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Views on the News

Views on the News*

  May 28, 2016

 

The most astounding thing about this year of political surprises in the United States is how slowly even eminent commentators have recognized the radical change in national political opinion.  Essentially, 75 to 80% of the Republicans and approximately half of the Democrats want a complete change of leadership and policy from the last 20 years.  About half of the Republicans, led by Donald Trump, seek a move toward the pragmatic center, with both conservative and liberal policy elements mixed together: the triumph of good sense efficiently enacted.  About a third of the Republicans, led by Ted Cruz, wish to move rigorously to the right.  Only a threadbare 20 or 25% of Republicans were prepared to give the status quo in that party represented by the Bushes and the Romneys and most of the Congressional leadership another chance. The change sought by the half of the Democrats led by Bernie Sanders is sharply to the left and dragged the Democrat center, represented by the Clintons, left into the ambiguous and ineffectual zone of the Obama administration.  Even Clinton, ironically, given how hard she worked to sell herself as a moderate, has moved a long way to the left to try to contain the Sanders insurgency.  We had months of the retreat of the national media as it laid down one threshold after another that Trump could not possibly cross, until he had, almost effortlessly it seemed, crossed them all, and secured the Republican nomination.  As he won the nomination of his party in what must rank as one of the most astonishing achievements in the entire political history of the United States, the deniers and traditionalists retreated into fatuous speculation about a third-party challenge.  The national media were just as late detecting the profound division among the Democrats as they had been in addressing the scale of the Trump insurrection.  Only after Trump clinched the nomination in Indiana, where, as Senator Cruz said, his campaign had “left it all on the field,” did the media really notice that Senator Sanders had defeated Hillary Clinton that night.  They still don’t seem to have noticed that in Indiana, which tends by only a narrow margin to be a Republican state in Presidential elections, Trump gained almost as many votes as Clinton and Sanders combined.  To some extent, reluctance to recognize the Sanders phenomenon is excusable. He is, after all, even more improbable a candidate than Donald Trump.  Trump managed to sell himself as being both decisive and not at all complicit in the terrible mistakes of the last 20 years.  He is, in fact, in policy terms, a moderate, possibly even an Eisenhower Republican.  He has as little electoral experience as General Eisenhower had had. Trump is, of course, a more raucous personality, and building fine buildings and operating casinos and golf courses and the Miss Universe contest do not rival the world-historic status of candidate Eisenhower, who had led the Western Allies to victory over Nazi Germany and founded the most successful alliance in history, NATO. I am not comparing their prestige as candidates.  In policy terms, Trump is somewhat more liberal than was President Eisenhower, especially in matters of civil rights and health care.  Senator Sanders is a self-styled socialist and has a long background on the left.  His sojourn in a Stalinist kibbutz in the late Fifties, even after the Soviet government and Communist Party had denounced Stalin and removed his corpse from Lenin’s tomb and placed it outside the walls of the Kremlin, raises concerns.  This seems not to have been discussed by the media, even those steeped to their investigative eyeballs in Trump University and the vagaries of the Atlantic City casino business.  Whatever happens from here on, the people have sent the message to the political class that they are extremely dissatisfied and that over 60% of the country feels that only a complete change in personalities and a radical change in policy will put the United States back on the path of national greatness.  About 25% want to move to the left even of Obama; 25% to the center, well to Obama’s right; and 15% well to the right of any president since Coolidge.  There has not been a real recovery from the worst recession in 75 years and the inflation that would normally be generated by doubling the national debt in seven years and vastly increasing the money supply has been avoided only by the deflationary pressures on many industries. The measurable prosperity of the middle class has flatlined for 15 years.  Trump is the closest the country now has to the personification of public impatience with absurd nostrums about global warming being America’s greatest threat and transgender washrooms a national issue, and politicians who failed to notice this will be seeking different employment.

(“Trump: The Voice of America’s Discontent” by Conrad Black dated May 24, 2016 published by National Review Online at http://www.nationalreview.com/article/435757/donald-trump-voter-discontent )

The Obama Justice Department has revealed its final descent into naked politics and totalitarian bullying.  Lois Lerner and Hillary Clinton, two transparently guilty criminals whose crimes are compounded by the fact that both are also lawyers, will face no indictments and no prosecution.  Lying under oath to Congress, failing to comply with Freedom of Information Act requests, conspiring to obstruct justice, and many other clear wrongdoings permeate almost every single crevice of the Obama administration, and yet no one who matters has faced any trouble from the Department of Justice.  The hyper-politicization of the Department of Justice by the left has been used unceasingly as a bludgeon against conservatives, Christians, and constitutionalists in America.  While a new Republican administration with an honorable and fair attorney general would be welcome, once the Pandora's box of hyper-politicization has been opened there is no real cure at the federal level.  The only effective solution is to abolish the United States Department of Justice, leaving the Office of Attorney General with a Spartan staff to perform those absolutely essential constitutional duties.  States have full authority to enforce federal laws and regulations, and Congress can return to state courts the enforcement of federal laws.  Congress can confer on states the right to enforce its laws, and it can confer upon state courts exclusive jurisdiction over "federal questions," with the single caveat that the Supreme Court would have appellate jurisdiction.  This would solve many problems:

·   First, it would mean folks like Lerner and Clinton, whose violations occurred in several states, would not be able to fix the system so that they are immune to prosecution.  The powerful would suddenly find it impossible to game the system with fifty different states able to prosecute offenses.

·   Second, because suddenly all the arcane and obscure federal laws, rules, and regulations would now be enforceable by fifty different jurisdictions, everyone in federal politics would see a strong need to adopt a short and sensible federal criminal code, and many federal offenses would likely be repealed as a consequence.  States have adequate criminal laws even in tricky areas like organized crime, and state prosecutors and law enforcement have longed worked effectively with sister states. 

·   Third, returning the prosecution of federal offenses to state criminal justice agencies would have the practical effect of also devolving power back to the states.  Indeed, the vast majority of activity currently done by federal agencies can be constitutionally done by state government agencies. 

This is a practical check on the abuse of federal power by placing primary enforcement in the hands of officers who are accountable to state elected officials.  The President would still have the Constitutional duty to see that the laws are faithfully executed, but nothing in the Constitution requires an army of federal bureaucrats to do that.  The Augean Stables are overflowing with the fetid muck of Washington insider-ism, and getting rid of the Department of Justice is a good place to begin the Herculean task of cleaning this horrid mess.

(“Abolish the Department of Justice” by Bruce Walker dated May 22, 2016 published by American Thinker at http://www.americanthinker.com/articles/2016/05/abolish_the_department_of_justice.html )

This summer, air travel is for people who expect to go to hell and want to know what it will be like. Security lines have reached epic lengths in many airports; thousands of travelers have missed flights; and the Transportation Security Administration now advises passengers to arrive two hours before departure for domestic flights, and three in some places.  The agency in charge of aviation security has become a major problem, which is odd, because it was supposed to be a solution.  The agency came into being because of the 9/11 attacks, carried out by terrorists who commandeered airliners.  A large share of the blame was heaped on airport security firms that didn't intercept the hijackers.  We were told that it was a failure of the private sector, which was responsible for screening, and the only reliable way to prevent future attacks was to turn security over to the federal government.  Private contractors, we were told, paid their screeners too little, hired employees without adequate background checks and sometimes missed weapons being taken through checkpoints.  The 9/11 Commission faulted the Federal Aviation Administration because its policies "were aimed at keeping bombs out of baggage, not at keeping planes from being turned into guided missiles."  Flight crews were trained not to resist hijackers, which made it easy for the terrorists to take over the planes.  Congress insisted on establishing the TSA, which today has some 55,000 employees, an annual budget of $7.44 billion and an aversion to self-criticism.  The delays would be easier to bear if screeners were relentlessly proving their value. Last year, in an investigation by the Department of Homeland Security's inspector general, undercover agents got banned items past screeners in 95% of their attempts.  After spending over $540 million on baggage screening equipment and millions more on training, the failure rate today is higher than it was in 2007.  One advantage of using private companies to do airport screening is that if they fail, you can fire them, but you can’t fire the TSA.

(“Airport Lines: Your Government Failing You” by Steve Chapman dated May 22, 2016 published by Town Hall at http://townhall.com/columnists/stevechapman/2016/05/22/airport-lines-your-government-failing-you-n2166315 )

 

Free enterprise and capitalism are being attacked by both presidential candidates Hillary Clinton and Donald Trump.  Both say they are for “free trade” but are against free trade deals negotiated over the past three decades by the United States.  Those trade deals have benefited American consumers, all of them in a macro sense, to the tune of billions of dollars in savings and benefits. A few Americans have lost jobs in the process in a micro sense.  In the largest sense, the number of lost jobs to trade over the past 30 years is infinitesimal.  For example, in the first 20 years of the North American Free Trade Agreement (NAFTA) a documented 50,000 jobs a year were lost.  By contrast, two and-a-half million jobs are lost in the average 18-month recession since 1946.  What free trade critics never mention is the jobs allegedly lost to trade relative to the number of jobs that are created by trade.  Over time, certain jobs classifications are more affected than others, such as manufacturing.  Though fewer Americans work in manufacturing, the U.S. is producing more manufactured goods with fewer people. Technology and automation are responsible.  At the same time, when trade grows so do attendant jobs.  The United States Chamber of Commerce estimates 14 million people work in trade with Canada and Mexico alone.  The Woodrow Wilson International Center for Scholars estimates six million in trade with Mexico alone.  On jobs, a miniscule number of jobs have been lost to Mexico in the 22 years since NAFTA began in January, 1994.  The other side of the jobs story is best reflected in the 692,000 California jobs involved in trade with Mexico; or, 463,000 jobs in Texas working in trade with Mexico; or, 14,372 jobs in Vermont; 128,000 in the state of Washington; or 75,500 in the state of Oregon.  All 50 states export billions worth of goods and services to Mexico and employ millions in production of goods and service for the Mexican market.  Critics of trade with Mexico are not only enemies of free enterprise, they strike the heart of the country’s philosophy of trade and violate our national consumer society’s rights and vision, its way of life and standard of living.  The entire American population benefits by billions in consumer savings, in wages to the millions working in trade with Mexico and national income that is unmatched by trade with any nation in the world.  For every dollar we send to China, a grand total of four cents comes back in the form of China buying our goods and services.  For every dollar we send to Mexico, forty cents comes back to the United States.  So there is no NAFTA trade problem.

(“Free Trade, the Leftist Issue and the Truth” by Raoul Lowery Contreras dated May 22, 2016 published by American Thinker at http://www.americanthinker.com/articles/2016/05/free_trade_the_leftist_issue_and_the_truth.html )

Is the country better off than it was eight years ago?  Obama has emerged as an unabashed cheerleader of the economic recovery during his time in office, seeking to cement a legacy as the President who dug the country out of the Great Recession.  Clinton frequently praises Obama, but she’s more apt to mention that people are still hurting, bowing to the reality that nearly seven in 10 Americans believe the country is on the wrong track.  She has even made comments that are implicitly critical of the performance of the economy on the President’s watch.  The disparity indicates that Democrats face a tough task in presenting a united front on the economy, an issue that voters rank as their top priority.  Democrats will have to do some fast talking to persuade jittery voters courted by presumptive Republican nominee Donald Trump.  The businessman has built an enthusiastic following by promising to bring back the country’s economic glory days.  The Democrat mixed message stands in contrast to Trump’s clear-cut promise to “Make America Great Again,” and could fuel the GOP’s argument that Clinton is essentially running for Obama’s third term.  Simply repeating what focus groups tell her to say won’t paper over the fact she is running on another four years of Obamanomics.  Obama has rarely missed an opportunity to talk up positive economic indicators during his final year in office.  The unemployment rate is at 5%, down from 10% at the height of the recession in 2009, and wage growth has finally started to tick upward.  The President has acknowledged that more work needs to be done on the economy.  While Obama is looking to shape his legacy, Clinton needs to win over voters, and not acknowledging the economic anxieties roiling the country could make her seem out of touch.  A recent Reuters/Ipsos found that 68% of adults believe the country is on the wrong track, including 51% of Democrats.  There’s also the reality that the recovery hasn’t touched many corners of the country.  Long-term unemployment remains high, fewer Americans are working and slow wage growth has made it hard for many middle- and working-class families to make a living.  Clinton told voters in Kentucky that she was considering tapping her husband, former President Bill Clinton, to help revitalize the economy, an implicit admission that economic growth hasn’t occurred at a fast enough pace under Obama.  Clinton cannot afford to stray too far from Obama.  His approval rating are high, and she’ll need his help reassembling the coalition of voters that propelled Democrats to victory in 2008 and 2012.  In an interview last October, she gave Obama an “A” grade, saying he “doesn’t get the credit he deserves for saving our economy.”  "I'm not running for my husband's third term," Clinton said last October. "I'm not running for President Obama's third term. I'm running for my first term, but I'm going to do what works." 

(“Tough question for Clinton on economy: Are you better off?” by Jordan Fabian dated May 22, 2016 published by The Hill at http://thehill.com/homenews/campaign/280756-tough-question-for-clinton-on-economy-are-you-better-off )

 

Ever since the Great Recession, central bankers around the world have been deploying ultra-low interest rates policies to revive global economic growth.  Initially, these policies had some success, helping the global economy grow out of the Great Recession, but growth hasn’t been sustainable.  Japan, the pioneer of ultra-low interest rates, has been floundering in the swamp of stagnation, counting one lost decade after the other.  America, the early adopter of this policy, is still growing at subpar rates, while Eurozone, the true believer in these policies, is barely growing, and things may turn worse in the near future for that region. The European Commission has lowered its spring economic forecast for Eurozone growth from 1.7% to 1.6%.  Worse, financial markets, which thus far have served as the link between ultra-low interest rates and the real economy, have begun to lose faith in central bankers.  Last time financial markets lost faith in central bankers was the late 1920s when bank failures spread like wild fire on both sides of the Atlantic, and aggregate demand collapsed.  We all know what happened shortly after: the global depression.  While things may not go that far this time around, there are two good reasons to believe that ultra-low interest rates are leading the global economy into the next Great Recession.  Ultra-low interest rates undermine the very existence of traditional banking, especially negative interest rates that turn the “interest rate spread,” the core source of traditional banking profitability, negative.  Ultra-low interest rates for a prolonged period of time fuel what I call “pent-down” demand, which undermines future growth.  Pent-up demand, which usually arises before a period of consumer euphoria, describes the lack of demand, when consumers choose to postpone their expenditures to a future date, due to lower price expectations, depressed consumer confidence, or lack of access to credit.  Simply put, ultra-low interest rates help “steal” sales from the future, creating market saturation that eventually depresses spending on “high ticket” items.  That’s what happened shortly before the Great Recession.  The Federal Reserve, by implementing a policy of ultra-low interest rates between 2002 and 2006, created a distorted economic environment where consumers abused cheap credit to boost present aggregate spending at the expense of future spending.  Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow.  Rather than reducing indebtedness, or de-leveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007.  Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17 percentage points.  That poses new risks to financial stability and may undermine global economic growth.  While higher debt levels boost economic growth in the short-term, they depress it in the long-term, as debt payments chip away at spending, setting the global economy into a vicious cycle whereby slow growth in one group of countries spreads to the rest of the world through international trade, which this time around the global economy may be heading to a more serious Great Recession than that of 2008-09.

(“How Ultra-Low Interest Rates Will Cause the Next Global Recession” by Panos Mourdoukoutas dated May 22, 2016 published by Forbes at http://www.forbes.com/sites/panosmourdoukoutas/2016/05/22/how-ultra-low-interest-rates-will-cause-the-next-global-recession/#22885867289f )

 

There is so much published each week that unless you search for it, you will miss important breaking news.  I try to package the best of this information into my “Views on the News” each Saturday morning.  No updates have been made this week to the issue sections.

 

David Coughlin

Hawthorne, NY

http://www.returntocommonsensesite.com/