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Recent reports suggest that the new tax law will contain a provision allowing companies to bring home money from outside the country and pay only 8 to 12 percent tax. One concern is what they will do with the money. One plan includes a provision that some of the funds be used for infrastructure and other plans dictate different uses. This is important because some companies will want to use the funds to buy back stock and while this will be good for the stockholders it will not create any new jobs. It is risky when the government tells companies how they can spend their money but in this case it is the tax savings that created the new funds.

Speeches

I watched the Trump speech tonight and on CNN it was juxtaposed with the White House correspondence dinner and it was a reminder of what the last election was about. You had part of the 30% of America who are college graduates sitting at a fancy dinner and in with Trump were part of the 70% who did not graduated from college. The first group was dressed in tuxedos eating fine food on fine china while the Trumpers were dressed in jeans and standing in a farm show complex. Group one was composed of top politicians, Hollywood stars and press elites and the other group working stiffs. Since Dodd/Frank the five big banks now have assets of 7 trillion dollars. The remaining 6,500 banks have assets of 8 trillion. The new bank regulations have concentrated the money at the top. Senator Elizabeth Warren is suggesting that we break up the big five and if they want to spread the money around to the 300 million regular citizens, I’m all for that. This will give each of us $25,000 which is nothing to sneeze at. However that is not what she wants. She wants to have the money go to the government and then the politicians decide how it is spread around.

DMZ

I offer the following as a layman’s view of the North Korean situation. The danger in waiting involves a number of risks the most ominous of which is the submarine. They currently have 70 submarines with 10 capable of launching missiles. If waiting allows them to developed submarined launched missiles with nuclear war heads then the chance of destroying their military without substantial damage to the US mainland is lost. If a first strike is determined to be the best action it must happen before the sub missiles are ready. How it would be done is probably in the planning stage at this time. Just what would that look like? There are a number of dangers that must be addressed simultaneously to destroy their military with a minimum of risk to our allies in South Korea and Japan. First off is the demilitarized zone (DMZ) which is the 160 mile border between North and South Korea. Along this border they have 12,000 artillery pieces along with various types of rocket launchers. Using the advantage of first strike the US would send in stealth bombers to knock out radar and immediately follow up with conventional bombing using 80 B-52’s each one carrying 100 five hundred pound GPS guided bombs. The planes would fly in a line across the DMZ with all planes dropping their bombs simultaneously. These planes would drop one bomb every 1000 feet for the entire 160 zone and this would neutralize the enemy forces in that area. While this was going on tomahawk missiles would be launched from the air craft carrier to destroy the missile launch sites and jets would be in the air to destroy any enemy planes that may take off. Within a few hours their military would be destroyed leaving only tanks and troops which are no match for air power. I go through this exercise to illustrate if an amateur sitting on the side lines can develop a plan the military experts can certain come up with a better one. To wait saying things like Soule will be destroyed before we can stop it means we just wait until they get the nuke submarines. Everyone wants to take the easy road and say wait and this is likely what will happen. It will be a couple of years before the nuke subs are ready and after that it will be just a matter of appeasing a dictator.

Negotiator

One of the many mysteries about Trump that is yet to be deciphered is whether a businessman can govern as a politician. One area that is slowly coming to light is his negotiating style. He said NATO was obsolete and then conceded it could be updated which would include all countries paying their part. He said China was a currency manipulator and he would consider working with Taiwan and then is willing to push that aside to get co-operation on North Korea. He cozied up to Russia to get them to join the fight against terrorism and then got tough as he tried to get them to weaken Assad. He said he would build a fence and enforce the border and this led to a decrease in border crossings. He said he would get rid of NAFTA and now Mexico has suggested they work out a new deal.

Tax plan

When state pension funds get to the point where they are underfunded they often times just increase the expected rate of return on their investments and that solves the problem. This has been going on for years and now the Trump tax plan will use the same mechanism to pass his tax plan. Since the democrats are committed to oppose any plan that Trump proposes the only way to pass a tax plan is through the reconciliation process. This means it must be part of the budget process and must be revenue neutral and is thus able for passage with a simple majority and can therefor avoid the senate filibuster. To make it revenue neutral the expected increase in the GDP caused by the tax reduction is adjusted accordingly just like what is done with pension plans.

Rights

The idea of rights is in the news because of health care but the concept is not often understood. The Constitution along with the Bill of Rights is clear in defining rights as individual rights. These rights cannot be given or taken away by joining or not joining a group. The first amendment right of religious freedom does not mean that an individual must belong to a church since the right is vested in the person not the organization. In today’s world there is a rallying cry for group rights like LBGT rights, women’s rights, Muslim rights, minority rights, illegal alien rights, and so on. The theory is that there is strength in numbers and while that is true the hope is that these groups will attain parity with individual rights. Why is the concept of individual rights so important? The Declaration of Independence America’s founding document, states: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights…” These words affirm that our Founding fathers saw rights as bestowed not by governments, but by God; not to groups, but to individuals.

Control

Since WW 2 the democrats have concentrated their efforts on organizing public unions, influencing formal education including universities and the national press and they have done so effectively. This was often in the news and today the words “liberal press” are accepted by most and stats show that universities are overloaded with liberal professors. Meanwhile the republicans have been busy behind the scenes organizing local elections of counties and states and governors and they too have been successful. Suddenly everyone is aware that republicans now control 32 state legislators and 31 governorships. This allows them to control redistricting which will come again in 2020. In addition the democrats are now the minority in the federal government both house and senate. People forget that the democrats controlled the house of representative for 40 years from 1954 until 1994 but all that has changed with the republicans maintaining control 20 of the last 24 years. While the democrats have been concentrating on groups the republicans have centered their attention around individuals selecting candidates who are electable.

What if

Back in the days when I worked as a financial planner I often discussed Wills and Living Trusts and this invariably led to what I came to call the what if game. This was a stalling tactic used to avoid having to face an uncomfortable decision. In time I learned to cut off this game early on so that we could proceed in getting something done. The government is facing the same situation with North Korea and everyone can avoid doing anything by playing what if.

First strike

When Bush 43 introduced the concept of a preemptive strike many people went apoplectic but in a few days and after reviewing all of the options the whole idea was put to sleep. The press had no interest in discussing it and politicians avoided the subject. With the rise of North Korea and its nuclear program the preemptive strike is once again in the news. The idea of first strike is antithetical to what America has always stood for but 9/11 was a wakeup call that cannot be dismissed and perhaps it is time for offense to become the new defense. The leader of North Korea realizes he must constantly increase the rhetoric to keep himself in the news and to prove to the world that he is a force to be reckoned with. It is likely that this will lead to some type of action along the Pacific Rim and then the actions will have to be of increasing nature. Add to that the fact that this man seems to be mentally unstable and his people are going hungry and you have a very volatile situation. The US, by constantly improving anti-missile weapons, can protect the West Coast against attack but countries closer to North Korea may not have that protection. Will the US have to attack first to protect an ally?

Changes

There are knowledgeable people, including FDR, who warned against public unions. One of the reasons for this was that while private unions negotiate with company money, public unions work with tax payer money. Trump is used to negotiating with people who put their own resources at risk and now he faces elected officials who are risking taxpayer money. This requires a different strategy and he is recognizing those differences. He is reacting similar to the way a business man does. As new information presents itself he changes his views. In business that is considered wise but in politics it is called flip-flopping. One of my favorite writers, Emerson, said “A foolish consistency is the hobgoblin of little minds”. Another big difference between business and politics is that in the former the goal is results and in the later it is credit. If Trump gets results his methods will become lost in the weeds and if he doesn’t he will be held accountable. This is the incentive for the democrats to block him in every way possible. That seems to be the way our government operates. Another business asset is delegation. Over the past several decades wars have been fought by politicians in Washington but Trump has turned over the military to his generals and this is an important change.

Infrastructure

Experience has shown that either political party is loathed to do anything that might credit the other party. Infrastructure is one such project. On the surface both parties agree that repairing and rebuilding transportation facilities is a good idea and so both will proceed but the real obstruction is the many regulations. So these must be changed and often times that requires consent of the political class and here is where one party can sabotage the project and do so behind the scenes. To uncover this activity requires some deep investigation and the press may not be inclined so and the whole idea will just die on the vine and nothing will get done.

Natural gas

Don’t let the perfect be the enemy of the good is a common phrase in use today and is appropriate when describing the problem of climate change. Changing the transportation industry over to natural gas will reduce CO2 emissions by 25%. Add to that power plants and you have another 10% reduction. This is already being done in various parts of the world but its importance is not recognized by the climate change scientists because it is not moving away from fossil fuels and that is their ultimate goal, (the perfect). In addition this will be handled by the petroleum industry and there are no kickbacks to politicians. There will be fewer grants given to researchers to write about the problems of climate change. The health benefits would be significant especially in places like India and China not to mention the potential for sales of US produced natural gas. These same sales opportunities are present in the European market. Growth in the solar and wind industries could continue but like Obama said: In his State of the Union address on Tuesday night, and again today at a UPS facility in Las Vegas, President Obama said that the country needs an “all-out, all of the above strategy that develops every available source of American energy—a strategy that’s cleaner, cheaper, and full of new jobs.”

War powers act

The Constitution grants congress the power to declare war. Sounds simple enough but there are complications. If the President went to congress asking permission to go to war there would be many questions. When are we going, where are we going, how many troops will be needed, what is the objective, what happens when the war is over, how much will it cost in lives and dollars. These would just be the beginning questions. There would be some in congress who would want to know intimate details about each battle plan and all of this would be leaked to the public and by extension to the enemy. As each bit of information is made public the lives of the military people will be further endangered. The war powers act was set up to avoid these problems but it only gives the President about 100 days after which he must go to congress. It may be necessary to revise this act.

Varify

A few days ago I mentioned how the press had fallen asleep during the last administration and the Syrian situation is another prime example. When Kerry told us that the Syrians had agreed to turn over their chemical weapons to Russian for disposal, everyone accepted that as gospel and surprise, the Syrians kept some. Wake up press people and do not accept anything our government says at face value.

Trust but varify

With the news of the chemical attack on civilians in Syria, I am reminded of how Secretary of State John Kerry celebrated when Syrian President Assad agreed to get rid of all of his chemical weapons. Go back to 1994 when former President Carter went to North Korea and negotiated a deal to stop their bomb program. For a commitment by the then leader of North Korea to stop his nuke program he received two nuke reactors and 5 billion in aid. Carter got the Nobel Peace prize for his efforts and he was praised by then President Clinton. It’s Chamberlin in Munich all over again. People like Hitler, Kim Jung-un and Bashar al-Assad cannot be trusted unless you follow the Reagan doctrine of trust but verify.

Gorsuch

Gorsuch is Trumps appointee to replace Scalia on the Supreme Court and he is having a tough time getting the votes. It appears that the Republicans will not have the 60 votes needed to overcome the filibuster. Gorsuch is said to be much like Scalia and for those who have forgotten Scalia was approved by a Senate vote of 98 to 0. This shows how much the Senate has changed since Scalia was approved in 1986.

16th amendment

The 16th amendment was passed in 1913 and this allowed the federal government to collect income tax. Many people felt that the constitution was violated by the way the tax was apportioned and so they refused to pay. I had a close friend who was a member of the John Birch Society and he and a number of his friends refused to pay their taxes and they were set upon by federal agents and soon found themselves in a heap of trouble. During the 50’s a number of states refused to integrate their schools and they too were soon in hot water. When a lady working in the courthouse in Kentucky refused to issue a marriage license to a gay couple she too was confronted by federal agents. The Supremacy Clause in the constitution clearly states that federal law is superior to state law and thus these attempts to circumvent federal law are always shot down. We are now faced with the latest challenge as many cities and a few states are refusing to follow federal guidelines on illegal aliens convicted of felony crimes. This time the feds have decided not to send in agents to enforce the law but have decided to withhold funds. This may work in the long run but there will be many days or even years in court first.

Press people

Many people are upset because they feel the press is being too hard on Trump. The press should be hard on all elected officials. When it comes to the president they should be doubly vigilant. They should question everything he says and does and more importantly they should follow up with investigations. One of the reasons people are upset is that the press has been asleep for years and are just now getting back to the job they are charged with. So many things went on during the last administration that led to problems because no one chose to look beneath the surface. One glaring example is the VA. When Obamacare was presented some objected to government run health care and they were told to look at the VA as a government health plan and how efficient it was run. People familiar with health care knew of the problems with the VA. These problems had been around for many years but the press just rolled over and no one bothered to investigate. It was only later that problems like the long waiting times were exposed and even after that not much was done about it. When the people were told that Obamacare would insure 31 million new people and the cost would be $2,500 per year less per family it was just accepted as fact. They even brought out the famous hockey stick curve to show how the cost would come down. The same goes for the claims of keeping your own doctor and keeping your own plan. Government is not to be trusted and the press should make every effort to check every issue. Trump has given new life to press people that seemed to have forgotten their main purpose.

Major medical cost

Average annual workplace family health premiums rise modest 3% to $18.142 in 2016; more workers enroll in high-deductible plans with savings options over the past two years. The costs in a typical company plan are $12,865 for the company and $5,277 for the employee. A person can purchase a major medical plan sometimes called catastrophic insurance for about $3,000 per year for a $10,000 annual family deductible plan. This means you pay out of your own pocket all of your health care cost up to $10,000 for your family each year. Everything over $10,000 is paid by your insurance. This type of insurance is purchased by wealthy individuals who can afford to self-insure for most of their health care needs. This type of plan can also save money for employees of companies who have group insurance plans. The company buys a major medical plan for you and your family at a cost of $3,000 and then the company puts $10,000 into your health savings account. This is after tax money that grows tax deferred and is used tax free for health care needs. Now instead of spending $18,000 per year between employee and employer they are now spending only $13,000 for a savings of $5,000 per year. Any money left over at retirement could be used just like 401K money. The $5,000 annual savings is generated by lower administrative (paper work) cost. Since over 90% of claims are less than $10,000 While the dollar savings are considerable there are other advantageous. Since consumers get to keep money they don’t spend they will shop around for healthcare and competition will help to lower prices. Look at what happened to Lasik surgery. A few years ago it was $5,000 and now it is less than $500. The same thing is currently happening to dental implants. The providers are pleased to get paid for their service on the spot, without having to file claims and wait 3 months to get paid. This idea is currently going nowhere because it eliminates most insurance companies. Only one or two large companies would remain to handle the claims over $10,000.