Asked But Not Answered

Rather than cite a bunch of opinion pieces and news articles I’ll just say okay, I get it. A lot of people are unhappy about “abandoning the Kurds”. Rather than just express outrage, I want to know what the alternative is? Do they want to maintain military bases in Syria on an indefinite basis? That’s a violation of international accords to which the U. S. is a party. Do they want the U. S. to occupy the entire Middle East and parts of West Asia indefinitely? What’s the exit strategy? Is there an exit strategy? Do they want an exit strategy?

And what’s the nonsense about sending thousands of U. S. troops to Saudi Arabia? The last time we did that we experienced a one-two punch. First, hundreds of our soldiers were killed in a terrorist attack on their barracks and then we experienced the most severe terrorist attack in the United States in our history with thousands killed. Since then we’ve spent trillions in a futile war against terrorism. I have no idea what they think they’re going to accomplish.

If you think the security measures we’ve put in place since 2001 have been effective, here in Chicago we have a news story about a little old lady who’s been sneaking onto flights at O’Hare for years. She’s just been apprehended again. There are probably hundreds or even thousands of such stories nationwide. If an old lady can sneak on flights, so can terrorists. Our security measures are security theater not real security.

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Process Matters

At RealClearPolitics A. B. Stoddard articulates what is quite close to my position on the House Democrats’ “impeachment inquiry”. First, the Democrats need to conduct a floor vote on the inquiry. Then they should conduct their official inquiry at a measured pace with a minimum of grandstanding and no prevarication. Then

Democrats need to use these months for an investigation that will further educate voters about what a threat to the balance of power and our constitutional democracy the president’s conduct, combined with his subpoena blockade, represents, and that under the Constitution he is not empowered to defy impeachment or congressional investigation.

Democrats should also be advocating for, and campaigning on, badly needed reforms such as the requirement for disclosure of any campaign help from foreign governments. Another would be to provide for expedited court consideration of future oversight battles between the legislative and executive branches — Republicans should have no problem voting for both.

Finally, there should also be concern that a narrow impeachment sent to the Senate may never go to trial. Senate Majority Leader Mitch McConnell has said he would have no choice but to take it up, but on CNBC he added, “How long you’re on it is a whole different matter.” We can all too easily imagine a scenario where McConnell dispenses with and rejects articles of impeachment on the argument that the House vote was partisan and Republicans “can’t impeach the president for one phone call.”

The risks that Democrats face is that they’ll provide no reason for Republican senators to vote to remove and they may convince independents that they’re engaged in a purely political exercise.

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Explaining What They’re Thinking

An article by Kim Geiger in the Chicago Tribune casts a little light on how the members of the Chicago Teachers Union are thinking:

Under Lightfoot’s proposal, a teacher with a bachelor’s degree and 10 years of experience today would see his or her salary increase to $95,604 by year five of the contract. That amount is $11,000, or 13%, more than the current teacher with 15 years of experience and a bachelor’s degree earns today. A teacher with a bachelor’s degree and five years of experience today would go from a salary of $58,315 to a salary of $81,701 in five years. That’s about $6,500 more than the $75,083 earned today by a similar teacher, or an increase of about 2% each year.

There are all sorts of problems with that calculus but I’ll just consider a few of them.

First, they want to be paid based on inputs rather than on outputs. I honestly don’t know any private company in which that would be the case. They’re estimating that the value of the hypothetical teacher five years from now will greater than the value of that same teacher today so his or her pay should reflect that. That’s not the way things work in the real world. You’re paid based on the expected outputs of other people who may only resemble you superficially.

I know more and am, presumably, more valuable than I was 30 years ago. If I want to earn more than I’m making now in practical terms I should look for another job. The problem that the Chicago teachers have is that they’re already making more than not just anybody in nearby districts but more than teachers in the other major school districts in the country.

Second, since every dollar received by a Chicago teacher must come from a real life resident of Chicago, as a matter of practical necessity teacher pay must be tethered to the ability of the people of Chicago to pay. Calculate the total earnings of all of the people who live in the city of Chicago. For teacher pay to rise faster than that amount you must take more money away from those other people. Eventually, people get fed up and move away. That’s has been happening for years. As fewer Chicagoans are available to pay taxes, even more money must be taken from them. It’s a vicious circle.

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Return With Us Now to Those Thrilling Days of Yesteryear

The editors of the Wall Street Journal are chortling over the predicament in which the State of California has placed its residents:

Californians are learning to live like the Amish after investor-owned utility PG&E this week shut off power to two million or so residents to prevent wildfires amid heavy, dry winds. Blame the state’s largest blackout on a perfect storm of bad policies.

Two dozen or so wildfires in the past few years have been linked to PG&E equipment, including one last fall that killed 85 people. PG&E under state law is on the hook for tens of billions of dollars in damages and has filed for bankruptcy. For years the utility skimped on safety upgrades and repairs while pumping billions into green energy and electric-car subsidies to please its overlords in Sacramento. Credit Suisse has estimated that long-term contracts with renewable developers cost the utility $2.2 billion annually more than current market power rates.

PG&E customers pay among the highest rates in America. But the utility says inspecting all of its 100,000 or so miles of power lines and clearing dangerous trees would require rates to increase by more than 400%. California’s litigation-friendly environment has also increased insurance rates for tree trimmers and made it hard to find workers.

Meantime, opposition to logging and prescribed burns in California’s forests compounded by a seven-year drought has yielded 147 million dead trees that make for combustible fuel. Rural communities are at especially high fire risk when winds kick up as they have this week.

To avoid more damage, PG&E announced this week that it would cut power across 34 counties in Central and Northern California as long as there are sustained winds of 25 miles an hour and gusts of 45 miles an hour. After winds subside, the utility says it may take several days to inspect equipment before power returns, and there could be more blackouts this fall.

I wonder what the carbon emissions of several million gasoline-power generators is? I wonder when the state will prohibit their sale and/or possession?

Here’s the part of the editorial I found interesting:

A report this week by Next 10 and Beacon Economics warns that the state isn’t on target to meet its climate goals in 2030 because Californians refuse to abandon SUVs for electric cars. Wildfires last year produced more CO2 than the state’s businesses, homes and farms, offsetting state emission reductions in 2017 nine times over.

which highlights a debate I’ve had over the years. Assuming arguendo that carbon emissions produce climate change, it doesn’t make a bit of difference what the source of the emissions are—electrical power generation, transportation, cement production, running backup generators, or forest fires.

If you’re worried about climate change due to carbon emissions and neither nuclear power nor carbon capture figure in your plans to reduce carbon emissions, I don’t believe you’ve thought the matter through. Every baseload power generation method whether solar, wind, or nuclear requires backup generation capability and that is generally accomplished by burning fossil fuels.

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Saez and Zucman Support Trump’s Tax Reform

I am quite confident that Drs. Saez and Zucman would be quite outraged at the interpretation of their latest op-ed in the New York Times of my title above but bear with me. In the op-ed they conclude that when local, state, and federal taxes are all taken into account the overall U. S. tax system is regressive:

America’s soaring inequality has a new engine: its regressive tax system. Over the past half century, even as their wealth rose to previously unseen heights, the richest Americans watched their tax rates collapse. Over the same period, as wages stagnated for the working classes, work conditions deteriorated and debts ballooned, their tax rates increased.

Stop to think this over for a minute: For the first time in the past hundred years, the working class — the 50 percent of Americans with the lowest incomes — today pays higher tax rates than billionaires.

The full extent of this situation is not visible in official statistics, which is perhaps why it has not received more attention so far. Government agencies like the Congressional Budget Office publish information about the distribution of federal taxes, but they disregard state and local taxes, which account for a third of all taxes paid by Americans and are in general highly regressive. The official statistics keepers do not provide specific information on the ultra-wealthy, who although few in number earn a large fraction of national income and therefore account for a large share of potential tax revenue. And until now there were no estimates of the total tax burden that factored in the effect of President Trump’s tax reform enacted at the end of 2017, which was particularly generous for the ultra-wealthy.

which is followed by a bizarrely formatted table which does not support their claim:

Unless I’m misreading that table it can be summarized as pointing out that our system is slightly progressive right up to the highest income earners at which point it becomes slightly regressive, due to the payroll tax. If the cap on FICA were raised to include all wage income, for example, all other things being equal our system would be quite progressive. I have supported raising the cap on FICA so that wage income right up to the threshold wage of the top 1% or income earners (presently $389,000) is subject to the tax. That’s a lot better than European countries in which the construction of their value-added taxes make their tax systems very regressive.

There are all sorts of flaws in their analysis but I will focus on just two. As I said you cannot evaluate a tax system based on rates. How you calculate income is where the real action is. When you add all transfer payments to income, our system is shown to be somewhat more progressive.

The second is that the United States does not have a tax system. It has tax systems. Thousands of them. In Illinois alone there are almost 7,000 independently taxing bodies. I can only speculate that there are tens of thousands of them in the United States as a whole.

Which brings me to the title of my post. Presumably, the authors support one aspect of Trump’s recent tax reform: the limitation on deductibility of state and local taxes. That tends to increase the tax liability of the highest income earners and, consequently, increases their taxes as a percentage of income. It also provides a political incentive for states to reduce their taxes, a major source of the inequity they point out.

I would claim that, other than FICA, most of the inequity in our “tax system” is on the part of a handful of high tax states. I would like to see an updated analysis on a state by state basis that considers income regardless of source.

Drs. Saez and Zucman have a plan:

Take big corporations. Some countries may have an interest in applying low tax rates, but that’s not an obstacle to making multinationals (and their shareholders) pay a lot. How? By collecting the taxes that tax havens choose not to levy. For example, imagine that the corporate tax rate in the United States was increased to 35 percent and that Apple found a way to book billions in profits in Ireland, taxed at 1 percent. The United States could simply decide to collect the missing 34 percent. Apple, like most Fortune 500 companies, does in fact have a big tax deficit: It pays much less in taxes globally than what it would pay if its profits were taxed at 35 percent in each country where it operates. For companies headquartered in the United States, the Internal Revenue Service should collect 100 percent of this tax deficit immediately, taking up the role of tax collector of last resort. The permission of tax havens is not required. All it would take is adding a paragraph in the United States tax code.

The same logic can be applied to companies headquartered abroad that sell products in America. The only difference is that the United States would collect not all but only a fraction of their tax deficit. For example, if the Swiss food giant Nestlé has a tax deficit of $1 billion and makes 20 percent of its global sales in the United States, the I.R.S. could collect 20 percent of its tax deficit, in addition to any tax owed in the United States. The information necessary to collect this remedial tax already exists: Thanks to recent advances in international cooperation, the I.R.S. knows where Nestlé books its profits, how much tax it pays in each country and where it makes its sales.

Collecting part of the tax deficit of foreign companies would not violate any international treaty.

I think they’re wrong in that last assertion but I have a question. How would they collect from Chinese companies? Sue? There is no such thing as a system of international system of civil law. And China does not have a robust system of civil law. The ability of foreign companies or even foreign governments to sue Chinese companies in Chinese courts is extremely limited.

Sue in American courts? How would they enforce the judgments? Seize the assets of those companies held in the United States? How much do those amount to? I would suggest that they come nowhere near covering the amounts that would be involved.

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Strategic Error

Better late than never, I guess. At the New York Times Farhad Manjoo laments:

The People’s Republic of China is the largest, most powerful and arguably most brutal totalitarian state in the world. It denies basic human rights to all of its nearly 1.4 billion citizens. There is no freedom of speech, thought, assembly, religion, movement or any semblance of political liberty in China. Under Xi Jinping, “president for life,” the Communist Party of China has built the most technologically sophisticated repression machine the world has ever seen. In Xinjiang, in Western China, the government is using technology to mount a cultural genocide against the Muslim Uighur minority that is even more total than the one it carried out in Tibet. Human rights experts say that more than a million people are being held in detention camps in Xinjiang, two million more are in forced “re-education,” and everyone else is invasively surveilled via ubiquitous cameras, artificial intelligence and other high-tech means.

None of this is a secret. Under Xi, China has grown markedly more Orwellian; not only is it stamping its heel more firmly on its own citizens, but it is also exporting its digital shackles to authoritarians the world over. Yet unlike the way we once talked about pariah nations — say East Germany or North Korea or apartheid South Africa — American and European lawmakers, Western media and the world’s largest corporations rarely treat China as what it plainly is: a growing and existential threat to human freedom across the world.

Why do we give China a pass? In a word: capitalism. Because for 40 years, the West’s relationship with China has been governed by a strategic error the dimensions of which are only now coming into horrific view.

He’s missing one word in that: crony. Free markets have nothing whatever to do with the disaster that China has been to the American economy. We do not now have free trade with China and have never had free trade with China. We have had managed trade and that has nothing to do with free markets and everything to do with crony capitalism.

There is also nothing in his piece that wasn’t apparent 10, 20, 30, or 40 years ago. Only wishful thinking has allowed the policy with China that we have followed for the last 40 years. It’s time for a little hard-nosed reality.

The reality is that manufacturing should and may return to the United States but the manufacturing jobs “lost” over the last 40 years are gone for good. If we’re going to continue to manage trade, it should be managed in a way that benefits most Americans rather than just a relative few.

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NYT Editors on the Impeachment Inquiry

I want to consider the issues raised by the editors of the New York Times in their editorial on the ongoing “impeachment inquiry” piecemeal. I agree with their opening:

The House of Representatives has undertaken the impeachment inquiry of a president only four times in American history. Each time, the House has set its own ground rules. The Constitution prescribes no specific process, nor does federal law. Court rulings and precedents, such as they are, tend to be narrow and particular. So when lawmakers determine that such a proceeding is warranted, they are forced to rely on their own cobbled-together rule book, with the trust of the American people in their government at stake.

This requires Congress to be rigorous in setting out the rules for conducting an inquiry.

That’s followed by a little throatclearing and then a discussion of the White House’s recent letter:

Take the first claim first, that there is nothing wrong with Mr. Trump shaking down a foreign leader for his own political benefit. Perhaps that’s the only position the White House can take, because the facts of the July 25 call are not in dispute. The administration’s own written summary of the conversation reveals that Mr. Trump pressured Volodymyr Zelensky, the Ukrainian president, to investigate former Vice President Joe Biden, a top political rival, and his son Hunter for supposed corruption. At the time of the call, Mr. Trump was withholding nearly $400 million in promised military aid to Ukraine — a topic that was alluded to in connection to his requests that Mr. Zelensky “do us a favor.”

Despite Mr. Trump’s claims to the contrary, this is not O.K.

which I agree with. That’s followed by some half-hearted defense of the House Democrats’ reluctance to hold a vote authorizing the inquiry:

First, there is nothing magical about a House vote authorizing an impeachment inquiry. The administration’s letter calls it a “necessary authorization,” but that’s simply false.

It’s false but unwise as the editors acknowledge later:

Ms. Pelosi also wants to protect Democratic members who represent more conservative districts from having to take a difficult vote that might come back to haunt them in 2020. This isn’t a very compelling rationale, especially when those same members will almost surely be called upon to vote on articles of impeachment soon enough.

They then challenge President Trump’s good faith:

Finally, Ms. Pelosi knows that Mr. Trump has no intention of cooperating with an impeachment inquiry, even if it were authorized by a vote. Instead, he would use what would likely be a party-line vote to further disparage the inquiry as a partisan hit job.

That’s probably true but I honestly have no idea. They present some contradicting evidence:

On Wednesday, Mr. Trump was asked whether he would cooperate if the House held a vote authorizing the impeachment inquiry. “Yeah, that sounds O.K.,” the president said. “We would if they give us our rights.”

Then they get to the real meat of the editorial:

And yet it may be a mistake for the Democrats to proceed much further without an authorization by the House. For one thing, a vote would strengthen Congress’s hand in any litigation arising out of the inquiry. A federal judge in Washington, Beryl Howell, said on Tuesday that having such a vote on record would make it “easier” for her to step in and make a ruling on House demands for documents or testimony.

Second, a resolution in support of the inquiry could also lay out specific ground rules, which could enhance the legitimacy of the inquiry in the minds of Americans.

Clearer, unified ground rules for this inquiry could address the other two main complaints in the White House’s letter: a lack of due process or subpoena power for the Republicans in the minority.

I agree with nearly every word of that. That’s my position.

They follow that by expressing skepticism again about the president’s good faith and pointing out that an authorization vote isn’t required before arriving here:

Still, there are good reasons to grant Mr. Trump certain procedural protections at this stage. For one thing, as Mr. Cipollone’s letter correctly notes, House Democrats gave President Nixon some of these protections during their impeachment inquiry in 1974, as did House Republicans with President Clinton in 1998. In that latter inquiry, House Republicans also gave Democrats in the minority some authority to issue subpoenas.

The bottom line is that Democrats need to honor basic fairness and conduct a thorough inquiry, but they also need to set hard limits on how much time they are willing to spend on any given negotiation or debate or vote.

Again, I agree with nearly every word of that. If the House Democrats are to produce anything but a partisan rallying cry that practically invites Republicans to vote against it and move independents, 40% of the country, to sympathize with Trump, it’s a purely partisan impeachment inquiry and ultimately vote which is widely considered unfair.

It all depends on what they want more.

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Should Supreme Court Judges Stand for Election?

In listening to the back and forth in the discussion of the oral arguments Bostock v. Clayton County and Harris Funeral Homes v. EEOC it occurred to me that over the period of the last several generations there has been an ongoing battle about the role of the Supreme Court that should be debated openly.

I think the Supreme Court should be rendering neutrally applying interpretive principles in full recognition that perfect neutrality is impossible. Simply because human beings are human beings does not mean that it is impossible to apply interpretive principles in a neutral fashion. I think that the courts should follow the law and leave the political decisions to the Congress.

Increasingly, I think it’s apparent that not everyone agrees with that role for the Supreme Court or, indeed, that justices should be bound by established law, precedent, or anything other than their own consciences.

So, here’s my question. If Supreme Court justices are to be political actors, should they be subject to the same review as other political actors? I.e. should they stand for re-election? It could be just a yes/no for retention as it is here in Illinois for judges or it could be a full-fledged election and it could be every 2, 4, 6, 8, or more years.

Should Supreme Court justices stand for election?

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Close Recess and Secret Conclave

What are the House Democrats trying to accomplish with their “impeachment inquiry”? Are they doing their constitutional duty to remove President Trump from office for “high crimes and misdemeanors”? Are they engaged in a elaborate political stunt to make Trump easier pickings in the 2020 election? Is the exercise to appease their more radical members? Trying to draw attention away from their own misconduct? A fit of pique? As the editors of the Wall Street Journal point out, the process that the House Democrats are pursuing certainly makes it excusable to suspect they are not motivated purely by the first objective:

Democrats are moving fast toward what looks like an inevitable vote to impeach President Trump, so why aren’t they doing more to persuade Americans who don’t already agree with them? They won’t convince anyone else with their current method of irregular order, secret hearings and selective leaks to the pro-impeachment press.

Start with the news that Democrats may attempt to keep secret the identity of the intelligence whistleblower whose complaint started the impeachment drive. The Washington Post reports that Chairman Adam Schiff’s House Intelligence Committee may have the official testify away from Capitol Hill, or allow only staff to attend, or obscure his image and voice as in a mafia trial.

This is astonishing. The key witness in an attempt to depose an elected President would testify without the American public getting a clue about who he is or what his motivations might be. Impeachment isn’t a criminal proceeding, so the right of Mr. Trump to face his accuser doesn’t apply. But you’d think that annulling the 2016 vote of 63 million Americans would be significant enough to demand witness transparency and a chance for both parties to test his knowledge and credibility.

At this point if the objective is to push Trump’s approval rating far enough down that the voters abandon him, it’s not working. According to the RCP index of polls, Trump’s approval rating has declined about two points after weeks non-stop criticism. It’s still 6-8 points higher than it was a year ago.

IMO the House Democrats should follow the procedures of the last two impeachment inquiries. They should take a vote. They should comport themselves with dignity. Stunts like Adam Schiff’s imaginary conversation should be eschewed. The spirit of the proceedings should be one of inquiry not inquisition.

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There Oughta Be a Law

Finally. Somebody calling for a corrupt practices act. In an op-ed in the New York Times Peter Schweizer remarks:

In 2016, JPMorgan Chase agreed to pay $264 million as part of a settlement with the federal government. The reason? An Asian subsidiary of the company had hired the children of Chinese government officials in the hopes of currying favor with their powerful parents — a violation of the Foreign Corrupt Practices Act.

Had the same thing happened with a foreign company and an American politician’s family, however, no violation would have occurred — because no equivalent American law prevents a foreign company or government from hiring the family members of American politicians.

This glaring loophole provides political families with an opportunity to effectively “offshore” corruption and cronyism. It gives the politically connected class enormously tempting opportunities for self-dealing, the sort of thing that is blatantly illegal in almost any other context.

He then goes on to outline the shenanigans of the Biden and McConnell families, enriching family members through what is essentially legal influence-peddling. Calling it for what it is, political corruption, is long overdue.

But I have a basic question. How in the world would it be enforced? Quis custodiet ipsos custodes? What we really need are elected officials whose own informed consciences would prevent them from engaging in corrupt practices and an electorate who won’t elect and re-elect corrupt officials because they belong to the right political party.

Corruption is endemic in government at every level and will not root itself out. It raises the cost of practically everything that government does. To name the most widespread and broadly accepted form of corruption public employee labor unions allowed to make political contributions are an inherently corrupt arrangement.

We’ll see if people are outraged enough to insist that action be taken. My bet is that we will return to our normal somnolent state. It’s a troubled sleep but it’s sleep nonetheless. Corruption will not find reasonable limits and resolve itself. The reason that greed is one of the Seven Deadly Sins is that it is not self-limiting.

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