Part Three – Government Shutdown Looms

Economy Section

We’re still waiting on whether there’ll be a government shutdown today as I write this, so I’ll start my commentary with thoughts on the new tax plan.  In DC, they basically sought a temporary spike in growth in exchange for higher long-term deficits.  The optimism now felt in corporate boardrooms over their shiny new object (big tax cuts) are likely to fade over time.  With the economy riding that short-term wave of the Trump-inspired sugar-high of his tax plan, sending the stock market to record highs, once that roller-coaster ride starts to dip, his approval ratings could really tank.  At that point maybe more GOP politicos would stop being such lackeys for the prez out of fear of backlash from Trump, the echo & the base.  There is also a tacit understanding among many workers which can become more clear as time goes on, that Trump’s tax cuts were indeed designed to mostly benefit large corporations as opposed to the middle class.  Shareholders will reap the rewards far more than employees.  

As I keep harping on, trickle down is mostly folly (but it’s not folly to those in the upper-income brackets).  And the GOP’s feel-good rhetoric can’t last for long without sound policies.  Trump’s cheerleading can create the impression with some the economy is doing much better than the data shows (of course, when is he ever honest on anything?), while many of the factors lifting economic growth have nothing to do with his policies.  For example, one big spark for the economy has been the new energy sources & technologies over the past decade which have made America more energy independent.  As an article below explains, our oil output is expected to surpass Saudi Arabia’s, while another article explains how Trump was dealt a lucky hand.  See the CNBC survey in the first few links below revealing very few execs of large companies say tax cuts will translate into higher worker incomes.  From the link few-large-companies-say-theyll-use-tax-savings-to-boost-wages-cnbc-survey-finds, here is an excerpt: 

Proponents of the recent tax reform law, which cuts the top corporate tax rate from 35 percent to 21 percent, argue that a significant portion of those savings will flow to workers in the form of higher wages. The Trump administration has estimated that the average American worker could see their annual wages grow by $4,000 as a result of the drop in corporate taxes. So far, however, those pay increases have been few and far between. With a few exceptions, companies that have announced specific plans are offering one-time bonuses in place of permanent wage increases.

Rubin’s take on this in the-phony-bonus-ploy concludes with this:

The tax plan should be evaluated according to the administration’s own selling points. Does it create more jobs than we already would have? Does it boost middle-class wages and not accentuate growing income inequality? Do companies relocate plants to the United States? Does it pay for itself? We won’t know for some time how this pans out, and hopefully by then Trump will be long gone.

There are smart things we can do.  I do believe the EITC (Earned-Income Tax Credit) effectively helps lift workers to a more sustainable income, but the article about free money discussing a potential UBI (Universal Basic Income) leaves me feeling a bit uneasy.  Progressive liberals will be touting this more over time.  As with most any government benefit program, it could easily get out of hand, becoming essentially a giant welfare program for all.  If the U.S. & the world are really serious about exploring such a concept, it’d better be done in a smart way.  The need is evolving based on automation/robotics taking away so many manual jobs, but I still implore UBI ideas should somehow be tied to labor in some form, since the most important mission the government can do for the economy is to partner up with the private sector to invent new/productive jobs using the new technologies, plus provide effective training for those jobs.  And any UBI proposals must be designed as a way to help those in need at least cover basic expenses, rather than being routinely abused & taken advantage of more like a hammock.  The revenue to help in such an endeavor would necessitate the community of nations agreeing on more uniform tax rates where corporations would be required to pay their fair share.

As for this deadline on a government shutdown tonight, it just again shows how difficult it is for DC to agree on anything.  But even McConnell is hinting Trump is all over the place on his immigration/DACA/border security stance, enough to where he can’t be pinned down on what he’s willing to sign. Lindsey Graham, who had been buddying up to the prez, was livid when Trump did an about-face on the bipartisan immigration deal Senators brought in last week, especially when a couple days earlier Trump promised to “take the heat” & “he’d sign whatever bill they brought him.”  With 87% of all voters supporting a deal on DACA to keep Dreamers in this country, it is reprehensible Trump & the far-right refuse to agree on a deal.  That’s why the GOP would take the brunt of the blame for any shutdown, not to mention they’re in control of DC.  So while the hardliners got him to backtrack on his immigration promises last week, & this week Trump lashed out at reauthorizing the important CHIP program for kids, making even a one-month extension on a budget deal to avoid a shutdown in doubt.  He’s actually negotiating against his own party!  He’s also sniping at his own Chief of Staff, John Kelly, over some border wall comments, another issue Trump keeps flip-flopping over.

Even passing through the House last night, getting a CR through the Senate will be the biggest hurdle, taking 60 votes.  The Dems won’t vote for anything without including a DACA fix, or at the very least long-term funding for CHIP.  The news/internet videos showing the heartless deportations of law-abiding people living here for decades, being ripped away from their crying families, certainly strengthens the Dem’s position.  Both parties are spinning it to blame the other side.  The real blame goes to Trump’s waffling, as he’s like a moving target for GOP congresspeople.  So as I write this, there’s still no deal to avoid a shutdown (you’ll probably know what already happened as you read this).  Maybe some 5-day stopgap will become a fallback, so Trump’s Mar-a-Lago golfing weekend doesn’t get interrupted.  A government shutdown in & of itself is not that big a deal, as long as it’s short in duration.  Although there is some kind of concern how the sequester would impact military funding, I think a shutdown could become a plus by highlighting the circus that has come to DC in the form of an erratic GOP President & Congress, so the faithful GOP base might start waking up to the calamity they’ve allowed to infest our halls of leadership.  The last shutdown in 2013 was more of a nuisance when at that time the real threat of a debt default is what was truly terrifying, with gridlock-Teddy Cruz nearly leading America into a disaster.  This time we don’t have a debt default to worry about, at least not yet.

As for the related articles, a Slate article speculates American workers can’t get a raise since there are too few employers.  They raise a good point, with the way we’ve seen so much consolidation in various industries, weak antitrust enforcement, the rise of behemoth multinational corporations, & the dynamics of the big fish keep swallowing the little fish.  That further emphasizes my opinions from the last commentary how the government must becoming more proactive in creating good jobs, or set the stage where the environment encourages the creation of those jobs.  Other links take us to reports having to do with medical, infrastructure & steelworkers.  From there we see groups about Trump’s economy, shutdown politics & a whole bunch of articles on immigration.  See some interesting articles at the bottom on our broken government & the wide/poisonous divide that’s had a disastrous impact on our nation.  And finally, as I watch the Pro-Life March on the Mall today, I’m reminded we can certainly pursue the cause under President Pence.