Monday, November 28, 2016

Donald Trump Is The 45th President: Now What?

Lorenzo Charles over
Phi Slamma Jama
David Over Goliath
In perhaps the greatest upset victory against 'conventional wisdom' since NC State upset the Phi Slamma Jama of Houston in 1983, or maybe even dating back to Little David knocking out Goliath in ancient days, Donald Trump is going to be the 45th President of the United States of America starting at noon, January 20, 2017.

You may have heard the old saying commonly attributed to Mahatma Gandhi (but never fully proven): “First they ignore you, then they laugh at you, then they fight you, then you win”

Critics of Donald Trump never got past the 'laughing at' stage. Perhaps that is why they missed what was actually going on beneath the surface which was clearly stated in every poll where 70%+ of the people in America did not think America was on the 'right track' even though President Obama enjoyed a personal approval rating of 53%.

'Can Anyone Here Play This Game?'
There is a big difference between being personally 'liked' and affable and having people 'approve' of your policies and leadership skills. Look at Casey Stengel, the long-time lovable loser from the NY Mets. He was personally 'loved' by New York Met and sports fans in general. But his Mets were truly amazingly horrible during his 4-year coaching tenure and won only 30% of their games under his leadership.

Many people feel as though President Obama only 'won' on maybe 10% of his initiatives both domestic and foreign as Chief Executive of our nation. Some even less.

People who voted for President-Elect Trump want a significant change from the direction and policies of President Barack Obama from the past 8 years.

They are about to get it.

'How so?' you may ask?

Here's a timeline of sorts that you can use to monitor the progress of the Trump Administration that will start at 12:01 pm, Friday, January 20, 2017:

  1. Probably that afternoon, President Trump will sign executive orders unwinding and reversing every executive order or memoranda signed by President Obama over the last 8 years, close to 400 in total.
  2. While he is at it, President Trump may choose to go back and unwind any onerous executive order dating back to George Washington if he wants to. Any executive order can be unwound by any future President thereby pointing out the futility of going it alone as President without leading the US Congress and US Senate into some sort of legislative compromise that would stand the test of time.
  3. Each of his Cabinet Secretaries and agency appointees will be charged to go through their department's budgets line-by-line to see what can be deleted, reduced, or reformed in terms of spending priorities. Due to their business backgrounds and abilities to see through worthless or out-dated, ineffective programs, expect to see a plethora of wasteful spending cut out of each agency's budgets like so much fat out of a holiday goose or cured ham.
  4. As the executive orders are reversed, the Federal Register will become a place of heightened activity as all the regulations promulgated (love that word) over the Obama years to support and explain the intent and scope of each Obama executive order has to be reviewed and essentially unwound and deleted as well. This could take 6 months to a year. As the executive orders are eliminated, there is no need for the expanded regulations to stay on the books but a review and comment period has to be allowed for the public to be able to comment on it nonetheless.
  5. While this is going on, a review and examination of every page of the over 860,000 new regulations promulgated by the Obama White House since 2009 will be made by the new Administration under President Trump to see which of those can be tossed into the trash bin of history. Since those are mostly tied to any legislation passed by Congress and signed into law by President Obama, primarily Obamacare, they will have to wait to be reversed until Congress makes changes to the underlying passed legislation....which brings us to:
  6. Congressional 'Repeal and Replacement of the ACA', aka Obamacare.

    Nothing may have signified a higher sense of disgust with the Obama years as the explosion of cost of health care premiums after the ACA went into law.

    Future historians will note that millions of folks, us included, received notices of much higher health care premiums for 2017 in mid-October ranging from 25% to over 100% across the entire nation.

    Our premiums leaped another 25% on top of the 30% and 50% increases we received over the past several years. We only had the courage to open up our notice over the Thanksgiving holidays to finally get the 'bad news'.

    Each of those people, most of whom did not qualify for any federal subsidy to help pay for their health insurance, showed up at Trump rallies by the pickup and van-ful. They voted with their hands and feet against Obamacare and, by extension, against Hillary Clinton who vowed to not only continue Obamacare but expand it.

    Congress will begin its process of amending the ACA in early February, 2017 which will necessitate the elimination of thousands of pages of promulgated regulations from the federal Register over the coming years.

    What will be left behind will include coverage of pre-existing conditions and keeping people on family plans up to age 26, two of the most popular features of the ACA. But it will be significantly scaled-back and replaced most likely with some form of a 'Medicaid-Plus' program that provides catastrophic coverage for people now eligible for the ACA plus some prescription drug benefits and wellness coverage care and then people can decide for themselves what other coverage they would like to buy on the open market or set up health savings accounts to pay for other health coverage during the year.
  7. Once the heavy wet blanket of federal regulations imposed on the economy under President Obama starts to be peeled back, economic growth should start to grow organically on its own.

    The American economy depends on 'confidence' far more than it does on tax or fiscal policy alone. Expect to see an economic policy looking more like that of Calvin Coolidge where the combination of slashed federal spending, lower taxes and less regulation led to an explosion of the economy in 1924 instead of the sluggish, if that, 1.5% annual growth of the economy under President Obama for the past 8 years.

    From the 300,000 foot viewpoint above the US economy, we 'only' need about 0.5% more economic growth per year than what is currently projected by CBO to balance the budget in the next 4-5 years sans ANY other tax or fiscal policy change.

    That would be a 'good thing' since balancing the budget is the first step towards arresting the exorbitant growth in the federal debt which is important to do before interest rates return to their 'normal' levels of 5% which is now more likely to happen since business confidence will return and the competition for scarce capital will begin in earnest once again and drive interest rates up from near-zero levels today.
  8. On top of that, if President Trump and Congress succeed in holding federal spending growth over the next 4-5 years to below 3% overall, THAT ALONE (again) would balance the federal budget sans any other tax policy change or additional rates of economic growth.
  9. Combine the two, achieving economic growth 0.5% above current CBO projections AND hold federal spending below 3% per year average annual growth, and we may have the elixir that produces the right combination to get us out of this economic and fiscal mess we have been mired in for the past 8 years and produce the sort of economy where everyone who wants to can participate and can find a job and provide a better future for themselves and their families.
We may be due for a slight recession early in the Trump Administration simply because we have not had negative economic growth for 2 consecutive quarters since the end of the Great Recession of 2008-2010, even though most of the time has not felt like an economic boom resembling any previous economic recovery.

Republicans may over-reach (again) as most political parties do once in full control of any government, federal or state, and try to enact an overly aggressive tax cut that will only add to the deficits and debt in the short-run which may be counter-productive to sound fiscal policy right now.

However, if it is done intelligently with an eye towards lowering corporate and individual tax rates while AT THE SAME TIME eliminating most, if not all, of the tax breaks covered under the so-called 'tax expenditure' tables we have referred to many times in previous posts, and they repatriate overseas profits of American corporations of $2.6-$3 trillion, which could yield $400 billion in immediate tax revenues to the US Treasury, the impact on the size of the deficits and national debt could be ameliorated somewhat while at the same time, produce a tax system that is more fair and consistent across-the-board.

You could see all this happen in the first 100 Days of the Trump Administration as some people dream, or by the end of June, 2017 which would be more likely.

Even if it takes a full year, the changes to our economic and fiscal house in America will be like night-and-day from the Obama White House days.

We could all use some robust good economic news nowadays, yes?

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Wednesday, November 16, 2016

What Now?

'I Toldja So, Didn't I?'
Before anyone on the right gets way too comfortable and complacent with the election of President-Elect Donald Trump and starts to think his election gives them the green-light to do whatever they want unimpeded, they need to realize one thing:

The Unaffiliated voters who voted for Donald Trump en masse don't like the Republican Party much more than the Democrat Party!

As liberal filmmaker Michael Moore postulated on October 25 in a letter he wrote and explained in a speech and video, millions of disgruntled, disenchanted and disaffected Americans would go into the ballot booth, pull the curtains and then quietly cast a ballot for Donald J. Trump and give the biggest revolutionary middle-finger to the media elites and the political establishment on both sides of the aisle we may have ever seen in American history.

As it turns out, Mr. Moore was right.

This may be the first time in American history that a true 'Independent' candidate has run for the White House and won. We have been seeing the rise of more and more independent/unaffiliated registered voters in NC for some time now; roughly 1/3 of the people who voted last week were UNAs or unaffiliateds.

Donald Trump somehow was able to do what Teddy Roosevelt couldn't do with his Bull Moose Party in 1912 or Ross Perot did with his 'I'm All Ears!'And 'Giant Flushing Sound!' Party in 1992 and 1996. Granted, both TR and Perot were running as a third candidate in a 3-way race which made it harder but still, Trump did what neither of them could do.

President-Elect Trump figured out how to defeat 16 other GOP candidates on their home court in the gauntlet of never-ending primaries and then beat the Democrat candidate, Hillary Clinton on her home court of Michigan, Wisconsin and Pennsylvania to win the Presidency.

 But he is still way more Independent in his outlook and philosophy than Republican in many ways.

What is so 'amazing' and should be so 'alarming' to the GOP in control of the House and Senate?

These unaffiliated Trump voters want ALL OF THEM, Republicans and Democrats in Congress and the Senate, to do their jobs, balance the budget, pass economic growth policies, fix health care, protect them from terrorists, shut up, stop blaming everyone else...and then go home and shut up again.

The people who elected Trump are NOT in love with the GOP leadership over the past 16 years. If the GOP leadership thinks Republicans can sit back and not do anything for the next 2 years and not work across the aisle with sane and sentient Democrats who want to get things done, these UNAs who supported Trump will turn on them with a vengeance in the mid-term elections in 2018.

The Trump voter is not a voter for 100% ideological purity. The Trump voter has just had it with the status quo of nothing happening that directly has helped them lead better lives with more prosperity and more safety and security over the past 16 years really and they voted for 100% political practicality. As in 'get something done!' Anything! On any issue!

Shutting down the government is not an option. Not compromising with enough Democrats to get 50%+1 (or 60 to get a bill on the floor of the Senate) is not an option. Not balancing the budget or passing comprehensive immigration laws or stopping radical Islamist terrorism dead in its tracks is not an option.

Anything less than bold, principled,practical leadership on the part of the GOP in the House and Senate will lead to a repudiation of both as in 2006.

I went to two of these Trump rallies in Raleigh at Dorton Arena on the State Fairgrounds, one last December 2015 and one on Monday before the election. 10,000 people at each one.

I did not see one single person I knew from any country club, bank, investment bank, GOP High Dollar Ranger Club or with whom I had gone to Carolina or Duke or that I have seen at any other political event in my entire life. Nobody I had ever seen before at hundreds of Republican political and fundraising events over the past 36 years in North Carolina were at either Trump event.

No Mercedes in the parking lot. No Volvos, Range Rovers or Maseratis. No fancy stickers on the rear windows touting their private school or Ivy League affiliation. Lots of NASCAR bumper stickers and flags; hardly any 'Save The Whales' or Greenpeace emblems.

Almost all of the people in attendance at both rallies were blue-collar, middle-class people who want to see massive change in Washington who took time off from their hourly jobs and drove to Raleigh from 60-150 miles away in their pickup trucks and old used Caravans packed to the gills.

One guy from Lee County brought 27 members of his family to see the next President of the United States of America at Dorton Arena. Wife, parents, grandparents, children, grandchildren, cousins, second cousins and third cousins twice-removed. Met them all. 25 of the 27 had already early voted for Donald Trump. The two that hadn't early voted were going to be escorted by their father to vote on Election Day 'or else'! he said.

They want to see their elected leaders in Washington do something big. Like doing their job. Period.

Because that is what this election was all about. It is not about some high-faluting philosophical exposition of Fredrich von Hayek free market principles or Reinhold Niebuhrian ruminations on the nature of man or whether the Laffer Curve works or not.

It is solely about electing people in our democratic republic to go to Washington and do the dirty but necessary work of debating, arguing and then negotiating and compromise to get a majority of the House and Senate to pass a bill that President-Elect Trump will sign and then go on to the next problem to solve.

And President-Elect Trump is a deal maker. Don't ever forget that.

So what does this mean policy-wise going forward into 2017? We will list a few things that we are almost 100% sure will happen from Day 1 over the coming weeks to try to help you dig deeper and expound more on the nuances of most of them, especially pertaining to tax, budget and health care policy.

Barack Obama said on Election Night in 2008 when he was elected President: 'Change is coming!'

Well, it is about to come again. Elections matter. Obviously.

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