• ZipDialog Roundup for Friday, November 3

    Articles chosen with care. Your comments welcomed.
    Linked articles in bold purple

    Bowe Bergdahl, Army deserter held by Taliban, avoids prison sentence (Washington Post)

    Comment: This outcome is shocking. US soldiers died looking for this creep. Others were injured. Lots of resources devoted to finding a soldier who voluntarily abandoned his post and planned for weeks to do so.

    Pres. Trump immediately weighed in, via Twitter. My guess is that Trump’s position will be very popular on this issue. He’s implicitly daring the Democrats to come out on the other side, as many of them did (to their cost) on the NFL kneeling.

    More good economic news: Unemployment down to 4.1%, the lowest rate since 2000.

    Less good: Wage growth slow (Wall Street Journal, subscription)

    Best news of all: Strong Productivity Growth. (CNBC)

    Comments: Productivity growth is crucial. It is the underlying source of real wage growth.

    The biggest problem for the economy now is the misfit between the skilled jobs available and the unskilled workers who are unemployed.

    Tax Bill, next phase: We will find new details (none good, otherwise they wouldn’t be hidden), and gored oxen will come out to save themselves

    Example of hidden details:

    House Republicans claim the tax plan they introduced Thursday keeps the top individual rate unchanged at 39.6 percent—the level at which it’s been capped for much of the past quarter-century. But a little-noticed provision effectively creates a new band in which income is taxed at over 45 percent.

    Thanks to a quirky proposed surcharge, Americans who earn more than $1 million in taxable income would trigger an extra 6 percent tax on the next $200,000 they earn—a complicated change that effectively creates a new, unannounced tax bracket of 45.6 percent. –Politico

    Example of gored oxen:  Republican Tax Proposal Gets Failing Grade From Higher-Ed Groups (Chronicle of Higher Education)

    The House tax-reform proposal released today would discourage participation in postsecondary education, make college more expensive for those who do enroll, and undermine the financial stability of public and private two-year and four-year colleges and universities,” said Ted Mitchell, president of the American Council on Education and under secretary of education in the Obama administration, in a written statement.

    In broad terms, the bill would eliminate or consolidate a number of tax deductions meant to offset the costs of higher education for individuals and companies, including the Lifetime Learning Credit, which provides a tax deduction of up to $2,000 for tuition, a credit for student-loan interest, and a $5,250 corporate deduction for education-assistance plans. –Chronicle of Higher Education

    Comment: There is also tremendous pushback on the limitations on deducting state and local taxes, led by Republicans in high-tax states.

    These issues will be fought out over the next month, first in House committee, then on the floor in both chambers, then in reconciliation.

     Spain issues arrest warrant for Catalonia’s leader, who has fled the country (BBC)

    ◆ Mainstream media ignore bombshell, documented revelation that Hillary and DNC rigged primaries

    All three major TV news networks completely skip the story (Fox News)

    NYT: nothing

    Comment: It’s not surprising that most Democratic politicians are silent. But the story is a significant one, and it’s omission by mainstream outlets is bias, pure and simple.

     Pressure builds on AG Jeff Sessions, accused of false or misleading statements to Congress. The issue: what he knew Trump campaign officials’ contacts with Russia 

    The Atlantic magazine calls it: “Jeff Sessions’ Selective Memory

     

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    Hat Tip to

    ◆ Robert Pahre for the Chronicle of Higher Education story

     

  • The Republican Tax Proposal: A Quick Summary

    Articles chosen with care. Your comments welcomed.
    Linked articles in bold purple

    ◆ Republicans roll out their tax plan. Here are the key provisions

    The Wall Street Journal (subscription) reports:

    Business: 

    • Rates permanently drop from 35% to 20%, with lots of other changes in deductibility
    • One-time tax of 12% to repatriate overseas profits, returning them to US

    Individuals:

    • Reduces seven individual income tax brackets to four at 12%, 25%, 35% and 39.6%.
    • Top tax bracket set for married couples earning $1,000,000 per year and individuals earning $500,000.
    • Bottom tax bracket extends up to $90,000 for couples and $45,000 for individuals.
    • The proposal doesn’t change the top tax rates on capital gains and dividend income.
    • Keeps 401(k) rules intact
    • Nearly doubles individual standard deduction to $24,400 for married couples and $12,200 for singles in 2018.
    • Increases child tax credit from $1,000 in 2017 to $1,600 plus $300 for each taxpayer, spouse and non-child dependents.
    • Places new limit on home mortgage-interest deduction at loans up to $500,000, down from $1,000,000, but existing loans would be grandfathered.
      • Comment: Big impact on expensive homes, especially hitting NYC, San Francisco, Boston, and wealthy suburbs
    • Keeps estate-tax. Sets exemption at $5.6 million per person and $11.2 million per married couple. Repeals the tax in 2024.
    • Repeals the alternative minimum tax
    • Repeals an itemized deduction for medical expenses.
    • Repeals deduction for student-loan interest.
    • State tax deduction eliminated; local tax deduction changed (link here)

    Families would also no longer be able to deduct their state income taxes from their federal taxable income, another change that would have a particular impact on places like New Jersey and New York, where state taxes are higher than in other areas. Taxpayers will be able to deduct their property taxes up to $10,000. –Washington Post

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  • Very good news in the Housing Market

    2comments No tags Permalink 0

    New home sales surge 18.9 percent in September, highest level in 10 years (Reuters via CNBC)

    The increase came across all US regions.

    Sales of new U.S. single-family homes unexpectedly rose in September, hitting their highest level in nearly 10 years, offering hope that the housing market was regaining speed after appearing to stall in recent months.

    The Commerce Department said on Wednesday new home sales surged 18.9 percent to a seasonally adjusted annual rate of 667,000 units last month amid an increase in all four regions. That was the highest level since October 2007 and followed August’s upwardly revised sales pace of 561,000 units.  ….

    At September’s robust sales pace it would take 5.0 months to clear the supply of houses on the market, down from 6.0 months in August.

    A six-month supply is viewed as a healthy balance between supply and demand. –CNBC

    A reminder: all single-month data bounces around.

    Comment: The downside is that the Federal Reserve may take this as another indicator that it can raise interest rates. (My hunch: it will raise rates to partially offset the stimulus effect of a major tax cut, if and when that is passed.)

  • Government Debt and Political Hypocrisy (by both parties)

    I just read the comment of a Democratic friend who is shocked, shocked that Pres. Trump’s tax proposals will increase the US budget deficit.

    Factually, he’s right. So say all the static projections I’ve seen.

    But, as Paul Harvey used to say, here’s the rest of the story.

    My comment: US debt is a serious issue, but the political sparring is utterly hypocritical. It’s not just my Democratic friend. The Republicans are filling the air with their own false platitudes.

    Under Pres. Obama, US government debt doubled. We were not in a recession, as measured by economists, though we were coming out of a scary one.  During the Obama presidency, the economy was growing, albeit slowly.

    While Pres. Obama, Harry Reid, and Nancy Pelosi were busy blowing up the budget, the Dems had only praise for “government investments” and “the stimulus effect.” As for the spiraling national debt, they were deaf, dumb, and blind. But they sure played a mean pinball.

     

    Here is the data from the (truly) non-partisan Center for a Responsibility Federal Budget, which does not lay all the blame on Pres. Obama.

    Not only were the totals substantially higher, they were substantially higher as a percentage of US GDP.

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    The Sky Is Falling . . . or not

     

    At the time, Republicans strenuously complained, “The sky is falling.”

    Now, the shoe is on the other foot–and it is the other party complaining.

    And the rebuttals are coming from Republicans, not Democrats.

    It is the “party of fiscal responsibility” that is downplaying the impact of the tax cuts on national debt.

    Their main claim: “It’s all about growth.”

    The Democrats, who have never met a deficit they didn’t like, are complaining, “The sky is falling.”

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    Democratic Complaints about Republican Deficits

    The Democrats’ complaints center on two issues.

    • First, the plan is Republican and the government is controlled by Republicans, not their own party. In this Congress, with this President, the Democrats’ attitude echoes Groucho Marx’s song, “Whatever it is, I’m against it.”

    • Second, the deficit will be caused by the government taking less money from citizens rather than the Democrats’ preferred way of running deficits: excess government spending.

    Both sides richly deserve the Claude Rains Medal for hypocrisy.

  • ZipDialog Roundup for Wednesday, September 13

    Articles chosen with care. Your comments welcomed.
    Linked articles in bold purple

    ◆ Bad as Hurricane Irma was, it could have been even worse

    Homeowners’ preparations and evacuations meant relatively few deaths.

    As for the physical damage, it is huge but still smaller than feared. One way to see that is to look at insurance company stocks.

    Today, they are UP. Chicago Tribune headline: Stocks jump as relieved investors buy banks, insurers, tech

    Small insurers, especially ones that do a lot of business in Florida, climbed. … Larger insurers also rallied. … Travel-related companies rose as investors felt their businesses won’t take such a big hit.  –Associated Press via Chicago Tribune

    The most immediate problem now: restoring electric power to millions of homes.

     Apple makes a big noise with its rollout. $1k for new phones. Market is unimpressed (Wall Street Journal, subscription)

    Comment: Students at elite universities will use the new phones to send selfies at demonstrations against inequality.

     Study: Over 90% of MSM reports on Trump are negative, same as previous studies (Washington Times)

    Comment: To be fair, they do actually hate him.

     Trump’s travel bans finally made it to the Supreme Court, which affirmed the President (Washington Times)

    The ruling, which stays a decision from the 9th Circuit, keeps some 24,000 refugees from entering the US, at least temporarily.=

    Good economic news: Middle-class incomes in US for 2016 were highest in history (in real terms)  (Washington Post)

    These figures from the Census Bureau cover the final year of Pres. Obama’s tenure.

    Median household income rose to $59,039 in 2016, a 3.2 percent increase from the previous year and the second consecutive year of healthy gains, the Census Bureau reported Tuesday. The nation’s poverty rate fell to 12.7 percent, returning nearly to what it was in 2007 before a financial crisis and deep recession walloped workers in ways that were still felt years later. –Washington Post

    Seattle Mayor, Ed Murray, resigns after fifth person comes forward accusing him of child-sex abuse (Seattle Times)

    The latest accuser: Murray’s cousin. He had been a teenager, like the others.

    The computer scandal engulfing House Democrats continues to widen. Latest news: the IT contractor used a secret server, tried to hide it, and then falsified what was on it (Daily Caller)

    Imran Awan, the Pakistani IT aide who worked closely with Rep. Debbie Wasserman Schultz, also used Dropbox to back up data, which is illegal for Congressional data.

    Awan had access to all emails and office computer files of 45 members of Congress who are listed below. Fear among members that Awan could release embarrassing information if they cooperated with prosecutors could explain why the Democrats have refused to acknowledge the cybersecurity breach publicly or criticize the suspects. –Daily Caller

    Comment: This scandal receives almost no coverage. That’s a scandal, too.

     

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  • ZipDialog Roundup for Wednesday, September 6

    Articles chosen with care. Your comments welcomed.
    Linked articles in bold purple

    ◆ Hurricane Irma, with 185 mph winds, predicted to turn due north.

    Forecasts show it moving up Florida’s heavily-populated East Coast.

    Evacuations expected soon

    The company that commissioned the unverified Trump-Russia dossier is stonewalling Senate investigators (Fox News)

    The company, Fusion GPS, has no attorney-client privilege but it is simply giving the committee thousands of blank pages.

    Comment: Delay, delay, delay and hope the Senate gets tired of the investigation. It won’t. They will threatened contempt, which Sessions’ DOJ, unlike Holder’s, will take to court.

    Trump’s 6-month pause on DACA expiration leaves everything in Congress’ hands (Washington Post)

    The Democrats are united, so far. The Republicans are split, naturally.

    Comment: Don’t know if the D’s will stick together if funding the wall is part of the ultimate deal.

    Don’t know if the Congress can act on this at all.

    If they don’t, it will be a problem for Pres. Trump to simply extend DACA because the original act by Pres. Obama won’t pass constitutional muster (as Obama himself noted for years before he actually did it).

    Trump sides with D’s on debt ceiling, throwing R plans into chaos (Washington Post)

    Wants three-month extension plus Harvey relief, agreeing with Schumer and Pelosi, just as Ryan was panning the idea.

    US now knows the name of North Korea’s top military scientist, heading Kim’s programs (Washington Post)

    Comment: That doesn’t matter unless they have a way to “neutralize” him. Meanwhile, he’ll be living underground.

    How local housing restrictions strangle the US economy. Op-ed in the NYT, of all places

    If you live in a coastal city like New York, Boston or San Francisco, you know that the cost of housing has skyrocketed. This housing crisis did not happen by chance: Increasingly restrictive land-use regulations in the last half-century contributed to it.

    But what appears to be several local housing crises is actually a much more alarming national crisis: Land-use restrictions are a significant drag on economic growth in the United States. –Chang-Tai Hsieh and Enrico Moretti, op-ed in the NYT

    Comment: So obvious, even the NYT editorial page noticed, perhaps because New York City is one of the worst cities for housing restrictions.

    Uncertain if they will ever discover which political party controls all those cities with heavy restrictions.

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  • ZipDialog Roundup: Breaking News for Tuesday, August 8

    Articles chosen with care. Your comments welcomed.
    Linked articles in bold purple

    ◆ BREAKING: North Korea now making miniaturized, missile-ready nuclear weapons, U.S. analysts say (Washington Post)

    North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles, crossing a key threshold on the path to becoming a full-fledged nuclear power, U.S. intelligence officials have concluded in a confidential assessment.

    The new analysis completed last month by the Defense Intelligence Agency comes on the heels of another intelligence assessment that sharply raises the official estimate for the total number of bombs in the communist country’s atomic arsenal. The U.S. calculated last month that up to 60 nuclear weapons are now controlled by North Korean leader Kim Jong Un. Some independent experts believe the number of bombs is much smaller. –Washington Post, reporting on Defense Intelligence Agency

     

    North Korea’s dangerous game: Trump is not Obama (BESA, Israeli think tank)

    Pyongyang uses the buzz that accompanies its ballistic missile and nuclear tests, as well as the obscurity that conceals the extent of its infrastructure for weapons grade fissile materials production and nuclear weaponization, as tools with which to challenge Washington. Trump is not Obama, however. Kim Jong-un will need to tread carefully to avoid provoking an American preemptive strike. — Raphael Ofek for the Begin-Sadat Center for Strategic Studies

     Robust US economy: Record number of job openings (Bloomberg)

    The gain in job openings underscores the need for workers in an economy that’s continuing to expand. At the same time, the pool of qualified Americans is shrinking and making some positions tougher to fill, one reason economists expect the monthly pace of hiring will eventually cool. –Bloomberg

    Comment: Great news. Now, to get wages moving up and people trained to fill those openings.

     Google fires author of viral memo on the downside of diversity hiring (Bloomberg)

    Google was already being sued for discrimination, and some executives said that, after the memo, they could not “in good conscience” assign some people to work the memo’s author, James Damore. They claimed his memo “perpetuated gender stereotypes.”

    Mr. Damore’s own response, which virtually nobody prints begins this way:

    I value diversity and inclusion, am not denying that sexism exists, and don’t endorse using stereotypes. When addressing the gap in representation in the population, we need to look at population level differences in distributions. If we can’t have an honest discussion about this, then we can never truly solve the problem.
    Psychological safety is built on mutual respect and acceptance, but unfortunately our culture of shaming and misrepresentation is disrespectful and unaccepting of anyone outside its echo chamber. –James Damore

    James Damore’s complete, original memo and response are here (Medium.com)

    Comment:

    • Expect him to sue.
    • Expect him to find it hard to gain employment in Silicon Valley.
    • Expect an honest discussion of these issues to become impossible.

    More troubles for Obamacare: Major insurers keep leaving the marketplace (Fox News)

    Exchanges are now down to 3 states. Insurers lost over $1 billion in last two years.

     

     

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  • ZipDialog Roundup for Friday, August 4

    Articles chosen with care. Your comments welcomed.
    Linked articles in bold purple

    ◆ EXCELLENT ECONOMIC NEWS: Surging jobs in July means that the US has now regained all the jobs lost in the recession. Wages rose 2.5% last year. Unemployment remains 4.3% Dow-Jones above 22k for the first time ever (Washington Post)

    Comment: Now, to get more healthy people back into the labor force.

     

     ◆ After latest leaks of private Presidential phone calls to foreign leaders, AG Jeff Sessions announces more measure to find and punish the perps (Fox News)

    Based on the leaked documents, The Washington Post reported new details Thursday about Trump’s tense phone calls in late January with Mexican President Enrique Peña Nieto and Australian Prime Minister Malcolm Turnbull. In the former, Trump reportedly told the Mexican leader to stop publicly saying his government would not pay for a border wall.

    The newspaper said the transcripts had notes indicating they had been classified by the chief of staff on the National Security Council. The Post said it obtained full transcripts, which were “produced by White House staff” and based on records kept by White House note-takers. –Fox News

    Comment: My guess: holdover staff from the last administration or people who have just been fired.

    Special Counsel Mueller empanels Grand Jury in Washington (The Hill)

    They already had one in Virginia, so this is really not new, just a more convenient location for Mueller’s office, which now has 16 full-time prosecutors.

    Comment: It means the investigation is

    • Clearly a criminal one, not limited to counter-intelligence
    • Not limited to Mike Flynn, who was the subject of the Virginia panel
    • Likely to last many more months

    Who should be worried? Anybody in Trump’s circle who has extensive business dealings with Russia or Russian-sponsored entities and, of course, anybody who lies to Federal agents. Lying to the media is not a crime, but a pattern of lying could indicate intent to cover up and prompt further inquiry.

    West Virginia’s Democratic Governor announces switch to GOP at Trump rally (Charleston WVa Gazette-Mail)

    West Virginia, once reliably Democratic, has voted for Republicans in each presidential race since 2000, and dramatically last year. Four of the state’s five Congressional seats have flipped to Republican.

    The most important elected Democrat in the state is now centrist Joe Manchin, who said he will remain a Democrat.

    Comment: Democrats now control only 15 governorships and the fewest state legislatures in the party’s history.

    Sticking with Bernie and Nancy is not going to help, but the ineptitude of the current Congress will.

    Israel: PM Netanyahu’s top aide agrees to testify against him in a bribery, fraud investigation (Bloomberg)

    Comment: Likely outcome: Netanyahu indicted.

    It’s grim when top officials are suspected of corruption, but it is good news when an independent judiciary can investigate them, as they do in constitutional democracies . . . and nowhere else.

    Chief of Staff John Kelly emerges as key supporter of National Security Council Adviser McMaster in White House in-fighting (Politico)

    Comment: Yes, it helps that they are both former generals. But the main point is that they are both experienced at high-level Washington bureaucratic politics.

    McMaster has been cleaning house in his operation, putting his own people in place.

    The problems: McMaster has a violent temper, often on display in staff meetings, and is frequently pitted against Steve Bannon, who is an important link to Pres. Trump’s populist constituency–and who would be harder on the Trump Administration outside the tent than inside.

    Fragile economy limits Putin (Reuters)

    And US sanctions weak him further.

    Comment: ZipDialog has made this point repeatedly. Most news commentary has overlooked it.

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    Hat Tip to

    ◆ Michael Lipson for the Grand Jury story