Newsletter 92 - Winter 2018
A shock to the system
Video corner (Star Spangled Banner)
A shock to the system – Donald Trump’s victory in the 2016 presidential race surprised many observers, and his political opponents came up with one idea after another for seeking to change the outcome or failing that delegitimize his victory. We hoped at the time that the furor would die down eventually. Look on the bright side, 12/19/16.
None of these efforts to change the outcome of the election, or failing that delegitimize it, seem likely to accomplish much. It might be more productive for his opponents to focus on assessing, and if appropriate pushing for changes in, the policy proposals that Trump puts on the table after taking office. Realistically, however, the passions that have been unleashed must play out first.
A month after the inauguration, the “resistance” showed no signs of dissipating. And it went beyond opposing specific legislation (such as proposals to “repeal and replace” GovCare) to unprecedented foot dragging in confirming administrative appointments (essentially all of them), a tidal wave of investigations, and a barrage of lawsuits aimed at blocking proposed policy changes. Trump won, get over it, 2/20/17.
Is a constitutional crisis brewing? Opinions vary, but clearly the political climate has grown toxic and there is no turnaround in sight.
Ten months later, in a conscious effort to “focus on the positive for a change,” we reported signs of progress. Maybe the US economy would take off with an assist from the just enacted tax cuts, Congress would responsibly resolve differences over spending, the Mueller probe would fizzle out, etc. SAFE newsletter, Winter 2017.
Not quite! The president’s opponents still seem intent on fighting him versus promoting constructive solutions to national problems. His management style differs from that of most US presidents (the closest parallel that comes to mind is FDR). His ideas are anathema to the political/business/intellectual “elite,” which is used to running this country. And the Democratic Party has been moving left, in a way that will make political consensus increasingly difficult. See Ship of Fools, Tucker Carlson, 2018.
US economy – Gross Domestic Product growth speeded up in 2018, hitting 4.2% in the 2nd quarter. Full year growth is expected to come in at over 3% which hasn’t happened since 2004-2005. Revitalizing the US economy, 11/19/18.
A slowdown is expected in 2019, however, with a substantial chance of a recession by 2020. US economy will slow in 2019, Kevin Kelleher, fortune.com, 11/21/18.
Working in favor of robust growth are (A) the tax cuts that were enacted at the end of 2017 (with SAFE’s endorsement, despite our concern about budget deficits); and (B) the relaxation of government regulations in various areas of the economy (great idea, keep it up!).
Clouding the outlook are three major factors: (1) Disruption of global trade patterns as a result of the administration’s policy of threatening and/or imposing higher tariffs on imports from countries running trade surpluses with the US; (2) Federal Reserve interest rate hikes, which according to the president and his advisers are unduly discouraging business investment; and (3) soaring budget deficits, which reflect the absence of any semblance of fiscal discipline.
Assessments of the economic outlook are inherently subjective, so instead of pondering which analysts to believe one might focus on stock prices (a proxy for the overall expectations of the financial community).
Stock prices soared after the 2016 elections, as though to indicate that the market approved of the outcome. Thus, the Dow 30 Index (closing prices) rose from 18,260 on 11/7/16 to 24,719 (+35%) on 12/29/17. It went on to peak at 26,828 (+47%) on 10/3/18. A sharp correction followed, however, and the index closed at 23,327 on 12/31/18 ( down 6% for the full year).
After claiming credit while stock prices were rising, the president has blamed the recent trend reversal on monetary policy. Trump blasts Federal Reserve as “only problem” with US economy, Kelly Cohen, Washington Examiner, 12/24/18.
All things considered, our take is that the economic picture looked considerably brighter a year ago.
Fiscal problem – Congress hadn’t passed any of its annual appropriation bills in December 2017, but a continuing resolution was enacted to avert a shutdown. We remained hopeful that the differences under discussion would be sorted out in a reasonable way. SAFE newsletter, Winter 2017.
On the spending side, the two parties passed an extension of the continuing resolution that will keep the government operating until January 19. It would have been nice to get a final spending deal, but at least there wasn’t any serious damage such as might have resulted from coming to terms under the imminent threat of a government shutdown. Hopefully, the sticking points (spending levels for defense vs. non-defense functions, disaster relief, GovCare stabilization, etc.) can be sorted out in January.
The Bipartisan Budget Act enacted in February, however, ensured higher budget deficits by providing generous spending increases for all areas of the “discretionary” budget and resurrecting dozens of special interest tax breaks that had been left out of the tax bill. More shutdown drama, mediocre results, 2/12/18.
Efforts were made this year to move appropriation bills for fiscal year 2019 through Congress without extensions i.e., get them all enacted by October 1. Five appropriation bills became law in September, including defense, while the deadline for the other seven was extended by a continuing resolution. The December 21 deadline ultimately passed without a deal due to an impasse over “border wall” funding, and the government units covered by the seven appropriation bills are now operating in “shutdown” mode.
The Bipartisan Budget Act provided for a joint select committee review of possibilities for reforming the budget and appropriations process. The 16 JSC members readily agreed that the system was “broken,” but they failed to pass a slate of proposed process changes. JSC proposals for budget system review, 11/26/18. This suggests the real issue isn’t a flawed system, it is a lack of political will to make the existing system work.
SAFE has periodically reached out to DC about the fiscal problem, as for example in a round of individualized letters that we sent to selected political leaders after enactment of the Bipartisan Budget Act. Our eight letters and a lone response (from the president in October) are posted on line. SAFE to DC: Please fix this problem, 2/26/18.
The finger pointing about the shutdown is just getting started. After the new Congress convenes in January, there will be one warning after another about the anticipated consequences. It’s already been suggested, for example, that food stamp benefits might have to be suspended (apparently as a result of “nonessential” employee absences). Food stamp money will run out by end of January if government shutdown lasts that long, Michael Snyder, freedomoutpost.com, 12/27/18.
The dollars involved are chump change by DC standards, but the border wall funding issue is deep-rooted and Democrats don’t seem disposed to negotiate. See the next section for discussion.
Immigration – The back story for the “border wall” issue was reprised in a recent blog entry. Briefly, we faulted (1) Democratic congressional leaders for adamantly opposing this project without offering solid reasons for their opposition, (2) Republican congressional leaders for giving lip service to the president’s goal without working to get it approved, and (3) the president for not making clear what he would do if the matter wasn’t resolved to his satisfaction. We’re all in the same boat, Item A, 12/24/18.
One could hardly deny that the situation on the southern border is out of control, not with tens of thousands of would-be immigrants (including children) illegally entering the country. And under existing law, at least as interpreted by certain judges around the country, the government has very little latitude in responding to the situation.
Suppose someone succeeds in crossing the border illegally, for example, and then demands asylum based on alleged persecution by the government in their home country. A legal hearing is required to consider the claim, which can take months due to the asylum case backlog. A district court judge in the 9th Circuit has ruled that such claimants can’t be returned to Mexico pending the hearing. And if released in the US, they may or may not show up for the hearing.
The Supreme Court denied an emergency government petition for review of the judge's nationwide enforcement order, so at best this order will be in effect for the next year or so. The federal courts have shut down our entire government, Daniel Horowitz, conservativereview.com, 12/27/18.
Opponents of border wall funding claim that the proposed facilities (which may actually be multilayered fencing, steel slat barriers, or the like versus masonry walls) are a dumb idea. Presumptive House Speaker Nancy Pelosi, for example, has called then “immoral, ineffective and expensive.” But the arguments on the other side seem more persuasive.
Consider this analysis by the late Charles Krauthammer, which concludes that effective physical barriers on the border are a prerequisite – along with E-Verify and visa tracking - for resolving the long-standing problem of illegal immigration. Build the wall, Prager University, video (5:35), 2017.
As for cost, wall construction is a bargain – even if the true number is $25 billion versus the $5 billion (or less) being requested for FY 2019. The cost of the wall is nothing compared to the yearly cost of illegal immigration, Daniel Horowitz, conservativereview.com, 12/26/18.
At one million illegal aliens every year, that is a cost of between $74 and $150 billion every year just for that year’s flow of illegal immigrants. And no, there are not only 12 million illegal immigrants in the country. When prompted by Steve King at the judiciary hearing,[HHS Secretary Kirstjen] Nielsen admitted that there definitely are somewhere between 12 and 22 million, “higher than originally estimated.”
In sum, border wall funding deserves to be debated on the merits, and if a government shutdown is necessary to bring about such a debate, so be it.
Delaware issues – Your hard-working editor recently offered some policy suggestions to the Delaware Republican Party, and it would be great if the Democratic Party picked up some of these ideas too. Letter, 12/26/18.
#Better schools – Empower school building administrators to run their schools while dialing back oversight by school boards and government bureaucrats. Say no to funding demands for new categories of mandated special services. Otherwise, 100% of the student body may soon fall in at least one “extra” funding category.
#Affordable energy - Freeze or ideally roll back the “renewable” energy programs that are running up the cost of electric power for Delaware consumers and businesses without any real benefit to the public. On a recent Delmarva Power bill, my “renewable compliance charge” was over 15% of the “total electric delivery charges.”. Talk about cronyism at work!
#Spending discipline - There are plenty of wasteful functions or activities that were never justified in the first place and/or have outlived their usefulness. Why not come up with a “hit list” and go after some of them?
#Foresight - Unfunded retirement benefits now total over $10 billion, and it’s time to do something about them. Conservative Caucus of Delaware newsletter, 10/1/18.
New director – A new director was elected at the SAFE annual meeting in November, increasing the size of the board from 8 to 9. He is John E. Greer Jr., a retired professional engineer.
John teamed up with SAFE founder Bill Morris a few years ago to organize the Climate Common Sense group. He has actively followed the debate about the manmade global warming theory, and given informative talks on the subject.
Video corner – To end this issue on an upbeat note, listen to 500 high school students sing the Star Spangled Banner in a multistory hotel lobby. Be sure to watch in full screen mode. Video (2:34), chonday.com.
About SAFE - SAFE is a non-partisan, all-volunteer organization that was founded in 1996. We advocate smaller, more focused, lower cost government, to be achieved by cutting spending, restructuring “entitlements,” simplifying taxes, and rationalizing regulations.
SAFE BOARD OF DIRECTORS
Andrew Betley, (302) 239-9679
John Greer, (302) 479-0485
Dan Kerrick, treasurer, (302) 521-4272
Steve McClain, (302) 998-3910
Jerry Martin, (302) 478-5064
John Nichols, (302) 378-0683
rycK Stout, (302) 478-9495
Bill Whipple, president, (302) 464-2688
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