Trump Administration Progress Report

Shortly after President Trump’s inauguration I wrote:

The true test of the Trump administration will be on how much it can deliver. If President Trump can just deliver on a third of his promises, it will be a successful Presidency. Batting .333 is good in any league. I hope commentators will begin to focus on what the Trump administration is actually doing, and not on what they fear he will do.

Little did I realize how hard it would be to find out what the Trump administration has actually accomplished. The President’s constant battles with the mainstream media, unprecedented obstruction on the part of the Democrat opposition, and the never-ending Mueller probe of Russian collusion and anything else it can dig up have obscured the real achievements of the last 18 months. 

For example, a few months ago surveys showed that “consumer confidence” in this country had approached an all-time high. Consumer confidence is an economic indicator that indicates that rising incomes are encouraging people to spend and save. Nevertheless, the media outlets I follow hardly mentioned this good sign and certainly did not attribute it to the President or his policies. 

I did read that lame duck Democrat Governor Malloy of Connecticut attributed the rising consumer confidence in his state to his own measures despite the fact that he has one of the lowest approval ratings of any governor in the country. Malloy could not bring himself to give President Trump the least bit of credit for the rise in consumer confidence even though the President’s approval rating is close to a record 50%.

The other day I watched a former director of the Federal Reserve Board (the Fed) give an interview on the CNBC show “The Closing Bell.” He was asked his opinion of President Trump’s recent criticism of the Fed. He expressed puzzlement over the President’s remarks, and said that Fed officials should just ignore them. He was obviously not a Trump partisan.

Nevertheless, he did give the President a lot of credit for the current state of the economy which most commentators agree is booming. He argued that the tax reform legislation and deregulation measures pushed by the Trump administration were the two biggest drivers of the booming economy. In addition, he argued that the President was correct in his tough trade position with China which has continually refused to abide by prior trade agreements and rules.  

Maybe the President and his administration does not deserve all the credit for the booming economy, and the rise in consumer confidence but any impartial person would have to admit that President Trump would have been given all the blame if things had gone in the opposite direction.  We have to remember that just 18 months ago the political opposition and mainstream media were predicting doom for the country and the world. Only grudgingly have they been forced to admit some progress.

Earlier this summer James Himes, my representative in Congress, informed his constituents of the passage of a bill that he had sponsored to protect senior citizens from fraud and abuse. Himes is no friend of President Trump but he did note that the President signed this bill into law. 

You will be glad to hear that President Trump signed the Senior Safe Act into law this past May after it passed the House and Senate with bipartisan support. As states begin administering these important protections, be assured that I will continue looking for more ways to defend seniors from deceit and injustice.

Earlier in the year Democrat Himes had to admit that there were many good features in the huge budget bill that the President approved with bipartisan support. Recently a bipartisan defense appropriation bill was also promoted and approved by the President.

Measures like the above are just the tip of the iceberg but they and other accomplishments are largely going unreported. The national and local media complain the President Trump is attacking freedom of the press but in actuality the press in this country has long ago enslaved itself to ideology and money. 

Here is one final example of how the media have obscured some real achievements. A little noticed feature of the tax reform bill of 2017 eliminated the income tax credit for undocumented and illegal children, a measure that would save the Treasury billions. As usual, the media screamed that this measure was robbing the poorest of the poor to benefit the rich.

In reality, the income tax credit for illegal immigrant children had turned into a scam of massive proportions. People with earnings in this country but without Social Security numbers were still required to file tax returns. These tax returns listed numerous child dependents but many of these dependents did not even reside in the country. One return showed nine nieces and nephews with only one actually residing in the USA. The billions funneled out of the Treasury in this tax credit scheme did not necessarily go to poor children. Much of it might have ended up in the hands of drug lords or gangs.

Here is a link to an Indiana report done in 2013 detailing the tax-credit scam, or just click on the video below.

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Asset Inequality?

                                          

Fairfield Marina

Recent articles in the Wall Street Journal have argued that the income inequality bemoaned by progressives in this country is a myth. Statistical studies that demonstrate an increasing amount of income inequality apparently leave out over a trillion dollars of government income transfers to those in lower income brackets. These studies also do not take into consideration the substantial impact of an effective progressive income tax code on the highest earners.  

In an August 7 WSJ op-ed Bruce D. Meyer, a professor of public policy at the University of Chicago, and James X. Sullivan, a professor of economics at Notre Dame, claimed that “there is much less material deprivation than there was decades ago.” They cited a number of studies including the American Housing Survey that demonstrated the significant strides made in this country. They wrote,

The poorest 20% of Americans live as the middle class did a generation ago as measured by the square footage of their homes, the number of rooms per person, and the presence of air conditioning, dishwashers, and other amenities.

Unfortunately, studies that claim that America has reached an unprecedented level of income equality are questioned by politicians and advocates on both extremes of the political spectrum. Right wingers claim that the enormous sums spent by government social programs or income transfers have largely been wasteful and ineffective. Left wingers claim that they have not gone far enough and call for massive spending to finance free college education, health care, minimum wage increases and a host of other benefits. 

Left wing progressives also claim that studies that indicate income inequality are a politically biased attempt to roll back or eliminate the social service safety net. As a last resort, even if they grudgingly admit some measure of income equality, progressives will then raise the issue of “asset” inequality. Even if the incomes of the poor are improving, the gap in asset ownership is greater than ever before in history and getting wider and wider.

I know that there are incredibly wealthy people in the country today. Jeff Bezos of Amazon is reputed to be the wealthiest person in the world with a fortune of $157 Billion. But my own experience leads me to believe that the gap between the very rich in this country and the rest of us is no wider than it has ever been, and that more Americans share in the American economy than ever before.

When I started my career in the financial services industry as a mutual fund salesman in 1972, it quickly became clear to me that most Americans did not own a share in the American economy. The mutual fund business was in its infancy, and only a small percentage of the population owned shares of common stock. Moreover, there were no IRA or 401k plans with tax favored treatment of retirement savings. Many leading companies had pension plans but there was little in the way of profit sharing plans or employee stock ownership plans. There were, however, two tax-favored retirement accounts but they were only available to small businesses (Keogh plans), and school teachers (403b plans). The 403b plan was the granddaddy of these plans and it is still used to fund the retirement of most college and university professors today. 

In the past 45 years the growth of all of these plans has been phenomenal. More Americans now own tax favored retirement plans than ever before and most of them are invested in a broad cross section of the American economy. In addition to the tax advantages, most people could participate in these plans through payroll deduction, the best way to save. Incredibly, the huge amount that Americans put into these tax favored retirement plans does not count in official government statistics as savings.

When I started in 1972 the Dow Jones Industrial Average (DJIA) was about 1000. Today it is around 25000. The baby boomers who began saving in the 1970s have become the richest generation in history. On a recent visit to Alameda California, across from San Francisco Bay, I discovered that the modest homes there could not be had for less than $1 Million largely due to its proximity to trendy San Francisco. Although San Francisco is the bluest city in the bluest state in the country, most ordinary people cannot afford to live there.

Closer to home, my wife and I enjoy sitting at the marina near Fairfield beach and watching the boats, both large and small, go in and out. It is a constant parade. Fairfield is a middle class town but a good number of its people enjoy messing around in boats, and can afford to do so. 

But what about the lower classes? Although people living on welfare have very little in the way of assets, their guaranteed welfare income and benefits makes them virtual millionaires. For example, if someone receives a monthly welfare check, subsidized medical care under Medicaid, and housing and food assistance, they could easily have the equivalent of an income of $2500 per month or $30000 per year. At 3% interest it takes a million dollars of assets to provide an income of $30000 per year. 

Despite protests from both the left and the right, it would appear that the social safety net has been working in America. 

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