I didn’t watch Trump and Hillary contend last night. Maybe readers can let me know what was interesting. One thing I am curious about is whether it makes sense to let a single person decide what is relevant. The moderator says “For the record, I decided the topics and the questions in each topic. None of those questions has been shared with the commission or the two candidates.” What if I were the moderator? Could I ask about Canon v. Nikon, iPhone v. Google Pixel, or obscure FAA regulations and demand that the American public follow along?
From looking at the transcript….
Hillary: the Supreme Court needs to stand on the side of the American people, not on the side of the powerful corporations and the wealthy.
Wealthy people don’t have legal rights.
Hillary: Well, I was upset because, unfortunately, dozens of toddlers injure themselves, even kill people with guns, because, unfortunately, not everyone who has loaded guns in their homes takes appropriate precautions.
Bureaucrats in D.C. are going to change the domestic behavior of gun owners and toddlers via regulation?
Hillary: The government has no business in the decisions that women make with their families in accordance with their faith, with medical advice.
Yet the government now pays for the majority of health care and determines what is paid for.
Trump: Drugs are pouring in through the border. … the single biggest problem is heroin that pours across our southern border.
Aren’t more Americans now addicted to prescription opioids than street heroin? And marijuana is now legal in a lot of states. Is Trump talking about the Colorado border?
Hillary: We have 11 million undocumented people. They have 4 million American citizen children, 15 million people. … I have been for border security for years. I voted for border security in the United States Senate.
Doesn’t this prove Trump’s point that the government, as currently run by people such as Hillary, is incompetent?
Trump: You’re the puppet!
How can a woman who has made more than a billion dollars (including the foundation funds that she can spend as desired) from “serving” as a politician be considered anyone else’s puppet? What does she need or want that she doesn’t already have? Gulfstream 650 instead of 450? The foundation can buy one.
Moderator: The top national security officials of this country do believe that Russia has been behind these hacks. Even if you don’t know for sure whether they are, do you condemn any interference by Russia in the American election?
Why would we want to hear from two older non-technical people regarding computer security?
Hillary: Well, I think when the middle class thrives, America thrives. And so my plan is based on growing the economy, giving middle-class families many more opportunities. I want us to have the biggest jobs program since World War II, jobs in infrastructure and advanced manufacturing.
She promises a Soviet-style planned economy. But why didn’t she and Barack Obama execute this plan back in 2009-2010 when the Democrats controlled congress?
Hillary: I think we can compete with high-wage countries, and I believe we should.
How is that possible when Americans are not as well-educated as people in high-wage countries?
Hillary: I want us to raise the national minimum wage
Why didn’t Obama do that already?
Hillary: I sure do want to make sure women get equal pay for the work we do.
The government will determine the correct wage for each worker, possibly after checking sex chromosomes? Or will gender ID determine the fair wage? Later the moderator points out “Secretary Clinton, I want to pursue your plan, because in many ways it is similar to the Obama stimulus plan in 2009, which has led to the slowest GDP growth since 1949.”
Hillary: I feel strongly that we have to have an education system that starts with preschool and goes through college. That’s why I want more technical education in high schools and in community colleges
The federal government will take over schools and colleges from states.
Trump: Saudi Arabia, nothing but money.
CIA Factbook says that they $53,600 in GDP per capita, about the same as the U.S. Despite falling oil prices their real GDP growth rate is at 3.4%, comfortably ahead of the population growth rate of 1.46%. Trump may be right on this one.
Trump: I am going to renegotiate NAFTA. And if I can’t make a great deal — then we’re going to terminate NAFTA and we’re going to create new deals.
Americans will be richer without having to study or work harder.
Trump: right now, our country is dying at 1 percent GDP.
Trump is correct that our GDP growth rate is pretty close to our population growth rate. Thus the only way to pay for the government that we have voted is massive population growth via immigration (doesn’t work if immigrants collect welfare, though?).
Hillary: I also will not add a penny to the debt.
Clinton is a defrosted Calvin Coolidge?
Hillary: one of the biggest problems we have with China is the illegal dumping of steel and aluminum into our markets. I have fought against that as a senator. I’ve stood up against it as secretary of state.
Why is it still happening then? And it is truly upsetting to have China sell us stuff at a low price?
Hillary: Donald has bought Chinese steel and aluminum.
So Trump is now a competent business manager who found a low-cost high-quality supplier?
Trump: She’s been doing this for 30 years. Why the hell didn’t you do it over the last 15, 20 years? … You were very much involved in every aspect of this country. Very much. And you do have experience. I say the one thing you have over me is experience, but it’s bad experience, because what you’ve done has turned out badly.
Hillary: back in the 1970s, I worked for the Children’s Defense Fund. And I was taking on discrimination against African-American kids in schools.
To the extent that we are told that there is still discrimination against African-Americans in schools today, doesn’t this prove Trump’s point regarding Hillary’s ineffectiveness?
Moderator: Secretary Clinton, during your 2009 Senate confirmation hearing, you promised to avoid even the appearance of a conflict of interest with your dealing with the Clinton Foundation while you were secretary of state, but e-mails show that donors got special access to you. Those seeking grants for Haiti relief were considered separately from non-donors, and some of those donors got contracts, government contracts, taxpayer money.
Hillary: everything I did as secretary of state was in furtherance of our country’s interests and our values. The State Department has said that.
What’s good for the Clinton family is good for America? Maybe that is true if they keep flying Gulfstreams and not Embraers.
Hillary: Well, very quickly, we at the Clinton Foundation spend 90 percent — 90 percent of all the money that is donated on behalf of programs of people around the world and in our own country. I’m very proud of that.
The poor and suffering get rides on chartered Gulfstreams?
Moderator: Do you make the same commitment that you will absolutely — sir, that you will absolutely accept the result of this election?
Trump: I will look at it at the time. I’m not looking at anything now. I’ll look at it at the time.
What does this question (now front page news) even mean? Is the election over when TV networks report a winner? After litigation over various state issues is concluded, as in Gore v. Bush? What if election officials report a result that is wildly inconsistent with polls? Should Hillary “accept the result” if officials say that Trump won by 99:1? What does it mean to reject a result? Sulk at home and tell reporters “I think the vote counting was inaccurate”? Or would Trump have to show up at the White House in January 2017 to demand a paycheck? Like a good deposition witness, Trump should probably have asked for a complete hypothetical rather than an incomplete hypothetical.
Trump: She shouldn’t be allowed to run. It’s crooked — she’s — she’s guilty of a very, very serious crime. She should not be allowed to run.
What does this mean? Who would block someone from running?
Hillary: So that is not the way our democracy works. We’ve been around for 240 years. We’ve had free and fair elections.
Lyndon Johnson was apparently elected to the Senate by fraud (nytimes) and presumably this is not the only example. Why do Americans think that our country is honest while everyone else around the world is corrupt?
Hillary: I am encouraged that there is an effort led by the Iraqi army, supported by Kurdish forces, and also given the help and advice from the number of special forces and other Americans on the ground. … The goal here is to take back Mosul. It’s going to be a hard fight. I’ve got no illusions about that. And then continue to press into Syria to begin to take back and move on Raqqa, which is the ISIS headquarters.
We’re going to pour just enough military resources into this war to make sure that it goes on forever.
Hillary: Donald is implying that he didn’t support the invasion of Iraq. … before the invasion, he supported it.
Why is this relevant? Wasn’t Trump merely a real estate developer at the time? Is he supposed to have had an informed opinion on U.S. military and foreign policy at all points in his life?
Hillary: you are the most dangerous person to run for president in the modern history of America.
More dangerous than Kennedy and Johnson who nearly got us into a nuclear war with the Soviets and who actually did get us into the Vietnam War?
Moderator: Let’s turn to Aleppo. Mr. Trump, in the last debate, you were both asked about the situation in the Syrian city of Aleppo. And I want to follow up on that, because you said several things in that debate which were not true, sir.
… big argument ensues about just how badly Aleppo is doing …
Is a U.S. president supposed to know every detail of every military problem all around the planet? What are the subordinates supposed to do?
Moderator: Secretary Clinton, you have talked about — and in the last debate and again today — that you would impose a no-fly zone to try to protect the people of Aleppo and to stop the killing there. President Obama has refused to do that because he fears it’s going to draw us closer or deeper into the conflict.
Hillary: Well, Chris, first of all, I think a no-fly zone could save lives and could hasten the end of the conflict. I’m well aware of the really legitimate concerns that you have expressed from both the president and the general. This would not be done just on the first day. This would take a lot of negotiation. And it would also take making it clear to the Russians and the Syrians that our purpose here was to provide safe zones on the ground.
We’re going to pour just enough military resources into this war to make sure that it goes on forever.
Hillary: We’ve had millions of people leave Syria and those millions of people inside Syria who have been dislocated.
We will keep pouring resources into the Syrian conflict to ensure that it goes on long enough for everyone in Syria to emigrate to Germany, the U.S., etc.
Hillary: I want to respond to what Donald said about refugees. He’s made these claims repeatedly. I am not going to let anyone into this country who is not vetted, who we do not have confidence in. But I am not going to slam the door on women and children. That picture of that little 4-year-old boy in Aleppo, with the blood coming down his face while he sat in an ambulance, is haunting. And so we are going to do very careful, thorough vetting.
The officials who put the Tsarnaev brothers on the citizenship fast-track, ignoring the warnings of the Russian security services, are not going to make any more mistakes.
Hillary: In fact, the killer of the dozens of people at the nightclub in Orlando, the Pulse nightclub, was born in Queens, the same place Donald was born.
“vetting” a child is going to ensure that he doesn’t grow up into a Jihad-waging adult? “vetting” adult immigrants is going to guard us against their American-born children growing up into Jihadis?
Moderator: Our national debt, as a share of the economy, our GDP, is now 77 percent. That’s the highest since just after World War II. But the nonpartisan Committee for a Responsible Federal Budget says, Secretary Clinton, under your plan, debt would rise to 86 percent of GDP over the next 10 years. Mr. Trump, under your plan, they say it would rise to 105 percent of GDP over the next 10 years. The question is, why are both of you ignoring this problem?
Trump: [we’ll grow out way out, just like we did after World War II]
Hillary: I do not add a penny to the national debt. … We are going to ask the wealthy and corporations to pay their fair share. And there is no evidence whatsoever that that will slow down or diminish our growth.
How could we grow our way out, as Trump suggests? Cut off all of the Obama-era expansions of welfare that led to the slowdown chronicled in Book Review: The Redistribution Recession? Maybe, but Trump doesn’t threaten non-working voters with the prospect of having to get jobs. Clinton seems to be ignoring about 70 years of economics papers showing that people reduce their efforts when tax rates go up (the French used to work more hours per year than Americans, for example!).
Moderator: And, Secretary Clinton, same question, because at this point, Social Security and Medicare are going to run out, the trust funds are going to run out of money. Will you as president entertain — will you consider a grand bargain, a deal that includes both tax increases and benefit cuts to try to save both programs?
Hillary: Well, Chris, I am on record as saying that we need to put more money into the Social Security Trust Fund. That’s part of my commitment to raise taxes on the wealthy. My Social Security payroll contribution will go up, as will Donald’s, assuming he can’t figure out how to get out of it. But what we want to do is to replenish the Social Security Trust Fund…
Trump: Such a nasty woman.
Hillary promises that rich people will pay for everything: “part of my commitment to raise taxes on the wealthy.” But her rich friends, such as Warren Buffett, essentially don’t pay for anything currently. Then she throws rocks at Trump for tax-avoidance, but the Clinton family, by stuffing everything into the Foundation, has avoided taxes on more than $1 billion in income. Maybe Trump’s summary (“such a nasty woman”) is accurate?
Hillary: I will stand up for families against powerful interests, against corporations. I will do everything that I can to make sure that you have good jobs, with rising incomes, that your kids have good educations from preschool through college.
She’s going to work against the interests of all of the people who paid her personally or paid into the foundation whose checkbook she controls? A federal politician is going to reach down into the states and change the quality of education delivered in public schools?
Trump: We take care of illegal immigrants, people that come into the country illegally, better than we take care of our vets.
I’m going to guess that he hasn’t seen a military pension schedule lately.
> Hillary: one of the biggest problems we have with China is the illegal dumping of steel and aluminum into our markets. I have fought against that as a senator. I’ve stood up against it as secretary of state.
but she was ok to allow shady steel deals with Ukrainian donor . May be China does not make contributions to her foundation?
https://wikileaks.org/podesta-emails/emailid/524#efmEv6E1w
Hm.. I am curious: what if rich people simply refuse to pay more, as per Hillary’s plan, and move their businesses out of the country? What’s next?
Severin has moved out to SIngapore and denounced his US citizenship. What if, say, Gates, Buffett, and Ellison suddenly decided to follow suit? And what if the richest 100 choose to do the same, just to make fun of Chuck Schumer’s schemes?
I have already learned from some readers of this blog that we don’t really need any more immigration no mater what. (That certainly doesn’t include grass mowers domestic maids.) Now, am I learning that we don’t need any native-born high earners either, right? Who is going to pay for the free college for Tom, Dick, and Harry? (Ya know, MIT can be quite expensive, especially for those with GPA 2.0) Who? The Clinton Foundation? The Donald J Trump estate?
On to 2020! We’re already f’d this time.
Since votes in Calif* don’t matter, I leaned back towards The Donald. Americans have gotten so used the way things are done that a politician is no longer considered legit unless he’s lying. Donald sounds crazy because he honestly believes everything he says & universal truth is utterly backwards to the standard political speech. H-Rod is loveable in the American mind because she lies.
Anon: For Hillary to experience a revenue shortfall, rich people don’t have to “refuse to pay more” or move a business out of the country. Previous economics research shows that people faced with a high tax rate will work fewer hours, retire earlier, etc. http://philip.greenspun.com/blog/2015/06/01/book-review-the-redistribution-recession/ is about this happening at the low end of the income scale (Obama-era welfare expansion puts a lot of low-income people in a 100% tax bracket and sometimes higher, so that if they earn more they can actually spend less), but high-income people behave in the same way. It doesn’t look like someone moving to Singapore; it looks like a doctor choosing to work 40 hours per week for an HMO instead of running her own practice (80 hours/week, including all admin and accounting hassles?).
For the truly rich, like Hillary, there will be more activity in the foundation and non-profit area. Instead of paying taxes, for example, someone can put money into a foundation and then fly around the world in a chartered Embraer bizjet having fun doing good works. Rich people who don’t want to help Africans can start insurance companies and stuff their income into a Vermont or Bermuda structure where it won’t be taxed for decades (see http://www.nytimes.com/2015/04/11/your-money/irs-is-looking-into-captive-insurance-shelters.html for how this works at the lower end of the scale (circa $1 million per year); see http://www.ey.com/Publication/vwLUAssets/EY_-_The_growth_of_hedge_fund-backed_reinsurers/$FILE/EY-Leading-the-way.pdf for how this works at the $1 billion scale).
Our population will be increasingly immigrants and children of immigrants. These folks will have connections to family members still in foreign countries, nearly all of which have lower corporate tax rates (many have no corporate tax at all; see Estonia, for example, which there is no tax until a distribution is made). So with higher U.S. tax rates you would see that a greater share of a multi-country operation’s revenue ends up in a foreign country. If it comes back to the U.S. in 20 years as a dividend or paycheck it will be taxable, of course, but that’s 20 years in which Presidents Hillary and Chelsea Clinton did not get any tax on this activity. (Analogous to Warren Buffett’s Berkshire Hathaway deferring taxes for decades by always being in the middle of an acquisition.)
The experiment has been done in the U.S. already. We had high income tax rates in the 1940s and 1950s so people converted ordinary income to capital gains. We had high income tax rates in the 1970s so dentists ended up owning railroad cars. I don’t think there was ever a time when the government collected a higher share of the GDP despite the higher official tax rates. See https://fred.stlouisfed.org/series/FYFRGDA188S for the federal story (but remember that this excludes state and local taxes). See http://www.usgovernmentrevenue.com/revenue_history for an attempt to include state and local taxes. We’re near an all-time high as a percentage of GDP, though of course it will need to go much higher to pay off pension and health care commitments to retired government workers.
The space between 2000 on that stlouisfed chart and 2015 is basically the current federal deficit.
Neal: You didn’t note that 2000 was equal to the all-time high for federal government revenues, as a percentage of GDP, matching what the Feds took in back in 1945. It isn’t typically reasonable to take the maximum of a chart and say “this is the normal level.” Why not look at the 1971 number of 16 percent instead? We were running a hot war in Vietnam. Why does the federal government need a larger slice of GDP now than it did in the middle of a major war? (I have heard that roughly 7,000 U.s. helicopters were crashed in Vietnam, as a starting point for the scale.)
philg: Thanks for the great links!
This campaign is full of shockingly absurd public statements to the effect of, We are going to do something really dumb and outrageously expensive and ask someone else, often those most negatively affected, to pay for it. And everybody cheers.
Why are we fooling ourselves? Also, why do we think that the 2020 election will be different?
Trump wants to build The Great Wall of Mexico, a dumb and expensive symbol of incompetence, and he expects Mexico to pick up the tab. But at least, the Mexican ex-president responded in a direct and idiomatic language.
Clinton said, “I do not add a penny to the national debt. We are going to ask the wealthy to pay their fair share.” Is there going to be a Vincente Fox of the American business?
I think I get the economics, but I was wondering what would happen if the ultra-rich just said NO, loud and clear. I do realize this is not likely to happen: not good for business, and the last known precedent in the West was probably “Qu’ils mangent de la brioche”.
philg: I didn’t say anything about “normal”. The thrust of your argument was that it is impossible to raise sufficient revenue to support a federal government of the current size. Year 2000 on that graph suggests that while it may not “normal” or “desirable” it is “possible”.
I don’t see why it is incumbent on my to explain WHY the federal government needs a larger slice of GDP now than it did in the middle of a major war. It IS now spending the larger slice, and no major politician in our lifetimes has shown an inclination (much less the political or technical ability) to reduce it. If I were to guess, my answer would be that social security and medical care account for most of the increase.
Neal: 2000 was an unusual year. It was the end of one of the longest and largest stock market booms in history. The Feds collected a huge amount of capital gains tax. So it is only demonstrably “possible” considering political and economic factors if you can engineer every future year going forward to be at the end of a stock market boom.
See http://taxfoundation.org/article/federal-capital-gains-tax-collections-1954-2009 for how “realized capital gains” in 2000 were 6.5 percent of GDP.
philg: Perhaps, but those data don’t show it is “impossible” either.
Forget the Wall on the border with Mexico. The real wall that is being erected right now is the increasing hurdles to renouncing US citizenship. Time is running out for the young people to escape from paying for all the commitments the Baby Boomers want fulfilled (eg. Medicare and Social Security). The USA and China are the few countries that still tax their citizens when they live abroad. Before 2010, it was free to renounce citizenship, after that it cost $450. Then in 2014 they raised it to $2350 . What’s going to stop them from raising it to $5,000? or $10,000? I haven’t even mentioned the exit tax yet! The Soviet Union built walls to prevent people from escaping. The USA is using laws to do the same thing.
trump is better than clinton on policy*, but clinton’s a better liar, and america’s demographics have changed, which makes it difficult for a republican to win the white house.
*yes i know this sounds crazy, but who wants more war? who wants to enforce immigration laws? who’s pushing campaign finance/lobbyist reform? whose support for immigration restriction will slow population growth, thereby fighting global warming?
philg: I finally got a chance to look at the capital gains data you referenced and I’m not seeing the same implication you are. Sure, 2000 was a big year for capital gains but the “excess” gains tax collected that year still didn’t amount to more than half a percent of GDP. Even if you remove those unusual receipts from the year 2000 revenues you still end up with sufficient revenue collected to close our current budget deficit (to a first approximation). It looks like the effect of gains tax variation was dwarfed by the effect of changes to tax rates which also occurred at that time. Clearly the year 2000 tax revenues were politically unsustainable, but that doesn’t mean they were inherently unsustainable.
Is it a coincidence that Berkshire Hathaway is built on insurance and reinsurance?
Those who hope to get rich on EY-style reinsurance are gambling that there won’t be a disaster that empties their pockets. Picking up pennies in front of the steam roller, as some call that strategy. In prior decades, Lloyds had so-called Names, private people who reinsured with unlimited liability. It was apparently quite profitable for a while, but after some years of heavy payouts and personal bankruptcies, it seems apetite for this approach waned.
That said, I don’t think it’s wrong for a company to, say, keep your own captive insurer to reduce insurance costs vs using an external party. (I’m sure there are situations where there can be shenanigans even so.)
I don’t think that moving money into insurance is “picking up pennies,” Tom. There may be an immediate savings of 40 or 50% as a result of not paying corporate and/or personal income tax (including state taxes). After that, the risk shouldn’t be greater than that faced by any other competently run insurance operation, should it? If a fund with $1 billion in capital buys a bunch of policies with limits of $5 million then they would need to have exceptionally bad luck to suffer a huge loss (and almost impossibly bad luck to wipe out the tax savings). https://en.wikipedia.org/wiki/Reinsurance doesn’t show that the reinsurance business inherently requires taking on unlimited liability.