THE ENTERPRISE—LOTS OF IMPORTANT THINGS TO UNDERSTAND

TRUMP’S TAX PLAN IS JUST WHAT WAS NEEDED—BOLD, COMPREHENSIVE, AND TARGETED AT ALL THE RIGHT PLACES

It is a “put up or shut up” and a challenge to his vitriolic opponents (Democrats) and any of the GOP members of Congress who aren’t with him… and I love it! He forces these obstructionist politicians to either support it, or duck for cover when their constituents come after them for not supporting a big tax cut for almost everyone. (Well, not quite everyone—see below)

I won’t write too much more because Kimberly Strassel of the WSJ has done it for me.  Click on this and read, listen…

https://www.wsj.com/articles/trumps-finest-moment-so-far-1493331435

 

NOW LOOK AT THIS AND SEE WHY SO MANY DEMS IN BIG STATES WILL SCREAM BLOODY MURDER

The claim that this tax plan favors the rich is blown out of the water by the two biggest states, where wealthiest Americans live—and pay high state income taxes: NY & CA.

Further, this plan also takes a large whack at “blue states,” but by doubling the standard deduction (hence raising the threshold for itemized deductions) gives a break to the poorer and middle class taxpayers—even in rich states.  Someone was very clever. Of course the Democrats will try to block it, modify it, and become even more hysterical about Trump.

 

 

THIS EDITION WILL BE A BIG CATCH-UP ON LOTS OF TOPICS

I’ve been waiting for something, anything, to be agreed upon in DC. Other than SCOTUS Justice Gorsuch and  (finally) Trump’s Cabinet appointments, not much is getting finalized. The Democrats have proven to be even better than the GOP was at obstructionism—perhaps because they don’t let ethics or the truth get in their way. When the mainstream media, and the major network news covers president Trump with 80-90% negative stories, we can all see why the nation’s liberals are winning the media wars. 

AN AMERICAN INSTITUTION IN DANGER
I don’t mean the U. of CA at Berkeley—although it is applicable. I mean “Free Speech” as guaranteed buy the US Constitution. American colleges are dominated by Faculty that is 75%+ liberal, and that filters immediately into the student bodies and the administration too.  I know first hand, having been the victim of liberal bias (anti-conservative bias) at a major, famous US university. I never publicized it, because I felt that “two wrongs don’t make a right.” It was painfully obvious why a previously agreed upon speaking and guest lecturing arrangement, suddenly was not only gone—but calls to ask why were never returned, emails never answered. I finally found two Deans with integrity—an outgoing one and an incoming one—who investigated, and told me the truth.
The Ann Coulter incident is just the most recent of many. Maybe it will take a new US law, withdrawing all Federal funding, grants, etc. from a public (state) college or university that acts (or fails to act) to assure free speech, and to absolutely stop censorship, or aggressive behaviors that impede free speech. Tough times require tough actions.

RETAILING IS WOUNDED BUT NOT DEAD—YET.
Posted below an article I wrote 3 years ago… and it tells part of the story fairly simply.  America has been over-retailed for decades. It’s sort of a by-product of entrepreneurial capitalism. Stores fail and go away, replaced by or run out of business by better or different ones. Most categories of stores start with many and end with just a few—toy stores, electronics stores, large discount stores, home/housewares stores, warehouse clubs, sporting goods stores, outfitters, and so forth. You can fill in the names; you know them.  Amazon and a host of other .com or on-line retailers are taking business away from conventional retail stores. 

 

Retail is actually referring to an earlier way of shopping—except the internet and smart phones have replaced catalogs sent to homes (remember Montgomery Wards and Sears, Roebuck huge catalogs? In 1982 the average home received 40 catalogs a year—and bought from them. Today, an active home shopper still gets that many, but the number of contacts is small compared to the emails received as a result of on-line shopping. In an earlier era, large department stores (before massive consolidation) offered places to dine, see events, watch fashion shows, and take classes. Get ready for a dose of “back to the future.”

 

Read the article again and you’ll see why. Ubiquitous smart phones and tablets (iPhones and iPads and all the derivatives) make shopping an interactive experience with abundant transparency of prices, selection, etc. Retail will survive…(you read it here)…in some form of local gathering place where shopping is just one of the activities that draws customers. But it will have to (like all organisms in nature) evolve and adapt to this new e-commerce environment.  Watch for it to happen.
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WHAT’S A RETAIL STORE, GRAMPS?  By John Mariotti, ©2014 
The time is only a decade or more in the future. Little 4-1/2 year old Susie just finished her Christmas—whoops—“Year End Annual Holiday” (YEAH) wish list using her latest 3D tablet. The list was instantly posted electronically to Gramps' and Gran's tablets. They reply with a question. “ Would you like to go to a retail store to shop for your YEAH gifts?"" The answer nearly floors them. "What's a retail store, Gramps? And how do you 'shop' in one? What does 'shop' mean? How will I find what I want? Is there a way to ‘search’ for what I want? And then can we buy it and do we carry it home with us?”  

If you think this is a far-fetched scenario, think again. Imagine the inefficiency of the entire retailing process. First someone must 'guess' at what consumers might want to buy. They are inevitably wrong, to varying degrees. Then the merchandise they 'guess' is needed must be ordered and transported either from the producer, or from a distribution center, to numerous stores spread all over population centers. Then people must drive their electric or hybrid vehicles from store to store, wasting energy and creating traffic jams, consuming huge amounts of time, just to see IF the desired items are there, and in the desired shape, size, color, spec or whatever. Often they are not, so it is on to yet another “store" (even the name implies accumulation and storage of goods) where the hunt continues…often fruitlessly). 

 

The signs are clear that traditional "bricks and mortar" (BAM) retailing is in decline. America has been "over-stored" for decades, so a natural selection process continues to winnow the number of retail outlets, forcing losers to close and winners to adapt to an entirely new landscape of "shopping and buying."

Regional discounters were wiped out by Walmart and Target's growth, which devastated dozens (too many to list here) of less efficient discounters who no longer exist. The hulks of their stores still litter the urban landscape, unused or being torn down and/or repurposed. Big box stores fell next. Circuit City, Linens 'N Things, Borders, and more, are simply gone. Consolidation further narrowed the field as new retailing concepts emerged, spread, then consolidated all within a few decades. Wholesale/warehouse clubs are a prime example of this…as are video rental stores, and recently, office products superstores. 

 

The explosion of e-commerce, on-line shopping, behemoths like amazon.com, and next day delivery is eating away at conventional BAM retailers faster and faster. Sears Holdings (Kmart) has been slowly sinking into oblivion, kept alive only by cash from real estate holdings. JC Penney is reeling after a failed makeover attempt. Office product superstores, spawned only 3 decades ago continue to consolidate and shrink. Office Depot & Office Max are merging, and Staples is closing 225 stores and shrinking the footprint of the remainder. Radio Shack, once ubiquitous, is disappearing before our very eyes. Considering that the life cycle of both wholesale/warehouse club and office product superstore evolution was only 3 decades (early 1980s to date), and that the rate of change in how goods are sold is accelerating, then Susie’s question is only a decade or two away from being realistic.  Even behemoth Walmart at nearly $500 Billion in annual sales is wondering and reconsidering what its “stores” should evolve to look like in a decade or two.  It is an enormous question for all retailers. Their very future existence depends on how well they answer it.

 

So, what's a retail store, Gramps? Little Susie's question is a harbinger of a future where a retail store is more of a "presence" than a "store." Retail stores of the future are more like physical "samplers" where "shoppers" want to see, feel, touch and investigate potential purchases--but not necessarily buy them. Ask Best Buy how this feels. Not so good, unless there is a newer, better revenue and profit model developed for BAM locations.

If this future of retailing were completely clear, everyone would be charging toward it, but it's not. What's clear is that just as hybrid autos are bridging the gap between gasoline/diesel vehicles and fully electric ones, and streaming audio and video are eating into sales of CDs and DVDs, there is a big transition coming. How soon no one knows, nor exactly what it will be, thus Susie’s question might still be very appropriate: “what's a retail store, Gramps?"

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HAVE YOU BEEN HACKED YET? IT’S NOT A MATTER OF IF—IT’S ONLY A MATTER OF WHEN AND TO WHAT DEGREE

When I re-wrote The Chinese Conspiracy in 2010, it was derived from an earlier edition/title The Silence, thatI wrote in 2000-2001. Identity theft, credit card theft (I’m on my third one, how about you?), phishing (DO NOT CLICK on that LINK!), DDoS (Distributed Denial of Service) is an old cyber attack that still works on large institutions—overload servers with a massive attack from Botnets of invaded computers—and the large institution (Bank, brokerage, government agency, whatever) computer servers simply shutdown to self-protect. Mission accomplished: Schwab or Chase or whoever is off line for minutes—or hours. I can’t bring myself to use those weird passwords, so I am constantly juggling an array of passwords derived from a common theme that I have a chance to remember or reconstruct. Keep firewalls on. Block cookies and popups from unfamiliar sites. Do not share confidential information, and when given a chance for two-factor ID security, use it. Even so, your contacts can be hacked and that can jeopardize your data. Find a good security provider and use it. You won’t realize how happy you can be until it avoids a disastrous hack or ransomware attack. (PS: Your new car and your new Internet-enabled “whatever” at home are easy targets for hackers.  Beware!)

 

HARRY REID DID ONE BIG THING THE GOP CAN USE AGAINST HIM (AND HIS KIND)

He changed Senate rules—forever—to help him pass unpopular legislation and appointees. The so-called Nuclear Option, whereby a simple majority in the Senate can pass something, will live on and grow and be expanded. As obstruction became political strategy, the old trick of filibuster (which used to require protracted talking for hours and hours) became a politically expedient “filibuster declaration” which corrupted the intent and use of the filibuster—to attempt to sway opposing positions by “talking them the death.” The filibuster is on its way out—for virtually everything—because the Senate is no longer populated with statesmen who debate issues for the good of the country and all Americans.  It is filled with far too many (not all, certainly, but way too) partisan-career-politicians who owe debts to far too many contributors, lobbyists, cronies and colleagues. Like a computer file that has become corrupted, the US Senate needs a “re-boot & reinstall with malware removal.” That will happen in the next 3+ years because the hysterical, Democrats (aided and abetted by liberal mainstream media) will try everything to stop Donald Trump’s agenda. It’s a shame, but much of old fashioned, Congressional cross-aisle give and take is gone, and that is definitely NOT progress.

 

TRUMP IS MAKING PROGRESS IN SPITE OF OBSTRUCTIONISM AND ROGUE JUDGES

He is using the other edge of Obama’s double-edge sword of Executive Orders, to reverse many of Obama’s “victories.” There is a problem arising that the SCOTUS will have to limit. Rogue judges issuing injunctions based on meritless opinions but applicable across the country. Clear cases of presidential Constitutional authority are being denied. The Trump Justice department must force these to the Supreme Court (SCOTUS) “as fast as possible” (which is still not very fast), and get these judges put in their place by the SCOTUS Justices. Trump’s recent order to review national monument status can reverse one big Obama misadventure—unless rogue judges somehow also block that move.

 

A PECULIAR KIND OF PROBLEM IS OCCURRING—QUALIFICATIONS BEING CRITICIZED AS CONFLICTS OF INTEREST

Democrat opponents have been challenging Trump appointees because they actually have too much relevant knowledge and experience in the fields they are being chosen to lead. It’s being called a “conflict of interest,” which provide ample “cover” for partisan politics to take over. Who better to manage a function or department than someone who has worked in that field? Yes, they much divest direct investments that they could “help” before taking office—but once that is done—their knowledge and experience is very valuable.  Somehow, when Obama appointments with former ties to big banks/investment firms, it was no problem—but now it’s a conflict of interest. Are double standards at work again? YES!

 

DISGUSTED BY THE NEW AL GORE PROPAGANDA MOVIE

My enjoyable day at the movies was interrupted by a sickening reprise of Al Gore’s Inconvenient Truth propaganda. I had to endure a movie trailer for yet another of his political and environmental screeds, posing as entertainment—really?  Since movies are largely made and controlled by Hollywood elite—who are mostly Democrats/liberal—his is not a bug surprise. If you spend enough time and money repeating lies, a lot of people will believe them.  Of course humanity is fouling the planet with its waste and offal Can anything be done about it? Yes. Does putting it in the hands of big government help that? NO! Until China and India and other third world countries control their climate pollution, the USA’s efforts can make very little difference, except make US companies globally less competitive. Find a way to regulate China, India, Pakistan, et. al. and that will help immensely. Meanwhile eliminate or cut back US regulations—and spend that money on finding new and better technologies—not supporting crony-capitalist partners in money-losing ventures. http://www.washingtontimes.com/news/2015/aug/26/solyndra-misled-government-get-535-million-solar-p/

 

CHINA IS KILLING ITS OWN PEOPLE—RIGHT NOW 

Hazardous air quality is causing 430 flights to be cancelled just in the Beijing area, one Sunday in January. Toxic smog is creating massive traffic jams, (and in a number of years, leading to lots of deaths). The World Health Organization recommends air quality exposure to a concentration of PM 2.5 particles (cause of greatest heath risks), be no more than 25 micrograms—in a 24 hour period. Near Tiananmen Square in Beijing this January it was 475 Micrograms/Cubic meter in the air the Chinese people were breathing.  25 Chinese cities has issues “red-alerts,” imposed vehicle restrictions and limited factory production. I didn’t see anything about this is the trailer for Al Gore’s latest movie!

 

REGULATIONS TAKE A LONG TIME TO UNWIND—MEANWHILE THE DAMAGE GOES ON

When foreign countries dump products into the US at below fair market cost/value, they must be stopped. Historically, this has taken so long that the US victims are long dead and gone before relief comes. Trumps new USTR (US Trade Representative Robert Lighthizer) is “a breath of fresh air,” who gets it. Fast and decisive actions can save US companies and entire industries. Slow and indecisive ones (ala the Obama era) kills US companies, entire industries and jobs.  Want more info?

https://www.ft.com/content/e1487162-d170-11e6-9341-7393bb2e1b51  Trump needs to pick up the pace filling other administration spots now that his cabinet is about done. These next levels can mitigate harmful regulations by how they are enforces—until new regulatory actions can be passed by Congress (and hopefully not filibustered)!

 

TRUMP NEEDS TO REMOVE CFPB HEAD, BUT NOT THIS MINUTE

A lot of the damage has been done by the Consumer Financial Protection Board—the largest unregulated and uncontrolled government agency in history. It needs to be reined in, and put under a much tighter form of oversight. This can take all year to do, unless Trump chooses to find “cause” in some of Richard Cordray’s actions. Many politicians think waiting until Cordray’s term runs out in 2018 is a better idea—avoid protracted and distracting litigation—and keeping Cordray from running of governor of OH as the Anti-Trump candidate. Watch how this unfolds. It could make a big difference in many ways.

CBO—FLAWED METRICS YIELD FLAWED RESULTS—DID YOU EVER OWN A CAR WITH A BAD SPEEDOMETER?
Read the attached article and see how CBO’s flawed analyses have consistently driven US fiscal policies in the WRONG DIRECTION.
It’s like having a car with a FAULTY SPEEDOMETER, or a sporting event with a faulty SCOREBOARD!  Here’s where the problem starts: https://www.cbo.gov/about/organization-and-staffing.  This organization works for CONGRESS! The Director reports to Congress—the Speaker of the House and President of the Senate.
It is time to fix this…and THE GOP is in a position to do it. (Control of House and Senate and White House!)

Get Senate on board, and enlist the President to launch a Twitter campaign to move the CBO’s errors to the headlines.
Why? When the “media reported scoreboard” calculates the score wrong—everything that happens after that is WRONG!
Coming events: ALL ARE DRAMATICALLY DRIVEN BY CBO PROCLAMATIONS WHICH HAVE BEEN CATEGORICALLY WRONG! SEE ARTICLE THAT FOLLOWS.

• Health Care (to replace Obamacare)

• Budget

• Tax Reform

• Regulatory Reform

• Welfare Reform

Then insist on immediate post-mortem adjustments by CBO (based on how/why they had to revise projections so many times in the past—always too high, and lowering them —Obama’s 8 yrs. and too low — Reagan’s 8 years). Insist on this immediate correction of their projections to compensate for their tendency to err this way. 
I’d bet it is a full 1 point +/- error—a huge difference.

THAT’S PLENTY FOR THIS EDITION, BACK IN A COUPLE OF WEEKS WITH MORE…

 

JOHN

 

HERE’S THE ARTICLE ON WHY TAX REFORM LIKE TRUMP PROPOSED WON’T BUST THE BUDGET:
http://www.uspolicymetrics.com/do-you-want-reagans-economy-or-obamas/

Do You Want Reagan’s Economy or Obama’s?

By Phil Gramm and Michael Solon

The CBO failed to predict the tax-reform boom of the 1980s and the weak recovery in recent years.

 

The best way to gauge America’s capacity to reignite economic growth through tax reform is to move beyond congressional economic models and look to the empirical evidence of our historical ability to grow and prosper. America’s economic exceptionalism has been the product of freedom and opportunity, secured through limited government. When government policies have strengthened or impeded these sources of American exceptionalism, they have yielded quantifiably different results.

 

The economic policies implemented by Presidents Reagan and Obama were the polar extremes of postwar policies. The economic consequences of those policies defined the highs and lows of America’s postwar experience. These extremes help define what might be expected if this administration and Congress are successful in reversing the Obama program and moving toward a more Reagan-type policy of tax reform and regulatory relief.

 

Mr. Obama implemented policies dramatically different from the postwar norm. Marginal tax rates soared; federal spending spiraled with a nearly trillion-dollar stimulus; Social Security Disability and food-stamp qualifications were eased; work requirements in welfare programs were suspended; Medicare and Medicaid were expanded and ObamaCare created. Federal debt doubled, and public and private debt held by the Federal Reserve quadrupled. New legislation, an unprecedented number of new regulations, and a torrent of executive orders transformed the role of government in American life.

 

Dramatically different policies were followed by dramatically different economic results. Economic growth during the Obama years averaged an astonishingly low 1.47%, as compared with the 3.4% average throughout all the postwar booms and busts before 2009. The extraordinary economic failure of the Obama era is not found in the recession that ended six months into his presidency but in the subsequent failed recovery, where real growth in gross domestic product averaged 2.1% per year, less than half the 4.5% average during previous postwar recoveries of similar duration.

 

Even after Mr. Obama announced a “summer of recovery” in 2010, the Congressional Budget Office was repeatedly forced to cut GDP and federal revenue estimates—by a total of $9 trillion and $4.2 trillion, respectively—due to weak economic growth. Federal revenues were supposed to rise by $650 billion over the following decade because of the Obama 2013 tax increase. They are now projected to fall by almost five times that amount because economic growth continues to falter.

 

GDP growth averaged 2.5% between 1974 and 1980. After taking office during a recession in 1981, Reagan cut marginal tax rates, cut nondefense and entitlement spending, and reduced the regulatory burden. Once those policies were in place, economic growth averaged 4.6% during the remainder of his presidency and federal revenues grew at double-digit rates in four of his last six years in office.

 

With efforts now under way to repeal the Obama program and replicate, at least in part, the successful tax reform of the Reagan era, it seems reasonable to assume that the economic benefits from these changes would help to pull the economy out of its current low-growth rut and propel it toward its historical postwar norm. Lifting the economy from the CBO’s post-Obama projection of 1.8% growth to the 3.4% postwar average would generate $4.6 trillion of additional federal revenues over 10 years.

 

Even if tax reform and the repeal of the Obama program closed only half the gap between the current 1.8% GDP growth rate and the 3.4% GDP growth rate that the economy averaged for the previous 64 years, that alone would deliver $2.3 trillion in new revenues due to higher growth over the next 10 years. This is important because together with the real reforms contained in the House tax-reform bill, this growth potential would make it possible for the House to drop the border-adjustment provision, which would supposedly raise $1.1 trillion in revenue. This change alone would remove the biggest obstacle to passing tax reform.

 

Budget and economic data over the seven postwar decades prove that American exceptionalism flourishes when supported by polices that promote freedom and opportunity and disappears when they are suppressed. But the CBO’s methods do not recognize that truth. No single part of the Obama program was ever scored in advance by the CBO as losing $4.2 trillion in federal revenues, but those losses reflect the totality of the impact of his policies.

 

No single Reagan action was ever scored by the CBO as producing the equivalent of $2.9 trillion in new revenues (relative to the current GDP), but that was the overall result of his program, which increased annual economic growth by an additional 1% over his presidency. The CBO originally assumed that the 1986 tax reform would produce no economic benefits and that the 1997 Balanced Budget Act would have only a small positive effect, yet together they helped produce a quarter-century of rapid growth, surging federal revenues and a balanced budget.

 

Since its models are incapable of distinguishing between failed and successful economic policies, the CBO will not score the economic growth and federal revenue coming from improved economic policy. If the House drops the border-adjustment provision, the current tax-reform bill could still be considered in the context of the budget reconciliation process, which requires only 51 votes in the Senate. But under Senate rules, a tax reform passed that way would be in place for only 10 years. If the reforms work as they have in the past, Republicans will win the 2018 elections, and then they can make the tax reform permanent.

 

Critics will denounce the idea that good policies have anything to do with economic growth. These are largely the same critics who have spent most of the past eight years denying that President Obama’s policies had anything to do with poor economic performance. But America itself is proof that policies matter. After all, policies of freedom and opportunity are what allowed America to take the world’s “huddled masses” and produce the most impressive empirical evidence the world has ever seen.

 

Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is a partner of US Policy Metrics.

 

Appeared in the Apr. 20, 2017, print edition.

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