Archive for the 'Economics and Politics' Category

30
Nov
17

GOP Tax Bill – Trumped Up Trickle-down Tax Plan

The GOP Tax Bill – The Trumped Up Trickle-down Tax Plan

What could be easier than passing a bill that cuts taxes on US citizens? It should be easier than falling down. I mean who doesn’t want to pay less on their taxes? But this is not what the GOP tax bill is. First and foremost, the tax cut is for the benefit of the sponsors of the Grand Old Party. It starts with the permanent tax cuts to large corporations. Next, you add other goodies, like getting rid of the Alternate Minimum Tax (which makes some very rich people pay at least some income tax), getting rid of the Estate Tax (House Plan and the Pass Through Tax Reduction for the wealthy. From these cornerstone, all other legislation follows. To get at least some support for their plan, the GOP feigned that they were going to cut taxes on the middle class. And, in order not to blow a giant blackhole in the Federal budget, the GOP has taken away tax deductions used by the middle class.

How popular is this Tax Plan?

The GOP Tax Plan is extremely unpopular, only 25% approve and 52% disapprove – see Axios Link. But The GOP wants to pass it anyway.

Why The GOP Tax Bill is Bad For America?

1. Tax Cuts To The Corporations Do Not Increase American Jobs or Increase Wages.

a) Trickle-down theory is a farce

The GOP Tax Plan is a re-hash of trickle-down economics, sometimes called Voodoo economics. The outrageous theory is that if you give money to the rich, it will trickle-down to the middle class. We have overwhelming evidence that it has never worked. The Reagan tax cuts, the first recent trickle-down tax cut, not only did not create more jobs, but it was the start of the widening economic disparity that has continued to widen. Even, more recently  the experience of the Republican-dominant state of Kansas has shown to nearly bankrupt the state.

b) The Real corporate tax rate is 15%, With the Corporate Tax decrease the real rate will be 8.5%

Corporations are making all time profits, capital can be borrowed at incredibly low rates and yet these corporations don’t hire any new employees or pay them more. There has been a change in the thinking of corporations. In the 1960’s, Corporations made up 21% of the total federal revenue. Now, in 2016 Corporations pay only 9% of the total federal revenue (CPPD), which means the bigger share comes from the middle class. And, now, the GOP wants to decrease the corporation tax rate from 35% to 20%!!! Not that Corporations pay 35% income tax, after all their lobby-filled special tax exemptions, corporations pay only 15% on income (Forbes) – and if you decrease the nominal rate from 35% to 20% without getting rid of these exemptions, the real corporation tax rate would be 8.5%. So, what would be the percentage of corporation revenue to Federal Revenue after this GOP tax cut? It would decrease the revenue towards to the Federal government from an already all time low of 9% to an obscene rate of 5%. Together, with the elimination of the estate tax, this means that the middle class will have to pitch in even more.

c) Why Don’t Corporations hire more or pay more with record breaking profits?

Corporations have had a change in philosophy/conscious. Since the 1970s, corporations’ goal has been to maximize profit while enriching their CEOs and shareholders. It used to be that a corporation would only “down-size” (resorting to mass firings) when the corporation profits were negative. Then, in the 1980s, corporations started downsizing when profits were static and, now, corporations routinely downsize even when they are pulling down record profits. So, what do corporations do with these record profits if they are not creating more jobs or paying higher wages? First, pay CEOs more: CEOs pay has been skyrocketing every year. The ratio of CEO pay to workers is 335 to 1. It used to be 17/1 in 1980. The second thing corporations do is pay more dividends to stockholders. The third thing corporations do with their record profits is they buy back their own stock to pump up their price in the stock market. (This practice should be illegal). Fourth, corporations, thanks to the Republican-dominant Supreme Court created the Citizens United Decision which allows corporations to contribute unlimited money into campaigns, which sends tons of money to their minions, so, the GOP can pass laws like the Trumped Up Trickle-down Tax Plan. The circle of greed continues.

2. Why is only One Party Doing this Tax Plan?

Like the unsuccessful repeal of the Affordable Care Act, The Republicans have been plotting in secret to pass the Trumped-Up, Trickle-down Plan through a process called Reconciliation. By using Reconciliation, only a simple majority is needed, the issue must be budgetary and would not increase significantly the federal deficit beyond a 10 year term limit. So, how does a plan that increases the federal deficit by $1.4 – 1.7 trillion fit that definition? I do not think it does. And because the GOP has majorities in the Senate, The House as well as The President, the  Republicans feel that they can do whatever their sponsors want. And despite what the public wants (52% disapprove), The GOP might just pass this pile of steaming garbage.

3. Who Profits of this Tax Plan?

Who are the winners of this plan(Wash. Post)? 62% of the money from this Republican Tax Plan goes to the top 1%. Obviously, corporations are the biggest winners. People making at least $200,000 and up are also winners – they will be rid of the Alternate Minimum Tax (Donald Trump would have gained $31 million in his 2005 Tax return). The House Tax Plan eliminates the Estate Tax, but today’s Senate Plan increases the the exemption to 11 million for a couple. In another give-away to the wealthy is a reduction in the tax rate who use a process called “Pass Through”. This is where a wealthy person who has a sole proprietorship or limited corporation income from their business transfers into their personal income at a rate of 25% instead of 39.5%.

4. Who Are The Losers of the Trumped-Up, Trickledown Tax Plan?

The GOP Tax plan is very tricky. Things like the repeal of the Estate Tax and decrease of Corporate tax are gradually phased in and are permanent, while the tax breaks to the middle class are gradually phased out and are temporary, which means that the middle class will pay more by 2027.

The Losers:

  1. Families with three or more children
  2. People that deduct state and local taxes from their federal taxes.
  3. Working poor.
  4. College students
  5. Small Businesses
  6. People who pay for Health insurance
  7. People who deduct home mortgage
  8. People Who adopt
  9. People who deduct medical expenses
  10. Wind Energy Producers
  11. Ph.D Students
  12. Electric vehicle buyers.

Below is a chart from the Congressional Budget Office which shows what the effect the Tax plan together with the repeal of the Affordable Care Act: Bottom line – people making $40,000 or less will be paying more. Also, 13 million more people will be off Health Insurance, which means more uninsured people showing up in Emergency Rooms whose bill will eventually paid by the taxpayers and not the bankrupt patients.

 

5. Top Economics Say GOP Tax Plan Will Not Increase Jobs and will cause a large Federal Deficit.

The University of Chicago School of Business asked 38 economists about the GOP Tax Plan. All agreed that trickle-down economics does not work and will only a create more than a trillion dollar federal debt, possibly $1.4 to 1.7 trillion. Some economists think that the deficit will be much more than this. So, Why pass this Tax Plan?!!! This is called a re-distribution of wealth from the middle class to the wealthy.

6. Some Other Things To Think About

With the Republicans purposely creating a huge federal deficit, the GOP have a chance to automatically cut other programs, something the GOP does not like to talk about. Automatic cuts (Paygo) means that the GOP would cut Medicare by $25 billion the first year and $400 Billion over ten years. It would also decrease Medicaid by $17 billion. Customs and Border Patrol, the Student Loan Administration and the Military Retirement Fund would also face the scalpel. But to decrease funds to Social Security, the GOP would have to separately vote on that (as it is not part of Paygo). But the GOP will surely eliminate many programs for the poor and the disabled – meals on wheels, vocational schools, etc, etc. If you hadn’t already known this, this Tax Plan is a bare-knuckled message to everybody: the Republican Party is the Party of the 1%, the ones responsible for the Washington Insiders cesspool, and the ones responsible for the greatest income disparity between the wealthy and the middle class. The Republicans and Donald Trump care not a whit for the working class. In a time of economic prosperity, we are supposed to pay down our debt, not increase it by $1.44 trillion. What happens if we hit another recession within the next 10 years? A total disaster would occur. The Republican Tax plan is totally irresponsible.

 

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28
Nov
17

Poll Support For Manufacturing Made in USA Goods Jumps But Don’t Credit Trump

Morning Consult: Poll Support For Manufacturing Made in USA goods jumps but don’t credit trump.

Consumer Preferences

Increased Support For Buying ‘Made in America’ Goods, but Don’t Credit Trump

The President’s boosterism of domestic manufacturing only goes so far, experts say

President Donald Trump signs an executive order to try to bring jobs back to American workers and revamp the H-1B visa guest worker program during a visit to the headquarters of tool manufacturer Snap-On on April 18. (Scott Olson/Getty Images)
  • Experts say that the discrepancy illustrates just how price-sensitive American shoppers are.

U.S. consumers are willing to pay more for “Made in America” goods, according to a recent nationwide survey. But there’s a financial limit to how much they’ll support a key 2016 campaign theme by President Donald Trump.

Sixty-seven percent of adults in the United States would be willing to pay more for products if they knew doing so would support American manufacturing, according to a Morning Consult poll conducted Oct. 26-30. The survey of 2,201 U.S. adults has a margin of error of 2 percentage points.

When asked about specific price points for a hypothetical product, however, consumer attitudes diverged — particularly along political lines.

Respondents were given the choice between a $50 coat made overseas and a $50 coat made in the United States, and 84 percent said they would opt for the domestic garment. As the price of the American-made coat rose to $60 and then $75, the percentage of respondents who said they would purchase it slipped to 70 percent and 52 percent, respectively.

Put another way: Support for purchasing a “Made in America” product dropped 38 percent when its price jumped 50 percent.

Experts said the discrepancy reveals just how price-sensitive American shoppers are, and they downplayed the effect of recent politicization of American manufacturing and consumption, such as Trump’s Buy American and Hire American executive order from April.

“We can put a dollar figure on anything,” said Anthony Dukes, an associate professor at the University of Southern California’s Marshall School of Business who specializes in pricing strategy, in an interview this month. “Marketers do this all the time. They put a value on a brand; they put a value on an attribute of a product; and they even put a dollar value on ‘Made in the USA.’”

Answers to this question have shifted since last year, when 47 percent of respondents said they would purchase the more expensive domestic coat; 52 percent this year said they would.

Dukes credited that uptick more to a consumer movement of buying locally, as opposed to the political atmosphere, though he said overall “patriotic obligation” is one reason why consumers may say they purchase domestic goods.

Sixty-five percent of Republicans said they would purchase the pricier coat, compared with 46 percent of Democrats, according to the October poll.

Ron Friedman, a partner at the public accounting and advisory firm Marcum LLP, agreed that the Trump administration’s economic nationalist rhetoric isn’t influencing consumers, and that shoppers always go for the less expensive item — wherever it’s made.

“The issue is price, not ‘Made in America,’” Friedman said in an interview this month.

“If a consumer had the opportunity to buy ‘Made in America’ versus, realistically, ‘Made in China,’ and the prices are exactly the same, they would buy ‘Made in America,’” Friedman said. “But the reality is the prices are not the same. The prices are just cheaper coming in from China.”

Although cost influences choice here, the tribalism of domestic consumption shouldn’t be overlooked.

Republicans making less than $50,000 a year were more likely than Democrats earning the same amount to say they would purchase the more expensive American good, by a similar margin: 67 percent versus 48 percent, respectively.

Americans making more than $100,000 a year are where support for the pricier domestic coat slips. Fifty-four percent of wealthy Republicans and 37 percent of Democrats with similar incomes were less likely than adults with smaller incomes to say they’d purchase the more expensive American-made item.

Measuring the number of products made in America can be challenging, especially when federal agencies use different definitions when overseeing such goods.

Fifty-three percent of “final demand for manufactured goods” or “personal consumption, business investment and government purchases” were made in the United States, according to the Commerce Department’s Economics and Statistics Administration. That means that about half the products Americans purchased were domestically produced.

That number varies by industry. Twenty-eight percent of the computer and electronic products and 48 percent of automobiles that Americans purchased in 2015 were domestically made, while 79 percent of food, beverage, and tobacco products consumed in the United States were American-made, according to the ESA.

When consumers finally get to the check-out line, Dukes said their sentiment for “Made in America” products may not always turn into action.

“It’s easy to say one thing, and then actually pull your wallet out — it’s different,” he said.

21
Nov
17

Chinese cars coming to America in 2019

GUANGZHOU, China — The cars are called Trumpchi (though their Chinese maker insists the name is just a coincidence).

Various models of Trumpchi cars have been motoring down Chinese roads for the past seven years. But even after the United States elected a real estate tycoon with a similar name as president, the world ignored them.

Now the company that makes Trumpchis hopes that will change — and China appears to believe the rest of its auto industry is ready to go global, too.

GAC Motor said on Friday that it would begin selling Trumpchis in the United States by the end of 2019. The company hopes it will be the first Chinese car brand to take off in a market that has eluded the country’s manufacturers.

Trumpchis have gained a devoted following in China. The brand’s burly GS8 midsize sport utility vehicle, the first model that the company plans to sell in the United States, and its spacious new GM8 minivan have sleek lines and levels of fit and finish close to those of Japanese automakers.

Top executives and their advisers are agonizing, however, over whether, and how, to change the name for the American market.

“There’s no Obama-mobile, that’s a cultural thing, there’s no Clinton car,” said Robert C. Maling Jr., a retired Lexus executive who is now an adviser to GAC. “It would be confusing to the American public to have the Trumpchi name.”

The Chinese government broadly appears to be gearing up for large-scale exports.

China’s auto industry has grown into the world’s largest, producing more cars each year than the United States and Japan combined, while shielded from imports by the highest trade barriers by far of any major car market. Those policies forced multinationals to move factories and their latest technology to China.

But Beijing is now discussing slight reductions in those restrictions. It is largely to prevent foreign governments from citing them as a reason to apply their own limits on Chinese automotive exports.

Unlike any other carmaking power, China requires multinationals to produce cars in 50-50 joint ventures with local companies, to help its domestic businesses learn the latest manufacturing techniques. But in statements over the past two weeks, the government has said that it may relax that rule somewhat for electric cars made in foreign trade zones.

China also said right after President Trump left Beijing a week ago that it would consider a gradual cut in its import tariffs. China charges a 25 percent tax on imported cars, compared with 2.5 percent in the United States.

Cars made in free trade zones must still pay the 25 percent tariff if they are shipped to Chinese dealers instead of being exported. But those rules also appear to be softening. In recent discussions with Tesla, the American electric car company that wants to build a wholly owned factory in a Shanghai free trade zone, Chinese officials have been looking into possibly reducing the tariff as well, two people familiar with the discussions said.

A formula being considered would apply the 25 percent tariff only to imported components in each Tesla car, said one of these people, who insisted on anonymity because the discussions were continuing. That would cut Tesla’s financial burden, while also putting heavy pressure on it to shift as much production as possible to Chinese suppliers.

Tesla declined to comment, except to repeat that it is in talks to set up a factory to supply the Chinese market.

Starting in 2013, Commerce Ministry officials have suggested they might lower China’s own automotive trade barriers once Chinese manufacturers were ready to sell abroad, to prevent them from being used as justification by other countries for reciprocal trade barriers. Indeed, carmakers from China that export electric vehicles to the United States could even find advantages.

Yu Jun, the president of GAC Motor, said in an interview on Friday that the company planned to export electric cars to the United States and Europe as well as gasoline-powered vehicles. If it does so, it could benefit from the United States’ $7,500 tax credit for electric car buyers.

Only the first 200,000 electric cars from each manufacturer qualify for the credit. Tesla and other American companies, like General Motors, are close to exhausting the credits for their customers. But GAC and other Chinese companies would each have the full 200,000 credits available.

The tax credit’s future, though, is uncertain. As Congress considers a tax overhaul, some lawmakers are considering eliminating it.

Here in China, the government has barred people who buy Teslas from collecting subsidies of $10,000 or more per electric car because such benefits are available only to buyers of Chinese-built cars. The American tax credits, by contrast, can be used for imports.

Despite the changing environment, GAC Group, GAC Motor’s parent company, has a lot of marketing work to do before it enters the American market.

At the Guangzhou auto show on Friday, Feng Xingya, the group’s president, emphasized that GAC is a state-owned enterprise seeking to faithfully carry out the goals of the Chinese government. That message might not go over as well next year at the Detroit and Chicago auto shows, where the company plans to announce more details of its American sales offensive.

And then there’s the name. GAC officials, for their part, say Trumpchi sounds in Chinese a little like “passing on happiness.” Any decision on whether to change the brand’s name would be announced at the Detroit auto show in January, Mr. Yu said.

Whatever it is called on arrival at American docks, Trumpchi may have the best shot of any Chinese competitor at international acceptance.

The Chinese government has long been leery of letting its automakers start exporting, for fear that they might embarrass the country and damage their brands by having shoddy quality. But Trumpchi has done much better than most Chinese brands, and better than some multinational brands’ China subsidiaries, in surveys of initial quality by J. D. Power and Associates, the global quality consulting company.

China is already ramping up trans-Pacific exports of multinational-brand cars. Volvo, now owned by a Chinese company, and G.M. have already started shipping cars from China to the United States. Ford announced in June that it would move production of its popular Focus compact car from Michigan to China.

China would be following the example of Japan and South Korea by jumping into the American market, but might face geopolitical obstacles. Beijing has been viewed warily in the United States for, among other things, building an archipelago of artificial islands with military-grade runways in the South China Sea.

Car dealers, however, may not be as concerned. “I’m not into the geopolitical nature of it,” said Bob Shuman, a Detroit-area Chrysler dealer who attended Trumpchi’s introduction of a new minivan in Guangzhou. “I’m just interested in selling cars.”

17
Nov
17

Driverless Cars Will Kill Jobs

Driverless Cars Will Kill the Most Jobs in Select US States

Yellow taxi cabs line up outside the Delta Terminal at LaGuardia Airport in Queens, New York.

 

Todd Maisel | NY Daily News | Getty Images
Yellow taxi cabs line up outside the Delta Terminal at LaGuardia Airport in Queens, New York.

If Silicon Valley gets its way, it won’t be long until every vehicle in the country has nobody behind the wheel.

Driverless car technology is expected to reduce labor costs, fuel costs and accidents, but it will also be a complete disaster for the millions of Americans who work as long-haul truckers, bus drivers or cab drivers. Truck driving alone is the most common job across vast swathes of the United States, and they could all be unemployed within years.

Almost 3 percent of all working American are drivers of some sort — more than 2 percent are truck drivers, 0.4 percent are bus drivers and 0.3 percent are cabbies and other types of drivers, according to Census Bureau occupational data. But those jobs aren’t evenly distributed across the country, and some places are going to get slammed by the automation of jobs more than others.

According to the 2014 Census data, there are more than 4.4 million Americans aged 16 and over working as drivers, and the vast majority of those are men who are categorized as “driver/sales workers and truck drivers.” In states like Wyoming and Idaho, the percent of the employed civilians working in driving jobs exceeds four percent. (The District of Columbia is the lowest by far, at only 1.6 percent).

It could be many years before vehicle automation takes those jobs. Even when driverless cars and trucks hit the road, regulators will expect them to continue to contain a human operator for the foreseeable future. But eventually, the economic endgame is to leave the drivers behind. Companies like Uber aren’t investing in driverless technology so they can continue to pay drivers:

“The reason Uber could be expensive is because you’re not just paying for the car — you’re paying for the other dude in the car,” Uber CEO Travis Kalanick said years ago. “When there’s no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle.”

And self-driving trucks have already been tested — the company Uber purchased to help develop its self-driving cars also plans to have thousands of trucks equipped with test technology by 2017. Those trucks will still have drivers behind the wheel, but like Uber’s cars, it’s hard to imagine they’ll be there for long.

Some states look like they’ll be particularly hard-hit, but the problem looks even worse if you zoom in and look at the same data by congressional district. Some areas — like the Bronx and Queens in New York City, and Hoboken, New Jersey — rely on driving jobs for nearly 9 percent of their work forces.

For men, who make up the majority of drivers, the situation is even more dire — in some places, 10 to 15 percent of the male workforce could find themselves newly unemployed.

What To Do To Stop Driverless Cars?
So, how do we stop driverless cars? First, I do not agree that it won’t kill jobs. To stop the progression of driverless cars: You can write, you can phone, you can blog and protest against driverless cars. There are also many ways that one can stop driverless cars individually. Some simple ways – when you see a car without a driver, get in front of it and slow down, don’t let it pass, maybe slow the driverless car to a stop and keep it stopped. For delivery vehicles, I can see people stopping the cars and robbing them, since there would be no human casualties these driverless cars would be an easy target. I wouldn’t condone this or robbing passengers of driverless Uber cars, but they would be more susceptible. Other ways, since these driverless cars depend on computers and GPS, obtaining a GPS jamming instrument and aiming it at the driverless car would make it inoperable. There are computer hackers that could have the car’s computer download a counterfeit map program which could lead the cars astray, or, in another way, a program, that alters where the satellites are perceived can also spell trouble for driverless cars. And finally, sue the car manufacturers for millions for any injury caused by driverless, soulless cars that don’t value human pain, suffering or lives.
Conclusion
This not just a battle against driverless cars but a battle against automation. The United States has embraced automation to the fullest. This is because American companies since the 1980’s have become the greediest, while at the same time, care the least about having any employees. Corporations are making record profits, yet do not expand the work force or increase their wages. (How is this GOP Tax Plan supposed to increase jobs by cutting taxes to corporations?) We are people and we do not need to join the corporate games.
How many times have you gone into a store – a mega-hardware store, a supermarket, or a department store that has vast amounts of space yet you can’t find one worker on the floor? If you are lucky enough to find something after hours of endless and aimless wandering, you, then take your item to check out, and what do you see? Multiple self-check-out stands, but only one manned check out stand. And there is a long line for either. In contrast, in Japan, where one thinks everything is automated, the scene couldn’t be more different. In the department stores, there are multiple sales people waiting to help you out at every turn. In the elevator, they have paid people who are operating the elevator, and there are human cashiers who are ready to check you out without any waiting. It is about service, ultimate service. In the US, it’s about volume and profits, damn the consumers.
It is not that I am against technology. I think technology should assist people, but not replace them. The exception would be eliminating very dangerous or very dirty jobs, like working in the sewers or coal-mining, now that I would approve of. But getting rid of drivers and losing 12 million US jobs? To that I say no.
Buy American, keep your neighbors employed.
08
Nov
17

Make or Break Moment for Trump on Trade

Manufacturing Group says Asia trip ‘make-or-break’ for President Trump

The Alliance for American Manufacturing (AAM) is declaring President Donald Trump’s trip to Asia a “make-or-break moment” for the administration on trade.

Thus far, the organization stated in a recent press release, he has not delivered on his promise to transform the United States’ trade relationship with China, adding that he “hasn’t delivered” and that the upcoming trip will prove “whether he will be able to get the job done.”

“One-sided trade with many Asian countries have led to factory closures and job losses,” said AAM President Scott Paul. “I’m glad Trump made trade relationships a priority, but without action, American workers continue to struggle.”

The major unfulfilled promises, Paul said, were cutting trade deficits, labeling China a currency manipulator, and stopping the country’s surge of steel imports.

“After 10 months in office, American workers will be anxiously watching to see if you will turn your tough trade rhetoric into real action,” Paul wrote in a letter to the president. “Despite your campaign promises to crack down on unfair trade and negotiate better trade agreements, since taking office, your words on many issues have resulted in either inaction or confusion as to the path forward.”

Because of this inaction, Paul noted, more than 21% additional steel has hit America’s shores, contributing in part to layoffs at two Pennsylvania steel mills, “including one that produces armor plate used in the production of vehicles that protect service men and women from IED attacks in Afghanistan.”

“Our national security rests on a healthy industrial base,” Paul said. “If domestic manufacturing capabilities deteriorate further, we may be forced to rely on countries like China and Russia to supply steel for our military and critical infrastructure needs. We cannot let that happen.”


Editor’s Comments

Day #293 of the Trump’s Presidency.

What has Donald Trump done to decrease the trade deficit and to bring back jobs from the USA? No longer does Trump try to take credit for jobs  coming back to the USA. Those decision were made by corporations that had been pursuing the process for years. Regarding Trump clothing: Has he even brought his Trump clothing-line jobs (or Ivanka’s) back from China? No. Does he even mention that he has jobs over there? No.

What about the withdraw from the Trans Pacific Partnership (TPP)? Well, the TPP never passed during the Obama administration, so it was already dead. He just said he wasn’t going to resurrect it from the dead. In fact, Trump has always boasted that he was a Free Trader (see Trump Clothing – Offshorer-in-chief) as late as October 18,2015.

Trump said he was going to rip up all the Free Trade Agreements when he took office. Has that happened? No. There are some minor negotiations going on with Canada and Mexico. Yes, two rounds so far. Did he get “business men” to negotiate these deals like he boasted would be a great idea? No. He hired Robert Lighthizer, diplomat, lawyer and trade representative. He was chosen only because he was a critic of the China.

His first executive order regarding trade on April 18, 2017, was “Buy American, Hire American.” Part of this order was just a reinstatement of an existing law: 1933 Buy American Act, where the military must buy made in USA when possible. The other part: tighten rules that award visas to skilled foreign workers and directs the federal government to enforce rules that bar foreign contractors from bidding on federal projects. Counterpoint (just this week): Trump gets visas for 70 foreign workers at Mar-a-Lago.

As Scott Paul has said, America continues to off-shore jobs, and it is not slowing down due to Trump’s Presidency. That is because the CEOs know that Trump will not punish corporations for off-shoring. Nor is China afraid that Trump will call them a currency manipulator. The Trump strategy is similar to his immigration policy: Build a $100 billion wall that will not stop anybody from coming and punish immigrants who dare to come over. That doesn’t work. Instead, if you fined employers who hire undocumented immigrants, like $2200 per worker and a week in jail for offenders – that would stop illegal immigration in a heartbeat.

Truth is Trump does not care about American jobs or American manufacturing. He just says things to sell you things. Still 33% of the population still believe this. Trump would rather pass the GOP tax plan which would help himself personally: eliminating the Estate Tax and eliminating the Alternate Minimum Tax which would save him $18 million per year based on the one public tax return that we can get a hold of.  In fact, I feel that Trump has cooled off the Made in America movement. He has been a terrible spokesman. I severely doubt that he can deliver, especially, on the things that he doesn’t really believe in.

10
Oct
17

Free Trade: Evil or Good?

Free Trade Evil or Good

There is a conflict within the struggling Democratic Party as to whether to support Free Trade or to ban it. Traditionally, for the past 150 years, Democrats have been the political party for the working class, to improve worker’s wages and their working conditions. Looking at the issue of whether you are for workers or against them, it is rather simple: you are either for workers or for the employers (you can’t be both). If you are against workers, then you are not called “Anti-worker”,  but “Pro-Business”. And there is nothing more “Pro-Business” than the issue of Free Trade.

What is Free Trade?

To understand “Trade” let us go back to the beginning – the writing of the U.S. Constitution, written mainly by James Madison, but implemented by Alexander Hamilton, the first Secretary of the Treasury. Part of “Trade” is customs or import taxes (taxes that are levied on products brought in from other countries into the USA). This was one of the first orders of the day. Import taxes did two important things: 1) it brought in a substantial amount of revenue into the US Treasury (in order to pay the back wages of soldiers of the Revolutionary War who had gone unpaid for many years) without individually taxing individuals and 2) it protected fledgling American businesses from being over-run by foreign companies. In fact, Hamilton set the Coast Guard to patrol offshore waters to intercept contraband (untaxed smuggled products).

It was Alexander Hamilton’s vision, as well as George Washington’s, that the United States should encourage manufacturers, especially textiles. This can be best exemplified by the ceremonial outfit worn by George Washington, who, at the first inauguration, wore a plain brown suit of American broadcloth woven at a mill in Hartford. (from Alexander Hamilton p277, by Ron Chernow). At that time, England was a giant manufacturer, holding secrets of manufacturing from competitors. England wanted to keep the US as a natural reserve of raw material and limiting any US manufacturing. It was one of the more important items that American colonists had rebelled against. Funny, the USA is once again becoming less a manufacturing power and more of a reserve of raw material, due to Free Trade.

Now, to more modern times, 1980s, The United States was the disputed king of manufacturing. The beginning of the end was that corporations and big business took over Congress (unfettered lobbying/corruption as it caused in every other country). These big monied business people, in an effort to increase profits while simultaneously decreasing pay for American workers, came up with the concept of “Free Trade”. By eliminating import taxes on products coming from other countries, corporations/big businesses could exploit low wages and decreased standard of living conditions of foreign nations to undercut the price of all products made in the USA, which caused tens of thousands of Americans businesses to fold or to move to  other countries like China or India and millions of Americans to lose their jobs. (7.23 million lost manufacturing jobs since 1979). This has caused the decay of American manufacturing and has hit some areas extremely hard, especially the small rural towns where manufacturing was their main source of revenue.(Globalization when factories close down and towns struggle).

Who is Helped by Free Trade?

Free Trade policies actually do help farmers. It did open more markets for American farmers to send their products. Of course, farmers only make up 1% of the US population. Other winners, CEOs of large companies. More profits, less responsibility. That is why someone like Donald Trump who says “America First”, still keeps his manufacturing plants in China.

The losers: American workers, loss of millions of American manufacturing jobs, decrease of US wages. When you open up the job market to the whole rest of the world, it mean the American worker had to compete against the global workforce of 1,12 billion workers. The worker glut has caused a decrease of American wages and benefits (Invisible Influence of China, Robert Samuelson for the Washington Post). Not only are the workers hurt, but so are the families, the towns, cities and communities as well as the associated businesses with manufacturing. Plus, as the World Trade Organization becomes bigger and bigger, the United States can no longer impose its own safety regulations such as on meat because it makes it unfair for countries with less regulation to compete with the US (The Official End to Country of Origin Meat Labels). So, there are a lot of down sides to Free Trade. Let us not forget the loss of all the revenue to the US Treasury by getting rid of all those trillions of dollars by eliminating the import taxes.

But how about the other winners? Well, the countries that the United States has shipped all their jobs to have certainly been helped. For example, China builds skyscrapers and bullet trains at a rate that we can not even comprehend. Rich Chinese businessman come to the United States and buy up American properties. Poverty is less worldwide.

The main argument for Free Trade is that it brings down costs. While inflation seems to hit everything, in clothing, due to mass production and slave labor, you can buy some clothing at the same price as you could in 1979. But is decreased prices everything? Cheap products have changed people’s philosophy, people now spend terribly unwisely – it has become an uncontrolled spending economy. And overproduction of products is also a bad thing: clothing is manufactured in such an overwhelming volume, 26 billion tons per year to the landfills, that landfills are having troubles taking it all in, while stripping away natural and unnatural resources to make them.

Which Political Party is For Free Trade?

The North America Free Trade Agreement (NAFTA) an agreement between the US, Canada and Mexico was the first Free Trade Agreement.  This was a Republican plan written up by Republicans, started under the administration of George H.W. Bush, voted on by a majority of Republicans and a minority of Democrats. But, sometimes considered a Democratic bill because George Clinton signed it into law. Almost immediately an infinitely larger Free Trade  deal happened, the World Trade Organization (WTO). It should be noted that all Free Trade bills are Republican bills, and they always will be. Even Donald Trump was Free Trade, still is Free Trade, except when he hypocritically says he is not. Free Trade is the Republican platform. Even Breitbart which is “anti Republican establishment” is Pro Free Trade. The Democratic Party is 85% Against Free Trade. And it is quite possible that if there will be a limitus test for the future Democratic Party, it is whether a Democrat is for Free Trade/Pro-Business/Anti-Worker or Against Free Trade/Pro-Worker. If the Democrats want to win back any part of the Senate, House or Presidency, they should all be Pro-Worker. The Democratic motto should be: “All People deserve the right to Life, Liberty, and the Pursuit of Happiness with Good Wages and Benefits.

Economic Forecast

Don’t be fooled, the United States and the world has been in the biggest economic boom ever seen. It has been going on the last seven years, but because the United States is not participating in manufacturing, workers have not seen wages increase. Donald Trump had promised 4% Gross Domestic Product (GFP) growth, but that will never happen without manufacturing which has been left behind. (7 Reasons why Trumps promise of 4% GDP growth will never happen in 2017) In reality we are probably close to the end of this economic tech boom. The stock market is way over valued, just like it always happens before the recession happens. Are the Day Traders afraid? NO. The reason, the big boys have super fast computers and lines of communication that allows them to almost instantaneously withdraw their money before they get hurt, while all the workers with their 401Ks will have to see their retirement plans slowly go down the drain. Not a rosy prediction. The path to a more stable future is to invest in manufacturing, especially making the more expensive technical components and to invest in infrastructure. Doubling down on trickledown economics, giving tax breaks to the rich and decreasing revenue to the Treasury is a sure way to continue on the same path we are on.. The rich get richer, the poor get poorer and the middle class once again becomes the poor class. Final Verdict: Free Trade is a menace to the American working class, but a real boon to the top 1% and other countries.

Remember to buy American, the job you save may be your own.

20
Jul
17

Robert Reich – What does it Mean Made in America




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