Friday, December 09, 2016

So What Happens Once The Republicans Implement Ryan's And Price's Plan To Kill The Affordable Care Act?

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Yesterday we all read that life expectancy-- particularly for the American working class-- has dropped. And you can't even blame the NRA for all of it-- heart disease, stroke, cancer, diabetes, Alzheimer's, drug overdoses are all contributing, as Gaius went into more deeply this morning. And Trump, Pence and Tom Price haven't even been sworn in yet! In theory Trump and the congressional Republicans are in synch about repealing Obamacare. Trump campaigned on repealing it and replacing it with something fabulous. Congressional Republicans mostly just campaigned on repealing it, presenting it as a substitute and an abstract effigy for Barack Obama, focusing as much hatred as they could on it. So do the congressional Republicans have to come up with something fabulous to replace it with so that Trump doesn't look like a lying sack of shit? Or is that just another one that just get slipped down the collective memory hole?

When they repeal and not replace the Affordable Care Act-- or at least start the process by killing off the exchanges-- it will send the U.S. health care system into disarray and lead to 29.8 million people losing their coverage, something like 16.6 million of whom are white-- not just white, but white working class. I wonder how many of them voted for Trump.

According to a new study from the Urban Institute, 82% of those who would lose coverage are in working families. Repealing the Affordable Care Act without a replacement plan will more than double the number of uninsured children in the country-- leaving 4 million children uninsured.

  Dangerous plans to repeal the Affordable Care Act without replacing it are a serious threat to hospitals, providers, and caregivers-- jeopardizing lives, livelihoods, and communities across the country. Hospitals are already warning of an "unprecedented public health crisis." Providers, including hospitals and doctors, would see a dramatic surge in uncompensated or charity care, $88 billion in 2019 alone and $1.1 trillion from 2019-2028.

Murderous mission
Paul Ryan, Kevin McCarthy, Tom Price, Mitch McConnell and Lamar Alexander are plotting to repeal the ACA, at least partially, through Reconciliation. The Urban Institute analysis starts with the premise that "since only components of the law with federal budget implications can be changed through reconciliation, this approach would permit elimination of the Medicaid expansion, the federal financial assistance for Marketplace coverage (premium tax credits and cost-sharing reductions), and the individual and employer mandates; it would leave the insurance market reforms (including the nongroup market’s guaranteed issue, prohibition on preexisting condition exclusions, modified community rating, essential health benefit requirements, and actuarial value standards) in place." They compare future health care coverage and government health care spending under the ACA and under passage of a reconciliation bill similar to one vetoed in January 2016. The key effects of passage of the anticipated reconciliation bill are as follows:
The number of uninsured people would rise from 28.9 million to 58.7 million in 2019, an increase of 29.8 million people (103 percent). The share of nonelderly people without insurance would increase from 11 percent to 21 percent, a higher rate of uninsurance than before the ACA because of the disruption to the nongroup insurance market.
Of the 29.8 million newly uninsured, 22.5 million people become uninsured as a result of eliminating the premium tax credits, the Medicaid expansion, and the individual mandate. The additional 7.3 million people become uninsured because of the near collapse of the nongroup insurance market.
Eighty-two percent of the people becoming uninsured would be in working families, 38 percent would be ages 18 to 34, and 56 percent would be non-Hispanic whites. Eighty percent of adults becoming uninsured would not have college degrees.
There would be 12.9 million fewer people with Medicaid or CHIP coverage in 2019.
Approximately 9.3 million people who would have received tax credits for private nongroup health coverage in 2019 would no longer receive assistance.
Federal government spending on health care for the nonelderly would be reduced by $109 billion in 2019 and by $1.3 trillion from 2019 to 2028 because the Medicaid expansion, premium tax credits, and cost-sharing assistance would be eliminated.
State spending on Medicaid and CHIP would fall by $76 billion between 2019 and 2028. In addition, because of the larger number of uninsured, financial pressures on state and local governments and health care providers (hospitals, physicians, pharmaceutical manufacturers, etc.) would increase dramatically. This financial pressure would result from the newly uninsured seeking an additional $1.1 trillion in uncompensated care between 2019 and 2028.
The 2016 reconciliation bill did not increase funding for uncompensated care beyond current levels. Unless different action is taken, the approach would place very large increases in demand for uncompensated care on state and local governments and providers. The increase in services sought by the uninsured is unlikely to be fully financed, leading to even greater financial burdens on the uninsured and higher levels of unmet need for health care services.
If Congress partially repeals the ACA with a reconciliation bill like that vetoed in January 2016 and eliminates the individual and employer mandates immediately, in the midst of an already established plan year, significant market disruption would occur. Some people would stop paying premiums, and insurers would suffer substantial financial losses (about $3 billion); the number of uninsured would increase right away (by 4.3 million people); at least some insurers would leave the nongroup market midyear; and consumers would be harmed financially.
Many, if not most, insurers are unlikely to participate in Marketplaces in 2018-- even with tax credits and cost-sharing reductions still in place-- if the individual mandate is not enforced starting in 2017. A precipitous drop in insurer participation is even more likely if the cost-sharing assistance is discontinued (as related to the House v. Burwell case) or if some additional financial support to the insurers to offset their increased risk is not provided.
We asked several of the most promising freshmen members of Congress what they think Democrats should do to protect their constituents. Aware of his outstanding record of leadership on tough, crucial issues in the Maryland legislature, Jamie Raskin was one of the first candidates Blue America endorsed in 2015. He beat a pack of wealthy, predatory self-funders in the primary and went on to win the general election with 60% of the vote. He's someone we'll be looking to for many years, not just for good votes, but for good ideas and strategies. This morning he asked rhetorically, "What kind of leaders seek to dismantle a program that provides health coverage to 20 million Americans? This is political malpractice in a democracy. Every American needs health care, not just billionaires and CEOs. TrumpCare is exactly what the doctor didn't order."

DWT is taking another look at Congressman-elect Ro Khanna, who defeated Mike Honda in a hard-fought run-off last month. Khanna has joined the Progressive Caucus and vowed to make a positive difference in the lives of California working families. Back from the freshman congressional sessions at Harvard University's Kennedy School of Government this week, he told us that "Jack Kingston, a former member of Congress and senior Trump advisor, openly told freshman members of Congress at our Harvard orientation that Trump's first priority will be to repeal the Affordable Care Act. He said every Republican needs to be for that because they must have campaigned on it."

All Democrats must make the defense of the Affordable Care Act our highest priority. We need to make the case that repeal will hurt working class Americans most-- many in districts that Trump carried. At a time when unfair trade deals and automation are hurting working families in middle America, we simply cannot afford to strip millions of Americans of basic health insurance.

As someone who was in the Obama Administration when the Affordable Care Act passed in 2010, I will play a leadership role to make the case why we must fight with every fibre of our being to keep it. I recognize as one of only two Obama Administration alum in the U.S. Congress and Senate that I have a unique responsibility.

Long term, we need to work towards a single payer system and Medicare for all. We can't take a step back now.


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U.S. Life Expectancy Falls for First Time Since 1993

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Dying of drugs and despair — causes of death in the working class, from a 2015 study.

by Gaius Publius

Part of the surprising (to many) primary-season discovery that Trump was popular, was the discovery of where he was popular. Put bluntly, he was popular where people, especially working class people, were dying. From Jeff Guo last March in the Washington Post:
Death predicts whether people vote for Donald Trump

A few weeks ago, following the Republican Iowa caucuses, I pointed out an eerie correlation in the voting data. It seems that Donald Trump performed the best in places where middle-aged whites are dying the fastest.

That wasn't a fluke. The relationship between white mortality and Trump support is real, as the fresh results from Super Tuesday confirmed.
The Post produced scatter plots to prove the point:


Note that only in the Massachusetts chart does mortality not correlate to Trump support.

This analysis can take us in several directions. One, naturally, is to see this as part of the "Trump phenomenon," part of the "what makes Trump special" discussion. Taking things that way, the discussion turns on race, especially as it relates to the 2016 electoral context.

Guo himself falls into this group, writing, "The people I've been describing — this distressed, dying demographic slice of America — are similar to the people who tend to vote for Trump, according to phone and exit polls. Trump supporters are mostly white; skew older; and are less likely to have college degrees than other Republicans." He also asserts, "Trump’s promise to 'Make America Great Again' has been most enthusiastically embraced by those who have seen their own life's prospects diminish the most — not [only] in terms of material wealth, but in terms of literal chances of survival."

Guo is not alone in making that correlation. Put briefly, that correlation states: "It's an important part of the Trump phenomenon that less educated, working class white people, who are now at increased risk of dying, are voting him."

The underlying study, however, was non-political and only seems to reach that conclusion. The report, published in the Proceedings of the National Academy of Sciences (PNAS) in September of 2015, found
a marked increase in the all-cause mortality of middle-aged white non-Hispanic men and women in the United States between 1999 and 2013. This change reversed decades of progress in mortality and was unique to the United States; no other rich country saw a similar turnaround.
Note the lack of a political dimension in the study. 

Of course, even outside of the electoral context, the study made news, since the reversal of decades of progress in life expectancy was both astonishing and unprecedented in modern America. Causes for increased mortality, as you may have read, included "midlife increases in suicides and drug poisonings," which lead some writers like myself to conclude that people in the working class were "dying of drugs and despair."

But Is This a Trump Phenomenon or an American Phenomenon?

Here is where the analysis gets interesting. This is not really a statement about Trump per se. Three points to note:

First, while Trump voters are overwhelmingly white, the country is overwhelmingly white as well, at least for now.

Second, the point that this was about Trump was made in the primary, when Trump's chief competition for these voters — Bernie Sanders — was not running in head-to-head contests against him. Note that Sanders, somewhat famously, also had strong white working class support — though he had broader support as well, despite the "white Bernie bro" meme that the Clinton campaign, strategically and perhaps cynically, deployed at the time.

Third, in the general election, it certainly seemed that Clinton & Co. did as much as they could to distance themselves from the white working class electorate. Clinton herself uttered the now-infamous "basket of deplorables" remark, and Chuck Schumer was widely noted as saying, "For every blue-collar Democrat we lose in western Pennsylvania, we will pick up two moderate Republicans in the suburbs in Philadelphia, and you can repeat that in Ohio and Illinois and Wisconsin." In short, the Democratic Party's "identity politics" strategy seemed almost designed not to appeal to the white working class, which made it easy, in the end, for Trump to pick them up as voters.

Would Trump have picked up the same percentage of these voters in a head-to-head contest with Sanders? I for one think not. Michigan voters went for Sanders (against Clinton) in droves. He would certainly have held many of those voters in a general election against Trump, while not losing any of Clinton's voters in those states. As many see it, in a Trump v. Sanders contest Sanders wins the Rust Belt vote hands down — and thus wins the general election as well.

All of which means that the "dying of despair" voters are not just Trump voters. They're American voters.

Death Rates Are Rising Generally in the U.S. 

Now comes another study to bolster that conclusion. General life expectancy in the U.S. is now in decline. The Washington Post again:
U.S. life expectancy declines for the first time since 1993

For the first time in more than two decades, life expectancy for Americans declined last year — a troubling development linked to a panoply of worsening health problems in the United States.

Rising fatalities from heart disease and stroke, diabetes, drug overdoses, accidents and other conditions caused the lower life expectancy revealed in a report released Thursday by the National Center for Health Statistics. In all, death rates rose for eight of the top 10 leading causes of death.
The article goes on to note:
Its findings show increases in “virtually every cause of death. It’s all ages,” said David Weir, director of the health and retirement study at the Institute for Social Research at the University of Michigan. Over the past five years, he noted, improvements in death rates were among the smallest of the past four decades. “There’s this just across-the-board [phenomenon] of not doing very well in the United States.”
What should we make of this?

Bottom Lines

I'm going to make these points quickly, and expand on them (defend them) later. I think we can easily draw three conclusions:

First, as Thomas Frank and others have extensively argued, it's not just the white working class that's been going over the cliff, it's everyone in the country not served by the two political parties, which means, everyone below the top 10% of the population. That's a lot of population (and a lot of Sanders voters, by the way). I'm not alone in arguing that in America today most of the country is represented by no one, that their interests are served by neither political party.

Second, the despair covers almost every demographic group, from older white and black workers, broken in body by years of physical labor, to students and former students of all economic classes who leave college with debt like a mortgage but no house, and with a degree they'll never use because no jobs. No one in the bottom 90% escapes this devastation. People who aren't themselves victims know someone who is. It's a painful country to live in for the lower 90%, and worse, no one suffering in it sees things getting better.

Which means the nation is "Brexit-hungry" for change, any change. In the general election, only Trump was on offer as "change," yet with cabinet pick after cabinet pick he's already proving to be no change at all.

Which also means, third, the U.S. is in trouble as a nation. A nation in despair has elected a wealth-serving autocrat as an economic savior, a "change agent" who's making no changes. It seems we're doomed to disappointment and worse. What's next?

Will the working class continue to commit suicide and still cheer Trump on? Not when they see no real improvement in the hopelessness of their lives — more crappy jobs, more degenerative diseases and conditions, more meth labs and oxycontin use, more suicides, more deaths from inadequate health care, or worse, inadequate health care withdrawn.

What will the increasingly dependent do when Medicare is cut or privatized, when Social Security benefits are sliced, when the now-unified government passes the old "grand bargain" between "entitlements" and taxes that Obama couldn't get through a Republican Congress, but Trump surely will?

I've said before that the U.S. is in a pre-revolutionary state. Trump beat every Establishment candidate in the Republican field by a lot. Sanders nearly toppled a former senator and First Lady, a woman running with every Establishment advantage at her disposal, including almost all media but that on the right. In the general election, Trump beat Clinton in a squeaker, but it's a race that should never have been close, except that Trump was on offer as the "change candidate," and she was not.

What will the nation do if people keep dying? The entire population, almost, is hungry for economic change, real betterment in their lives. If elections don't provide that change, the people may provide it themselves in some other way. And if they do that, there will be rough times ahead.

GP
    

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Hillary Won 7 California Districts That The DCCC Blew-- But Pelosi Re-Hired Lujan Anyway

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Good help may be hard to find-- but for Pelosi, it's impossible to find

Let's look at some congressional districts where there was enough ticket splitting to elect a member of Congress from one party and a president from the other. Unfortunately, with not all votes in there are still some districts that are too close to call in the presidential race-- and the numbers of voters for Trump and Clinton are still not broken out by congressional district.

Working alphabetically, the first state with anomalies is Arizona. The state elected 5 Republicans and 4 Democrats to the House,although two of the Democrats-- Tom O'Halleran and Kyrsten Sinema-- are so far to the right, that they might as well be considered Republicans. Sinema, in fact, has the worst ProgressivePunch lifetime crucial vote score of any Democrat from any state going back to Congress next year (a dismal and abhorrent 36.63-- in a Tempe,Mesa, Scottsdale, Chandler district Obama won both against McCain and against Romney. Sinema, whose raised $3,927,992 to her opponent Dave Giles' $233,297 won 60.9-39.0%. The race between Trump and Clinton is still too close to call in the district. Same in gigantic AZ-01 (most of the eastern part of the state plus Flagstaff, some southern Phoenix and northern Tucson suburbs)-- too close to call between Trump and Hillary but "former" Republican/pretend Democrat Tom O'Halleran beat the gay sheriff, Paul Babeu, 50.7-43.4%, after outspending him significantly. (Obama lost the district with 48% both times he ran.) The only other district where Clinton may have beaten Trump, AZ-02 (Tucson), Republican Martha McSally triumphed over Matt Heinz (who, unlike O'Halleran, got ZERO help from the DCCC) 57-43%. Clinton out-performed Trump in the Tucson suburbs but votes are still being tabulated so the district numbers aren't in yet.

On to California where Clinton won seven red districts: CA-10 (Modesto), CA-21 (Central Valley), CA-25 (Santa Clarita), CA-39 (Orange County), CA-45 (Orange County), CA-48 (Orange County) and CA-49 (Orange County/San Diego), where Republican incumbents, respectively, Jeff Denham, David Valadao, Steve Knight, Ed Royce, Mimi Walters, Dana Rohrabacher and Darrell Issa all managed to win reelection, primarily because even if the DCCC tried to be less competent they could't be as incompetent as they continue to prove themselves.

In Colorado, Clinton beat Trump in CO-06 (Aurora and the Denver suburbs) but Mike Coffman still managed to hang on 50.9-42.6%. He outspent Morgan Carroll, a credible candidate $2,725,315 to $2,326,607 but the GOP swamped the Democrats in outside spending $7.2 million to $5.2 million.


In Florida, it was the same ole, same ole: the two blue Miami-Dade, districts, FL-26 and FL-27, Clinton won (just as Obama had) but Wasserman Schultz made sure Ileana Ros-Lehtinen was reelected in one and the Democrats nominated an unelected corrupt Blue Dog, Joe Garcia, in the other district. What a mess. If Tim Canova manages to beat Wasserman Schultz in 2018, Ros-Lehtinen will be a guaranteed loss immediately after.

In Illinois, the Democrats seem to want to protect Peter Roskam for some reason I could never figure out. IL-06 (Chicagoland suburbs) went for Obama in 2008, Romney in 2012 and Clinton this year-- and reelected Republican Peter Roskam 59.2-40.8% with no DCCC participation whatsoever. Trump may have won IL-17 (Moline, Rock Island)-- still countin'-- while Blue Dog Cheri Bustos won reelection 60.3-39.7% in a dead race where she outraised Republican Patrick Harlan $3,249,480 to $11,284.

Trump swept Iowa-- like seem to have loved having him denigrate them and call them brain-damaged morons during the primaries-- and he won all 4 district, including IA-02, where Democrat Dave Loebsack was reelected 53.7-46.2%, outraging Republican Chris Peters $1,542,987 to $207,030.

Kansas was Trumpland, of course, but Hillary won KS-03 (Kansas City and its suburbs), while Kevin Yoder managed to beat DCCC recruit Jay Sidie (who was buried in GOP cash) 51.3-40.6%.

In Minnesota, Democrat Tim Walz managed to narrowly win his MN-01 southern tier district, despite a win by Trump. Walk outraised Republican Jim Hagedorn $1,462,926 to $311,542 and the NRCC stayed out of it. They probably would haven the seat had they jumped in. Conversely, up in MN-03 (the suburbs west of the Twin cities), Erik Paulsen managed to win 56.7-43.0% despite a Clinton win in the district. He outraised Blue Dog Terri Bonoff $4,493,021 to $1,656,703. Trump won MN-07 and MN-08, but both Democratic incumbents, progressive Rick Nolan and ultra-reactionary Blue Dog Collin Peterson both hung on, respectively 50.2-49.6% and 52.5-47.4%.

New Hampshire was finally officially awarded to Clinton yesterday but one district went strongly for her and one district, NH-01, went narrowly for Trump. Luckily, the DCCC didn't interfere in the congressional race and the progressiveDemocrat running, Carol Shea-Porter, despite being outspent won the three way race 45.8% to 44.4% to 7.0%. The incumbent Republican, Frank Guinta, spent, $1,117,756, gay Wall Street fake-Democrat who had some Bernie backing despite professing a desire to cut Social Security and Medicare (Sean O'Connor) ran as an independent to damage Shea-Porter and spent $1,056,281. Carol spent less than either: $1,025,533, but won the race. The NRCC threw around another $1,294,212 against Shea-Porter but it was badly spent and ineffectual.

In New Jersey, Trump managed to win the northern tier of the state, NJ-05, while the incumbent Republican extremist there, Scott Garrett, was defeated by Blue Dog Josh Gottheimer, who buried him in spending. Both Leonard Lance and Rodney Frelinghuysen faced severely under-financed opponents but both there districts, respectivley NJ-07 and NJ-11 are still too close to call and it looks like Clinton may have one them.

Across the river, Sean Patrick Maloney was reelected in NY-18, 55.2-44.8%, while Trump took his district. Clinton won the Syracuse district (NY-24) but the incredibly bad candidate, Collleen Deacon, who Kirsten Gillibrand and the DCCC forced on the district lost miserably to dull incumbent John Katko, 61.0-38.9%.

The 3 GOP-held Philly collar counties are all still GOP-held but this was ground-zero for Clinton's suburban moderate Republican strategy and it failed. PA-08, Bucks County, went for Trump and the other two, PA-06 and PA-07 are both till too close to call in the presidential race. Further north, Matt Cartwright won reelection, 53.8-46.2%, but Trump beat Clinton there (PA-17).

In Texas, where the suburbs did swing to Clinton, she won TX-07 (Houston suburbs) and TX-32 (Dallas suburbs), while right-wing GOP incumbents John Culberson and Pete Sessions were reelected handily, Sessions with no Democratic opponent at all, and Culbertson with one who had no money and no backing. Culbertson raised $1,169,866 and the Democrat, Jim Cargas raised $36,235. Culbertson walked away with a 56.2-43.8% win. In the heavily Latino south TX-23 district, it's still to close between Trump and Clinton to call but the DCCC managed to find a weak enough crap-canddiate, Pete Gallego, to lose to incumbent Will Hurd, albeit very narrowly. Democrats have been yammering for years about demographics making Texas bluer, are they expecting a shofar band to make a racket when it happens so they know?

In Virginia, Clinton won the DC suburban VA-10, but the flawed DCCC candidate, LuAnn Bennett lost to right-wing nut incumbent Barbara Comstock, who outraised her $4,634,196 to $2,200,188. The DCCC and House majority PAC flushed around $6 million down that rat-hole, while the NRCC and Congressional Leadership Fund spent around $7.4 million on Comstock.

In Wisconsin, Trump won the 3rd district in the west, while New Dem Ron Kind had no GOP opponent-- why should they bother when Kind is basically a Republican anyway?

The next time we look at this, we'll have all the completed tabulations but I know for the handful of people who like this kind of stuff, well... you're probably not going to find it anywhere else before 2017.

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Thursday, December 08, 2016

Trumpy-The-Clown, The Stock Markets And Tax Policy

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I'm sure you noticed that the stock markets have reacted favorably to the prospect of a Trump presidency. Wednesday the Dow closed at an all-time high. It has rocketed 1200 points since Trump "won." The Dow is getting close to 20,000, something few people thought they would ever live to see. As CNN reported this week, "Wall Street is betting that Trump will be great for business and help accelerate the U.S. economy. Trump has promised to slash taxes, roll back costly regulations and spend big on infrastructure. Trump's less business-friendly promises-- tearing up NAFTA, breaking up the big banks and auditing the Federal Reserve-- have largely been shrugged off as campaign rhetoric." Today I spent some time with my financial planner talking about what happens when Trump disappoints-- as his entire life in business clears shows he will-- and rather drastically. I'm shocked that so few financial analysts are taking that into account. It's terrifying actually.

One of my advisors sent out a newsletter today-- from a money-Republican perspective basically-- about all the wonderful things Trumpism will bring to the greed and selfishness set. "President-elect Donald Trump," they drooled, "has made it clear that he wants tax reform, and he wants it as quickly as possible. To help him in this quest, he has a Republican House and Senate who also want tax reform.
There are two obstacles that will need to be overcome in order to enact tax reform. The first is the “Senate road bump.” The final count on the political distribution of the Senate is anticipated to be 52-48 in favor of the Republicans [after Louisiana elects a Republican]. In order to avoid the possibility of filibuster as a tool to prevent tax legislation from advancing, either: eight Democrats will need to get on board to attain the 60 vote Super Majority rule, or the Budget Reconciliation Process will need to be used which allows tax legislation to pass with a simple 51 vote majority.

The second obstacle is the resulting decrease in revenues. The 10-year cost of Trump’s proposal is estimated by experts to be between $4.4 and $5.9 trillion, with the GOP estimate half of that at $3.1 trillion.1 But where will offset replacement revenues or expense reductions be found? And how will the parallel proposal of massive works projects to improve infrastructure be paid for?

These two issues are likely the only potential “drag” on the march to tax reform. Many commentators believe the proposed changes to the tax laws will ultimately pass, probably with some compromises.

While Trump and the GOP's versions of tax reform have differences, they also share many similarities. It is safe to assume that whatever proposals we are seeing now will be “tweaked” before the cake is baked. Here is an overview of the changes proposed by Trump:
Lower Individual Income Tax

As part of Trump’s proposal, individual income tax rates would go down. Currently we have seven income tax brackets. Trump’s plan has 3 brackets: 12, 25 and 33%. Capital gains rates stay the same-- 0, 15 and 20%. The GOP proposal for capital gains is to allow a 50% deduction of the gain before the tax is imposed.

As part of the calculation of taxable income, the Trump proposal changes three items: (1) personal exemptions are eliminated, (2) standard deduction is increased, and (3) itemized deductions are capped.

The new standard deduction: for single individuals from current $6,300 to $15,000; for married-joint filers from current $12,600 to $30,000. Itemized deductions will be capped at $100,000 for single filers, $200,000 for married-joint filers. We should note that the GOP plan does not contain these caps, rather it eliminates itemized deductions entirely, with the exception of mortgage interest, charitable donations and a few taxes (excluding state income tax). The elimination of personal exemptions may be bad for families with more than two dependent children (2016 personal exemption is $4,050). A family of five with 3 dependent children would see less deduction from the new system. Under the current rules, that family would have a $12,600 standard deduction plus 5 personal exemptions at $4,050 per person, for a total of $32,850. However, under the proposal, they are capped at $30,000.

The new standard deduction could negatively impact the benefits of the mortgage interest deduction for middle-class families with mortgage payments and few other itemized deductions. The first $30,000 a year in deductions will have no income tax benefit for a married couple because of the increased size of the standard deduction.

Childcare and eldercare Deductions

An “above-the-line” deduction would be allowed for childcare costs for children under the age of 13, and would be capped based on a state average for a child of that age. The deduction would also apply for Eldercare expenses for a dependent of up to $5,000 a year. This deduction would not be allowed for married couples making over $500,000 a year and singles making over $250,000 a year. These benefits would be indexed for inflation.

Eliminate tax loophole for "carried interest"

The average American may not know what “Carried Interest” is, but many have heard the stories of wealthy individuals avoiding millions in taxes by taking ownership in the company they work for in order to ultimately sell and pay capital gains instead of ordinary income. Ordinarily they would have received income and paid ordinary income tax. This is a huge paradigm shift on a contentious issue. Under the proposal, taxpayers who make money this way would have to pay ordinary income tax rates on their gains when the company is sold.

Lower corporate income tax

The corporate income tax rate would be lowered from 35% to 15% with some limitations on deductions. The GOP proposal is 20%. There is uncertainty whether the 15% tax rate also applies to business income that flows through to individual tax returns, if the taxpayer has an active business structured as a “pass-through” (S corporations, LLCs, Partnerships and sole proprietorships). If this becomes part of the plan, it would create huge incentives for individuals to become independent contractors instead of employees. The proposal also provides for 100% expensing of capital expenditures in the year of acquisition instead of depreciation or amortization.

In addition, Trump’s proposal would encourage U.S. corporations that keep money overseas (from profits made overseas) to repatriate those assets by having a repatriation “holiday” (fixed-time period) when those assets could be brought back to the U.S. at only a 10% tax rate (as compared to the current 35% tax rate). Capital Economics reports that, as of 2015, U.S. corporations had over $2.5 trillion parked overseas, including $110 billion by Microsoft alone.

Eliminate 3 taxes

Details on Estate Tax repeal


The Trump proposal calls for full estate tax repeal. Stepped-up basis for transfers at death would be repealed as well, and instead carryover basis would apply. For example, assume Antonio purchased a rental property many years ago and had taken depreciation, and his basis was currently $100,000, and the fair market value of the property currently $1 million. If Antonio sold the property, he would have to pay capital gains on $900,000, the difference between his $100,000 basis and the $1 million sales price (plus recapture depreciation). Under current law, if Antonio passed away and left his home to daughter Gabrielle, and Gabrielle sold the property for $1 million, she would pay $0 capital gains taxes because she got stepped up basis. If instead she held the property for a couple more years and was then able to sell for $1.2 million, she would pay capital gains only on the $200,000 of appreciation that occurred since her father died. If instead the new law is passed and Gabrielle only gets carryover basis, she would pay the same amount of capital gains tax as her father if he had sold it.

However, there is also an argument that what Trump means is that he actually wants to trigger all capital gains taxes at death (similar to the Canadian system). Trump’s website vaguely references some break on the triggering of capital gains tax at death for owners of small businesses and farms, without any details. In addition, there would be an exemption taxpayers could use to allocate to specific assets that would allow those assets to get stepped-up basis at the death of the taxpayer: $10 million exemption for married taxpayers; $5 million for single. Presumably a taxpayer (or the representative of their estate) could pick and choose which assets to allocate this exemption to, with the preference being the most highly appreciated assets, while factoring in whether there are any assets never likely to be sold by the heirs. This in turn leads to the conclusion that there would still have to be some kind of Federal estate information return filed to show the allocation of this tax benefit among the assets owned by the deceased. With this system, it would be imperative that a client’s estate plan make clear either who benefits from the $10/$5 million and/or who gets to make the decision. The GOP proposal is full estate tax repeal while retaining stepped up basis at death on all assets.

What is unclear at this point is whether full “estate tax repeal” also means full gift tax repeal and generation skipping tax repeal. Trump’s proposals to date have been silent on whether “estate tax repeal” really means the entire system including gift taxes and generation skipping taxes, or literally just estate tax repeal. It is likely that it does include generation skipping tax repeal. There is a split of opinion on whether it also means gift tax repeal; more on this in a moment.

...If the gift tax is also being repealed as part of the proposal, there would be no more restrictions on transfers of assets to your family and friends. No more $14,000 limit on annual gifts. So, if you wanted to give your children money or real estate, you could just go ahead and give it to them – or to anybody else for that matter. See below for comments on the ability to transfer assets at will as a means to move taxable income into lower tax brackets of family members and whether there will need to be some “gift-tax-like” rules to prevent this. However, no one yet knows if the tax proposal will eliminate the gift tax or otherwise put restrictions on it such as limiting how much you can gift during lifetime.

Will the middle class see real benefits from income tax reform?

Trump's proposal is positioned to help the middle class. Some interesting observations were recently made about the potential tax savings for a sample “middle class” taxpayer.2 Households with an annual income between $143,100 and $292,100 will see an average annual savings of $4,300 under Trump's proposal, and an average annual savings of $300 under the GOP's plan.

Households with an annual income of $3.8 million or more will see an average annual savings of $1.07 million under Trump's proposal, and an average annual savings of $1.2 million under the GOP's plan.

Déjà vu?

We’ve been here before with George W. Bush in 2001 and a Republican House and Senate. Economic Growth and Tax Relief Reconciliation Act of 2001 (EGGTRA) was passed in August of that year. It included the phase out of the Federal estate tax, with full repeal by 2010. The thinking behind waiting until 2010 was that Congress would figure out the numbers before then so that estate tax repeal would be permanent. But they never did figure it out. Or, put another way, they chose not to deal with the issue.

So, what's different now? First, the repeal of estate tax has now been on the table for 15 years. Additionally, the public has been convinced it's an unfair tax, even if most people don't pay it. Finally, Trump wants it and he has incredible political capital at the moment.
UPDATE: Trump And Taxes:

Bloomberg just ran the numbers on what Trump's tax plans would mean to Trump and the cabinet from Hell. Their point is that though he "won the hearts and minds of millions of working-class voters, [he] may help deliver a multibillion-dollar bonanza to America’s wealthiest families."
The Manhattan businessman’s election offers congressional Republicans their best chance in years to eliminate the estate tax, which he and others call the “death tax.” Abolishing it would save more than $20 billion a year for the millionaires and billionaires the tax applies to-- including the Trump family and several of the people he has chosen for his administration.

...Under federal law, the tax, which is levied at a 40 percent rate, applies only to estates worth more than $5.45 million for individuals and $10.9 million for couples. Estates worth less than that may be passed on to heirs tax-free. Last year, just 0.2 percent of estates of people who died were subject to the tax, according to estimates by the Tax Policy Center, a Washington-based research group that’s a joint venture of the Urban Institute and the Brookings Institution.

At that 18.8 percent effective rate, repealing the tax would be a large windfall to the leaders-in-waiting of the Trump administration.

Trump’s estate would save $564 million, based on his estimated net worth of $3 billion. Trump disagrees with that net-worth estimate, which Bloomberg News compiled in July; he has said his net worth exceeds $10 billion. If so, his savings would increase-- to as much as $1.9 billion at an 18.8 percent effective tax rate. Trump’s transition team didn’t respond to a request for comment for this story.

Trump’s Commerce secretary choice, Wilbur Ross, might save about $545 million, based on his estimated net worth of $2.9 billion. Ross is the chairman and chief strategy officer of WL Ross & Co. LLC. Richard DeVos, the father-in-law of Trump’s education secretary choice Betsy DeVos, might save $900 million, based on his estimated $4.8 billion net worth. Richard DeVos is co-founder of Alticor Inc., the parent of closely held direct-seller Amway Corp. Their net worth estimates were compiled by the Bloomberg Billionaires Index.

Repealing the tax would also benefit Treasury secretary nominee Steven Mnuchin, who held shares in CIT Group Inc. worth more than $100 million as of Dec. 2. And Linda McMahon, Trump’s pick to head the Small Business Administration, and her husband, Vince McMahon, have earned hundreds of millions of dollars after founding World Wrestling Entertainment Inc.

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Republican Kathryn Barger, Predictably, Pisses on Democratic Endorsers

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The gang's all here: Hilda Solis, Janice Hahn, their GOP Latino-hating pal Kathryn Barger and Sheila Kuehl 

-by Dorothy Reik
President, Progressive Democrats of the Santa Monica Mountains


Once Republican Kathryn Barger was elected to the L.A. County Board of Supervisors, defeating Democrat Darren Park, she wasted no time in showing her true colors-- not brown or black or even purple-- her color is TRUMP RED.

It was a busy first day in the Chamber with Barger going along with the rest of the Supervisors on many good motions but then the rubber met the road. On protection for immigrants who fear for their safety and whose families are under threat of being torn apart, Barger abstained. If Hilda Solis held her motion so her endorsed candidate Barger would make the vote unanimous she was sadly mistaken:
Solis recommended protections for immigrants, a motion she previewed two weeks ago but chose to hold for a vote until after Hahn and Barger were sworn in. After more than 100 speakers expressed their support and dozens more chose to waive their time to speak at the end of a long day that motion was approved on a 4-0 vote, with Barger abstaining.
Another Barger endorser who might be scratching her head is Maria Elena Durazo, Vice Chair of the Democratic National Committee no less! How can she endorse a Republican? She can because the Democratic Party is undisciplined giving its members license to be unprincipled.

Of course Maria and Hilda were not the only Democrats who fell for Barger’s promises in spite of warnings that she had supported the sheriff’s abuse of minority tenants in her district as the chief deputy of right wing Republican disaster Michael Antonovich. The fact that he annointed her as his preferred successor, undoing the term limits put in place to get rid of him, should have been enough to send them running. "Los Angeles County Supervisor Michael D. Antonovich has tapped his chief of staff, Kathryn Barger-Leibrich, as his preferred successor." This rotten apple did not fall far from her tree.

Way before Trump’s name became a household word outside of New York, minorities in Barger’s district, especially in the Antelope Valley and Palmdale, faced abusive, racist policing. The district had to settle a federal lawsuit for millions of dollars. "Federal officials said some (italics are mine) sheriff's personnel in the Antelope Valley had engaged in a 'pattern or practice of unconstitutional and unlawful policing regarding stops, searches and seizures, excessive force, and discriminatory targeting of voucher holders in their homes.'"

Barger supported the sheriffs and they returned the favor: "Campaign finance statements posted Monday show that the Assn. for Los Angeles Deputy Sheriffs and Los Angeles County Firefighter Local 1014 have each contributed $400,000 to the outside committee set up to support Barger." Barger also supports the environmentally disastrous Newhall Ranch development and the Chiquita Canyon landfill expansion, both abhorred by environmentalists.

In addition to Durazo and Solis, the following leading Democrats endorsed Barger: Sheila Kuehl, Gloria Molina, Zev Yaroslavsky, Eric Garcetti and Jeffrey Prang. Depressing-- but something to remember as time goes on.

They could have supported the Democrat, Darrell Park, who was endorsed by the Los Angeles County Democratic Party and all the Democratic Clubs, but they didn’t. Why? Would Barger have won anyway? We will never know. The residents of District 5 are the losers here-- even more than Darrell Park. They are the ones who will continue to live with abusive sheriffs and who will have to continue their fight against the Chiquita garbage dump (let’s call it what it is!) and the disastrous Newhall Ranch development and their own elected supervisor will be leading the charge against their efforts.

But how were they to know? The leading Democrats endorsed her. They trusted the Democratic leadership. We know how that turned out in the presidential election. It worked out the same way in District 5. That’s where Our Revolution needs to start.

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Nancy Pelosi = Bob Michel? Maybe... But The House Dems Have No Newt To Save Them

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Robert Michel (R-IL) was in Congress for 38 years, starting when I was a pre-teen. And he was After serving as Minority Whip for half a dozen years, he became Minority Leader in 1981 and was finally ousted in 1995, completely changing the fortunes of the utterly pathetic House Republicans. Before Congress, Michel had served as an infantryman during World War II, earning two Bronze Stars, a Purple Heart and 4 battle stars. But getting rid of Michel, a decent, old school Peoria gentleman, breathed new life into the GOP. For the entire 38 years he served in Congress-- employing the same failed strategies and tactics over and over and over-- the GOP was never the majority party. That changed-- and in a really big way-- as soon as they, painfully, put Michel out to pasture. I say "painfully," because he came under withering attack from his own party's far right, led by... a slick hustler: Newt Gingrich. By the early 90s Gingrich and other Republican extremists, tired of being irrelevant started attacking Michel as a weak and ineffective compromiser who just wanted to get along with the Democrats, play golf with them and never fight hard for Republican ideals.

Gingrich was seen as a "bomb-thrower" but more and more House Republicans were rallying to his standard and Michel decided to not seek reelection in the 1994 midterms, ceding party leadership to Gingrich and his aggressive right-wing agenda. That year the Republicans swept into power, winning 54 Democratic seats and taking over the House for the first time since 1952, even defeating House Speaker Tom Foley as well as several senior committee chairmen. Gingrich became Speaker and the GOP remained in power until the Democrats stumbled into a very short-lived majority in 2006.

Since 2010 Pelosi-Michel comparisons have been something Democrats whisper about. almost all the overt criticism of her leadership comes from the right, from the Republican wing of the Democratic Party (the Blue Dogs and New Dems, who hate her for her progressive instincts however faded). Tim Ryan, obviously, was no Newt Gingrich. In fact, the spineless House Democrats don't have anyone willing to stand up to Pelosi except much worse alternatives (again, Blue Dogs and New Dems), who want to move the party in far worse directions than Pelosi has steered it. Younger leaders who she's taken under her wing to groom for party leadership-- particularly Chris Van Hollen and Xavier Becerra-- have grown tired of waiting for her to move on. It was like being a prince of England under Elizabeth II. Last year Van Hollen said "screw it" and ran for an open Senate seat and last month Becerra took an appointment as California Attorney General, widely seen as a stature-raising stepping stone for the Feinstein Senate seat.

Now the House Democrats have only the dimmest of possible prospects for the post-Pelosi/Hoyer era: corrupt garbage conservatives like New Dem chief Joe Crowley and Congress' most universally hated-Democrat: Debbie Wasserman Schultz. Hoyer has been training two rot-gut right-wing Blue Dogs for leadership positions: Kyrsten Sinema, who has the worst voting record of any Democrat returning to Congress next year, and Illinois reactionary and Rahm Emanuel protégée Cheri Bustos.

Pelosi has the 25th ProgressivePunch lifetime crucial vote score (93.80). Among the two dozen Democrats with better voting records, almost all of them all also extremely old-- many tired and jaded-- and some of the younger ones not showing any real leadership abilities and inclinations. Mark Pocan from Madison may be the one bright exception, although it's reasonable to root for Judy Chu (CA) and Karen Bass (CA) to step on the gas a little as well. Another hope for future-- and not distant-- leadership is Ted Lieu. Like Pocan, Chu and Bass, Lieu is no bomb-thrower of a Gingrich variety and I don't see him ever leading a much-needed revolt against a worn-out Pelosi. Yesterday's New York Times included a somewhat fatuous piece, The Next Class of California Political Leaders and the only member of Congress they included was Lieu. They pointed out that one of the most alarming factors facing the Democrats today is that their leaders are all relics, although they politely called it "a paucity of younger Democrats" but claim California is a bright spot where there is "a generational renewal" as "Gov. Jerry Brown, 78; Senator Barbara Boxer, 76; Senator Dianne Feinstein, 83; and Nancy Pelosi, the house minority leader, who is 76 approach the end of their public careers."
This new class of Democratic leaders seems likely to reshape the political face of California for a generation. But for national Democrats, they also represent a potential talent pool of leaders who can help pull the party out of the worst crisis it has faced since 2005, the last time the Republicans controlled the White House and both houses of Congress. California also stands ready to become a laboratory for Democratic policy that, it seems fair to say, will have little chance for enactment in Washington, at least for the next two years.

There may be no more Democratic state than California in this new Trump era. This election delivered the party two-thirds control of both houses of the Legislature, in addition to control of all statewide elected officials. And Democrats here stand in stark contrast in terms of ideology and demographics to Mr. Trump and his followers.

That has been particularly clear this week in Sacramento, where the Democratic leaders of the Assembly and Senate-- Kevin de Leon, the president of the Senate, and Anthony Rendon, the leader of the Assembly-- introduced legislation intended to thwart any effort by Mr. Trump to crack down on immigration.

...Both Mr. Rendon and Mr. de Leon are viewed as part of this new class of leaders. They are also Latino, like many of the elected officials on the list below. Latinos now make up 40 percent of the state’s population. In the latest sign of their rising influence here-- and presumably nationally, at least at some point-- Mr. Brown appointed Representataive Xavier Becerra of Los Angeles as attorney general, succeeding Kamala Harris, who was elected last month to fill Ms. Boxer’s position in the Senate.
Among the bright-spots the Times pointed to were L.A. Mayor Eric Garcetti (45), state Senate leader Kevin de León (49), Becerra, the still completely unproven Kamala Harris (52), the much-disliked slimy corporate whore Gavin Newsom (49) and, of course, Lieu (47), a nose-to-the-grindstone legislative powerhouse who is committed to accomplishing the agenda that drew him to public service-- ameliorating Climate Change, protecting civil liberties, fighting for equal opportunities for working families... Problem with younger people, like Lieu? I hope I'm not speaking out of school here but I begged him to run for DCCC chairman and he turned me down flat because he has-- as people his age tend to-- two young sons, Brennan and Austin, who he is committed to spending real time with, something that would be impossible to do and simultaneously be a winning DCCC chairman. Alas, being a winning DCCC chair isn't something that has probably ever crossed the mind off Ben Ray Luján (44 and a bachelor), since he-- even more so than Bob Michel or Nancy Pelosi-- only knows the rut of losing and losing and losing; he was instructed by Steve Israel, expert in nothing but losing-- and kept the losinest team in town, the corrupt and incompetent DCCC staff.



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Two Ways of Looking at U.S. Industrial Policy

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U.S. industrial policy, as practiced (click to enlarge; source)

by Gaius Publius

I was of two minds,
Like a tree
In which there are two blackbirds.

    (with apologies to Wallace Stevens)

Much of the debate around U.S. trade policy — or "trade" policy, since so much of it really concerns capital flow and "investor rights" than it does actual trade — is really an attempt to define and direct U.S. industrial policy.

Here's one definition of "industrial policy":
The industrial policy of a country, sometimes denoted IP, is its official strategic effort to encourage the development and growth of part or all of the manufacturing sector as well as other sectors of the economy.[1][2][3] The government takes measures "aimed at improving the competitiveness and capabilities of domestic firms and promoting structural transformation."[4] A country's infrastructure (transportation, telecommunications and energy industry) is a major part of the manufacturing sector that often has a key role in IP.
Ignore the part about "aimed at improving the competitiveness of domestic firms," since industrial policy can have other, more pernicious goals, as you'll see shortly. Industrial policy certainly promotes "structural transformation" when it acts. In the same way, by inaction industrial policy leaves in place structures it prefers not to disturb.

In short, "industrial policy" is what a nation does or does not do to structure its manufacturing capability — its ability to produce good domestically, with domestic labor — as it wishes. In other words, the goal of a nation's industrial policy is to enable the wishes of the nation's leaders, whatever they are, even when those wishes are other than "improving the competitiveness of domestic firms."

Let's look at two definitions of current U.S. industrial policy, in particular, mine and Marcy Wheeler's. While quite different, these definitions are not mutually exclusive, since, as the piece quoted above points out, "Industrial policies are sector-specific." One (mine) deals largely with manufacturing for the privately financed consumer-based economy. Wheeler's deals largely with the publicly financed and supposedly military-based economy.

First my own definition, then Wheeler's.

U.S. Industrial Policy — Beggar the Nation to Enrich the Wealthy

If you consider the effect (i.e., the goal as practiced) of U.S. industrial policy, you can't in good conscience say it's "aimed at improving the competitiveness of domestic firms," since what would improve that competitiveness (that is, bolster the competitiveness of goods manufactured domestically) is the kind of protectionism practiced during the first 200 years of the nation's history, explicitly argued by Alexander Hamilton and adopted under the George Washington administration.

The Washington administration, and every administration until Reagan's, had as a goal to increase the competitive success of the domestic manufacturing sector, the sector powered by U.S. labor, relative to both domestic (U.S.) markets and world markets. Under Reagan, and under every president since — Bush I, Clinton, Bush II, Obama — the U.S. manufacturing sector, or that part of it that services the consumer economy, has been systematically dismantled. (The arguments that this is true are legion, but for the short version, think NAFTA.)

Thus my definition of U.S. industrial policy as practiced:
Current U.S. industrial policy is to move our consumer manufacturing capability out of the country at the fastest possible rate and to hand the (untaxed) savings to billionaires, using corporations as a pass-through.
That is, the people who control U.S. government policy vis-à-vis the manufacture of consumer products make sure that the nation's manufacturing worker class is made poorer so that the savings in labor cost can go into the pockets of the corporate ownership and financier classes. They do this to the greatest extent possible, and at the fastest rate allowable under current conditions.

They do this by action — through treaties like NAFTA, for example, as well as numerous bilateral agreements — and by inaction, through tax policies that don't interrupt, or in many cases accelerate, the wealth drain out of the worker class (including white collar workers) into the pockets of the international wealthy.

Regarding U.S. industrial policy for the consumer manufacturing sector, a person would be hard put, I think, to disagree. Which is why I wrote at the start of this piece that the "wishes" or goals of a nation's policy don't necessarily have to be beneficial to its manufacturing sector. In this case, the U.S. beggars (dismantles) its manufacturing sector for another goal — the enrichment of those who control the political and political-messaging processes.

The F-35 As U.S. Industrial Policy

Marcy Wheeler takes another approach to determining what U.S. industrial policy is, and hits the nail on the head, at least as regards the military-industrial-congressional sector. Wheeler discusses that here (my emphasis):
Our Industrial Policy Is the F-35

...I actually think the [Carrier] deal ought to elicit a more interesting discussion of industrial policy — the kind of systematic intervention that [economist Jared] Bernstein talks about that might actually do something about the hollowing out of America’s manufacturing base.

Such a discussion has long been forbidden in American political discourse, in part because the same economists pretending such whack-a-mole bribes haven’t become the norm in American political life also pretend that an unfettered “free” market (always defined to include mobile capital and goods, but not labor) will benefit everyone.

Yet even during the period when any discussion of industrial policy has been forbidden, we’ve had one.

Our industrial policy consists of massive US [taxpayer-financed] investments in manufacturing war and intelligence toys that we then sell to foreign governments. When done with Middle Eastern petro-states like Saudi Arabia, that trade goes a long way to equalize our foreign trade deficit, but it contributes directly to instability that then requires us to intervene and build more war toys. That investment in war leads, in turn, to a disinvestment in publicly funded infrastructure that could also provide jobs in the heartland.

The most obvious symbol of our unacknowledged industrial policy is the F-35...
Wheeler goes on to add:
Our current industrial policy, you see, feeds so few prime contractors that they are virtually immune from the competition that might pressure them to deliver quality goods. Which leads, in turn, to rework, contract overruns, and contractors walking out of the building with our government’s most closely guarded secrets, all with no consequences.

Let’s stop pretending (as this piece does) that America’s manufacturing, increasingly dominated by the production of war toys, exists in a a real market, shall we?
Which is where our views converge:
Once we do that, we might begin to address the diseases of our defense contracting and — more importantly — rediscover the value of investing in other kinds of manufacturing that our country needs to have. Justify these investments by some future defense need, I don’t give a damn (though there are military officials who will soberly explain the risks of the hollowing out of our manufacturing base). But invest in the technologies the US needs to stay competitive and retain a manufacturing base.
And there it is, two definitions of "U.S. industrial policy," one for manufacturers in the privately financed consumer sector and one for manufacturers in the tax-payer financed military-industrial-congressional sector.

Interesting how the source of the money used — whether it comes from the public pocket (yours and mine) or the pocket of those who own the business — determines where the manufacturing occurs. It probably helps a lot that publicly financed manufacturing includes a very generous profit guarantee (which Wheeler also discusses), a guarantee not available to private corporations.

These must guarantee their profit — and their mahogany suite compensation and "golden parachutes" packages — by taking from tax-payers in another way. They take from them directly, in other words, in the form of lost wages, since they can't use the IRS as an extraction tool.

GP
 

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Are Schools Afraid To Teach Critical Thinking? Or Is It Just Too Damn Hard?

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Yesterday charter school shill Sarah Hernandez jumped into the open seat race for CA-34, one of the bluest districts in the country. The last thing that kind of district needs is some pawn on the charter school billionaires jumping into Congress disguised as a progressive Democrat just because EMILY's List demands a woman fill the seat. Betsy DeVos is a woman too. Stephen Henderson, who writes for the Detroit Free Press knows her well and shared his insights about why she could well be Trump's most dangerous cabinet pick so far with USA Today readers this week.
In Detroit, parents of school-age children have plenty of choices, thanks to the nation's largest urban network of charter schools.

What remains in short supply is quality.

In Brightmoor, the only high school left is Detroit Community Schools, a charter boasting more than a decade of abysmal test scores and, until recently, a superintendent who earned $130,000 a year despite a dearth of educational experience or credentials.

On the west side, another charter school, Hope Academy, has been serving the community around Grand River and Livernois for 20 years. Its test scores have been among the lowest in the state throughout those two decades; in 2013 the school ranked in the first percentile, the absolute bottom for academic performance.

Or if you live downtown, you could try Woodward Academy, a charter that has limped along near the bottom of school achievement since 1998, while its operator has been allowed to expand into other communities.

This deeply dysfunctional educational landscape is no accident. It was created by an ideological lobby that has zealously championed free-market education reform for decades, with little regard for the outcome. And at the center of that lobby is Betsy DeVos, the west Michigan advocate whose family has contributed millions of dollars to the cause of school choice and unregulated charter expansion throughout Michigan.

President-elect Donald Trump has made a number of controversial cabinet nominations already. But none seems more inappropriate, or more contrary to reason, than his choice of DeVos to lead the Department of Education.

DeVos isn’t an educator, or an education leader. She’s not an expert in pedagogy or curriculum or school governance. In fact, she has no relevant credentials or experience for a job setting standards and guiding dollars for the nation’s public schools.

She is, in essence, a lobbyist-- someone who has used her extraordinary wealth to influence the conversation about education reform, and to bend that conversation to her ideological convictions despite the dearth of evidence supporting them.

For 20 years, the lobby her family bankrolls has propped up the billion-dollar charter school industry and insulated it from commonsense oversight, even as charter schools repeatedly failed to deliver on their promises to parents and children.

DeVos is a believer, and a powerful influence wielder for the special interest she has championed. But that doesn't make her the right pick to helm an entire arm of the federal government. Wealth should not buy a seat at the head of any policy-making table.

That is true especially in public education-- a trust between government and the people that seeks to provide opportunity for those who wouldn’t otherwise have it.

Supporters call Betsy DeVos an "advocate" who cares for children. And she may be that.

But the policy expression of that concern has been one-sided, and as much about establishing an industry as it is about kids.

The DeVos family has helped private interests commandeer public money that was intended to fulfill the state's mandate to provide compulsory education. The family started the Great Lakes Education Project, whose political action committee does the most prolific and aggressive lobbying for charter schools.

Betsy DeVos and other family members have given more than $2 million to the PAC since 2001. GLEP has spent that money essentially buying policy outcomes that have helped Michigan's charter industry grow while shielding it from accountability.

This summer, the DeVos family contributed $1.45 million over two months-- an astounding average of $25,000 a day-- to Michigan GOP lawmakers and the state party after the Republican-led Legislature derailed a bipartisan provision that would have provided more charter school oversight in Detroit.

GLEP also pushed hard and successfully to lift the cap on charter schools a few years ago, even though Michigan already had one of the highest numbers of charters in the nation, despite statistics suggesting charters weren't substantively outperforming traditional public schools.

And in 2000, the DeVos extended family spent $5.6 million on an unsuccessful campaign to amend Michigan's constitution to allow school vouchers-- the only choice tool not currently in play in Michigan.

Even if Betsy DeVos ceased her substantial contributions to pro-school choice lawmakers, or to GLEP’s PAC, what credibility would she have in a policy job that requires her to be an advocate for all schools? How could she credibly distance herself from her history as a lobbyist?

Beyond the conflicts, there are also deep questions about her substantive understanding of education policy.

As a private citizen, DeVos is free to hold any belief she wants, and to promote her beliefs however she likes, regardless of how they comport with fact or outcome. But as secretary of Education, DeVos would be expected to help set standards, guide accountability and oversee research in a way that benefits children, through outcomes, not one particular interest or industry. And more important, the U.S. Secretary of Education must understand the value of both high-performing charters and traditional public schools.

She has no track record of working along those lines, and no experience that suggests she’s even interested in it.

Largely as a result of the DeVos lobbying, Michigan tolerates more low-performing charter schools than just about any other state. And it lacks any effective mechanism for shutting down, or even improving, failing charters.

We're a laughingstock in national education circles, and a pariah among reputable charter school operators, who have not opened schools in Detroit because of the wild West nature of the educational landscape here.

In Michigan, just about anyone can open a charter school if they can raise the money. That's not so in most other states, where proven track records are required. In other states, poor performers are subject to improvement efforts, or sometimes closed. By contrast, once a school opens in Michigan, it's free to operate for as long as it wants.

And in Michigan, you can operate a charter for profit, so even schools that fail academically are worth keeping open because they can make money. Michigan leads the nation in the number of schools operated for profit, while other states have moved to curb the expansion of for-profit charters, or banned them outright.

The results of this free-for-all have been tragic for Michigan children, and especially for those in Detroit, where 79% of the state's charters are located.

A yearlong Free Press investigation found that 20 years after Michigan's charter school experiment began, Detroit's charter schools have shown themselves to be only incrementally stronger, on average, than traditional public schools. They have admirable graduation rates, but test scores that look nearly identical to those of public schools.

The most accurate assessment is that charter schools are simply a second, privately managed failing system. Yes, there are high-performing outliers--  slightly more than 10% of the charter schools perform in the top tier. But in Detroit, the best schools are as likely to be traditional public schools.

DeVos and her family have not been daunted by these outcomes. It's as if the reams of data showing just incremental progress or abysmal failure don't matter. Their belief in charter schools is unshakable, their resistance to systematic reforms that would improve both public and charter schools unyielding.

They have also pushed hard on schools of choice, where districts open their borders to kids from other jurisdictions.

In concept, it could be a great equalizer: Children from poor districts could attend schools that have many more resources. But in practice, white and more affluent parents have fled as poorer, minority kids have come into their schools, exacerbating de facto segregation, according to a report by Bridge Magazine.

This newspaper has been, and will continue to be, an advocate for successful charter schools, and for educational choice as one way-- but certainly not the only way--  to improve this state’s school landscape.

But it's impossible to imagine such improvement will be aided by an education secretary so willfully impervious to the relevant data. Instead, Betsy DeVos' lodestar has been her conviction that any nontraditional public school is better than a traditional one, simply because it's not operated by government.

Charter school advocates like DeVos reject any criticism of charters as a defense of the status quo. But that's a gross and partisan distortion, especially for people like me.

I've made the most personal endorsement possible by sending my two children to charter schools in Baltimore and here in Detroit. In both cases, we've chosen high-quality charters; in Detroit, the best choices were far scarcer than in Baltimore. And to get into the high-performing school we chose in Detroit required an extraordinary effort. I have the income, the transportation and access to be sure my kids get the best opportunity available.

Most Detroit parents don't enjoy those same advantages, and they are stuck choosing from among a sea of mediocrity or worse.

DeVos' lobbying hasn't been good for Detroit, or Michigan.

It won't be good for the nation.

And if you noticed that virtually every member of the Trump Administration-- from top to bottom-- is weighted down by unbelievable conflicts of interest, you would be guessing right if you assumed DeVos is one of the worst. Even the Wall Street Journal couldn't help noticing yesterday. Her family invests heavily in Social Finance Inc., "a startup whose fortunes hinge in part on policies crafted by the department Ms. DeVos would run... Much of SoFi’s business stems from refinancing student loans; the Department of Education is by far the country’s biggest student lender, with $1.3 trillion in outstanding loans."

So what happens when we educate children poorly. I'm sure you know. Trump's election stands as a testament to ill-advised political interference in the education system by right-wing ideologues like DeVos for decades. This week an occasional DWT contributor, author and neuroscientist Daniel Levitin, penned a special report for the New York Daily News on the "fake news" pizzagate insanity of recent days. This could only happen in a country filled with self-righteous, ill-educated morons, the people who, in large part, elected Trump. Dan started his piece by acknowledging he was about to drive some of those morons into a frothy frenzy "by saying two things that will surely make some people very mad. First, the language we use has begun to obscure the relationship between facts and fantasy. Second, this is a dangerous byproduct of a lack of education in our country that has now affected an entire generation of citizens."
Regarding language: we are all being more than a bit too careful in how we refer to falsehoods. Perhaps in an effort not to create interpersonal confrontations, an effort to "just get along" we have started to use euphemisms to refer to things that are just plain whack-a-doo crazy. The lie that Washington, D.C. pizza shop Comet Ping Pong was running a sex slave operation spearheaded by Hillary Clinton led to a shooting on Sunday. This newspaper called the lie a "fringe theory."

Other euphemisms for lies are counterknowledge, half-truths, extreme views, conspiracy theories, and, the more recent appellation, "fake news."

The phrase "fake news" sounds too playful, too much like a schoolchild faking illness to get out of a test. The euphemisms obscure the fact that the sex-slave story is an out-and-out lie. The people who wrote it knew that it wasn't true. There are not two sides to a story when one side is a lie. Journalists-- and the rest of us-- must stop giving equal time to things that don't have an opposing side. Two sides to a story exist when evidence exists on both sides of a position. Then, reasonable people may disagree about how to weigh that evidence, and what conclusion to form from it. Everyone, of course, is entitled to their own opinion. But they are not entitled to their own facts. Lies are an absence of facts and, in many cases, a direct contradiction of them.

Regarding education: We have failed to teach our children what constitutes evidence, and how to evaluate it. Edgar Welch, the Comet Ping Pong shooter, told authorities that he was "investigating" the conspiracy theory. I believe he thought that is what he was doing, but there is no evidence that any investigating was performed. I suspect that this ignorant citizen does not know what it is to compile and evaluate evidence. In this case, one might look for a link between Hillary Clinton and the restaurant, behaviors of Clinton that would suggest an interest in running a prostitution ring, or even a motive for why she might benefit from such a thing (certainly the motive could not have been financial, given her speaking fees). Or, lacking the mentality and education to conduct one's own investigation, one could rely on professionals by reading what trained investigative journalists have to say about the theory. The fact that no credible journalist gives this any credence should tell you all you need to know.

We have failed to teach our children to fight the evolutionary tendency towards gullibility. We are a social species, and we tend to believe what others tell us. And our brains are great storytelling and confabulation machines: given an outlandish premise, we can generate fanciful explanations for how they might be true. But that's the difference between creative thinking and critical thinking, between lies and the truth: the truth has factual, objective evidence to support it.

A Stanford University study of civic online reasoning tested more than 7,800 students from intermediate school through college for 18 months ending June 2016. The researchers cite a "stunning and dismaying consistency. Overall, young people's ability to reason about the information on the Internet can be summed up in one word: bleak." They were horrible at distinguishing high quality news from lies. We need to start teaching them to do so now. And while we're at it, the rest of us could use a refresher course. Fortunately, evidence-based thinking is not beyond the grasp of most 12-year olds, if only they are shown the way.

Our kids isn't learning.

Many are saying that Pizzagate is a direct result of fake news (but let's call it like it is: lies). But what weaponizes the lies is not the belief in them-- belief in lies can be harmless, such as belief in Santa Claus or that these new jeans make me look thin. The danger is in the intensity of that belief-- the unquestioning overconfidence that it is true.

Critical thinking trains us to take a step back, to evaluate facts and form evidence-based conclusions. What got Welch into a situation of discharging a firearm in a DC pizza parlor was a complete inability to understand that a view he held might be wrong. The most important quality in critical thinking is in short supply these days: humility. If we realize we don't know everything, we can learn. If we think we know everything, learning is impossible. Somehow, our educational system and our reliance on the internet has led to a generation of kids who do not know what they don't know. If we can accept that truth, we can educate to stamp out the lies.
Yesterday, the NY Times looked at those PISA results (from the video up top) and although there is some controversy over the premises, everyone agrees that the U.S. is doing pretty badly at educating young people-- treading water in the middle of the pool. "Generally speaking, the smartest countries tend to be those that have acted to make teaching more prestigious and selective; directed more resources to their neediest children; enrolled most children in high-quality preschools; helped schools establish cultures of constant improvement; and applied rigorous, consistent standards across all classrooms."
For now, the PISA reveals brutal truths about America’s education system: Math, a subject that reliably predicts children’s future earnings, continues to be the United States’ weakest area at every income level. Nearly a third of American 15-year-olds are not meeting a baseline level of ability-- the lowest level the O.E.C.D. believes children must reach in order to thrive as adults in the modern world.

And affluence is no guarantee of better results, particularly in science and math: The latest PISA data (which includes private-school students) shows that America’s most advantaged teenagers scored below their well-off peers in science in 20 other countries, including Canada and Britain.

The good news is that a handful of places, including Estonia, Canada, Denmark and Hong Kong, are proving that it is possible to do much better. These places now educate virtually all their children to higher levels of critical thinking in math, reading and science-- and do so more equitably than Americans do. (Vietnam and various provinces in China are omitted here because many 15-year-olds are still not enrolled in school systems there, limiting the comparability of PISA results.)

As we drift toward a world in which more good jobs will require Americans to think critically-- and to repeatedly prove their abilities before and after they are hired-- it is hard to imagine a more pressing national problem. “Your president-elect has promised to make America great again,” Mr. Schleicher said. But he warned, “He won’t be able to do that without fixing education.”
Change for the sale of change is never the answer. In fact, its as likely that change will make thing worse instead of better. And, judging by who Trump picked to head his education efforts, worse is exactly the direction the U.S. will soon be headed.



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