2017 American Political Scene

[YellowFever]

It is all fun and games, until someone hires 2 Russian prostitutes to pee in your bed.

And sometimes even that can be fun and games.

[citanon]

I agree, but will stay alert and prepared to resist any moves on his part that threaten our basic institutions. Beware if he starts saying the ends justify the means.

It's oddly refreshing that we have in him a leader who says out loud what he thinks as opposed to leaders who say the right thing in public while suppressing what they really think. It's troubling that he has those thoughts in the first place. In no way does this openness redeem his naivete on domestic and international issues. Like you say, we'll see what happens after the Inauguration. I have noticed, however, that his public statements and tweets, while still rancorous, show tiny signs that he is learning. In his return fire on Rep Lewis, he ended by asking Lewis for help with urban troubles. A small thing, but telling. Then, today, he issued a nice tribute to MLK and had a meeting with MLK III. Kushner's advice?


But I don't think he'll ever let his Twitter account grow cold. He learned at a young age that hard retaliation throws people off their game, and in later years he learned from Roy Cohen that he best defense is an outsized, audacious offense works.

JAD,

I agree with you. We've heard a lot of talk so far that, to my ear, consists of very ambiguous language designed to maximize negotiating room and strategic options. He's said some things that are shaking up the status quo and making people anxious. It could mean that he's naive or it could mean that it's prelude to some smart moves. The real key is the actions.

For example, for a long time we've wanted Europeans to pay more for defense. If some tough words about NATO will shake them out of complacency then it will be good for the alliance in the long run. After all, we are facing opponents who listen to actions much more than to words. On the other hand, if it's the prelude to actually damaging the alliance, then it's something I and many other conservatives will oppose.

On Russian sanctions and nuclear weapons, I think it's a smart move linking the two. Do we expect sanctions will get Russia to ever return Crimea? No. So is the plan going forward choking Russian finances with a permanent sanctions regime? This also has problems, lest we think that creating ever greater antagonism and isolation in the world's largest nuclear power is a good thing. As we were just discussing earlier, Russia's primary basis for acting as a superpower is its nuclear weapons arsenal. Thanks to Obama's folly, they now have close to 500 more deployed nuclear warheads than the US. Those masters of wishful thinking who are so prominent in the "mainstream" public discourse say that's only a temporary situation created by modernization of Russian deployed weapons. I'm not holding my breath. Trump is linking sanctions regime directly to substantial cuts in the core component of Russia's national power, meaning that they can choose more cooperation but only by moderating ambitions to further leverage their strategic capabilities. I think that is a fair trade.

Let's note also that a cut to parity, with no reduction in current deployed US nuclear arsenal, would see Russia decommission hundreds of warheads.

Let's also note that to create pressure for disarmament, we may have to re-expand our arsenal back up to parity with the Russians. This matches what Trump stated regarding greatly increasing the nuclear capabilities. Our strategic weapons enterprise are sorely in need of rejuvenation.

On the other hand, if Trump uses this to cut a sweet heart deal that requires no significant change of course or sacrifice from the Russians, then we have a problem.

These are just two issues amongst many where the President elect's words leave much ambiguity that has been overlooked in the media hysteria. I'm hoping for his success but ready to oppose him if his actions harm the country.

[astralis]

GVChamp,

American Presidents have signed deals with Russia/USSR with varying degrees of success over since the 40s. The most recent one was the last President. If you're someone thinking Trump is unique, then you're the one with ideas that are quite far removed from reality.

the unique thing about Trump in this singular aspect is not that he wants to make a deal with Russia. it's -how he's going about it-. OK, he wants to negotiate; and right off the bat he weakens his own bargaining position by undermining NATO. he then talks about removing sanctions on Russia and then de facto recognizing Russian aggression vis-a-vis Ukraine as part of a future deal.

it's one thing to say "i'd like another round of nuclear discussions", it's another to show just how far you're willing to go before the discussions even begin.

if it wasn't clear why Trump went into bankruptcy earlier, it's certainly becoming clear now.

WRT to economic policy:
The correct response to economic recession is almost certainly the Keynesian one. Even viewpoints that we don't think of as Keynesian, like Milton Friedman, are using a lot of the same fundamental analysis. It's just a question of using fiscal stimulus vs. monetary stimulus.

or both now. monetarism is dead courtesy of the Great Recession, showing the limits of monetary policy.

I can respect not trusting massive government spending: tax cuts are just as effective according to Romer's research and gives government less ability to pick winners and losers. Plus, a lot of the infrastructure projects we want are not shovel-ready jobs, and when we try to expedite production and ignore environmental regulations, we get DAPL'd.

it's been a while since I read the Romer study but IIRC all she said was that "they work", not necessarily that "they work just as effectively".

and certain types of tax cuts are more effective than others. in the context of a demand-starved economy, tax cuts on the lower/middle classes tend to get spent right away and thus are more effective as stimulus. tax cuts on the wealthy tend to not spur demand, with the extra money going into savings instead.

[GVChamp]

From a fiscal stimulus perspective, most conservatives support payroll tax cuts. Upper-income tax cuts are probably not the most stimulating option.

I don't think all of us agree that monetary stimulus doesn't work or that the Zero Lower Bound is anything meaningful. There's always the option of money helicopter, and there's a lot of options between QE and money helicopter.

I might have thoughts WRT negotiations with Russia, but Trump has negotiated far more deals than me, so any advice I give would just be ridiculous. It's also obvious that Russia is never going to give up Crimea, no one is going to make them, and those sanctions on Russia aren't going to last forever, so what's your issue with stating the obvious? They are going to be on the table in any future negotiations with Russia.

NATO signaling is telling the Europeans and Americans that there is a new sheriff in town and to recognize they are going to have to make some behavioral changes to work with the new administration. Trump's not bending over backwards to work with them (especially since they have zero leverage).

[astralis]

GVChamp,

From a fiscal stimulus perspective, most conservatives support payroll tax cuts. Upper-income tax cuts are probably not the most stimulating option.

yet the impetus of every single Republican tax cut plan is upper-income tax cuts.

I don't think all of us agree that monetary stimulus doesn't work or that the Zero Lower Bound is anything meaningful.

what monetarism is saying is that monetary stimulus is enough to work alone, and indeed is -preferable- to fiscal stimulus. the Great Recession showed that elements of both are needed.

I might have thoughts WRT negotiations with Russia, but Trump has negotiated far more deals than me, so any advice I give would just be ridiculous.

feh, and Obama has negotiated far more deals than you too but that sure doesn't keep him from getting criticized :-)

It's also obvious that Russia is never going to give up Crimea, no one is going to make them, and those sanctions on Russia aren't going to last forever, so what's your issue with stating the obvious? They are going to be on the table in any future negotiations with Russia.

Trump is essentially -agreeing with Putin- on every single major foreign policy goal Putin has vs Europe BEFORE negotiations even start, and signaling his readiness to throw American allies under the bus.

that's a novel negotiation tactic.

[tbm3fan]

YF

I'm somewhere in there with you. But I didn't vote for him because I felt his lifestyle and business ethics were a poor example for the upcoming generation. When you compare his leadership style to those of great leaders, like Washington, Lincoln, Teddy Roosevelt, and FDR you realize how deficient he is, at least going in.

But he'll be our president, and on day one he deserves our support. On day 2, who knows.

It will be interesting at first to watch this odd man operate, much like it was interesting to watch our first black president operate, and if I may add, Obama comported himself extremely well throughout as a family man and a boss.

Now that Trump's going to be our president, I want him to succeed. Like you point out, just in case he goes rouge, we have the necessary institutional safeguards to check him.

I have to say both you and Yellowfever are optimistic about the guy. Wish I could be but as I said I have followed him since the mid-70's and didn't like him then. His self-centered ego was obvious as can be back then. Worst of all I consider him to be a bully. We all know bullies or should to some extent. We also know that if they don't meet the consequences of their bullying then they will continue all their life since it always worked. That is why I said he needed a good shot in the nose in high school so he might learn those consequences. Being the new small 2nd year kid in a small Catholic high made me a target. However I was extremely vicious with them after they tried something on me. They actually learned as one can see when they signed my yearbook. The third guy who tried it stumbled out of my house and never heard from again. As they say a zebra doesn't change it's stripes and so Trump will continue to attack and bully all those who criticize him in any shape, form or matter. It is too late for him to change himself. He acts more out of reflex, like a one celled animal, than anybody I have ever seen.

[DOR]

From a fiscal stimulus perspective, most conservatives support payroll tax cuts. Upper-income tax cuts are probably not the most stimulating option.

I don't think all of us agree that monetary stimulus doesn't work or that the Zero Lower Bound is anything meaningful. There's always the option of money helicopter, and there's a lot of options between QE and money helicopter.

I might have thoughts WRT negotiations with Russia, but Trump has negotiated far more deals than me, so any advice I give would just be ridiculous. It's also obvious that Russia is never going to give up Crimea, no one is going to make them, and those sanctions on Russia aren't going to last forever, so what's your issue with stating the obvious? They are going to be on the table in any future negotiations with Russia.

NATO signaling is telling the Europeans and Americans that there is a new sheriff in town and to recognize they are going to have to make some behavioral changes to work with the new administration. Trump's not bending over backwards to work with them (especially since they have zero leverage).

Upper income tax cuts are counter-productive as an economic stimulus measure. The lead to more savings than spending, whereas lower-income tax cuts or negative taxes lead to more spending than savings. The differences are very clear and extremely well documented.

Monetary policy was never intended to work in isolation. But, after Congress went on strike against the economic recovery, monetary policy has been all that's left. As evidence, consider that in 2011 (-3%), 2012 (-1.9%), 2013 (-2.9%) and 2014 (-0.9%) government consumption expenditure and gross investment was moving in exactly the wrong direction to support monetary policy, economic recovery or basic national interests. See: https://fred.stlouisfed.org/series/A822RL1A225NBEA

If you don’t like QE ∞ blame it on fiscal policy.

[GVChamp]

Republicans are going to push for upper-income tax decreases in all cases. This needs to be separated intellectually from counter-cyclical fiscal policy. Milton Friedman's statement was also "support any tax cut for any reason." That's not an endorsement of it as counter-cyclical policy.

I don't think it's any more unethical than "if you like your plan, you can keep it." Politicians lie, that's what they do.

I also don't think that the Great Recession shows that fiscal policy is needed to recover. We have been at ZLB for years but the various QE programs were still effective, even if the Fed didn't want to jack up their balance sheet enough to fill the entire output gap. I also don't think it's obvious that we want to close the entire output gap with fiscal policy, when we will then be stuck with a massively expanded government spending money on questionable things, and permanent deficits or increased taxes to pay for it.

What's worse from a conservative perspective? A lengthy recession or a New Deal 2.0? You're going to get near unanimous agreement that New Deal 2.0 is worse, because we'll be stuck with it. Forever.


Also, from a conservative perspective, what's worse? Using a recession to reduce tax rates or bowing to 50+% marginal tax rates (which we think are unethical outside of war), or the 90+% that Bernie Sanders and about half of Democrats advocate for?

[snapper]

Trump is essentially -agreeing with Putin- on every single major foreign policy goal Putin has vs Europe BEFORE negotiations even start, and signaling his readiness to throw American allies under the bus.

that's a novel negotiation tactic.

Believe me it hurts... like.

[DOR]

Republicans are going to push for upper-income tax decreases in all cases. This needs to be separated intellectually from counter-cyclical fiscal policy. Milton Friedman's statement was also "support any tax cut for any reason." That's not an endorsement of it as counter-cyclical policy.

I don't think it's any more unethical than "if you like your plan, you can keep it." Politicians lie, that's what they do.

I also don't think that the Great Recession shows that fiscal policy is needed to recover. We have been at ZLB for years but the various QE programs were still effective, even if the Fed didn't want to jack up their balance sheet enough to fill the entire output gap. I also don't think it's obvious that we want to close the entire output gap with fiscal policy, when we will then be stuck with a massively expanded government spending money on questionable things, and permanent deficits or increased taxes to pay for it.

What's worse from a conservative perspective? A lengthy recession or a New Deal 2.0? You're going to get near unanimous agreement that New Deal 2.0 is worse, because we'll be stuck with it. Forever.


Also, from a conservative perspective, what's worse? Using a recession to reduce tax rates or bowing to 50+% marginal tax rates (which we think are unethical outside of war), or the 90+% that Bernie Sanders and about half of Democrats advocate for?

What might have been if Congress had worked with the Administration to alleviate the worst effects of the Bush Depression? We'll never know. But, what we can know is what happened in the past. That's why we have the Keynesian approach: spend money when demand is slack, and recoup it when demand is strong.

We have an example of the hands-off approach ca. 1930. The Smoot-Hawley Tariff Act, for example, raised the cost of doing business at a time when few companies thought they’d be able to pass on cost increases to their customers. Beggar Thy Neighbor policies aren’t a good idea. Neither is letting the banks fail in massive numbers, wiping out household (and business) savings. Of course, neither was as bad as Congress’ counter-cyclical tax increase.

Staying on the gold standard was the equivalent of dramatically tightening monetary policy, exactly the wrong thing to do.

[astralis]

GVChamp,

Republicans are going to push for upper-income tax decreases in all cases. This needs to be separated intellectually from counter-cyclical fiscal policy. Milton Friedman's statement was also "support any tax cut for any reason." That's not an endorsement of it as counter-cyclical policy.

mmm, "this needs to be separated intellectually" is a worthless statement when Republican diagnoses of counter-cyclical fiscal policy IS more upper-income tax decreases.

IE, when have republicans -prioritized- any other sort of tax decrease beside upper-income tax decrease?

I also don't think that the Great Recession shows that fiscal policy is needed to recover. We have been at ZLB for years but the various QE programs were still effective, even if the Fed didn't want to jack up their balance sheet enough to fill the entire output gap. I also don't think it's obvious that we want to close the entire output gap with fiscal policy, when we will then be stuck with a massively expanded government spending money on questionable things, and permanent deficits or increased taxes to pay for it.

which is ALSO the end result if a recession goes long. mandatory spending automatically goes up. "the various QE programs were still effective", in relationship to what? it is true we did better than Europe because we DID have a fiscal stimulus, inadequate as it was, plus a sane monetary policy. but effectively losing hundreds of billions, if not trillions, in lost output due to a singular reliance on monetary policy is also counter-productive.

What's worse from a conservative perspective? A lengthy recession or a New Deal 2.0? You're going to get near unanimous agreement that New Deal 2.0 is worse, because we'll be stuck with it. Forever.

yes, the triumph of ideology over practicality, i'm well-aware. considering conservatives have also been attacking the Fed, what you're looking at is the conservative re-embrace of neo-classical economics. actually, if anything, the Austrian school detests monetary policy even more than neo-classical economics. "liquidate, liquidate, liquidate!"

of course the last time this was actually enacted as policy, Republicans became a minority party for fifty years.

what's really amusing is how quiet conservatives (outside perhaps one or two editoral writers on the WSJ) have gotten over our President-Elect's view of economic policy, which boils down to using the Presidential office to bully and harangue companies into keeping a piddly number of jobs in the US and then trumpeting it to the skies.

[JAD_333]

I have to say both you and Yellowfever are optimistic about the guy. Wish I could be but as I said I have followed him since the mid-70's and didn't like him then.

Can't speak for YF, but I'm more hopeful than optimistic.

As for his public persona, I admit it's course. I've never met the guy, so I don't know how much of it is real or self-fabricated for effect. On the web, you can find stories from average people who have met him in person. They say he was nice and respectful to them. My guess is that the White House staff will end up liking him too, which in the larger scheme of things may not matter. It's good to keep one's emotions in balance when it comes to Trump or any public person. Neither love nor hate, are good filters for clarity when it comes to politics. And allowing process to take center stage over objectives could be counterproductive. If a conceited, obnoxious politician comes up with a great solution for a pro, what do we do? Throw it out? Is the sex life of the farmer who provides your food more important than eating?

His self-centered ego was obvious as can be back then. Worst of all I consider him to be a bully. We all know bullies or should to some extent. We also know that if they don't meet the consequences of their bullying then they will continue all their life since it always worked. That is why I said he needed a good shot in the nose in high school so he might learn those consequences. Being the new small 2nd year kid in a small Catholic high made me a target. However I was extremely vicious with them after they tried something on me. They actually learned as one can see when they signed my yearbook. The third guy who tried it stumbled out of my house and never heard from again. As they say a zebra doesn't change it's stripes and so Trump will continue to attack and bully all those who criticize him in any shape, form or matter. It is too late for him to change himself. He acts more out of reflex, like a one celled animal, than anybody I have ever seen.

I had similar experiences when I was a kid. I remember the first time I discovered a bully backs off when you don't back down. P.S. I was also in a Catholic parochial school at the time.

[JAD_333]

I am not expecting much from him.

YF:

Is it that you don't care, or that you think he won't accomplish much? I'm expecting lots of fireworks. ;-)

[YellowFever]

YF:

Is it that you don't care, or that you think he won't accomplish much? I'm expecting lots of fireworks. ;-)

I don't care in the sense that either Hillary or other Republican candidates meant we were slowly rowing a boat called the USA off of a waterfall, just the way Europe has.

And I'm talking both social issues and economic issues.

And I am actually hoping for major fireworks with lots of burnt casualties (politically).

Anything is preferable rather than business (or politics) as usual.

[GVChamp]

What might have been if Congress had worked with the Administration to alleviate the worst effects of the Bush Depression? We'll never know. But, what we can know is what happened in the past. That's why we have the Keynesian approach: spend money when demand is slack, and recoup it when demand is strong.

We have an example of the hands-off approach ca. 1930. The Smoot-Hawley Tariff Act, for example, raised the cost of doing business at a time when few companies thought they’d be able to pass on cost increases to their customers. Beggar Thy Neighbor policies aren’t a good idea. Neither is letting the banks fail in massive numbers, wiping out household (and business) savings. Of course, neither was as bad as Congress’ counter-cyclical tax increase.

Staying on the gold standard was the equivalent of dramatically tightening monetary policy, exactly the wrong thing to do.

I'm not arguing for a hands-off approach, I'm just stating a slow recovery is preferable to New Deal 2.0 (from a conservative POV). Other conservatives would argue for a hands-off approach, but I don't agree with them, and there are a lot of conservatives who don't (Mankiw and Bernanke both jump to mind, Greenspan stimulated the economy even though he's a freakin' Ayn Rand nut).

A lot of the Tea Party is out there in far right field, intellectually. But they ARE driving electoral success, so the moderate types need to learn to live with them. Ted Cruz is definitely preferable to reliving 60s industrial, tax, and social policy.

GVChamp,



mmm, "this needs to be separated intellectually" is a worthless statement when Republican diagnoses of counter-cyclical fiscal policy IS more upper-income tax decreases.

IE, when have republicans -prioritized- any other sort of tax decrease beside upper-income tax decrease?



which is ALSO the end result if a recession goes long. mandatory spending automatically goes up. "the various QE programs were still effective", in relationship to what? it is true we did better than Europe because we DID have a fiscal stimulus, inadequate as it was, plus a sane monetary policy. but effectively losing hundreds of billions, if not trillions, in lost output due to a singular reliance on monetary policy is also counter-productive.



yes, the triumph of ideology over practicality, i'm well-aware. considering conservatives have also been attacking the Fed, what you're looking at is the conservative re-embrace of neo-classical economics. actually, if anything, the Austrian school detests monetary policy even more than neo-classical economics. "liquidate, liquidate, liquidate!"

of course the last time this was actually enacted as policy, Republicans became a minority party for fifty years.

what's really amusing is how quiet conservatives (outside perhaps one or two editoral writers on the WSJ) have gotten over our President-Elect's view of economic policy, which boils down to using the Presidential office to bully and harangue companies into keeping a piddly number of jobs in the US and then trumpeting it to the skies.

See above: not all conservatives think upper income tax cuts are the appropriate response to demand-side recessions. The consensus would probably be monetary policy in accordance with some fiscal policy. This is the case even among Ayn Rand-influenced conservatives like Alan Greenspan. Or even Ted Cruz, who spent a chunk off the election cycle talking about how the Fed didn't do enough to stimulate the economy.

As for practicality over ideology? The ideological stand would be yelling at people who want to take advantage of the recession to cut taxes on upper income people. That's ideological. The practical stand is to let them do it. Sure, it's not ideal COUNTER-CYCLICAL FISCAL POLICY, but we support tax cuts on the upper income brackets anyways. So they are using the wrong argument to justify it: so what?

As for QE, it's either effective, or it's not. QE was effective in comparison to doing nothing, which means it was effective. If ZLB was actually binding, it would've done squat. So if it's effective, monetary policy is still fine, and we should do more monetary policy. The alternative of bigger government is not a good trade-off for conservatives. Also, yes, a longer recession means "bigger government" in terms of transfer payments, but those will go down because unemployment benefits expire and eventually the economy will recover. Allowing Democrats to pass massive new spending bills to create more constituencies that will in turn demand permanent spending is NOT a win.

Taking it easy on Trump is just intelligent, and, again practical, not ideological. Trump won the Presidency and is the sitting President. He also won a lot of voters that Republicans previously did not win. Picking an unnecessary fight is the ideological course of action.


EDIT:

... the AIDS epidemic in Botswana is a horrible event for millions of people that uprooted lives and destroyed families and promises to leave a generation of orphans.

However, Botswana’s GDP growth didn’t turn negative until Lehman Brothers went under.That a Global Financial Crisis could do what rampant death and disease could not, is an important indicator of the nature of recession.

A recession isn’t when bad things happen, whether that’s loosing your house to foreclosure or your parents to AIDS. A recession is when the economy produces less.

Somehow you have to make a link between the bad thing happening and the economy producing less. I maintain that, that link almost always runs through the supply of money and credit.

Recessions everywhere operate ultimately through these channels and can be addressed only through these channels. Even government fiscal stimulus doesn't do anything except through the monetary medium...basically government spending more money isn't any different than the central bank dropping money out of a helicopter, from the perspective of boosting GDP growth.