Policies, Impact on US Economy and Other GOP Presidential Candidates
by Victor Sperandeo, edited the Curmudgeon
The Trump Card:
The extensive coverage of the 2016 US Presidential election, primarily due to Donald Trump's unusual style of campaigning, has created a revolution within the Republican Party (the Grand Old Party or GOP). If Trump wins the Republican nomination and the Presidential election, what would that mean for the U.S. economy and our freedom?
For full disclosure, I'm not a fan of Mr. Trump and would not support him, but for different reasons than the GOP candidates and main street media critics. However, I'm glad he is in the race for the differences he brings, and in many cases, the blatant candidness in expressing his views that is nothing like any "politician" before him that has run for President. When you combine the Don Rickles - like insults, with the Jackie Mason political satire, he is in reality a major hit show that entertains "the people."
The reward to all of us for Donald Trump running for President is the psychological reaction by the public, the media and the other candidates to his words and outlined policies. It's not so much “the Donald” is liked, as it is his total outrage at the typical politician (with the lies they spew out to please everyone, but mean nothing to the political candidates after their words have been uttered).
Sidebar: Opinion on Political Parties Beholding to Special Interests:
The methods and procedures that are used to make the laws, rules, and regulations which effect all Americans are very similar for both of our political parties. Yet they have been shown to be disgusting to the bulk of the U.S. citizens, because they are for the special interests and NOT the people. They only change in small ways for the people, and move back and forth depending on who is disliked least at the time and thereby wins power.
You really are not voting for a specific political candidate, but rather the group (gang) called a “political party,” with instructions from the Caporegime or capo (in the mafia, a high ranking made member of a crime family). Regrettably, that is the heart and soul of the voting process.
Exhibit A - The Iran Nuclear Deal:
According to a PEW poll, only 21% of the public is for the deal as of 9/9/15. CNN shows 56% (as of 8/21/15) of the people are against it, and 22% don't know what to think. Yet the Iran Nuclear deal is moving forward.
That's not unique. Except for elections, the public never mattered if one party had an agenda it wanted to pass Congress (e.g. "Affordable Care Act" by the Democrats). The Democrats agenda this time was the Iran Nuclear Deal - to supposedly keep the world safe by preventing Iran from acquiring a nuclear bomb.
Clarification: The Iran Nuclear Deal is not called a treaty, but an "executive agreement" and thereby legally does not exist as a law. It is a non-binding agreement between President Obama, the UN, and Iran that can be changed with the next president, according to the U.S. Constitution. Therefore, this new “law” (?) is completely unique. “The limitation on the President is he’s only got the ability to do this during his term,” Rep. Peter Roskam (R., Ill.) said in an interview with the WSJ.
The Senate Committee on Foreign Relations (leader is Bob Corker (R-TENN), together with Senate Majority leader Mitch McConnell, turned the US Constitution upside down to help President Obama win this deal. As a result, one of the most important treaties in our lifetime is not even going to get a vote, even though the Constitution states 2/3's of the Senate needs to vote "yes" for a treaty pass!
Curmudgeon Note: This weekend's WSJ (Sept 12-13, 2015) has an important lead article titled: Obama Methodically Wooed Democrats to Back Iran Nuclear Deal. The claim is that the White House set up an ‘anti-war’ room to pressure fellow Democrats, worked with House minority leader Nancy Pelosi and outside groups to ensure enough votes such that a veto wouldn't be necessary.
To buttress Victor's assertion about politicians working with special interest groups, consider that the Obama administration enlisted the San Francisco, CA based Ploughshares Fund to get the Iran deal done! The Ploughshares coalition includes a former Iranian government spokesman, according to the Journal. Ploughshares has spent more than $7 million in the past four years funding think tanks, media organizations and activist groups focused on championing diplomacy with Iran.
The WSJ article states: “A week before the deal was reached, Ploughshares organized for the White House a conference call for around 100 activist groups to strategize how to promote the Iran deal. Two members of the White House’s Office of Public Engagement took part.”
The Curmudgeon wonders why the Obama administration had to outsource its Iran deal Congressional lobbying effort to a nonprofit organization. Is that what “public-private” partnerships have become in the age of special interest groups?
Why Trump is in the Lead:
This is, in major part, why Trump is ahead in the polls. As everyone states, he is reflecting the disgust and hatred with professional politicians (or con men and women) of both parties. What is telling is the politicians know this and don't care!
More accurately, the Republican "Establishment," originally under the banner of "Rockefeller” liberal or moderate Republicans are still strong believers in the Welfare State i.e. “Socialism Lite.” They sold the citizens liberty for power. This morphed into neo-conservatism started by Irving Kristol (The Godfather of the Neo-con movement). It's represented today by his son Bill Kristol of the "Weekly Standard Magazine." This mentality promotes democracy and American national interests in international affairs (sometimes referred to as "the New World Order") and goes into wars if need be. This has been eagerly pursued by George W Bush, along with John McCain, Lindsey Graham, or the "war cabal."
The difference between Trump and the war cabal is that “the Donald” wants to be paid for going to war by the country involved. For example, by the US commandeering natural resources such as Middle East oil. This is not constitutional, but is imperialism. So as where the war cabal wants to CONTROL these nations, Trump wants to TAKE their resources. The problem with that thinking is a lack of dealing in principles and ideals. Rather, they deal in whims.
Taxes and the Constitution:
Trump, like many of the other presidential candidates want a progressive income tax. On the other hand, Ted Cruz, Ben Carson, Mike Huckabee and Rand Paul want a Flat Consumption tax or “fair tax” and an end to the IRS.
Taxes are by far the greatest enslavement tool of Statists.1 The taxes collected by the government are often spent on projects or preferences of companies or groups which give campaign contributions to the politicians who in turn “dish out the dough.”
Note 1. Statism is the belief that the state should control either economic and/or social policy. Statism is effectively the opposite of anarchism. An individual who supports the existence of the state is a statist.
Trump's tax plan is better than most progressive schemes, but it seems to be temporary. The rules of the Constitution were based on an excise tax on foreign goods and "proportional" taxes if needed (like in a war). Karl Marx knew that a "progressive" tax would over-turn Capitalism...and if you trace most of the problems in the U.S., taxes is at the top of the list.
Donald never relates to this nation's Constitution, but instead wants to "get the job done" by any means possible. I believe he would change the economy for the better, but it would be temporary. His tax plan is contained within his 2011 book, "Time to Get Tough."
His five-step plan includes eliminating the estate tax and the corporate income tax, lowering the tax rate on capital gains and dividends, enacting a 20% tariff on all imported goods and creating a new, lower income tax rate structure. The income tax would include a tax rate structure of: 1% for up to $30,000; 5% for $30,000-$100,000; 10 % for $100,000-$1,000,000; and 15% for income over $1,000,000.
Trump's plan for immigration and taxes are a huge move to positive change as they would increase income for the people. Who would not take a maximum 15% tax over $1 million in income? Today it's 43.35% with the Medicare tax. Increased pay for a lower supply of workers would raise incomes, add more manufacturing in the US via a proposed 20% tariff, etc.
The hatred for Trump by the "Republican Establishment" and media is because he is not CONTROLLABLE, and therefore threatens all their jobs! Without a Corporate Income Tax, GOP politicians could not bribe corporate donors for House and Senate member campaign funds, as they wouldn't have much to offer in return.
As a result, Trump is the establishment's worst nightmare in many ways, as are all the other flat tax candidates.
Curmudgeon Note: Trump has stated that any money he receives from campaign contributions will not come with expectations of political favors. We don't hear other candidates making that promise.
Dealing with Illegal Immigrants:
Illegal aliens, or undocumented immigrants/workers is a relatively easy problem to solve. Simply charge employers up to a $250,000 fine and three years in jail, or both for hiring an illegal alien. The estimated 11 million undocumented immigrants would then leave, because they couldn't get a job.
Trump's plan to end illegal immigration and deport undocumented migrants is causing sleepless nights for many U.S. companies which would then have to pay more to hire and retain U.S. workers.
In summary, Trump could be effective, but in a highly capricious manner.
Other GOP Candidates:
The strong GOP "establishment candidates" are: Bush, Christie, Rubio, Pataki, Graham, Santorum, Kasich, and Gilmore (Perry has dropped out).
Less establishment oriented, but not independent of the party: Walker, Huckabee, Fiorina, and Jindal.
Far more freedom Constitutional minded are: Carson, Cruz, and Paul. (For full disclosure I am a contributor to Carson's campaign).
The Unicorn is Trump. It's hard to classify his mentality, since it has changed many times, apparently due to his lack of thinking in terms of principles or the U.S. Constitution.
The Evils of World are outlined in the Canon of Westminster Abbey which identifies 7 Cardinal Crimes of Modern Society. The Seven Social Sins are:
This is why the “Establishment Republicans" are in big trouble and Trump is often perceived as a “White Knight.” The people get his message. However, most of the people who like Trump don't notice he is espousing unconstitutional policies!
Ben Carson, a more normal GOP candidate (who the CURMUDGEON also supports) is currently second in the polls. He may gain ground as the Presidential campaign progresses into 2016.
Upcoming Speaking Appearance:
I will be speaking at the 7th Annual Mises Celebration at 7:30pm on Sept 26th in San Jose, CA. Jeffrey Tucker's keynote speech at 8pm will be on "Why Mises Still Matters in the Digital Age." Invitations to attend this reasonably priced event are extended to readers via the above hyperlink. The Curmudgeon will also attend, but incognito as his identity must always remain a secret.
Good luck and till next time…
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Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.
Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever changing and arcane world of markets, economies and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.
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