Polarizing Pelosi should stay


Staff Reports



Opinion: Five Reasons Democrats Should Keep Nancy Pelosi As Their Leader

By Karlyn Bowman

InsideSources.com

NBC reported recently that 42 of the party’s nominees for House seats and nine incumbent Democratic lawmakers won’t back Nancy Pelosi for speaker if the Democrats regain the House of Representatives this fall. Should she step aside for the good of her party? Here are five reasons it would be a mistake for Democrats.

First, Nancy Pelosi is one of the best fundraisers the Democrats have ever had and that’s important when you have as many close House contests as there are this year. Pelosi raised nearly $50 million for Democrats in 2017. She’s raised $700 million since she joined the Democratic leadership team in 2002, and her fundraising prowess is impressive again this year. Her tireless fundraising could give many Democratic candidates the boost they need to win this fall.

Second, she’s a woman. Voting or easing out the top elected Democratic official in the year of the pink wave would be an embarrassment to the party that prides itself on being a staunch advocate for women. It is one thing to have disagreements about the direction of the party, but it is quite another to throw your top leader, the first female speaker of the House, out. She’s led her party for the last 15 years.

Third, if you are going to kill the queen, you need to know who and what comes next. After the 2016 election, nearly a third of the Democratic caucus voted for someone other than Pelosi, the most opposition she has ever had. Pelosi is 78 years old and some in her party are arguing that the Democrats need a new younger leader and team. While that may be true, there is no obvious successor who can step into her shoes right now and present a fresh face for the party. Representative Joe Crowley, the fourth ranking member of the Democratic leadership, was rumored to be a strong favorite, but his defeat by Alexandria Ocasio-Cortez dashed his hopes. There is no successor who has her strengths. “Democrats in Disarray” isn’t a headline a party wants.

Fourth, in her leadership position, she’s straddled the factions within the party while remaining true to her liberal roots. And she’s been effective. My former AEI colleague Tom Mann once said that she was the “strongest and most effective speaker of modern times.” Pelosi corralled the troops for Barack Obama and deserves credit for helping to pass his stimulus plan and the Affordable Care Act.

Fifth, she’s a tough street fighter, most recently taking on the media in response to stories that she should step aside. She accused NBC of being on a “jag as one of their priorities to undermine my prospects as speaker” after the guest host for the program asked if she would be willing to give up the gavel and give it to a new generation of leaders if the Democrats retake control. “I do not think our opponents should select the leaders of our party,” she said. “The Republicans are spending millions, tens of millions of dollars against me because they’re afraid of me … because I out-raise them in the political arena, because I outsmart them at the negotiating table, and because I’m a woman who is going to be (at) a seat at that table.”

When Morning Consult and Politico asked people recently who should be the speaker if Democrats take control, Pelosi was the top choice of self-identified Democrats at 32 percent followed by Ohio Democrat Tim Ryan at 13 percent and House Minority Whip Steny Hoyer at 4 percent. Thirty-eight percent of Democrats were undecided or didn’t give an answer. It’s not clear how much the poll means. Pelosi’s standing no doubt reflects her strong name identification, but it also reflects years of effective work for her party.

Both Nancy Pelosi and Paul Ryan have low approval ratings. In their highly visible positions, they are lightning rods for the opposition. Many Republican attack ads feature Pelosi, hoping that her unpopularity nationally will help them win key races. That could happen this fall in some contests, but Democrats should think carefully about what might be lost if Pelosi steps down.

ABOUT THE WRITER

Karlyn Bowman is a senior fellow at the American Enterprise Institute. She wrote this for InsideSources.com.

Opinion: Questions for Supreme Court Nominee Brett Kavanaugh

By James P. Freeman

InsideSources.com

“Football is football and talent is talent. But the mindset of your team makes all the difference.” — Robert Griffin III, quarterback, Baltimore Ravens and 2011 Heisman Trophy Winner

As Americans prepare for fall and football, the new political season kicks off the day after Labor Day with public hearings in the Senate Judiciary Committee as part of the confirmation process of Brett Kavanaugh’s nomination to the Supreme Court. Little is known about the judge’s mindset or how he’ll play on the team. And during the coming televised stagecraft partisan senators will likely get bogged down in jurisprudential minutia unintelligible to everyday people.

So here are some questions that might elicit better insights:

1. Judge Kavanaugh, on January 22, 1973, the court affirmed the legality of a woman’s right to abortion under the 14th Amendment to the Constitution. Since that time, it is estimated that there have been more than 60 million abortions in the United States. It is still a contentious issue. Much has changed in those 45 years: biological and scientific revelations, legal and economic assumptions, and political and social values. Given all we know today, what are your thoughts on “fetal viability”? Is it time to reconsider that concept as it applies to constitutional law? Why or why not?

2. Since the Supreme Court was established in 1789 there have been 113 people who have served on the high court. Of this elite and select group — among the living and the dead — who do you most admire and why?

3. You worked in the 1990s on the team (led by Independent Counsel Kenneth Starr) investigating the Whitewater matter. Those efforts eventually, and remarkably, led to the impeachment of President Bill Clinton. In February 1998, you were part of a panel discussion about the future of the Independent Counsel Statute (1978). You raised the question of whether a sitting president could be subject to criminal indictment at all. (You called it a “lurking constitutional issue” that should be “resolved so that we can determine whether the Congress or an independent counsel can investigate a president when his conduct is at issue.”) What are your thoughts on the matter today? What parallels do you see between the investigation of Clinton and today’s investigation using an independent counsel that is edging ever so close into the red zone of President Trump’s presidency?

4. What is the most important opinion you have written as an appeals judge? Why?

5. Here’s a riddle: Which of the following is considered in some circles a violation of state and federal law and hence an affront to individual liberties? (A) Requiring identification to board a plane. (B) Requiring ID to purchase cigarettes and alcohol. (C) Requiring ID to open a bank account. (D) Requiring ID to enter into corporate and government offices. (E) Requiring ID to vote in state and federal elections. If you guessed “E” you are correct! If public officials initiate steps in choice E, are such measures unconstitutional? Why or why not? Might any of these be deemed unconstitutional? Why or why not? On the night President Trump nominated you to the court, did you need to show ID to walk into the White House?

6. Since the inception of the court, there have been 91 Protestant judges named out of 113 justices. Roger B. Taney was the first Catholic to serve on the court, beginning in 1836. In more recent times, Catholics have dominated the court. At one point, when justice Antonin Scalia was alive, there were six Catholic justices on the same court. If you were to be sworn in to the court today you would be the fifth Catholic justice (joining John Roberts, Clarence Thomas, Samuel Alito and Sonia Sotomayor). How has your Catholic faith shaped and informed your judicial philosophy? Did the court get it right last year in the separation of church and state case Trinity Lutheran v Comer?

7. Are The Federalist Papers still relevant today in terms of interpreting and understanding the original intent of the Constitution? Why or why not?

8. In an October 2016 ruling, PHH v Consumer Financial Protection Bureau, in a case involving the unbridled power of what some would call extra-constitutional congressional creations, you wrote that, “Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power.” You added, “The concentration of massive, unchecked power in a single Director marks a dramatic departure from settled historical practice and makes the CFPB unique among independent agencies.” Can you further articulate your philosophy on the separation of powers and overreaching executive authority? What other government entities, in your estimation, resemble those of the CFPB?

It remains to be seen on September 4 if Brett Kavanaugh will fumble the opening kickoff or return it for a long touchdown. But it is certain he will be brushing up on the playbook.

ABOUT THE WRITER

James P. Freeman is a former columnist with The New Boston Post and The Cape Cod Times. He wrote this for InsideSources.com.

Opinion: The Reagan Tax Cuts — A Failure for Workers

By Dean Baker

InsideSources.com

Thirty-seven years ago Ronald Reagan signed the tax cut that provided the centerpiece for his election campaign. This measure reduced tax rates by an average of 25 percent, with the top tax rate lowered from 70 percent to 50 percent.

Five years later, Reagan was back with another round of tax cuts. This lowered the top rate further to 28 percent. The 1986 tax cut also featured a big reduction in the corporate tax rate, lowering it from 46 percent to 35 percent.

In both cases, especially the first tax cut, the bulk of the immediate benefits went to higher income households. This was hardly a secret; anyone could see the rich were getting the biggest cuts in tax rates. Also, when corporations get a tax cut, the shareholders, who are overwhelmingly wealthy, get the biggest immediate benefit.

But, the tax cuts were justified with the argument that putting money in the hands of the wealthy would benefit everyone since they would save and invest more, leading to more jobs, growth and higher wages. They also argued that the additional growth would pay for the tax cut.

On the last point, the evidence is rock solid. There was no huge boost to growth. In fact, growth for the decade of the 1980s was actually a hair slower than it had been for the decade of the 1970s, averaging 3.1 percent annually in the 1980s compared to 3.2 percent in the 1970s.

Revenue fell sharply relative to the size of the economy, and the deficit exploded. Deficits went from averaging just over 2 percent of GDP in the three years preceding the 1981 cut to an average of almost 5 percent of GDP ($1 trillion annually in today’s economy) in the years 1984-1986, after the economy had recovered from the recession.

Nonetheless, people care more about their pocketbooks than the size of the budget deficit, but here also the tax cuts didn’t come through as promised. In fact, the outcome was pretty much the reverse of the happy story promised by Reagan.

Instead of leading to a boom, investment spending fell from a post-World War II peak of 15.4 percent of GDP in 1981 to less than 13 percent of GDP in the mid- and late-1980s. The weak levels of investment went along with weak productivity growth. The productivity slowdown that began in the mid-1970s continued through the 1980s.

More important, workers did not get their share of even this modest productivity growth. After adjusting for changes in purchasing power, the wage of a typical worker was 1 percent lower in 1989 than it had been in 1979.

The story looks even worse for less-educated workers. While women with just a high school degree were able to tread water, with their wages holding constant over the decade, men with just a high school degree saw a 12.5 percent reduction in their hourly wage. That is a very large hit to a group that was almost two-thirds of male workers at the time of the first tax cut.

The Reagan tax cuts certainly can’t be blamed for everything bad that happened to workers in the 1980s. The Reagan administration pursued an explicitly anti-union policy that was designed to reduce union membership and weaken the power of unions where they existed. It also refused to raise the minimum wage, allowing inflation to reduce its purchasing power by close to a third by the end of the decade.

These and other Reagan administration policies also had the effect of reducing workers’ bargaining power and putting downward pressure on wages.

But, there are always complicating factors in economics. While it is arguable that the pre-Reagan tax rates were too high and were leading people to waste resources in tax avoidance and evasion, the economic gains from reducing rates were obviously limited.

In terms of producing a surge of investment, growth and wages, the tax cuts clearly came up short. And, they certainly did not pay for themselves, as the budget deficit exploded. Of course, if the point was to give more money to the richest people in the country, the Reagan tax cuts were a huge success.

ABOUT THE WRITER

Dean Baker is a macroeconomist and senior economist at the Center for Economic and Policy Research in Washington. He wrote this for InsideSources.com.

Opinion: Playing With Emerging Market Economic Fire

By Desmond Lachman

InsideSources.com

One has to be dismayed about the insularity of U.S. economic policy making in the age of Trump. This is particularly the case with respect to the emerging market economies, which now account for more than half of the world’s economic output and which have been the main engine of global economic growth.

The financial market spillovers to the rest of the world from the rapidly unfolding Turkish economic crisis, which are now in plain sight, should be forewarning U.S. economic policymakers that they would be continuing to ignore the emerging market economies at their peril.

One instance of U.S. economic policy making insularity can be found at the Federal Reserve. After years of flooding the emerging market economies with very easy money under its quantitative easing program, the Fed is now proceeding to normalize its monetary policy in total disregard of what effect that normalization might have on those economies.

As if to underline this point, on several occasions this year, Fed Chairman Jerome Powell has blithely insisted that the emerging market economies will easily weather the Fed’s program of gradually raising U.S. interest rates and reducing the size of its bloated balance sheet. He has done so despite the clearest of evidence that the Fed’s policy is once again resulting in a sudden stop in the flow of money to the emerging market economies and is causing the currencies of as important economies as Argentina, Brazil, Russia, Turkey and South Africa to all plummet this year by at least 20 percent.

A more serious example of U.S. policy insularity has been that of President Trump’s ill-advised large unfunded tax cut and of his support for public spending increases at a time that the U.S. economy is at close to full employment.

Never mind that such an irresponsible budget policy is forcing the Fed to be more restrictive than it would otherwise have to be and is thereby pushing the U.S. dollar ever higher. Never mind that this toxic combination of higher U.S. interest rates and a rising dollar is causing an abrupt reversal in capital flows to the emerging market economies.

President Trump’s “America First” trade policy provides yet another example of the United States’ seeming disregard for the emerging market economies. At a time that China, the world’s second largest economy and the world’s main consumer of international commodities, is slowing as it tries to rein in its credit bubble, the Trump administration chooses to engage in a trade war with China that is bound to exacerbate the Chinese economic slowdown.

Similarly at a time that Turkey is in the midst of a major currency crisis, the Trump administration chooses to impose punitive tariffs on that country’s aluminum and steel exports. By so doing, the administration is breaking with 70 years of U.S. emerging market economic crisis management. Rather than extending Turkey a lifeline to help stabilize its very troubled economy, the administration has opted for kicking the Turkish economy while it is still down.

This would not seem to bode well for future U.S. emerging market crisis management should there indeed be contagion from Turkey. This would be particularly the case if the contagion were to engulf another systemically important economy like Brazil in the run up to its contentious presidential election this October.

U.S. policymakers’ disregard for the emerging market economies would be lamentable at the best of times. However, these are hardly the best of times for those economies. According to IMF estimates, never before have those economies been as indebted in relation to their overall output as they are today. Meanwhile, rarely before have emerging market investors been as poorly compensated for the risk that they have been running in lending to the emerging market economies as they are today.

On the eve of the 10th anniversary of the Lehman Bros. crisis, one must hope that U.S. policymakers gain the insight to appreciate the real risks that the highly indebted emerging market economies could pose to the United States and global economies. In much the same as in 2008 when a crisis at a small U.S. investment bank managed to destabilize the rest of the global economy, one would think that a major emerging market crisis has the potential to derail the U.S. economic recovery.

It it hoped an appreciation of the risks posed by the emerging market economies to the U.S. economy will make policymakers take those economies into greater account in setting economic policy. However, judging by Trump’s clinging to an American First trade policy and the Federal Reserve’s seeming haste to normalize U.S. monetary policy, I am bracing myself for the U.S. economy to be hit by a major emerging market economic storm well before the November midterm elections.

ABOUT THE WRITER

Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund’s Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney. He wrote this for InsideSources.com.

The Conversation

How the Trump Foundation illustrates the limits of charity regulations

August 20, 2018

Author

Ellen P. Aprill

Professor of Law; John E. Anderson Chair in Tax Law, Loyola Law School Los Angeles

Disclosure statement

Ellen P. Aprill has received funding from NYU and the Urban Institute for papers presented at conferences of the NYU Center for Philanthropy and the Law. None of these papers discussed the Donald J. Trump Foundation. One such paper did address charitable self-dealing more generally.

Since 2008, nearly every donation Donald Trump’s foundation has made near his Mar-a-Lago mansion and club in Florida funded charities that hosted events there, according to recent investigative reporting.

This pattern, first reported by The Palm Beach Post, follows an accusation New York Attorney General Barbara Underwood made when she filed a lawsuit against the foundation, Trump and three of his adult children for an alleged “pattern of persistent illegal conduct.”

I am a scholar of nonprofits who has researched their regulation since I served in the Treasury Department’s Office of Tax Policy in the late 1980s. I find these reports about the Trump Foundation disturbing because they give the impression that the foundation was benefiting Trump’s business interests. And that is at odds with the purpose of philanthropy.

At the same time, based on the evidence currently available, I do not believe that the Trump family will have to pay penalties, much less face criminal charges, even if the reports of self-serving charity are true.

A suspicious pattern

The newspaper found that eight charities received donations, typically of US$25,000, from the Trump Foundation after they changed plans to hold their galas and other events at Mar-a-Lago instead of at other venues.

The most notable on the list was the Red Cross Ball, although that organization did cancel its 2018 soiree altogether and it will hold its next ball at the Norton Museum of Art.

These gifts from the Trump Foundation to the nonprofits that doubled as Mar-a-Lago’s clients make it seem as if the donations were a quid pro quo for doing business with Trump. Even if the charities managed to use that glitzy venue at a bargain rate, any explicit arrangement would still violate relevant tax laws that prohibit transactions that benefit foundation insiders.

The nonprofits, however, deny that there were any strings attached to their gifts from the Trump Foundation. Instead, they say, the donations came as a “surprise.”

One reason why this venue moving stood out is that it clashed with a regional trend. More than two dozen charities that had held events at Mar-a-Lago stopped doing that in the 2017-2018 gala season.

Self-dealing rules

Since 1969, the Internal Revenue Code has included a set of onerous excise taxes – a kind of fine designed to prevent self-dealing by private foundations, such as when they make business transactions that involve insiders, like their board members or executives.

These penalties apply in many different situations. They can be a way to punish private foundations for lavishing donations on people and charities closely related to their leaders. More typically, foundations pay off the debts insiders owe or manipulate prices.

Although the tax code provisions that spell out what constitutes using philanthropic money for non-charitable purposes are broadly defined, I do not believe that they would apply with the Trump Foundation’s alleged behavior involving Mar-a-Lago fundraising events.

Nonetheless, this alleged pattern does reinforce widespread concerns about how that foundation operated.

Not technically illegal

While it might seem that using assets of the Donald J. Trump Foundation to benefit Mar-a-Lago clients who rent the venue for their fundraising events could have broken tax rules, no evidence of an agreement between the foundation and the charities that held Mar-a-Lago events has come to light.

But in my view, private foundations have a responsibility to do more than merely comply with tax laws in a technical sense. They have a duty to serve public, not private, interests.

Giving the impression that the foundation’s charitable gifts were somehow tied to driving business to Mar-a-Lago, like New York Attorney General Underwood’s accusations, I believe, demonstrate the Trump Foundation’s failure to see its purpose as pursuing a charitable mission.

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Staff Reports