Are Trump's Tax Cuts Just a Three Card Trick?

I trust you will be relieved to hear I do not intend to write a summary of America’s 2017 political year. First, so much has happened, often depressing, so why do a recap? Second, the political scene has been dominated by one man so he occupies the blog almost exclusively. Without question, Mr. Trump has overturned the way American leaders do politics. In this, he stands comparison with FDR, whose domination of Congress and US politics has yet to be beaten. Even LBJ could not claim such hegemony.

So, to focus. In this past year, I have been and remain confused by Trumponomics. For clarity, here is a glossary of terms:

National Debt: The amount which one nation owes to others, usually through borrowings in the bond market. Reports estimate the American debt exceeds $13 trillion.

Government Deficit: The amount of government expenditure, including interest on borrowings, less taxation earnings. It is estimated that the Trump government deficit in the current fiscal year will be $1.5 trillion.

I freely admit I am no economist and my detailed knowledge of economics would not stand much investigation. However, quite how the $1.5 trillion government deficit can be arrived at defeats me. Currently, observers can only see one side of the balance sheet. The tax cuts are known but the budget expenditure is not decided. Congress has yet to agree a budget for 2018, and the most recent Continuing Resolution, which keeps the federal government open, needs to be renewed before January 19^th, 2018 unless the Budget itself is finalised.

The howls of protest from many Congressional Democrats at the provisions of the Tax Cut and Jobs Bill matched the outrageous statement by Speaker Paul Ryan: “we are giving Americans back their money.” Really, Mr Speaker? How is money borrowed on the bond market to fund a deficit giving money back?

It is a sine qua non that people who do not pay tax will not derive a direct benefit from a tax cut. Employees who pay tax will not necessarily see a benefit from a corporation tax cut, unless they are shareholders or the corporation decides to invest the savings in increased wages. There is a small cut given to the highest income tax level earners. This will benefit the high earners disproportionately.

The key provision is the reduction in corporation tax. Will corporates invest the derived benefit in higher wages and more jobs? If so, it will prove to be a good move. If not, we are back to the failure of former President Reagan’s “trickle down” theories. There is one other oddity. The tax take from corporations may remain constant, despite the tax cut, through higher profits and a reduced tax avoidance stance.

But the bill not only re-defines tax policy. It has barbs. Oil drilling will be allowed in Alaska’s Arctic national wildlife refuge. The Affordable Care Act’s individual mandate, which requires Americans to either buy health insurance or pay a penalty, will be eliminated. American healthcare will revert to the pre-Obamacare dark ages when the poor could not afford insurance and lived their lives on a tightrope, worrying if medical treatment would result in bankruptcy. Republican ideology has overtaken common sense.

The other side of the Trump balance sheet remains uncertain. What will the federal government spend its tax take on? The anticipated deficit shows the tax take will be insufficient to meet current spending. Since a majority of federal government funding is directed to benefit the poor, it is the poor who will suffer most if there are welfare cuts.

No mention has been made of late by the executive branch about The Wall. If expenditure is to be made, which benefit programs will suffer? I consider that the proposed infrastructure program is sensible. It provides work and benefits communities with improved roads, community buildings, bridges and railways. However, I want to see strict provisions for administering the infrastructure programs. Otherwise, they could be an open invitation to corrupt people. America’s state and city governments have a long history of Bossdom and men gouging from the community trough. Trump says, “Clean the swamp”. Will he also make sure he does not create other swamps which resemble gravy trains?

I can see benefits from the tax cuts but only if those who pocket the lion’s share of benefit “play the game” and let many others enjoy more money in their pockets. America’s debt is almost unsustainable. If Trump’s plans send the debt into even higher numbers, who will pay eventually? For sure, not those who have created the economic disaster. That’s another set of questions that need answering.

On that note and before I dash for a cliff to jump off, may I wish you all a very Happy and Peaceful New Year. I would have added Prosperous but this is not in my gift…..until you elect me POTUS.

 

Dear Santa.

Dear Santa,

Last year, I sent you my Christmas letter earlier than usual and you came through for me. I am now the President of the United States. Well, truth be told, I deserve the lion’s share of the credit for my stunning victory because it was me who campaigned so hard and won. Most important, I have invented FAKE NEWS. What did you do? You just slithered down a few chimneys or did something or other with your reindeer for help. I never charged you for the mince pie but it’s the end result is what matters.

Anyway, I think it right you should do some things for me in 2018, as you actually did so little last year. So, here’s my Christmas list:

1.      Please make sure crooked Hillary gets hers for all sorts of things: private e-mail servers, cavorting with the Russians and basically for everything I am accused of. Not fair she should get a free ride while I have to take time out from running the country to avoid defending my actions.

2.      My good friend, Mr Putin, is a strong man, much like me though he is not so valued in my country, just like me in some of those sad states. How odd! I thought they loved me in Alabama. Anyway, please have people forget about Crimea, the Russians interfering with elections and other things like cyber-warfare in which Mr Putin allegedly indulges. Many of my Americans revere him just like they worship me.

3.      Little Rocket Man is still a pain in my butt. This applies for the rest of the free world, too, but my butt is far more valuable. The inscrute (my new word) Chinese say they are going to do one thing or another to get North Korea on side but when push gets to shove, nada, nothing. And the Chinese are my friends! I love them because they have screwed the American economy for decades, just like I have. Please use your influence to get the Chinese to do my bidding.

4.      I am without doubt the most successful President of the United States there has ever been or will be. Just look at the Stock Market. However, people seem upset along the way. For example, please have them understand that in education, Mrs de Vos is doing so well. We as a nation need only educate the top 10% of students, preferably in private schools, and there is no need to worry or care about the rest.

5.      In environment, my good friends in manufacturing and energy businesses need a supportive government to promote coal mining, Alaskan exploration and the like. This is what we must have to make America Great Again, jobs for the many – well a few - and huge profits for the elite. The Paris Accords were all wrong. What do environmental scientists know anyway about climate change and global warming? See what you can do, Santa. The wealthy are relying on us.

6.      I have to admit my record is being frustrated by blocks on meaningful legislation. The trouble is in the Senate and that damn filibuster rule. I think you could help by getting a few of those ill-informed, stupid Democrat senators like Pocohontas Liz Warren to disappear in the snow. You have no idea what damage their ignorant interference is doing. Looks like I am going to get the Tax Cut Cut Cut Bill through. My good, billionaire friends will be happy.

7.      Where I’ve done okay is in judicial appointments. I like judges who oppose single sex relations, abortions and human rights. But I am now being challenged by people supposedly on my side of the aisle. A Republican, I ask you, John Kennedy of Louisiana, challenged the qualifications of my appointee to the federal bench, Matthew Spencer Petersen. Now I am the boss. I say who gets to sit as a judge and I say where. Not sure what you can do about this but you are Santa. Your red coat says you are a Republican, thus revere me and back me up.

So, there we are, Santa. A short list. I hope you are not too busy to help this humble but most worthy President. After all, you don’t want a nuke drop on the North Pole.

Looking forward to hearing from you favourably. After all, I am the Commander-in-Chief.

The Donald.

Christmas Spirit in DC...Is Hard to Find.

 

December looks like it is going to be a tough month for both the President and Congress. Maybe their lives will become a Frank Capra-like movie, where a hero or heroine emerges, bringing peace and harmony to the chief executive and legislators, as snow falls over the final credits. The trouble is that Washington is not that kind of town. When the people who work there sing, “God rest ye, merry gentlemen,” they are vocalising about undertakers. Goodwill is regarded by working Washingtonians as a mere American charity, not a feeling of bonhomie.

The President has a major juggling act on his hands. If a spending bill is not passed by Congress by midnight on 8^th December, the federal government will theoretically run out of money. Federal employees will be laid off just before Christmas. That would not play well in Peoria or anywhere else.

Usually, the political parties would agree another Continuing Resolution to extend the date until after the Christmas Recess enjoyed by legislators and I do not dismiss this as a possibility. However, the Senate Democrats, as well as contrary Senate Republicans, have an opportunity to use the situation to seek deals from a President who is currently unwilling to agree what is wanted. The Donald tweeted earlier this week about a meeting with Democrat leaders, Chuck Shumer and Nancy Pelosi:

            “Meeting with “Chuck and Nancy” today about keeping government open and working. Problem is they want illegal immigrants flooding into our Country unchecked, are weak on Crime and want to substantially RAISE Taxes. I don’t see a deal!”

Republicans need at least eight Democrats in the Senate to meet the 60-vote threshold to bring cloture (closure) to a filibuster and pass a bill, so serious compromises by the President and the Congress majorities may well be the price to pay for a spending bill. However, going back to Clinton’s incumbency, the ‘shutdown samba’ is a known process, with last minute deals being done. The card Mr Trump could play is to recall Congress for a special session before Christmas. It’s fine if you have a seat in Maryland; not so good if you are from the far west. The President can tell the voters, “I’ve recalled Congress to do the business required and demanded by the people they serve.”

The Democrats have a lot of political leverage despite the fact they are in the minority. Their Christmas wish list from the Republicans and the Administration is already long. Here are some of the terms they are likely to demand:

·         First and foremost, “clean” passage of the DREAM Act, permitting undocumented, illegal immigrants the right to remain in USA if the latter comply with stated conditions. Democrats are on record that they would agree to additional border security enforcement but nothing approaching the current, stringent White House proposals on the topic.

·       A health care deal to stabilize the Affordable Care Act’s exchanges, funding key subsidies to give  the states more flexibility on Obamacare’s regulations. The proposal already has overwhelming bipartisan support, but Speaker Ryan has taken a hard line against it. Democrats may well use the spending deadline to force Republicans to vote for the bill, thus maintaining Obamacare.

·         Extension of the Children's Health Insurance Program, from which nine million children benefit, which has expired. This program has widespread bipartisan support in the House but a group of House Republicans want CHIP’s cost be offset by reducing funding for Medicare and the Affordable Care Act.

Trump is keenly aware that Congressional Republicans have not delivered a single major legislative victory during his time in the White House. With Republicans in control of both chambers as well as the White House, it will look weak and ineffectual if they are unable to keep the federal government open at Christmas.

With his right of veto, Mr Trump has the final say on the spending bill. He appears less than concerned with the prospect of a government shutdown. Instead, he has raised the stakes by throwing policy deadlines to Congress on immigration and health care. If the federal government closes, who will be blamed? That’s hypothetical and for another day.

What may well be the ultimate sticking point for all parties is tax cuts and tax reform. In the good old days of Reagan and Bush W, a big tax cut for the rich was packaged with a modest tax cut for the middle class. President Trump and Congressional Republicans suggest they are following precedent. Their proposals deliver an average tax cut of $700,000 to the nation’s 175,000 richest families and they say there are benefits for the middle classes. However, concerned, expert observers say Trump’s plan does not cut taxes for many middle-class families. It raises them. Unsurprisingly, recent polls give the plan a 30% approval rating.

I do not propose to go into detail on the budget and tax cut proposals. Undoubtedly they will change over time before agreement is reached. It’s the politics that interests me. The 2018 mid-term elections are fast approaching. How will voters respond if mammoth tax cuts are awarded to the rich whilst benefits and services for the poor and middle classes are reduced and eroded?

There are so many variables in this situation. It needs the touch of FDR, the negotiating skills of LBJ, the charm of Reagan and the political charisma of Clinton to get these deals done. It is an enormous test of Trump and his self-vaunted negotiating skills, especially when he has another problem with ‘Rocket Man’ and the inability of the Chinese to curb their acolyte’s ambitions. The President may surprise all and be up to the job but I would not bet much. By New Year, things may well be a lot clearer but the beauty of politics means you can never be certain.

 

My Outlook Inbox and Messenger App have been flooded with complaints about the President for tweeting and giving oxygen to Jayda Franzen and Britain First, an unspeakable group devoted to hatred of Muslims. Perhaps we Brits should start re-tweeting about white American policemen shooting innocent black people and tell the President to stop racial discrimination and murder. If Congress chooses to take Mr Trump to task, I hope the Bills of Impeachment include a charge of inciting racial and religious hatred, using the re-tweets as evidence.

 

I am taking a break for a week or so.

 

Eccentrics and Egocentrics

It is so dangerous to generalise, especially when it comes to the United States. If you pose the question, who is an American, one answer could be, ‘a person who was born and lives in America.’ However, it’s not so simple. There are geographical distinctions as well as issues of race, religion, class, politics, population density, acquired citizenship and comparative wealth. When you get down to it, America has diversity in spades.

And yet, there is an astonishing level of conformity. For example, in education, schoolchildren every morning pledge allegiance to the flag. Although there is no Church of America, there appears to be strong church attendance throughout the nation. Despite an apparent divide in political policy of the main parties, America seems to be a conservative country. For example, the policies of Richard Nixon’s administration would be well to the left of most Democrats these days.

It could be problematical to find the American eccentrics. We, in Good Olde England, have them in abundance. So, it was with great cheer that I read an item in last week’s Washington Post. Californian, Mike Hughes, is planning to launch himself 1800 feet high in a home-built, scrap metal rocket to prove the Earth is flat. The experiment was postponed when the federal agency responsible for this stuff would not give permission for a launch on public land. When interviewed, Mr Hughes said, “It's still happening. We're just moving it three miles down the road to the Mojave Desert. This is what happens anytime you have to deal with any kind of government agency.”

If the mile-long flight does not kill Mr Hughes, his journey will mark the beginning of a flat-Earth space program, where the ultimate goal is a launch that puts him miles above Earth. This nutcase, sorry – eccentric - hopes to photograph the proof that we all live on a flat disk. I suppose you could call it space programme denial. If Mr Hughes truly believes there is a conspiracy and that the space flights, moon landings and space stations, not to mention voyages to the planets, all sent back fake photographs, he will then have to prove that all nations who have flown into space bought into the conspiracy. No doubt he will allege that round-Earth technology is just FAKE news.

 

Speaking of which, is the current President an eccentric, egocentric or both? If the former, an eccentric can be defined as a person who is unconventional, uncommon, abnormal, irregular, aberrant, anomalous, odd, queer, strange, peculiar, weird, bizarre, off-centre, outlandish, freakish and extraordinary. I leave it to the reader to decide the extent to which these adjectives apply to Mr Trump. I could add others like self-defensive, boastful and uncaring of others except when they impinge on The Donald himself but these are no evidence of eccentricity rather than egocentricity.

 

There is a story doing the rounds that Mr Trump has refused to let Time Magazine take his photograph for their front cover on the Xmas issue because Time will not guarantee to put him front and centre. This is not Time’s first controversy with Presidential involvement. Its November, 1944 issue featured recently elected Vice-President Harry Truman on the front cover, accompanied by an article stressing the importance of the work of the Truman Committee in the Senate. Billions of taxpayers’ dollars had been saved on military expenditure. President Roosevelt showed his jealousy when he exclaimed: “They put Harry on the front cover? Why not me? I appointed him to the job, didn’t I?” By this FDR meant the job of chairman of the Senate Truman Committee. This was nonsense. A President cannot appoint the members of a Senate committee.

 

Then there’s former President Richard Nixon. He and sidekick Henry Kissinger conducted foreign policy in French: remember ‘détente’ and ‘rapprochement’. Bearing in mind they were playing off the Chinese and Russians, this was an eccentric choice of language, to which could be added the German, realpolitik. But while all this was going on, Tricky Dicky found time to design 18^th century costumes for White House servants. Not even Mr Trump has done that….yet.

 

Eccentricity and egocentricity is the stuff of life. It’s certainly adds entertainment to the current sad and depressing American scene but do we need a floor show? I suppose banning Flat Earth believers for merely mentioning the suggestion is out of the question?

Sex, Sex, Sex

From a young age, it is drummed into us: you do not discuss politics, religion or sex in polite society. However, since you are unlikely to read a Blog about weather beyond the first sentence, I am going to tread into dangerous waters. The Harvey Weinstein revelations started a tsunami of disclosures about sex within American society which then spread to Great Britain. In fact, the revelations aren’t solely about sex. They concern allegations of rape, bullying and one person exercising power wrongfully against another, usually a woman, who found it difficult, if not impossible, to resist advances at the cost of her career.

Last week, Ohio voters were told by a boastful senior judge that he had been sexually intimate with approximately 50 very attractive females. State Supreme Court Judge Bill O'Neill, who is a Democratic candidate for Governor, posted the claim on Facebook. In a follow-up interview he defended his post which began: "Now that the dogs of war are calling for the head of Senator Al Franken, I believe it is time to speak up on behalf of all heterosexual males." Judge O'Neill claimed his admission would save his opponents wasting time on opposition research. This could be a smart move.

The 70-year-old Democrat went on to describe two of the women and his alleged encounters with them. "It ranged from a gorgeous personal secretary to Senator Bob Taft (Senior) who was my first true love and we made passionate love in the hayloft of her parents’ barn." He later edited the post to clarify it was the secretary - not Senator Taft - with whom he purportedly had sexual relations. Never mind political correctness. Look at the grammar! There is no evidence to suggest the sexual encounters were anything but consensual. Accordingly, I regard the Judge’s disclosures as bad taste, nothing more.

Last week, National Public Radio host, Rachel Martin, gave a personal reflection on sexual-harassment allegations at the public broadcaster. She said that NPR “prided itself on being a place where women and men are treated equally and fairly. That's at the core of who we are. Because of that, this cuts deeper. We have thought of ourselves, perhaps naively, as exempt from something like this.”

Roger Ailes and Bill O'Reilly exited from Fox News amid accusations of sexual harassment. Some observers thought the problem was confined to a single network. Recent allegations that veteran journalist Mike Oreskes harassed women at both NPR and The New York Times have helped shatter that illusion. And this week, mega-journalist, talk show host, Charlie Rose has been accused of sexual harassment. This is of earthquake proportions.

The question, at this point, is: how wide and deep is the media's sexual-harassment problem, not to mention the film industry and the acting profession? A survey project by the Columbia Journalism Review could provide clues. CJR is asking journalists about their personal experiences, whether they have been harassed in newsrooms or witnessed harassment and whether the news outlets that employ them have clear policies and cultures in which victims feel safe to come forward. Hopefully, the project will expose strengths and weaknesses of the media's handling of sexual-harassment claims within its own ranks.

When it comes to senior politicians, there is a long list of sexual predators, going back to the Founding Fathers. Alexander Hamilton was caught in an affair with Maria Reynolds, a married woman. Thomas Jefferson fathered children with Sally Hemmings, a slave. Woodrow Wilson conducted an extra-marital affair when President of Princeton. Warren Harding was a known womaniser when both a US Senator and the President. Franklin Roosevelt conducted a long affair with Lucy Rutherfurd whilst Chief Executive.

More recently, married man Garry “where’s the beef” Hart, then a Presidential candidate, was caught in an affair with Donna Rice. They were pictured together on a yacht, “Monkey Business.” Newt Gingrich got caught out in an affair with a staffer when he was with wife number two. Clinton and Lewinsky remains a cause celebre even today. And another Presidential hopeful, John Edwards, conducted an affair during his run for the Presidency when his wife was dying from cancer. Accusations against President Trump of being a sexual predator surfaced during the 2016 campaign. Trump has denied the allegations but the lawsuits are pending.

Judge Roy Moore of Alabama, a candidate for the US Senate, is ensnared in a sex scandal, allegedly having relations with six teenagers. And Minnesota US Senator, Al Franken, is the subject of forcible kiss and grope allegations that took place eleven years ago. Ohio Supreme Court Chief Justice Maureen O'Connor condemned both her colleague O’Neill and other sex predators: "No words can convey my shock. This gross disrespect for women shakes the public's confidence in the integrity of the judiciary," and, by extension, politicians.

If people exercise undue influence over others, especially minors, for sexual gratification, it is plainly wrong and needs to stop. Whether criminal action should follow will depend on the strength of evidence. However, if adults conduct consensual liaisons of a sexual nature, they may be morally at fault but nothing else. What troubles me in this spate of disclosures and allegations, both in USA and here in the UK, is the number of years which it seems have passed since the alleged events complained of took place not to mention the issue of proof.

What troubles me more is that sexual harassment seems to be in the culture of certain stratas of society in both the US and UK. We don’t need new laws. I am sure there are criminal statutes available to prosecute the perpetrators and in both nations, there is no legal bar to civil proceedings. So, the question is: how do you change people’s minds and behaviour? And this question relates to both the offenders and those who have suffered at their hands.

I understand that people will have been scarred by what happened to them but, surely, if the event occurred more than ten years ago, it’s time to let it go or, at the very least, come clean with why it was kept quiet. Looking back at my own life, should I be worried that a misplaced fumble sixty years ago or more will now come back to haunt me? If so, would I remember the girl in question or would it all be imagination?

 

 

Inside the Beltway

Some years ago, I had the pleasure of interviewing Michael Brunson, the television journalist and formal political editor of ITN. Michael spent several years as a Washington D.C. correspondent. He told me: “Inside the Beltway – the ring road around Washington – politicians, administrators, lobbyists and journalists all believe they live in the centre of the world and what they do is more important than anything else. Outside the Beltway, nobody cares!”

I suppose the same test could be applied to Westminster, Canberra, Ottawa and other political centres. This is why, so far, I have kept my powder dry about the Mueller investigation into Russian political interference and influences into the 2016 Presidential election. However, there are rumblings in both the American and British press that the President might fire the Special Counsel, Robert Mueller. There are suggestions that Mueller’s investigation is getting too close to the President and members of his family. As a counter, Trump supporters are stating that Mueller is exceeding his brief and venturing beyond his remit. But, at the moment, does anyone outside the Beltway care?

I have checked the terms of Mueller’s appointment, as made by Rod Rosenstein, the Deputy Attorney General. They are:

            “To conduct the investigation before the House Permanent Select Committee on Intelligence on 20^th March, 2017, including:

(i)                 any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump; and

(ii)               any matters that arose or may arise directly from the investigation; and

(iii)             any other matters within the scope of Section 600.4-10 of Title 28 of the Code of Federal Regulations. [These detail the powers of the Special Counsel.]

I am not qualified in American law but the appointment letter reads like a blank cheque, permitting Mueller to follow any and every avenue uncovered by his investigation. So, were Trump to fire Mueller, he would have little or no justification in saying that the Special Counsel had exceeded his authority.

There is precedent for firing a special counsel. In 1973, under enormous pressure from Congress, Richard Nixon appointed Archibald Cox, a Harvard educated lawyer and Solicitor General under JFK, as special prosecutor, to look into the Watergate affair. During Senate hearings, Alexander Butterfield, a White House deputy assistant to Nixon, disclosed the existence of an Oval Office taping system. Cox subpoenaed several tapes. Nixon refused to hand them over so Cox went to Court to seek an order that the President produce those tapes. Negotiations ensued between the President’s lawyers and Cox’s team but failed. Needing to head off Cox, Nixon ordered him to be fired.

In what became known as The Saturday Night Massacre, Nixon ordered Attorney General Elliott Richardson to fire Cox. Richardson refused and resigned in protest. Nixon then ordered Deputy Attorney General William Ruckelshaus to fire Cox. Ruckelshaus also refused and resigned. Finally, Nixon ordered the Solicitor General, Robert Bork, as acting head of the Justice Department, to fire Cox. Bork obeyed. The night Cox was fired, his deputy held a news briefing and read the following statement: "Whether ours shall continue to be a government of laws and not of men is now for Congress and ultimately the American people."

On November 14, 1973, federal district judge Gerhard Gesell ruled Cox’s dismissal was illegal. Congress was infuriated by what it saw as a gross abuse of presidential power and in short order, the polls showed that, for the first time, a plurality of U.S. citizens supported impeaching Nixon. Cox was replaced by Leon Jaworski, who took the tapes case before the Supreme Court and won 8-0. Soon after, the House of Representatives voted for Bills of Impeachment and Nixon resigned.

Cox was not the only special prosecutor to be replaced. As a result of an exposé in The New York Times, the Justice Department opened an investigation into the failed Whitewater property deal in which President Clinton was implicated. In 1994, at the President’s request, Attorney General Janet Reno appointed Robert Fiske as special prosecutor to investigate “the legality of the Whitewater transactions.” Fiske conducted himself too properly for Republicans in Congress and was replaced after a few months on grounds that he had been appointed by a Democrat and that there was a conflict of interest. Republicans pressed for the appointment of  Kenneth Starr by a so-called independent three-judge panel to continue the Whitewater investigation. Eventually, Starr found no impropriety by the President in relation to Whitewater but his enquiry had delved into Mr Clinton’s private life. The President was impeached but found not guilty, when the Senate voted on party lines.

In an episode this week which can best be described as tit for tat, Attorney General Jeff Sessions, coping with a disgruntled President, as well as increased scrutiny over his knowledge of the Trump campaign’s dealings with Russia, is reported by the American press to be considering the appointment of a second special counsel to investigate allegations against Hillary Clinton, otherwise known as Crooked Hillary, and other Democrats.

Appointing a second special counsel would be seen as a move to appease a President who has long been critical of his Attorney General. I see this latest twist as a mere deflection, a political inspired manoeuvre to distract the public’s attention from the reality of Mueller’s probe. Bearing in mind FBI chief James Comey’s rigorous investigation of Mrs Clinton’s private e-mail server, if there was anything to be found that implicated Mrs Clinton with the Russians, surely it would have surfaced.

Sessions himself gave evidence to the House Judiciary Committee and was pressed on the need for the appointment of a second special counsel. The exchange between Sessions and Republican Representative, Jim Jordan of Ohio, showed the Attorney General in a combatant light as he dismissed a conspiracy theory:

“We know one fact,” said Jordan. “We know the Clinton campaign and the Democratic National Committee paid for the dossier. We know that happened and it sure looks like the FBI was paying the author of that document. And it sure looks like a major political party was working with the federal government to then turn an opposition research document that quoted some National Enquirer story into an intelligence document, take that to the Foreign Intelligence Surveillance Act court so that they could then get a warrant to spy on Americans associated with President Trump's campaign. That's what it looks like.”

Sessions's retorted: “I would say 'looks like' is not enough basis to appoint a special counsel.” A left hook for Jordan and a right cross for the President. Once again, a hare has been set running in D.C. without much basis in reality but this does not mean that politics will not rear its head with yet another investigation. It has to be said that Mr Trump would love it if the Justice Department took on ‘Crooked Hillary’, never mind the facts.

History has a habit of imitating itself. Should Mueller’s investigation lead to prosecutions of the Trump inner circle and immediate family, not to mention Trump himself, the President would have to think very carefully about the ramifications of sacking Mueller as his special counsel. Whatever happens will be as much political as it is legal and President Trump does not seem to have a great deal of political capital at the moment.

 

 

 

The New Chairman of The Fed.

 

The President has selected Jerome Powell to be the next Federal Reserve chairman. This is the first time in decades that a U.S. President has not reappointed a chairman for a second term. If the Senate confirms the appointment, Powell will succeed Janet Yellen, the first woman to have headed The Fed. Some in Wall Street have criticised Mr Trump for breaking with convention and ending a tradition that the Chair serves two terms. Powell has been one of Yellen’s most reliable supporters in setting monetary policy, so Trump has made a steady-as-she-goes selection. In choosing Powell, Trump has ignored some Senate Republicans who urged him to select a “hawk,” a central banker more prone to steeper and speedier rate hikes.

According to most observers, Yellen has done a good job. However, it is worth remembering that when it comes to breaking with a long held convention, no less a President than Franklin Roosevelt sought a third and fourth term as President. Furthermore, the implied entitlement to a second term as Chairman of the Fed smacks of “buggins turn,” an old Congress tradition, now ended, when those who served the longest had the unfettered right to the plum jobs.

Before my banker friends/readers yell, with some justice, “what do you know about this stuff?” I confess that I am a novice about central banking systems. I am aware that the Federal Reserve, created in 1913, known simply as The Fed, is the central banking system of the United States. It came into force after numerous financial panics when US government decided that central control of the monetary system was needed to head off or ameliorate financial crises. The Great Depression in the 1930s and the Great Recession during the 2000s led to the expansion of the roles and responsibilities of The Fed.

Congress established three key objectives for The Fed in administering monetary policy: maximizing employment, stabilizing prices, and moderating long-term interest rates.  After the 2009 crash in the banking industry, the Fed’s duties widened to include supervising and regulating banks, maintaining the stability of the financial system and providing financial services to depository institutions and the U.S. government. 

The Fed is governed by a Board of Governors, appointed by the President with the advice and consent of the Senate, which is a fancy way of saying that appointments are subject to Senate approval. It follows that the appointment process is political. I explore this aspect later.

As a Brit, I am used to the independence of the Bank of England. For example, since 1997, the B of E has the sole power to set UK interest rates. Likewise, The Fed has a high level of independence as a central bank: its monetary policy decisions are not subject to approval by the executive or legislative branches of the US government. The Fed does not receive funding from Congress and the length of the terms served by Board members span multiple Presidential and congressional terms. However, the Government Accountability Office and an outside auditor regularly audit the Fed, although audits do not cover monetary policy actions nor dealings with foreign governments and other central banks.

In announcing Powell’s nomination, the President said, “if we are to sustain all of this tremendous economic growth, our economy requires sound monetary policy and prudent oversight of our banking system. That is why we need strong, sound and steady leadership at the United States Federal Reserve. I have nominated Jay to be our next federal chairman… because he will provide exactly that type of leadership: He’s strong, he’s committed, he’s smart.” It seems to me that Yellen fits the same description so why Trump should imply criticism of the incumbent is a guess. May be he wants his own nominee, a man, in charge.

Powell, a Republican who made a fortune in the private equity business, has served on the Fed’s board of governors since 2012. Evidently, among the chattering banking classes, he is regarded as only slightly more conservative than Yellen and is expected to maintain the monetary and regulatory policies the Fed has pursued since the financial crisis of 2009. Powell was one of Yellen’s most reliable supporters in setting monetary policy.

There has to be a possibility that Trump and Powell will butt heads. The Washington Post has identified four issues for Powell to confront:

1. This could be the most polarizing vote ever to confirm a Fed chair: Congress did not require confirmation of Fed chair nominations until 1977. Since then, most nominations have been confirmed in bipartisan votes. However, the political parties have favoured different monetary and regulatory policies since the 2009 financial crisis and President Obama’s two appointees to the Fed chair faced a rough entry. When Obama nominated Powell for a Fed Board seat in 2014, fewer than half of GOP senators supported him. Of those, 22 Republican “no” voters are still serving in the Senate. Will they support Powell’s appointment now that he’s a Trump nominee? It would be foolhardy to suggest the present crop of Senate Republicans will not kick up some kind of fuss, although a behind-closed-doors solution cannot be dismissed.

2. How will Powell forge consensus at the Fed? Powell at the top should make little difference in monetary policy, i.e. interest rates and quantitative easing. Powell is expected to continue Yellen’s path of higher interest rates and a shrinking Fed balance sheet. As Powell offers continuity, his nomination should calm market fears of any sudden monetary policy shifts. But the Chair is just one person. Trump has three more Board vacancies to fill and if Yellen leaves the Board when her term ends, Trump will have a fourth. All Trump’s nominees will be involved in shaping the economy’s outlook. Powell’s power might be limited or strengthened. What the nominees tell the President before appointment and what they do after reaching the Board could be different things.

3. Will the new Fed unravel Dodd-Frank’s regulatory policies? Trump and his economic advisers are no fans of Dodd-Frank, the laws that tightened supervision and regulation of the banking industry after the financial crisis. Powell has largely defended Dodd-Frank. He even called the Trump Treasury’s plan for financial deregulation a “mixed bag,” noting some ideas he wouldn’t support. Is there a train wreck on the horizon as a coalition of right-wing politicians and bankers clash against The Fed?

4. Will a Republican Congress ease up on a Republican-led Fed? In President Obama’s time, Congressional Republicans tried to resist The Fed’s monetary policy. Predicting inflation that never occurred, Republicans argued that rates were being kept too low for too long. They also threatened to curtail The Fed’s policy discretion by requiring the latter to follow formulaic rules setting interest rates. When The Fed bought massive quantities of bonds to stimulate the economy in the wake of the crisis, GOP lawmakers accused the central bank of a multitrillion-dollar intrusion into the credit market. As the chair of the House financial services panel warned, “If we are not careful we may wake up one day to find our central bankers have instead become our central planners.”

In this week’s Sunday Times, Irwin Stelzer wrote: “Mr Trump knows the ultimate success of his Presidency depends on delivering a fast-growing economy.” He states that Powell is inheriting a reasonable healthy economy, for which Yellen can take credit. Unemployment is down to 4.1%, the last two quarters’ growth have exceeded 3% and consumer confidence is at its highest for seventeen years. But is all this due to a year of Republican executive policies? Surely, Yellen’s wise ‘steady-as-it goes’ policies must be a major contributing factor.

As an interested observer of the American political system, it would be fascinating to watch a “who rules” fight between Congress, supported by the President, and The Fed, a respected and independent American institution. The Vice-President, Mike Pence, is against Powell, as are more radical members of Trump’s team. They have made known their preference for John Taylor, who has a more radical agenda: faster rises in interest rates and ending printing of cheap money for the banks. In a dog fight, Congress would be bound to be the winner as it has power to change the law and neutralise The Fed. But would the American people support such a fundamental change, removing The Fed’s independence? Even a President as powerful as FDR could not get changes to The Supreme Court.

When President Bill Clinton was elected in 1992, as his first act he wanted to give the middle classes a tax cut. He spoke with Fed chair Alan Greenspan, who told him the bond market would not accept the cut. If this was right, US government borrowing from bond sellers would become far more expensive very quickly and suck up even more taxpayers’money. Clinton gave up the idea. Don’t tell me The Fed has little power.

 

 

 

Terrified

There are different levels of terror, for example apprehension is less than fright, which in turn is less than scared. I was thirteen when I recall being between scared and terrified. At my school, boxing was compulsory and for three days before my first fight, I was struck by terror. I won but lost the next one badly. Thank heavens, it was the end of my fight career. Since then, there have been occasions when I have gone through one or more stages of terror but most related to family and health issues.

As I look at the world scene, I am between scared and terrified again. In Germany, Alternative for Germany, an extreme right wing party, achieved 13% of the vote in the recent elections. In Austria, a new Chancellor has been elected on a right wing ticket, targeting immigrants. In UK, the Conservatives hold a fingernail hold on Parliament and could lose a vote of confidence any time. Jeremy Corbyn might sit in No 10 Downing Street before the summer. His extreme left wing ideology is supported by thousands of members of the Labour Momentum grassroots movement who will be at the forefront to put radical Labour into government. Why does this scare me? Labour has a substantial anti-semitic element which the leadership allows to do its ugly work.

In Spain, Catalonia has sought independence, based on an unlawful referendum which attracted a minority population turnout. Catalonian leaders called for talks. The Spanish government in Madrid replied by taking power in Catalonia and a demonstration in Barcelona last weekend showed that many Catalonians do not want independence. However, there are parallels with 1936 and the Spanish Civil War, when Catalonia aligned itself with the legitimate government from whom it expected to achieve independence. But so did the right wing Basques. Spain has a history of putting down rebellions in the harshest way. Imprisoning most of the Catalonian leadership on remand bodes ill.

The Middle East and Asian wars continue to rage in Palestine, Syria, Iran, Iraq, Afghanistan and who knows where else in the near future. Israel is always on a war footing. Surely it is just a matter of time before the Saudi regime collapses. Britain’s withdrawal from the European Union has left all manner of issues and people in limbo. At the moment, the negotiators are conducting economic warfare. The 27 EU countries are demanding billions of Euros from the British as the price of divorce. All parties seem to think an intransigent stance is the right way to go and no need to keep in mind the future of 500 million people. It is not the hugest stretch moving from the current economic war to the real thing.

Recently, Secretary of State Tillerson worked on opening a dialogue with the North Korean regime. The President declared publicly that he should not waste his time. I would not object so much to the crass, undiplomatic war of words between Trump and Kim Jon-Un, otherwise known as Rocket Man, if it were not for the fact that both have nuclear weapons at their disposal. Why is it that the world elects or allows men who lead their countries to behave like nutcases?

The first side effect of the North Korean crisis is Japan, whose recently re-elected Prime Minister wants to change his country’s pacifism policy and increase the armed forces and its weapons. I do not choose to insult Japanese people. Indeed, those I’ve met over the years have been delightful. But I don’t forget how they behaved in Manchuria in the late 1930s and, of course in Burma in World War II.

What of America? I could well be wrong about the difficulties in which the current administration may find itself but I have been writing for many weeks that the President’s future rests with the Mueller investigation into Russian interference with the 2016 election. In the film, Wag the Dog, a beleaguered President starts a foreign war to get the American people united and on his side. The rhetoric between Trump and Rocket Man blows hot and cold but should it resume with raised stakes, it might be because Mueller is getting too close to Mr Trump.

For the last few weeks, Trump has sent an extraordinary fusillade of angry tweets about the investigation into possible ties between his election campaign and Russia, amid reports that the special counsel leading the inquiry was making the first arrests. In a series of tweets, Trump referenced what he called “phony Trump/Russia ‘collusion’ which doesn’t exist”, accusing Democrats of a “witch hunt” and “evil politics”, before adding that Republicans were “fighting back like never before”. He laso asks Mueller, “what about crooked Hillary?”

US intelligence agencies concluded almost a year ago that Russia interfered in the election to try to help Trump defeat Clinton by hacking and releasing embarrassing emails and disseminating propaganda via social media to discredit her. Mueller is also investigating whether Trump campaign officials colluded with those Russian efforts. The investigation has been circling some of Trump’s closest confidants, such as former national security adviser Michael Flynn. Former campaign manager Paul Manafort and his business associate, Rick Gates, have been charged on twelve counts including conspiracy against the United States, money laundering and tax fraud. George Papadopoulos, a Trump campaign adviser, has entered a guilty plea for lying about contacts with the Russians.

Mueller is conducting a classic enquiry. Start with people on the outside, charge them and see who or what they will give up for a deal to save themselves. Trump knows this, so little wonder that he and his supporters have disparaged Mueller and tried to portray him as a Clinton sympathiser, as well as a fan of James Comey, the FBI chief fired by Trump. Mueller will run for months, not weeks, and at some stage, I suspect Congress will weigh in with its own enquiry. If there is just a whiff of collusion by the President, the American government may well be brought to a standstill.

In the meantime, the warring ideology of world leaders is frightening me. I am not terrified yet but I know how quickly a political situation can evolve into fighting. I keep saying to myself, “war is diplomacy by other means” and as Churchill said, “jaw, jaw, jaw is better than war, war, war.” I just hope my assessment of the world situation is wrong. However, one phrase that sends a chill up my spine is ‘Make America Great Again.’ I cannot forget that just a few decades ago, Adolph Hitler exhorted his fellow countrymen, ‘Make Germany Great Again.’

 

 

The 25th Amendment:

The fourth series of the The West Wing opens with President Jed Bartlet writing to Congress, invoking the 25^th Amendment and stating he is unable to fulfil his duties because of the capture of his youngest daughter, Zoe, by terrorists hostile to America. When Zoe is rescued, Bartlet signs another letter saying he will resume his duties. As one of the actor’s opposed to the ruling Party says, “You can’t fault Bartlet. He did everything right.”

The 25^th Amendment to the Constitution was ratified in the aftermath of President Kennedy’s assassination. It sets out procedures to replace a President or Vice-President in the event of the death, removal, resignation or incapacitation of the incumbent. The Amendment has been applied twice in real life, both in the 1970s: first when Gerald Ford replaced Vice-President Spiro Agnew and second when Ford replaced Nixon as President and Nelson Rockefeller filled the Vice-Presidential vacancy.

The Amendment is specific on process. If the President is unable to discharge his powers and duties, the declaration must either be in writing signed by the President himself, or the VP and a majority of the principal executive officers (i.e. the cabinet) or other body specified by Congress, declaring that the President is unable to discharge his powers and duties. If the President steps aside, he may resume his duties by written declaration that no such inability continues to exist. To date, no President has declared himself or been declared unable to fulfil his office.

President Trump’s fitness for office has been the subject of press speculation, not to mention Washington gossip, since his election. Former President Bush (43) recently commented how the hostility of party politics in Virginia is damaging to the people of the state but the implication of criticism of Trump was clear. Later, both Bush and Obama repudiated President Trump for his brand of politics and his approach to the world.

Senator John McCain has also lambasted Trump. In a speech in Philadelphia, he said, “To fear the world we have organized and led for three-quarters of a century, to abandon the ideals we have advanced around the globe, to refuse the obligations of international leadership and our duty to remain ‘the last best hope of Earth’ for the sake of some half-baked, spurious nationalism, cooked up by people who would rather find scapegoats than solve problems, is as unpatriotic as an attachment to any other tired dogma of the past that Americans consigned to the ash heap of history.”

This was no side-swipe at Trump. It was a right hook. No doubt, President Trump will fire back a volley of abuse at these senior politicians. I can’t wait for the tweets to start. It’s a pity Trump refuses to listen to these experienced politicians and mend his ways but that just will not happen.

I have often written that there is no prospect of Trump’s impeachment at present, unless Robert Mueller’s Russian investigation discloses serious wrongdoings by the President. Even so, impeachment is far more political than legal and there would have to be 67 Senate votes to convict the President and remove him from office. Instead, there is now mention amongst the chattering political classes of invoking the 25^th Amendment. I see no valid, legal grounds for this. Nothing about this President’s behaviour has been surprising, given the style of last year’s campaign. For example, evidence of Trump’s molestation of women and insulting the parents of a dead soldier did not deter voters. Since the inauguration, none of the Trump and family-related scandals have morphed into potential high crimes and misdemeanours. Perhaps a high degree of incompetence can be alleged but if you go back a century, how competent was Warren Harding? To use the 25^th on grounds of incompetence would be one heck of a stretch.

I strongly believe the Presidency is not simply another office. Since Roosevelt’s days, it has been the centre of American political power and sometimes the last resort for life and death decisions. The powers of Congress, as envisaged by the Framers, have been usurped by the executive branch. So, Americans are entitled to expect their President to use intellectual rigour, sound management and morality and not to govern by political ideology. After all, the chief executive is President for all the people. I consider Trump has failed in every department. He is like a spoiled child, not wanting to share toys, vicious in his treatment of others he considers inferior, a man who clearly despises blacks and Asians. He is a person riddled with complexes that would need a psychiatrist to name. Put simply, in my opinion he is unqualified for the job.

However, millions of people voted for him and I detect no sign that a vast majority of those voters have changed their minds. Currently, he has an overall approval rating of 37% but in Trumpland he has an 88% approval rating. Trump voters want him to annoy the Washington establishment, show belligerence to North Korea, force European allies to fund NATO, remove Obamacare and lower taxes. Trump has another trump card – excuse the pun. Congress’s approval rating is at an all-time low of 16%.

The 25^th Amendment is not the proper vehicle to seek removal of a President in the current circumstances. It is not a substitute for impeachment. America and the rest of the world will have to await the outcome next year’s mid-term elections to see if Trump gets a bloody nose. If Republicans lose their House and Senate majorities, we have a new ball game where almost every Presidential move can be blocked. Until then, those who cannot stand the current administration will have to suck it up.