When Tax Reform Isn’t-What Congress Giveth It Taketh Away-Podcast 676

They call it Tax Reform. A Jobs Bill. That’s what it must be, right? Journalists and commentators are playing the same old game. Argue a proposed piece of legislation on its merits. Time to reset the boundaries in When Tax Reform Isn’t-What Congress Giveth It Taketh Away-Podcast 676.

Freedom Of Choice

While listeners to The Bob Davis Podcasts always have the freedom to choose what they think is right, I want to introduce the concept of marginal improvement. Legislators on both sides of the political spectrum talk big about ‘reform’. Usually though they make what really are marginal changes. This is especially relevant when we’re talking about the tax code.

The Real Football Game Is Congress

Team Red moves the ball back to the Blue thirty yard line. It’s hailed as a great victory. Team Blue moves the ball back to the Red twenty yard line a few years later. These are what both sides call marginal improvements. Meanwhile, as economist Milton Friedman famously suggested, they keep getting elected by making the tax code more complicated.

Budget Neutrality Isn’t A Thing

Enter a legislative concept called Budget Neutrality. The idea every expenditure must be ‘paid for’ with tax increases, or budget cuts. You think Tax Reform means lower taxes. What they’re really doing is taking away tax deductions and loop holes, and increasing our overall tax. The sad part is, it’s not their money, it’s our money. In When Tax Reform Isn’t-What Congress Giveth It Taketh Away-Podcast 676.

What Is Real Reform?

If you want real reform. The end to this kind of corruption? Then the power of the federal government to tax our incomes and our property must be permanently eliminated. Should corporations be taxed at all? Do you have property rights if you pay property taxes? How does government pay for the wonderful things both sides wants it to provide? We talk about it in When Tax Reform Isn’t-What Congress Giveth It Taketh Away-Podcast 676.

Already Socialists

So called conservatives like to argue the merits of capitalism versus socialism. It seems like I’d be on pretty safe ground if I suggested the United States has been collectivist for decades. Our economic system is not so much capitalist as it is a controlled market economy. Our elected Kings and their privy courts control our behavior and our futures with regulation and a tax code so complex, were it to be proposed as a single law in its present form, it would cause a revolution.

(Editor’s Note: While the first actual income tax in the United States was levied during the Civil War, it was later repealed as ‘unconstitutional’. Several attempts were made to establish an income tax through the late 1800’s which were unsuccessful, until the 16th amendment, ratified in 1913.)

Sponsored by Ryan Plumbing and Heating of Saint Paul and Reliafund

When Tax Reform Isn’t-What Congress Giveth It Taketh Away-Podcast 676

Podcast 595-Money

Money and Controlling the Media Battle Space

Money. Money. Money! Everything the new President says and does is controversial. The latest eruption concerns Trump’s executive order regarding immigrants from several war-torn countries in the middle east region. A handful of court rulings challenging the order are centered on whether due process can be denied people allowed into the United States legally. The court rulings do not suggest the President cannot use executive orders to control departments in the executive branch but whether if the executive orders deny legal rights without due process.

This is just another in a series of actions and comments by President Trump and his administration that have received wide comment and coverage in the media. While protesters protest and media outlets gas-bag about the latest affront to society, Trump and his people throw another rock into the lake creating new ripples that have to be protested against and reacted to by the already too reactive media. This is a tactic or strategy known as an OODA Loop. Trump is forcing the media and his opponents to react to him. When they react his team observes their reaction, decides on a new initiative and then acts, restarting the loop. In this way the administration controls the media battle space.

About the Money

In Podcast 595-Money: When it comes to Money, once the initial spate of executive orders and stunts at press conferences passes, Congress and the President will get down to work on legislative initiatives to address the moribund economy of the United States. Podcast 595-Money wonders whether what has been talked about by this president on the campaign trail and in the media will indeed, make America Great Again.

No Growth

The United States has grown less than 3 percent a year roughly for the last eight years. Those old enough to remember the early 80’s know that the experience of robust economic growth in that era was real. People didn’t worry so much about getting jobs. As inflation came under control and interest rates came down and as unemployment started to come down, optimism took hold. We have not had that kind of feeling in the United States for a long time.

The question is whether the things Trump wants to do will actually produce economic growth. Middle Class taxes are already historically low. Cutting corporate taxes may result in higher profits which is good for Wall Street but may not translate to jobs. Some parts of clearing out the thicket of Federal Regulations can be done by executive order but most of it will require congressional action. Will a Trillion Dollar Stimulus package to build roads and bridges spur economic growth?

A Republican Stimulus?

President Obama’s Trillion Dollar stimulus was supposed to stimulate economic growth and didn’t. Part of the problem with big federal stimulus efforts is the money has to be block granted to states and the spending becomes political. Another issue is the fact that most people in the United States are employed in services rather than construction trade. Aside from the fact that government spending doesn’t ‘create’ jobs, putting people to work in a small swath of the population usually doesn’t result in a high multiple. This is why the Obama Stimulus produced dubious results.

Another problem is Trump’s Trade Protectionist sentiments. While the trade unions love the idea generally the United States has been a free trade nation. Trade agreements are negotiated because most of our trading partners are trade protectionists. The agreements generally break down borders to our trade. The fact certain kinds of manufacturing is cheaper in Latin America and Asia has actually benefited Americans in the form of cheaper goods. Putting up barriers to manufacturing overseas also means goods in the US will become more expensive.

Most of the jobs lost in the last decade or so have been lost due to information technology, robotics and automation. New manufacturing plants are much more automated these days which means they will not produce the manufacturing jobs expected. When one considers completely automated warehouses like Amazon’s and robotic manufacturing like Elon Musk’s showplace plant, don’t expect ‘bringing manufacturing back to the United States’ means jobs at the factory for Uncle Mike.

If you believe the economy is the sum total of individual’s transactions then an economy can be considered a force of nature. This is the first time in recent memory a ‘conservative’ president has endorsed trade protection and big government spending. Two of the biggest problems economically in the United States are the ongoing budget deficits and the total public debt. One wonders how the cornerstones of the Trump economic policy will produce enough growth to reduce the deficits and public debt.

Finally in Podcast 595-Money, the proof will be in the pudding. With all the other controversies swirling around this president after just two weeks if his policies fail to produce the promised economic growth republicans will have real problems in the 2018 and perhaps the 2020 cycles, especially for the politicians that endorsed Trump. Be careful what you pray for.

Sponsored by X Government Cars and Ryan Plumbing and Heating of Saint Paul.

 

Podcast 506

Future Shock. As the 24 hour news media and talk radio fixate on gorillas and high school election antics, its hard to get a conversation going about the future. Is the future potential leaders want the future we should have? Is it the future we want? There are developments almost everyday now with autonomous cars, robotics, materials, aviation, and communications; the building blocks of a future wave that will leave nothing untouched and unchanged. A series of stories from today’s headlines shedding a light on one potential future and a question; Planners and government officials are  diverting resources to bring about a vision of the city of tomorrow, which is really the city of the early 1900’s. Is this what you want? Will the driverless car, autonomous software and machines, robotics, and other developments make trains, buses and the standard bureaucracy heavy city, state and federal government ‘obsolete’? If so, why is so much time, effort and authority expended to see that we plan for and create a urban spaces, and that suburban villages and towns conform to a vision of a city that probably never existed and never will. Driverless cars will render the amount of space needed for freeways and parking ramps obsolete. Remote technology, robotics and other technologies may mean that people will not have to travel to large office complexes for their work, with increasing freelance employment. What are our so called leaders talking about? Minimum wages, government controlled health insurance and trains. Trains. Why are we planning for 1940’s Chicago when reality could be closer to Jefferson’s vision than Robert Moses? The old world is being torn down and a new one is being built that will be very different from what we know. Do our leaders understand this? Future Shock. Sponsored by Ryan Plumbing and Heating of Saint Paul and X Government Cars.