Reagan to the Power of Ten

By Thomas Piketty, Le Monde

16 June 17

s Trump a UFO in American history or can he be seen as the continuation of long-term trends? While we have no desire to deny “Donald’s” obvious specificities, including his inimitable art of the tweet, we do have to admit that elements of continuity prevail.

The tax agenda which he has just tabled in Congress is eloquent. It can be summed up in two central measures: reduction of federal income tax on corporate profits from 35% to 15% (a rate which Trump would also like to see applied to individual entrepreneurs like himself); a total end to inheritance tax. This is clearly a direct prolongation of the programme for ‘scrapping’ the progressive tax launched by Reagan in the 1980s.

Let’s go back a bit. In order to counter the rise in inequality and the excessive concentration of wealth (at the time, considered as contrary to the democratic spirit in America) and also to avoid any resemblance with Old Europe one day (considered across the Atlantic in the 19th century and at the Belle Epoque as aristocratic and oligarchic, and rightly so), between 1910 and 1920, the United States set up a level of progressive taxation, hitherto unknown in history. This major movement of compression of inequalities implied both taxing income (the rate applied to the highest incomes was on average 82% between 1930 and 1980) and estates, (with rates rising to 70% on the transmission of the largest estates).

All this changed with the election of Reagan in 1980: in 1986, the reform reduced the top rate of income tax and ignored the Social Policies set up by the New Deal under Roosevelt. These were accused of having ‘softened’ America and to having helped those who lost out during the war to ‘catch up’. But Reagan left a high corporate tax in place and high progressive rates of taxation on estates. Thirty years after Reagan and ten years after the first attempt by Bush junior to abolish so-called « death duties », in 2017 Trump has launched a new wave of presents to the biggest and wealthiest fortunes, and all this after abolishing Obamacare.

There is a fair chance that he will be followed by Congress. The Republicans will, of course, attempt to add a “border adjustment mechanism” consisting in authorizing the deduction from exports of the taxable profit and, conversely, in forbidding the deduction from imports (the well-known Ryan plan). This unprecedented blend of corporate tax and of European style V.A.T. has already aroused the anger of the WTO (something which pleases Trump) but also of importers (for example the Walmart supermarkets) which is more problematic. Theoretically the measure could be neutralised by a rise in the dollar, but in practice the exchange rates are determined by many other factors and nobody wants to take the risk.

It is likely that those concerned will settle for targeting specific imports and exports (with the intention of getting the message out that the Republicans defend American industry better than the Democrats, who are described as covert free traders and always ready to give everything to the Mexicans and all those other jealous people who surround America) and that a compromise will be found both for estate duties and for a massive reduction in the rate of corporate company profits, doubtless in the range of 15% to 20%, which may relaunch fiscal dumping in Europe and in the world.

The main question remains: how does a programme which is so clearly pro-rich and anti-social succeed in appealing to a majority of Americans as it did in 1980 and again in 2016? The classical answer is that globalisation and cut-throat competition between countries leads to the reign of each man for himself. But that is not sufficient: we have to add the skill of the Republicans in using nationalist rhetoric, in cultivating a degree of anti-intellectualism and, above all, in dividing the working classes by exacerbating ethnic, cultural and religious divisions.

As early as the 1960s, the Republicans began to benefit from the gradual transfer of part of the vote of the white and southern working classes, unhappy with the civil rights movement and the social policies, accused of benefitting primarily the Black population. This long and in-depth movement continued with the crucial victory of Nixon in 1972 (faced with the Democrat, McGovern, who suggested implementing a universal basic income at federal level, financed by a new increase in estate duties: this was the summit of the Roosevelt Programme), Reagan in 1980, and finally Trump in 2016 (who had no hesitation in racially stigmatising Obamacare, as Nixon and Reagan had done previously).

In the meantime, the Democrat electorate focussed increasingly on the most highly educated and the minorities, and in the end, in some ways resembled the Republican electorate at the end of the 19th century (upscale Whites and Blacks emancipated), as if the wheel had turned full circle and the Roosevelt coalition uniting the working classes over and above racial differences had ultimately only been a parenthesis.

Let’s hope that Europe, which in some ways is threatened by a similar development with the working classes having greater faith for their defence in the anti-immigrant forces, than in those who describe themselves as progressive – will be capable of learning the lessons of history. And that the inevitable social failure of Trumpism will not lead our “Donald” into a headlong nationalist and military rush, as it has done others before him.

Mr. Mueller Is Following the Money

By Charles Pierce, Esquire

15 June 17

And he will not be deterred.

'd say that shit just got real around the White House on Wednesday night, but shit hasn't been anything but real there ever since the country determined it would be best led for the next four to eight years by a vulgar talking yam. As everyone who follows Preet Bharara on the electric Twitter machine—and why don't you, by the way?—knew was coming, the news that special counsel Robert Mueller had rolled out the railroad artillery broke well after the close of business. From The Washington Post:

The move by special counsel Robert S. Mueller III to investigate Trump's conduct marks a major turning point in the nearly year-old FBI investigation, which until recently focused on Russian meddling during the presidential campaign and on whether there was any coordination between the Trump campaign and the Kremlin. Investigators have also been looking for any evidence of possible financial crimes among Trump associates, officials said. Trump had received private assurances from then-FBI Director James B. Comey starting in January that he was not personally under investigation. Officials say that changed shortly after Comey's firing.

You can't fix stupid, boys. Better men than you have tried.

Five people briefed on the interview requests, speaking on the condition of anonymity because they were not authorized to discuss the matter publicly, said that Daniel Coats, the current director of national intelligence, Mike Rogers, head of the National Security Agency, and Rogers's recently departed deputy, Richard Ledgett, agreed to be interviewed by Mueller's investigators as early as this week.

Also, never underestimate the destructive power of terrified careerists, as The Daily Beast illustrates:

But some privately concede that Trump is so unpredictable—and so frustrated with the persistence of the investigation and its cost in political capital—that they're not ruling it out. Another White House official conceded that it would be "suicide" if Trump sacked Mueller at this point, but "I'd be insincere if I said it wasn't a concern that the president would try to do it anyway."

Let's see if there's any solace to be found over here with the folks at The New York Times. Oops, no, shit's gotten pretty real there, too, via RawStory:

"A former senior official said Mr. Mueller's investigation was looking at money laundering by Trump associates," a source told the Times. "The suspicion is that any cooperation with Russian officials would most likely have been done in exchange for some kind of financial payoff, and that there would have been an effort to hide the payoffs, most likely by routing them through offshore banking centers." A separate investigation into Russia has also reportedly focused on potential use of offshore banking centers to launder money. In April, House Intelligence Committee member Rep. Mike Quigley (D-IL) visited Cyprus, which "has a reputation as a laundromat for the Russians who are trying to avoid sanctions."

It is now painfully clear that Mueller has opened the ballgame on the Trump organization's entire business model, which always has been aromatic but which now has become entangled with the intelligence community, the institutions of government, and the national interest, as interpreted by Robert Mueller. He isn't some roofing specialist that you can stiff and then drag through the courts until he can't afford the trip any more. He isn't someone you can scare off with your usual gang of billable-hour button men. He isn't some dingy Russian banker who can float you a loan to tide you over. He is honest and respected and relentless, and the only way you're going to get rid of him is to fire him. In a way, the country is daring you to do that, just to see if you have the stones for what comes next, and (possibly) as the last excuse it needs to insist on a new president. Go ahead. Make our day.

For a long time, I didn't believe that the president* would bring all this down on himself just to hide the fact that he isn't as rich as he says he is, but now I'm less sure. I think, maybe, that's what's at the bottom of everything else. I think he isn't that rich, so he and the family business allegedly needed freshly laundered Russian money to keep the business—and his image—afloat. Then, of course, the bill came due from Moscow, and that required another set of malodorous transactions which, in turn, required that they be concealed by another set of malodorous transactions, including the firing of James Comey, and so on.

God, the tax returns. If he'd only released the tax returns, and the people had gotten a look at how he does business and how much he's really worth, it's likely none of this happens. Of course, it's also likely he doesn't become president* either, but, what the hell, all indications are he doesn't much like the job, anyway, at least not enough to learn the basics of how to do it properly.

In any event, it appears that we're all going to get a crash course in the crooked side of high finance—like we need another one of those—and in identifying all the various fauna in the wild kingdom of the international real estate game. I love those teachable moments. Truly, I do.