Category Archives: Current Affairs & Politics

DID TRUMP REALLY OPPOSE THE REAGAN TAX REFORM ACT?

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Reconsidering one’s decision to vote for Donald Trump.  Had just read that Trump was opposed to the 1986 Tax Reform Act, one of the cornerstones of the Reagan economic-revival.  Immediate thought:  If Trump does not understand that tax reform is one of the most important components of conservative economic policy (along with conservative fiscal and monetary policies and intelligent reductions in the regulatory burden on the private sector), then why should he run?  How easily could you distinguish his economic policies from those of the first Native American running for Vice-President?  Especially given Trump’s hostility to free trade, his perceived preference for international protectionism.

So, searched for the source of the alleged Trump/TRA comments.  Turns out it goes back to Trump’s pique over what the TRA did to the real estate industry, which took a bigger hit from that legislation than did any other business-sector.  He lost a lot of money, as did many other real estate people, such those who marketed tax sheltered real-estate investments.  But it was reported in the 7/28/15 online edition of Forbes Magazine, that “Donald Trump did not like the tax reform Ronald Reagan signed into law in 1986. In an op-ed in The Wall Street Journal, he called it ‘one of the worst ideas in recent history.’”

If you read the entire Forbes piece and the entire Trump op-ed, you realize that the Trump op-ed, written in 1999, focused on the aspects of the 1986 Act that affected real estate, not on the many, many other provisions of that act.  Turns out Trump was not opposed to tax reform, he just didn’t like being targeted by the TRA, which he thought was harder on real estate than on other commercial sectors.  When commentators describe Trump as being opposed to the TRA, giving the impression that he opposed tax reform in general, they are being misleading.  He was understandably piqued over his losses but did not indicate a generalized opposition to the essence of the TRA, which was to cut tax rates, cut tax deductions and credits, and simplify the tax code in general.

Trump is in fact fully on-board with the kinds of reforms embodied in the 1986 TRA, as is revealed by his published tax-reform proposal, at https://www.donaldjtrump.com/positions/tax-reform ,and by the comments of Steve Moore, one of Trump’s key economic advisors, in an interview published on June 1, 2016 in Conservative Review – https://www.conservativereview.com/commentary/2016/05/the-man-behind-the-curtain-the-economist-to-the-candidates

It is interesting to note that Moore also suggests that he is doing his best to convert Trump into a free-trader.  In choosing advisors like Steve Moore and Larry Kudlow, Trump is making a pretty solid statement that when it comes to fleshing-out the principles and specifics of his intended policies on economics, including fiscal policy and monetary policy, he will follow a decidedly conservative path.

Must say, the whole experience of tracking this down was enlightening.  With friends like the supposedly conservative Forbes, who needs leftist enemies?

CONSERVATIVE VALUES

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A few words on “conservative values.”  There is a world of difference between conservative values (Senator Cruz’s favored term) and conservative principles.  The difference was well-described by the late William Safire, in these excerpts from “On Language; Principle vs. Value,” in the August 12, 1984 edition of The New York Times:

  • The word values has become the all-embracing vogue term for “God and country,” the work ethic, respect for family, coming to the dinner table with your hair slicked down and your mouth watering for apple pie with a slab of very American cheese. . .
  • Only a few years ago, principles were the big thing in politics; lately, that word has been shunted aside for values, usually modified as family values.  The phrase traditional values is also used, by people who probably mean historical values.  What happened in American life that replaced principles with values? What’s the difference between the two words?  . . .
  • The Latin principium meant “source, origin, beginning.”  That came to mean a primary truth that formed the basis for other beliefs and then to mean a rule for ethical conduct . . .
  • Not so with values.  Rooted in the Latin word for “strength,” the plural meant what Bacon used it to mean:  material worth.  It gradually came to acquire a meaning of intrinsic worth.  .  . In this sociopolitical meaning, values are neither standards of intrinsic worth nor eternal verities.  They are relative, not universal:  sociologists used the term to describe the behavior that is accepted by consensus.
  • Values can change but principles do not . . .Principles are what you stand for in life; values are what you stand around in among your friends. Principles are stern and unyielding; values are warm and supportive . . .

The Ten Commandments are principles; the Declaration of Independence, the U.S. Constitution, and the Gettysburg Address are primarily statements of principles.  (Can you picture Lincoln orating about transgender bathrooms?)  The writings of Milton Friedman and Friedrich Hayek are statements of principles.  So are the writings of Karl Marx.  As indicated by Safire, the “God and country” model, the work ethic/ family dinner model, the yearning for a suburban house with kids and dogs, represents a set of values, not a principle.  Let’s simplify this:  principles are what you know you should do; values are what you feel like doing.

Today’s Republicans talk more about conservative values than they do about conservative principles.  They talk about abortion, gay marriage, GLBT issues, transgender bathrooms, etc., which involve  values, not principles.  This represents a political victory for the Left, as it means they have set the agenda; the battles are now being fought on their turf.  When policies once considered values are elevated to the status of principles, we are diminished.  When Tea Party members endorse a candidate because he is a “Christian Conservative,” one wonders which of the two words is the more important to them.

Many “conservatives” would not know Milton Friedman from Kinky Friedman, could not tell you the difference between a Hayek and a kayak.  These are people who do not care about the difference between free-market capitalism and the centrally-planned economy, who do not understand the principles behind their instinctive objection to governance by Executive Orders, who are clueless as to why Chief Justice Roberts chose to squander the opportunity to kill ObamaCare.

Ted Cruz presents himself as the only true conservative politician in America, but he shows little interest in Paul Ryan’s genuinely-conservative plans for reforming healthcare, Medicare, and Social security.  Senator Cruz talks often about conservative values but rarely about conservative principles.  He advocates “limited government” in ways that suggest he could not identify any of the good things that government can provide. Is he just pandering?

Orthodox conservative writers and commentators (think Kristol, William) cannot get over the fact that no one cares to understand conservatism anymore.  Could it be that the electorate  –  regardless of party affiliation  – would rather think about values than about the national economy and foreign policy?  Will the Republican Party ever be able to regenerate orthodox conservatism?  If the ascension of Donald Trump is any indication, the answer is, No.  Apparently Mr.Trump could not care less about Friedman and Hayek, and the same is true of his supporters.  Marco Rubio could win a dozen debates on the economy and foreign policy, and he still would not win the nomination.

If there is hope for a renaissance, it lies in the possibility that a lifestyle/values guy like Donald Trump might turn out to be a closet conservative-principles guy.  For sure, we are not likely to elect another President based upon his or her articulated principles.  Maybe it is comforting  to consider that Ronald Reagan, in the view of many, was elected on his values (and personality) rather than his principles.

I KNEW RONALD REAGAN, AND . . .

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Making peace with oneself in deciding to vote for Trump in November was the easy part; anyone-but-a-socialist (closeted or brazen) is the rational choice for any citizen who got his first smartphone after puberty.  The hard part was, how to appease one’s conscience and disclose one’s decision to others.  Here is how to do it.

So far, the visible part of the upside on Trump is three possibilities:  (1) he would blow up Washington; (2) he would take counsel on economics from a responsible grown-up; and (3) he would fill the Scalia vacancy with a Scalia Conservative rather than a Roberts Conservative or worse.  The first seems like a great idea and pretty much a sure thing, so let’s consider (2) and (3).

Trump has come forward with an indication that he is taking advice on economics from Larry Kudlow and Steve Moore, each of whom grasps the fundamental conservative principles that economic growth is our most important issue other than national security, and that the key to economic growth is the restoration of free-market incentives via tax reform rather than mere tax cuts.  Unlike many self-styled conservatives, Kudlow and Moore know that cutting tax rates is not enough, that you also have to cut or eliminate the vast array of deductions and credits that have turned our tax system into a crony-capitalism system. True tax reform means that the changes are no worse than revenue-neutral but that they create massive new incentives to entrepreneurial activity and business growth.  In other words, resurrect the 1986 Tax Reform Act.  Businesses would no longer have to focus upon ways to manage and exploit their relations with the regulatory state and would be freed to focus instead upon providing better products and services to compete more effectively in the market – especially if the existing regulatory burdens on the market had been removed or at least made less political and more rational.

Trump has not tipped his hand on his selection of judges, but it would seem an easy choice for him to announce an intention to nominate Ted Cruz to fill the Scalia vacancy.  Not only would this go a long way toward winning over the hardcore Cruz-wing of the Republican Party, it would also assure all Republicans that they would be getting a justice who, unlike the Chief Justice, is willing to pay at least some attention to the outcomes of cases.  Roberts, in his unbending nonpartisanship, provides a very valuable service, but for so long as the Court includes four lefties who ALWAYS vote for the litigant they favor rather than the one with the better legal case, judicial balance requires that we nominate a conservative version of Ginsburg or Sotomayor, and Cruz appears ideally suited for that role.  And besides, everyone knows he was the smartest constitutional lawyer to come out of Harvard Law since Louis Brandeis, or at least since Felix Frankfurter.  Try Borking HIM.

If Trump indeed follows and sticks to this path, we could be watching the early stages of a Reaganesque political career.  Look at the similarities:  when Reagan began his political career, and especially when he ran for President, the conventional wisdom was that he should have stuck to something he knew and was good at.  The  Anyone-But-Trump crowd should recall that Reagan was initially considered an entertainer, a former Democrat, not a serious politician, and not very bright, and that many thought his policy views were inappropriate, radical, and dangerous.  He was the original anti-establishment candidate.

IS TRUMP REALLY AS BAD AS CLINTON?

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I detest Donald Trump, and I am not convinced that he is any more of a conservative than Hillary Clinton.  But if he is nominated by the Republican Party, I will vote for him.  Here’s why.

There is no possibility that Clinton would replace Justice Scalia with anyone but a “living Constitution”  lefty, be he or she a non-threatening one (such as Judge Garland) or a more blatant one.  Indeed one would not be shocked if she nominated President Obama, who has shown beyond all reasonable doubt that he cannot be outflanked on the left.  Until Mr. Trump makes it clear he might not nominate a conservative justice, one must give him the benefit of the doubt.  And this issue may have more importance for America’s future than any issue of the economy or national security.

Mr. Trump is in favor of tax-rate cuts.  Not sure he really means it, and definitely not sure how he would accomplish it, given his indications that he would not seek any changes in Medicare or Social Security and that he is not a fan of the Paul Ryan agenda (whose centerpiece is a reform of healthcare and entitlements).  More likely he will renounce his pledge and rationalize his decision by citing the lefty fiction that you can only balance a budget by raising tax rates or cutting expenses.  All conservatives know that that theory is nonsense, but we also know how that movie always ends.

Even giving Mr. Trump the benefit of the doubt on the rate cuts, even assuming he expects the tax rate-cuts to stimulate economic growth to such an extent that we might fulfill even the most optimistic projections from the Laffer Curve, this one seems kind of shaky.  But it is way better than the lefty agenda of raising tax rates, leaving entitlements as they are, enduring exponential increases in our annual deficits and accumulated debt, and dreaming the whole Ponzi Scheme can be pursued into infinity with no fear of a crash in the market for our Treasuries.  As naive as Mr. Trump’s views on economics may be, we do not yet know that he is uneducable on such matters, whereas we know Mrs. Clinton could not care less about running huge increases in deficits and debt.

Mr. Trump detests political correctness.  Maybe he will pull all the pieces together and use that emotion as the basis for upending all of the catastrophic policies we now maintain in the name of trying to treat all people as though they were equal in talents and skills, as distinct from being equal in terms of their rights and liberties.  In other words, restore equal opportunities rather seeking equal outcomes.  Maybe he could even do it in time to save our public K-12 schools and our colleges and universities from their politics and their unions before we end up having to look mostly abroad to find young people with the education and skills that are required by our modern, technology-based businesses and government.

Mr. Trump loves and admires our country, warts and all – which of course sets him totally at odds with the entire Democratic party.  He wants us to continue to be a leader, not just another geopolitical entity.

One could go on, but one must concede that even though Mr. Trump’s personality and style are detestable and his conservative chops may be virtually non-existent, at worst he would be less of a catastrophe for America than any living Democrat.  With him, there is at least hope.  With Clinton, thy hope ends here.

ECONOMIC GROWTH IS SO LAST CENTURY

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Economist John Cochrane’s piece in the Wall Street Journal (5/4/16) was terrific, an admirable presentation of the reasons why economic growth is nearly extinct in America, as it now is in most of the rest of the world.  (Not counting China, which first needs to pick off the rest of the low-hanging fruit before achieving the capitalistic dead zone.)  But Cochrane’s prescription for growth is becoming the dodo bird of economic thought.  Even if we elect the Republicans’ presumptive nominee, even if the Republicans somehow maintain control of Congress, there will be few remaining politicians or academics  who could put together a cogent and coherent argument in support of the conservative (i.e., what used to be called libertarian or Hayekian) principles of economic growth.  As a practical matter, the term “economic growth” may already be obsolete.

Trying to analyze the Trumpian victory, aka the Rubio/Kasich/Cruz self-immolation, one is struck by the thought that the Republicans had no candidate who was capable of explaining free-market economics to the general public.  One would like to think that Rubio gets it, and Cruz seems to arrive at it backwards (via his trademark “minimalist government” approach), but it is plain that Kasich thinks of growth only as the reward for good central-planning. Trump, alas, seems ignorant on the topic; his only useful contribution is his advocacy of tax cuts.  But even Cruz and Rubio at their best were never able to show anything remotely comparable to Reagan’s crude-but-sophisticated mastery of the Hayek /Friedman principles.  If our best politicians are all either in permanent denial (both the Democrats) or blissful ignorance (Trump and the other Republicans) of those principles, what chance does free-market capitalism have?

The Cochrane essay is an unexceptionable, good-faith effort to set forth free-market economics for the masses, but does the country really get it?  We didn’t get it when we had it (JFK, Reagan, even Bill Clinton on a good day), and we certainly don’t get it after Obama’s 7-year tutorial in how leftism can wreck a major economy.

One hears that the Republican Party is going to be shaken up, even dismantled, but the more likely outcome is that both our major parties will survive, that the surviving versions of the parties will have re-defined the “center” on matters of economics, and that the new center will be so far to the left of Hayek and Friedman that we will have little left to quibble about other than the optimal deployment of the government’s unlimited powers of taxation and regulation.  The Reagan movement has died, R.I.P.  We have entered the Populist era.  Probably to be followed by the authoritarian era, something like an Iron Age with smartphones.