging either the motives or the character of those who disagree with us.

As President, Donald Trump could also try to set a more civil tone of political discourse and behavior.  For example, he could:

• Tone down the rhetoric and implementation of tariffs, especially on our democratic allies around the world. This would remove much of the uncertainty that is currently disrupting the economy and making inflation worse than it would be otherwise.
• Cut back on ICE enforcement raids on critical industries. The raid on the South Korean Hyundai Battery Plant in Georgia was especially harmful, considering that the Administration is trying to work out a big trade agreement with South Korea.

  

• Shift attention from tariff and immigration issues to foreign policy issues such as the Israel/Gaza and Russia/Ukraine situations, which would benefit from strong and decisive US intervention, see here and here.

Conclusion.  Let’s honor Charlie Kirk’s memory by attempting to make his murder a real turning point in American political discourse.  Everyone, from political leaders to ordinary American citizens, can contribute to making this a reality by toning down our own rhetoric.

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On this blog, I discuss important national issues, often with reference to economic and fiscal matters.  Lately, I have devoted much attention to presidential politics, especially concerning the records of Presidents Biden and Trump.

Today, I discuss where I think President Trump is both succeeding and not, first, where he is succeeding:

• Populism is popular. Not surprisingly, mass, uncontrolled, migration is very unpopular all over the Western world.  Trump has essentially closed our southern border to illegal crossings.

  Furthermore, (mostly illegal) immigrant population has declined by about 1.4 million  since January 2025, showing the effect of Trump’s policies (see chart below).

  

  Public K-12 education is performing poorly in the inner city, and Democrats have virtually given up on school reform.  It is in the red states where school choice is prevailing.

• Wokeness prevails in the blue states. Notions of white supremacy, systemic racism, and gender fluidity, for example, are very unpopular amongst the non-elite.
• Crime control. His National Guard intervention in Washington, D.C. is popular and working well, but his power to intervene elsewhere is limited by law.

But President Trump is also floundering in some areas, especially on the economy:

• Labor market gains have slowed to a crawl, as demonstrated in the chart below. The problem is the uncertainty being caused by constantly changing tariff policies, which override the gains from the recently passed business tax reforms. The middle-class vibe has changed from secure to squeezed.

  

Conclusion.  Trump is riding the reigning populist, anti-woke wave, so prominent in the affluent Western world.  But inflation is still pronounced, and his constantly changing tariff policies are creating economic uncertainty.  His political fate is up in the air at this point.  It will be tested in the 2026 midterm elections.

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On this blog, I discuss a variety of important national problems, often centered around fiscal and economic issues.  Today, I talk about political polarization, which is considered a major issue by many people.

State level polarization. We know that our national politics is highly polarized between the two parties.  It so happens that politics at the state level is also highly polarized.  Looking at the map below, one can see that 25 states are completely controlled by Republicans, either by holding both legislative branches and the governorship, or else both legislative branches with supermajorities, with 15 states being controlled by Democrats in the same way. This means that issues like abortion and gun control can be dealt with on a completely partisan basis by one party alone in 40 out of 50 states.

School choice.  School choice is booming in the red states.  In Florida, for example, 51% of K-12 students are now attending a school of their choice, beyond the neighborhood school they are assigned to.  School choice in the U.S. is the tipping edge of much-needed education reform. 

Congressional redistricting. Congressional redistricting is required every 10 years after a new census in order to equalize population between districts. This process is controlled by state legislatures.   But occasionally, such as at the present time, some states will try to redistrict mid-census. Republican Texas and Democratic California and Illinois are considering this right now.

But regardless of how this plays out, the chart below shows that, based on current population trends,  Democratic states are likely to lose 12 Congressional seats after the 2030 census, with Republican states gaining 12 seats.  This will be a big blow to Democratic prospects for control of the U.S. House of Representatives.  The more one party dominates Congress, the more powerful polarization becomes.

Conclusion.  Both our national government and our state governments are highly polarized at present and are likely to become more so in the near future.  There is at least one benefit of state-level polarization.  It is allowing red states to establish school choice.  This is the tipping edge of education reform.  As school choice improves K-12 educational outcomes, as it surely will, hopefully blue states will recognize this and get on board.

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On this blog, I discuss important national issues of many different types. types.  Lately, the discussion has mostly been about the successes and failures of Presidents Biden and Trump. See here and here.

But let’s step back from day-to-day politics and take a look more generally at how well America is doing.  Several years ago, I summarized a study by the American Enterprise Institute’s Michael Strain on how well the American middle class is doing.  The main findings were: 1) wages for typical workers have increased by at least 20% in recent decades, 2) the median household has seen net income, after taxes and income transfers, grow by 44% in recent years, and 3) the share of adult children with higher incomes than their parents is very high.

Now consider a recent update by the AEI’s James Pethokoukis:

• As of today, real wages for the median worker have increased by 40% since the business cycle peak of 1990. And this doesn’t take into account the modern consumer innovations such as smartphones, ride-sharing, and targeted cancer immunotherapy.
• The age-adjusted cancer mortality rate has fallen dramatically in the past thirty years. It is now one-third less than in 1990.  In the U.S. alone, more than six million deaths were averted between 1975 and 2020 from just five forms of cancer: lung, breast, bowel, prostate, and cervical.
• And there is more ahead. Research into pre-cancer biology, immunotherapies, and risk-targeted vaccines is moving fast. Thirty years from now, cancer will be much less deadly than it is today.

Conclusion.  The big story here is progress: economic, technological, and medical.  This stands in sharp contrast with the prevailing declinist narrative that dominates so much of our present-day politics.

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On this blog, I discuss important national issues.  Lately, I have mostly been discussing how President Trump has been dealing on these issues.  For example, my last post, pointed out that Trump is following a Jacksonian foreign policy, in the sense that the most important priority of his government is the security and well-being of the American people.

Today, I summarize what I think Trump is doing well, poorly, or in between.

First of all, what Trump is doing well:

• He has closed our southern border. The number of illegal border crossings has slowed to a trickle (see chart below).

  

• He has severely set back Iran’s attempt to develop nuclear weapons. Iran is a terrorist state, and so this is clearly in America’s best interest.
• He has strongly and successfully supported Congress in extending the 2017 tax reform law passed at the beginning of his first term.

Secondly, where Trump is floundering and needs to change course:

• His tariff program, aimed at creating a more efficient international trading system, is overbearing and keeps trading partners guessing at what he really wants. It also risks reigniting inflation, which is what sank Biden’s presidency, and will also hurt Trump badly if it does reignite.

Finally, where Trump is doing poorly:

• He has shown little, if any, concern about our annual deficit spending, now approaching $2 trillion per year. Not only do these very large deficits make our national debt, now over $36 trillion, grow much too fast, but they also put upward pressure on inflation, which needs to be lowered to the Federal Reserve’s target of 2% annually.  The key to shrinking our annual deficit spending is to cut federal spending significantly.

  

• He is not putting nearly enough pressure on Russian President Putin to end the war in Ukraine. Granted, one can argue that what happens to Ukraine doesn’t matter to the U.S.  But this is shortsighted.  If Putin succeeds in subjugating Ukraine, he is then likely to undermine other eastern European countries and create a big problem for our NATO allies.

Conclusion.  Trump is doing well on several important problems, such as border control, resisting nuclear proliferation, and maintaining business tax incentives.  He is floundering on tariff policy and doing poorly on fiscal responsibility and supporting Ukraine in its war against Russian invasion.

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On this blog, I write about important national issues, mostly economic and fiscal.  But today the topic is foreign policy, especially for our current President, Donald Trump.  An excellent analysis of different types of foreign policy has been given by Walter Russell Mead in the WSJ.

According to Mead, there are four main approaches to American foreign policy:

• Regard a strong alliance between government and big business “as the key to effective action abroad.”  (Hamiltonian)
• Believe that the U.S. has both “a moral obligation and an important national interest” in spreading democratic values throughout the world.  (Wilsonian)
• Believe the most important priority of the U.S. government in both foreign and domestic policy is the security and well-being of the American people.  (Jacksonian)
• Would “avoid all foreign entanglements.”  (Jeffersonian)

Here are some recent examples:

• Ronald Reagan was an effective blend of the Hamiltonian and Wilsonian. “Power grows from the barrel of a gun and a gun grows from a good economy.”
• Barack Obama was “a decadent Wilsonian, to whom being on the good side of something was more important than achieving some power goal.”
• George W. Bush started as a Jacksonian by trying to stop terrorists from having weapons of mass destruction. But then he became a Wilsonian by trying to bring democracy to Iraq.

Turning now to Donald Trump: 

• The air strikes on Iran are “a very Jacksonian action” because Iran’s development of nuclear weapons is a threat to the U.S.

  

• There is a group of Jeffersonian isolationists within the MAGA movement. Trump nodded to them by imposing a ceasefire on Israel/Iran after the American bombs were dropped.
• Trump broadcasts bellicosity but does not want to start a war. Jacksonians don’t want to make the world more like America.  They just don’t want other countries threatening our legitimate interests.

Will the U.S. defend Taiwan from attack by China, if necessary?  Chinese control of Taiwan is a major threat to the U.S. according to Mr. Mead.  It would push back U.S. sea power hundreds if not thousands of miles.  This would force Japan and South Korea to reach an agreement with China because China could block their trade.  It would also force other Western allies, such as Australia, Indonesia, and India, to redefine their relations with China to China’s advantage.

Conclusion.  “America First” is a Jacksonian approach to foreign and domestic policy.  Denying nuclear weapons to Iran is clearly in America’s own best interest.  A big question: will Trump, if necessary, help Taiwan defend itself?  This is also in America’s own best interest.

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The U.S. is the strongest and most prosperous country the world has ever known, and also one of the freest countries in the world today.   We are blessed to live in America.  But, of course, we do have big problems to address.  Among the most urgent of these problems is our massive, and rapidly increasing, national debt, now sitting at close to $37 trillion.  Annual spending deficits are approaching $2 trillion, which means that, not only is our debt way too large, it is also rapidly increasing at the rate of almost $2 trillion per year.

I have recently stated that controlling inflation is Trump’s biggest (political) challenge. But this can only be done successfully by shrinking the annual deficit, which, as a practical matter, means cutting federal spending.

Senator Ron Johnson has recently given an excellent analysis of our federal spending challenge.

As he says:

• In FY 2019, federal outlays totaled $4.447 trillion. In FY 2020, federal outlays jumped to $6.554 trillion because of the pandemic spending spree.  Although grossly overdone, the spike was understandable.  Cities locked down, businesses closed, and unemployment soared.  Between March 2020 and March 2022, the federal government spent $5.2 trillion on Covid relief alone.
• There is no justification for maintaining this level of spending now that the pandemic is over. Yet we have turned pandemic spending into the new baseline, spending $6.6 trillion, $6.8 trillion, $6.3 trillion, $6.1 trillion, and $6.8 trillion in FYs 2020, 2021, 2022, 2023, and 2024, respectively.  President Biden’s proposed FY 2025 budget was $7.3 trillion.  This is $2.8 trillion (63.3%) higher than the FY 2019 spending of $4.4 trillion.
• A reasonable way to increase federal spending from one year to the next would allow for both population growth and inflation. Using FY 1998 as a base (the first year we’ve had a balanced budget since 1969), Senator Johnson calculates a total (reasonable!) budget for FY 2025 of $5.5 trillion.  President Biden also projected FY 2025 revenue of $5.5 trillion which would create a balanced budget.  Using pre-pandemic FY2019 outlays as a base would result in a FY 2025 budget of $6.5 trillion with a deficit of $1 trillion, still vastly superior to our current $1.85 trillion annual deficit from FY 2024.
• A continuing resolution passed in April 2025 “continues” the FY 2024 budget of $6.8 trillion to FY 2025. There does not appear to be a good estimate for the FY 2025 deficit under the continuing resolution.
• The federal debt has skyrocketed from “only” $5.5 trillion in 1998 to over $36 trillion today. A dollar held in 1998 is worth only 51 cents today.  Today’s big spenders should explain why they’ve allowed this devaluation of the dollar to occur!

Conclusion.  Fiscal sanity and responsibility in Washington are badly needed.  Cutting federal spending back to more appropriate levels should be a top priority for our national leaders.  Not only is it plain common sense, but it is also necessary for controlling inflation, which is Trump’s biggest challenge.

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On this blog, I discuss our country’s biggest problems, especially regarding economics and fiscal policy.  Since Donald Trump began his second term as President in January, much of my focus has been on his policies, especially his tariff policies, and their potential effect on inflation.

As I have stated several times, Trump was elected for a second term because of Joe Biden’s three major mistakes: 1) tripping off inflation with massive deficit spending, 2) allowing an out-of-control open southern border to develop, and 3) exhibiting a weak foreign policy, beginning with the disastrous withdrawal from Afghanistan in August 2021.

Trump has responded well to Biden’s last two problems.  Our southern border is now virtually closed, with daily illegal border crossings already down to a trickle.

Trump’s foreign policy is also doing well for the most part.  His successful Middle East trip, just concluded, establishes the Trump “Doctrine of the Deal” which offers a realism built on commerce, even if it is lacking American idealism.  He will now have to get very tough with Vladimir Putin, to have any chance of achieving a just end to the Russian-Ukraine war.  Hopefully, he will be able to accomplish this.

But Trump’s biggest challenge for his second term is to keep inflation under control.   Consider:

• In the first four months of 2025, the Consumer Price Index (CPI) has been 3.0 (January), 2.8 (February), 2.4 (March) and 2.3 (April). So inflation has been going steadily down since Trump took office, which is what we all want.

  

• The problem is that Trump’s tariff proposals risk reigniting inflation. Right now his original, and massive, tariff proposals are on temporary hold while individual bilateral agreements are being negotiated.
• America’s biggest retailer, Walmart, has already announced some price increases, based on current tariff projections. Other companies are likely to follow suit.  This will put upward pressure on inflation.  On the other hand, if consumer confidence continues to wane, this will tend to keep prices down.

  

Conclusion.  Trump has succeeded in closing our southern border and is off to a good start in foreign policy.  His biggest challenge will be keeping inflation under control, and continuing to fall towards the Fed’s desired goal of 2%.  Continuing to keep his tariff goals moderate will be key in this respect.

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