Shopping Season: Ghosts of Christmas Past and Yet To Come

Retailers were pleased with 2016’s holiday shoppers and their willingness to open their wallets.  However, interspersed with the congratulatory messages about sales numbers there were some words of warning:

These are also the worst of times for retail. National chains including Macy’sSearsJ.C. Penney’sKohl’s and Barnes & Noble all suffered absolutely brutal holiday seasons, calling into question what — if anything — they can do to right the ship and compete more effectively in an increasingly digital world.  [RD Jan 2017]

By April 10, 2017 the sounds were still ominous:

There have been nine retail bankruptcies in 2017—as many as all of 2016. J.C. Penney, RadioShack, Macy’s, and Sears have each announced more than 100 store closures. Sports Authority has liquidated, and Payless has filed for bankruptcy. Last week, several apparel companies’ stocks hit new multi-year lows, including Lululemon, Urban Outfitters, and American Eagle, and Ralph Lauren announced that it is closing its flagship Polo store on Fifth Avenue, one of several brands to abandon that iconic thoroughfare.  [Atlantic]

Part of the explanation is obvious — for example mobile shopping increased from 2% of spending to 20% from 2010 to 2016.  The increases in e-commerce is also readily apparent.  The enthusiasm of developers for shopping malls caused massive “over-building” and this fad has collapsed in a heap.  It isn’t more explicitly stated than this:

The number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015, according to Cowen and Company’s research analysts. By one measure of consumerist plentitude—shopping center “gross leasable area”—the U.S. has 40 percent more shopping space per capita than Canada, five times more the the U.K., and 10 times more than Germany. So it’s no surprise that the Great Recession provided such a devastating blow: Mall visits declined 50 percent between 2010 and 2013, according to the real-estate research firm Cushman and Wakefield, and they’ve kept falling every year since.   [Atlantic]

It’s no mystery why mall visits would decline in the wake of the Housing Bubble/Wall Street Casino collapse, what we should be asking is why the mall visits have kept falling every year since.   And we’re back to the convenience of e-commerce, mobile shopping, and overbuilding argument.  There’s another element involved, and it may be hidden in plain sight, i.e. in the comments from Cowen’s retail recommendations. (pdf)

At the end of the first quarter of 2017 Cowen’s was embellishing its five year store analysis report segment with a rain shower graphic, warning that retailers like JC Penney, and Macy’s might need to close some 20-30% of their stores,  and Kohl’s might look to decrease its operations by about 10%.  There was another rain cloud for malls, associated with the prediction saying 20% of malls would need to be transformed from current operations or closed outright.   So, what received the sunshine graphics?  “Speed, service, and branding,” along with “deep value.”   What’s “deep value?”  Read Cheap.

Outside one questionable thesis stating that the middle class is shrinking because its membership is moving up into upper income brackets, most analysis describes the declines in sectors of the retail market as it relates to the middle income squeeze.

“It’s hard not to see the invisible hand of income inequality reflected in the fortunes of the retail sector. As the gulf between the rich and poor grows, and the middle class shrinks, retailers serving the former are seeing big growth, while those aiming with a middle-class clientele are struggling to bounce back.

The numbers don’t lie: wealth distribution is more uneven than ever. And the middle class is getting smaller with each passing year: According to a study by Pew Research, “From 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas” examined in the study.  And that bodes poorly for the economy as a whole, as the report suggests that “a struggling middle class could be holding back the potential for future economic growth.” [Balance]

About whom are we speaking?

While discounters and high-end luxury have thrived, department stores serving a more middle-class customer base have struggled. Macy’s (M), Kohl’s (KSS) and Nordstrom (JWN) and single-brand retailers like The Gap (GPS) had terrible quarters and struggled with declining foot traffic and inventory issues.  [Balance] (Aug 2016)

Nordstrum’s as of last February? “Nordstrom continued to see greater difficulties in its premium namesake brand. The Nordstrom brand saw comparable sales fall 2.7%, leading to a 1.1% drop in segment revenue. Strength in women’s apparel and beauty weren’t enough to pull the overall company’s number higher, and the East was the best region geographically. However, the discount Nordstrom Rack concept kept doing well. Revenue was up double-digit percentages for the quarter, and comparable-store sales were up 4.3%.”  [Fool]

The latest news from Macy’s: “Macy’s is looking to use the crucial holiday shopping season as a springboard to reverse 11 straight quarters of same-store sales contraction. A decline in foot traffic at malls and the rise of e-commerce has shaken investor confidence in department stores and led Gennette to slash costs, close stores and reduce inventory. Macy’s is also seeking monetize some of its real estate holdings.”

What do these retail giants have in common?  They both catered to middle and upper middle income shoppers.   Thus no one should be surprised to find job numbers moving up in general while retailers weren’t sharing the optimism. [Dive]  Even Macy’s recent announcement of seasonal hiring was tempered by saying the jobs were temporary.

The Republican offerings on this subject?  Enact a tax scheme which overwhelmingly benefits corporations and upper income individuals.   This is a perfect way to exacerbate the current retail situation wherein the elite stores are doing well, and Dollar General is expanding for everyone else.

Enact a tax scheme which is “territorial” the antithesis of keeping jobs in the United States:  “ It could give a permanent preference to foreign income and lead companies to shift more profits to tax havens knowing that they could permanently avoid virtually all taxation on such profits.”  Again, a permanent tax cut for corporations while raising taxation revenue from everyone else who isn’t a millionaire or billionaire.

So, retail employees, who earn an average of $22,900 per year or about $11.00 per hour, and a third of whom work part time, will see the Great Squeeze continue.   It remains to be seen if those retailers who target middle income earners (Sears, Nordstrum, JCP) will be able to stave off the onslaught of online, e-commerce, deep discount shopping.  And, the GOP will continue to believe in the Growth Fairy coming to the rescue of their highly specious arguments for Trickle Down Hoax economics.   A prediction for the 4th quarter of 2017:  Elves who spent the holiday season cutting prices may see short term gains with yet more indications we’re looking at some more long term losses for middle income America.  In the competition between the Growth Fairy and the Discount Elf — bet on the Elf.

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Meanwhile! Back At The Ballot Boxes

Not that I’m unconcerned about sexual harassment (etc) BUT there’s another story which is getting lost behind the steady drip of the Mueller Investigation and the deluge of harassment stories — not to put too fine a point to it, but the Russians played havoc with our election in 2016 and the Congress of the United States hasn’t done squat about it.

The House Permanent Select Committee on Intelligence seems perfectly happy to make charges and counter-charges about “collusion” without apparently looking all that deeply into what espionage techniques and strategies were applied by the Russians, and what was the outcome. Nor have I heard one peep out of them about how to better secure our election institutions and systems against incursions.  Given White House water boy Devin Nunes is in charge of the committee, I don’t suppose we’ll get that much out of this outfit, and that’s both a tragedy and a missed opportunity.

While the Senate Select Committee on Intelligence manages to sound more organized and focused,  there’s not much emerging from that quarter either.   Again, the committee seems to have Republicans intent on proving there’s “nothing to see here,” and Democrats hoping to find the smoking arsenal.  Again, the conspiracy/collusion segment is only part of the story, and while it’s important so too is the notion that we need to find out what the Russians did, how they did it, and how we can prevent this from happening in future elections.

Then there’s the Senate Committee on the Judiciary.   Chairman Charles Grassley (R-IA) seems rather more interested in absolving Republicans and the President from responsibility for or knowledge of Russian activities than in finding out exactly what happened in 2016.   I wouldn’t want to hang by my hair for as long as it will take to get this outfit to determine what laws were broken, or eluded, by Russians — nor how we might want to modify our statutes to prevent future problems.  The House Judiciary Committee is essentially AWOL on all manner of topics, case in point the “calendar” for the subcommittees is almost blank for the month of December with one FBI “oversight” hearing, and one session with Deputy AG Rod Rosenstein.  The Chairman appears to be more concerned with disparaging the Mueller Investigation than with determining how to identify and prevent foreign incursions into our elections.

Remember back on September 22, 2017 the Department of Homeland Security finally informed 21 states that their elections systems had been hacked in some way, shape, or form:

“The federal government on Friday told election officials in 21 states that hackers targeted their systems before last year’s presidential election.

The notification came roughly a year after officials with the United States Department of Homeland Security first said states were targeted by hacking efforts possibly connected to Russia. The states that told The Associated Press they had been targeted included some key political battlegrounds, such as Florida, Ohio, Pennsylvania, Virginia and Wisconsin.

The A.P. contacted every state election office to determine which ones had been informed that their election systems had been targeted. The others that confirmed they were targeted were Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, Illinois, Iowa, Maryland, Minnesota, North Dakota, Oklahoma, Oregon, Texas and Washington.” (emphasis added)

21 states, notified a year after the fact was bad enough — but not only was the information belated, but some of it wasn’t even accurate.

“Now election officials in Wisconsin and California say DHS has provided them with additional information showing that Russian hackers actually scanned networks at other state agencies unconnected to voter data. In Wisconsin, DHS told officials on Tuesday that hackers had scanned an IP address belonging to the Department of Workforce Development, not the Wisconsin Elections Commission.

California Secretary of State Alex Padilla (D) said in a statement Wednesday that DHS gave his office additional information saying hackers had attempted to target the network of the California Department of Technology’s statewide network and not the secretary of state’s office.”

So, we might expect the Senate Homeland Security and Government Affairs Committee to be looking into this?  No, the Chairman, Sen. Ron Johnson is more interested in finding out if members of the Mueller team are biased against the current President.  The “logic” appears to be that because Special Counsel Mueller REMOVED those who made prejudicial statements in text messages therefore the investigation is prejudiced.  It doesn’t get more bass-ackwards than this.   Can we expect oversight regarding the slowness and inaccuracy of the DHS response to election hacking?  Under the current Senate leadership probably not.

The national broadcast media (as usual) is currently chasing the newest shiny object — which members of the Congress can or cannot keep their hands to themselves and their “little soldiers” zipped inside the “barracks.”  This is an important topic — but to continue to focus on the salacious and to continue to ignore the insidious is not in the best interest of this country and its institutions.

There are questions introduced last August which remain unresolved, and for which we should demand answers:

  1. What was the extent and nature of Russian hacking (and meddling) in the US election of 2016?
  2. Will the United States deploy safeguards and countermeasures to address thee Russian activities?
  3. Will the frustrations of state governments with the quality of information shared by DHS be alleviated? Will states receive up to date and accurate information so they can prevent hacking and meddling?
  4. What measures should be taken to prevent future hacking and meddling, and to give the states the support they need to deal with forms of assault as yet undeployed by the Russians?

The Mueller Investigation can explore and illuminate the extent to which criminal statutes may have been broken in regard to the 2016 election, but it cannot determine how the US analyzes, evaluates, and prepares for the next round of elections.  That should be the function of Congress, but then we seem to have one so focused on giving tax breaks to the wealthy and so determined to cut Social Security, Medicare, and Medicaid they can barely pay attention to the transgressions of their own members (speaking of Farenholdt here) while chasing conspiracy theories about the “Deep State” opposition to the administration.

Perhaps in the midst of asking our Senators and Representatives about the “questions of the day,” we should squeeze in a couple of questions (see above) that have been sitting on the shelves since last Summer?

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FYI: State Department Vacancies with no nominations

No, the State Department is not “moving right along.”  The Foreign Service tracking system shows the following vacancies for which there are no current nominees as of December 4, 2017:

Argentina
ASEAN
Australis
Austria
Belarus
Belgium
Belize
Bolivia
DR Congo
Cote d’Ivoire
Cuba
Egypt
Eritrea
European Union
Honduras
Hungary
Iceland
Ireland
Jamaica
Jordan
Mongolia
OECD
OSCE
Saudi Arabia
Somalia
South Africa
South Korea
Sudan
Sweden
Syria
Tajikistan
Tanzania
Trinidad and Tobago
Turkey
United Arab Emirates
UN Deputy Representative
UN Human Rights Council
UN Management & Reform
UN Rome
UN Vienna
UNESCO
Venezuela

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Memory, Convenient and Otherwise

Some of the rationalizations for supporting accused child molester and Mall Troll Roy Moore are truly interesting.  The lamest fall into the “I wasn’t there, so I don’t know” category.  Give. Me. A. Break.

I wasn’t there, but I’m reasonably sure Qin Shi Huang was the first emperor of a unified China in 220 B.C.

I wasn’t there but I’m certain that on January 27, 1880 Thomas Edison received a patent for an incandescent light bulb.

I wasn’t there but I do know that on July 21, 2016 Roger Ailes left Fox  News under a billowing cloud of sexual harassment allegations.

So, give me a break — personal knowledge is not necessary to establish the truth of a situation.  Credibility is required, and if the women’s’ reports are credible then we can reasonably conclude that impropriety took place.  Those who have decided to discount the credibility of the women’s accusations do so at their own risk.  The first risk is that they are denying evidence which conflicts with their ideological bent. This isn’t what the world calls rational.  The second is that they are discounting evidence which in other circumstances they would admit (as if the accused was a member of another political party) thus rendering themselves hypocritical. Third, there’s a risk of discounting all allegations of sexual misconduct, as if men were never responsible for sexual harassment — this is painfully close to the “she made me do it” excuse.

We’ve had some problems with this third excuse over time, usually falling into the She Was Asking For It — category of justification.  She was dressing too provocatively.  She was moving on me.  She was where she wasn’t supposed to be if she were a nice girl.  No. This isn’t how it works.  Even though several courts in times past have allowed this defense.  That it was once a mainstay of male rationalization doesn’t make it so in the 21st century.  That bus left the station years ago.

However,  worst consequences are for the once proud Republican Party.  The Party of Everett Dirksen, Robert Dole, and Ronald Reagan is now the party of Donald Trump, Roy Moore, and Steve Bannon.  The Party that ran on family values and personal responsibility now supports those whose values are highly questionable and whose sense of responsibility comes to a screeching halt when they are called to account.

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Contempt for the Great Generality: Hatch, Grassley, and the Great Unwashed

Every once in a while a Republican is caught being honest.  Consider the commentary from Iowa Senator Charles Grassley on the value of eliminating most of the inheritance tax because “they” invest, but the rest of the country…not so much. So, what to do when the comments create a social media fire storm?  Backtrack:

Sen. Chuck Grassley (R-Iowa) on Monday said his comments that the estate tax rewards those who don’t spend “every darn penny” on “booze or women or movies” were taken out of context, saying he meant that the government shouldn’t punish investment.

“My point regarding the estate tax, which has been taken out of context, is that the government shouldn’t seize the fruits of someone’s lifetime of labor after they die,” Grassley said in a statement.”

Nice try, but the “out of context” excuse has gotten thinner than the roast beef at the deli counter.  Senator Hatch (R-UT) was a bit more subtle when discussing the children’s health insurance funding, but not by much:

“In his speech, Hatch also said he thinks CHIP has done a “terrific job for people who really need the help” and noted that he had advocated for helping those who can’t help themselves throughout his Senate career. But, he continued, “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything.” He blamed a “liberal philosophy” for creating millions of people “who believe everything they are or ever hope to be depend upon the federal government rather than the opportunities that this great country grants them.”

There they go again.  Oh, those Undeserving Poors who just Want Stuff, and won’t work for it.   The median household income in Nevada is $52,421, meaning half the families in Nevada have annual income below that figure.   So, what does it cost to get the kid’s tonsils removed?  ($4,153 to $6,381, with an average cost of $5,442)  How about that common childhood injury — the broken arm?  Expect this to carve out some $2,500 from the family budget.   It the youngster has a chronic condition — asthma, heart problems,  diabetes,etc. the price, of course goes up, and up and up.   We’re not talking here about “people who won’t lift a finger.”  we’re discussing families — working families who are hard pressed to find the resources to pay for medical treatment for their children.  And now we come to the place where Hatch and Grassley’s perspectives merge in a miserable view of humanity.

What these members of the US Senate are doing is using the old Reagan Era “Welfare Queen” mythology to camouflage their contempt for their fellow Americans.

“They” just want everything done for them.   “They” won’t lift a finger.  “They” are cheating me out of my money.  It’s never something like the single mother of a six year old who has asthma having to maintain a family budget while keeping up with the costs of inhaler medication.  Nor, do we hear much about the family in which both parents are working two jobs to keep close to that $52,421 number, and who are coping with a youngster with diabetes.  Well, well, sputter the solons, we weren’t speaking of Them.  Of course not.  And, I’m assured they weren’t talking about children suffering with cerebral palsy or other chronic conditions with serious financial implications for the family.  So, who are they talking about?  The hard truth is that they aren’t talking about anyone!

They aren’t talking about real people.  They are talking about that imaginary Great Unwashed, who are Welfare Queens, who are urban — and probably African American.  The subject of the Hatch-Grassley fears are highly generalized, mostly mythological, nearly always racist, ideas about the Undeserving Poor, who don’t “lift a finger.”  People, whose stories would touch our hearts and stir our empathy, are ignored in favor of painting with the broadest spray can nozzle possible a picture of urban, black, moral decay from which white America may safely distance itself.

They can (almost) manage some sympathy for the poor white families in remote areas of  America.  However, mention cities, and the racism kicks in.  It’s a hard and tragic thing to see the loss of employment in mining regions but no such sympathy is extended to the members of minority communities who languish in the Rust Belt.   However, even that small instance of empathy is victim to Republican ideas of virtue.  Those afflicted with opioid addition in those former mining regions may be unemployable because of their addictions, but by Republican lights must be employed in order to qualify for treatment.  In short, they can’t win for losing.

The Republican Party, once the party of progressive legislation, and even later of fiscal conservatism, has devolved into the party of racists, radicals, and unreasonable shills for corporate interests.  It’s a sad state of affairs. And, a sadder commentary on the political discourse of contempt.

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Gobs of Goodies Tax Bill: The Potable Portion

Excuse me while I continue to rush about trying to take advantage of the benefits tucked into the Republican Tax Plan, now subject to a conference to settle differences between the Senate and House versions.  I need to start making beer.

“The tax cut legislation includes a provision that cuts taxes on beer, wine, and liquor produced or imported into the country, saving companies involved around $4.2 billion over 10 years. The provision mirrors language from the Craft Beverage Modernization and Tax Reform Act, or S. 236, introduced by Sen. Roy Blunt, a Republican from Missouri and a member of the Senate GOP leadership team. (While the legislation does benefit craft, or small breweries, it extends the cuts to larger companies and the industry as a whole.)”

There’s a bit more:

“…the Senate has a thing for craft brewing. The updated bill includes what is effectively a major new piece of alcohol legislation, cutting taxes on beer produced in the U.S.—and especially on small breweries. Taxes on the first 60,000 barrels of beer produced domestically by small brewers would be cut in half, from $7 to $3.50. The tax rate on the first 6 million barrels produced would fall from $18 to $16 per barrel. Anheuser-Busch produces tens of millions of barrels of beer a year; a small brewer like D.C. Brau produces around 15,000. The reforms also cut taxes on certain wines and make other technical changes to federal alcohol rules.”

And more become where there’s beer there’s wine:

“The first thing the new bill does is take the tax credit, currently only available to wineries making up to 250,000 gallons, and expand it to all wineries regardless of how much wine they make overall. The two tiers in current law would become three tiers: Wineries will receive a $1 credit per gallon for the first 30,000 gallons made, $0.90 for the next 100,000, and $0.535 for the next 620,000. Wineries making more than 750,000 gallons pay the full tax rate on everything over 750,000 gallons.”

There’s also a tip of the hat to the current penchant for making wine with a higher alcohol content.  We’ll need that — higher alcohol content  — to get through the Great Tax Shift from Corporate America to the Middle Class.  (There’s more info on the underlying bill for those who are interested.

Republicans seem to have a different perspective on spirits, depending on who is consuming them. Senator Grassley (R-IA) appears to approve of Upper Class Guzzling, for the other 99.8% of us, not so much.

“I think not having the estate tax recognizes the people that are investing,” Grassley told the Register. “As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”

Enough said.

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The Great Bamboozle: GOP Tax Plan Targeted Right At the Middle Of The Top 1%

There are some amazing feats of verbal legerdemain going on as Republicans try to explain why their Jam It Through Tax Plan isn’t a real bag of snakes.

Oh, don’t worry about our plan…people want to see an improving economy…people want to see more in their paychecks…now 90% of the people can file a simple return…there’s a lot of wishful thinking going on here, and most of it is wrong.  The political advertising is going to write itself in 2018.

Senator Maria Cantwell (D-WA) is correct to say that “haste makes waste,” and in its haste the GOP is about to unload both barrels into their own feet.

The tax cuts will explode the debt.  Remember all the times the GOP told us that debt is a problem?  It certainly can be.  When there was a Democrat in the White House the Heritage Foundation positively screamed about the impact of increasing the national debt:

Current and projected increases in government debt, cutting into future economic growth rates, also mean slower future growth of government revenues. Even as future interest expense rises as taxpayers are called upon to service all this debt, growth in government revenues will slow, leaving less available for other priorities, such as national security and economic security, education, and innovation-driving research.

The only difference now is that the accumulated deficits will be driven by a Republican penchant for rewarding the investor class with amazing tax cuts.  Now the argument is reversed: there will supposedly be More revenue, More innovation, More funds for national security and research.  No there won’t. And we don’t need to kid ourselves, because the same basic economic elements are going to underpin the new tax/budget structure that are girding the current one. 

Nothing in the tax bill reverses the current emphasis on short term gains. The GOP is fond of pointing to gains in the stock market as “proof” of its stewardship of economic growth.  There’s an obvious problem with this, as noted by the Chicago Tribune:

Nearly half of country has $0 invested in the market, according to the Federal Reserve and numerous surveys by groups such as Gallup and Bankrate. That means people have no money in pension funds, 401(k) retirement plans, IRAs, mutual funds or ETFs. They certainly don’t own individual stocks such as Facebook or Apple.

So, nearly half the population has Zilch invested in The Market. What about the others?  While people don’t generally have elephantine memories, 2008 isn’t that far in the rear view mirror, and that’s part of the reason about 54% of Americans have some sort of investments, as opposed to the 62% prior to the Big Crash of 2007-08.

Further,  there’s some recent research indicating the decline isn’t over.

Rosenthal and Austin’s main focus was the precipitous decline of taxable investment accounts. In 50 years, the amount of stock owned by individual investors and funds outside retirement and nontaxable accounts such as 529 college-savings plans has dropped off a cliff — to about 25% in 2015 from over 80% in 1965.

But wait, there’s more:

The other startling finding was the growth in foreign investment in the US stock market. What was once a small sliver of the makeup now accounts for a quarter of all stock ownership at $5.5 trillion. Part of this may be due to increasing wealth in foreign countries, but, as the researchers noted, it could also be influenced by corporate inversions, in which foreign-domiciled firms have large direct holdings of US-based stock.

So, we have a structural situation in which the percentage of individual investors is declining precipitously, the percentage of institutional investors is increasing, as is the percentage of foreign investors.   It doesn’t take much effort to perceive that the produce of stock market gains aren’t going to benefit most Americans, but should assist institutional and foreign investors.

But surely those institutional investors will be looking for long term investment prospects and will act as a curb on short term pursuits as exemplified by hedge fund operations?  Nupe.  That part of the structure hasn’t changed either.  It’s not happening:

Across the world, a clamor is rising against corporate short-termism—the undue attention to quarterly earnings at the expense of long-term sustainable growth. In one survey of chief financial officers, the majority of respondents reported that they would forgo current spending on profitable long-term projects to avoid missing earnings estimates for the upcoming quarter.1

Critics of short-termism have singled out a set of culprits—activist hedge funds that acquire 1% or 2% of a company’s stock and then push hard for measures designed to boost the stock price quickly but unsustainably. 2 The typical activist program involves raising dividends, increasing stock buybacks, or spinning off corporate divisions—usually accompanied by a request for board seats.

If corporations increase profitability I am hearing, “raising dividends, increasing stock buybacks, and mergers, acquisitions, and spin offs.  I am NOT hearing investment in plant expansion, workers’ wages, and company benefits.  And, I’m certainly not hearing anything about encouraging the promotion of taxable investment accounts, the kind that  puts revenue into the Nation’s coffers.

Nothing in the tax bill addresses wage stagnation.   And, no, this is not a myth:

“After adjusting for inflation, wages are only 10 percent higher in 2017 than they were in 1973, with annual real wage growth just below 0.2 percent.[1] The U.S. economy has experienced long-term real wage stagnation and a persistent lack of economic progress for many workers.” […] ” The portion of national income received by workers fell from 64.5 percent in 1974 Q3 to 56.8 percent in 2017 Q2.”

Ouch.  Somehow, the Growth Fairy is supposed to be so enamored of tax cuts for corporations and wealthy individuals that more greenbacks will float down and squirm into the pay packets of average American workers.  Probably not, and putting more dollars into the pockets of institutional investors — foreign and domestic — isn’t going to be all that helpful either.  So, not only does the tax plan not address short term-ism, it doesn’t really address paycheck issues either.

But Wait! How about increasing the child tax credits and standard deductions?  It’s no secret that those people earning $75,000 or less aren’t going to be the big winners in this tax bill.  “The tax bill Senate Republicans are championing would give large tax cuts to the rich while raising taxes on American families earning $10,000 to $75,000 over the next decade, according to a report released Thursday by the Joint Committee on Taxation, Congress’s official nonpartisan analysts.” [WaPo]

But, but, but…Your tax filings will be simpler!  Simple doesn’t matter if you aren’t getting your taxes cut.  And, if the tax preparation deduction is eliminated then there are going to be some mom and pop franchises in serious straits — those just happen to be local small businesses as well.

But, but, but…jobs won’t go overseas!  You can only dream.  The arguments get a bit into the economic weeds, into territorial taxation, but the bottom line is clear:

This might seem like a small difference, but the design of their global minimum tax creates perverse incentives for companies to offshore jobs and shift profits to tax havens—outcomes that a per-country minimum tax would avoid.

Perverse indeed, especially if one expects the new tax plan to provides incentives for companies to expand operations domestically.  Nothing in this plan actually and directly promotes domestic expansion in the economy — it’s all indirect and absolutely hopeful, perhaps even illusory if not downright delusional.

In the meantime, Medicare will be facing cuts of about $25 billion.  There will be calls to “reform” Social Security” in order to reduce the debt — translation: Higher requirements for fewer benefits.  There will be calls to cut SNAP programs — not a drop in the bucket needed to fill the debt hole; and, educational funding — another squeeze on programs that actually help people eventually earn higher wages.

This won’t prevent Republicans like Nevada’s Senator Dean Heller from enjoying the passage of a “great tax cut,” while he hopes to high Heaven no one in the state notices cuts to Medicare, Medicaid, Childrens’ Health Insurance, and no one talks about increased premiums in the individual health insurance market.  Perhaps no one will notice that graduate students at UNR and UNLV are supposed to pay taxes on tuition waivers while they’re actually earning minimum wages for part time jobs?  No one will notice the reduction in home mortgage interest deductions?  No one will observe the reduction or elimination of deductions for major medical expenses — much of which will be out of the pockets of the elderly.

My guess is that Nevadans will notice.  The political ads may, indeed, write themselves.

 

 

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