Carried interest

As Trump surrounds himself with wealthy wall-street types the question arises will they promote their own friends or will they follow instructions from the President. Here is a quick test. If they get rid of carried interest, they will be Trumpers and if not he should replace them. My guess is that this as already been decided and they would not have received the appointments if they did not agree to get rid of this type of capital gain. Keep in mind that this is mostly for show since what this tax would bring in represents about 0.04% of tax revenues. In case you have forgotten carried interest which has been around forever allows certain profits of limited partnerships to be taxed as capital gain, 23% instead of ordinary income tax at 43%. If Trump would get rid of the capital gains tax then people like Warren Buffet would pay a lot higher rate that their secretaries, but don’t hold your breath on that change. Recall that a limited partnership is where one group puts up the money and another group manages the money. They buy businesses that they judge not to be operating properly and then make changes and then sell those businesses and share the profits. Normally 80% goes to the investors and 20% to the managers. If this time between buying and selling exceeds one year the profits are taxed as long term capital gains. Now the managers get a fee of 2% that is taxed as ordinary income tax but the 20% they get is taxed at the capital gain rate and this is called carried interest. It is this 20% that some say should also be taxed as ordinary income since many feel that this is also a management fee.

Civil service

While many reporters see the democrats as Trumps great nemesis, the hidden enemy is the life time civil servants who work in places like the state department and the VA. These people refer to the incoming administration people as Christmas help, knowing that they will only be around for a few years and gone into the history books. They know that they can’t be fired, thanks to civil services rules and so they work quietly behind the scenes to maintain the status quo. They tend to be liberals because they know that every time Republicans take control they threaten to cut government jobs and when the Democrats take over they tend to increase government. This is the reason why for years elected officials have promised to fix the VA and nothing happens. Trump has had some experience in this area when he dealt with the unions in NY city but this will be a real challenge and if I had to bet, I would bet on those minions who are entrenched in the system.

Police action

I am upset like many with the developments in Iraq and Syria. The US takes over a city and many civilians are killed and injured. Then the other guys take over and many innocents are killed and injured. Then the US takes over and so on. I saw a picture of cannons pointed at Mosel and in the caption it said there were somewhere between one and two million civilians in the city. This is what happens when politicians are running the operation. Note I did not call it war. In Korea we called it a police action and that name has stuck since, at least in United Nations speak. While doing this we constantly express our concern about minimizing collateral damage. I am getting more upset as I write this so I will quit.

Greed

Some have expressed surprise at President Obama’s rather neutral remarks about Fidel Castro but I am not one of them. Over the years my liberal friends have shown a tolerance toward Communist regimes. I recall one person who was well informed that thought more highly of Gorbachev than of Reagan and even today many liberals credit the breakdown of the Soviet Union to Gorbachev. These are the people who became apoplectic when Reagan called the Soviet Union the evil empire. They feared that such talk would start WW 3. There have been many examples of liberals visiting communist leaders and sometimes praising the social programs they developed. It is a little ironic that most of these people became very wealthy under the capitalist system and they accumulated much of their money during the 80’s which they called the decade of greed.

Castro

I bought my first house in 1959 and that was the year that Fidel Castro came to power so I remember many of the details. American businesses built up the sugar industry in Cuba and by the 1950’s Cuba was the world’s largest exported of sugar producing 20% of the world’s supply. After Castro came to power and nationalized the sugar industry things started to go downhill. The management left and the profit motive left with them. Cuba lost the US as its main customer and began shipping to Russia and other European countries. In the 70’s Cuba tried to increase production but failed. The more they tried to salvage the sugar business the worse things got and the country declined as sugar declined. This has happened many times throughout history. A political leader will take over a country promising the poor people new hope and when the dust settles a few elite remain in power and the poor end up worse off. I recall when Fidel’s brother took over about five years ago he allowed small private businesses to develop and following the Chinese model things are starting to improve. Give people the freedom to take a business risk and let them keep the rewards and good things happen.

Objectivity

Over the past 20 plus years the line between journalist and commentator has blurred and the most recent example is from Christiane Amanpour, a lady described on Google as a British-Iranian journalist and television host, saying, “I believe in being truthful, not neutral. While human beings cannot be objective the news people have maintained over the years that they try but that is no longer the case. Many of the national news people now openly say that they are injecting their personal views into their news reports. In one way this is refreshing as we no longer have to pretend neutrality. A good case in point is NPR, a news outlet, that always maintained neutrality but many listeners had doubts. Whenever Republicans were in office they threatened to cut funding to NPR and Democrats promised to keep and increase funding and so the question comes up, did that affect the NPR view of news?

Media guards

The election of Trump will get the media back on track. It is the job of the media to be tough on all government officials, elected or appointed, and they have been derelict in their duties. With Trump in the White House perhaps they will once again become the watchdogs of our Republic. We don’t need the Supreme Court to tie up their time deciding whether Trump’s holdings represent a conflict of interest, we just need the press to do their job and investigate any claims. My guess is that they will be on top of this. My feelings about government can best be understood by the way I reacted to my friends when I lived in the south. When a guy came up to me and said John, you’re a college boy so you know a lot more than I do, I immediately started backing up. When the government man tells me not to worry, I start backing up. I have said that while the free market is the best economic system we must always look out for corruption and the free press is our guard, as long as they do their job.

School bus

This week a school bus ran off the road and children were injured and killed. The first reports showed the driver to be a young black man and many assumed there were drugs involved. Later reports indicate that was not the case. I drove a school bus and have a possible answer to why he was speeding and on a different route. The drivers in most districts take kids to elementary, then middle school and finally high school. This is why the schools have different starting times. I recall one particular route that required me to speed in order to get to the second school on time. I pointed this out to the district and do not know if anything was ever done about it. If a driver is running late he gets a call on the radio asking what happened. It is possible that this driver faced that problem and not only went faster but knew of a shorter route. I will wait until the final report but I am not ready to convict him at this time.

Road back

President Obama’s approval rating leaving office is 56% and that is a little above average. He is an attractive man with great charisma. He is a good husband and father and one of the best orators of our time. In other words people like him and that is very important in today’s political world. He also leaves office with the Democratic Party in the worst shape since the 1920’s. The party’s record in states is abysmal and the house and senate remains Republican. Obama is the leader of the party but there are few young shinning stars. The leadership is in their 70’s and in disarray. Usually when this happens it isn’t long before the party come roaring back. If Trump can provide good paying jobs the Dems will have a longer road back.

Violent

Today President Obama announced that 79 convicted felons would be released and this brought the total during his time to over a thousand. He has every right to do this. What I object to is the phrase, “non-violent crimes”. In many major cities crimes related to drugs represent the bulk of arrest but these are the causes of much of the drug related shootings. To call a person convicted of selling drugs a non-violent offender is misleading at best. Not only the victims of shootings but the cost to the users represent the seriousness of these crimes and certainly contribute to the violence.

Government private

In Grand Forks, like many university towns, there was a program called Communiversity. This is where professors would put on classes of public interest on the four Sunday nights in February. The last year of this program I was invited to be on the board and to advice on the type of courses that would interest the public. In fact I was asked because they thought I would be good at soliciting donations from local business to advertise the program. In any event I quickly discovered that at the meetings the default position was to postpone things until the next meeting. I was of the opinion that what we accomplished in 6 weeks could have been done the two weeks. I bring this up at this time because of the way in which Trump is adding to his staff. He is way ahead of most former presidents at this time and I believe he will continue at this pace. There is a difference between the way private verses government works. I realize when companies get big enough they start to act more like government but since Trump is a one man show that did not happen to him. He often boast of completing jobs early and below cost and that too is what can happen when you are in charge of the whole operation. When you are in charge of everything, decisions can be made quickly and then you must accept the results good or bad. Trump will find that government moves slow and this may not be to his liking but it may save him and the country from some bad decisions.

Campaigns

It appears that there has been a fundamental shift in how presidential campaigns are run. The percentage of money from super pacs has gone down from 600 million in 2012 to 250 million this year. The Romney campaign spent over one billion and the Trump total was under 800 million. Trump showed that holding rallies that were covered by TV was a new way of competing with TV ads. The complaints about the Supreme Court ruling that allowed for super pacs will die out especially since they benefited democrats over the past three presidential elections. This will also dampen support for campaign finance reform. Money in this campaign was also different in that Trump spent 60 million of his own money. Recall that Ross Perot spent about 100 million of his own money in today’s dollars. Maybe rallies and social media will replace TV in future campaigns. $1.3 B $556 million Hillary Clinton campaign $544.4 million Party and joint fundraising committees $188 million Super PACs $795 M $248.3 million Donald Trump campaign $486.7 million Party and joint fundraising committees $60.1 million Super PACs

Reagan democrats

I think of myself as a reasonably informed citizen but I am having difficulty following the news regarding the so called Reagan Democrats. These people, sometimes referred to as blue collar voters, are credited with helping Reagan, Bill Clinton, Obama and now Trump get elected. Apparently some portion of this group is considered bigoted but no one is sure how many fall into that category. If this is the case and this group is instrumental in winning the presidency then candidates will have to take the good with the bad. The Democratic Party is now setting up plans to win this group back. Maybe it is necessary to take in some undesirables in order to win.

Term limits

Talk about term limits is once more in the news but don’t hold your breath. It takes a constitutional amendment and that means 2/3 rds vote in both house and senate. I was always opposed to term limits as I felt the elections should do this but that was before jerrymandering. This is an example of corruption but there is a simple way out of this mess and that is through technology. A computer can easily draw up districts by population but politicians would have to give up their control over setting up district lines. Once again don’t hold your breath.

Hate crimes

Hate crimes are once again in the news and unfortunately we don’t have up to date data but historically Jews have always led the way. The latest FBI statistics on hate crimes base on religion are from 2014 and show the following: Against Jews 648 Against Muslims 183 Against religion in general 125 Against Christian 102 In regards to racial hate crimes there were 3,400 reported and 66% were against blacks and 21% against whites.

Song

There was an unusual occurrence at the high school today. In the morning the teachers were told to be aware of any activity regarding race or religion because of the election. Later than morning they put on a show for Veterans Day and the choir and band put on a wonderful performance which included singing, “The Battle Hymn of the Republic”. If you are not familiar with the lyrics here is one stanza: In the beauty of the lilies Christ was born across the sea, With a glory in His bosom that transfigures you and me; As He died to make men holy, let us die to make men free! While God is marching on. In this day of political correctness I was pleased and surprised that this song was chosen.

I voted

I subbed at the high school today and one of the teachers asked my thoughts on the election. I told them in the end I decided to vote for Trump. I was going to write in the name Kasich but a friend told me that it would be a vote for Trump so I just checked Trump. He said he voted for Clinton and I told him why I thought he might do that. I told him that over the past 30 years that he has been teaching he went to work to a job he mostly enjoyed and with good working conditions. I told him he watched the equity build in his home while his pension got larger. I told him he had a decent health plan along with benefits like vacation, holiday pay and sick leave. I told him he was able to take the family on vacation and help with college expenses. I told him that these things that he rightfully earned with his diploma made him a part of the establishment and that Clinton would keep things going in his direction. Then I told him about the 70% of the population that did not go to college and how all too many of them have watched their lives come to a standstill over the past 45 years as their income stagnated. Even as they made the transition to two income families they still lived pay check to pay check. They were downsized to jobs they didn’t like and all too often in work situations that lacked a way out. They listened year after year to politicians making promises to help them to a better life and nothing came of it and so they finally found a ray of hope in Trump. They were so desperate that they were willing to overlook his many flaws on the outside chance that maybe he was different than the typical politician. Will things change? We will see!

Bubba

The preliminaries are over and it is time for the main event. In the red corner weighing in at 500 pound is Hilary surrounded by her team consisting of the national press, the big money donors, the big banks and Wall Street plus the 30% of Americans who are college graduates. In the blue corner we have weighing in at 100 pounds, Bubba. It is David verses Goliath. Hilary represents the establishment, the in crowd, the big money crowd and the crowd with influence. These are the people who run the country, the people who promise every four years to take care of the middle class. They are the Lucy’s who keep pulling the football away from Bubba. For 45 years Bubba and his clan have watched their wages stagnate while families with one working member grew into two working families. All the while the rich got richer and the gap today is greater that it has ever been. Will Bubba, the guy who never answers the pollsters including exit polling, come out and vote in numbers large enough to make difference? Will he overlook the crude, rude talk, the wild accusations, the obvious lies, the politically incorrectness taken to extreme and go for the slim hope that something might change? Will he drain the swamp!

50's

There is a way that the US can bring back manufacturing jobs. Begin to place import taxes on cheap goods from overseas. This will raise the price of goods to US consumers and their wages will rise accordingly. As people make more money and things cost more the standard of living will not change much. In time US manufacturers will once again be competitive in goods like appliances and electronics. This will spread to hard goods like steel and other heavy manufactured items. Wage price inflation will return and things might begin to resemble the 1950’s, when wages were rising slightly ahead of inflation and people got a raise every year and felt like they were getting ahead. There were jobs for people right out of high school where they could make a decent living. As the US reenters the manufacturing market they will do so with new more efficient factories and prices will increase more slowly than wages. Stores will be filled with products made in America. Lower energy prices will help all manufacturing as well as helping family budgets. While this is going on the infrastructure can be modernized and the GDP will gradually increase to the 4% level needed for solid growth. 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, which had wreaked havoc on the economy immediately after World War II, was minimal, in part because of Eisenhower's persistent efforts to balance the federal budget. Except for a mild recession in 1954 and a more serious one in 1958, unemployment remained low, bottoming at less than 4.5% in the middle of the decade.