December 4, 2018

Posted by orrinj at 6:45 PM


My Prozac Economics Lecture: Showing Students What They'd Earn if Their FICA Taxes Were Put in the S&P (T. Norman Van Cott , 11/26/18, FEE)

What if students, instead of being legally obligated to pay Social Security taxes, had the option of putting and holding those funds in the stock market?

The discussion is organized around the following question: What if students, instead of being legally obligated to pay Social Security taxes, had the option of putting and holding those funds in the stock market?

To this end, it should be noted that the average annual return in the stock market since 1928, as measured by the S&P 500 index, is 9.8 percent (not that the return every year is 9.8 percent, mind you--just that over the last 90 years, annual returns average out to 9.8 percent). Then pick an annual starting salary students might earn. Say it's $35,000, and assume it rises by 3 percent a year. Under this latter assumption, the salary never rises above the current $127,400 maximum taxable annual income.

Assume the person intends to work 41 years. Then at the end of the first year of employment, his/her $4,340 Social Security tax for the year ($35,000 x 12.4 percent) is invested in an S&P 500 index fund and held for the following 40 years at the 9.8 percent average return. What will it equal at the end of 40 years? Believe it or not, $182,634. That's right; just the first year's tax will grow to $182,634. The second year's tax ($4,470), held for 39 years, will grow to $171,316, and so on.

Making these calculations by hand is tedious, to say the least. For example, the growth in the first year's tax is the answer to $4,340 x (1.098)40. The second year's tax follows from $4,470 x (1.098)39 and so on. Don't despair. Websites like this enable you to make the calculations quite easily by plugging in the numbers.

Thus, if the student never saved another penny in his/her whole life, just the first two years of Social Security taxes invested under the above conditions would grow to $353,950, more than one-third of a million dollars, when they retired 41 years after graduation.

If the student's Social Security taxes for the first 10 years of working life were invested at the S&P 500's 9.8 percent return, he/she would have a $1,391,844 portfolio at the end of 41 years; the first 20 years of taxes would grow to $2,126,777; the first 30 years of taxes grows to $2,514,569; and for the entire 40 years, it's $2,718,713.

Posted by orrinj at 6:42 PM


Japan Needs to Change its Attitude to Foreigners (Editorial Board, December 4, 2018, Bloomberg)

A bill approved by the lower house of the Diet would open Japan's doors to two types of foreign workers. Lower-skilled laborers in 14 sectors would for the first time be able to apply for five-year visas after demonstrating a good command of Japanese. And highly skilled workers would be eligible for work visas that can be renewed indefinitely, could bring their families with them, and could apply for permanent residency after 10 years. The government aims to push the bill through the upper house before the current session ends.

It's a good plan, as far as it goes. There's no question Japan needs the newcomers. At just above 2 percent, the country's unemployment rate is the lowest it's been since the early 1990s; labor shortages are acute in several industries, including construction and nursing care. The longer-term picture is even more worrying. Recent forecasts predict that the population will shrink to two-thirds its current size by 2065. By then, one in four Japanese will be over age 75.

Prime Minister Shinzo Abe's government has made progress in getting more women and senior citizens back into the workforce, and is working to nudge up the fertility rate. It's also allowed in more foreigners than many realize, partly through a technical internship program meant to impart skills that workers can take back to their home countries. The new bill is an acknowledgment that such measures won't be nearly enough to stop Japan's working-age population from imploding. There's widespread opposition to mass immigration, so the admission is brave.

The good thing about such a population collapse will be that such nations can offer housing in order to lure the young.

Posted by orrinj at 6:37 PM


Everyone loves Paul Volcker. Everyone is wrong (Jeff Spross, December 4, 2018, The Week)

Yes, Volcker successfully tamed inflation. The question is whether there was a better way to do it than setting off a massive recession. At the time, America was dealing with oil shocks, a broken consumer price index, the fallout from funding the Vietnam War, the end of the Bretton Woods system, and a new political enthusiasm for massive tax cuts for the wealthy. Any combination of these factors could have been driving the price spiral.

But Volcker's solution destroyed the American working class for a generation. Unemployment peaked as high or higher than in the Great Recession. Unions, already in decline, went into free fall. Volcker explicitly viewed breaking the power of organized labor as a critical piece of his anti-inflation crusade. "The standard of living of the average American has to decline," Volcker declared shortly after becoming Fed Chair. Trace the modern trends in wage stagnation and inequality, and they lead back to Volcker's recession.

There's also the lesson Volcker taught the Fed. In many ways, the institutional culture of the Fed remains fixated on the moral narrative of the 1970s inflation and guided by Volcker's tough-love disciple. Fed Chair Alan Greenspan, Volcker's successor, argued that keeping workers "traumatized" was key to restraining prices.

In free market nations, inflation is just a function of wage pressure.

Posted by orrinj at 6:34 PM


Abortion rates continue downward trend, hitting lowest numbers since Roe v. Wade was decided: CDC (CHEYENNE HASLETT Nov 21, 2018, ABC News)

From 2006 until 2015, the total number of reported abortions decreased by 24 percent -- from more than 840,000 in 2006 to about 638,000 in 2015, the report found.

The CDC also focused on two other measures that reached their lowest level over the same time period: the total number of abortions in the population, or the abortion rate, which decreased 26 percent, and the proportion of all pregnancies that end in abortion rather than birth, or the abortion ratio, which decreased 19 percent.

Posted by orrinj at 6:21 PM


Subpoenas issued to Trump Organization in emoluments lawsuit (Jan Wolfe, 12/04/18, Reuters)

Among other documents, the attorneys general are seeking revenue statements and tax returns from the Trump Organization entities.

Ignoring the subpoenas would result in a finding of contempt of court, said George Brown, a professor at Boston College Law School.

The development "brings us closer to judicially enforced discovery about the Trump empire," said Brown. "It will probably tell us a lot we don't know because nobody is going to hide that stuff in the face of a subpoena."

Posted by orrinj at 5:17 PM


Stock Market Drops 700+ Points As Trump Declares Himself 'Tariff Man' (BEN SHAPIRO, 12/04/18, Daily Wire)

Posted by orrinj at 5:16 PM


Posted by orrinj at 5:09 PM


Mueller Is Laying Siege to the Trump Presidency (Mikhaila Fogel & Benjamin Wittes, 12/0/18, The Atlantic)

No, Mueller and his forces are not a Mongol horde, but the Trump White House is very much under siege.

Mueller's army isn't the only force encircling Trump's fortress, but it is the largest and most active force, and it actually has several distinct encampments. One contingent of Mueller's forces is charged with investigating efforts by the Russian government to interfere with the 2016 election. In this capacity, the special counsel's office has indicted individuals associated with the Internet Research Agency, a Russian troll farm that has spread disinformation and propaganda on social media. His office also indicted 13 members of the Russian military intelligence organization, the GRU, in connection with deliberately hacking into the Democratic National Committee server and passing the fruits of that hack to WikiLeaks "to interfere with the 2016 U.S. presidential election."

The immediate threat this particular force poses to the castle right now involves its evident interest in Roger Stone and the group of people around him. The GRU indictment does not name Stone, but he has publicly admitted that he is the person referred to in the indictment "who was in regular contact with senior members of the presidential campaign of Donald J. Trump" and who corresponded with a fake hacktivist persona used by the Russians.

This front of the siege has become hot in recent months and will likely remain an area of intense activity over the coming weeks. Recently, Jerome Corsi publicly shared a draft statement of offense in connection with a plea agreement offered him by the special counsel's office. The document details contact between Corsi and an individual reported to be Stone regarding WikiLeaks' planned release of the hacked material. Moreover, in the coming weeks, the U.S. Court of Appeals for the D.C. Circuit is expected to rule on whether Andrew Miller, another Stone associate, is obligated to testify before Mueller's grand jury. Miller had appealed a contempt citation, contending that Mueller's appointment was unconstitutional. Stone and Corsi both seem to expect indictments.

This front is likely to remain active and to generate big news events. But note as well if and when either man or both face charges, that will not be the sky falling for Trump any more than last week's Cohen plea was. It will be just another set of stones blasted out of the city walls.

Last week's events revealed another force surrounding the castle, also under Mueller's command: the investigation of Trump's efforts to do financial business in Russia. The president, while insisting there was "NO Collusion with Russia," admitted that he "lightly looked" into building a tower in Moscow months into the 2016 campaign. Trebuchets from the Cohen front sounded into Friday evening, when Cohen's lawyers filed a sentencing memorandum as a follow-up to the guilty plea. In the memo, Cohen's legal team said that Cohen "remained in close and regular contact with White House-based staff and legal counsel to Client-1," another euphemism for Trump. It's unclear to what extent this investigation is one and the same with the main Mueller collusion force, but it is evidently an active matter, too.

Mueller's forces also include a major encampment focused on obstruction of justice. This force has so far not done anything the public can see, but it may be getting ready to launch some kind of report against the castle. And this report, whenever it materializes, may prove devastating. But note that the day such a report is completed will also not be the "big one"--the cataclysmic event that causes the house of cards to collapse. After all, any report would likely have to undergo a lengthy approval process, either from within the Justice Department or by the courts, or both. It might have to be approved by Matthew Whitaker, the acting attorney general, before being released. It may have significant classified components. Even if the findings in this report are of bombshell proportions, given that it is unlikely Mueller will reject Office of Legal Counsel guidelines against the indictment of a sitting president, the damage that bombshell will inflict will ultimately be determined by Congress, and its detonation would likely be substantially delayed.

Posted by orrinj at 5:04 PM


Republicans Finally Have an Election Fraud Scandal (Pema Levy, December 4, 2018, Mother Jones)

[T]here is one place where there is a strong possibility of fraud in the 2018 midterms, and so far, none of these Republicans have mentioned it. In North Carolina's 9th Congressional District, the state election board has refused to certify the results of the election as it investigates the possibility that fraud helped Republican Mark Harris defeat Democrat Dan McCready by 905 votes out of more than 280,000 cast.

Thus far, there is evidence of tampering with absentee ballots in Bladen County, a large rural county in the southeast corner of the state. One woman recounted in a sworn affidavit that a woman had collected her absentee ballot before it was sealed in its envelope; another voter also recalled in an affidavit a woman picking up her ballot. In North Carolina, it is illegal for anyone but the voter to turn in his or her absentee ballot. Some affidavits fingered a local Republican operator, Leslie McCrae Dowless, Jr., who worked as on behalf of the Harris campaign, according to the Charlotte Observer. The Washington Post reported Monday that according to one sworn affidavit from a former friend of Dowless, "he oversaw a crew of workers who collected absentee ballots from voters and updated the Harris campaign on the numbers."

Posted by orrinj at 4:04 AM


Majority of Voters Back National Health Plan -- Unless It's Called 'Single Payer' (YUSRA MURAD, November 29, 2018, Morning Consult)

As they deliberate messaging tactics, a new Morning Consult/Politico survey suggests that while describing the controversial health policy as "Medicare for all" is a crowd pleaser, Democrats should avoid calling it a "single-payer" plan.

The survey of 1,957 registered voters asked respondents about their support for a system where all Americans would get their health insurance from the government, labeled as Medicare for all, single payer, universal health care or socialized medicine. While not truly synonymous, the terms are often used interchangeably to describe a national health plan that guarantees coverage for each resident.

According to the messaging test in the survey, "Medicare for all" has the highest favorability, with 58 percent of registered voters saying they would back such a plan.

Posted by orrinj at 4:00 AM


It's Actually Not a "Good Time" for a Government Shutdown (JIM NEWELL, DEC 03, 2018, Slate)

The Democratic takeover of the House makes it more pressing for Trump that he get the wall money he wants right now--and less likely that he gets it. His chances of constructing the wall of his dreams will be shot once Democrats take control of the chamber. But if there's a protracted government shutdown that carries through the holidays, it will be resolved by that new House Democratic majority anyway--and after the already unpopular president has taken a hit by shutting down the government over the unpopular issue of a border wall.

In other words, congressional Republicans will be spending these next several weeks finding the president an out.

Posted by orrinj at 3:59 AM


The Battle over Conservative Masculinity, from Bush I to Trump (DAVID FRENCH, December 3, 2018, National Review)

After Bush's death, this almost 40-year-old clip of Bush on CBS's Face the Nation rocketed around the Internet. In it, Bush presents the best answer I've ever heard to the charge that he was too nice. [...]

Here was his answer, and it's brilliant:

I equate toughness with moral fiber, with character, with principle, with demonstrated leadership in tough jobs where you emerge not bullying somebody, but with the respect of the people you led. That's toughness. That's fiber. That's character. I have got it. And if I happen to be decent in the process, that should not be a liability.

As we raise our sons, who is the better model? Is it the "wimp" who enlisted in the Navy at age 18, became one of the service's youngest aviators, was shot down over the Pacific and rescued, went on to a lifetime of public service (including the presidency), led the nation in war, and managed the fall of the Soviet Union with calmness, ending a great-power conflict without triggering a cataclysm? Is it the beloved husband (of one wife for more than 70 years) and father -- a man of real faith?

Or is it the "tough guy" who ducked his war, paid off porn stars, gloried in his adultery, married three women, built a business empire in part through nepotism and "suspect" tax schemes, bankrupted casinos, and now adopts his aggressive posture mainly through public insults and angry tweets? This isn't the masculinity that we should respect. And it's hardly "manly" to defend behavior that is barely removed from the posturing and strutting of the schoolyard bully.

Posted by orrinj at 3:58 AM


Senior aides push back on Trump's claim that China agreed to cut auto tariffs (JIM PUZZANGHERA, DEC 03, 2018, LA Times)

[T]rump's top economic advisors made clear Monday that no agreement to reduce and remove the tariffs yet existed, despite Trump's boast.

"We don't yet have a specific agreement on that, but I will just tell you ... we expect those tariffs to go to zero," Larry Kudlow, Trump's top economic advisor, told reporters in a conference call from the White House. [...]

Treasury Secretary Steven T. Mnuchin gave mixed messages, appearing to confirm the auto tariff cut but then backing off.

"There is an immediate focus on reducing auto tariffs," Mnuchin told reporters. "There's a lot of work to be done over the next 90 days."

White House trade advisor Peter Navarro also wouldn't confirm China was lifting auto tariffs. He told NPR that the issue "certainly came up in discussions" between Trump and Xi.

Posted by orrinj at 3:56 AM


Why Michael Cohen, Trump's Fixer, Confessed to It All (Benjamin Weiser, Dec. 3, 2018, NY Times)

Of all of President Trump's former associates who have come under scrutiny in the special counsel's Russia investigation, his former personal lawyer, Michael D. Cohen, has undertaken perhaps the most surprising and risky legal strategy.

Mr. Cohen has twice pleaded guilty in federal court in Manhattan to a litany of crimes, and he has volunteered information to the special counsel and other agencies investigating Mr. Trump and his inner circle. He did all this without first obtaining a traditional, ironclad deal under which the government would commit to seeking leniency on Mr. Cohen's behalf when he is sentenced on Dec. 12.

Mr. Cohen has concluded that his life has been utterly destroyed by his relationship with Mr. Trump and his own actions, and to begin anew he needed to speed up the legal process by quickly confessing his crimes and serving any sentence he receives, according to his friends and associates, and analysis of documents in the case.

He has told friends that he is mystified that he is taking the fall for actions he carried out on behalf of Mr. Trump, who remains unscathed. Still, he is resigned to accepting responsibility. [...]

Surprisingly, Mr. Cohen entered his plea without a traditional cooperation deal in which the Southern District would write to the judge and seek leniency when he was finally sentenced.

Cooperating witnesses are often not sentenced until investigations are completed, months or even years later. Mr. Cohen was concerned that signing a deal would delay his sentencing, his lawyers explained in their filing on Friday.

"He respectfully declined to pursue conventional cooperation so that his sentencing proceeding would go forward as scheduled," wrote the lawyers, Guy Petrillo and Amy Lester, both former Southern District prosecutors.