Debt Service and Mick Mulveney

People are talking about the huge deficit Trump's new budget will create and what that will do to the overall deficit.  The stock market tanked recently when there were fears that inflation was returning and the Fed would raise interest rates higher and more quickly.  So far, nobody is talking about what happens when these two things come together.  A huge public debt and high interest rates mean that paying interest on the debt will take up a bigger and bigger piece of the federal budget, leaving less money for everything from the military to medicare.  It's a problem that only gets worse.  Higher debt means investors from pension funds to the Chinese government will be less willing to buy US bonds, and that will mean the government will have to pay higher interest to get people to buy them. 

Mick Mulveney, Trump's Director of the Office of Management and Budget (OMB), is the man who is supposed to keep the budget under control. I worry that he will follow in the footsteps of his predecessor in the Reagan administration, David Stockman.  Stockman and his Republican colleagues encouraged Reagan to cut taxes deeply.  Their idea was that once taxes were cut, there would be no money to fund the liberal programs, like Medicare and food stamps, that they disliked.  However, Stockman misjudged Reagan.  When push came to shove, Reagan was unwilling to cut these programs that helped poor and ordinary people. Reagan was too soft-hearted for Stockman.  As a result, Reagan cut taxes, but not spending, leading to huge deficits and the federal debt that we face today. 

It now looks like, not only Trump, but the entire Republican party (except for Rand Paul) has followed in Reagan's footsteps and ceased to worry about unfunded government spending and the deficits and increased debit that it brings.  Stockman has gone on to make millions in New York, but so has Donald Trump.  Nobody knows what the mplications are of this debt load, because there has never been anything like it before.  What it brings for smaller nations who have less control over financial markets is usually austerity and recession to pay for the years of carefree spending.  We'll see if the US profligacy will end any better will end any better than it has for other nations. 

One example that worries me, given the important role of Jews in the US government and the financial sector, is Germany between the world wars.  Germany found itself in terrible financial straits after World War I.  It could not pay the huge debts it had incurred to finance the war.  It printed money and inflation became rampant.  At that time Jews became very prominent in German business and financial affairs.  One study reports that

In the early 20th century, a dense corporate network was created among large German corporations, with about 16 percent of the members of this corporate network of Jewish background. At the centre of the network (big linkers) about 25 percent were Jewish. The percentage of Jews in the general population was less than one percent in 1914.

https://www.uni-trier.de/fileadmin/fb4/prof/SOZ/APO/Windolf/ZUGJewishElite.pdf

This outsized influence of Jewish businessmen and bankers enabled Hitler to blame the Jews for many of the hardships the average German population was experiencing in the 1930s.  It influenced many average Germans to accept his increasing persecution of Jews.  Let us hope that America does not end up like Germany, with Jews presiding over a failing country that cannot pay its debts.  Chuck Schumer, Steve Mnuchin, Gary Cohn, Michael Bloomberg, Lloyd Blankfein, Larry Fink, Larry Ellison, Sergey Brin, Mark Zuckerberg and company would do well to help America get its financial house in order, 

Opposition to DACA

I am against special treatment for DACA "Dreamers."

My first job in the Foreign Service was as a vice-consul issuing visas at the American Consulate General in Sao Paulo, Brazil, in the 1970s.  Every time I refused a visa to a Brazilian applicant because I thought he might try to work illegally in the US, I felt badly because I knew if he lived in Mexico, he could just walk across the border into the US.  That was not an option for Brazilians, especially poor ones for whom travel was expensive. 

For immigrant visas, two of the most important requirements were that the visa applicant have a labor certification that he or she would not take a job in America that would displace an American worker, and that he or she had sufficient financial resources so that they would not become a public charge and receive welfare benefits.  Mexicans illegally entering the US did not have to meet either of these tests.  On the one hand, DACA advocates argue that illegals only take jobs that Americans will not do; on the other hand, PBS and other pro-DACA news media show many DACA candidates who are studying to be doctors, lawyers, or computer scientists, or who have started successful businesses.  Which is it?  It's some of both, but interestingly, many of the low wage Mexican workers probably displace African-Americans.  Democrats don't worry about African-Americans, because they are guaranteed to vote Democratic.  To assuage black concerns about losing jobs to Mexicans, Democrats will give them lots of welfare. 

The Democrats are pushing for DACA because they expect Mexicans will vote Democratic and they want as many of them in the US as possible to build up the Democratic base, even if it takes a few years to get them the vote. 

The American immigration system has been broken for at least 50 years.  It is sort of the reverse image of our drug laws.  We have relatively few immigrants in prison, even for serious crimes, while we have many drug users in jail for minor crimes.  Both represent failed policies and poor law enforcement. 

We should be somewhat concerned about hardships imposed on Dreamers; we don't have to put all of them on buses back to Mexico tomorrow.   But we should enforce applicable laws in a humane fashion.  While they are here, I don't think we should give them lots of money, whether for subsistence, health care, or other necessities.  If they can't support themselves, send them back to Mexico sooner rather than later, and let the Mexican government support them.  They should also show some interest in becoming Americans, whether as citizens or permanent residents, not just in working or going to school here because they just happen to be here.  The whole point of DACA is that these kids did not want to come to America; they were dragged here. 

People say that children should not be punished for the crimes of their parents, but if the parents rob a bank, the children should not be allowed to keep the money their parents stole.  Allowing Dreamers to stay in the US is a benefit for which they should be prepared to work and sacrifice.  If they don't want to, send them back to Mexico. 

I was concerned during the government shutdown that the Democratic Party was putting the interests of Mexicans (Dreamers) ahead of the interests of American citizens, such as military veterans.  The VA hospital in Denver is an illustration of government's perverse priorities.  Millions, maybe billions, have been paid to contractors and other political donors to construct an empty building that is an insult to veterans.  While veterans die, Democrats cry tears for Dreamers and shovel money out the door to help them.  I understand that Mexicans are the future of the Democratic Party and that they must buy their votes now to strengthen the party in future years, but it leaves a bad taste in the mouths of Americans. 

I do not care much about building a wall.  The wall is symbolic.  If we build it, it is concrete proof that we are serious about enforcing immigration laws.  If we don't build it, it means we will carry on with business as usual, ignoring many laws already on the books.  

Michael Wolff Is Austin Powers

Think you've seen Michael Wolff before?  Is it Austin Powers, international man of mystery, or just Mini-Me grown up? 

Brooks on Democracy

Brooks on Democracy David Brooks has a good column in the NYT on the virtues of democracy, “The Glory of Democracy,” but one questions he fails to deal with is who should participate in it. When the US was created, the founding fathers limited the vote to older, white, male citizens who owned property. If we still had these restrictions, the US government would look very different from how it does today. The founding fathers did not even trust this limited electorate, but instituted indirect elections for the most important offices, such as the electoral college for the Presidential election. They thought rough hewn voters would electe better educated, wiser men to make the final choice, hopefully adhering more closely to the ideals Mann and Brooks espouse.

 Mann and Brooks say that in an ideal world voters would “seek justice, freedom and truth.” I haven’t heard anybody campaign on those issues lately. Mann says democracy should encourage everybody to make the best of their capacities, to seek beauty and truth. Today we see mainly people whom Mann would call the enemies of democracy, seeking money, status, and a free lunch from the government.

 Brooks aims his criticism at the Trump Republicans as the crass money grubbers, but Trump is President because so many Americans saw the Democrats squandering the national inheritance of property and decency built up over hundreds of years through trial, error and hardship. Democrats espoused lofty goals, but sold them out for personal power and cronyism.