Category Archives: Economy

Is America a Republic or a Democracy?

Jay Davidson
Thoughts regarding A New Trumpet for Democracy
Our form of government is strong, persistent and thriving.  But its not a Democracy…Nor do you want it.  All Democracies devolve into the tyranny of the many over the few.  Democracies are like two wolves and one sheep voting what’s for dinner.  What is the one overriding theme of all Democrat legislation?  It is to increase the size, scope and power of the federal government.
Where in all the Founding Documents do you find the word Democracy?  Nowhere.  In fact, the original documents went out of their way to prevent Democracy.  The Electoral College is the only remaining body solely placed to prevent Democracy.
America is, or was intended to be, a Republic of independent states whose governing bodies are constrained by the Constution, the Amendments and the Bill of Rights.  Or it used to be.  I find it highly disappointing when well-informed people, like this author, fail to discern the reality of democracy versus a Republic.

A New Trumpet for Democracy

Contrary to his isolationist reputation, the president echoes Reagan in affirming America’s founding values.

President Trump outlines his National Security Strategy, Dec. 18.

President Trump outlines his National Security Strategy, Dec. 18. Photo: MANDEL NGAN/AFP/Getty Images

Ronald Reagan’s wisdom often went unappreciated in his day. In a 1982 address to the British Parliament, he presented a strategy to confront Soviet communism and other forms of dictatorship by championing American values. Commentators deemed it “naive” and “wishful thinking”—not to mention dangerous—to talk of advancing American principles and ideals. Why provoke hostility by trumpeting the superiority of democracy?

This Monday President Trump gave a speech outlining his National Security Strategy. Like Reagan 35 years ago, Mr. Trump celebrated the U.S. as a force for good in the world and cited America’s founding values as a powerful advantage against repressive regimes. The NSS document, which the White House released the same day, asserts the administration’s determination to protect American sovereignty by “defending the institutions, traditions and principles that allow us to live in freedom.” It identifies America’s fundamental source of strength: “we the people.”

Those expecting a more isolationist approach or a retreat from global engagement, especially with regard to championing American values such as democracy and individual rights, may be wondering whether Mr. Trump’s fundamental outlook has changed. What they need to understand—and the NSS makes clear—is that in today’s brutishly competitive world, in which rivals are actively seeking military, economic and political gains at U.S. expense, the American idea still reigns as the nation’s greatest competitive asset.

Prior administrations have used the NSS document primarily as an internal plan for coordinating policies among government agencies and departments. That Mr. Trump chose to present its key points directly to the public shows that he recognizes the global appeal of the American model of governance. Acknowledging that “we are not going to impose our values on others,” the document nevertheless affirms that the U.S. “will encourage reform, working with promising nations to promote effective governance, improve the rule of law, and develop institutions accountable and responsive to citizens.”

No one would accuse Mr. Trump of mushy sentimentalism when it comes to foreign policy. If he now embraces America’s founding principles as an advantage in the global arena, it is because he understands the potency of success as a countermeasure against ideologies hostile to freedom. He appreciates the value of a good brand—and America’s trademark represents the values that distinguish it from authoritarian regimes that treat their citizens as expendable.

The NSS document provides an operational blueprint for addressing specific threats to the U.S. and its citizens. It lays out four basic “pillars” aimed at protecting the homeland, promoting American prosperity, preserving peace through strength, and advancing American influence in the world. That last pillar defines the moral impact of America’s presence in the global arena—and how it redounds to the nation’s benefit by enhancing the prospects for peace and prosperity in the long run.

“The extraordinary trajectory of the United States from a group of colonies to a thriving, industrialized, sovereign republic—the world’s lone superpower—is a testimony to the strength of the idea on which our nation is founded, namely that each of our citizens is born free and equal under the law,” the document states. “America’s core principles, enshrined in the Declaration of Independence, are secured by the Bill of Rights. . . . Liberty, free enterprise, equal justice under the law, and the dignity of every human life are central to who we are as a people.”

Reagan’s speech 35 years ago called on democratic nations to join in reaffirming the power of ideas to change the world for the better, reminding their citizens to think of themselves as “free people, worthy of freedom and determined not only to remain so but to help others gain their freedom as well.” Wars initiated by tyrants had devastated whole continents; the best way to fight totalitarianism and its terrible inhumanity was by actively promoting freedom and democratic ideals.

Two years later, on the 40th anniversary of D-Day, Reagan noted at Normandy that the men who fought there had faith that what they were doing was right, faith that they fought for all humanity: “You all knew that some things are worth dying for. One’s country is worth dying for, and democracy is worth dying for, because it’s the most deeply honorable form of government ever devised by man.”

Mr. Trump’s National Security Strategy aims to rebuild U.S. economic and military strength. The goal is to keep the peace, so that soldiers will not have to make the ultimate sacrifice to defend America’s vital national interests, its principles and its way of life. But as the world has learned, to great sorrow and loss of life, there are no guarantees. “We know that American success is not a foregone conclusion,” Mr. Trump said Monday. “It must be earned and it must be won.”

Or as Reagan put it in 1982: “No, democracy is not a fragile flower. Still it needs cultivating.”

Ms. Shelton is chairman of the National Endowment for Democracy. She served on the Trump transition team.

Appeared in the December 21, 2017, print edition.

Finding America’s Lost 3% Growth – Jay Davidson

ECONOMIC RECOVERY demands economic growth in the private sector.  Show me any nation that successfully grows its federal control and its economy.  This fact is the Achilles Heal of all Socialist, Communist and Democrat rhetoric.
The best government is one that stays out of the private sector and lets market forces prevail.
Remember F.A. Hayek’s quote: “If a Socialist understood the economy, he would no longer be a Socialist.”
– Jay Davidson

Finding America’s Lost 3% Growth

For the original WSJ article, please go here.

If the country can’t grow like it once did, then the American Dream really is irretrievably lost.

Growth deniers are declaring that America’s economy has lost its ability to grow at 3% above inflation. If that’s the case, maybe we should go back to where we lost 3% growth and retrace our steps until we find it. For only with 3% or higher growth does America experience measurable progress in poverty reduction, strong job creation and income growth. If 3% growth is irretrievably lost, so is the American Dream.

Did America actually experience 3% real growth to start with? Yes. In the postwar era, the U.S. averaged 3.4% annual growth from 1948 through 2008. We averaged 3% growth for half of the George W. Bush presidency (2003-06). From 2009-12, the Obama administration, the Congressional Budget Office and the Federal Reserve all thought they saw 3% growth just around the corner. If the possibility of 3% growth is gone forever, it hasn’t been gone very long.

America enjoyed 3% growth for so long it’s practically become our national birthright. Census data show that real economic growth averaged 3.7% from 1890-1948. British economist Angus Maddison estimates that the U.S. averaged 4.2% real growth from 1820-89. Based on all available data, America has enjoyed an average real growth rate of more than 3% since the founding of the nation, despite the Civil War, two world wars, the Great Depression and at least 32 recessions and financial panics. If 3% growth has now slipped from our grasp, we certainly had it for a long time before we lost it.

So poor was our economic performance during the Obama presidency, with its 1.47% economic growth, that now many Americans believe 3% growth is gone forever. The CBO has slashed its 10-year growth forecast to a measly 1.8% per year. If we never see 3% growth again, our grandchildren may point to 2009 and say, “That was when the American economy ran out of gas.”

While Obama apologists like to claim that labor-productivity and labor-supply factors preclude 3% growth, most of the growth constraints we face today are directly attributable to Mr. Obama’s policies. The Bureau of Labor Statistics reports that labor-productivity growth since 2010 has plummeted to less than one-quarter of the average for the previous 20, 30 or 40 years. Productivity fell during the current recovery, not during the recession. With high marginal tax rates, especially on investment income, new investment during the Obama era managed only to offset depreciation, so the value of the capital stock per worker, the engine of the American colossus, stopped expanding and contributed nothing to growth.

Illustration: David Klein

A tidal wave of new rules and regulations across health care, financial services, energy and manufacturing forced companies to spend billions on new capital and labor that served government and not consumers. Banks hired compliance officers rather than loan officers. Energy companies spent billions on environmental compliance costs, and none of it produced energy more cheaply or abundantly. Health-insurance premiums skyrocketed but with no additional benefit to the vast majority of covered workers.

In a world of higher costs, productivity plummeted. Productivity measures the production of things the market values that flow from the employment of labor and capital. Try listing the Obama-era regulatory requirements that generated the employment of labor and capital in ways that actually produced something you buy.

True, America is aging. In 2006, when the labor force participation rate was 66.2%, the BLS predicted that demographic changes would push it down to 65.5% by 2016. Under Mr. Obama’s policies, it actually fell further, to 62.8%, and the number of working-age Americans not in the labor market spiked to 55 million.

By waiving work requirements for welfare, lowering food-stamp eligibility requirements and easing standards for disability payments, Mr. Obama’s policies disincentivized work. Disability rolls have expanded 18.6% during the current recovery, compared with a 16% decline during the Reagan recovery. The CBO estimates ObamaCare alone will reduce work hours by 2% and eliminate 2.5 million jobs by 2024. At the current 1% growth in the civilian population above the age of 16, a mere reversion to the pre-Obama labor-force participation rates would supply more than enough workers to generate a 3% growth rate.

Even baby-boomer retirement is driven in part by public policy. When Social Security paid its first check in 1940 average life expectancy was 64 years and benefits started at 65. Today early retirement is available at 62. Life expectancy is now projected to be 79 years. People are healthier, morbidity rates have fallen dramatically, and the retirement age can and should be raised.

Bad policies—not bad luck or a loss of God’s favor—have driven down labor productivity and the labor supply. We can change those policies. If reversing Mr. Obama’s policies simply eliminated half the gap between the projected 1.8% growth rate and the average growth rates during the Reagan and Clinton recoveries, it would deliver 3% real growth generating nearly $3.5 trillion in new federal revenues over the next 10 years. That’s not as much as the $4.3 trillion in revenues lost by Mr. Obama’s slow growth, but it’s more than Mr. Trump promises to bring back by reversing his predecessor’s policies.

America without 3% growth is not America. Since 1960, the American economy has experienced 30 years with growth of 3% or more. Seventy-nine percent of all jobs created since 1960 were created during those years. The poverty rate fell by 72% and real median household income rose by $20,519. In the 26 years when the economy had less than 3% growth, just 21% of all post-1960 jobs were created, the poverty rate rose by 37% and household income fell by $12,004. With 3% growth, the American dream is achievable and virtually anybody willing to work hard can live it. Let 3% growth die and a lot of what we love most about our country will die with it.

Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute. Mr. Solon is a partner of US Policy Metrics.

Jay Davidson

The largest threat to our prosperity is government spending that far exceeds their authority – Jay Davidson

Every time the Federal Government spends a dollar, on anything, it must first obtain that dollar through one of two methods: take it from the working private citizen through taxation, or print money, which is the same as going further into debt, which debt will be paid by the private citizen, another form of tax.  Even when corporations pay tax, they pass that cost along to the consumer.  Therefore, are you getting value for the vast amount of tax you pay?
Is the Federal government efficient in using your money?  In very few instances, it is probably the most inefficient entity in the nation.  Why then would any rational, thinking citizen allow their elected congressmen to increase federal spending, which means more taxation and more debt flowing to the most inefficient user of your hard earned money?  You, and only you, are paying for your government.
Politicians say that Welfare and Entitlement are the third rail, to touch them (reduce spending on them) is political suicide.  Well, we the people need to make NOT reducing federal spending political suicide by speaking up, supporting, or not, those politicians who are willing to reduce the destructive burden of federal excess.  It starts with federal spending reduction.
Progressives, Socialists and Communists live to increase taxation using the excuse that welfare and entitlements are morally just.  But these same economic morons ignore the fact that their ‘moral” social vision costs money, our money.  They absolutely ignore the rights to private ownership by ever-increasing taxes to pay for their perverted “moral” vision.  It is time to re-balance the scales of justice.
Jay Davidson

We’re All to Blame

For the original article link, please go here.
The largest threat to our prosperity is government spending that far exceeds the authority enumerated in Article 1, Section 8 of the U.S. Constitution. Federal spending in 2017 will top $4 trillion. Social Security, at $1 trillion, will take up most of it. Medicare ($582 billion) and Medicaid ($404 billion) are the next-largest expenditures. Other federal social spending includes food stamps, unemployment compensation, child nutrition, child tax credits, supplemental security income and student loans, all of which total roughly $550 billion. Social spending by Congress consumes about two-thirds of the federal budget.

Where do you think Congress gets the resources for such spending? It’s not the tooth fairy or Santa Claus. The only way Congress can give one American a dollar is to use threats, intimidation and coercion to confiscate that dollar from another American. Congress forcibly uses one American to serve the purposes of another American. We might ask ourselves: What standard of morality justifies the forcible use of one American to serve the purposes of another American? By the way, the forcible use of one person to serve the purposes of another is a fairly good working definition of slavery.

Today’s Americans have little appreciation for how their values reflect a contempt for those of our Founding Fathers. You ask, “Williams, what do you mean by such a statement?” In 1794, Congress appropriated $15,000 to help French refugees who had fled from insurrection in Saint-Domingue (now Haiti). James Madison, the “Father of the Constitution,” stood on the floor of the House to object, saying, “I cannot undertake to lay my finger on that article in the federal Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” Most federal spending today is on “objects of benevolence.” Madison also said, “Charity is no part of the legislative duty of the government.”

No doubt some congressmen, academics, hustlers and ignorant people will argue that the general welfare clause of the U.S. Constitution authorizes today’s spending. That is simply unadulterated nonsense. Thomas Jefferson wrote, “Congress (has) not unlimited powers to provide for the general welfare, but (is) restrained to those specifically enumerated.” Madison wrote that “if Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the Government is no longer a limited one possessing enumerated powers, but an indefinite one.” In other words, the general welfare clause authorized Congress to spend money only to carry out the powers and duties specifically enumerated in Article 1, Section 8 and elsewhere in the Constitution, not to meet the infinite needs of the general welfare.

We cannot blame politicians for the spending that places our nation in peril. Politicians are doing precisely what the American people elect them to office to do — namely, use the power of their office to take the rightful property of other Americans and deliver it to them. It would be political suicide for a president or a congressman to argue as Madison did that Congress has no right to expend “on objects of benevolence” the money of its constituents and that “charity is no part of the legislative duty of the government.” It’s unreasonable of us to expect any politician to sabotage his career by living up to his oath of office to uphold and defend our Constitution. That means that if we are to save our nation from the economic and social chaos that awaits us, we the people must have a moral reawakening and eschew what is no less than legalized theft, the taking from one American for the benefit of another.

I know that some people will say, “Williams, I agree with most of what you say, but not when it comes to Social Security. Social Security is my money I had taken out of my pay for retirement.” If you think that, you’ve been duped. The only way you get a Social Security check is for Congress to take the earnings of a worker. Explanation of your duping can be found on my website, in a 2010 article I wrote titled “Washington’s Lies” (

Supplying the Federal Beast with tax revenue is like pumping gasoline into a fire, it accelerates the destruction – Jay Davidson

Supplying the Federal Beast with tax revenue is like pumping gasoline into a fire, it accelerates the destruction.
Consider the absurdity of taxation: 50% of the citizens pay their own hard earned money to the Federal Behemoth so that the other non-working 50% can receive the benefits.  The Federal Monster thereby guarantees its cancerous growth.  It adds little value compared to its cost.
However, there is a tipping point, soon to be reached, where there will not be enough workers to support the non-working.  That is the end of every Socialist, Communist and Democratic society.  (Democracy devolves into an Oligarchy or rule by the few, the Elites.)
There is one solution: Restore our Constitutional Republic form of government and slay the federal beast or at the least, control the federal government through our Constitution, as envisioned by the Founders.  Either we control our destiny or the very size of the federal beast will topple, on its bloated carcass, crushing our nation and any future for our progeny.
– Jay Davidson
Read the original WSJ article here

Paul Ryan’s ‘Anxiety’ Cure

Americans may be feeling better already.

President Donald Trump delivers remarks about things other than tax reform at Trump Tower on August 15.

President Donald Trump delivers remarks about things other than tax reform at Trump Tower on August 15. Photo: Drew Angerer/Getty Images


James Freeman

Do we dare to hope that politicians may now be turning their attention to encouraging prosperity for all Americans? For any readers who have found it stressful observing the issues that have lately dominated political discourse, there may be a treatment. Joseph Lawler of the Washington Examiner reports from Everett, Washington:

House Speaker Paul Ryan toured businesses in the Pacific Northwest this week to deliver the message that Republicans can produce a historic revision of the tax code…

Tax reform was always planned for the fall, and for Ryan, getting something done here is a chance to deliver a much-needed win for the GOP.

“I’ve been focused on this literally my adult life. But now, more than ever,” Ryan said, a major overhaul of the tax code could “help reduce that anxiety” that the country feels over politics.

Anxiety reduction would be most welcome. Wall Street seems to have gotten over its own minor case of anxiety on the news that President Trump’s economic adviser Gary Cohn will be sticking around the White House for a while. Some investors have been fretting that markets would decline if Mr. Cohn chooses to leave, on the theory that the former Goldman Sachs executive is critical to the effort to cut taxes.

This column is glad Mr. Cohn is around to encourage free trade, but has been skeptical of the analysis that he’s the key to tax cuts. This skepticism is based on the fact that Mr. Cohn wasn’t much of a cheerleader for tax relief before entering the White House and didn’t seem to have his heart in it once he arrived.

But Mr. Cohn’s new interview with the Financial Times may serve as a useful therapy for any Americans suffering from generalized economic anxiety disorder. The British business publication asked, “Will you offer any concessions to get some Democrats on board?”

Here’s Mr. Cohn’s response, according to an edited transcript:

If the Democrats want to work with us on a bipartisan tax bill we are excited to have them on board. But if not we will just do reconciliation. The important issue we need to talk about is why are we so compelled to do taxes . . . that is what the president is going to be out selling.

If you look at US GDP since 2008 we have been averaging less than 1.5 per cent GDP growth [including the recession]. Before that, we had much higher growth. We don’t think that a 2 per cent growth economy is good enough — we need to raise that.

It’s reassuring to know that Mr. Cohn is not satisfied with the Obama-era new normal of slow growth. Even more encouraging is that, unprompted by the Financial Times, he then explained why it’s so important for the United States to cut corporate income tax rates.

Many leftists argue that since tax rates aren’t as high as they were when President Ronald Reagan took office in 1981, there’s less need to enact a Reagan-style tax cut to boost growth now as he did then. But Mr. Cohn provides the important context, which is that the world’s other advanced countries have been busy cutting their own rates. As Mr. Cohn explains, the world has simply become a more competitive place, including in the 34 other member countries that, along with the U.S., belong to the Organization for Economic Cooperation and Development:

If you go back to the early 1980s and look at OECD and US tax rates, they were pretty similar then. But then most OECD rates went down, down, down. The US had one big drop in 1986 but we then flatlined… So we used to have a competitive advantage, but since then we have continued to be less and less competitive. Today we are 14.4 percentage points more expensive on tax rate than the rest of the OECD — we used to have a 5.7 percentage point advantage.

According to KPMG, the overall state and federal corporate income tax burden in the U.S. is even worse on a relative basis—closer to 16 percentage points above the OECD average. But Mr. Cohn is right on target in adding, “We have just gotten uncompetitive.” He also suggests that the trade deficit that is a fixation of some economic nationalists is in part just an artifact of bad tax policy:

If you are a company which manufactures in Europe and sells in the US and European tax is 10 percentage points lower in Europe than in the US then what you want is for as much profit as possible to show up in Europe. So you sell your product to the US subsidiary at the highest possible price and what does that do to the trade deficit?

The Trump adviser also said that the President will begin making his case with a speech in Missouri. According to the Financial Times:

“Starting next week, the president’s agenda and calendar is going to revolve around tax reform,” Mr Cohn said in an interview. “He will start being on the road making major addresses justifying the reasoning for tax reform and why we need it in the US.”

A leadership team in Washington focused on economic growth is making this column feel better already.

Has President Trump done anything in his first six months?

What has Donald Trump done since he has been in office!!!
Maybe you should READ, I did not realize many of these!

1. Supreme Court Judge Gorsuch
2. 59 missiles dropped in Syria.
3. He took us out of TPP
4. Illegal immigration is now down 70%( the lowest in 17 years)
5. Consumer confidence highest since 2000 at index 125.6
6. Mortgage applications for new homes rise to a 7 year high.
7. Pulled out of the lopsided Paris accord.
8. Arranged 20% Tariff on soft lumber from Canada.
9. Bids for border wall are well underway.
10. Keystone pipeline approved.
11. NATO allies boost spending by 4.3%
12. Allowing VA to terminate bad employees.
13. Allowing private healthcare choices for veterans.
14. More than 600,000. Jobs created
15. Median household income at a 7 year high.
16. The Stock Market is at the highest ever In its history.
17. China agreed to American import of beef.
18. $89 Billion saved in regulation rollbacks.
19. Rollback of A Regulation to boost coal mining.
20. MOAB for ISIS
21. Travel ban reinstated.
22. Executive order for religious freedom.
23. Jump started NASA
24. $600 million cut from UN peacekeeping budget.
25. Targeting of MS13 gangs
26. Deporting violent illegal immigrants.
27. Signed 41 bills to date
28. Created a commission on child trafficking
29. Created a commission on voter fraud
30. Created a commission for opioids addiction.
31. Giving power to states to drug test unemployment recipients.
32. Unemployment lowest since may 2007.
33. Historic Black College University initiative
34. Women In Entrepreneurship Act
35. Created an office or illegal immigrant crime victims.
36. Reversed Dodd-Frank
37. Repealed DOT ruling which would have taken power away from local governments for infrastructure planning
38. Order to stop crime against law enforcement.
39. End of DAPA program.
40. Stopped companies from moving out of America.
41. Promoted businesses to create American Jobs.
42. Encouraged country to once again
43. ‘Buy American and hire American
44. Cutting regulations 2 for every one created.
45. Review of all trade agreements to make sure they are America first.
46. Apprentice program
47. Highest manufacturing surge in 3 years.
48. $78 Billion promised reinvestment from major businesses like Exxon, Bayer, Apple, SoftBank, Toyota…
49. Denied FBI a new building.
50. $700 million saved with F-35 renegotiation.
51. Saves $22 million by reducing white house payroll.
52. Dept of treasury reports a $182 billion surplus for April 2017 (2nd largest in history.)
53. Negotiated the release of 6 US humanitarian workers held captive in Egypt.
54. Gas prices lowest in more than 12 years.
55. Signed An Executive Order To Promote Energy Independence And Economic Growth
56. Has already accomplished more to stop government interference into people’s lives than any President in the history of America.
57. President Trump has worked with Congress to pass more legislation in his first 100 days than any President since Truman.
58. Has given head executive of each branches 6 month time Frame dated march 15 2017, to trim the fat. restructure and improve efficacy of their branch.Observe the pushback, the leaks and the lies as entrenched POWER refuses to go silently into that good night!
59. Last, Refused his Presidential Pay Check, donated it to Veterans issues.

Repealing the Arbitration Rule

Any politician that states his goal is to protect the consumer, should ask us if we want that protection.  I say no, I’ve seen how well all the other federal programs work.

Just how stupid do politicians and bureaucrats think consumers are?

“Mr. Cordray said the ban would protect consumers, but his own agency’s study suggests otherwise. Consumers who prevailed in arbitration recovered on average $5,389 while those who joined class actions received $32. Trial lawyers on average raked in $1 million.”


Repealing the Arbitration Rule

Congress can kill Cordray’s payoff to his trial-lawyer funders.

By The WSJ Editorial Board

July 25, 2017 7:32 p.m. ET


Consumer Financial Protection Bureau chief Richard Cordray has been on a regulatory tear as he prepares to run for Governor in Ohio. But many of the Obama appointee’s midnight rule-makings need not see the light of day—for instance, his arbitrary ban on mandatory arbitration that the House voted to repeal on Tuesday.

The Congressional Review Act lets a majority of both chambers rescind a final agency rule issued in the past 60 legislative days. The 231-190 House vote overturns the CFPB’s new rule prohibiting class-action waivers in virtually all financial consumer-service agreements. Twenty-four GOP Senators have introduced a similar resolution.

Mr. Cordray said the ban would protect consumers, but his own agency’s study suggests otherwise. Consumers who prevailed in arbitration recovered on average $5,389 while those who joined class actions received $32. Trial lawyers on average raked in $1 million.

Most claims can’t be litigated on a class basis—though trial attorneys try—and arbitration provides an affordable and expeditious alternative. Companies typically pick up most if not all of the filing, administrative and arbitrator costs. Consumers usually obtain relief within two months, while class actions typically take years to resolve.

The rule would cause many firms to stop using arbitration since they would have to spend more defending class actions. The CFPB estimates that financial companies would spend between $2.62 billion and $5.23 billion over the next five years—much of which would go to attorneys—to defend some 6,000 class actions.

Ohio Senator Sherrod Brown, another plaintiff-bar favorite, cites Wells Fargo , which was found to have opened millions of unauthorized accounts in the names of its customers. But Wells Fargo agreed to settle the case on a class basis for $142 million—twice as much as estimated consumer out-of-pocket losses—because arbitrating individual disputes could have cost much more. The bank also paid $185 million to regulators and agreed to refund fees for unauthorized accounts.

Mr. Cordray wants to build a nationwide plaintiff-lawyer fund-raising base for his Ohio campaign. And he may hope that a few Republican Senators like South Carolina’s Lindsey Graham will sink the repeal resolution for their trial-bar campaign donors. But if Republicans stand together on repeal, the CFPB would be prohibited from ever issuing a similar rule. Republicans can strike a blow for the rule of law and against a major progressive cash source for Democrats with a single vote.

Appeared in the July 26, 2017, print edition.

Title: Re-affirms one’s faith in the Austrian School of Economics; that freedom begins with economic freedom…

Re-affirms one’s faith in the Austrian School of Economics; that freedom begins with economic freedom…

“But for the tax side of “one big idea,” Laffer would like to see corporate-tax reform. I agree. Reagan used to say, “Give me half a loaf now, and I’ll get the other half later.” Well, I’d take the half-loaf of corporate tax cuts right now.”

“…said Forbes, who offered an alternative: “The smart approach is get this economy moving through these tax cuts and deregulation … and then having a stable dollar, and then you sit down with country by country and remove trade barriers.” Anything but the trade protectionism that blew up the stock market in 1929.

“To which Laffer added the great line: “Don’t just stand there; undo something!”

“”Cut taxes, stabilize the dollar, reduce tariffs, reduce regulation,” he said. “Undo, undo, undo and undo the damages these other guys have done.””

For the original link to this article, please go here.

Big Economic Ideas From Art Laffer and Steve Forbes
Big Economic Ideas From Art Laffer and Steve Forbes
I participated in perhaps a bit of radio history last week when Steve Forbes and Art Laffer joined me on my syndicated radio show. It may have been the first time these supply-side economics giants were ever together over the airwaves.

Forbes, of course, is chairman of Forbes Media, and he twice ran brilliant issue campaigns for president. And Laffer, once a key adviser to President Ronald Reagan, is father to the groundbreaking Laffer Curve, for which he should have won a Nobel prize. In our discussion, they didn’t disappoint. (For a full transcript, visit

We started with “one big idea.” That’s how the late Jack Kemp approached economic policy reform back in the 1980s. And his big idea, embraced by Reagan, was a mix of low marginal tax rates to spur economic growth incentives and a sound, reliable dollar to conquer inflation and create confidence. (This duplicated President John F. Kennedy’s prosperity model, which Brian Domitrovic and I wrote about in “JFK and the Reagan Revolution.”)

But these days, if you adhere to that big idea, you’re ridiculed as clinging to the past. My guests would have none of it.

“We need it now more than ever,” said Forbes. “To say that just because it worked 40 years ago, therefore it’s old, is like saying the Declaration of Independence and the Constitution are old, therefore we can cast them aside.”

Forbes’ version of “one big idea” is a flat tax and a sound dollar linked to gold. If we have that, we’ll be the “land of opportunity again.”

Laffer agreed. “Our economic verities have remained forever,” he said. “They go back to caveman, pre-cavemen. Incentives matter: If you reward an activity, then people do more of it. If you punish an activity, people do less of it.”

But for the tax side of “one big idea,” Laffer would like to see corporate-tax reform. I agree. Reagan used to say, “Give me half a loaf now, and I’ll get the other half later.” Well, I’d take the half-loaf of corporate tax cuts right now.

And that would work for Forbes, who can see income-tax reform following corporate-tax reform. Of President Trump, he said, “Even if we get to this two years down the road, I think he’d be amenable to doing something radical like a flat tax.”

But why is it that our Democratic friends in the economics profession and politics work so hard to discredit the idea of lowering marginal tax rates on the extra dollar earned to spark the positive incentives that lead to prosperity?

“Let me put it just succinctly,” answered Laffer. “These people are willing to rebut arguments they know to be true in order to curry favors with their political benefactors.”

To which Forbes added: “A lot of these far-left ideologues would rather have a smaller economy and more government power than a bigger economy and a smaller government.”

From that sad truth, we moved to prosperity killers — trade protectionism in particular, about which there is still much talk within the Trump camp. Where, I asked, does trade protectionism — including tariffs on China — fit into the low-tax-rate, strong-dollar prosperity model?

“It doesn’t,” said Forbes, who offered an alternative: “The smart approach is get this economy moving through these tax cuts and deregulation … and then having a stable dollar, and then you sit down with country by country and remove trade barriers.” Anything but the trade protectionism that blew up the stock market in 1929.

To which Laffer added the great line: “Don’t just stand there; undo something!”

“Cut taxes, stabilize the dollar, reduce tariffs, reduce regulation,” he said. “Undo, undo, undo and undo the damages these other guys have done.”

One of those damages is Obamacare. And the fear now is that it will never get undone.

But my guests were optimistic, if philosophical. How will we get true free-market health care reform?

“You do this often, sometimes with great leaps but sometimes step by step,” said Forbes, to which Laffer added: “With any type of change that we can make in the right direction … never let the best be the enemy of the good.”

Finally, I asked, “Is the free-market model losing ground?” We’ve seen its decline in Europe, Latin America and elsewhere.

“This thing always ebbs and flows,” said Laffer. “Reagan, at first, was dissed by all the foreign leaders, except for Thatcher. And once our success story came in, he’s now virtually a god. That’s going to happen again, believe me.”

The limits of this space have forced me to drastically abbreviate what I do believe was a historic radio event. Two economic giants met and discussed the big ideas that will restore growth and prosperity. They offered the “how” and were confident that the “when” is near.

To find out more about Lawrence Kudlow and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at


Trump to Nominate Randal Quarles as Fed Bank Regulator

For the original WSJ link to this article, please click here.

Jay Davidson comments the article:  

Look for some major and positive changes to the banking environment.  Trump’s Federal Reserve nominee to vice chairman of supervision understands the cost of high capital ratios:

Mr. Quarles, in a March 2016 Wall Street Journal op-ed that he co-wrote, said he didn’t support “arbitrarily taking an ax to big banks and irreparably damaging the economy.” He endorsed a review of postcrisis regulations but warned that “the consequence of a dramatic increase in bank capital is an increase in the cost of bank credit.”


He also understands the high cost of regulation:

The choice of Mr. Quarles “shows that we’re looking for a change to the heavy-handed approach to regulation from the prior administration,” the White House official said Monday. Mr. Quarles, the official said, “has a track record of working well with others to implement public policy.”Former Treasury official would be the first Fed vice chairman of supervision

Randal Quarles spoke in New York in 2008.

Randal Quarles spoke in New York in 2008. Photo: BLOOMBERG NEWS

WASHINGTON—President Donald Trump plans to put his first mark on the Federal Reserve by nominating Randal Quarles, an investment-fund manager and former Republican Treasury official, to be the central bank’s top official in charge of regulating big banks.

The choice of Mr. Quarles, expected for months and confirmed by a White House official Monday, would put a more industry-friendly voice in perhaps the most powerful U.S. bank-regulatory post: Fed vice chair of supervision.

That job was created by Congress in 2010 and was never filled during the Obama administration, although former Fed governor Daniel Tarullo filled the role de facto. If confirmed by the Senate, Mr. Quarles would take a lead role in carrying out the Trump administration’s goal of rethinking many financial regulations adopted during the Obama era.

Mr. Quarles would also weigh in on monetary policy as one of seven members of the Fed’s board of governors, now short-staffed with only four members. His views in that sphere could put him at odds with his new colleagues, notably because he has criticized the Fed’s policy of keeping interest rates near zero for years following the financial crisis, and advocated for a monetary-policy rule, or formula, to guide rate decisions.

The Fed board has three vacancies, and the White House hopes to offer two more nominees as soon as possible, the official said. The administration has also begun the search for the next Fed chairman, though Mr. Trump hasn’t ruled out nominating Chairwoman Janet Yellen to a second term, to begin when her current term expires in February.

Mr. Quarles has donated to Republican candidates for years and served in the Treasury Department in both Bush administrations, working on both international affairs and as undersecretary for domestic finance, a senior job that involves coordination with the many U.S. agencies that oversee the financial sector.

He left the government in 2006 and was a managing director at the Carlyle Groupprivate-equity firm, investing in troubled banks. He is now managing director at Cynosure Group, a Utah investment firm.

Mr. Quarles, in a March 2016 Wall Street Journal op-ed that he co-wrote, said he didn’t support “arbitrarily taking an ax to big banks and irreparably damaging the economy.” He endorsed a review of postcrisis regulations but warned that “the consequence of a dramatic increase in bank capital is an increase in the cost of bank credit.”

Analysts and government officials have said nominating Mr. Quarles, an establishment Republican, would be a sign that the White House favors more incremental rather than radical changes to the Fed, an institution that has long engendered mistrust among the economic nationalists who backed Mr. Trump during his campaign last year.

Mr. Trump’s team has advocated a rethink of Wall Street rules but has few officials in place at financial regulatory agencies. If confirmed, Mr. Quarles would immediately take over the job of overseeing the Fed’s regulatory staff, which supervises some of the largest U.S. financial firms including J.P. Morgan Chase & Co., Bank of America Corp. and Citigroup Inc.

He could push for changes in the way the Fed oversees those firms, but he couldn’t change the rules on his own. For that, he would need the support of other members of the Fed’s board and other agencies.

The choice of Mr. Quarles “shows that we’re looking for a change to the heavy-handed approach to regulation from the prior administration,” the White House official said Monday. Mr. Quarles, the official said, “has a track record of working well with others to implement public policy.”

Obama administration officials have said stricter curbs on financial risk-taking were warranted in the wake of the financial crisis.

Mr. Quarles would find some familiar faces at the Fed. He has worked before with Fed governor Jerome Powell, who is now the point person on the Fed’s regulatory efforts and also served in the George H.W. Bush administration and worked at Carlyle Group.

Mr. Quarles is married to Hope Eccles, who is a relative of Marriner Eccles, the New Deal-era Fed chairman whose name is on the building where Mr. Quarles would have his office.

Ms. Yellen is set to testify on Wednesday and Thursday on Capitol Hill, where she will likely be asked about Mr. Quarles and the Fed’s agenda. In the past, she has said she is open to changing some bank rules but not what she regards as core changes adopted after the 2008 financial bailouts.

Ms. Yellen has objected to proposals to require the Fed to use a mathematical monetary-policy rule, an approach popular among some conservatives who argue central banks have too much discretion and should be more accountable to the public.

Mr. Quarles said in the 2016 op-ed that low-interest-rate policies have “led to a rise in speculative positions” across the financial system and that a monetary-policy rule would reduce the incentive for big banks and smaller firms to take dangerous risks.

Mr. Quarles’s path to the nomination illustrates a broader trend in which nominees across the executive branch have faced delays completing the traditional background clearance and screening process.

Top White House officials had identified the vice chair post as a priority weeks after Mr. Trump’s election last year, and after an extended search process, officials identified Mr. Quarles as their top pick in April. At the time, Treasury Secretary Steven Mnuchin had indicated a nominee for the post was imminent.

The White House expected Mr. Quarles’s nomination to receive broad Republican support. He needs a simple majority to be approved by the Senate, where Republicans control 52 out of 100 seats.

The White House has also been considering economist Marvin Goodfriend to fill a second vacancy on the Fed board, according to people familiar with the matter. It isn’t clear when his nomination might be announced and submitted to the Senate.

The White House has been searching for a candidate with experience in small, locally focused community banks for the third opening, as a result of a law requiring that someone on the Fed board have experience in that industry.

But finding a nominee has been difficult in part because of federal ethics rules that require Fed officials to divest of their interest in financial firms. Once a regulatory nominee is selected, the process for security and ethics reviews has been taking about two months.

Write to Ryan Tracy at, Kate Davidson at kate.davidson@wsj.comand Nick Timiraos at

Appeared in the July 11, 2017, print edition as ‘Trump to Appoint Fed Bank Regulator.’

The last eight years are “the Recovery that Wasn’t” -Jay Davidson

For original link to this WSJ article go HERE.
Mr. Ip is usually better informed.  The last eight years are “the Recovery that Wasn’t.”  There is little inflation because supply and demand are not unbalanced.  The reason that supply and demand are balanced, and inflation is benign, is that economic activity is depressed: Business is not growing or expanding and private investors are not investing.
Lest we forget, as everyone seemed to during the Obama socialistic rampage, it is the private business and investor that is our economy; federal spending requires that the government first takes money from the private citizen, through taxation, before the government spends that taxed money.
The Fed Reserve and Mr. Ip would better serve the nation if they asked why business activity remains depressed.  For the answer, look to Fiscal Policy.  Until the Congress solves the regulatory excesses that befell private businesses during Obama’s Socialist/Communist experiment, there will not be any recovery.  Until Congress reduces federal spending and debt, there will be no business growth.  Until the Congress reduces the tax burden on businesses, investors and citizens, there is no recovery.  This is a Zombie Recovery until the nation as a whole embraces the concept of far less government. – Jay Davidson
Why Soaring Assets and Low Unemployment Mean It’s Time to Start Worrying – WSJ

Today’s conditions expose vulnerabilities that make a recession or market meltdown more likely

Fed Chairwoman Janet Yellen, a veteran of past mayhem, needs to be on guard for a repeat.

Fed Chairwoman Janet Yellen, a veteran of past mayhem, needs to be on guard for a repeat. Photo: joshua roberts/Reuters


Greg Ip

If you drew up a list of preconditions for recession, it would include the following: a labor market at full strength, frothy asset prices, tightening central banks, and a pervasive sense of calm.

In other words, it would look a lot like the present.

Those of us who have lived through economic mayhem before feel our muscle memory twitch at times like this. Consider the worrisome absence of worry. “Implied volatility” measures the cost of hedging against big market moves via options. When fear is pervasive, options are expensive so implied volatility is high. At present, implied volatility in bonds, stocks, currencies and gold sits near its lowest since mid-2007, the eve of the financial crisis, according to a composite measure maintained by Variant Perception, a London-based investment advisory.

The economic expansion is now entering its ninth year and in two years will be the longest on record. The unemployment rate sits at 4.3%, the lowest in 16 years, suggesting the economy has reached, or nearly reached, full capacity.

Expansions don’t die of old age, economists like to say. On the other hand, should we really assume this one will be a record breaker? From a level this low, unemployment has more room to go up than down. Another ominous sign: Central banks are tightening monetary policy, which has preceded every recession. The Fed has raised rates three times since December and last week central banks in Britain, the eurozone and Canada all hinted that years of easy money were coming to an end.

Still, the presence of recession preconditions isn’t enough to say one is imminent. To understand implied volatility, think of hurricane insurance. Right after a storm, homeowners are more anxious to have coverage, even as insurers withdraw, which of course means premiums spike. As years go by without another hurricane, homeowners let their coverage lapse, insurers return and premiums drop. Similarly, implied volatility is low today because years without a financial calamity have sapped demand for hedging while enticing sellers with the prospect of steady income in exchange for potentially huge losses. But just as hurricane premiums don’t predict the next hurricane, low implied volatility tells us nothing about whether or when a downdraft will actually come.

Similarly, when unemployment got nearly this low in 1989 and again in 2006, a recession was about a year away; but in 1998, it was three years away, and in 1965, four years. A narrowing spread between short-term interest rates and long-term rates comparable to the present has happened 12 times since 1962, and only five times did recession follow within two years.

But if today’s conditions don’t dictate a recession or a market meltdown, they expose vulnerabilities that make either more likely in the face of some catalyzing event.

When ​growth is steady and interest rates are low for years, investors and businesses behave as if those conditions will last forever. That’s why even with muted economic growth, stocks are trading at a historically high 22 times the past year’s earnings. It’s also why home prices have returned to their pre-crisis peaks in major American cities. Real estate has scaled even greater heights in Australia, Canada and parts of China, which exhibit some of the same lax lending and wishful thinking that underlay the U.S. housing bubble a decade ago.

Companies meanwhile have responded to slow, stable growth and low rates by borrowing heavily, often to buy back stock or pay dividends. Corporate debt as a share of economic output is at levels last seen just before the past two recessions.

When everyone acts as if steady growth and low volatility will last forever, it guarantees they won’t. Once asset prices fall, the flow of credit that sustained them dries up, aggravating the correction. Corporate leverage is at levels that in the past led to weakening corporate bond prices and greater equity volatility, says Jonathan Tepper, founder of Variant. “A high proportion of companies won’t be able to pay back debt.” A selloff in corporate bonds and stocks could become self-reinforcing as those who insured against such a move sell into it to limit their own losses.

Of course, some things are different this time. The postcrisis regulatory crackdown means if asset prices fall, they probably won’t take banks down with them. Last week Janet Yellen, the Fed chairwoman, said she thought there wouldn’t be another financial crisis “in our lifetimes.” Fair enough: crises as catastrophic as the last happen twice a century. But small crises are inevitable as risk migrates to financial players who haven’t drawn the attention of regulators. “Elevated asset valuation pressures today may be indicative of rising vulnerabilities tomorrow,” Fed vice chairman Stanley Fischer warned last week.

Inflation is uncomfortably low rather than too high as in previous cycles, which makes it less likely central banks will have to raise interest rates sharply or rapidly. But in a world with permanently lower inflation and growth, businesses will struggle to earn their way out of debt, and interest rates will bite at lower levels than before. This confronts the Fed with a dilemma. If bond yields remain around 2% to 2.5%, the Fed may be playing with fire by pushing rates to 3%, as planned. If it backs off those plans, it could egg on excesses that make any reversal more violent.

Ms. Yellen and Mr. Fischer, both veterans of past mayhem, need to be on guard for a repeat. So should everyone else.

Could Trump Really Be Draining the Swamp? a fox – WSJ

Could Trump Really Be Draining the Swamp?

Original post on WSJ site can be found HERE>.

The water appears to be receding at key Beltway bureaucracies.

President Donald Trump and Secretary of State Rex Tillerson in the Cabinet Room of the White House on Friday.

President Donald Trump and Secretary of State Rex Tillerson in the Cabinet Room of the White House on Friday. Photo: brendan smialowski/Agence France-Presse/Getty Images


James Freeman

The Senate still hasn’t voted on ObamaCare reform, U.S. workers are still waiting for tax cuts to drive economic growth and President of the United States Donald Trump is trading insults with the co-hosts of an MSNBC talk show. Yet Mr. Trump appears to be making progress in what might have seemed the most difficult task given to him by voters in 2016: reducing the power of Washington’s permanent bureaucracy.

Secretary of State Rex Tillerson wasn’t exactly dying to move to Washington to run a federal department, but he seems to have warmed to the task. Max Bergmann, a former Obama Administration official now at the leftist Center for American Progress, writes inPolitico that the “deconstruction of the State Department is well underway.” Discounting for the usual Beltway hyperbole, this probably isn’t as good as it sounds.

All kidding aside, the State Department is one federal agency that was actually contemplated by America’s founders. Conducting foreign policy is an important and necessary task for our central government. But like so much of the Beltway bureaucracy State has been overfunded and undermanaged for years. Now, despite what you may have read about untouchable bureaucrats unaccountable to the public they are supposed to serve, Mr. Tillerson has found ways to clean house, at least according to Mr. Bergmann:

As I walked through the halls once stalked by diplomatic giants like Dean Acheson and James Baker, the deconstruction was literally visible. Furniture from now-closed offices crowded the hallways. Dropping in on one of my old offices, I expected to see a former colleague—a career senior foreign service officer—but was stunned to find out she had been abruptly forced into retirement and had departed the previous week. This office, once bustling, had just one person present, keeping on the lights.

The former Obama appointee is apparently so unnerved by the Trump-Tillerson era at State that he lets slip the fact that the career staff didn’t think much of the previous management either, and that the conservative critique of the department is at least partly true:

When Rex Tillerson was announced as secretary of state, there was a general feeling of excitement and relief in the department. After eight years of high-profile, jet-setting secretaries, the building was genuinely looking forward to having someone experienced in corporate management. Like all large, sprawling organizations, the State Department’s structure is in perpetual need of an organizational rethink. That was what was hoped for, but that is not what is happening. Tillerson is not reorganizing, he’s downsizing.

Do taxpayers dare to dream? As odd as this sounds for regular observers of the federal leviathan, the new boss seems to be imposing the kind of tough measures often seen at struggling companies, but almost never witnessed at government departments that have lost their way:

While the lack of senior political appointees has gotten a lot of attention, less attention has been paid to the hollowing out of the career workforce, who actually run the department day to day. Tillerson has canceled the incoming class of foreign service officers. This as if the Navy told all of its incoming Naval Academy officers they weren’t needed. Senior officers have been unceremoniously pushed out. Many saw the writing on the wall and just retired, and many others are now awaiting buyout offers. He has dismissed State’s equivalent of an officer reserve—retired FSOs, who are often called upon to fill State’s many short-term staffing gaps, have been sent home despite no one to replace them. Office managers are now told three people must depart before they can make one hire.

Perhaps the Tillerson method could work at other agencies too. Mr. Bergmann for his part seems to be disappointed that the un-elected career staff has not been able to impose its will on the duly-elected political leadership:

At the root of the problem is the inherent distrust of the State Department and career officers. I can sympathize with this—I, too, was once a naive political appointee, like many of the Trump people. During the 2000s, when I was in my 20s, I couldn’t imagine anyone working for George W. Bush. I often interpreted every action from the Bush administration in the most nefarious way possible. Almost immediately after entering government, I realized how foolish I had been.

For most of Foggy Bottom, the politics of Washington might as well have been the politics of Timbuktu—a distant concern, with little relevance to most people’s work.

Here’s to making the will of voters more than just a distant concern– and highly relevant to the work of federal agencies.

Meanwhile over at the Environmental Protection Agency, new boss Scott Pruitt is not just draining the bureaucratic swamp in Washington, he’s taking away the agency’s power to oversee swamps nationwide. The Journal reported on Tuesday:

President Donald Trump’s administration is moving ahead with plans to dismantle another piece of the Obama administration’s environmental legacy, the rule that sought to protect clean drinking water by expanding Washington’s power to regulate major rivers and lakes as well as smaller streams and wetlands.

And now the Journal reports:

President Donald Trump declared a new age of “energy dominance” by the U.S. on Thursday as he outlined plans to roll back Obama era restrictions and regulations meant to protect the environment.

In a speech at the Energy Department, the president promised to expand the country’s nuclear-energy sector and open up more federal lands and offshore sites to oil and natural-gas drilling.

Mr. Trump also celebrated his decision earlier this month to withdraw the U.S. from the 195-country Paris climate accord and the Environmental Protection Agency’s rescindment this week of the Obama administration’s clean-water rules that farmers and business groups found onerous.

“We don’t want to let other countries take away our sovereignty and tell us what to do and how to do it,” Mr. Trump said.

Mr. Trump also issued a special permit authorizing the construction of a new pipeline between the U.S. and Mexico that would carry fuels across the border in Texas, the State Department said.

If Mr. Trump can finally reform the Washington bureaucracy and make the will of voters its primary concern, voters may decide he can tweet whatever he wants.