Archive

January 18th, 2017

In remarkable exchange with undocumented mom, Paul Ryan holds out hope for immigrants

    One big question that looms as Donald Trump takes power is this: Will Trump actually make good on the aspects of his program that embody Trumpism at its most cruel and inhumane? Trump promised to expand mass deportations and to end protections for those brought here illegally as children. Now he must decide whether to deliver on those promises -- which, if carried out, will likely cause the broader public to recoil.

    In a remarkable exchange with an undocumented mother Thursday night at a CNN town hall, House Speaker Paul Ryan strongly suggested to her that the revocation of protections for the DREAMers brought here as children will not be carried out. That's newsworthy on its own. But beyond that, the exchange, captured on youtube, also exposed the cruelty of stepped-up mass deportations for many other low-level undocumented offenders:

    The policy details lurking underneath the emotion are extremely important. A woman brought here illegally as an 11-year-old child "through no fault of her own," as CNN's Jake Tapper put it, asked whether she and "many families in my situation" should face deportation. "No," Ryan responded. After noting her love for her daughter, Ryan added:

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We don't have to be flat broke in retirement

    Of the many proposed legislative changes that might occur during the presidency of Donald Trump, the one with the highest probability of actually becoming law is a reduction in corporate tax rates. While we are considering making changes to the tax laws, I have a modest, related proposal that won't cost very much and has enormous potential benefits: Raising the ceiling on contributions to individual retirement accounts (IRAs), 401(k)s and other tax-deferred retirement-savings accounts.

    At a minimum the IRA contribution ceiling should be tripled to $15,000 a year, and indexed to inflation, and the 401(k) limit should be doubled to $36,000 a year. QuickTake America's Retirement Gap

    Let's begin with the basic facts: For this year, IRAs top out at $5,500 a person ($6,500 if you are 50 or older); 401(k)s max out at $18,000 ($24,000 if you're 50-plus).

    Those numbers are, to be blunt, absurd. Without any changes, the U.S. will face a retirement crisis in the next 20 years or so. Raising the limits would be the first of several steps the U.S. should take to avoid that fate. (Fixing Social Security and Medicare are subjects for another column.)

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Trump remains shockingly uninformed

    Donald Trump's first press conference since the election basically confirmed he's easily the least suited person to be president who ever got anywhere near to the office.

    The office he will occupy in nine days.

    Candidate Trump displayed vast ignorance of policy and of basic rules of how the government works. On Wednesday, President-elect Trump utterly failed to demonstrate that he's learned anything. On health care, on Russia, on anything.

    For example, Trump claimed he'll be issuing a "plan" to replace Obamacare as soon as his Health and Human Services secretary is confirmed. But he didn't even hint at any broad outline of what might be in such a plan, and spent most of his answer on health care . . . well, I don't even know what to call it. Babbling about Obamacare? That's about the closest I can get.

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Trump proved Obama's point

    Sen. Ben Cardin used one of the oldest saws in politics to lay out an imperative for the coming Trump era. "It cannot be business as usual," Cardin said.

    He was talking primarily about Russia, but his statement stands on its own. Under the 45th president, it cannot be business as usual for the media, for Congress or for any citizen who values our liberties. We are in for a very dangerous national ride.

    Cardin, a Maryland Democrat who is one of the least partisan voices in Congress, spoke at the opening of Senate hearings on Trump's nomination of Rex Tillerson -- a man with close ties to Vladimir Putin -- for secretary of state. The hearing began against the backdrop of shocking allegations that Russian intelligence services have compromising material on Trump's personal life and finances. There are also reports of collusion between Trump's political operatives and Russia's spies and cyber thieves.

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Trump has brought us the American style in paranoid politics

    Political scientists long assumed that U.S. institutions were more open and sturdier than those in other countries. One manifestation of that robustness, the theory went, was that U.S. politics appeared largely free from troubling symptoms like conspiracy thinking. Foreigners -- particularly in less-developed countries -- might attribute the actions of their leaders to shadowy forces like the CIA or Mossad, but Americans knew better than to think that offstage actors could have such influence on them.

    That belief is no longer tenable. Conspiracy thinking has been normalized in American politics in a way that almost nobody could have expected a year ago. Today, it is plausible to think that U.S. politics could soon resemble cultures that most Americans once regarded as conspiratorial or paranoid.

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Tribal warfare in economics is a thing of the past

    I still remember going to a graduate student barbecue my first month at the University of Michigan. I told a woman from another department that I was studying economics, and she asked me: "What school?" Blinking, I replied "This one. The University of Michigan."

    That wasn't what she was asking, of course. She wanted to know which tribe of economists I belonged to -- the Chicago school, the Austrian school and so on. But to me, the question made no sense, because academic economists in this day and age are not actually divided into warring schools of thought. And it's best that people stopped thinking about economists in those terms.

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The dark side of Donald Trump's insatiable desire to be liked

    "If (Vladimir) Putin likes Donald Trump, I consider that an asset, not a liability, because we have a horrible relationship with Russia," President-elect Donald Trump declared in his wild ride of a news conference on Wednesday. "Now, I don't know that I'm going to get along with Vladimir Putin. I hope I do. But there's a good chance I won't."

    The specific nature of Trump's relationship with the sinister president of Russia has been giving foreign policy experts shudders for months, climaxing this week in the publication of a dossier with allegations so salacious that they practically gave smelling salts a comeback. Beyond Putin, Trump's voracious hunger to be liked seems to be one of the defining elements of his personality and, likely, of his presidency. He doesn't yet seem to have learned that being liked can be a very bad thing and that there are times when it's worth making an active effort to earn a good enemy.

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The best president Putin could buy

    There's no doubt about it. Even Donald Trump now admits it. The Russian government, under direct orders from Vladimir Putin, interfered in the 2016 presidential election in order to help Donald Trump win -- and succeeded in their goal.

    Read that paragraph again. This is nothing short of an act of war. And the only thing more shocking than the fact that Russia did, indeed, hack our election is the reaction of President-elect Donald Trump, whose response to the most serious case of cyberwarfare in our history is a blase "So what?"

    For weeks, Trump simply denied Russia's role in the hacking of the DNC and Clinton campaign. We don't know it was Russia, he insisted. It could have been China. Or just "some guy in New Jersey." But whoever did it, said Trump, it was nothing but a "political witch hunt," hatched by Democrats in order to undermine the legitimacy of his victory on Nov. 8.

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January 17th

Republicans will find corporate tax reform is hard

    Legislating can be so much more challenging that it seems during an election campaign. That's becoming increasingly clear about Republican promises to repeal and replace Obamacare. And it's about to become clearer on corporate tax reform.

    Tax reform is a relatively easy concept: Most people favor lowering the tax rate and closing loopholes. The difficulty is in the details.

    Consider the proposal now before the House of Representatives. It includes a reduction in the corporate tax rate; a one-time lower tax on profits accumulated abroad; an end to the tax deductibility of interest expense, coupled with immediate expensing of investments; and a border-adjustment system that would impose the corporate tax on imports but not exports.

    The plan has several potentially desirable attributes. It would, for example, effectively eliminate the incentive for companies to shift profits abroad. However, the plan as a whole also has little chance of being enacted into law. Here's why not.

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Milton Friedman's Cherished Theory Is Laid to Rest

    When you're wrong, you're wrong, no matter how famous and respected you might be as a scientist. Albert Einstein was wrong about quantum mechanics. Linus Pauling was wrong about the structure of DNA. And Milton Friedman was wrong about the permanent income hypothesis. But unlike with the first two examples, where scientists quickly realized the mistake, economists haven't yet come to grips with the reality.

    Friedman's theory says that people's consumption isn't affected by how much they earn day-to-day. Instead, what they care about is how much they expect to earn during a lifetime. If they have a sudden, temporary loss of income -- a spell of unemployment, for example -- they borrow money to ride out the dip. If they get a windfall, like a government stimulus check, they stick it in the bank for a rainy day rather than use it to boost consumption. Only if people believe that their future earning power has changed do they respond by adjusting how much they spend.

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