Even More Lies the President Told me: The RNC Speech

The Truth vs Trump’s RNC Claims

        Listen to what his older sister, herself a former federal judge, says; “He has no principles.”, “All he wants to do his appeal to his base,” “He doesn’t read.” “I’m talking too freely, but you know. The change of stories. The lack of preparation. The lying. Holy shit.” And she’s a blood relative! 

    No President is an expert on everything, but this is the first in my memory who refuses to listen and cannot even write a literate English sentence. His older sister, the federal judge, actually also said he cheated to get into college, which echoes what several former professors have said. The only one who has EVER said Trump is a "genius" is Trump himself. He has lied about his college grades and had Cohen, (the former lawyer, now felon), threaten Penn with a lawsuit if they ever released any of his grades.

       The only mystery to me, and I have never had anyone willing to enter into a civil conversation on this point, is exactly what about Donald Trump is admirable? It certainly isn't his personality. He has kept essentially none of his campaign promises, He says he has, and people go "oh yeah, he said it, so it must be true." He has turned the big lie into an art form

        The "great Trade Deals" he refers to are costing every household in the US about $850 annually because of the tariffs every responsible economist warned him not to enact. The farmers he was going to "help" with tariffs on China have lost billions. "Usual" farm subsidies average about $25 billion annually. Add $32 billion to that because of the Chinese not buying US soybeans. Moreover, the trade “deals” he brags about are very thinly veiled, almost precise, copies of the ones they replaced. Yes, criticize Obama for the Trans Pacific Partnership (TPP) which a Republican controlled Senate ratified, and then roll out one essentially just like it and brag about it, as if you either wrote it or understood it.  

        John Bolton, Trump's hand-picked National Security advisor who also served in the Bush 43 administration, writes that where the President is supposed to listen during the daily security briefs, Trump talks, usually bitching about things he doesn't understand. He refuses to read briefing papers but obsessively watches the gospel from Hannity and Carlson.  In fact, the reasons and psychological flaws which led to things Bolton describes in his book, written after he resigned in disgust, are explained by Trump's  niece (the PhD Psychologist) in her book. It is interesting that now, recently, even the older sister has weighed in with confirmation.

       The general theme of both is that his claims to religious faith are the biggest lie of all because he is amoral and has no room for any God except himself. It saddens me that many who overlook all these things still cling to the manufactured myth that Trump is a man of God. 

       This goes back to Roe V Wade. Being a history teacher, I looked back at when, and how, the religious evangelicals hijacked the Republican party. It happened shortly after Roe V Wade. The original Southern Baptist Convention's response to Roe V Wade was printed in their in-house newspaper. It called the decision a "triumph for personal liberty!”  Read that again. However, several political operatives led by Lee Atwater and several very conservative businessmen saw the chance to make "choice" a divisive issue. 

      

        Note that I said "choice" because no one is "pro-abortion" - that's another far right lie,  but I digress; they politically "weaponized" religion by claiming that abortion was "Biblically”  a sin.

       Of course, the only actual mention of abortion in the Bible in ten separate instances has God killing the unborn, or in one case\, the priests will give the pregnant woman the "herbs" to cause her to abort. In fact, as late as Augustine, 400 years AD, the unborn were not considered to have life or souls, yet the same who say "but now science shows they are alive”, deny many of the other things science also shows us (you know evolution, global warming..real stuff?) The entire abortion issue has been manufactured to get those religious persons who might actually evaluate all political issues, to focus on only one and determined their votes on that one made up issue. The real reason Trump magically became pro-life (after urging his first trophy wife to abort Tiffany (yes, she said he did; I believe her) was to get votes.

        It's the same reason Trump caters to working class folks with racism and xenophobia. We know he has no actual respect for them. Ask any of the multitude of workers he has stiffed. Ask the caterer he engaged for a wedding, then when the bill came, he refused to pay, saying that "just doing my wedding" was payment enough! (yes, really!) 

       In fact, it may well have been that the "genius” couldn't pay because, by that time, US banks were sharply curtailing his credit. This would have been about the time daddy, Fred Sr, was clandestinely sending employees to Atlantic City to buy chips at Donnie’s casino, which was struggling. They would spend hundreds of thousands and never use the chips, instead bringing them back to NYC. Sound like money laundering? It was, in essence. Even with dad’s help the casino eventually became just another bankruptcy. Jump ahead to 2017, 18 and 19. All years during which Trump bragged incessantly that he had created the very, very greatest, best economy in history.

  

      So, what’s wrong with that? First the GDP growth increase began in the Obama recovery from the housing bubble collapse. Oddly, although Trump brags (a redundancy, because he always brags) about the “amazing growth” only he could have caused, the GDP growth percentage, the true measure of how robust (or not) an economy truly is, tells us a contrasting reality: Comparing the growth of US GDP for 2014 and 2015, under Obama  actually yields a slightly higher growth rate than the growth rate in 2017 and 2018, under Trump!! Of course, Obama just didn’t brag about it and claim the credit.  

        Stranger still, all the Trump budget deficits (2017-19) are higher than the last three Obama years (2014-16). More to the point, and even worse, the deficit as a percentage of GDP is also significantly greater, all in this “wonderful, very, very, great economy!”. His one truthful answer, when questioned on the huge deficits (even before 2020’s CoVid nightmare)  was, "Oh well we won't be here."

        Trump has bragged on defense spending, claiming that the military was weak under Obama. This was a lie, and senior officials know it, but he tells the deplorables and they buy it.  In fact, as a percentage of GDP, defense spending has been essentially flat from 2010 to the projected 2020 figure.  

        Perhaps the most unpleasant part of all this for me, having traveled much of western Europe in recent years has been the precipitous decline in the esteem in which our nation is now held by our allies. Oh, the Saudis and Russians like us but many of our former allies are simply dumbfounded and troubled by what we have become.  

        And finally, since I have ranted on CoVid in depth in several other pieces: You might remember that I previously pointed out that the Obama administration, contrary to Mitch McConnell’s blatant lie, did leave a “play book” aimed at handling a pandemic. I further pointed out that the Obama administration also ran a scenario using that play book with members of the Trump transition team, including then Energy sec. Rick Perry and Transportation sec.(and Moscow Mitch’s spouse) Elaine Chao. 

       What I haven’t previously discussed was that the Trump administration also ran a scenario called Crimson Contagion, which has been a fairly well-kept secret. I’ll tell you why in a moment.  Crimson Contagion was a joint exercise conducted from January to August 2019, (yes a whole year before CoVid!!) in which numerous national, state and local, private and public organizations in the US participated, in order to test the capacity of the federal government and twelve states to respond to a severe pandemic of influenza originating in China.

                The simulation, conducted months prior to the start of the COVID-19 pandemic, involved a scenario in which tourists returning from China spread a respiratory virus in the United States.  In less than two months the (simulated) virus had infected 110 million Americans, killing more than half a million. The report issued at the conclusion of the exercise outlined the government's limited capacity to respond to a pandemic, with federal agencies lacking the funds, coordination, and resources to facilitate an effective response to the virus. Rather than summarize all the conclusions of the study, let’s just say that nothing we have seen in 2020 was not obvious long before. What action did the Trump administration take? Do nothing and blame Obama, who’d been gone for several years!  

        I could go on, but it’s lunch time. Register, Vote.

Debt and deficit 101 (part the third and mercifully final)

Debt and Deficit 101, last gasp

        We hear a great deal of Republican bitching about “entitlements,” and there is no question that these mandatory budget items are a large chunk of the whole,  The use of the word, however,  is somewhat offensive as used because it is often delivered as if the money was somehow an undeserved government gift. Let’s take the two largest, one at a time:

Social Security:

       Social Security mandatory spending comprises more than a third of mandatory spending and around 23 percent of the total federal budget. Medicare makes up an additional 23 percent of mandatory spending and 15 percent of the total federal budget. (More on Medicare later). The issue with Social Security is easily understood even if unpleasant. More of us are living longer. Period. However, as large a driver of the current cost is that fewer workers are paying in (relative to those drawing out) than ever before. The Baby boomers, that huge population “bulge” of the late 40s and early 50s are now drawing Social Security, beginning about 2010. 

       In the 1950s, the number of children per family averaged more than 2 and was 2.44 in 1965. It is currently below 2. This is meaningful because, while more persons are living longer, fewer workers are paying into Social Security. In 1945, for everyone drawing SS, there were 41.9 workers paying into the system. By 1950, that number was 16.5, and in 2000, there were just 3.9 workers paying in per recipient, and those recipients were living longer.

        The “good news” is that, as boomers move through the system to whatever cosmic muffin they may think comes next, the “workers to recipient ratio” will eventually improve. That’s if we just wait. 

       So, when Trump speaks, as he has, of ending employers’ payroll tax contributions to SS, (50% of contributions) he threatens the system permanently. As the ratio of workers to seniors evens out, even if nothing else is done, the SS shortfall percentage of the budget will decline somewhat.

        The above eventual demographic change will, eventually, lower the SS related deficit, but there is another factor at work which was not only foreseeable, but avoidable with proper Congressional action.  In 1940, (SS was established in 1936), the percentage of males reaching 65 was 53.9%; for women slightly higher at 60.6%.  with medical advances and better living conditions, those figures in 1990 were 72.4% for men and 83.6% for women. Not only were more Americans every year gaining SS eligibility age, but men were living (and drawing benefits) for an average of 3 years longer for men and 5 years longer for women!

        One obvious (although undoubtedly unpopular) “fix” would have been simply to look at the data and realize that retirement age should have  been adjusted upward, perhaps a year at a time each decade since 1950, grandfathering those in the decade. Two or three iterations of this adjustment would have considerably moderated the current situation. Another fix which could (and should, IMHO, be implemented is either eliminating “early” retirement or moving it upward from 62 to 65. It also of course, true that increasing the SS portion of the payroll tax could accomplish the same thing.

        Another radical fix, but consistent with the original intent of the program would be adding more rigor to “disability” claims. As the law was originally structured, there was no such thing as “Social Security disability”. It was enacted in 1956 during a period of economic growth and signed into law by President Eisenhower. Even then, at first the program provided monthly benefits only to disabled workers between the ages of 50 and 65 who met certain requirements for insured status. Most are aware now that obtaining dubious SS disability has become a cottage industry for lawyers. Few are aware that the original proposals for Social Security rejected disability but did propose national health insurance, which was lobbied against by the AMA! A conservative estimate of disability fraud is about $50 billion annually! 

 Medicare/Medicaid:

       This is an easy fix, but one which will take the will to do the right thing in the face of intense lobbying and political pressure.   

        Private insurers negotiate far lower than “retail” prices for hospitalization, procedures and drug prices. Every time one gets a statement of benefits there are the “fee charged” and “fee paid” columns. So, one asks, if the medical professionals are willing to accept less, why even mention the higher “asking” price? The answer lies in those who have no coverage and are required to pay the list price. There is one of several big lies told by those who oppose national health care such as Medicare for all, and it’s a whopper: “Well, Medicare pays less, so hospitals would suffer.” Guess what Jethro; every private insurer in America pays less, and in the odd instance even less than Medicare. The problem is that the “lower negotiated price” which applies to essentially every medical issue and procedure doesn’t apply in one critical area – drug prices.

        I’ve covered this in other essays, but for the uninitiated, when Medicare Part D (drug plan) was created, intense lobbying from Big Pharma resulted in the stipulation that Medicare/Medicaid would pay full “list price” for all drugs and  that all drugs, regardless of expense, would be available to all patients covered under either program. It must be noted that all other federal programs bargain much lower prices, while Medicare/Medicaid cannot.

  

       Stay with me here for a couple of examples and a rather startling conclusion”

       The total price (Medicare part D and copay) for an EpiPen 2 pack is $700. The Veteran’s Administration pays $183 for it! If EpiPen is prescribed, Medicare will pay even though the Pharmacist would offer the generic equivalent. Likewise, Medicare patients can’t take advantage of reduced-price coupons. The manufacturer’s cost to produce is $30! Yes, that’s a 2300% profit if the patient’s drug plan is Medicare.

        High end drugs are even worse. Stelara, a Godsend for those with chronic ulcerative colitis or Crohn’s disease, retails at about $22,000. I take it for Psoriasis. My drug plan, also federal, but Tricare for military retirees (not Medicare!) pays $6700 for precisely the same drug. Yes, Medicare pays 3.2 times as much as any other insurer.

        How did we get to this ridiculous abuse? Former Congressman Billy Tauzin, R–La., who steered the bill through the House, retired soon after and took a $2 million a year job as president of Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry lobbying group. Medicare boss Thomas Scully, who threatened to fire Medicare Chief Actuary Richard Foster if he reported how much the bill would actually cost, was negotiating for a new job as a pharmaceutical lobbyist as the bill was working through Congress. 14 congressional aides quit their jobs to work for related lobbies immediately after the bill's passage. Ahh, the power of lobbyists!

        Ok, Ok, but how does this relate to the deficit? That’s what we were talking about, right? Assume that Medicare could negotiate the same reduction in drug costs as private insurance does, which would require the Congress to "grow a set," tell the Pharma lobby to fuck off,  and repel the “no bargaining” provision of part D.

       Medicare drug spending for 2019 was about $700 billion with another $64 in Medicaid drug bucks.  Using a conservative estimate (remembering many drugs cost Medicare/Medicaid more than 3 times the cost to all other providers), let’s assume bargaining costs could reduce spending by only 60% (it’d be more more) annually. For 2019, that would have meant a savings of $458 billion!  Economist Joseph Stiglitz in his book entitled The Price of Inequality estimated a "middle-cost scenario" of $563 billion in savings for the same budget window.

        In plain terms, the same Republicans (and, to be fair, some Democrats) who whine incessantly about entitlements, which are overwhelmingly Medicare/Medicaid and Social Security, have, and have always had, it within their power to reduce the impact of the two largest (by far) non-discretionary repeating chunks of federal spending. 

        “Fixing” Social Security is a long- term effort which will, to an extent, self-correct as the population demographic shifts as boomers move through and beyond. 

       Drug pricing, however, could and should be immediately addressed, fairly, with no negative effect on patients, by simply levelling the playing field between Medicare and all other insurers. The savings on Medicare/Medicaid drug costs alone would have negated three of the last four Obama deficits!

        Before you even think about concerning yourself about the welfare and profits of big Pharma, know that, as an industry, Pharma, and health care in general, is the most profitable as a group of any US industry, and it isn’t close. In one recent year Pfizer actually posted a 47% NET profit! Annual net profits of 25 to 30% are common industry wide. As for the rest of the business world, most US corporations would consider a 6% annual net profit a great year. That’d be a down year for a Pharma firm. Remember, they’re already selling to Canada and the UK cheaper than here at home. And no, they aren’t losing money on any sales.

A brief Tax reprise:       

       in review and summary,  I wouldn’t suggest that higher marginal tax rates are a cure-all but, it is worthy of note that historically, there is a great gap between what conservatives want and tell us will happen, and what actually results when the highest marginal tax rates are lowered. This largely follows the question “Who gets hurt and who “makes out”? 

        Historically, as I showed at some length, there tends to be an inverse relationship between the size of federal deficits and high earner marginal tax rates. Generally, the higher the upper marginal tax rate, the lower the deficit because of higher revenues. That isn’t economic theory, it’s a statistical fact. Even so, this has resulted in others like Ronald Reagan, a fiscal dunce, in pressing, against the advice of multiple economic advisors, but at the urging of voices of those who stood to make even more excess profit, for a tax cut. Result? – the Reagan recession. 

       In 2017, the Trump administration passed a tax cut ballyhooed as (insert typical Trump superlative here). Immediate results have been years of increasing deficits during what Trump insisted was the best economy anywhere in the universe.

        It’s a simple concept, really, if you spend more than you make, your debt increases. It then becomes a question of “What do you value?” This results in such pathetic efforts, especially in the current administration, as whining about the cost of food stamp programs (about $60 billion) while ignoring abusive drug pricing costing 10 times more.

So, there you have it, budget and deficit are manageable, but priorities matter. If making rich donors richer becomes more important than sound economic policy, we will end up ….where we are.

Debt and Deficit part deux

Debt and Deficit 101

(part deux)

       I wrote a lot (too much?) in part one regarding the nature and origins of the national debt, mentioning deficit along the way. In many ways the burgeoning budget deficits of the last 50 years (Clinton’s last 4 years being notable exceptions) have put the nation in much the same position as the individual who uses a credit card to charge the expenses incurred over and above their income. I used to caution students about debt using the example of simply paying the monthly minimum (interest plus a very small amount on principal). A $2,000 credit balance with an 18% annual rate, with a minimum payment of 2% of the balance, or $10, whichever is greater, would take 370 months or just over 30 years to pay off! And this assumes no new charges.

        Now consider how this differs from the national debt and deficit:

First: The amount of interest on the national debt, while nowhere near the 18% APR figure in the example, is considerable. The federal debt at the end of the 2018/19 fiscal year (ended September 30, 2019) was $22.7 trillion. Interest alone, (no debt reduction at all) was about $404 billion! That sum consumed 11.5% of the federal budget in 2019. This is equivalent to a family planning a budget with the understanding that 11.5% of their income will be unavailable because of debt service. Before you say it, no it isn’t “just like a mortgage,” because there is a tangible asset at the end of the mortgage tunnel.

       Adding to the debt figure by borrowing to cover spending which exceeds income (deficit) has the obvious effect of increasing the debt service (interest) for the next budget, and so it goes. There is no real humane alternative to deficits in emergencies such as CoVid, war or recession. Of course, there are options which can avoid war (Iraq, VietNam), but even with un-necessary wars (as a talking point) from 1950 to 1965 the total debt increase was “only” $40 billion.

        When discussing deficits, while there is no “one size fits all” answer, explanation or avoidance, there are some obvious things which can be done to reduce them, which I’ll cover shortly. Likewise, Political Party has had some, limited influence on the inception and recovery of several of these.

        Obviously, no economy can handle the cost of a world war, world-wide depression, or global pandemic out of pocket. Deficits in these cases are predictable and understandable. Avoidance, however, is in almost every case far simpler than recovery. Without going into a great deal more detail, I would offer that both of the great economic disasters of the past 100 years resulted from the same root cause.

        Unregulated Free Market Capitalism, in the sense that inspired Karl Marx to rail against it, drove the insane stock market surge which culminated, in the crash of 1929 and the housing bubble collapse of 2008. Both also resulted in the necessity of the government spending money it didn’t have to avoid revolution it didn’t want (in the early 1930s), and national impoverishment in 2009-14. For more on the Great Depression (and a lot more dirt on some major commercial banks) I suggest “The Great Crash, 1929” by J.K Galbraith. If you remain insufficiently nauseated, then read (or view) “The Big Short” (book by Michael Lewis).   

          A final word on political systems. Free Market Capitalism with no (or limited) national conscience has caused or exacerbated about 20, or so, US Recessions in the 19^th, 20^th, and 21^st centuries. Worldwide the number is closer to 45. Both Republican Theodore Roosevelt and Democrat Woodrow Wilson stressed the importance of regulation of some aspects of the economy “in the public interest”. Safe drugs, Meat, and business competition vice monopoly are accepted today by the vast majority of us excluding, possibly John Stossell.

        The Great Depression triggered more regulatory legislation, especially in the area of banking and securities trading. The Glass Stegall banking act (1933) was an attempt to protect bank customers from the misuse of deposits by the banks. Later, Savings and Loans also got a dose of regulation following a $105 billion Federal bailout, with the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Apparently pressed by commercial banking interests, Congress responded with the partial repeal of Glass Stegall in 1999, just in time for the 2007-13 abuse of investor funds leading to the housing bubble collapse.

         The resultant attempt to right the ship, as well as protect consumers, Dodd-Frank, was enacted only to see the Trump administration assail it currently. What has gone unmentioned in all this is the fact that commercial banks were and are doing just fine but wanted to do “finer.”  Senator Elizabeth Warren has summed it up thus:

“Federal regulators have concluded that five U.S. banks are large enough that any one of them could crash the economy again if they started to fail and were not bailed out.… There would have been no crisis without these giant banks. They encouraged reckless lending by gobbling up an endless stream of mortgages to securitize and by funding the slimy subprime lenders who peddled their miserable products to millions of American families. The giant banks spread that risk throughout the financial system by misleading investors about the quality of the mortgages in the securities they were offering.”

          This is why, while some scream and warn of “socialism,” the real issue is lack of conscience and/or regulation in a manner which benefits all of us equally, not necessarily in condition, but in access and opportunity on a level playing field.  I’ve spent so much time on this because so incredibly much deficit spending has resulted from those large financial concerns and their (mis)management. Some few of those responsible may have been somewhat disadvantaged but damned few, if any, have lost their homes or been forced to use food stamps due to their bad behavior. In fact, one is now Secretary of the Treasury.

        So, what could be done to limit or eliminate deficits? The next factoid will alarm some, but most will get it. The low sum total of federal deficits from 1950 to 1960 was $18 billion, which included the Korean war which, on balance, was the last “Just War” the US has fought. There is a common thread throughout this period. From 1950 to 1963 the average highest marginal income tax rate was 91%! Read it again. We hear frequent bitching re: high taxes, yet, the economy overall grew by 37% during the 1950s. At the end of the decade, the median American family had 30% more purchasing power than at the beginning. Inflation was minimal, in part because of   Republican President Eisenhower's efforts to balance the federal budget. Unemployment remained low, about 4.5%. There were three years of actual budget surpluses!

         During the 1960-70 span, marginal rates remained between 71.5% to 91%.  Through that span, the US engaged in the space race, fought an undeclared war in Southeast Asia, enacted Medicare and Medicaid, and financed a moon landing.

        During the 1970-1980 period, taxes remained in the 70% range but the war in Vietnam escalated, causing deficits to ramp up,  energy crises in the last half of the decade added to the misery and we experienced double digit billion deficits most years.  

        Enter Ronald Reagan. Within 2 years, highest marginal rates were cut to 50%, which was a 40% decrease on the highest taxed revenues. At the same time, defense spending was increased, and, predictably, deficits bloomed to several hundreds of billions annually from 1982 to 1990. Along the way, even facing deficits, the highest marginal tax rate was lowered even further, to 28 % in 1988, where three straight deficits of almost $300 billion resulted as tax revenues declined even further. 

        In 1992, the Clinton administration urged and managed to get (over significant Republican objection) a highest marginal rate increase back up to 39.6% which remained in effect until 2002. In 1994, the deficit dropped below $200 billion and to $22 billion in 1997. Then, in 1998, 99, 2000, and 2001 (all Clinton budgets) the combined budget surplus totaled more than half a trillion dollars. 

        With Bush 43 also came a war on a nation which had not attacked us and the return to deficits for 2002 to 2009. The 2009 budget, a Bush budget, saw the first Trillion dollar deficit, although Bush was as much victim as anything else, as the large commercial banks’ fiddling with dubious securities came home with a vengeance, and we heard the phrase “too big to fail” for the first time.  The resultant Troubled Asset Recovery Program (TARP) spiked the deficit to a new high, a 2010 Obama tax cut didn’t help matters any and we saw the nation’s economic woes, largely (again) brought on by rich folks fiddling with others people’s money, rise to four consecutive trillion dollar deficits.

        In 2013 the marginal tax rate was increased to 39.6%, and the deficit dropped back below $1 trillion. In 2014 and 15, the deficit decreased to less than 3 percent of GDP for the first time in six years when Obama left office. Since then, the Trump tax cut which reduced corporate tax rate from 35% to 21%, predictably resulted in a $1.5 trillion decrease in federal revenues. The modest, but temporary decrease in personal income tax was far more than offset by decreased corporate taxes. With a self-described “booming” economy, Trump has charted three straight years of large and increasing deficits approaching a trillion once more. Trump’s literal response to questions about these deficits and what would be the result was “Well, we won’t be here.” This, of course was before 2020 is added. Current OMB deficit prediction for this year is $3.7 trillion, with Covid impact a large part. 

        So here we are, with the lowest marginal tax rate since 1931 (except for the Reagan /Bush 41 fiasco of 28% for 1988,89, and 90) and deficits seem to be a permanent fixture even with the world’s greatest economy (just ask him). What drives them? what can be done?  Stay tuned.

Debt and Deficit 101

Debt and Deficit 101

We will undoubtedly, over the next months,  hear and read a plethora of “wise old men” (and women) schooling us on the meaning and implication of the national debt and the seemingly unending string of deficits which fuel it. The background of “the debt” is, as are many family budgets, a matter of periodic “cash flow” problems stretching all the way back to the post-Revolutionary war era. The government under the Articles of Confederation was a very different and much weaker animal than that created by the Constitution.

        Under the Articles, the states, but not the Continental Congress, had the power to tax. Congress could raise money only by asking the states for funds, borrowing from foreign governments, or selling western lands. In addition, Congress could not draft soldiers or regulate trade. There was no provision for national courts. There were actually 6 separate drafts written with various differences, but the general gist of all of them was that the states would retain sovereignty. Benjamin Franklin wrote the first and presented it to Congress in July 1775.

        A final version was approved, after much debate between July 1776 and November 1777, more than a year later, with the newly declared nation already at war, by the Second Continental Congress on November 15, 1777, and sent to the states for ratification. It wouldn’t be ratified by all 13 states until 1881. At this point, it had become obvious to some that trying to fund a war and pay an army was difficult when the organization running the war was reliant on voluntary donations from the states. Added to this was the fact that much of the war in the early years was fought in the Northeast and impacted those states far more than their Southern compatriots until the last year or so of the war. During those early years, many Northern states had run up significant debt to their own people, selling bonds to outfit army regiments.

        If this sounds somewhat unworkable, that’s because it was. The Articles of Confederation held the new United States together long enough for it to prevail in the Revolutionary War, but once the war was over the league of friends quickly became a league of impoverished quibblers. The men who met in Philadelphia in wartime had been so concerned with making sure the central government couldn’t become too powerful that they neglected to make it powerful enough to solve the issues facing a new nation. As the Confederation Congress attempted to govern the continually growing American states, delegates discovered that the limitations placed upon the central government rendered it ineffective at doing so. Eventually the government's weaknesses became apparent, especially after Shays' Rebellion, which was primarily fueled by Massachusetts’ attempts to raise funds to repay the war loan debts they owed their wealthier citizens by taxing all their citizens.  

       Some prominent political thinkers in the fledgling union, led by men like James Madison and Alexander Hamilton, and several others, began urging changes to the Articles.

        Their hope and initial objective was to create a stronger government. Initially, some states had convened meetings to deal with their mutual trade and economic problems. However, as more states became interested in meeting to change the Articles, a meeting was set in Philadelphia on May 25, 1787. This became the Constitutional Convention. It was quickly agreed that as structured, changes would not work, and instead the entire Articles needed to be replaced.

        I have always been somewhat amused by the fact that while the folks back home had sent delegates to revise, once in Philadelphia, they concluded (without further consultation) that replacement was better!  There was not universal accord among the states or even within the states regarding this proposed shift to centralized power and authority. Hamilton and Madison, with contributions by John Jay, were the most outspoken (and literate) advocate for this radical power shift, Their series of newspaper essays, under the collective name The Federalist Papers, were instrumental in gaining sufficient support for ratification of this new model of government under the Constitution.

           In 1789, the government under the Articles was replaced with a federal government under the Constitution. The new Constitution provided for a much stronger federal government by establishing a chief executive (the President), courts, and taxing powers. During the first Washington administration there was significant debate regarding those significant war loan debts owed by several states (primarily northern) to their citizens. An underlying issue was that, as long as the wealthy northeastern merchant class was owed money by their state governments, their loyalties would almost certainly “follow the money.”

        Treasury Secretary, Alexander Hamilton, recognizing this, proposed that the Federal Government assume the states war debts. This was met with a predictable lack of enthusiasm by those states with little or no remaining war debt. Called “the Assumption Controversy,” this was a serious threat to national harmony almost as soon as Washington took office.

        Massachusetts had serious outstanding war debt while Virginia had none, for example. In a series of negotiations which would give Lin-Manuel Miranda the basis for a great song, (The Room Where it Happened) Hamilton (primarily) negotiated a compromise, often referred to by historians as the Compromise of 1790, which moved the national capitol from New York City to Philadelphia until a new capitol could be built on the current site of Washington, DC. This somewhat mollified southerners who had viewed a NYC capitol as signifying Northern dominance. In return, it was agreed that the national government would assume all outstanding state war debts. Hamilton saw this as shifting wealthy creditors’ allegiance from states to federal authority.

        Hamilton also, in a “Report on Manufactures” encouraged Congress to enact Excise Taxes, or taxes on domestic production (leading to the Whiskey rebellion) and more importantly, tariffs on foreign imported goods. These tariffs would be, until the Civil War and beyond, the primary source of funding Government operations. It is estimated that in some years during the 19th Century, the tariff provided as much as 95% of the revenue for the federal government.  

        To reduce the national debt, from 1796 to 1811 there were 14 budget surpluses (high tariff receipts from European manufactured imports) and 2 deficits. There was a sharp increase in the debt as a result of the War of 1812. In the 20 years following that war, there were 18 surpluses. In 1835, Andrew Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished. In 1833, Jackson had retaliated against the Bank of the United States by removing federal government deposits and placing them in "pet" state banks. Jackson had vetoed a bill to re-charter the Second Bank in July 1832 by arguing that in the form presented to him it was incompatible with “justice,” “sound policy” and the Constitution.  Jackson then ordered the Specie Circular, which required all payments for government lands to be paid in gold or silver.... When combined with loose state banking practices and a credit contraction, a major economic crisis was brewing and came to the boil, when Martin Van Buren took office as president in March 1837.  No longer debt free!

        During the Civil War, Federal tariff income slipped, as such European imports as slipped through Union blockades into southern ports were no longer taxed. Added to this was the cost of mobilizing a huge army while major southern tariff ports (New Orleans, Charlestown, Mobile) were generating no revenue to fund it. The result was an income tax. On August 5, 1861, President Lincoln imposed the first federal income tax by signing the Revenue Act. Strapped for cash with which to pursue the Civil War, Lincoln and Congress agreed to impose a 3 percent tax on annual incomes over $800.

       In 1860, the year before the American Civil War started, the U.S. Government debt was $64.8 million. In current terms that would be a national debt of just $864 million. However, once war began, national debt grew quickly. The financial cost of the war was significant, totaling an estimated $5.2 billion. By the end of the Civil War, the USA had financed about two-thirds of its $3.4 billion in direct costs by selling War Bonds, increasing National debt by a factor of 50! The debt was just $65 million in 1860 but passed $1 billion in 1863 and reached $2.7 billion by the end of the war.

        During the following 47 years, there were 36 surpluses and 11 deficits. During this period 55% of the national debt was paid off.       It could have been more, maybe all, but a succession of Republican Presidents politically catering to Union Army Veterans, their families and their children, intensely lobbied by the almost overwhelmingly Republican vote producing veteran’s association, the GAR (Grand Army of the Republic). This US Union vets pension system was the biggest welfare system in the world at that point; at its height it accounted for one third of the federal government’s budget. It wasn’t until this year, 2020, that the last Civil war “child of a soldier” pensioner died at the age of 90. The war ended in 1865, her father died in 1938, and she drew a check for the next 82 years!

       What is “money?”  The “gold standard” is (was) a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold. National money and other forms of money (bank deposits and notes) were freely converted into gold at the fixed price. The United States, though formally on a bimetallic (gold and silver) standard, switched to gold, de facto in 1834 and de jure in 1900 when Congress passed the Gold Standard Act. To the layman, this meant there weas a dollar’s worth of gold somewhere (Fort Knox) for every paper dollar in circulation. It also meant to some extent that the price of gold was determined, not by market forces, but by someone’s arbitrary decision.  

         This has led during the last years of the 19^th century to “panics” at times when inflation drove the face value of money above the gold reserves of the nation.  During the Panic of 1893, JP Morgan Used $60 Million in Bonds to Bail Out the United States Government. because the gold standard gives government very little discretion to use monetary policy, economies on the gold standard are less able to avoid or offset either monetary or real shocks. It would take a book to discuss all the nuances and arguments related to the gold standard, which Nixon ended in 1973 for the USA. What is fact is that regardless of what standard (if any) is used barring a monstrous gold rush which is on US soil, gold is “iffy.” After the Gold rushes of CA and AK  in the 19th centuries, gold supplies remained relatively stable and prices pegged to it remained somewhat flat while prices for imports and other tangibles rose, hammering US Agriculture as farm prices remained low while cost to produce grew.

        Regardless of currency foundation or lack of same, there are factors which, in the modern, cannot be solved by gold. WWI, the Great Depression, WWII, and the Great Recession are all exemplary of events which have driven national debt. All these however are also atypical events (no I don’t want to get into a Marxian discussion here, although it relates to a significant degree, especially in 2007-8.  The first three events were largely externally driven, but the 2008 Housing Bubble collapse and subsequent recession are self-inflicted wounds.  Historically, and unsurprisingly, the US public debt as a share of gross domestic product (GDP) has increased during wars and recessions, and subsequently declined. It should surprise no one that spending during WWI the Great Depression and WWII all led to deficit ridden budgets and accordingly increasing debt.

        Economists tend to look at a nation’s financial stability by comparing the amount of the Federal Debt to the Gross Domestic Product (GDP) for the same year. GDP is a measure of the total size and output of the economy. This measure of the “debt burden” is its size relative to GDP, called the "debt-to-GDP ratio."  A low debt-to-GDP ratio indicates an economy that produces and sells goods and services sufficient to pay back debts without incurring further debt. One might expect that absent a war or recession, the deficit would decrease. Someone naive enough might actually expect the deficit to go to zero.  Don’t hold your breath. The last time the deficit was even in single digits of billions was 1974 when it was $6 billion, that is, until the second Clinton administration actually had 4 consecutive multi-billion-dollar surplus years from 1998-2001!

        The problem with the debt is that the more you owe, the more interest you pay. Anyone who’s ever had a home mortgage knows that feeling in the first years when interest is such a huge chunk of the payment, The same is true for federal debt also, in fact in 2019, the interest, alone, on the federal debt was $375 billion.  The recent large increases in total debt due to increases in the deficit reflect several discrete factors. In my opinion they are/were:

 The housing bubble collapse and aftermath (TARP, extended unemployment, tax revenue decrease due to bankruptcies and foreclosures. Hopefully non-repeating, although Trump has attempted to gut Dodd-Frank which attempts to preclude a repetition.

War on terror involvement in Iraq. They didn’t attack us, Saudi’s funded it. We’re still there.

Prior to Covid in a strong economy: from 2013-2015 during the Obama recovery from the worst economic downturn since the depression, deficits were too high but lower than 3% of GDP.

From 2016 to 2020 (Not factoring in CoVid which will, predictably, push the deficit to a record peacetime high which while possibly higher than it might have been, is still understandable) which Trump has proclaimed “the greatest economy ever”, we have seen 4 straight deficits of more than 3% of GDP. In fact, 2019 and 2020 (as submitted without accounting for any CoVid spending) are more than 4.5% of GDP and both at or over $1 trillion.    

So, what drives these deficits?  What can be done about it? What should be done about it?

              Stay tuned for (a much shorter) part two

Trump's Lame Response to Michelle Obama

(The majority of what follows is verbatim from an op-ed in the WaPo by Greg Sargent. As a subscriber, I can read it, but many who might wish to see it cannot, so as advertised, this is most of what it says.)

Trump’s unhinged Twitter meltdown 

shows Michelle Obama drew blood.

Me: predictably, following the moving speech by Michelle Obama at the DNC “mostly video” convention, Donald Trump responded in what amounts to the only way he knows. I say that because, when he tweets, there is no one to immediately “call bullshit” when he lies, which is most of the time. It is unlikely that after the last disaster, when he was interviewed live on camera and was adrift in a sea of his own falsehoods, pointed out in real time by the interviewer, that Trump will avoid accountability if at all possible. Mrs. Obama’s speech was measured, on point and contained factual analysis of the disaster that is the Trump administration.    

After a brief description of the speech, the op-ed writer compares it to the Trump response, which, as expected, is fraught with outright falsehoods, He says: Op-ed begins:

        “Her case, boiled down, is that Trump inherited a country that, for all its deep problems and lingering inequalities, was on the mend following another previous crisis. Trump proceeded to utterly wreck the place through his incompetence, malevolence, corruption and depraved conviction that stoking as much civil conflict and racial incitement as possible helps him.

Trump’s substitute tale, reflected in a series of tweets, runs as follows: Trump won the White House only as a reaction to Barack Obama’s failures — to “the job done by your husband,” as he sneered. Trump then built the “greatest economy” in the known universe, then voluntarily turned off that economy in a benevolent and responsible effort to save “millions of lives.”

Now, goes this story, Trump is “building an even greater economy.” And the real failure in handling pandemics was by “ObamaBiden” on H1N1. Obama and Joe Biden presided over the “most corrupt” administration ever, including launching the Russia investigation.”

And the truth:  

“Trump’s story is pure disinformation

        Here’s the reality: Trump largely inherited the economic trends he enjoyed for three years. Trump was compelled into acting on the novel coronavirus only when his efforts to lie the crisis out of existence grew impossible to sustain. His dithering helped cost tens of thousands of lives, while the handling of H1N1 was relatively smooth and effective.

        The fundamental premises of his alternate history are rejected by large majorities, who disapprove of Trump’s handling of the coronavirus, say it is not under control, believe Trump acted too slowly on it, view the recovery negatively and prioritize containing the virus over herding people back to work, which Trump wants to do.

       Which brings us to one last way the former first lady told the truth: “Right now, folks who know they cannot win fair and square at the ballot box are doing everything they can to stop us from voting. They’re closing down polling places in minority neighborhoods. They’re purging voter rolls. They’re sending people out to intimidate voters, and they’re lying about the security of our ballots.

And this means:

       We’ve got to vote early, in person if we can. We’ve got to request our mail-in ballots right now, tonight, and send them back immediately and follow-up to make sure they’re received. And then, make sure our friends and families do the same.”

After the speech, Trump retweeted a bunch of nonsense purporting to debunk claims that he’s trying to sabotage mail balloting. But Trump himself confirmed the truth of her allegation when he said on Monday: “The only way we lose the election is if the election is rigged.”

       Even as the U.S. Postal Service pursues operational changes that the USPS itself says could delay the delivery of mail ballots, Trump is telegraphing that he will seek to dismiss all late-arriving ballots as illegitimate. Meanwhile, GOP lawyers are working to protect laws that will invalidate those ballots, even if they arrive late due to pandemic conditions and operational delays — through no fault of the voters.

       So, Mrs. Obama’s ultimate claim, stated indirectly, is right: Faced with his inability to make his catastrophic record disappear with lies, Trump is plainly persuaded he cannot win a free and fair election. So he’s trying to corrupt it.

       As she noted, to overcome that effort to evade an uncorrupted election, Democrats may have to win overwhelmingly. That this may be required is a terrible thing to contemplate. But that very fact itself stands as searing an indictment of Trump’s record — and his efforts to evade accountability for it at the hands of the voters — that anyone could ask for.”  End of WaPo op-ed.

Me: It is truly puzzling to me that any rational human, aware of the monstrous untruths that Trump has continued to spout can support the man. He reaches out to so called Christians yet is the most irreligious man ever to hold the presidency. The tragic truth is that those too blind to realize/admit  what he has done to our nation at home and, just as bad, what he has done to our relations with the rest if the world, are blind to these fatal flaws because  of what’s left:  Xenophobia and :

White supremacist bigotry. At this point no other explanation works for the mainstream Trump supporter.

        Of course, his wealthy (I almost typed “friends” but he has none) supporters are themselves on the side of deregulation of many, if not most, legislative protections of the middle class and the environment. For them, bigotry, while real, is secondary to the bottom line. All Trump deregulation is heralded as being “pro-business” and good for all Americans. If reducing clean water protections is “good” for anyone, I’d like to know who.

        As far as the wild “economy” claims, the list of Trump lies about numbers of “new factories” and “new businesses” is a matter of record and “fact checked” to death. What Trump will never admit is that he simply built on the Obama recovery from the 2007-2008 (who was President?) housing bubble fraud collapse. In fact, 2015 saw record economic growth under Obama policies.

        Some of the mysteries of the current political situation are explained in both John Bolton’s and Dr. Mary Trump’s books. Bolton describes a loose cannon, poor reader and even poorer listener, yet convinced he’s always right, and cites the ways this has damaged foreign policy. Dr. Trump describes in depth the family dysfunction and personal damage which explains it.

        I have asked numerous Trump supporters for a measured, respectful, dialogue to try to wrap my head around their blind adherence to the man, even at the price of the US no longer being the respected leader of the free world. I’m still waiting. It’s almost as if they believe that if they dress in the right tee shirt and wear the MAGA hat everywhere that it will hide their own innate flaws.

MInutia

Minutia

        In 1957 an American motion picture, a musical drama, was banned in many towns throughout England after being slammed as "sex crazed and disgusting" by British film critics. London critics described the film as "An unsavoury, nauseating and muddy brew of delinquency, bad taste and violence". In Australia, church leaders and psychiatrists tried to have the film banned.  The name of this cesspit of cinematic tripe?  Jailhouse Rock ! Since the bulk of the film was set in a prison and having, myself, been one of the eager American teens who shelled out a quarter to see it, (popcorn was 10 cents a bag, as I remember) I recall absolutely nothing sexual about the  movie. I suppose this shouldn’t be surprising, considering that as recently as the beginnings of the first Gulf War the dorks at the Beeb banned “Waterloo” (ABBA) and “Killer Queen” by …well. Queen. Even the Beatles “A Day in the Life,” an acknowledged, masterwork, was banned for several years. BBC banning and censorship finally succumbed to listeners abandoning it for “pirate” broadcasters. (see the 2009 film, “The Boat That Rocked” if only to see the incomparable Philip Seymour Hoffmann at his best)

        In another musical oddity:   Although Frank Sinatra topped both the US and UK charts in 1966 with "Strangers In The Night", winning a Grammy Award for Best Male Pop Vocal Performance and Record of the Year in the process, he (Sinatra) despised the song and called it "a piece of shit," and "the worst fucking song I ever heard." Go figure.

But seriously folks,

        Donald Trump will have to look hard to find “positives” of his administration to use as campaign issues. (Note: vintage Trumpism generally eschews positives, rather focusing on slandering the opponent) One “accomplishment” he will probably attempt to mine for useable talking points is immigration. “They never show up for the trial. So, by the time their trial comes, they’re gone. Nobody knows where they are.” – Donald Trump. 

       Both Trump and former Secretary of Homeland Security, Kirstjen Nielsen, have stated that immigrants going through removal proceedings—particularly those applying for asylum—simply do not appear at their court dates, instead choosing to remain in the United States unlawfully. The truth is more than a bit contradictory. The Department of Justice’s own statistics show that nearly three-quarters of all immigrants appear at their hearings, including nearly 90 percent of those seeking asylum.

       In prior years, when the Obama administration ran a pilot program where asylum applicants were let go with a promise to appear vice incarceration and family separation, 99% showed up in court at the appointed time for their hearing. That Trump lied is not surprising. That so few of his supporters will acknowledge it, much more so.

        Trump also ran on a promise to provide a “very much better, really, really, great, (or some equally flowery blast of drivel) health care alternative to ‘Obama care.’” He has not. I have written at length on health care costs in general and specifically about the advantages of single payer systems and lies we’ve been bombarded with on that subject. It is worth noting that the pharmaceutical industry (Pharma) leads all industries in lobbying donations. Top House member recipient?   Minority Leader Kevin McCarthy (R-CA), just under half a million! (and over 4 times as much as Mrs. Pelosi.) Of course, McCarthy is being paid to oppose the Affordable Care Act, isn’t he?

        This pathetic national health care situation, specifically ludicrous drug costs, was reaffirmed for me on a personal level this week. Having been diagnosed with Psoriasis years ago, the newer drugs which actually control it are little short of miraculous in effect. I rarely have a “flareup”, but with the monoclonal antibody class of drugs, tolerance and decreasing effectiveness can happen. After 13 years of using one treatment, its efficacy waned and my dermatologist switched me to another.  Yeah, I know.….So?

          So, as a military retiree, I have Medicare as first provider and Tricare for life (military retired Medicare supplement and drug plan), which covers both Emily and I. How good is it? I have a $33,000 hip for which I have paid nothing!  Tricare also uses Express Scripts (an online pharmacy) as drug provider.  I received my first dose of my new psoriasis drug, Stelara, Thursday, - one syringe. With it was the statement of coverage, listing my copay (just $21.00) and what Tricare paid, which was $6,700! That’s what the government via Tricare paid the provider of the medication. I can assure you that, at that price, the drug’s manufacturer, Janssen biotech, is making a huge profit for their 90 ccs of Stelara. Am I content with the price I pay? Of course. But…!

        The list price of Stelara is over $12,000 per month, but it isn’t a monthly injection, rather every three months after a loading dose. Using GoodRx as my source, l found that a refill of Stelara (with a coupon, no less) costs over $22,000! It costs a small decimal fraction of that price to produce. Private insurers, like Tricare, which is administered as a private insurer also, negotiate far lower prices, hence the $6700 every three months, which is actually a bit lower than some private Medicare Advantage plans. According to the National Psoriasis Foundation, without insurance, the retail value of a year’s worth of Stelara injections would cost between $30,000 and $70,000. None of these drugs is a cure, so this cost is the gift that keeps on giving,

        Now the rest of the story. A patient on Medicare who has no part D drug plan or other insurance would pay retail, that is about $22,000 per refill. Obviously, that is well beyond the means of many, or most, of us, but, and this is huge, Medicare Part D (drug plan) itself will pay (and must by law) the actual list price, no negotiating, no reduction. The same is true for Medicaid. Patients over 65 may pay less out of pocket because their Private Medicare advantage plan has no restrictions on negotiating lower prices (hence the $6700 my plan paid). This vast difference between what private insurers bargain down to and the “list” prices, which Medicare and Medicaid must pay, is what drives the huge annual Medicare /Medicaid monetary outlay for drugs. In 2018 that number was $1.347 trillion! Changing the part D law to allow the bargaining of prices, as private insurers do, would reduce that number by more than 50% per conservative estimates. For the sake of comparison that reduction would have eliminated federal budget deficits each year from 2013 to 2016! So, remember, when Republicans whine about “Entitlements” the biggest one of all is the “Full Price guarantee” given Pharma by Medicare part D legislation. No wonder advertising and lobbying are now the Pharma industries’ first and second largest expenditures annually.   

And I do believe that’s all I have to say about that.