A few weeks ago, I shared some thoughts about our current President and his economic credentials.

Donald John Trump was one of 366 student members of the class of 1968 who was awarded a Bachelor of Science degree in Economics from the Wharton School of Finance and Commerce at the University of Pennsylvania.

Other than his bachelor’s degree and some experience working in the family real estate business, there is no evidence that Mr. Trump has pursued additional education, credentials or capabilities in the field of economics.

Trump’s paucity of bona fides in the world of economic theory and practice has not deterred him from taking an active role in testing new economic theories and concepts.

Below, I introduce a new chapter in my observations on Donald Trump’s economic strategy:
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July 31, 2019 (Wednesday):  Federal Reserve Chairman Powell reluctantly announced a 25bp cut in the federal funds rate, the first rate cut in over a decade (December 2008).  In his announcement, Chairman Powell cited, “implications of global developments for the economic outlook as well as muted inflation pressures”.  The Fed also referenced an apparent global economic slowdown; uncertainty around U.S.-China trade negotiations; and ‘stubbornly low inflation’.

August 1, 2019 (Thursday):  Donald Trump announced (in a series of tweets) that the U.S. would impose a new 10 percent tariff on certain goods from China beginning on September 1, 2019, following the news that trade talks with the China have failed to make sufficient progress.

These new tariffs will apply to the $300 Billion of Chinese goods which had not before faced a tariff. Another $250 Billion of Chinese goods will continue to be tariffed at a 25 percent rate.

This abrupt and unusual move roiled the equity markets, creating a major sell-off.

Since late 2018, the U.S. economy has been showing signs of slowing — bond markets are flaccid; GDP has slowed; new home sales are generally flat; and business investment is anemic, at best.

Virtually every main-stream economist agrees that Trump’s trade war is contributing to the domestic economic malaise, although it’s too early to determine by how much, and if the damage is permanent.

The Fed rate cut on Wednesday was accompanied by a caveat that one purpose was to help create a barrier to prevent Trump’s trade wars from toppling our domestic economy.

Thursday’s surprise announcement by Trump reveals a new, arbitrary, capricious and  unilateral decision by the White House which will result in higher taxes to Americans on imports; and further expand uncertainty for businesses which need significant time to manage their supply chains.

The agricultural sector in the U.S. – farms and ancillary industries, suppliers, manufacturers, etc – are already fighting the unexpected impacts of climate and weather on production.  Then, they were handed a potential death sentence by a White House which is guided not by strategy and planning, but by impetuous and arbitrary policy changes driven by Trump’s narcissistic compulsions.

If Trump’s Trade War battle plans were conceived within a coordinated environment (i.e. in concert with the Fed and the Congress) perhaps we would be able to see a pathway toward successful outcomes.

Trump is consistent in his bravado that he – and he alone – has the vision, wisdom and solutions to create equilibrium in the trade accounts between the U.S. and China.

According to a BBC analysis from May 2019, “Trump’s decision to take on China could lead to adverse effects for consumers in the US and in China, but also worldwide. An economic showdown between the world’s biggest economies doesn’t look good for anyone.”

Article I of the US Constitution vests the power to set tariffs in Congress, thus Congress has the power to stop this President from continuing his arbitrary and impetuous trade war.  The question remains:  Will elected officials in Congress wake up, do their job and use that power, or will they continue to abdicate legislative responsibilities to this President?

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Let’s be clear: the terms ‘tax evasion’ and ‘tax avoidance’ are often used interchangeably. However, only those activities which occur in a tax avoidance scheme are considered lawful.

Plenty of reliable media sources have carefully examined and reported on the awful legacy of Donald Trump’s multiple bankruptcies on a myriad of small businesses: architects, carpet suppliers, lighting and electrical distributors, even custom cabinet-makers.

A recent expose published by The New York Times focused on Trump’s taxes and revealed a previously unexposed nuance:  many of his unpaid bills were essentially ‘double counted’ through the magic of accrual accounting.  Thus, Trump and his Organization underpaid many vendors, while concurrently creating a paper loss for Trump which translated into a ‘tax loss carryforward’ good to shield future profits from future taxation.

If people had been able to look at this bad behavior as a base line, and project it forward, they might have been able to see how much damage The Donald has already done to families and communities in the U.S.

Following his inauguration in January 2017, Trump’s operating principles haven’t changed at all.

A direct result of the introduction of Trump operating principles into the Executive Office has become an oblique assault on moderate and small family-owned businesses across the U.S. — in the manufacturing sector; in retail; agriculture; mining; ranching; hospitality; media; transportation; entertainment; food; construction; business services; technology; and more.

The foundation of success epitomized in the American Dream is entrepreneurial — hard work, focus and sacrifice oriented to a long term view.

The minority of small business operators who operate like Trump — those who operate at the margins and take advantage of honest business people who operate on the platform of honesty and honor — get put out of business quickly.

Tax avoidance – using any and every loophole to avoid paying taxes – is legal, even when some of the activities involved may be considered by some to be morally repugnant.

Somehow, Trump has been able to use his unique combination of charisma and showmanship to fool a rather sizeable segment of American adults into believing his shtick.

How very sad…

Paul Ryan retired from Congress in January 2019 after 20 years of service culminating in his 3+ years of service as Speaker of the House.

Ryan was the chief cheerleader for the Tax Cuts and Jobs Act, and he left D.C. touting it as the greatest accomplishment of his political career.

Ryan repeatedly exclaimed how this new legislation (TCJA) would unleash unprecedented U.S. economic prosperity, by providing:

  1. Tax relief for middle-income families;
  2. Simplification of the tax code for individuals;
  3. Economic growth; and
  4. Repatriation of $3+ Trillion of profits U.S. companies have parked overseas would generate more investment and jobs in the U.S.

16 months after passage of the TCJA, it should be crystal clear that:

  1. Almost none of the tax cut benefits have reached the low- and middle income Americans who were promised tax relief;
  2. The TCJA legislation is some 1,097 pages itself, and it states very clearly that it is an Amendment to (the existing) Internal Revenue Code of 1986 (not a simplification);
  3. Economic Growth? The jury is still out on this one, but there seems to be no evidence of growth above or beyond the existing growth trend line which began in mid-2009;
  4. American companies have returned some (+/- $500 Billion) of their profits held overseas as a result of the tax holiday which was part of TCJA. Much of that money was used for stock buy-backs and debt reduction.

In fact, 16 months following the passage of the TCJA, U.S. companies are still waiting for final guidance from the Treasury Department on many of the final rules relative to repatriation.

And, despite continued U.S. economic growth and record corporate profits, a record 60 Fortune 500 companies avoided paying any federal income tax in 2018.

Federal tax revenues have declined during a period of economic expansion and our government spending has increased, thus the verifiable result from Paul Ryan’s signature accomplishment – the TCJA — is an increase in our federal deficit, an extra-special gift to our children and grandchildren.

The Treasury Department announced in March 2019 that the deficit for the first four months of the 2019 budget year (which began Oct. 1, 2018) totaled $310.3 Billion, up from a deficit of $175.7 Billion in the same period the year prior.

The Congressional Budget Office is projecting that the annual federal deficit between revenues and expenses will hit $897 Billion in fiscal year 2019, up 15.1 percent from the $779 Billion deficit recorded in FY 2018.

The end result: Our total federal debt will reach $22 Trillion this year – about 105% of GDP.

Why is that important? A comprehensive study by the World Bank examined economic data from 100 developing and developed economies spanning a time period from 1980 to 2008, concluding that a public debt/GDP above 77% begins to create a drag on economic growth.

The World Bank analysis concluded that for each additional percentage point of debt above the 77% threshold costs 0.017 percentage points of annual real growth.

If the World Bank study is correct, we are currently missing about 0.5% of our economic growth potential due to misguided public policy decisions, in addition to the future burden of repaying federal debt which was incurred unnecessarily.

Paul Ryan achieved his personal goal of shepherding record tax reform through Congress resulting in the passage of TCJA.

Although his personal goal was achieved at the expense of American society, Paul Ryan clearly is a winner.  So, please join me in sending a note of thanks and congratulations to Paul Ryan.  He left us a legacy.

National Emergency

February 13, 2019

Yes, we are facing a national emergency, and it’s not along our southern border.

Our real national emergency is our National Debt.

Let’s first agree that when the U.S. federal government runs a deficit, or spends more than it receives in tax revenue, the U.S. Treasury Department borrows money to make up the difference.

Next, let’s agree that our national debt is the amount of money the federal government has borrowed through various means, including: (1) by issuing bills, notes and bonds which are bought by investors (domestic and foreign), including the public, the Federal Reserve and foreign governments; (2) through intra-governmental debt, essentially money borrowed from trust funds used to pay for programs like Social Security and Medicare.

The great majority of economists and economic and fiscal analysts tend to agree that the significance of national debt is best measured by comparing the debt with the federal government’s ability to pay it off using the debt-to-GDP ratio, simply by dividing a nation’s debt by its gross domestic product.

Various sources have estimated that a healthy debt-to-GDP ratio is in the 40% to 60% range.  A longitudinal study conducted by World Bank economists published in 2010 estimated that in highly developed countries, 77% was a ‘tipping point’ where productivity and potential economic growth was constrained by adding additional debt without addition of incremental revenue.  (In emerging economies, they estimate that 64% is the tipping point.)  In either case, potential for default begins to increase once the tipping point has been breached, thus putting upward pressure on borrowing costs.

The first instance when U.S. debt-to-GDP ratio exceeded 77% was toward the end of World War II.  In the post-war years, our national debt shrank in comparison to the booming post-war economy, and the debt-to-GDP ratio fell as low as 24 percent in 1974.

Recession and rising interest rates during the Carter administration put upward pressure on the debt-to-GDP ratio, and once the tax cuts enacted during Reagan’s first term combined with increased spending on both defense and social programs, the debt-to-GDP ratio reached 50 % in July 1989.

Economic growth in the ‘90s, combined with tax increases under both Presidents George H.W. Bush and Bill Clinton helped keep the debt load in line, and by the end of December 2000, our national debt was about 55% of GDP.

Following the terrorist attacks on 9/11/2001, U.S. military spending spiked, yet tax cuts enacted in 2001 and 2003 during the George W. Bush administration combined with a mild recession in 2001 and the Great Recession beginning in 2007 caused significant decreases in tax revenues. By the time Barack Obama took office in January 2009, the debt-to- GDP-ratio reached 75%.

Deficit spending is one of the key tools available to stimulate economic recovery, and by the time of Obama’s 2nd inauguration in January 2013, the U.S. debt had grown to $16 Trillion – a debt-to-GDP ratio of 101%. By that time, it was clear that the economic stimulus of deficit spending had worked, evidenced by an expanding U.S. economy; signs of ending the wars in Afghanistan and Iraq; resurgence of the U.S. stock market; continued job growth; and other positive economic indicators.

All of these positive signs at the beginning of 2013 pointed to the need to rein in government spending and to strategically increase revenues (i.e. raise taxes).

Yet, the Congress has stubbornly refused to deal with the reality that our U.S. debt-to-GDP ratio has remained above 100 percent since 2013.

In early 2018, an analysis by the nonpartisan Committee for a Responsible Federal Budget concluded that the Tax Cuts and Jobs Act signed into law in late 2017 will push the U.S. national debt to $33 Trillion — 113 % of GDP — by 2028, a ratio not seen since immediately after World War II.

The Tax Cuts and Jobs Act is a sham (and a scam) which created a situation exactly opposite of what responsible elected officials should have supported.  The sooner it is  amended, repaired or repealed, the sooner the American people will be transitioned into a less dangerous and more stable and sustainable economic environment.

Constitutional Conflicts

August 11, 2018

We frequently hear from advocates of the 1st amendment, the 2nd amendment, the 4th amendment, et al.

We don’t often hear about one of the key concerns of our ‘Founding Fathers’, perhaps best voiced by James Madison who said, “The truth is that all men having power ought to be mistrusted.”

Indeed.

Madison and his colleagues made sure that one of the basic precepts of the U.S. Constitution was to ensure a separation of powers enforced through a series of checks and balances to prevent a single person (or branch of the federal government) from becoming too powerful, thus thwarting the potential for fraud, self-aggrandizement and to encourage timely correction of errors or omissions.

The system of checks and balances is intended to act as a circuit breaker over the separation of powers, balancing the authorities of the separate branches of government.

It assumes honest and impartial actions by each department charged with the responsibility to verify the appropriateness and legality of actions initiated by the others.

Never before Donald Trump have we had a senior elected federal official who refused to disclose the details of his finances.  And, in U.S. history there has never been a president for whom it was more important that we know the details of his finances.

Trump has a well-documented history as an incompetent and perhaps corrupt businessman. After election, he refused to divest himself of his holdings, providing an open window of opportunities for bad people to entice him – and his family – with unimaginable advantages.  Why?  Trump’s income comes from an incredibly complex web of companies that are impossible for outside observers to comprehend.

We know from public information that the Trump Organization is not just one company, but a very complex assemblage of pass-through entities.  In a March 2016 letter from his tax lawyers, Donald Trump’s financial situation is described as “inordinately large and complex for an individual” because he holds “interests as the sole or principal owner in approximately 500 separate entities (which) are collectively referred to and do business as The Trump Organization.”

Now, more than 18 months after Trump was inaugurated, The Trump Organization continues to bring in money from deals involving potentially questionable characters and foreign governments possibly looking to influence POTUS. We have no idea who his partners in those hundreds of pass-through companies are, and whether they might have compromising information on him.

How can it be that we have allowed Mr. Trump to get away with keeping his tax returns secret?

Why?

Members of Congress have abdicated their role as arbiters of Executive Branch ethics by refusing to demand release of current (2014 – 2017) business and personal federal income tax returns from Donald Trump, The Trump Organization, and any relevant and/or related entities.

We can only conclude that this is clear evidence of dereliction of duty by these officials whom we elected to represent the interests of the American people.

Economically and financially competent American voters must demand full and immediate disclosure of current tax returns by senior elected officials, particularly at the executive and legislative level.

If they who wish to serve don’t wish to disclose, they shouldn’t run for public office.

If they who are elected refuse to disclose, they should automatically be removed from public office.

No exceptions. No excuses.

The headline comes directly from Steven Mnuchin, our U.S. Treasury Secretary, who recently penned an op-ed piece which appeared in print in the Tampa Bay Times (July 3, 2018).  https://www.whitehouse.gov/articles/trump-tax-cuts-strengthened-u-s-economy/

Mnuchin’s opinion piece seems to consist primarily of fluffed-up puffery related to the Tax Cuts and Jobs Act (TCJA) of 2017.

Mr. Mnuchin omitted several critical issues which most economists agree must be included in any analysis of the U.S. economy.

First is the ‘business (economic) cycle’.  The National Bureau of Economic Research (NBER) has been tracking the U.S. economy for 160+ years.  NBER defines one business cycle as: A period of economic expansion; followed by a contraction (recession); ending at the next point of recovery.

NBER’s 160+ years of records reflect that (over that time) the U.S. economy experienced 66 business cycles. Since 1945, we have experienced 11 business cycles with an average length of expansions of 5 years, followed by an average length of recessions of 1 year.

We can’t forget that the U.S. economy almost collapsed in early 2008 following a period of ebullience and expansion apparently accompanied by loose regulatory oversight of the financial sector.

Quick intervention in 2008 by our federal government saved the U.S. economy from the deepest and longest downturn since the Great Depression.  NBER data reflects the point of recovery (beginning of expansion) of the U.S. economy occurred in June 2009, and has now entered its 10th year (109th month) of growth.

Our current economic expansion is now the second-longest expansion on record, exceeded only by the expansion from March 1991 to March 2001, which lasted a full 10 years.

History tells us we are very close to the point of contraction (recession) of the U.S. economy.

Second is the ‘Skills Gap’.  When Mr. Mnuchin tells us that “…there are enough job openings in America for every unemployed person in the country” he fails to explain that the majority of open jobs require skills which the majority of unemployed people lack. In other cases, the unfilled jobs are located hundreds – maybe thousands – of miles away from the location of potential job seekers.

One solution to filling the open jobs is to encourage migration – or immigration — of skilled workers.

Another solution is to recruit, educate and train currently underemployed or unemployed U.S. residents who live in near proximity to the open jobs.

Third involves a dangerous combination of tax cuts and deficit spending to finance those tax cuts.

Mr. Mnuchin touts benefits to U.S. workers as a result of repatriation of hundreds of billions of dollars from off-shore corporate subsidiaries to the U.S.  In fact, companies thus far have paid out dividends and other withdrawals of $305.6 billion from foreign receipts which far outstripped the amount of this cash which was reinvested domestically.  By some estimates, corporations have spent 72 times as much on share buybacks as they have spent on one-time worker bonuses and raises.

The U.S. ‘current account deficit’, which measures the flow of goods, services and investments into and out of the country, widened by $8.0 billion to $124.1 billion, or 2.5 percent of national economic output in the first 3 months of 2018, virtually all of which seems to be attributable to the repatriation tax holiday.

To make up for the loss of tax revenue, the Trump administration is relying on a combination of debt financing and mystical economic growth which they expect to occur at the end of an extended business cycle.

Mnuchin tells us that U.S. economic growth is on steroids.

Some observers have noted that the appearance of economic growth is highly influenced by the infusion of repatriated cash – somewhat similar to feeding 2nd graders sugar before sending them out onto the playground.

The energy is intense, but it won’t last very long, and it is just not sustainable.

A recent report (6/21/2108) from the U.S. Office of Government Accountability (GAO) warns that responsible action is needed on the nation’s growing federal deficit, which grew to $666 Billion in FY 2017 (10/01/16 to 9/30/17) and is projected to surpass $1 Trillion by 2020.

According to the GAO’s 2017 financial report, the federal deficit in FY 2017 increased by 13.5% from $587 Billion in FY 2016 and $439 Billion in FY 2015. Federal receipts in FY 2017 increased by $48 billion, but that was outweighed by a $127 billion increase in spending.  (Note that Deficit is an annual measure; National Debt is aggregate, an accumulation of annual shortfalls.)

The aggregate (gross) amount that the U.S. Treasury can borrow is limited by the U.S. debt ceiling. As of April 30, 2018, our National Debt was $21 Trillion, about 78% of GDP.

Since its passage in December 2017, the non-partisan Congressional Budget Office has warned that TCJA will add $1.84 Trillion to the federal deficit over the next 10 years, which they estimate will push the National Debt to an unprecedented 152 percent of GDP by 2028, significantly increasing the odds of a new financial crisis.

Interest rates are rising, and National Debt is increasing, thus interest on National Debt will consume an ever-increasing amount of future federal budgets.

And, of great concern is the flattening of the ‘yield curve’.  Traditionally, interest rates on short-term debt are lower than rates paid on long-term obligations.

The spread between the yields of the 2-year Treasury note (2.55 percent) and 10-year Treasury note (2.89 percent) was 34 basis points on June 23. That’s less than half of what it was in early February and the narrowest it’s been since August 2007.

An inversion of the yield curve — when long-term rates fall below short-term rates — traditionally predicts a looming recession.

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It’s not clear why Mr. Mnuchin – a seasoned financial services sector professional with a clear expertise in fixed income securities – would omit such important information in his assessment of the U.S. economy.

I am drawn to conclude Mr. Mnuchin is using his position as a high-ranking federal official to ‘butter his own toast’, likely through complex – and undisclosed — derivative positions.

We’ll have to see if the Walrus is correct…..

Another branch of our armed forces?

I just can’t imagine an Industrial Engineer who would look at the current structure of the Pentagon and the U.S. military and not conclude that we have an extraordinarily inefficient approach to defense.

Air, land and sea.  Sounds good, right?

Except that we have 5 branches which overlap, compete with each other directly and indirectly, and don’t always communicate well.

Now, the Master Obfuscator and Distracter-in-Chief wants to start a 6th branch!

I can only conclude that The Donald is running wild trying to divert attention away from some of his self-created demons: Immigration; His war on Canada; His new love affair with Kim Jong Un; A ‘tax reform’ plan which will leave America bankrupt; The deterioration and ultimate disintegration of the American health care system; The ‘Russia thing’; Cyber security intrusions and risks across the entire U.S. public and private sector; Rapidly deteriorating physical infrastructure across the U.S.; Escalating gun violence, the NRA and 21st century gun control; Mueller and his ‘Russian Witch Hunt Hoax’; Stormy Daniels; and Dozens of other critical issues which need to be addressed in an honest, responsible and strategic fashion.

Donald J. Trump has the attention span of a gnat, the moral turpitude of a ‘made man’ and the integrity of a Carnival Barker.  Despite that, he is our POTUS, and he continues to dash along his path toward fooling many of the people most of the time.

April, 11, 2018:  Paul Ryan announced his plan to retire from Congress in January 2019, at the end of his current term, and further stated that he will not run for re-election.

Ryan said that he is proud of the accomplishments which occurred during his 20 years of service in Congress, although he regrets that ‘they were unable to achieve Entitlement Reform’ during his tenure in office.  Despite his vocal regrets, he is planning to leave Washington in January 2019 with some of the most generous and egregious entitlements remaining in the U.S.

It has been said that Ryan’s remaining goal (‘Entitlement Reform’) is razor focused on cutting federal spending on Medicare, Medicaid and welfare programs as a way to temper extraordinary increases in the federal deficit.

These increases in the deficit were willfully enacted as a component of the 2017 Tax Cuts and Jobs Act as a result of rare, curious, wild and crazy tax cuts combined with wild and crazy spending increases, at a point in our economic cycle which begs for caution and restraint.

Paul Ryan said that he is extremely pleased to have played a significant role in the passage of the Tax Cuts and Jobs Act which he considers to be a highlight of his service in Washington.

Background on Jobs:

Since 2010, the U.S. economy has supported the creation of almost 17.5 Million jobs, leading to a November 2017 unemployment rate of 4.1%, a 17-year low. (Perspective: Unemployment reached 15% toward the end of 2009; many economists agree that “full-employment” occurs when the unemployment rate is at 5% or lower.)

Hundreds of U.S companies have been looking to hire workers for skilled positions to help them meet growing demand for their products and services. These jobs are often called “family wage jobs” because they provide compensation and benefits sufficient to support a family in the local economy.

The number of job openings in the U.S. (October 2017) remained at the 6 Million level, marginally lower than at the end of 2016. (Perspective: When the Great Recession was at its worst in 2009, job openings fell to 2.2 million, an all-time low.)

Average hourly earnings had risen just 2.5% over the 12 month period ending in October 2017, helping to support the theory that a significant skills gap continues to impede hiring for family wage jobs which typically require advanced reading, math and computer skills.

In addition to the dilemma of finding skilled workers in shrinking regional labor market pools (“skills gap”), hiring managers and economic development experts also report obstacles cited by job seekers such as: transportation (including long commutes); day care/child care; and noncompetitive wage rates.

Despite these documented facts, Paul Ryan, many members of Congress and President Trump actively and enthusiastically supported “The Tax Cuts and Jobs Act” of 2017, telling us – among other things, “Our legislation is focused entirely on growing our economy, bringing jobs back to our local communities, increasing paychecks for our workers…”

At a point in time when we had apparently reached full employment; when some 6 Million higher-skilled, family wage jobs were unfilled, at least 2 questions remained unanswered:

– Other than engaging in war, or the innovative programs launched in the 1930’s (CCC, WPA, etc.), has the federal government ever succeeded in an effort to create sustainable private sector employment?

– If new family wage jobs are created, who would be available to fill them?

Background on the tax side:

When George W. Bush (POTUS 43) took office in January 2001, he inherited a federal budget from his predecessor.

Fiscal Year Ending (FYE) 9/30/2001 resulted in revenues of $2.39 Trillion and expenditures of $2.23 Trillion, resulting in a budget surplus of $0.15 Trillion. FYE 2001 federal debt held by the public was $3.34 Trillion, representing 31.7% of GDP.

Fast forward to his final full year in office (FYE 9/30/08), Bush watched over a federal budget which included revenues of $2.52 Trillion and expenditures of $2.98 Trillion.

That left a FYE deficit of $458.6 Billion, which (combined with prior deficit spending) resulted in total federal debt of $9.99 Trillion at FYE (9/30/08), representing 67.7% of GDP.

The federal budget for FY 2009 was developed by then-president Bush, submitted to Congress, and inherited by Obama (POTUS 44). The actual federal revenues for FY 2009 were $2.10 Trillion; expenditures were $3.52 Trillion. That left a 2009 FYE deficit of $1.41 Trillion, which (combined with prior deficit spending) resulted in total federal debt of $11.88 Trillion at FYE (9/30/09), representing 82.4% of GDP.

Most reasonable people will agree that a newly elected President who inherits a spending plan from his predecessor should not be given credit for its success or failure.

POTUS 44 (Obama) presided over 7 years of steady economic growth in the U.S., and under his watch, the close of FY 2017 budget reflects an increase of total federal debt to $14.67 Trillion, which was a numerical increase, but which represented a relative decrease to 76.3% of GDP.

Not great, but a clear improvement over what Obama inherited from Bush.

Some economists have suggested a 60% ceiling for publicly held debt vs. GDP which seems to make sense.

Although policies enacted during the Obama administration did reduce the ratio for 82% to 76%, we have a long way to go.

The correct way to address this situation is through tax policy reform designed to create balanced federal budgets, focused on reducing federal deficits.

That is not what our Congress has approved, and what President Trump signed into law just prior to Christmas 2017.

Most recent analysis by the Congressional Budget Office (4/10/2018) estimates that the combined effect of the 2017 tax cuts and the March 2018 budget-busting spending bill is sending the annual federal deficit toward the $1 Trillion mark in 2019.

The CBO report says our nation’s current $21 Trillion debt would spike to more than $33 Trillion in 10 years, with debt held by investors spiking to levels that would come close to equaling the size of the economy, reaching levels that many economists fear could spark a debt crisis.

CBO says economic growth from the tax cuts will add 0.7 percent on average to the nation’s economic output over the coming decade. Those effects will only partially offset the deficit cost of the tax cuts.

The administration had promised the cuts would pay for themselves.

Best I can see, only Robert Reich has focused on the Real Facts, and who would listen to a guy like Reich, who has degrees from Yale, Oxford, Dartmouth — clearly a left-wing Liberal Snowflake….

As interim Pres. Trump tweeted today, “We are with you, Paul!”

I live in Westchester County, NY – the place they say has the highest property tax burden in the U.S.

Our Governor – Andrew Cuomo – also comes from Westchester County — and he has made it his mission to support effective ways to reduce and/or eliminate the government waste which necessitates the high property taxes we pay.

The incredible inefficiency of having 400+ independent government entities operating within Westchester County certainly is a primary culprit for the dubious honor of being named the highest taxed county in the U.S.

The largest portion of property taxes paid is attributable to funding public schools — 41 regular school districts in a county with less than 1 Million in total population.

Each of these districts is ‘self contained’ in that they have their own administration, buildings, and all of the fixed cost infrastructure which gets paid for whether there 275 students served (Pocantico Hills at an average per-pupil cost of $42,000) or 25,000 students (Yonkers at an average per-pupil cost of $19,600).

Contrast this to Montgomery County, Maryland — about the same physical size as Westchester, and with a very diverse population of just under 1 Million, demographically quite similar.

Montgomery County has just one school district which educates all of the 150,000 public school students in the county at an average per-pupil cost of $15,421.

Just about every year, Maryland Public Schools are ranked at the top in the nation. http://www.washingtonpost.com/blogs/maryland-schools-insider/post/maryland-schools-ranked-number-one–again/2012/01/11/gIQA7NEqrP_blog.html

While Montgomery County — perhaps due to its ethnic, racial and economic diversity — is not number one in the state, it seems to consistently score in the top 10, and compares very favorably against the composite Westchester score.

It’s really time for the taxpayers in NYS to put aside the political rhetoric and to find a way to reduce overall costs, whether through actual mergers and consolidations, or through consolidation of services which are not directly related to the classroom.

We can do better, and we must!

We have some 700 public school districts across New York State, and as Governor Cuomo pointed out recently in an interview, “It’s not about more money gets us more results.  Because if that was the case, our students would be doing better than any students in the country, because we are spending more than anyone else.”

No one could successfully argue that the K-12 public education system in New York State is either (a) effective, or (b) efficient.

Designed and governed under assumptions which were likely correct in the 19th century, we continue to operate our schools as though we live in a world where the horse is the primary means of transportation; where oil lamps and candles are used for illumination after dusk; and where young people are needed early and late each day to do chores on the farm.

An article published on February 7, 2014 in The Journal News (http://www.lohud.com/article/20140207/NEWS/302070065/City-rural-schools-say-they-re-underfunded) helps to illustrate some of the complexities in state funding formulas which seem to have disparate negative impact on small city and rural school districts which are more likely to be both ‘high need’ and ‘low resource’.

Digging further into the mystery of school funding in New York State led me to the NYS Association of Small City School Districts, and the December 2013 newsletter, http://scsd.neric.org/newsletters/2013/2013%20SCSD%20Newsletter%20december%202013%20FINAL.pdf.

One of the outcomes of ‘The Campaign for Fiscal Equity’ was a promise made in 2007 by our elected officials in Albany that state funding would be adjusted to take into account both the availability of local resources and the relative “need” of students in each district.

As Governor Cuomo pointed out, we are already spending the most of any state on education, and our overall results are mediocre.

Indeed, it is not how much we are spending, but how the money gets spent.  If our elected officials want to constrain education spending, they need to pass legislation which removes costs from the system.  One way to accomplish that would be through school district consolidation to remove redundancies and spread fixed costs over a broader base.

Another way to accomplish holding the line on spending would be to divert aid from wealthy, high-performing districts and re-direct that aid to low-resource, under-performing districts.

When it comes to educating our young people, there really doesn’t seem to be any “starve the beast” solution on the horizon.

Let’s pay attention to this issue now, because if we don’t fix it now, it will only continue to fester and act as a drag on the economic and fiscal viability of New York State.