If you want to know why I think the Democrats should be offering policy proposals of their own and not relying so much on being anti-Trump, you need only consider the graph above. The Democrats are at their lowest approval rating in 35 years.

I presume the retort will be that own-Congressman approval remains higher than that. That’s true of both Democrats and Republicans and it won’t improve the Democrats’ fortunes in the mid-terms.

I should also mention that I don’t believe that banking on bad economic news for the country is a good look.

I did a little back-of-the-envelope calculation comparing the effective tax rate paid by the top .1% of income earners to what they’d be paying with various different flat tax rates (without any deductions). The results of my calculations suggest that they are presently paying an effective tax rate of something between 30% and 35% and it would require a flat tax considerably higher than that to meet present expenses, i.e. for expenses to come reasonably close to revenues.

As I’ve said before since present defense spending is around $1 trillion and the deficit is around $1.9 trillion, we can’t achieve a reasonable deficit solely by cutting defense spending. I don’t think it can be done without increasing the effective tax rate, expanding the tax base on which new taxes will fall beyond the rich, and reducing spending including but not exclusively defense spending. IMO the lowest-hanging fruit other than defense spending is healthcare spending.

Shorter: we’re living beyond our means and changing that will be painful.

If you think there’s a way to do it, please show your work.

I found this editorial from the Wall Street Journal if not a concurrence with my recent post at least highly complementary with it:

Financial industry news site Investment Executive reported this week that the largest U.S. investment banks recorded a 17% aggregate increase in trading revenues in the second quarter compared to the same period last year. Goldman Sachs and Morgan Stanley reported more than a 20% increase in equities trading revenue. Talk about springtime for bankers.

Mr. Trump’s semi-tariff reprieve with Japan seems to have prompted investors to double down on the TACO trade—Trump Always Chickens Out—and sent the S&P 500 and Nasdaq to new highs. The price-earnings ratio for the S&P 500 is close to record levels, which suggests that valuations may be stretched.

Look no further than so-called meme stocks, which are experiencing a mania a la early 2021. As then, retail traders are making leveraged bets on stocks that have large short-interest plays such as Kohl’s, GoPro, Opendoor and Krispy Kreme. Hedge funds are riding the stock-market roller coaster to riches, and day traders want in on the fun.

but

None of this signals that there’s a shortage of liquidity, or that current interest rates are restricting credit conditions. Yet back on Main Street, businesses are struggling to borrow. Bank construction loans and housing starts have declined. Job growth has stalled in recent months in most industries outside of healthcare and government.

In other words the Magnificent Seven stocks are doing just fine even as they engage in mass layoffs and big investment banks are prospering but small companies and workers not so much.

This is an observation that I thought of putting in comments but decided to post instead. Something we need to keep in mind: industrial capability is downstream from energy production, intensive energy production. Military might is downstream from industrial production.

Solar power and wind power are fine for particular niches but they do not provide reliable, intensive energy which is what is needed for heavy industry. They might someday but that is not the case today. Today the potential sources for the energy required for heavy industry are coal, oil, gas, and nuclear. All things considered I think that nuclear is the best choice. In preemptive response to criticism of the expense of nuclear energy, a considerable portion of the cost of nuclear consists of legal and regulatory expenses. Those could be addressed with appropriate legislation.

I totally love this story by Stephen Neukam at Axios:

Top Senate Democrats on Friday accused Republicans of using a $50 billion fund for rural hospitals to “pay off” GOP lawmakers for their support of the “big, beautiful bill,” Axios has learned.

I have absolutely no doubt that the fund is and will be used as a “slush fund”. The rub in this is that one man’s slush fund is another man’s constituent service. It’s subjective. And a great example of why what we do at the federal level should be limited to the Constitutional enumerated powers. It’s as the late Ev Dirksen said: “A billion here and a billion there and pretty soon you’re talking about real money.”

There is no doubt in my mind whatever that there are thousands if not tens of thousands of such slush funds in the federal budget. Whether you think they’re the traditional waste, fraud, or abuse depends mostly on your point-of-view.

I don’t know whether to find this op-ed in the Wall Street Journal a flicker of hope or deeply distressing. In the op-ed Yasser Abu Shabab writes:

While most of Gaza continues to suffer under the ongoing war between Hamas and Israel, things are very different for thousands living in eastern Rafah—for us, the war is already over.

The Popular Forces, an independent Palestinian group under my leadership, have secured several square kilometers of land that have been home to my Bedouin tribe, the Tarabin, for generations. We aren’t an ideological movement, but a pragmatic one. Our primary goal is to separate Palestinians who have nothing to do with Hamas from the fire of war.

For the past seven weeks, our neighborhood has become the only area in Gaza governed by a Palestinian administration not affiliated with Hamas since 2007. Our armed patrols have successfully kept Hamas and other militant groups out. As a result, life here no longer feels like life in Gaza. In eastern Rafah, people have access to shelter, food, water, and basic medical supplies—all without fear of Hamas stealing aid or being caught in the crossfire with the Israeli military.

The effect has been tremendous: no more airstrike casualties, no chaotic aid lines, no evacuation orders, and no fear of booby-trapped homes or children being used as human shields by Hamas. While there is still much to improve, people now sleep at night without fear of death.

Sounds hopeful, doesn’t it? He continues:

This should not be the exception in Gaza—it can be the model, the new norm. The vast majority of Gazans reject Hamas. They don’t want it to remain in power after the war ends. But though they hate Hamas, they still fear it. Since protests began earlier this year calling for the group’s removal, demonstrators have been killed, tortured or forced into hiding.

My own family didn’t take part in those protests, but when Hamas killed my brother, Fathi Abu Shabab, and my cousin, Ibrahim Abu Shabab, for trying to secure aid for our family—and when 52 civilians under our care were murdered in their homes—I realized that silence is no longer an option. If we remain quiet now, we will never be free, cease-fire or not.

This may be our only chance to secure a future that rejects violence and embraces reason. What has prevented most Gazans from expressing their true anger at Hamas is the lack of a viable alternative. Hamas still controls aid access and dominates institutions like the U.N. Relief and Works Agency for Palestine Refugees in the Near East, or Unrwa. Hamas still turns aid centers into hubs for its own operations. In some areas, the only thing preventing people from fleeing is the presence of Israeli troops, which might withdraw as part of a cease-fire.

No one else has been willing to step up and risk publicly breaking with Hamas. Those fears lost their meaning for me after my brother and cousin were murdered. Hamas has labeled me a criminal and collaborator, but I am not intimidated by them. I won’t surrender.

As one of my college professors once said, pay no attention to an undergraduate paper until the first “however”.

We need only three things to make this vision a reality: financial support to prevent Hamas’s return, humanitarian aid to meet the population’s immediate needs for food and shelter, and safe corridors so people can move around. In a short time, we could transform most of Gaza from a war zone into functioning communities. When the rebuilding has begun, Hamas can negotiate with Israel for the release of hostages in exchange for safe passage out of Gaza. Let them go to Qatar, Turkey or wherever their enablers will have them. We don’t want them among us.

The hopeful aspects are that this militia is not Hamas, he at least claims to have driven Hamas from the territory they control and are maintaining the peace, and he says the Gazans hate Hamas. The less than hopeful aspects are that it’s a militia, it has no relevant previous experience in governing, and it only controls a few square kilometers of Gaza. Furthermore, I have no idea how the Israelis can distinguish between this particular militia, armed and wearing black hoods, from Hamas or any other militia. Also Israel goes unmentioned in the op-ed other than in the context of the IDF.

There’s a proverb for which I cannot testify as to the veracity, attributed to the Bedouins: “I, against my brothers. I and my brothers against my cousins. I and my brothers and my cousins against the world.” Is the Popular Forces the beginning of a new, brighter future for Gaza or one splinter of a thousand contending splinters, portending a chaotic and continuingly violent future for Gaza? I don’t know. I don’t even know who can know.

The ceasefire talks between Russia and Ukraine don’t seem to be going anywhere. President Trump continues to threaten harsh sanctions against Russia.

How do you sanction Russia without applying sanctions on Russia’s trading partners, especially China and India? How do you sanction China and India effectively without bringing the U. S. economy to its knees?

A couple of days ago Ray Dalio (or his social media assistant) had a impassioned post at LinkedIn on how urgently we need to balance the federal budget. I presume that was an indirect pitch for his new book.

I put a response there which has received a few approvals with a simple question: how? The only budget item that really could use cutting is healthcare spending and we can’t balance the budget by cutting taxes. Indeed, we need to raise the effective tax rate and that’s harder than it sounds. The effective tax rate on the top 1% of income earners has been remarkably steady since 1950 (2025 update here) despite a reduction in the top marginal tax rate from 94% to its present 37%.

As to cutting healthcare spending we’ve never been able to manage to do that. The most we’ve accomplished is slowing its rate of increase which is what was done in the last budget.

So, I’ll ask my questions here. How do you increase the effective tax rate; how do you decrease spending? I’m in favor of it. I just don’t know how.

I began assembling a chart of just how dependent the growth in the S&P 500 stock index was on just the “Magnificent Seven” stocks but, lo!, and behold the Visual Capitalist had already done it for me. What that chart tells me is that the index is very much dependent on those stocks and becoming more so.

Just seven stocks carrying such weight is a very narrow base. Their total global workforce is about 2.37 million people. Most of those are in the United States. They comprise less than 2% of total U. S. employment and all are technology stocks. I don’t think that’s healthy. Most of them are companies that didn’t exist 30 years ago and only one of them existed 50 years ago. Easy come, easy go.