California

In years past people would say that as California goes so goes the country. If that holds the state will give us an incite into what a more socialistic type government will do. Over the years the state has offered generous pension benefits to all state employees including teachers and the result is there is not enough money to pay the promised benefits. Now the state is proposing free healthcare for all residence regardless of citizenship. At a top rate of 13.3% the state has the highest state income rate and 150,000 people out of 40 million pay one half of the state income tax.

Public pensions

While private employee unions are good for the economy, many feel that public pensions are not. Even FDR opposed public pensions because they negotiate with taxpayer monies. Public unions entered the game after WW 2 when most of the hard work to improve wages and working conditions occurred in the prewar years. They earned their power by doing all the right things. They organized and got out the vote gave up immediate income for long term gains and succeeded beyond expectations but now comes the time to pay the piper and the money is not there. Illinois is one of the more serious situations. The state constitution says the benefits must be paid but not how they are paid. Out going Mayor Rahm Emanuel recognizes this and has proposed changes that will adversely effect pensions. A constitutional amendment to allow changes to future, unearned pension benefits is the only way to stop rising property taxes and income taxes, as well as prevent annual pension contributions from crowding out government spending on education and social services, both at the state and local levels.

Ugly American

When I was a young man in the fifties there was a popular book called, "The Ugly American". The book told the story of how US diplomats didn't understand the culture and language of the countries where they were stationed but the Soviet diplomats were sensitive to these issues. The Americans were thought of as rich snobs who flaunted their we're better than you attitude. It is often said that history repeats itself and it seems that is happening in this case. We now have China spoiling their environment by mining rare earth metals so we can enjoy electronics like smart phones. We need these metals for wind mills and solar panels so we can keep our air clean while sending coal to Asia and Africa to kill their citizens with poisonous smog. Have we once again become the ugly American?

Trade with China

The US has an import tax on cars from China of 2.5% while China charges 25% or ten times more on US exports to China. One of the result can be seen in total sales. The U.S. imported 58,000 passenger cars from China worth $1.5 billion last year, according to the International Trade Administration, a federal agency within the Department of Commerce. That was a fraction of the number of cars the U.S. exported to China: 267,000 passenger vehicles worth $9.9 billion China has 4 times as many people. Overall China sells the US $420 billion dollars per year more than they buy from the US resulting in a trade imbalance. Would China be happy to get rid of all import taxes? Would it help the US if all import taxes were removed?

Pay raise

On Trumps trip to Iraq, he once again got himself caught up in child like lies. He said he got the troops a raise and in fact the raise is automatic and based on the cost of living. Military people get this every year no matter who is president. After WW 2 the defense spending was cut and US troops went into Korea with old tanks and went up against new Russian tanks and it cost lives. After the wall came down defense spending was cut and troops went to Afghanistan with unsafe vehicles that were damaged by mines and had to be updated while in action. What Trump could have said to the troops is that defense spending was increase to make their lives safer by providing them with better equipment.

Tax cuts

. Federal deficits are on the rise but not because of lower revenues but because of higher spending. The spending was bi-partisan since Trump wanted a large increase in military spending but the only way he could get it was to agree to a large increase in domestic spending. In other words the republicans have joined with the democrats to forget about the deficit and just spend. Revenue FY 2019 $3.422 trillion FY 2018 $3.340 trillion FY 2017 $3.320 trillion The tax cuts kicked in in January of 2018 and gave the people $200 billion and revenue still increased.

Russia and Trump

The Trump administration upheld all of the sanctions on Russia and added new ones starting with imposing financial penalties on 7 wealthy Russian businessmen and 17 top political officials for interfering in US elections. Trump then ordered the closing of Russian diplomatic properties in San Francisco, Washington D.C, New York City and Seattle. Trump then expelled 60 Russian diplomats after the killing of former spy in England. Trump sent military aid to Ukraine something his predecessor refused to do. While all of these things hurt Russia the biggest pain they suffered and are suffering is the low price of oil. Russia is the second biggest oil exporter in the world, making its economy vastly dependent on the global oil market. Oil and gas exports constitute 40 percent of the total federal budget revenue of Russia. Because of fracking the price of oil has fallen from over $100 per barrel to yesterdays close at $45. Trump is also pushing Germany not to build a new gas pipeline from Russia and to consider the purchase of natural gas from the US.