The Weiner Component #163 – Part 2: The 2017 Presidency

English: Seal of the President of the United S...

Official portrait of Secretary of State Hillar...

The Presidential Campaign will continue until Tuesday, November 8th of 2016, with both sides continually verbally attacking the other.  Trump has reorganized his staff three times, hiring among others someone who has made a career of attacking and trying to discredit the Clintons. He is supposed to excel in dirty tricks.  Hillary Clinton will continue with her basic premise that Trump is unfit to be President and move on from there.  In fact on Wednesday, September 7, at a back to back veteran’s Town Hall with Clinton, Trump defined the secret briefing as being anti Obama in the body language of the men who gave it, something which the intelligence community said never happened.  In terms of money raised for campaigning Clinton seems to be able to raise well over ten times the amount Trump does.

 

(In fact, Trumps entire Washington Bureau Organization quit when Trump refused to send them the promised checks for their work. This seems to be a pattern of Trump’s, stiffing his employees by not paying them.}

 

There are to be four debates scheduled, three will be between the Presidential candidates and one between the Vice-Presidential choices.  Of these one will be moderated by a NBC moderator, one by a Fox News employee, one by ABC News and CNN with joint a moderator from each network, and the Vice Presidential one by CBS News.  They will begin on September 26th and end on October 19th.  They should be interesting or at least colorful.

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When all this is done and the votes finally counted at the end of November 8th the next President of the United States will be officially elected to that office and will take the helm in January of 2017 of guiding the country for the next four years.

 

If we ask, which candidate will it be?  There is a high probability that it will be Hillary Rodham Clinton.  It is also probably that the Senate will return to a Democratic majority after the election but that the House of Representatives will remain in the hands of the Republicans.  This is the exact situation that President Obama faced from his third year in office until his sixth year there.  In 2014, a non-Presidential Election year, the Republicans also achieved a slight majority in the Senate.

 

From 2011 on there was a Democratic President, a Republican majority in the House of Representatives, and until 2014, a Democratic majority in the Senate.  The result, since 2011, has been total gridlock with the House most of the time unsuccessfully trying to force its will upon the President and the Senate; and in many cases adding something that they wanted like defunding Planned Parenthood to a necessary bill which was then vetoed.

 

For the duration of his first term in office the Congressional Republicans in both Houses of Congress were determined to make Barack Obama a one term President.  They opposed everything he supported.  The Affordable Health Care Bill, which was modeled upon one developed by the Republican Think Tank, Citizen’s United, for Mitt Romney when he was governor OF Massachusetts and applied to that state.  It espouses Republican values by allowing private enterprise to control the plan.  Yet it was passed in Congress on a strict Party basis.  Democrats voted for it and all Republicans all opposed it.  The House, after the Republican majority was reached there spent over fifty days bringing its demise up and voting to end it even though these numerous identical Bills were never brought up in the Senate.  The vote has always been strictly upon Party lines.

 

For his first four years in office President Barack Obama seemed to feel that he could get some cooperation from the Republicans in Congress.  It never happened.  For his second term he knew better but he nor the rest of the Democratic Party ever really took them on.  While neither the President nor the Democrats in Congress never really exposed the Republican actions or non-actions the Republican’s never stopped blaming the President and the Democrats for what they, the Republicans, did not do.

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The odds are that Hillary Clinton on November 8th will be elected 45th President of the United States, and the Senate will regain its Democratic majority.  But there is a high probability that the Republicans in the House of Representatives, while losing some of their majority members, will still have control of that body.

 

There are 435 voting members in the House.  Currently 247 are Republicans and 188 are Democrats.  The Democrats would have to win 30 seats in the House to just gain control of that body.  They will probably gain some seats but not the 30 needed.  Consequently the probable state of affairs during the Clinton Presidency could very well be continued gridlock.

 

With this situation there is the question of how will Hillary Clinton be able to bring part or all of her agenda about.

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One of the major group of incidents that have frustrated President Obama during his presidency has been the random terrorist massacres that have occurred throughout the United States.  Generally Congress will observe a moment of silence but essentially the Republicans will pass no laws to control the purchase of firearms.  The National Rifle Association, which contributes heavily to Congressional elections and supports gun owners throughout the U.S. and is controlled by the gun, magazine, and ammunition producing companies, holds the position that any step in weapon control is the first step in taking guns away from American citizens. Essentially what the reformers want is to have thorough background checks upon everyone buying a firearm and to stop the sale to people with mental problems or to those who have criminal records.

 

The random gun shootings in the United States are at least 22 times higher than in any other industrial nation.  The last terrorist attack was on the night of June 12, 2016, when Omar Mateen, an American born, not too well mentally balanced 29 year old Moslem, who worked as a security guard, killed 49 people and wounded 53 others in a terrorist hate crime inside Pulse, a gay nightclub in Orlando, Florida.  After a three hour siege he was shot and killed by the Orlando Police Department swat team.  Mateen had purchased the semi-automatic firearms legally the prior week.

 

This issue was dealt with at least twice at the Democratic Convention: once by adults who had lost a parent or child to random shooting and once by people whose parent or child had been specifically or otherwise targeted.

 

The Senate had blocked four gun measures the following Monday, two from each party.  Mitch McConnell, the Senate majority leader said that Democrats were taking advantage of the Orlando Massacre, using it as a political talking point.  He called the Republican proposals, “real solutions.”  Harry Reid, the minority leader, called the Republican measures, “political stunts.”  Hillary Clinton had one word for the Senate after the gun vote, “Enough.”  She later tweeted, “It’s time to demand more than thoughts and prayers from our elected officials.”

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At the Democratic Convention, the Platform writing committee consisted of fifteen members: Clinton appointed six of them, Sanders five, and Wasserman Schultz four.  The Platform was described by NBC News as the most progressive in party history.

 

They want to raise the federal minimum wage to $15 an hour and index it to inflation.  They also desire to include 12 weeks of paid family and medical leave.  On health care, the Democrats want a public option for the Affordable Care Act and legislation to allow Americans aged 55 and over to buy into Medicare.  They also want Medicare to negotiate lower prices for prescription drugs and to double their support for community health centers that provide primary health-care services, particularly in rural areas.

 

The Democrats express support for Wall Street reform.  They want a 21st Century Glass-Steagall Act to keep banks from gambling with depositor’s money and a breakup of “too big to fail” financial institutions.  Also there should be an expansion of Social Security and the abolition of the death penalty.  There is support for criminal justice reform, and an end to private prisons; and reforms to boost police accountability to communities.

 

On taxation the platform pledges “tax relief for middle class families” and improvement on K-12 education.  On workers’ rights the platform endorses expanding and defending the right of workers to organize unions and bargain collectively.  The platform maintains the long standing support of Israel.  On abortion it states, “We believe, like the majority of Americans, that every woman should have access to quality reproductive health care services, including safe and legal abortion – regardless of where she lives, how much money she makes, or how she is insured.”  It also defends Planned Parenthood.  It urges the elimination of all forms of discrimination against women and supports passage of the Equal Rights Amendment.  “After 240 years, we will finally enshrine the rights of women in the Constitution.”

 

There are other considerations in the Democratic Platform but these are ones that both Hillary Clinton and Bernie Sander strongly support.

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The next question that arises is: How will President Hillary Clinton bring many or most of these positions to fruition?  Will she end up like President Barack Obama, having to fight the House of Representatives, in many cases unsuccessfully, for every change the country needed?  President Obama was mostly successful working through the Federal Reserve and by using executive orders.  He got very little from Congress except having the House close down the government.

 

The Republicans in the House of Representatives seem to have no understanding of fiscal policy and many of them seem to want to limit the powers of the Federal Reserve, particularly in terms of monetary policy.  One gets the impression that many Republicans in the House do not really understand the principles of economics as they apply to the Central Government.  Basic ignorance does not bring about solutions to problems.  In fact they worsen those situations.  Witness the Great Recession of 2008.  A Republican President in 2009 would have turned it into a Greater Depression than that of 1929.

 

The actions taken by the Republican dominated House of Representatives from 2011 tended to worsen economic conditions by cutting government spending and increasing unemployment.  It was President Obama and the Federal Reserve, under Chairman Ben Bernanke, using creative monetary policy that largely solved the problem of unemployment, which should have been solved completely by Congress using fiscal policy.

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In 2017 President Clinton will have her hands full.  Will she be able to work with Republicans to bring about full employment and an era of increased prosperity for the majority of the American people?

The Weiner Component #149 Part 1 – The 2016 Political Presidential Campaign

speaking at CPAC in Washington D.C. on Februar...

speaking at CPAC in Washington D.C. on February 10, 2011. (Photo credit: Wikipedia)

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The Candidates from both political parties have completed a number of debates and also some TV Town Halls.  The Republican debates have been considered more dramatic by American viewers, so they have had larger audiences. 

 

It is important to keep in mind that only Republicans are voting for Republican candidates and that their debates and current actions are aimed at being chosen as the Republican candidate at the Nominating Convention in late July and conversely only Democrats are voting for their candidates for the same reason.  The debates are a means for each to demonstrate his/her ability and political position.  The public is getting a view of all the candidates so that they can make up their minds about the candidates of both parties.  Only one will emerge from each party and the voters will have a choice as to whom they want to be President over the next four years.

 

For those who like drama, the Republican debates have been more interesting because their leading candidate, Donald Trump, will say almost anything and often does so.  At least he did so in the earlier debates.  In the first one he verbally attacked one of the female reporters who was asking questions.  Apparently he didn’t like her question.  In the other debates he tended to verbally attack the other Republican candidates.  The Democratic debates dealt with issues concerning the nation only and didn’t get as many million people watching them.

                           

The Democratic Town Halls, having different people in the audience asking questions, had both candidates, each using half the time.  The Republican Town Halls have had only one of the possible candidates taking questions from an audience. 

 

On the Saturday, February 20th the Democrats held a Caucus and the Republicans a Debate in South Carolina.  Of the remaining six potential candidates in the Republican debate, Donald Trump was the winner by about ten points.  He had 32.5% if the Republican vote.  Marco Rubio and Ted Cruz were second and third, separated by two tenths of a point, 22.5% and 22.3%.  John Kasich and Jeb Bush were tied for fourth with 7.8% of the vote each and Ben Carson came in last.  Bush suspended his campaign after dropping lower than he had been in his prior debate.  In the Democratic primary Hillary Clinton won 52.7% of the Democratic vote and Bernie Sanders got 47.2%.

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There is an interesting psychological phenomena at work when it comes to choosing the candidates to support in the election.  It seems that there are two kinds of people, one that lives in the right now and one that makes most decisions with an eye toward the future.  The first group is instantly taking satisfaction from immediately solving or seeming to solve a problem.  They will similarly handle all other problems when they come along in the future.  And the second group who deal with everything with an eye to the future. 

 

The first group would be backers of Donald Trump and Bernie Sanders. These are the protest candidates for the two major political parties, who are the living symbols for the dissatisfied generally silent majorities in both parties, who have been duly voting for their political candidates over the years and getting nothing in return.  To the blue collar, and, I would suspect, in most cases, the gun loving and/or evangelicals, who could never find themselves in a position to vote Democratic, Trump represents their basic attitudes, prejudices, and beliefs.  He will, in their minds, to quote him, “Make America Great Again.” 

 

He also gives them an innate satisfaction when they listen to him because he expresses what they feel and believe.  Presumably he represents smaller government, that is: getting government out of everyone’s lives, and lower taxes.  He is the protest candidate who will lower their taxes, increase the military, beat-up the terrorists, make America feared by every other country on the planet, actually make The U.S. the bully of the world.  His words themselves give these people a sense of satisfaction.

 

In order to solve the illegal immigration problem Trump will also build a high wall separating the United States from Mexico that he says will be paid for by Mexico; deducted from money the United States owes Mexico.  Governments do not lend or give money generally to other countries.  There doesn’t seem to be any evidence that Mexico lent or gave money to the U. S. that the American Government has to return.  If there is an imbalance of trade and Mexicans are selling more to American businesses than Mexican businesses are buying from the U.S. then those are arrangements between Mexican individuals and companies and American individuals and companies.  There is no legal way that our government can seize any of those funds to pay for a border wall, unless suddenly extremely high taxes are placed upon all trade between the two countries,

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A good percentage of the blue collar Republicans and Evangelicals have constantly given their vote to the Republican Party but have not, like the wealthy upper percentile, really gotten anything for their continued allegiance to the party.  Trump is their hero.  He will give them, this silent majority to the right, true justice, make the Republican Party mean something to Blue Collar and Evangelical America.

 

Of course all this rests on the proposition that we were great before, forgetting the fact that U.S. foreign policy under George W. Bush was a joke to most of the world.  The United States invaded Iraq because of a lie pushed by Bush and his administration.  The U.S. was then able to bribe some of the smaller nations with massive aid contributions to join into a sort of wartime coalition to look for “weapons of mass destruction,” which never existed.  The Bush White House, while serving as sheriff of the Middle East destabilized the entire region and through its actions indirectly helped establish the growth of the terrorist organizations like ISIS.

 

Bernie Sanders, the Democratic Socialist who is registered as an Independent but caucuses with the Democrats, is the other left extreme of Donald Trump.  Trump is on the far reactionary right while Bernie Sanders is on the far radical left.  They are both appealing to people, who are in the main, are either disgusted with Washington politics that seems to promise everything during elections and deliver nothing during the course of the elected term.  Both candidates are promising the world if elected. 

 

Sanders is promising free education through college and free medical coverage for everyone as a right.  He says he will pay for these by taxing Wall Street for speculative spending.  What is speculative spending?  I suppose it’s any investment, buying or selling stock or property.  That would certainly raise the price of every stock or property bought or sold. 

 

In both the Scandinavian countries and the rest of Europe the population gets free medical care by paying heavier taxes than we do in the United States.  The public shares in the paying of the “free” medical care with increased taxes. 

 

The same can be said for public education which goes from kindergarten through college, if the student is qualified.  In the United States education is a right that everyone has through high school.  While there are public colleges and universities they still have a cost factor for the participant.  In Europe education is free but it has to be earned.  A student moves from level to level by continually proving his/her capability to function on a higher level.  If a student cannot pass the examinations they are shunted to vocational training and an exit from the school system.  This also is paid for by increased taxes shared by all the taxpayers.

 

My feeling is that most people actually agree with Bernie Sanders.  The model he is using is Scandinavian Socialism which also exists in most European and successful Asian countries.  Even Hillary Clinton likes what Bernie is representing.  But is it real in the United States?  Can he do it if he is elected President without massively raising taxes?  Most Americans are complaining that the current tax system is too high.  For that matter is what Donald Trump says he is going to do real? 

 

First off: What is the power of the President?  If elected can he decree free education or universal medical care?  Or, for that matter, a great wall between the United States and Mexico?

 

The answer to all of these changes is NO.  The President is the elected Chief Administrator of the laws passed by Congress and himself.  His major function is to carry out the laws and keep the country functioning.  He can issue Executive Orders; but these are not laws.  His legislative powers are almost nonexistent.  The President can recommend and negotiate with Congress or veto a bill; but that is the full extent of his legislative powers.

 

Bernie Sanders has called for a Populist Revolution.  Donald Trump has not.  Unless the one who gets elected has an overwhelming majority in both Houses of Congress, well over 50% in the House and a super majority of 60 or more Senators he will be extremely frustrated in office, feeling he is totally unable to bring about or, for that matter, even begin his program. 

 

In fact the probability is that regardless of who is elected as President the House of Representatives will, in all probability, have a slight Republican majority because of gerrymandering, having the voting districts set up in the states to benefit one particular political party.  This was done in 2010 by the Republicans and will not be redone until 2020 when the next population census occurs.  In the 2014 Midterm Election for the House of Representatives 1¼ million addition votes were cast for Democratic candidates, over what the Republicans received, but the Republicans still maintained the majority in the House.

 

The Senate will probably end up in 2016 with a slight Democratic majority, since i/3d of the Senate will be up for reelection.   The Senators are elected by all the voters of each state.  Since the Democrats are the majority party the Senate will probably be returned to Democratic control by a slight majority.  And there is a very high probability that Congress will again be gridlocked from 2017 through 2020.  The only candidate who might get some legislation through, and that by constant “horse trading” is Hillary Rodham Clinton.  The next four years are not going to be a fun time!

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It has been my observation that there is one very important point that everyone seems to ignore in every major election.  How many people were fourteen to just short of eighteen during the prior Presidential Election four years earlier?  The number has to be, in this country of over 350 million people, somewhere in the millions.  These youngsters come to the election generally with a certain amount of disgust.  They’ve heard their parents, relatives, and others continually complain about deadlock in Washington, D.C. and gridlock when it comes to passing necessary laws.  And, of course, the loud complaints by the Republicans about the Democrats.  They may have learned about the principles of government in high school; but the country doesn’t seem to be operating that way.  To them someone like Bernie Sanders would be a living symbol of hope.  Watching him at his televised rallies one sees a lot of young faces wanting a positive future.

 

The same can be said for President Barack Obama back in 2008 when he first ran for the presidency.  His slogan was: “It’s time for a change.”  But Barack Obama inherited the beginnings of a major depression from George W. Bush.  He spent his first two years in office avoiding a depression that would have been greater than the Great Depression of 1929 and he helped pass a universal type health law, the Affordable Health Care Law.  Two year later in 2010 the Republicans gained control of the House of Representatives and Congress would function from 2011 on in a state of gridlock with nothing positive happening.  The young voters and minorities stayed at home on election days because they had not seen the change they wanted.  Changes had occurred that saved the country but they had been largely invisible.  The Republicans stayed in control of the House of Representatives.  The Senate in 2014 was also taken over by the Republicans because people did not vote and there was some Republican suppression of the vote.

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The noted economist, Paul Klugman, called Sander’s view of the changes he wants to bring about “fantasy economics.”  I strongly suspect that Sanders was shocked or amazed at the reception he got for his bid for the presidency.  He was used to being a voice of protest in the Congress for a large number of years.  He no doubt expected to be a Democratic Socialist protest candidate.  With the reception his campaign has and is receiving he talks about a Revolution that he’ll bring about.  By “Revolution” Bernie Sanders means that the majority of the people will verbally rise up and force their legislators to pass the laws he is talking about.

 

If 74 year old Bernie Sanders were to be elected President of the United States he would spend four years in total frustration because no part of his program will happen with a Republican controlled House of Representatives.  Probably very little would happen with a fully controlled Democratic Congress. 

 

Change occurs slowly.  Public colleges were essentially free when I went to one of them in the 1950s.  Since then life has become more expensive and complicated.  I remember my parents in the 1940s taking their children to the doctor when they were sick and paying for the visits and for the prescriptions.  They spent far less providing medical care for themselves and three children than I spend now at Kaiser with full Medicare.  And that does not include what we spend on my wife who also has full Medicare.

 

The House of Representatives will probably remain Republican because of gerrymandering and the Senate may return to Democratic control.  Twenty-four Republican Senators will be standing an election.  Many of them are in swing states which could go either way.  This would be particularly true if the Republicans gain bad publicity by impeding the functioning of the government by not holding  hearings for the vacancy on the Supreme Court or doing some other outlandish things.

 

Essentially for four years Sanders will face Congressional gridlock.  If he survives the four years in which he will be largely helpless to bring about any kind of change then he will be 79 at the end of his term in office.  If anything conditions may well get worse that they are now.  And 79 is longer than most people live, particularly men.

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Looking at the current five remaining Republican candidates, that’s five out of the original twelve or so.  Bush is gone; he has suspended his campaign after spending 70 million dollars.  Mainly that leaves Donald Trump, Marco Rubio, and Ted Cruz.  Of the remaining two, John Kasich may be looking forward to a possible Vice-Presidency and Ben Carson seems to be along for the ride.  I understand he is also selling an autobiography and doing book signings along the way. 

 

Chris Mathews called the Thursday night, February 25, Debate a meeting of “The Three Stodges.”  Trump, Cruz, and Rubio spent most of their time verbally attacking one another.  Usually two of them were talking at the same time and most of what they said was incomprehensible; it’s difficult to understand what’s being said when two people are continually talking loudly at the same time.  They gave an outstanding performance of how a President should not act.

 

Both Rubio and Cruz are Tea Party Republicans.  Strange to say Trump seems to be the most liberal among the three who are now considered serious candidates.  Both Trump and Cruz are considered unacceptable to the Party leadership but the Party has no mechanism to get rid of them, at least not until the Party Convention.  Some Republican Party leaders have said that if Trump becomes President it would be a total disaster and that it could destroy the Republican Party.

 

Both Ohio Governor John Kasich and Dr. Ben Carson were also in the Debate but they did not have much to say.  Of the five, Kasich appeared mostly as a President should, but he ranked only at 9 plus percent among the Republican voters of Texas.

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As a sort of footnote it is worth observing what the Republicans in Congress are doing about the public protest of their actions over the last six years.  Many of the Blue Collar Republicans are supporting Donald Trump to demonstrate their betrayal by the Republican Congress.  The Republican leadership objects to him.  The least the Republican led Congress can do is to hold hearing concerning their needs and wants.  But instead they are doing nothing, essentially ignoring the protest and objecting to Trump.  It is business as usual, expecting to get reelected and continue representing the upper 1% of the country. 

The Weiner Component #141 – Fiscal, Monetary Policy & the Republican Party

English: James Earl "Jimmy" Carter

English: James Earl “Jimmy” Carter (Photo credit: Wikipedia)

English: United States mean duration of unempl...

English: United States mean duration of unemployment 1948-2010. Data source: FRED, Federal Reserve Economic Data, Federal Reserve Bank of St. Louis: Average (Mean) Duration of Unemployment [UEMPMEAN] ; U.S. Department of Labor: Bureau of Labor Statistics; accessed August 14, 2010. (Photo credit: Wikipedia)

English: A map of the 12 districts of the Unit...

English: A map of the 12 districts of the United States Federal Reserve system. (Photo credit: Wikipedia)

Historically and in the present, Fiscal and Monetary Policy are the two major tools that the Federal Government is supposed to use to continually fine-tune the American economy.   Fiscal Policy is used by the Congress passing specific economic enhancing laws signed by the President and Monetary Policy is used by the Federal Reserve continually adjusting the U.S. money supply to maintain a healthy economic national environment.

 

During the Presidency of Jimmy Carter (1977 – 1980) unemployment rose to 7%.  This was also the post Viet Nam War period.   From 1977 on the government engaged in an expansive fiscal policy; there was an expansion in Public Works strongly supported by the President.  It averaged $4.38 billion per quarter.

 

At that period I was teaching Social Science classes at a High School in Southern California.  The School District was asked by representatives of the Federal Government to make a wish list of what they would like for the District.  A list of ten items was prepared by District officials and, as an afterthought, someone suggested a second or girl’s gymnasium and it was added to the bottom of the list.  The government officials choose the girl’s or second gymnasium as the item that would create the most jobs.

 

I remember that the high school got a second gym which was gray, the color of the concrete.  The money that paid for the gym ran out at that point and it was a few years before the School District came up with the funds to have the building painted.

 

It seemed that all the tasks and labor involved in building the gymnasium, both directly and indirectly, would create the maximum employment possible for the expenditure of the funds required for the project.  I suspect that Troy High School in Southern California is one of the few secondary schools in the country that has two separate gymnasiums.

 

To understand how this expenditure works for the benefit of the overall economy we have to trace the money and see what happens to it.  Usually money spent is actually spent six to eight times; it is a volatile substance.  For example, in producing and packaging the concrete used in the building the manufacturer has to pay his employees.  They, in turn, have to pay rent or a mortgage or, for that matter, buy food.  The landlord, bank, or supermarket continues the same process, and on and on for six to eight times becomes part of the natural flow within the economy.  This occurs with everyone directly or indirectly involved in producing that building.

 

Every million dollars the government spends creates six to eight million dollars in the exchange of goods and services.  To use an analogy, a child throws a rock into a quiet lake.  There are a large number of ripples spreading out in all directions from where the stone hits the water.  They spread out and dissipate as the stone drops to the bottom of the lake, infinitesimally raising the level of the water.  Consequently the $4.38 billion that the government added quarterly to the economy of the United States was actually generating a little over 26.3 to 35 billion dollars in new productivity every three months.  This also gives us an idea of the volatility of new money added to the National Cash Flow.  Of course if the reverse were to occur for any reason, such as the 2008 Real Estate Crash, the 26.3 to 35 billion dollars would be removed from the National Cash Flow.

 

In 1977, when Jimmy Carter became President, the 95th Congress was elected.  In that Congress the Democrats had a majority in both Houses of Congress; in the House of Representatives they had 292 elected Democrats to 143 Republicans and in the Senate there were 61 Democrats to 30 Republican Senators, a super majority which made the Senate filibuster proof, as only 60 votes are needed to end a filibuster.  The Democrats could pass any legislation they felt was needed and they applied, among other things, fiscal policy to the post Viet Nam War period.  Unemployment during the Carter period was considered high, running from 6.9% to 5.8%, and ending in 1980 at 7%.

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From the beginning of President Lynden Johnson’s acceleration of the Viet Nam War inflation slowly began to increase in the country.  The country was both fighting a war and allowing the public to maintain their peacetime standard of living.  By 1980 it had reached two digits and would that year eventually rise to about 15%.  The economic situation that occurred was labeled, stagflation.  It consisted of both stagnation, high unemployment, and inflation, prices rapidly rising because of shortages brought about by having fought a major war, maintaining the military during the Cold War, and supplying all the needs of the American people at the same time.

 

Generally during a period of inflation there are not enough goods and services available to match the demand and prices rise until a new equilibrium is reached of the goods and services offered.  If anything there should be lower unemployment.  But in this case there was also stagnation; there were not enough jobs for everyone able to work and wanting employment.  This was stagflation, the concurrent existence of two economic opposites.

 

There was a way to break this economic condition by having the Federal Reserve raise interest rates far higher than they were, raising the rate of inflation until it exploded.  But this would throw a lot of small businesses and even some large companies into bankruptcy.  This action would bring about immediate adverse economic conditions for a large number of people; it would bring about a short term depression which would temporarily increase unemployment.

 

President Carter had the Federal Reserve Chairman, Paul Volker, begin this process but then after receiving innumerable complaints President Carter backed off.  The next President, Ronald Reagan, allowed Volker to carry out this policy.  It took about a year and a lot of human misery to break this economic cycle.

 

When this came about, early in the Reagan administration, the President got on national television holding a copy of the Sunday New York Times Business Section and said something to the effect of there were umpteen pages of jobs available according to the newspaper and that if there were no jobs where the people lived then they should go to where there were jobs.  This presentation exacerbated the problem because suddenly there were old jalopies crisscrossing the country, being driven by people looking for employment, following whatever rumor promised jobs somewhere else.  This so-called friendly advice or thoughtless act created the homeless problem in the United States.

 

This policy, by the Federal Reserve which was necessary that broke the inflation cycle which had been begun by President Lynden B. Johnson in the 1960s, created an instant depression but ended the stagflation.  Interest rates dropped to a low single digit where they remained until 2008, when they dropped even further almost approaching zero, where they remain today.

 

As a footnote it should be noted that the people who pay for this low interest are the people in the United States who deposit their money into the banks and receive an interest payment on most of their deposits of one tenth of one percent per year.  The amount of interest most people get on their bank holdings is so low it is not even taxable.

 

Fiscal Policy with other economic remedies ended this economic crisis.  The other equally important economic remedy was Monetary Policy.  This is controlled by the Federal Reserve.

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Monetary Policy is the process that the Federal Reserve uses to control the supply of money, its availability, and the cost of money or its rate of interest in the country.  Its objective is aimed at the growth and stability of the economy.

 

The Federal Reserve (FED) has twelve regional banking districts, each with a major regional bank and each with a possible auxiliary bank covering the entire United States, with the major one in Washington, D.C.  It is a private government banking system that controls all the public banks in the country.

 

The FED’s major function is to regulate the private or public banks and to help control economic growth and stability, as well as maintain low unemployment and maintain predictable exchange rates with other currencies.

 

The tools the FED uses are:

(1) Its Open Market operation, constantly buying and selling bonds to increase or decrease the amount of money available in the National Cash Flow.  Here it works from the Public or National Debt, increasing or decreasing it to fine-tune the economy.

2) Adjusting the Discount Rate, setting the interest rates in the private banks by the amount it charges them interest.  The private banks determine the interest they charge the public based upon the interest they pay the FED.  They have to make a reasonable profit above what they pay to the FED.  The higher the FED’s interest rate the more expensive the money is and the less is borrowed.  Conversely the lower the interest rate potentially the more will be borrowed and used for economic expansion.  And the more employment will occur.  Since the 2008 Real Estate Crash the interest rate has dropped to almost zero (one tenth of one percent), and expansion has very slowly occurred.  In fact we are still, seven years later, in the process of recovering from that crash.

(It should also be noted that since 2011, when the Republicans took control of the House of Representatives there has been no Fiscal Policy.  In fact the House has forced through bills increasing the unemployment level and exacerbating the recession.  They have been very good at worsening economic conditions and then blaming the Democrats for it.

3) The third method is raising the Reserve Requirements that the banks are required to observe.  The public banks have to keep a certain percentage of their deposits for every loan they make.  But regulating the amount that the bank has to keep the Federal Reserve can significantly increase or decrease the amount of money that a bank can lend.

 

Among all the dollars deposited in the banks this would also include demand deposits (checking accounts).  Most people deposit their paychecks and reserve funds in banks which pay them a token interest for these funds.  People can at any time withdraw part or all of their money.  Meanwhile the banks lend out this money.  By law they must keep a small percentage, about five percent.  The banks can then lend out or invest ninety-five percent of the money deposited.  This expands the amount of money in circulation.  If the FED were to raise the Reserve Requirement to ten percent this would lower the amount that the banks can lend out by 50%.

The actual amounts that the banks have to keep in reserve are: up to 14.5million 0%, over 14.5 million to 103.6 million, 3%, over 103.6 million, 10%.  It should also be noted that after a bank lends out all its available funds it can deposit its loan papers with the FED and lend out the money all over again under the same conditions.  It should be noted that once the money lent out is redeposited into the banks 95% of it can again be loaned out.  Interestingly the FED is now considering raising the current reserve requirement.

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Using their Reserve Requirements, up to the end of 2008, the major banking houses in the United States had created trillions of dollars in real estate value by constantly mortgaging and remortgaging individual properties at higher and higher rates throughout the 50 states.  This collapsed virtually overnight towards the end of 2008.  President George W. Bush, at the very end of his presidency bailed out the major banking houses which were then facing bankruptcy.  This process was continued by the new president in 2009, Barak Obama.  While a few banking houses went under and were absorbed by other banking houses the Federal Government had no choice but to bail out most of the banks.  For one thing all the commercial banks had all their deposits insured up to ½ million dollars each by the Federal Insurance Deposit Corporation (FDIC).  The Federal Government would be liable for all this money if most of the banks failed.  In addition most of the business transactions in this country are paid for by either checks or credit cards that are all processed through the banks.  If the major banking houses like the Bank of America, JPMorgan Chase, Wells Fargo and most other bands were to suddenly disappear the movement of money throughout the United States would practically cease and the country would face a depression that would make the Great Depression of 1929 look like a weekend disruption.

 

Interestingly the potential 2016 Republican presidential candidates in their Third Debate, on November 10, 2015, mostly stated that if they were elected to the presidency one of the first things that they would do would be to get rid of the Dodd/Frank Bill that was passed to avert a possible repetition of the 2008 Crash and, if there were to be another economic crash they would not bail out the banks, that nothing is “too big to fail.”

 

What this 3d Republican Debate illustrated was that these people are blatant liars who will say anything to get elected or that they are totally ignorant of Macroeconomics or any other type of economics.  I don’t know which position is worse?  I was also shocked that the “media,” who seems very conscious of “fact checking” didn’t pick up on any of this.

 

If another Banking Crash were to occur and one of them were President of the United States at the time he/she would be forced by their own advisors to again bail out the banks.  For one thing it would probably cost the Federal Government and taxpayers directly more money to not bail them out and the following economic breakdown of the society would last for well over a decade, which is how long it took for the Great Depression to end.

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President Barak Obama’s major problem, after he assumed office in 2009 was dealing with the Real Estate Crash that he inherited from the Bush Administration.  For his first two years in office he had a Democratic majority in both Houses of Congress that cooperated with him.  The Republicans at this point at a meeting agreed to oppose everything he did and make him a one term president.

 

In 2006 Ben Bernanke was appointed Chairman of the Federal Reserve by President George W. Bush.  Bernanke replaced Alan Greenspan.  Bernanke working with President Obama utilized creative Monetary Policy to essentially pull the country out of a major depression without being able, after 2011, to get any cooperation from the House of Representatives.  Up until 2015 there was no Fiscal Policy applied.  Toward the end of 2015 both Republican dominated Houses of Congress passed a bipartisan bill to extend Federal Funding on road construction and maintenance throughout the nation which had initially been passed into law before the Republicans took control of the House and was due to end.

 

Initially after 2011 Bernanke innumerably called for Congress to enact Fiscal Policy legislation.  Obama even presented a proposal for much needed infrastructure improvements which would also create a large number of jobs.  This proposal never even reached the floor of the House.  If anything the Republican House of Representatives cut Federal Government funding to a multitude of programs and decreased, on a number of levels, government jobs actually worsening unemployment under the guise of economizing.

 

The FED then came up with a creative twist to Monetary Policy.  One additional major problem that came with the Real Estate Crash was who owned the properties/homes that then had mortgages on them of greater value than the property was worth.  The mortgages had been divided up into fractional shares, distributed to innumerable hedge funds, and the banks had reorganized record keeping on a very sloppy basis.  It was, in many cases almost impossible to discover who owned 50.1% of many if not most of the properties.  This was a dilemma that would ordinarily take two or more decades to clear up.

 

The FED’s solution to this problem and the shortage of money in the National Cash Flow that was causing the massive unemployment was to add 85 billion to the economy every month for a period of over two years.  45 billion was used to buy mortgage paper (fractional pieced of mortgages) in all fifty states and forty billion was used to buy back debt paper (government bonds).  This added one trillion twenty billion dollars to the National Cash Flow a year.  It was gradually phased down and ended in 2015.

 

Currently it looks like interest rates for the public will remain at almost zero for at least the balance of 2015.  But unemployment has dropped nationally to around 5%.  Creative Monetary Policy had turned a possible great depression into a recession and brought the country well in the direction of economic recovery.  All this has been done under the administration of President Barak Obama largely with no cooperation from the Republicans in Congress.

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Issues are never simple cause and effect actions.  There are always multitudes of variable affected in addition to the major outcome desired.  Everything consists of hard choices.  These should be made by experts who are aware of all the possible outcomes.  Or, at the very least, it will be people who will listen to experts and act accordantly.

 

In November of 2016 a major election is coming up, the next Presidential Election.  Both major political parties will be presenting a host of candidates for the Presidency and Congress.  The entire House of Representatives will be up for election and also one third of the Senate. In addition there will be major elections in all 50 states.  The people will speak by voting or not voting.  If the Republicans maintain their majorities in both Houses of Congress and in the majority of the states then very little will be done in the next four years.  The public by their action or inaction will decide what the future will hold.

 

 

 

 

 

 

 

 

The Weiner Component #140E – Assorted National Problems Not Dealt With by the Republican Congress

The western front of the United States Capitol...

Development, Relief and Education for Alien Mi...

Development, Relief and Education for Alien Minors Act (Photo credit: Wikipedia)

With his family by his side, Barack Obama is s...

In addition to what we have been dealing with for the last four blogs there are other serious problems that the Republican led Congress, particularly the House of Representatives, have ignored.  The first of these is guns, both pistols and assault weapons.  Another, which can seriously hurt Republicans in the 2016 Presidential Election, deals with immigration policies.  Still another immediate problem, which will be coming up at the latest in early December, is funding the Federal Government for the oncoming fiscal year.  And still another is a Declaration of War against ISIS and possibly a debate about what to do about Syria.  We’ve mentioned their compensation packages and days of work over the year but it might be worthwhile to reconsider these.  Also there is the fact that Congress has passed a law automatically giving themselves raises unless they pass another law stopping that particular raise from happening.

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President Obama and others have stated that gun violence is much worse in the U.S. than in other advanced countries.  Italy comes next with less than 20% of what occurs in the U.S.  Below that comes Canada, then Sweden, then Germany.  By the time we reach Germany the level is well under than 10% of the U.S. level.  The other industrial nations are far below that.

 

The problem with gun violence seems to be that Americans are much more likely to own guns than their peers around the world.  It seems that the more guns there are in the society then also the more homicides that occur in the society.  According to President Obama Americans kill each other with guns at a rate 297 times more than Japan, 49 times more than France, and 33 times more than Israel.

 

Following is a gun violence estimate for 2015 based upon actual shootings and prior years.

Total shootings                              47,071

Deaths                                           11,868

Children to age 11                              632

Teens 12-17 injured and killed       2,354

Mass shootings                                 303

Officer involved shootings              3,923

Home invasions                              2,029

Defensive shootings                       1,088

Accidental shootings                      1,694

The problem is an extensive one that Congress has totally ignored.  If nothing else it should be debated in Congress.  Presently it is largely invisible to the general public because the media tends to ignore the general information.  While the information is available one has to dig to find it out.  What is shocking about this is that these facts seem to make the terrorist threats minor in terms of the pointless loss of life that continually goes on.

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Another major problem that Congress should be dealing with is Immigration.  This is far more complex than just having foreigners illegally living and presumably working in the United States.  On and off Congress has ineptly been dealing with this problem for the last fifteen years.  Currently they are ignoring it and suing the administration for President Barak Obama’s executive order dealing with “dreamers,” children who were brought to the United States by their parent(s) and raised in this country

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The reason this issue is complicated is that we are not just dealing with aliens, foreigners who are illegally is this country, but also with their families, some of whom may be citizens.  Sending their parents or one of the adults back to their country of origin breaks up the family.  Among others, there is one adult Hispanic legislator whose father disappeared when he was a small child and he never saw him again.  There has to be something wrong with this.

 

First there are alien couples whose children were born in the United States and are therefore citizens of the U.S.  Do we ship the parents back to their country of origin but leave the children here?  There are children who were brought to this country and may have none or very little memory of their country of origin.  They have been educated in the U.S. and think of themselves as Americans.  Some have served in the military.  Do we send them to a country of which they have no knowledge?  There are also the Dreamers, (Development, Relief, and Education for Alien Minors,) who were 16 or younger when they were brought into the U.S.  The estimate is that there are about 1.8 million of these, many are college graduates.  There are married couples of which one is a citizen and the other an alien.  Do we separate these couples by sending one of them back to their country or origin?   There should, at least, be a debate about this in both Houses of Congress but the subject has not been brought up..

 

An important point, which the Republican candidates in the 2016 Presidential Election seem to be ignoring is that according to the 2010 Census there were 50.5 million Hispanic or Latinos counted.  That is 16% of the overall population.  They had increased 13% since the 2000 Census.  For the 2016 Election the number will have increased at least another 7%, that’s about another 4 million potential voters.  In 2012 President Obama got the majority of those voters.  What will happen in 2016?

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Starting in the Twentieth Century a quota system was devised that set the quota or number allowed in the U/S. from each country.  Interestingly both my parents came to this country indirectly from the Russian Ukraine in the early 1920s shortly after World War I.  My father and his younger brother crossed Europe and emigrated from England.  My mother signed a one year contract to work as a maid in Canada.  This paid for her passage across the Atlantic Ocean.  At the end of the year she came to the United States as an immigrant from Canada.  There were very high quotas for Northern Europe and Canada.  For Eastern Europe one had to sign up and wait for their turn.  A college friend of mine’s parents came from Greece.  The wait there had been seven years.  Someone had signed up and then when their turn finally came they changed their minds.  A neighbor and his wife took their name and their place.  My friend had been their child.

 

Quotas had never been fair.  They were set based up attitudes or prejudices toward the countries involved.  Low, in so called undesirable countries and high in desirable ones.  These same principles have essentially carried over to today.  Mexico, Central and South America have low quotas.  Asian countries would also have fairly low quotas.  Northern European quotas are never reached.

 

And then there is the concept of refugees, people who are fleeing disastrous conditions at their original homes.  In Asia a number of these people became refugees because they sided with the United States, like in Viet Nam after the U.S. left there in 1975.  Others left intolerant or dangerous conditions behind to find safe conditions for themselves and their children.  One of the places to which they fled was the United States.  Were they all upright, honest citizens?  Mostly; but they also included a criminal element.  That’s how, for example, the mafia got a foothold within the U.S.  Does that mean that we stopped letting in people from Sicily and Italy?  No.  Does it mean that we should not allow people from Syria to immigrate to the United States because some terrorists might sneak in that way?  That’s an interesting question.  It should be honestly debated in Congress and not just have Congress pass a bill practically excluding all Syrians.  After all, these people are the victims of civil war and terror.

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An immediate problem that Congress has to immediately resolve prior to December 11th is funding the Federal Government for at least the oncoming year.  If a bill is not passed prior to that day the Treasury will run out of money with which to pay the government’s bills and interest rates will go berserk and the Federal Government will again shut down.

 

The issue prior to the former Speaker, John Boehner’s retirement, was the House of Representatives refusing to pass a funding bill unless funding for Planned Parenthood was removed from the bill.  If this were done the President said he would veto the bill.  While the Republicans currently have a majority in both Houses of Congress they do not have enough of a majority in either House to override a veto.  By resigning Boehner got the bill kicked up from the end of October to December 11th.  President Obama stated that he wanted a clean bill that would fund the government for the next two years or he would veto any future bill.  This time the Republicans in the House want to keep Syrian refugees from entering the United States because a few terrorists might also sneak in and they still want to defund Planned Parenthood.  The reality of keeping out Syrians is questionable because it currently takes Syrians from 18 months to two years of screening before they are legally admitted into the country.  The House would add a further step and have each Syrian also individually approved by the head of the FBI.

 

What will happen is any bodies guess.  Will the Federal Government be functioning after December 11th?  A government shutdown would probably hurt Republicans in the 2016 Election and cost the government additional millions if not billions of dollars.  Paul Ryan, the Speaker of the House of Representatives seems poised for a dramatic showdown on December 12.

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There is still the question of a new war powers authorization which President Obama has requested for the fight against the Islamic State terror organization, ISIS, which was made last February.  Congress has not bothered using its War Powers given to it by the Constitution.  As far as they seem to be concerned his executive actions in immigration for the Dreamers are unconstitutional but his actions in going after ISIS are currently legal.  They, Congress, don’t need to act.  Is this attitude valid or does Congress need to act?

 

We also have the question of Syria.  What should our actions there be?  Congress and the country need a debate to clarify that issue if it can be clarified.  Should we continue with just air force action against ISIS?  Should there be American troops on the ground as some of the Republican candidates have stated?  There are innumerable forces involved in the revolution there.  Are there any group or groups we can support?  Russia is now also involved with support for Syria, supporting President Assad, while supposedly bombing ISIS, but according to the U.S. actually bombing Assad’s enemies.  Is it a war we can win or will we be stuck there for decades if not longer?  Congress is ignoring this problem completely.

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With the upcoming election next year, plus the fact that the Republicans have a Democratic president who they don’t like and with whom they have problems cooperating, both Republican Houses of Congress have given themselves a light schedule for 2016.  In fact the new Speaker of the House of Representatives, Paul Ryan, has called the President “Untrustworthy.”  After the Thanksgiving Recess the House of Representatives plans on twelve more days of business this year.  In that time they will have to pass a bill funding the government.   Next year looks to be a very light legislating time.  The Senate plans to spend 143 days in session and the House of Representatives is planning only 111 days in Washington, D.C.

 

I would assume that there are numerous other problems that have not been mentioned that Congress will and/or should probably be dealing with.  Fiscal policy laws are still needed both to enhance employment within the country and modernize the infrastructure.  Emergencies may well come up in terms of the security and safety within the United States.  Sequestration, in those many areas that have not so far been removed from the sequester in 2015, will automatically come up in early 2016.  They will present additional hardships as funds in entitlement and other programs diminish.  Will Congress ignore these problems or make adjustments in some of them?

 

The country needs a Criminal Justice Reform Bill to lighten the load on the over-filled prisons in the United States.  Presumably both parties agree on this.  Will any action be taken?  Will there be time to take any action?  A Mental Health Bill is needed to deal with, at least, a part of the current surge in violence in the nation.

 

The Republicans will have to give the impression that they have a positive program if they are to maintain their majority in both houses of Congress.  They also have to support the policies of whoever is their final choice of a Presidential Candidate.  It could take some tricky maneuvering to achieve all this.

 

To also be fair, all the members of the House of Representatives and 1/3d of the Senate will be running for reelection next year.  Presumably they will need more time in order to campaign even though in the prior year the 114th Congress had shortened its term in Washington, D.C.

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In the oncoming election year early national party conventions will mean that the Congressmen will be taking the second half of July off without giving up their traditional August recess.  October through mid-November will be cleared for campaigning for the November 8th general election.  Will they have time to deal with any of these problems?

 

The Congressional behavior also reflects the tensions between President Obama and the GOP Congressional leaders.  There are, of course some necessary bills that will have to be passed like funding the government so it can pay its bills for the oncoming year; but outside of that Congress may plan to do almost nothing, strongly hoping for a continued majority in both Houses of Congress in 2017 plus a Republican president.

 

For close to seven years President Obama has bent backwards trying to get some cooperation from the Republicans in Congress.  In this he has largely failed.  Under Paul Ryan’s inspiration they have attempted to force him to support their agenda by tying bills necessary for the functioning of the nation with causes they wished to become part of the laws.  This has resulted in a government shutdown and a number of bills going to the brink, generally being passed on the last possible day.  This has lowered the credit rating of the United States and cost additional billions of dollars.

 

At this point, with a little over one year left to serve as President, I would imagine Barak Obama has had it.  He will play no more games with Congressional shenanigans.  The government has to be funded for the oncoming year well before December 11, 2015 or the dollar may again be downgraded and interest rates for loans may unnecessarily jump.  This bill was pushed up to December in October and the President said he will veto any more short term passages.  He wants a clean two year bill.  What will happen?

 

The Republicans, who prior to October wanted to defund Planned Parenthood in order to fund the government now have threatened to add a section to the bill requiring that every Middle East refugee be personally approved by a high official in the U.S. government before they can be accepted into the country.  President Obama has stated that the current screening system is adequate for all immigrants from the Middle East.  Currently it takes 18 months to two years for a Syrian to be allowed to settle in the U.S.  While he has not specifically stated it the probability is that he will veto the spending bill if it contains that measure.  And there is also the probability that he will veto this specific bill, which recently was passed by the House of Representatives that requires a guarantee from a high government official for each Syrian emigrating to the U.S., if it is passed by the Senate and comes up before him.  It seems that the President is no longer open to attempted blackmail in order to get necessary legislation passed.  The person who came up with this tactic is now Speaker of the House of Representatives.   It should be an interesting 13 months!

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As a footnote: In just about every occupation the employee is continually evaluated as to how well he or she performs on their job.  If they are continually below a certain level then they are terminated.  This seems to be true for all occupations except for those Republicans elected to Congress, particularly for those elected to the House of Representatives which has been essentially nonfunctional since 2011 when they achieved a majority in the House of Representatives.  This is the period during which we’ve had gridlock in Washington, D.C.  Here inefficiency or inability to function seems to be the quality needed to function and keep your job.

The Weiner Component #138 – The Current System of American Taxation: Loopholes & Special Privileges

Distribution of U.S. federal taxes for 2000 as...

English: Tim Walz, candidate for United States...

English: Tim Walz, candidate for United States Congress, at a Memorial Day picnic in Rochester, Minnesota (Photo credit: Wikipedia)

English: Grover Norquist at a political confer...

English: Grover Norquist at a political conference in Orlando, Florida. (Photo credit: Wikipedia)

In this year of 2015 the American System of Taxation is set in such a fashion to totally favor of the wealthy and the large corporations, at the expense of everyone else.  Probably not since shortly before the French Revolution in the late 19th Century has a system of taxation been so unfair as to place most of its burden upon the middle and lower classes.  If the general public became aware of the total extent of this there would be an outcry throughout most of the society.

 

In prerevolutionary France the nobility and church paid no taxes and wealthy members of the middle class paid a bonus one year to the government and never again had to pay taxes for themselves or their businesses.  Poorer class of society bore the burden of paying taxes.  In the United States we have lobbyists representing the wealthy and their businesses and they tend to control much of the legislation passed.

 

The very wealthy have somehow created the illusion that taxing the rich limits economic growth, particularly among members of the Republicans Party which they largely finance.  Their slogan is that the rich create jobs.  Of course there has never been any evidence of this.  Invariably, the former Speaker of the House of Representatives, John Boehner, has stated publically that the very rich create jobs.  He has strongly implied that taxing them would limit economic growth.

 

Practically all federal, state and municipal taxes are regressive.  The income taxes for a married couple filing jointly is graduated up to $457,600, but regressive for any amount above that figure.  Above that amount it becomes $127,962.50 no matter how high the earnings go, to one million, to one billion or beyond.  The maximum graduated level is slightly lower for a single filing his or her taxes.

 

All other taxes with the exception of federal and state income taxes up to a certain level, are regressive.  Most are usage taxes.  Here the argument for them is that they are fair because everyone pays the same amount.  The fallacy here is that if all these taxes are taken as a percentage of income then the more the individual earns the lower is the tax as a percentage of his income.  Consequently the poor and middle class, the overall majority of the population, pay a larger percentage of their incomes in these so-called fair taxes where everyone pays the same amount regardless of their actual incomes.

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The United States tax code is 71,000 pages.  This document was not written all at once; it came into existence on a piecemeal basis over a large number of years.  Many bits and pieces were passed for the benefit of specific individuals and companies or special interests mostly with aid by lobbyists.  A goodly number of these taxes were sentences or even clauses added to other bills at the last minute and had no relationship to the bill in which they originally existed.

 

And since for the last six or so years every Republican has signed a pledge to Grover Norquist not to raise taxes.  This has made all these subsidies and loopholes sacrosanct; doing away with any of them would be raising taxes.  It could also cut political contributions to their political party.

 

It is important to remember that a Congressional Bill does not have to deal with just one subject.  It can deal with any number of topics.  But that bill has to be passed as one whole unit or not passed.  In addition any number of amendments on virtually any subject can be added to it.  Unlike some of the states which have a line item veto, that is any sentence or group of sentences can be individually vetoed by the governor before he signs the bill, a federal bill can only be signed and totally approved by the President or vetoed and totally rejected.

 

Perhaps it time to reform this practice.  Ronald Reagan, as President, had a line item veto when he was Governor of California but not as President of the United States.  He complained vociferously about this fact.  Numerous other presidents have made similar comments.  Whatever it would take to change the current practice would be a long step in the direction of reform.

 

Too many times a bill has to be passed and unrelated changes have been added to it.  In order to keep the government functioning the President has to sign the bill.  A line item veto would certainly make his job both easier and saner.

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The tax code allows numerous deductions that are taken from the yearly income.  Some of these have definitions that have been expanded phenomenally.  For example in 1913 the home mortgage interest deduction was added.  It was added to encourage home ownership.  (Interestingly countries like Australia and Canada do not have a similar law but do have the same large amount of home ownership as the United States.)  The law was to make home ownership more affordable.

 

In more modern times Congress declared in a new bill that boats can be homes if they have a kitchen, bathroom, and sleeping quarters.  The luxury boating industry had been able to buy its way into home mortgages.  Three percent of the boating industry qualifies as homes and interest paid on their purchase loans is deductible.

 

For example someone like Microsoft CEO, Paul Allen, has a $200 million yacht that comes equipped with an indoor pool, basketball court and its own submarine.  It also has a kitchen, bathrooms, and sleeping quarters.  He is able to deduct the interest paid on his ocean going home from his yearly income taxes.

 

One Congressman, Tim Walz (D-Minnesota) stated that the law was passed to make home ownership more affordable for the middle class.  He wrote a bill: Ending Taxpayer Subsidies for Yacht’s Act, hoping to end the practice by the wealthy.  The chairman of the committee that handled the bill in committee is a Republican and did not even allow the bill to come up for examination.  The bill died in committee; it never even came up for a vote there.  Would it have passed if it came up on the floor of the House?  This is a tax loophole that benefits a few people at the very top, according to Walz.

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The House of Representatives is composed of 19 standing committees and the Senate of 17.  The Speaker of the House and the Majority Leader of the Senate is responsible for assigning bills to the proper standing committee.

 

The House Rules Committee manages the flow of bills to the full House by scheduling their flow.  They can also ignore a bill if they think it appropriate.  In the Senate the majority floor leader controls the bills.  He can also ignore a bill.

The Standing Committees generally have jurisdiction over a specific set of issues such as Agriculture, Appropriations, Foreign Affairs, and Commerce.  Each has one or several functions.  They hold hearings, can amend, and report a bill under their jurisdiction.  The chairman can also remove a bill from consideration and the committee votes on whether or not to forward a bill to their entire house or remove it from consideration.

The House originates all revenue bills and the Senate has the power of “advice and consent” over the President’s appointments and treaties.  Whatever is not directly stated in the Constitution is controlled by the Ways & Means Committee, which has more representation by the majority party.  The Ethics Committee has equal representation by both parties.

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Obviously the committee system is necessary because there are too many bills proposed for them to go directly to one of the Houses of Congress.  Obviously the Committee, or Subcommittee for that matter, which is made up of a small number of Congressmen and women, can more easily do everything necessary, marking up the bill and even possibly changing it.  It can kill the final version or recommend it for passage by the full body of the House or Senate.

 

In addition, as we’ve seen, the chairperson of the committee, who comes from the majority party of his/her particular House has almost dictatorial power in running  the committee he/she chairs.  This person does this by almost completely controlling the agenda of the committee.  They can and have ignored one or some of the bills the committee is supposed to deal with.  In this way a bill can be killed without ever having a hearing.  And this can be done to a bill that will probably pass.  It can even be done to a bill that has been passed in the other House.  Once this is done it is almost impossible to bring such a bill before the House or Senate.  And this is what has happened to every bill that has attempted to do away with any subsidy or tax loophole.

 

In all fairness it should also be stated that the same power exists in both Houses of Congress.  Both the Speaker of the House and the Majority Leader of the Senate have done so with and without good reason.

 

From 2011 on, when they took control of the House of Representatives, the Republican majority had passed a bill to do away with Affordable Health Care (Obamacare) at least 50 times.  Harry Reed, the then majority leader of the Senate never once even brought it to the floor of the Senate.  The same thing happened to a large number of bill passed by the then Democratic Senate.

 

Interestingly after the Republicans won control of the Senate in 2014 by a slight margin both they and the House, which has no Constitutional ability to do so, attempted to stop the President from negotiating with Iran.  The negotiations were being done by the leaders of the United Nations, which also included the U.S.  It was not an American treaty.  It did, however, include the U.S. as one of the six nations negotiating with Iran.  Both Republican Houses of Congress wanted to pass laws controlling this two year process.  Apparently the members of the House hadn’t read the Constitution or didn’t care what it said; and young Senator Tom Cotton attempted with 46 other Senate signatures to openly negotiate with Iran.

 

Can reform be brought about in the Committee System?  One possibility would be to change the rules on Committees requiring that all bills be examined that receiver a 40% approval rate by all the members of the committee.  This could be done once a week and would require a bit more work by the committee.  It would be following the example of the Supreme Court.  It takes four affirmative votes out of nine for them to accept a case.  Would Congress be willing be willing to bring about such a rule change?

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Barak Obama, during his campaign for the presidency in 2008 promised, among other things, to end numerous loopholes and subsidies but he couldn’t get any of those bills through Congress.  He wanted to eliminate “special tax breaks for oil and gas companies, including special expensing rules, foreign tax credit benefits, and manufacturing deductions for the rich oil and gas firms.

 

The American Petroleum Institute stated, I imagine proudly, that none of President Obama’s proposed bills, which would be presented by a member of Congress in one or both Houses of Congress, were enacted into law; in fact, they were dead upon arrival in either House.  Is lobbying sometimes open bribery?

 

When a bill is presented in either House of Congress it is given a number and sent by the Ways & Means Committee to a specific Standing Committee to be examined.  Each member of Congress is generally on at least two committees.  In the case of the House of Representatives most committees are also broken into subcommittees.  The Chair of each committee sets the agenda for each meeting.  From 2011, when the Republicans gained the majority in the House of Representatives, the chairman became a Republican and, from what I understand, no tax reform bill made it to a committee for examination and recommendation.  This also occurred in the Senate from 2014 on when the Republicans received a slight majority there.

 

From 2009 to 2010 both the House and Senate were very busy fighting off a giant depression and Republicans were busy fighting off Affordable Health Care (Obamacare) which they failed to keep from passing.  There would have been little or any time for the Democratic Congress to do anything else.  And if such a bill came up in the Senate it could have been easily filibustered.  In the House of Representatives extended debate and amendments to the bill, which would add endlessly, to the extended debate, would have easily killed any bill.

 

If we ask why any loophole of subsidy bill would present a problem?  The answer is that a very large percentage of Congressmen or women are dependent upon these very companies for large political contributions.  Are they then dependent upon bribes?  The answer is legally no, but technically yes.

 

In order for an individual to run for either House of Congress he/she needs large amounts of money for staff, adds, mailings, television commercials, etc.  This money is supplied for Republicans and many Democrats by political contributions.  For example Ted Cruz’s current presidential campaign is currently being financed mostly by four very rich individuals.  I suspect that if he got elected he would do nothing to make any of these individuals unhappy about anything.  The same attitude would be true for any House or Senate member.

 

The contributors, individuals and companies, which make large contributions to political campaigns have purchased almost instant access to the people they have financially funded.  In addition many government officials also have use of company jets and free expensive vacations.  Is it bribery or an exchange among friends?  The legislators are supposed to represent their constituents who elect them.  But who is primary?  Is it the constituents or the large contributors?

 

Whether the legislator truly believes he is acting for the good of his state or understands that he is paying a debt by supporting his major contributor’s interests is really beside the point.  The interests of the large contributors are primary in the minds of the legislators.  To go against their interests would be an act of financial suicide.  It would cut off large portions of their funding and they could easily loose them the support of their party as well as that of the large contributor.

 

Why then have the Republicans, as a group, refuted the concept of climate change.  Presumably for them the planet is getting less inhabitable not because of man’s increasing pollution but probably because God is ticked off with people.

 

Can the current system be adjusted so that Congress can go back to the original purpose of the Founding Fathers, to serve the people of the United States?  Interesting question!  Not too long ago the Supreme Court in the Citizen’s United Case expanded the meaning of a part of the First Amendment to make the spending of money part of the Free Speech clause of the First Amendment to the Constitution.  This has led to almost unlimited spending in political elections because money is now an expression of free speech.  To limit contributions in a political election is now to limit the expression of free speech.

 

The political system, by the way it is set up, practically puts every politician susceptible to some level of corruption.  Can this system be changed?  Another interesting question.  Can tax reform come about?  Not by the current organization of Congress.

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