Trump Bumbles at the G7 Meeting

Before heading off to the glitzy French town of Biarritz, located on the Atlantic coast near Spain, to meet with six other world leaders, Donald Trump announced new tariffs on imports from China. China responded with new tariffs on imports from the U.S. However, when he got to the G7 meeting, he was asked if he had second thoughts about the tariffs and said: "Yeah, sure, why not?" (Hint: because if you retract what you say two days after you say it, no one will take you seriously thereafter.) To clarify things, White House Press Secretary Stephanie Grisham then announced that Trump's only regret was not going for higher tariffs. But then, economic adviser Larry Kudlow helpfully explained that Trump didn't hear the question about tariffs correctly.

Shortly thereafter, U.K Prime Minister Boris Johnson, who could be compared to a bull in a china shop except that would reflect badly on bulls, very politely told Trump: "But just to register the faint, sheeplike note of our view on the trade war: We're in favor of trade peace on the whole, and dialing it down if we can." That's proper British for "go shove it." So the first effect of the G7 conference was for America's closest (still-) European ally to tell the president that his trade policy is misbegotten. With friends like that, who needs enemies?

Trump very much wanted to chat about China with the other leaders, and reportedly had an hour-long presentation ready and raring to go. However, they weren't interested, and wanted to talk instead about things like global warming, the fires in the Amazon, and the Brexit. Trump denies the first, is barely aware of the second, and had already made clear his position on the third, so he was pretty much a spectator while the group chatted.

Trump also tried to make up for loss of trade with China by revving up trade with Japan. He bragged that Japanese Prime Minister Shinzō Abe had agreed to buy hundreds of millions of dollars worth of corn that U.S. farmers would otherwise have sold to China were it not for his little trade war. Abe didn't quite see it that way and downgraded the boast to "the potential purchase of American corn" and noted that it will be done by the Japanese private sector, not the government. In other words, there currently isn't any deal at all.

But the biggest surprise of the day was the appearance of the Iranian Foreign Minister Mohammad Javad Zarif, who showed up at the invitation of French President Emmanuel Macron. Trump is used to being the one to pull surprises, but this time he was, once again, merely a spectator.

In short, in the past, the U.S. president played a dominant role in G7 meetings. Trump promised to shake things up and he lived up to his promise. Now the U.S. president at a G7 meeting is taken as seriously as your loud-mouth alcoholic uncle at Thanksgiving dinner. (V)

DNC Votes Down Single-Issue Debates

Democratic climate-change activists suffered a defeat Saturday when the DNC voted down a proposal that would have allowed single-issue debates for the presidential candidates. The vote was 222 to 137. The activists wanted a debate solely devoted to climate change. They are not going to get it.

The reason for not allowing single-issue debates is that the DNC knows precisely what would come next if they were allowed. Activists for LGBT rights, reproductive rights, criminal justice reform, care for veterans, immigration reform, reparations, capital punishment, fighting poverty, and 101 other issues would be demanding single-issue debates on their respective causes. The DNC felt that if it prioritized climate change over, say, criminal justice reform or LGBT rights, that would anger black and gay voters, respectively. The reality is that there is no issue that all Democrats regard as number one, not even defeating Donald Trump. (V)

Trump Wants to Cut Social Security and Medicare in His Second Term

The cat is out of the bag. Several Republican senators have leaked the fact that if he is reelected, Donald Trump wants to cut Social Security and Medicare to try to rein in the exploding deficit caused by his tax cuts. When you look at the big picture, this makes perfect sense.

Many people are wondering what the Republican Party stands for these days. It's clearly not free trade and a balanced budget, as it once was. The (inconvenient) truth is that the people who actually run the Republican Party, starting with Senate Majority Leader Mitch McConnell (R-KY) and the big donors, like the late David Koch (see below), have been completely consistent on the things that really matter to them. What they want are essentially three things:

• Lower income and estate taxes for the rich
• A reduction or end to all programs that transfer money from the rich to the poor
• Reduced regulation of businesses, consumers and the environment be damned

The rest is window dressing. The problem is that running on the above platform is not likely to be a big winner. It was Karl Rove's genius to grab the baton from Pat Buchanan and run with the culture wars as a major part of the Republican platform. What Rove understood was that many older, less-educated, white men saw that the country was changing and their power was slipping away from them as women and minorities (with very different priorities) angrily demanded a place at the table. By making abortion and opposition to gay rights central to the GOP platform, he got these people—who were formerly the core of FDR's coalition—to identify as Republicans so strongly that they didn't notice that the Republicans didn't care a whit about their economic condition. The Party's leaders don't actually give a hoot about abortion or gay rights. If one of them gets his girlfriend pregnant, they can just fly to Toronto or London to solve the problem.

So this is where cutting Social Security and Medicare comes in. That plan aligns well with bullet point two above. Millionaires don't need these programs and would be happy to abolish them in return for not having to pay the corresponding taxes. Poor people desperately need the programs. Once Trump is freed of having to worry about reelection, he could indeed go after Social Security and Medicare with a carving knife and as long as he also kept up a good show about blocking immigration (and thus implicitly telling his base that he will fight to keep anyone from taking their power), he might get away with it. Of course, if Trump wins reelection but the Democrats hold at least one chamber of Congress, then both programs are safe. (V)

Trump Could Pocket Millions If Interest Rates Go Down

Donald Trump has been yelling at Fed Chairman Jerome Powell for weeks now, ordering him to cut interest rates by 1%. Powell doesn't seem to be obeying, however. Nominally, Trump wants the rate cuts to stimulate the economy, but once a "recession is coming" mentality sets in, companies are going to be loath to borrow money to build new factories to produce products they don't expect to be able to sell in a recession.

However, as is often the case with Trump, his official explanation of something he wants or does may not be the real one. The Washington Post has discovered that in the 5 years before becoming president, Trump borrowed (at least) $360 million from Deutsche Bank for his hotels in D.C. and Chicago and his Doral golf resort in Florida. The loans all have variable interest rates, so a 1% drop in interest rates would save Trump $3.6 million per year on these loans alone. And he may have other loans outstanding that haven't been discovered yet. Consequently, his anger at Powell may simply reflect the fact that all Powell has to do is convince the governors of the Fed to make a simple decision, and it would save Trump (at least) $18 million over the next 5 years. If somebody could make a simple decision that would put $18 million in your pocket and refuses to do so, wouldn't you be angry? (V)

Trump Tries to Block Deutsche Bank from Giving Congress His Financial records

Speaking of Deutsche Bank, it is back in the news. House Democrats have subpoenaed the bank to hand over the financial records of Trump, his family, and his company. Trump sued to block the subpoenas, but in April U.S. District Court Judge Edgardo Ramos ruled that the subpoenas were valid and could be enforced. Trump appealed.

On Friday, Trump's lawyers argued before the U.S. Court of Appeals for the Second Circuit in Manhattan that the Democrats are just trying to damage him and have no valid legislative reason for seeing all the records. House lawyers said that Congress has investigative powers as well as legislative powers and needs the records to see if there has been money laundering and foreign meddling in U.S. elections.

At the end of the court session, Judge Jon Newman asked lawyers for Deutsche Bank and Capital One, which was also subpoenaed, if they possess Trump's tax returns or those of his children. Capital One's lawyer, James Murphy, replied: "I prefer not to [answer]." Judges tend not to be fond of "answers" like that, but so far Newman hasn't cited anyone for contempt of court.

In cases like this, judges sometimes try to work out a compromise. Rather than giving Congress everything or nothing, the three judges could try to get the parties to agree that certain documents must be turned over and others not. When asked if he was ready to deal, Trump's lawyer, Patrick Strawbridge, said he wasn't authorized to negotiate on behalf of his client. If a deal is ultimately not forthcoming, the judges will have to make a ruling, essentially "yes" or "no." In theory, the political leanings of the judges shouldn't matter, but as Yogi Berra once pointed out: "In theory, theory and practice are the same. In practice they aren't." Newman is a Jimmy Carter appointee. The other two judges are Peter Hall and Debra Livingston, both George W. Bush appointees. (V)

Joe Walsh Is Officially Running for the Republican Presidential Nomination

As has been widely reported, former Illinois representative Joe Walsh, is indeed going to run for president. He made it official yesterday by telling ABC's George Stephanopoulos: "We've got a guy in the White House who is unfit, completely unfit to be president." He also said: "You can't believe a word he says. He's nuts. He's erratic. He's cruel. He stokes bigotry. He's incompetent. He doesn't know what he is doing. George, he's a narcissist. The only thing he cares about is Trump." These are not words Trump likes to hear, but if he responds, that will only draw more attention to Walsh.

Life's been good for Walsh, so far. He's spent time as an actor, social worker, businessman, radio host, and political activist. He is a tea party Republican who was elected to the House in the 2010 GOP wave, and served one term before his district was redrawn and he was unseated by fellow Republican Randy Hultgren. To his credit (?), Walsh is an equal-opportuity hater. In 2016, he accused Barack Obama of hating Israel and supported the false claim that Obama is a Muslim. He also once said that the only reason Obama was elected was that he was a black man who was articulate.

Walsh isn't the only other Republican gunning for the nomination. Former Massachusetts governor Bill Weld announced in April, and then promptly vanished from view. In a few months, we will know if Walsh fares any better.

If California's new law requiring presidential candidates to release years of tax returns is upheld in court, Trump won't be on the California primary ballot, so Weld and Walsh could pick up many delegates. California will send 172 pledged delegates to the Republican National Convention in Charlotte, NC, which starts on Aug. 24, 2020. Each of the 53 congressional districts will send three delegates, the statewide winner will get an additional 10, and the three California members of the RNC will also get to go as voting (super)delegates. This will be the largest delegation, beating out Texas' 155 delegates. While 172 anti-Trump delegates won't be able to affect any votes, they could make a lot of noise. Just imagine a Walsh delegate repeating his statements above from the floor of the convention on national TV. (V)

Poll: Americans Are as Angry Now as in 2015

In August 2015, 69% of Americans were very or somewhat angry at the political system. A new NBC News/WSJ poll says the number now has risen slightly, to 70%. One of the pollsters, Jeff Horwitt said: "Four years ago, we uncovered a deep and boiling anger across the country engulfing our political system. Four years later, with a very different political leader in place, that anger remains at the same level." Americans told Horwitt that the system seems to be only working for the insiders with power and money."

Sounds like one or two of the Democratic candidates could latch onto that anger and propel himself or herself to the nomination. Oh, wait. Two of them, Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA), have already latched on and that's their core message. It might just work for one of them.

But then there is the electability issue. At this point in 2007, voters saw Hillary Clinton as far more electable than newbie Barack Obama. We now know how that turned out. To the extent that anger at the system comes to dominate the election (which could easily happen if the economy goes south), then Democrats could easily change their minds about who is the most electable candidate, and it might not be Joe Biden anymore. (V)

Senate Democratic Candidates Shun Medicare for All

The Democrats' prospects in the Senate have brightened recently, with Arizona, Colorado, Iowa, North Carolina, Maine, Texas, and Kentucky all potentially in play. If term-limited Gov. Steve Bullock (D-MT) would simply look at the wall, he would see the handwriting on it, which clearly says: "Dummy, run for the Senate, where you could win." Each race has different Democrats running, of course, and the state issues are not all the same, but pretty much none of the Senate candidates want Medicare for All. They all support continuing the ACA and adding a public option. That also holds for most of the Democratic incumbents up in 2020. Could these people, who are closer to the ground than the presidential candidates, know something that the folks running to be top dog don't know?

Health care was a winning issue for the Democrats in 2018 and figures to be on the agenda again in 2020. In addition to pitching a public option, the Senate Democratic candidates are sure to constantly remind the voters that the Republicans are still trying to repeal the ACA, this time via a lawsuit. Nevertheless every Republican incumbent is going to try to tie every Democrat to Medicare for All, regardless of whether his or her opponent supports that idea (and most don't). (V)

Jobs Number Is Revised Way Down

Every month, the Bureau of Labor Statistics releases preliminary employment/unemployment numbers. Then, months later, the initial estimates are cross checked with tax and other documents employers are required to file and final numbers are published. The BLS has now revised the March 2019 numbers and they show that the number of jobs created is 501,000 fewer than previously reported. While this doesn't mean that a recession is lurking around the corner, it's not a great sign, either.

In 2018, the monthly increase in employment was reported as 223,000, which was seen as very strong. Now the number has been brought down to a more plausible 185,000. In particular, fewer jobs were created in restaurants, hotels, retail, and professional business services. However, despite these downward revisions, a new CBS/YouGov poll released yesterday shows that 38% of Americans are optimistic about the economy and 35% were pessimistic. The other 27% are the realists: They don't have a clue what is going to happen next.

One consequence of the downward revision of the number of jobs created is that Donald Trump's claim that his tax cut stimulated the economy is greatly weakened. Going forward and next year, he will have fewer new jobs to brag about. On the other hand, a weakening economy might induce the Fed to cut interest rates, something Trump desperately wants (see above). (V)

David Koch Is Dead

Half of the much-feared Koch brothers duo is gone. David Koch died of prostate cancer on Aug. 23. His $51 billion fortune bought him the best doctors in the country, but even they couldn't save him. He was 79. His twin brother, William, is still alive, as is his older brother and political comrade-in-arms, Charles. Koch was a philanthropist as well as a political operative. He gave away $1.2 billion to cultural, educational, and research organizations in his lifetime, including over $100 million to create a cancer research institute at his alma mater, M.I.T.

The Koch brothers' impact on politics can't be overestimated. Before them, every four years, a few political groups would start up, collect money from wealthy donors, and buy lots of television ads. After the election they would disband. What the Koch brothers did was build a well-funded permanent infrastructure for influencing public policy. They funded think tanks to pump out position papers chock full of libertarian ideas. They started foundations to give their ideas the aura of respectability. They hired their own pollsters. They supported candidates, not only for high-profile positions, but also for state senator and state representative. In 2012, they dumped $400 million into political races. By 2016, they had permanent, paid, state directors in 34 states. In fact, they had set up a shadow Republican Party, almost as big as the real one, and answerable only to themselves.

The big question now, of course, is what is going to happen to the political network David and Charles created? Charles is 83 and won't be able to run the show much longer. He is starting to turn the reins over to his only son, Chase Koch (39) because his only daughter, Elizabeth, is not involved in Koch Industries or politics and David's children are all under 25.

Chase Koch has various irons in the fire. He favors a kinder, gentler libertarianism than his father and uncle. He also is active in organizing the adult children of conservative billionaires to maintain the Koch network going forward, albeit with a somewhat different focus. Chase has a particular interest in education. How the network will evolve is not clear yet and won't be until Charles dies and Chase inherits some real money. No doubt one of the items on his agenda now is for Congress to abolish the estate tax, but with Democrats in charge of the House, that is not going to happen. (V)

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