Friday, February 16, 2018

Wealthy in real estate, he became president


Most of the assets of the man reputed to be the wealthiest American president were in real estate, like those of one of his successors.

Unlike that successor, he was moderate in speech and open to all views before deciding. He set a model for his country. On Monday, we celebrate George Washington’s official birthday.

Not Presidents’ Day. Washington's Birthday is the legal U.S. and Maine government designation of the day. In remembering all presidents, some outright failures, the day meant to honor Washington has become a commercial holiday. 
 
But we should recall this country’s good fortune to have been led by this exceptional man. This is my annual column to recognize and remember him. 
 
While we sometimes believe he had an easier job in simpler times than faces today’s president, he had to set up a federal government designed to last for centuries. He acted while being viewed with suspicion by some who feared he would end up as king.

Washington was an even better statesman than military leader. His strength was his unwavering commitment to the idea of the American republic. His chief personal ambition was not to rule, but to retire to Mount Vernon. He declined his pay in public service.

Drafting the Constitution, accomplished under his presidency of the Constitutional Convention, was only part of the task. How would the first president apply the Constitution?

Washington believed in what might be considered “big government.” During the Revolutionary War, he had depended on voluntary state financial and military contributions. The experience made him a supporter of a strong national government.

He aligned himself with constitutional drafters who argued that the United States could only become a great nation if powers were transferred from the states to the federal government. He advocated the expansion of the government he led. 
 
He faced strong opposition from those worried that the national government would override states’ rights and individual freedoms. Washington accepted the Bill of Rights as an essential part of the deal to make a new country. 
 
No American has ever enjoyed more prestige in his own lifetime than Washington. But he wore the mantel of power with modesty and showed great respect for the views of others.

Washington worried about the growth of political parties that he witnessed. He predicted “the spirit of revenge, natural to party dissension ....” He concluded that strong partisanship could undermine the functioning of government. 
 
In proposing an accord with the British, his former enemy, Washington subscribed to a view later formulated by a British statesman: "Nations have no permanent friends or allies, they only have permanent interests." Jefferson and his supporters disagreed, years later launching the disastrous War of 1812 against the British.

Jefferson had attacked him openly. Though Washington would ultimately cut off contact with him, he refrained from any personal attacks on his fellow Virginian. Such values seem lost in today’s politics.

Washington, a southern slave owner, agonized over slavery. He recognized that the country might break apart over the issue. If it did, a friend reported in 1795, "he had made up his mind to remove and be of the northern."

He believed that slavery would disappear as the nation's economy developed, though he was overly optimistic about its end. He recognized that the future lay in the development of "manufactures" produced by wage labor, as was beginning to happen in the North.
 
Thus, 70 years before Lincoln's defense of the Union in the Civil War and his willingness to compromise on slavery, Washington used his national standing to hold the country together. His will freed his slaves after his death, and, against Virginia law, he left money for their education.

Washington had a deep religious belief and was a practicing Christian who often prayed. Yet he did not believe that the United States was a Christian nation, writing to a Jewish congregation, "All possess alike liberty of conscience and immunities of citizenship."
 
He resigned as general and declined to serve more than two terms as president. When Britain’s King George III, America’s old enemy, was told that Washington would walk away from high office, he said, “If he does that, he will be the greatest man in the world.”

Washington created the aura of the presidency. Despite his divisive personal style, Donald Trump benefits from the respect for his office that is Washington’s legacy.

Washington has become a symbolic figure, causing us to lose sight of him as a real person. He was a general, a president, a statesman and, above all, a great man. We should remember that man.

Friday, February 9, 2018

Economy up, stocks volatile – who gets credit, blame?

 
The American economy remains in one of its longest recoveries in history. Does President Trump deserve the credit?
The memory of the 2007 financial meltdown fades. Unemployment is down. Incomes are beginning to increase. Consumer spending, the driver of the economy, is picking up. The recovery, begun years ago, remained strong during Trump’s first year in office.
A close look reveals a far more complicated explanation for the recovery in which Trump plays only a surprisingly small part.
Government is a player in the economy, but does not drive it. Businesses and individuals decide on its direction. Their actions don’t all head the same way at the same time. In a free enterprise society, the big decisions are not made by government, though it provides incentives and controls.
Government economic action is composed of two elements, fiscal policy and monetary policy. The president and Congress manage fiscal policy – taxes and spending, while the Federal Reserve, independent of the president, runs monetary policy – interest rates and the supply of money.
From the moment he took office in 2009, President Obama tried to boost government spending to stimulate the economy. At first, he was successful, and Congress agreed to a $787 billion stimulus. Republicans opposed any added government efforts, arguing they would increase the national debt.
Fiscal policy would go no further, leaving recovery to the Federal Reserve. Under recently departed Fed chair Janet Yellin and her predecessor, interest rates were cut close to zero and the money supply expanded. The Fed made it easier for people to borrow and then spend to boost the economy.
Yellin’s team managed to promote growth without high inflation. While personal income did not grow much, neither did prices.
Most presidents reappoint a Fed chair to a second term even if he or she is a member of another party. But Trump wanted to put his own stamp on the office. He picked a person remarkably similar to Yellin, but who might give Trump some room to claim credit for the appointment and for monetary policy.
Trump’s contribution to recovery was limited to his signature on a tax cut bill entirely developed by others, the congressional GOP. The bill created expectations that money saved on taxes will grow the economy, thus producing more tax revenues. Meanwhile, it increases the national debt far more than Obama’s proposal would have.
Trump has taken credit for economic gains, including some under Obama. The same positive statistics he scorned as a candidate, because they made Obama look good, he now claims have become accurate under his regime.
Putting presidential politics aside, Yellin deserves more credit for the recovery than either president.
Government spending sets the priorities for only a portion of the economy. Obama’s effort promoted basic developments like roads and hospitals. Tax cuts allow companies and people to set their own priorities, which do not usually include public works. That’s why more money will be needed for those purposes.
Consumer spending may increase, but what people buy may be more expensive. Trade policy is beginning to have the effect of raising the price of imports, which are a large part of our shopping carts.
One other problem with the recovery is that its benefits are uneven. Most economic gains have gone to the top 10 percent, while incomes for others have been relatively flat. Even if the 90 percent is beginning to see some progress, they have a long way to go to close the gap.
The same kind of gap also exists between urban and rural areas. Gains have been going to areas classified as urban and not to rural America. According to the census, Maine has fewer people living in urban areas than any other state. So many Mainers still await the chance to catch up.
Beyond taking credit for the economy, Trump has boasted of the big increases in stock prices, the “Trump Bump.” However, despite impressive gains, the stock market’s future is unclear. It is quite different from the economy. Speculation, normal in investing, is unlike decisions about what goes in the shopping cart.
The stock market can swing rapidly. Investors are now worried about higher interest rates and wage growth that will boost prices, causing inflation, and harming some corporations.
A president’s risk in claiming credit for the economy or stock market that he or she doesn’t really control puts the president in line for the blame when either declines, which is inevitable.
Modesty, now in short supply, would be a good idea.

Friday, February 2, 2018

Politicians use jargon to disguise the truth

 
“If you can’t convince them, confuse them.” President Truman supposedly said that.
It still seems to apply to the way the federal government communicates with us voters. To clarify a bit, here are some things politicians say and what they mean.
Congress adopts a “continuing resolution” when it cannot agree on a budget. A continuing resolution extends the previous year’s spending temporarily for a few weeks or months. The current budget year began last October, but we are still “temporarily” living hand-to-mouth with a previous budget.
“Regular order” means Congress acts normally by holding hearings and debates and then working out compromises between the House and Senate. Sen. McCain famously asked for it, and Sens. Collins and King want it. But congressional leaders push bills through using speeded up procedures.
“Democratic republic” is what we supposedly have, which should allow any member of Congress – they’re all equal, right – to bring up a bill. Only two people can allow a bill to get to a vote, the Speaker of the House and the Senate Majority Leader.
The “Freedom Caucus” is the strongly conservative group in the House that opposes government spending. It has enough votes to deny the House the freedom to vote on many proposals, because of Speaker Ryan’s practice, explained next.
The “Hastert Rule” isn’t a rule but a Republican practice begun by an earlier speaker, saying that no bill will reach the House floor unless “a majority of the majority” GOP supports it. Speaker Ryan adds to it by requiring that no bill may reach the floor unless it can pass with only GOP votes.
“Cloture” means getting the 60 votes it takes to allow a bill to face the final simple majority vote in the Senate. That can give the minority, now the Democrats, some influence in it. President Trump wants the “nuclear option” that would end the 60-vote requirement, but the GOP worries about when it will be the minority.
“The [Obamacare] individual mandate is now gone” said President Trump. The mandate was not repealed. The penalty for violating it was cut to zero. Some will obey it anyhow, thanks to government subsidies for insurance premiums. By the way, we obey the flag code and there’s no penalty for violating it.
“The bill is a thousand pages long” implies that Congress lets matters get too complicated for average people. Any time even one word of a section of law is amended, the whole section must be printed. Small changes can take many pages.
“An obscure law” means a law that the writer never heard of. Most laws are, by nature, obscure. One is the Logan Act, banning private citizens from carrying on foreign relations for the government on their own. Nobody has been prosecuted in 200 plus years. That makes it “obscure,” when perhaps it has simply been obeyed.
“The American people want” is a phrase based on polling. But, because of the way the GOP has designed congressional districts in many states, the Democrats have to be well ahead in the polls to hope to gain control of the House. Polling meets political game playing.
“Russian attempts to influence the election” are illegal, because foreigners cannot participate in or contribute to campaigns. This is mixed up with “collusion,” working with foreigners. It’s possible that, even without working together, merely knowing about foreign activity and accepting it should be rejected.
“Bipartisanship” is what candidates promise but don’t produce. They claim they are ready “to work across the aisle,” doing the public’s business through compromise with members of the other party. The Freedom Caucus is exempt from this promise. Candidates say this, because that’s what voters want, but it doesn’t happen.
“Compromise” is thought to mean that each side makes concessions to the other to achieve a result. For many in the GOP majority, it means they are willing to accept Democratic support for their positions, but won’t make any concessions. The Dems reciprocate and “compromise” remains as rare as the dodo.
‘Switzerland” is what some call Sen. Susan Collins’ office. That makes it neutral territory for Republicans and Democrats who like to consider themselves moderates to try to reach agreement on immigration and force the Senate Majority Leader to allow a vote on their deal.
What Collins is doing is positive. The would-be moderates need first to agree and then stick together to insist they carry as much weight as the Freedom Caucus. Then, we voters might get some of the bipartisanship we were promised.