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Economy

As the GOP banks on the tax bill for preserving majorities, their real threat is the economy

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As the GOP banks on the tax bill for preserving majorities their real threat is the economy

Republicans believe their tax cut bill is the first step in winning enough during the midterm elections to preserve their majorities in the House and Senate. It’s absolutely necessary following the Obamacare repeal debacle. If they finish their first year with control of the House, Senate, and White House without passing any meaningful piece of legislation, voters will rightfully wonder what they’re doing in DC in the first place.

The tax bill is not a guarantee they’ll win. In fact, passing it will temporarily hurt their chances. As David M. Drucker pointed out, the bill is unpopular at a time when a majority of Americans want Democrats in control on Capitol Hill:

Republicans stake control of Congress on tax bill

http://www.washingtonexaminer.com/republicans-stake-control-of-congress-on-tax-bill/article/2643895Republicans are counting on the Tax Cuts and Jobs Act to change the minds of unhappy voters who would prefer to have the Democrats in charge on Capitol Hill by an 11-point margin and consistently rate Trump’s job performance at around 40 percent, according to polling averages.

That’s a tall order for a proposal that has been underwater for weeks and is viewed skeptically by upscale suburban voters in Republican strongholds who worry it will raise their taxes. A fresh Monmouth University survey pegs support for the package at just 26 percent; 47 percent disapproved.

Drucker and Republican strategists agree that passing it launches a new campaign: selling it to the American people. How the GOP tries to sell it will determine their success in the midterm elections. If they go down the road of telling people they’re better off because of this cut or that change, their message will be completely ineffective. Leftist mainstream media isn’t on their side, which means they need more than facts and figures to convince people the tax bill is a good thing.

They need emotion. They need to make it personal. To do this, they’ll need to attach the tax plan to every piece of good economic news that comes in for the next 10 months while shifting blame for any negative economic news. They need to learn from the mistakes the Democrats made in attempting to defend Obamacare. The healthcare bill was more popular in its early days than the GOP tax plan is today, so Republicans have to work both harder and smarter if they’re going to avoid massive losses.

Avoiding the Obamacare defense mistakes

Republican majorities in the House and Senate are 100% due to Obamacare. They used it to get conservatives rallying behind them more than ever, especially through the Tea Party movement. Democrats failed to defend their policy because they weren’t willing to accept any responsibility for its shortcomings.

The GOP needs to own up to the shortcomings of the tax plan when they pop up, then redirect overall blame. An example of this will be the incessant stories about families in New York or California who end up paying more taxes thanks to cuts in state and local deductions. The Democrats and the media will find some suburban middle-upper class family who had to sell their home and move into a cramped apartment thanks to unexpected tax hikes hitting their bottom line. This is a fair point that the Democrats and media will make just as it was fair for Republicans to point out how people lost access to good healthcare because of Obamacare.

The Democrats played the “isolated case” card and it didn’t work. To avoid this mistake, the GOP will need to own up to the fact that somewhere around 20% of taxpayers, mostly in very blue states, will see their taxes rise. They need to then redirect it back on the blue states themselves, demonstrating how these states have become addicted to high taxes and had to lean on deductions from federal taxes to make up for it. This will be challenging for Republicans in these states to keep their seats, but many have simply opposed the bill to protect their own chances of reelection. It may be enough to distance themselves. As for all the other Republicans, their narrative should be that California and New York need to rein in their tax and spend mentality to protect their own people rather than reliance on federal breaks to make up the difference. Why should these blue states penalize red states by overcharging taxes and sucking up these breaks?

If it sounds like a tough case to make, that’s because it is. Nevertheless, there’s no better narrative for defending their home turf than to say the Democrat-controlled states are the ones paying their fair share now that the new tax plan is in place.

That’s the defensive message. The positive message will be attributing fiscal success to the tax cuts at every level. Americans who have more money come tax time can thank the tax cuts. Increased job and wage numbers can thank the corporate tax cuts. Every company that moves operations back to the United States will do so because of tax cuts. If money is good, it’s because of the tax cuts.

There’s a potential problem with this strategy. What if the economy doesn’t do so well in 2018? The economy is looking great, but did it peak too early? Can the nation sustain strong economic indicators all the way through to election day? That’s a question that concerns the standard financial crystal balls out there. These are tumultuous times in the United States and around the world. The GOP desperately needs all indicators to be strong, attributed to tax cuts, and showing no signs of weakness if they’re going to be able to maintain their majorities.

If things start to go south with the economy, the best ally for pushing Republican victories in 2018 will become their worst enemy. He sits in the Oval Office.

The wild (Trump) card

As long as the economy can continue down the road it’s on, President Trump and Republicans on Capitol Hill should get along just fine. If things turn south and questions start getting asked, expect the President to put all the blame on the Republican-controlled Congress.

This is why the Democrats want so badly for the economy to start failing. It’s not just the standard good-money/bad-money narratives that come into play every election. President Trump magnifies it in both directions. If the economy continues to thrive, he’ll take all the credit, including “his” tax plan. That should be just fine for Republicans on Capitol Hill as it will mean they can keep their majorities. If the economy starts having problems, President Trump will turn against the House and Senate. Doing so will hurt the economy even more. Then more blame. Then worse economy. It we be a domino effect that reaches far and wide across the nation.

Financial indicators may end up determining whether President Trump helps the GOP or hurts it.

The sad part is we shouldn’t need the GOP to use subterfuge and politics to sell their tax plan. If they did as the Federalist Party would do (dramatically cutting national budgets and spending while committing to true tax reform rather that cuts within the current progressive system) the GOP could let the results do the selling for them. Instead, they have to hope for certain things to happen while manipulating the narrative to support their premise.

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Economy

Fed survey cites rising concerns about trade tariffs

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Fed survey cites rising concerns about trade tariffs

WASHINGTON (AP) — The Federal Reserve said Wednesday that the U.S. economy was growing in the fall, but there were concerns about higher tariffs from a widening trade war, rising interest rates and tight labor markets.

In its latest report on economic conditions around the country, the Fed said that most of its 12 regions saw moderate growth through late November. Dallas and Philadelphia said growth had slowed, while St. Louis and Kansas City depicted growth as slight.

The report, known as the beige book, found that optimism about the future had waned somewhat, with business contacts citing “increased uncertainty.”

The survey will used at the Fed’s next meeting on Dec. 18-19. The central bank is widely expected to boost its benchmark rate for a fourth time this year at that meeting.

The beige book report noted problems the higher tariffs from Trump’s get-tough approach to trade were causing: rising costs for manufacturers, weaker sales at companies and farmers hurt by retaliatory tariffs imposed by China and other nations.

Even with the tariff concerns, the beige book said most districts continued to report moderate growth in manufacturing.

The impact of rising interest rates affected interest-rate sensitive sectors such as housing, with the beige book noting that new home construction and sales of existing homes were either holding steady or experiencing slight declines.

The Fed survey said that labor markets had tightened further across a broad range of occupations.

“Over half of the districts cited firms for which employment, production and sometimes capacity expansion had been constrained by an inability to attract and retain qualified workers,” the report said.

Unemployment fell in October to a 49-year low of 3.7 percent with economists forecasting further declines in the coming months. A key reason the Fed has been raising interest rates is to slow the economy to ensure that tight labor markets don’t unleash unwanted inflation pressures.

With labor markets already so tight, the Fed said that many districts were seeing examples of firms enhancing their nonwage benefits, including health benefits, profit-sharing, bonuses and paid vacation days.

Despite the wage pressures, the report said that prices continued to increase at a modest pace in most districts although reports of tariff-inducted cost increases have spread more broadly in such areas as manufacturing, retailing and restaurants.

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Economy

White House intensifies confusion and fear on US-China deal

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White House intensifies confusion and fear on US-China deal

WASHINGTON (AP) — The Trump administration raised doubts Tuesday about the substance of a U.S.-China trade cease-fire, contributing to a broad stock market plunge and intensifying fears of a global economic slowdown.

Investors had initially welcomed the truce that the administration said was reached over the weekend in Argentina between Presidents Donald Trump and Xi Jinping — and sent stocks up Monday. But on Tuesday, after a series of confusing and conflicting words from Trump and some senior officials, stocks tumbled, with the Dow Jones shedding about 800 points, or 3.1 percent.

White House aides have struggled to explain the details of what the two countries actually agreed on. And China has not confirmed that it made most of the concessions that the Trump administration has claimed.

“The sense is that there’s less and less agreement between the two sides about what actually took place,” said Willie Delwiche, an investment strategist at Baird. “There was a rally in the expectation that something had happened. The problem is that something turned out to be nothing.”

Other concerns contributed to the stock sell-off, including falling long-term bond yields. Those lower rates suggested that investors expect the U.S. economy to slow, along with global growth, and possibly fall into recession in the coming year or two.

John Williams, president of the Federal Reserve Bank of New York, also unnerved investors by telling reporters Tuesday that he supports further Fed rate hikes. His remarks renewed fears that the Fed may miscalculate and raise rates so high or so fast as to depress growth.

The disarray surrounding the China deal coincides with a global economy that faces other challenges: Britain is struggling to negotiate its exit from the European Union. Italy’s government is seeking to spend and borrow more, which could elevate interest rates and stifle growth.

And in the United States, home sales have fallen sharply in the past year as mortgage rates have jumped.

Trump and White House aides have promoted the apparent U.S.-China agreement in Buenos Aires as a historic breakthrough that would ease trade tensions and potentially reduce tariffs. They announced that China had agreed to buy many more American products and to negotiate over the administration’s assertions that Beijing steals American technology. But by Tuesday morning, Trump was renewing his tariff threats in a series of tweets.

“President Xi and I want this deal to happen, and it probably will,” Trump tweeted. “But if not remember, I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.”

Trump added that a 90-day timetable for negotiators to reach a deeper agreement had begun and that his aides would see “whether or not a REAL deal with China is actually possible.”

He revisited the issue later Tuesday with a tweet that said: “We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major Tariffs against Chinese product being shipped into the United States. Ultimately, I believe, we will be making a deal – either now or into the future. China does not want Tariffs!”

The president’s words had the effect of making the weekend agreement, already a vague and uncertain one, seem even less likely to produce a long-lasting trade accord.

“We expect the relationship between the world’s two largest economies to remain contentious,” Moody’s Investors Service said in a report. “Narrow agreements and modest concessions in their ongoing trade dispute will not bridge the wide gulf in their respective economic, political and strategic interests.”

Among the conflicting assertions that White House officials made was over whether China had actually agreed to drop its 40 percent tariffs on U.S. autos.

In addition, Treasury Secretary Steven Mnuchin said Tuesday on the Fox Business Network that China agreed to buy $1.2 trillion of U.S. products. But Mnuchin added, “If that’s real” — thereby raising some doubt — it would close the U.S. trade deficit with China, and “We have to have a negotiated agreement and have this on paper.”

Many economists have expressed skepticism that very much could be achieved to bridge the vast disagreements between the two countries in just 90 days.

“The actual amount of concrete progress made at this meeting appears to have been quite limited,” Alec Phillips and other economists at Goldman Sachs wrote in a research note.

During the talks in Buenos Aires, Trump agreed to delay a scheduled escalation in U.S. tariffs on many Chinese goods, from 10 percent to 25 percent, that had been set to take effect Jan. 1. Instead, the two sides are to negotiate over U.S. complaints about China’s trade practices, notably that it has used predatory tactics to try to achieve supremacy in technology. These practices, according to the administration and outside analysts, include stealing intellectual property and forcing companies to turn over technology to gain access to China’s market.

In return for the postponement in the higher U.S. tariffs, the White House said China had agreed to step up its purchases of U.S. farm, energy and industrial goods. Most economists noted that the two countries remain far apart on the sharpest areas of disagreement, which include Beijing’s subsidies for strategic Chinese industries, in addition to forced technology transfers and intellectual property theft.

Chief economic adviser Larry Kudlow acknowledged those challenges in remarks Tuesday morning.

“China’s discussed these things with the U.S. many times down through the years and the results have not been very good,” he said. “So this time around, as I said, I’m hopeful, we’re covering more ground than ever … So we’ll see.”

Complicating the challenge, Trump’s complaints strike at the heart of the Communist Party’s state-led economic model and its plans to elevate China to political and cultural leadership by creating global champions in robotics and other fields.

“It’s impossible for China to cancel its industry policies or major industry and technology development plans,” said economist Cui Fan of the University of International Business and Economics in Beijing.

Trump had tweeted Sunday that China agreed to “reduce and remove” its 40 percent tariff on cars imported from the U.S. Mnuchin said Monday that there was a “specific agreement” on the auto tariffs.

Yet Kudlow said later that there was no “specific agreement” regarding auto trade, though he added, “We expect those tariffs to go to zero.”

___

Associated Press writer Joe McDonald in Beijing contributed to this report.

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Economy

Medicare-for-All would cost more than every penny we’ve spent on defense in the country’s history

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Medicare-for-All would cost more than every penny weve spent on defense in the countrys history

Math is hard for many Americans. It isn’t just the sad state of our public school system that keeps the people down. It’s politicians like Bernie Sanders and Alexandria Ocasio-Cortez who push lies and pipe dreams that keep many Americans thinking the government has unlimited money and there’s no real difference between millions, billions, and trillions.

There’s a big difference, of course, but leftists will never let the number of zeroes get in the way of promoting their ideological goals. As I posted earlier, even left-leaning news outlets like the Washington Post are calling out Ocasio-Cortez for her false statements about Medicare-for-All.

Alexandria Ocasio-Cortez earns 4 Pinocchios over bungled defense budget interpretation

http://noqreport.com/2018/12/04/alexandria-ocasio-cortez-earns-4-pinocchios-bungled-defense-budget-interpretation/Ocasio-Cortez must have realized when she Tweeted the article that there’s no way “66% of Medicare for All could have been funded already by the Pentagon.” She was certainly playing down to her base in hopes they’d ignore reality and embrace her false notions just because she said it. The Tweet was either a bald-faced lie or she’s an absolute moron. Or both.

Washington Post, which normally supports socialist initiatives recommended by their Democratic puppetmasters, had to call this particular claim out. They gave the claim “4 Pinocchios,” a designation they save for some of the most egregious lies in politics.

It isn’t just about being completely wrong on the Pentagon’s accounting errors. This goes deeper. While fact-checking her claims, PolitiFact decided to do some math of their own. They gathered defense spending data as far back as they could – 1940 – and tallied the totals. Those who understand the difference between millions, billions, and trillions probably won’t be surprised to learn the total spent in that time is under $18 trillion, well short of the $21 trillion Ocasio-Cortez claimed she could have used to pay 2/3 of Medicare-for-All.

The also stipulated that since defense spending was much lower in the past, it’s very likely the total spent since the nation’s inception still couldn’t hit Ocasio-Cortez’ number.

Alexandria Ocasio-Cortez wrong on scale of Pentagon accounting errors

https://www.politifact.com/truth-o-meter/statements/2018/dec/03/alexandria-ocasio-cortez/alexandria-ocasio-cortez-wrong-scale-pentagon-acco/One tip-off is the amount of Ocasio-Cortez’s “accounting errors” is far bigger than the actual Pentagon spending from 1998 to 2015, which was $8.5 trillion. In fact, it’s also far bigger than the amount the government has spent on national security since 1940 and, in all likelihood, in the nation’s history.

Here’s a chart we assembled showing national-security spending by the federal government from 1940 to today. Ocasio-Cortez’s $21 trillion estimate exceeds the entirety of national-security spending since 1940, which checks in around $17.8 trillion. And while full data back to 1776 doesn’t exist, prorating backwards for another 164 years would almost certainly not add enough to make the total $21 trillion.

Medicare-for-All is projected to cost $32 trillion over its first 10 years alone.

Bernie Sanders, Alexandria Ocasio-Cortez, and all their mathematically challenged supporters need to hear this information now. If you could somehow take back every dollar spent on defense from the time the nation was formed until today, it still wouldn’t be enough to pay for Medicare-for-All. This isn’t a right-wing conspiracy. This is left-leaning Politifact crunching the numbers.

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