Fake Tax Reform

After supposedly chomping on the bit for years to pass meaningful tax reform, Republicans are now set to blow an historic opportunity. Whatever version of the Bill that emerges from the House and Senate Conference Committee (which will be signed by President Trump faster than he can down a Filet o’Fish), will be far less than the Republicans envisioned when they finally captured the White House and both Congressional Chambers in 2016. But from what I have seen of the particulars, the revisions to the tax code will offer a marginal, although temporary, win for low income individuals, a major slap for moderately successful wage earners and home owners, (especially in the high tax Blue States) and a huge victory for the extremely wealthy and certain categories of business owners. While it is certain that the plan will add to the growing deficit, its immediate economic and political impact is hard to predict.
For generations, taxpayers and politicians alike lambasted our overly complex tax code for its myriad of economic distorting loopholes that seemed to produce nothing except employment for legions of accountants and tax lawyers adept at gaming the system. As a result, talk about tax reform has always included proposals to make the system simpler, fairer, and more transparent. But on that front, the Republican proposals fail miserably. Trump and Congress will hail this achievement as being a major victory for the American people. But the true winner will be the swamp that Trump promised to drain.
Unlike Ronald Reagan, who passed tax reform in 1986 by striking a deal with Democrat House Speaker Tip O’Neill, Trump and Congressional Republicans faced no particular need to compromise. If Reagan had the benefits enjoyed by Trump, Ryan and McConnell, his tax cuts would have been paired with significant spending cuts and perhaps a balanced budget. But to get O’Neill (and his whopping 71 seat House majority) to go along, Reagan’s ideals of fiscal prudence and smaller government had to be set aside. But Trump is no Reagan, and today’s Republican Party has about as much commitment to shrinking the size of government as did the Democrats in the 1980s.

This post was published at Euro Pac on Thursday, December 7, 2017.

Obama Humiliated: For The First Time, Congress Votes To Override President’s “Sept 11” Bill Veto

Summary: US Congress, first the Senate and then the House, humiliated the president when it voted on Wednesday to override Obama for the first time in his eight-year tenure, as the House rejected a veto of legislation allowing families of terrorist victims to sue Saudi Arabia. The House easily cleared the two-thirds threshold with a 348-77 vote to push back against the veto. The Senate voted 97-1 in favor of the override earlier in the day, with only Democratic Leader Harry Reid voting to sustain the president’s veto.
‘We can no longer allow those who injure and kill Americans to hide behind legal loopholes denying justice to the victims of terror,’ said House Judiciary Committee Chairman Bob Goodlatte (R-Va.).
The White House immediately slammed lawmakers following the Senate vote.
‘I would venture to say that this is the single most embarrassing thing that the United States Senate has done possibly since 1983,’ press secretary Josh Earnest told reporters aboard Air Force One, an apparent reference to a 95-0 vote to override President Ronald Reagan that year.
The override was widely expected in both chambers, with lawmakers from both sides of the aisle characterizing it as an act of justice for the victims of the Sept. 11 attacks.

This post was published at Zero Hedge on Sep 28, 2016.

Obama Humiliated: Congress Overwhelmingly Votes To Override President’s Veto Of “Sept 11” Bill

Summary: The US Congress, first the Senate and then the House, humiliated the president when it voted on Wednesday to override Obama for the first time in his eight-year tenure, as the House voted 348-77 to reject a veto of legislation allowing families of terrorist victims to sue Saudi Arabia. The House easily cleared the two-thirds threshold to push back against the veto. The Senate voted 97-1 in favor of the override earlier in the day, with only Democratic Leader Harry Reid voting to sustain the president’s veto.
‘We can no longer allow those who injure and kill Americans to hide behind legal loopholes denying justice to the victims of terror,’ said House Judiciary Committee Chairman Bob Goodlatte (R-Va.).
The White House immediately slammed lawmakers following the Senate vote.
‘I would venture to say that this is the single most embarrassing thing that the United States Senate has done possibly since 1983,’ press secretary Josh Earnest told reporters aboard Air Force One, an apparent reference to a 95-0 vote to override President Ronald Reagan that year.

This post was published at Zero Hedge on Sep 28, 2016.

The National Security ‘Experts’ Denouncing Trump Are a Who’s Who of Disastrous Neocons

This piece first appeared at TomDispatch.com.
It’s not every day that Republicans publish an open letter announcing that their presidential candidate is unfit for office. But lately this sort of thing has been happeningmore and more frequently. The most recent example: we just heard from 50 representatives of the national security apparatus, men – and a few women – who served under Republican presidents from Ronald Reagan to George W. Bush. All of them are very worried about Donald Trump.
They think we should be alerted to the fact that the Republican standard-bearer ‘lacks the character, values, and experience to be president.’
That’s true of course, but it’s also pretty rich, coming from this bunch. The letter’s signers include, among others, the man who was Condoleezza Rice’s legal advisor when she ran the National Security Council (John Bellinger III); one of George W. Bush’s CIA directors who also ran the National Security Agency (Michael Hayden); a Bush administration ambassador to the United Nations and Iraq (John Negroponte); an architect of the neoconservative policy in the Middle East adopted by the Bush administration that led to the invasion of Iraq, who has since served as president of the World Bank (Robert Zoellick). In short, given the history of the ‘global war on terror,’ this is your basic list of potential American war criminals.
Their letter continues, ‘He weakens U. S. moral authority as the leader of the free world.’
There’s a sentence that could use some unpacking.

This post was published at David Stockmans Contra Corner on August 24, 2016.

Coming Soon: Trumped! and The New Contra Corner

NOTE TO READERS
I am in the throes of finishing a book on the upheaval represented by the Trump candidacy and movement. It is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.
It also delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.
In order to complete the manuscript on a timely basis, I will not be doing daily posts for the next week or two. Instead, I will post excerpts from the book that crystalize its key themes and which also relate to the on-going gong show in the presidential campaigns and in the financial and economic arenas. The first of these is included below.
I am also working with my partners at Agora Financial on a new version of Contra Corner. More information on that will be coming early next month.
TRUMPED! A NATION ON THE BRINK OF RUIN….. AND HOW TO BRING IT BACK
By David A. Stockman
……… First there were seventeen. At length, there was one. And now there is even a chance he may become President.
Donald Trump’s wildly improbable capture of the GOP nomination and rise toward the White House is surely the most significant upheaval in American politics since Ronald Reagan.

This post was published at David Stockmans Contra Corner on July 21, 2016.

This Could Soon Lead to the Collapse of the U.S. Dollar — Nick Giambruno

‘I did not have sexual relations with that woman.’
‘Read my lips: no new taxes.’
“We were not trading arms for hostages.’
Politicians are professional liars. They do it every day. And they usually do it without any consequences.
I’d bet that Bill Clinton, George H. W. Bush, and Ronald Reagan, who told the three lies quoted above, didn’t think twice about them.
But the lies would all come back to haunt and humble them.

This post was published at International Man

Hillary’s New Milestone – -Her Negatives Now Surpass Trump’s

American voters dislike Hillary Clinton and Donald Trump.
A record 61 percent have a negative view of the likely Democratic nominee, according to a Fox News poll released Wednesday. That’s up from 58 percent in March.
Fifty-six percent have an unfavorable view of Trump – though that’s actually good news for Donald. Because it was 65 percent two months ago (that was a record high).
Thirty-seven percent have a favorable opinion of Clinton, down two points from 39 percent in March, establishing a new low. The likely Republican nominee’s favorable jumped over the same time period: 41 percent view Trump positively, up from 31 percent in March.
‘The standard for unpopular presidential candidates has been Jimmy Carter and Ronald Reagan in 1980, but we have two new champions,’ says Republican pollster Daron Shaw, who conducts the Fox News Poll with Democratic pollster Chris Anderson. ‘Clinton and Trump rate lower than disastrous candidates like Mondale or Dole.’
Among women, one in three views Trump positively (33 percent), while nearly twice as many view him negatively (63 percent). That’s little changed – even going back to last fall. He was underwater by more than 30 points among women in September: 31-62 percent.

This post was published at David Stockmans Contra Corner By Dana Blanton Fox News’ May 19, 2016.

For Stan Druckenmiller This Is “The Endgame” – His Full ‘Apocalyptic’ Presentation

Several days ago, hedge fund legend Stan Druckenmiller spoke at the Sohn Conference, delivering what may have been his most bearish fire and brimstone sermon yet, and in fact according to some buysiders who were present, its somber mood and lack of faux optimism was downright apocalyptic. And how can it not be when Druckenmiller said that while the Fed and policymakers have no endgame, markets do – hinting that one is rapidly approaching – and suggested that everyone should liquidate their equity holdings and buy a certain 5000 year old shiny asset, which as we reported earlier this week, is Druckenmiller’s “largest currency allocation.”
And just so everyone can appreciate what is keeping up at night one of the most illustrious investing minds of any generation (with a 30% average return from 1986 through 2010) below we repost his entire presentation delivered at the May 4 Sohn Conference, titled appropriately enough…
The Endgame
When I started Duquesne in February of 1981, the risk free rate of return, 5 year treasuries, was 15%. Real rates were close to 5%. We were setting up for one of the greatest bull markets in financial history as assets were priced incredibly cheaply to compete with risk free rates and Volcker’s brutal monetary squeeze forced much needed restructuring at the macro and micro level. It is not a coincidence that strange bedfellows Tip O’Neill and Ronald Reagan produced the last major reforms in social security and taxes shortly thereafter. Moreover, the 15% hurdle rate forced corporations to invest their capital wisely and engage in their own structural reform. If this led to one of the greatest investment environments ever, how can the mirror of it, which is where we are today, also be a great investment environment? Not a week goes by without someone extolling the virtues of the equity market because ‘there is no alternative’ with rates at zero. The view has become so widely held it has its own acronym, ‘TINA’.

This post was published at Zero Hedge on 05/07/2016.

Trumped! Why It Happened And What Comes Next, Part 1

First there were seventeen. At length, there was one.
Donald Trump’s wildly improbable capture of the GOP nomination, therefore, is the most significant upheaval in American politics since Ronald Reagan. And the proximate cause is essentially the same. Like back then, an era of drastic bipartisan mis-governance has finally generated an electoral impulse to sweep out the stables.
Accordingly, the Donald’s patented phrase that ‘we aren’t winning anymore’ is striking a deep nerve on main street. But that is not on account of giant trade deficits or a faltering foreign policy and failed military adventures per se.
Indeed, it has very little to do with any patriotic impulse with respect to America’s collective polity, and everything to do with voter perceptions that they personally are not winning economically anymore, either.
What is winning is Washington, Wall Street and the bicoastal elites. The latter prosper off finance, the LA branch of entertainment (movies and TV), the SF/technology branch of entertainment (social media) and the great rackets of the Imperial City – including the military/industrial/surveillance complex, the health and education cartels, the plaintiffs bar, the tax loophole farmers and the endless lesser K-Street racketeers.
Consequently, most of America’s vast flyover zone has been left behind. Thus, the bottom 90% of families have no more real net worth than they had 30 years ago. By contrast, the real net worth of the top 9% stands at 150% its 1985 level, and the very top 1% is at 300% of its level three decades ago.
Moreover, the wealth round trip of the bottom 90% depicted in the chart below was hardly real in the first place. Main Street net worth temporarily soared owing to Greenspan’s 15-year housing bubble which culminated in the great financial crisis. What is left is mainly the mortgage debt.

This post was published at David Stockmans Contra Corner on May 4, 2016.

NATO: Worse Than “Obsolete” – It’s A Crony Capitalist’s Dream

Unlike many libertarians, I love presidential election season, because that’s when generally ignored foreign policy issues are discussed beyond the small circle of Washington wonks. And that’s why I’m having such fun with Donald Trump – much to the annoyance of some of my readers, both libertarians and liberals alike: because he’s provoking a much-needed discussion about who benefits (and loses) from ‘American leadership’ on the world stage. Most useful is his recent assertion that the North Atlantic Treaty Organization (NATO) is ‘obsolete.’
So it is. When the Berlin Wall fell, and the Soviet Union dissolved, the rationale for NATO disintegrated along with it. However, as libertarians know all too well, government programs (especially those that benefit the corporate sector) never die, nor do they fade away: they just keep growing to the degree that their constituency wields political clout. In NATO’s case, this clout is considerable.
When the citizens of Berlin did what Ronald Reagan urged Gorbachev to do – ‘Mr. Gorbachev, tear down that wall!’ – the Soviet leader tried to negotiate with the West. And, to his mind, he succeeded: an understanding was reached with Washington that the Russians would allow German reunification on the condition that the NATO alliance would not expand eastward.

This post was published at Zero Hedge on 04/01/2016.

Trump’s Essential Foreign Policy Predicate – -America Is Not An Empire, Its Broke

On the campaign trail, Donald Trump’s foreign policy smacks of bluster and bellicosity. He is, as he often says, ready to ‘knock the hell out of ISIS.’ But that kind of rhetoric appears to mask a far different philosophy, that of an inward-looking politician whose views represent a dramatic break with years of Republican Party orthodoxy.
From the Middle East to Europe to Asia, Trump’s instincts appear shaped by his belief that too much has been asked of the United States and that it’s time for other nations to shoulder a far bigger share of the financial and other burdens of dealing with a world of dangerous terrorists and aggressive states such as Russia and China.
Trump met Monday morning with members of The Washington Post’s editorial board. An audio recording of the hour-long interview was shared with reporters and editors in the newsroom. In perhaps the most extensive questioning he has faced on foreign policy issues, the Republican front-runner sounded more isolationist than interventionist, more interested in rebuilding the United States than nation-building overseas.
‘I don’t think we should be doing nation-building anymore,’ he said when he was asked about the values and policies of previous presidents such as Ronald Reagan. ‘I think it’s proven not to work. .’.’. I just think we have to rebuild our country. .’.’. There are values in our country that we have to promote. We have a country that’s in bad shape.’
He fretted that the United States is spending billions and billions of dollars to support countries such as Germany, Saudi Arabia, Japan and South Korea. ‘We spent billions of dollars on Saudi Arabia and they have nothing but money, and I say, ‘Why?”’ Trump said. ‘I would structure a much different deal with them, and it would be a much better deal.’

This post was published at David Stockmans Contra Corner on March 23, 2016.

Take Cover – – Now Comes The Gong Show

It was a bad hair night for the Beltway. Among the roughly 515,000 votes cast in the New Hampshire primaries, about 55% or 280,000 went to Bernie, the Donald and Senator Cruz. That is, the preponderance of Republican, Democrat and independent votes alike went for the anti-establishment candidates.
Since the latter are basically campaigning against the Imperial City and all of its careerists, cronies and corruptions, the first impulse is to cheer them on. After all, nothing could be worse than the self-perpetuating gang of war mongers, welfare statists, K-Street lobbyists and pork-barreling politicians who rule the nation today from their permanent berths in Washington DC.
Unfortunately, there is something worse. When you combine the mindless raw populism of Bernie and the Donald with the rapidly advancing lunacy and desperation of Janet and her baleful band of money printers you have a combustible recipe for abrupt system failure. American capitalism and democracy as we have known it could blow sky high by the time this election cycle is complete and a new President settles into office.
Before elaborating on that dismal note, however, let me first dispatch with Senator Ted Cruz. He unfortunately has the Ronald Reagan mutation when it comes to his political genome. I admire his resolute opposition to Big Government at home and his demonstration in Iowa that you can standup to a big, thieving special interest group like the Ethanol Lobby, and still win elections.

This post was published at David Stockmans Contra Corner on February 10, 2016.

We’re About To Find Out What Happens When US Political Parties Die

I’ve alluded to being a registered Democrat now and again, a disclosure that makes some readers go feral with wrath. For years I could only justify it as formal opposition to the cretinous brand of Republicanism that washed over the country like a septic wave with the reign of that sainted pompadour-in-search-of-a-brain, Ronald Reagan, whose ‘morning in America’ bromide was among the biggest whoppers of my lifetime. With Reagan, we got the officially-sanctioned marriage of right wing politics and the most moronic strains of Southland evangelical religiosity. (Ronnie stated more than once his belief that Biblical ‘end times’ were close at hand, which should have raised the question of his actual concern for the nation’s future – did he think it had one? – but nobody ever asked him about it.) George H. W. Bush expressed a similar view, perhaps merely pandering to the dolts of Dixie.
So, who in his right mind could have subscribed to that load of bullshit?
Meanwhile, the youthful and magnetic Clintons came on in 1992. They put on a good show of national stewardship in the early going. Bill could speak English fluently, unlike his two predecessors. Hillary’s committee to tackle health care reform came to grief, but the effort at least implied a recognition that medicine was turning into a shameless racket (now fully metastasized). Bill managed to shove through a species of welfare reform – remarkable for a Democrat – that has since deliquesced back into a swamp of disability fraud. But the Clinton turning point was the repeal of the Glass-Steagall Act, which opened the door to an orgy of financial mischief so arrant and awful, and to a plague of corruption so broad and deep, that American life is now pitching into a long emergency.

This post was published at Wall Street Examiner by James Howard Kunstler ‘ September 14, 2015.

One Registered Democrat Rages

I’ve alluded to being a registered Democrat now and again, a disclosure that makes some readers go feral with wrath. For years I could only justify it as formal opposition to the cretinous brand of Republicanism that washed over the country like a septic wave with the reign of that sainted pompadour-in-search-of-a-brain, Ronald Reagan, whose ‘morning in America’ bromide was among the biggest whoppers of my lifetime. With Reagan, we got the officially-sanctioned marriage of right wing politics and the most moronic strains of Southland evangelical religiosity. (Ronnie stated more than once his belief that Biblical ‘end times’ were close at hand, which should have raised the question of his actual concern for the nation’s future – did he think it had one? – but nobody ever asked him about it.) George H. W. Bush expressed a similar view, perhaps merely pandering to the dolts of Dixie.
So, who in his right mind could have subscribed to that load of bullshit?
Meanwhile, the youthful and magnetic Clintons came on in 1992. They put on a good show of national stewardship in the early going. Bill could speak English fluently, unlike his two predecessors. Hillary’s committee to tackle health care reform came to grief, but the effort at least implied a recognition that medicine was turning into a shameless racket (now fully metastasized). Bill managed to shove through a species of welfare reform – remarkable for a Democrat – that has since deliquesced back into a swamp of disability fraud. But the Clinton turning point was the repeal of the Glass-Steagall Act, which opened the door to an orgy of financial mischief so arrant and awful, and to a plague of corruption so broad and deep, that American life is now pitching into a long emergency.

This post was published at Zero Hedge on 09/14/2015.

Alexis Tsipras – -Angel Of Mercy Or ‘Trusty’ Of The Keynesian Central Bankers’ Debt Prison?

Greece, Europe and the world are being crucified on a cross of Keynesian central banking. The latter’s two-decade long deluge of money printing and ZIRP has generated a fantastic worldwide financial bubble, and one which has accrued to just a tiny slice of mankind. That much is blindingly evident, but there’s more and its worse.
The present replay of high noon on Greece’s impossible mountain of debt clarifies an even greater evil. Namely, that the central bank printing presses have also utterly destroyed the fundamental requisite of fiscal democracy.
To wit, in the modern world of massive, interventionist welfare states, fiscal governance desperately needs an honest bond market. The latter is the only mechanism capable of taming the modern state’s primal urge to entitle, transfer, indulge, placate, subsidize and spend without the parallel pain of a commensurate burden of taxation.
Soaring bond yields and the fear of losing market access, therefore, are the one force that can cause the politicians, thieves and charlatans who man the machinery of democracy to sober-up and acknowledge the facts; and then to weigh the difficult options and tradeoffs, congeal a consensus and close the deal.
This proposition is based on experience, not theory – – even though the logic of bond market discipline is unassailable. Approximately 33-years ago, in fact, I was part of a small group of White House staff who talked Ronald Reagan into the impossible. That is, into signing not only a giant tax increase bill at the dark bottom of the 1982 recession, but to actually embracing several more such measures over the course of the subsequent three years. When the dust settled, these so-called ‘tax grabs’ took back fully 40% of his cherished and sweeping 1981 tax reduction.

This post was published at David Stockmans Contra Corner by David Stockman ‘ June 22, 2015.

Why Ronald Reagan Is Rolling In His Grave: The Keynesian Putsch At The Fed

Ronald Reagan is surely rolling in his grave. He is credited for much that he didn’t actually accomplish on the economic front, but his most singular real victory – -decisive repudiation of the Keynesian macro-economic policy model that had produced stagflationary havoc for more than a decade – -overshadows all his fiscal failures and the urban legend that he actually tamed Big Government.
Needless to say, however, that 35-year ago repudiation has now been itself completely repudiated by the keynesian apparatchiks who presently rule the Eccles Building. Yesterday Janet Yellen was at it again, displaying outright contempt for the Gipper’s crowning achievement.
To that end, she announced that interest rates will remain pegged at zero until at least September. That is, the Fed will continue to dispenseFREE MONEY to Wall Street gamblers for what will now be 80 months running.
This lunacy is purportedly necessary to accommodate economic recovery, even if it does fuel the fires of financial speculation. Indeed, one of the Fed’s faithful MSM flaks, Greg Ip of the Wall Street Journal, said as much in a hot off the press column obviously written in the Eccles Building:

This post was published at David Stockmans Contra Corner by David Stockman ‘ June 18, 2015.

David Stockman Talks Historical Dominoes – – Rise Of the Warfare State And Keynesian Central Banking

Click here to listen.
David Stockman interview on the Political Badger:
Today I had the pleasure of interviewing David Stockman. He is a former Congressman from Michigan, former Director of the Office of Management and Budget under President Ronald Reagan, and former partner at The Blackstone Group. Stockman is the author of The Triumph of Politics: Why the Reagan Revolution Failed (1986) and 2013′s The Great Deformation: The Corruption of Capitalism in America. On the show today we discussed how some of his work traces ‘historical dominoes.’ It was fascinating to learn how certain events in history led to others and so on, until we wind up with thus and so… For example: how did the creation of the Fed in 1913 lead to the 2008 crisis? What was the chain of events? Find out in today’s episode.

This post was published at David Stockmans Contra Corner on December 13, 2014.

How We’ve Devolved into the Current System of Crony Capitalism

In this interview with Bill Moyers, David Stockman, who first coined the term Crony Capitalism, explains what’s happened in the political-economic realm since his post as Budget Director under Reagan. The evidence that we’ve embarked on a “new system” has become more obvious with time. Beginning with the $20 billion bailout of the Mexican peso in 1994, progressing with the bailout of Long Term Capital Management in 1998 and the recent bailout in 2008 with the $700 billion Wall Street package, Stockman explains that the benefactors are not limited to those being bailed out. The investors who financed those failures are the ones who’ve really benefited.  These are the so-called cronies, who have ties to those in high positions, capable of bending laws to ensure the majority of profits go to themselves, while losses are always taken by the tax payers.