U.S. Politics 2017: He's Good Enough, He's Smart Enough, and GODDAMMIT AL, WTF WERE YOU THINKING?

[Martell Spy]

Steve Mnuchin Is Flattered People Think He Looks Like a Bond Villain

https://www.thecut.com/2017/11/steve-mnuchin-loves-looking-like-a-bond-villain.html

[Kalbear]

The same god damn equivalence is being done with Roy Moore that was done with Donald Trump, and it's fucking pissing me off. No coverage on Doug Jones being an actually good candidate, no coverage really on anything other than Moore and Franken, as if they're at all equivalent. 

The media is broken, and the US follows.

[Altherion]

51 minutes ago, Kalbear said:

The same god damn equivalence is being done with Roy Moore that was done with Donald Trump, and it's fucking pissing me off. No coverage on Doug Jones being an actually good candidate, no coverage really on anything other than Moore and Franken, as if they're at all equivalent. 

The media is broken, and the US follows.

Is Jones in fact a good candidate? The only place I've read anything at all about him is on Breitbart (they have a couple of articles about how he supported full-term abortion and how he thinks Trump's proposed wall is too expensive). If the mainstream media is not talking about a candidate, the candidate is usually either not very good or rather boring.

[LongRider]

Breibart?  hahahhahahhahhhaa  thought you were above all the 'propaganda'?  

there is this:

Sure, they are newspapers, Alabama newspapers.

http://www.al.com/opinion/index.ssf/2017/11/our_view_alabama_voters_must_r.html

Quote

 

Our view: Alabama voters must reject Roy Moore; we endorse Doug Jones for U.S. Senate

However, we endorse the third option: Doug Jones.

Despite what you may have heard, Doug Jones is a moderate Democrat and a strong candidate for all Alabamians. As the son of a steel family, he understands the concerns facing working class families as factories close and jobs disappear. He's been an active member of Canterbury United Methodist Church in Birmingham. He has built a platform around issues that will define Alabama: job creation, small business development, child healthcare, criminal justice reform and, perhaps most needed of all, compromise.

 

 

 

[Manhole Eunuchsbane]

3 hours ago, Martell Spy said:

Steve Mnuchin Is Flattered People Think He Looks Like a Bond Villain

https://www.thecut.com/2017/11/steve-mnuchin-loves-looking-like-a-bond-villain.html

Gorka has him beat 6 ways to Sunday. Mnuchin looks like inbred middle management if you ask me.

 

 

[DireWolfSpirit]

Wow.....even that bastion of conservative viewpoint, aka "Forbes Magazine", has published a scathing rebuke of the current GOP Tax bill making its way through Congress. https://www.forbes.com/sites/stancollender/2017/11/19/gop-tax-bill-is-the-end-of-all-economic-sanity-in-washington/amp/?ref=yfp

[OldGimletEye]

Okay, now conservative sorts of people.

Master of the universe guy is working in office wondering if he’d should do that next investment project.

He does something like:

NPV = Current Outlays – (1-t)C(1)/(1+r(1)) +…………...+(1-t)C(n)(1+r(n))^n

And if NPV comes out to 0, he goes  like “ kewl this projects gonna be a go.” And if NPV comes out to greater than 0, which it probably does given that market power his firm is has, he probably says, “monopoly power is kewl.” But, lets ignore the monopoly thing for now.

If, t goes to zero, then surely NPV would go above 0, indicating the project returns more than what the cost of capital requires. But only if rates of return (1+r) remain the same. And they might not. They may adjust up. Maybe the pre-tax rate of return will adjust to the post rate of return once taxes are cut, but that might take a very long time.

The point here conservative sorts of people is that there are income effects and there are substitution effects.If I’m investor guy, I might say, “kewl, I’m getting a tax cut, on margin those investments look better, so I think I’ll invest more.”  But, I might say, “kewl I’m getting a tax cut, that means I’ll have more lifetime income. I think I consume more now.”

Lets say were making cocanuts and we have a simple Cobb-Douglas production function like k^a. And on margin each extra coconut produces ak^(a-1).  Coconuts are used to make other coconuts. So we an after tax return like:

r* = (1-t)ak^a-1

And lets say a is .5, and k = 100, and t = 25%. And with these numbers the before tax return is like 5% and the after tax return is like 3.75%. And master of the universe guy says, “Man eliminate those corporate taxes and watch an investment boom as the rate of interest drops to 3.75%.” And I’m sayin’, “How in the fuck do you know it will drop to 3.75%. Maybe, real rich guy or whatever, will consume more now, because he knows his income in the future will be greater, and it won’t drop at at all or rises, or maybe it drops just some, but it’s really nothing to crow about.”

But, maybe investor guy, just takes that extra cash and puts into very safe investments ie cash and high grade bonds. And conservative sort of person might say, “So what, it’s saving and investment isn’t it?” And I say, “well maybe thats like saying that taco ‘salad’ you ate, with it’s three pounds of beef, is a ‘salad’. Sure the risk free rate will drop, but it may not be enough to clear the market, particularly if there is a higher risk premium.”

Anyway,

https://www.bloomberg.com/view/articles/2017-11-17/yes-a-corporate-tax-cut-would-increase-investment

Quote

A common criticism of the current Republican tax plans is that they will not boost private investment. While I have major reservations about these plans as a whole, this particular objection is oversold. The most likely result is that lower corporate tax rates will lead to more investment projects and thus more aggregate economic activity.

 

Quote

The evidence on investment behavior is fairly clear. When companies have more “free cash” at hand, they tend to invest more, and this effect is distinct from any effect of the tax cut on expected rates of return. So, in other words, when critics call the corporate rate cut a “giveaway” to business, that is precisely the mechanism that tends to boost investment.

Okay, but, it’s not particularly surprising to me that if companies have greater cash flows they tend to invest more. If I were to collect a whole bunch of microeconomic evidence on firm behavior, it wouldn’t surprise me one iota that firms with higher cash flows invest more. Like duh. By definition, assuming rates of interest stay about the same, greater cash flows makes NPV rise.  And I get your trying to say extra cash flows will lead to greater investment, even if the cost of capital changes, but just doing a quick perusual of the paper you cited, it seems it says just about nothing how cash flows change and how rates of interest change after a corporate tax cut. And from what I know, it’s unlikely there is such a paper. The fact of the matter is that since there have been so few corporate tax rate changes, in the US, we simply don’t have enough variation to get a real good handle on this stuff.

Accordingly, we are left a lot with thinking about alternative models and looking at broad aggregates. Once again, conservative sorts of people, real per capita gdp growth was about 2.2 percent between 1870-1912. Between, 1947 – 1997, arguably during the era of “big government” and corporate taxes, it averaged about 2.2 percent. And this would suggest to me models that assume big substitution effects are kind of shady. Or maybe simplistic loanable funds theory is kinda shady and there is something to liquidity preference theory, which perhaps I will get into conservative sorts of people (well I kind of did).

And of course conservative sorts of people, these corporate tax cuts can’t just be viewed under a ceteris paribus condition, cause it’s not likely “all else will be equal.” Take the Clownback, oops I mean’t Brownback, “Boom”. I’d expect the Brownback “Boom” to have little impact. But, it turns out, even to my surprise, that it may have in fact damaged Kansas’ economy. And the culprit is as follows, I think: In order to make the tax cuts operational, Kansas had to cut it’s budget, and leading to a drop aggregate demand. And interest rates simply could not adjust fast enough to offset the drop. There is that simplistic loanable funds thingy again.

Quote

A related worry is that companies will take their cash windfalls and simply return them to investors in the form of dividends and cash buybacks. First, the evidence doesn’t support this fear. When all variables are measured properly, it seems major companies are paying out to shareholders about 22 percent of their net income. It’s therefore unlikely that new profit, as might follow from lower corporate tax rates, will simply be drained out of the corporation.

Hmm, I'm not too sure about this. If you’re saying, that corporate payouts are fairly stable, with respect to net income, wouldn’t that mean payouts would rise after a corporate tax cuts? If there were large up front substitution effects, wouldn’t you expect there to be decline in the percentage of payouts? So you know, I’m not too sure about this. Just sayin.

Quote

More generally, sending money back to investors doesn’t have to mean no new investment. What if those investors take the money and put it in a venture capital fund or invest it in some other manner? The whole point of capital markets is to recycle resources into the most profitable new opportunities, and that may or may not involve the companies that initially earned those profits. In some cases, investors might feel that not all of the past winners are going to be the future winners.

Well sure an investor who makes money off one investment might turn around and take those funds and put into something else. But, this doesn’t address the question of what happens to the path of interest rates after corporate tax cuts. Because the same investor might go out and buy more MAGA caps because he has greater expected future income. So, were left with the issue of income effects and substitution effects, if were just working in a simple loanable funds model. I mean I’d hope corporate finance departments aren’t just pulling stuff out of their ass and are looking at capital cost, when they make decisions. But, maybe they are. Who knows.

Quote

The first and most general rejoinder is simply that asking business people is not our best or most reliable source of information about policies. For instance, business people often believe, and will testify accordingly, that increases in the minimum wage will boost unemployment significantly. There is an extensive debate in the economics profession about this question, but the testimony of business people is hardly taken to be decisive, even though they are the ones doing the hiring. 

And this I broadly agree with. I’m extremely skeptical of taking business people’s advice on policy. I’ve heard too many gaffes, screw ups, and shady comments from business people to take their opining to the bank. Like say Carly Fiorina running around 2012 or whatever saying, “that everyone agrees that our fiscal defecit is a big problem right now.”, when in fact a lot of smart people would disagree. Or say Jamie Dimon whining about equity capital requirements. Or Dimon, again, running around talking about a skills gap, when really that wasn’t the main issue, just a few years back. And of course business peoples opinions about the effect of minimum wage is usually worthless. Sorry business people, even if you’re a master of the universe type, I prefer models and empirical evidence as being more  reliable guides on what to do.

Quote

More importantly, let’s take the extreme scenario where companies simply take all of the proceeds from the tax rate cut and put them in the bank, never increasing their own investments as a result. Well, the banks now have more funds to lend out, and so investment still is likely to go up, even if this happens somewhere far and wide from the original corporation earning the new profits. 

Okay, given your fondness for RBC models, I get why you think this way. Under those models ie Robinson Caruso economies, a coconut saved today, leads to more coconuts tomorrow. But, in the monetary economy we live in, things are not so simple. If the extra funds are used soley to buy safe asset classes, it can drop the safe rate of return down, making liquidity trap situations more likely. It can also cause risk premia spreads to increase. Sorry there buddy, but a simple act of savings doesn't always translate into an act of investment.

Quote

Another scenario is that the new corporate profits are placed in Treasury securities. Even then, that would lower borrowing rates for the U.S. government, freeing up money for government programs or at least limiting the degree of painful austerity that eventually will be required.

Yeah, but when the rate of return on safe assets become too low, then your likely to be nearer a "safety trap" and that's a big reason why monetary policy has had such a difficult time as of late. And when the economic is likely to be in safety trap, then guess what? There is likely to be less investment. Again, where you screw up, is by assuming that a coconut saved today leads to more coconuts being produced tomorrow. Its easy to make this error when you assume that the economy is in a continual state of market clearing.

And I'd say many a conservative error has been made by assuming the continuous market clearing assumption. As Keynes might say, "It's an example of how starting with a mistake a remorseless  logician can end up in bedlam."

Quote

Just to be clear, I think the currently circulating versions of the tax plan are unwise. They increase the deficit too much, don’t have the right kind of distributional consequences to prove stable, and they might eliminate the Obamacare mandate without a planned stabilizing replacement. Those and other more technical reasons are enough to bring at least parts of these proposed laws back to the drawing board.

Yes, the Republicans tax plan pretty much stinks.
 

[Altherion]

10 hours ago, Nasty LongRider said:

Breibart?  hahahhahahhahhhaa  thought you were above all the 'propaganda'?  

The only way to truly be above the all the propaganda is not to pay any attention to it at all. The less extreme alternative is to balance one's intake -- I read the Washington Post and NYT, but also a variety of other sources (including Breitbart).

[Mexal]

11 hours ago, Altherion said:

Is Jones in fact a good candidate? The only place I've read anything at all about him is on Breitbart (they have a couple of articles about how he supported full-term abortion and how he thinks Trump's proposed wall is too expensive). If the mainstream media is not talking about a candidate, the candidate is usually either not very good or rather boring.

That's just not true (he must be a bad candidate because the media doesn't talk about him). The mainstream media doesn't talk about positive stories these days. It's all negative because negative stories gets clicks. They are doing the same thing to Jones now as they did to Clinton, just without Clinton emails. That means, any message he has is drowned out by every little story about Moore and his quest for teenagers. It's all Moore all the time, exactly what happened with Trump. We'll see what happens as we are already seeing justification to vote for Moore because of Supreme Court Justices, tax cut, repeal and replace Obamacare and the media is doing a fucking terrible job of even showing Doug Jones for 30 seconds.

[mormont]

1 hour ago, Altherion said:

The only way to truly be above the all the propaganda is not to pay any attention to it at all. The less extreme alternative is to balance one's intake -- I read the Washington Post and NYT, but also a variety of other sources (including Breitbart).

I, too, like to balance my intake of healthy food by eating hallucinogenic mushrooms.

[Ormond]

17 hours ago, Nasty LongRider said:

Forbes isn't impressed with 'tax reform.'

 

This seems to be a good analysis. However, it is wrong of you to say "Forbes" isn't impressed. This is not an editorial for that magazine or website, but is listed as a column by a "contributor" named Stan Collender, and it is stated at the top of the column:

Opinions expressed by Forbes Contributors are their own.

You can't attribute the opinions of individual columnists to entire news organizations. Most reputable magazines, websites, and newspapers will run columns by contributors who have very different opinions from each other. Only pieces which are specifically labeled as "editorials" should be attributed to the name of the publication.

 

[S John]

1 hour ago, Mexal said:

That's just not true (he must be a bad candidate because the media doesn't talk about him). The mainstream media doesn't talk about positive stories these days. It's all negative because negative stories gets clicks. They are doing the same thing to Jones now as they did to Clinton, just without Clinton emails. That means, any message he has is drowned out by every little story about Moore and his quest for teenagers. It's all Moore all the time, exactly what happened with Trump. We'll see what happens as we are already seeing justification to vote for Moore because of Supreme Court Justices, tax cut, repeal and replace Obamacare and the media is doing a fucking terrible job of even showing Doug Jones for 30 seconds.

This post made me realize that I actually do not know what Doug Jones looks like since I have mostly read about this Alabama fiasco and the only visual clip related to any of it that I can recall is the one where Moore is on stage waving a gun around.  

[Mexal]

21 minutes ago, S John said:

This post made me realize that I actually do not know what Doug Jones looks like since I have mostly read about this Alabama fiasco and the only visual clip related to any of it that I can recall is the one where Moore is on stage waving a gun around.  

Yea, the media has done an astounding of job of ignoring Doug Jones, his background, his message, his campaign. All the focus has been on Moore, his press conferences, his love of teenagers. It's over-saturation to the extreme.

[Fragile Bird]

With the traditional Thanksgiving pardoning-of-the-turkey about to happen, there has been a lot of speculation about whether or not Trump will pardon more than just turkeys. Or, turkeys of another kind, the human kind. Or even people who took the position of 'will work for Turkey'.

This made me wonder about something else. Trump always seems to do the unexpected (I have stopped saying I didn't think I could be surprised anymore, because somehow he still manages to surprise me) and if there's anything he seems to be obsessed with it's undoing everything Obama did.

Can he reverse pardons Obama handed out? I assume the answer is no, but...

[OldGimletEye]

23 hours ago, Fragile Bird said:

With the traditional Thanksgiving pardoning-of-the-turkey about to happen, there has been a lot of speculation about whether or not Trump will pardon more than just turkeys. Or, turkeys of another kind, the human kind. Or even people who took the position of 'will work for Turkey'.

This made me wonder about something else. Trump always seems to do the unexpected (I have stopped saying I didn't think I could be surprised anymore, because somehow he still manages to surprise me) and if there's anything he seems to be obsessed with it's undoing everything Obama did.

Can he reverse pardons Obama handed out? I assume the answer is no, but...

Maybe he pardons the biggest  turkey in the whitehouse. Himself.

[Maithanet]

11 minutes ago, Fragile Bird said:

Can he reverse pardons Obama handed out? I assume the answer is no, but...

He cannot.  Nor can any of his pardons be reversed by later Presidents once he leaves office. 

[Zorral]

The mainstream media is all about Clinton (Bill) and Franken.

Franken is the top caption of every paper, etc. from The Daily News to Huff Po, and at the top of NPR's news breaks every half hour or hour.

In the meantime, whatever we may think of Clinton's (Bill) behaviors, there is this:

https://www.nytimes.com/2017/11/19/opinion/bill-clinton-lawyer.html?

Like everything else he and Hillary have been accused of over the years, the Starr investigation which cost millions and went on for four years, and involved testimonies, trials, everything -- he was exonerated of all the rape accusations -- including that Juanita Broaddrick flat out said under oath, three times, that he did not rape her.  So we aren't to believe her now?  Why?

So? what?  What people have somehow, inexplicably forgotten already, is that the official, publicly declare Republican party politics of the time was to take out Clinton from the Oval by any an all means possible.  They LIED, and LIED, and LIED and LIED some more about EVERYTHING, including the Clintons, making shyte up as they pleased, with Fox Noose leading the howling mobs.  People forget this -- and they want to reopen the Starr investigation, yet again???????  Even the NY Times and The Atlantic Monthly saying such bs?

[Fragile Bird]

NVM

[Kalbear]

38 minutes ago, Zorral said:

The mainstream media is all about Clinton (Bill) and Franken.

Franken is the top caption of every paper, etc. from The Daily News to Huff Po, and at the top of NPR's news breaks every half hour or hour.

In the meantime, whatever we may think of Clinton's (Bill) behaviors, there is this:

https://www.nytimes.com/2017/11/19/opinion/bill-clinton-lawyer.html?

Like everything else he and Hillary have been accused of over the years, the Starr investigation which cost millions and went on for four years, and involved testimonies, trials, everything -- he was exonerated of all the rape accusations -- including that Juanita Broaddrick flat out said under oath, three times, that he did not rape her.  So we aren't to believe her now?  Why?

Ignore those cases entirely, if you like. 

Clinton probably should have resigned because he lied under oath in order to protect his sexual harassment of an underling. 

[DMC]

This is from Friday, but I don't believe it's been posted here.  The most recent update of the Cook Report's ratings moves six of seven seats closer to the Dems (a Minnesota Dem seat moved to toss up due to the most electable GOP candidate having the primary field cleared for him and the Dem incumbent facing a primary challenge).

Looking at their ratings, 212 seats are now at tossup or better for Dems.  Put another way, the Dems need to win 23 of 37 GOP seats rated as tossup (17) or lean (20) to retake the House - as long as they hold their own seats (4 tossup, 5 Dem leans) and win the open FL-27 GOP seat, which is currently rated as Dem lean.  That seems imminently doable if the climate sustains and the fundraising keeps on coming.  

One interesting note from Wasserman's write-up:

Quote

Democrats are increasingly confident Speaker Paul Ryan will turn into a more effective bogeyman than either Trump or Nancy Pelosi, because he's disliked not only by Democrats but by much of Trump's base — a constituency GOP members badly need to motivate and turn out to win their races.