Democrats need to make a sharp turn to the right

Posted by Shyam Moondra

President Barack Obama created a monstrous welfare state costing $1 trillion dollars for free/subsidized housing, health care, food, child care, education, etc. At the same time, the number of people under poverty level increased to a record 40 million. Socialism has proven to be disastrous for the poor people – just look at countries like Cuba, North Korea, Venezuela, and Greece - the people live in extreme hardship and poverty. Handing out free stuff doesn't solve any problem - it only gives poor people an incentive to not work at all (why would you work if you can get free things?). Many of these welfare programs are fraught with waste, fraud, and abuse and they are growing at an alarming rate which could worsen the budget deficit problem. While Obama’s focus on helping the poor was noble, the welfare state is just a band aid approach to dealing with the broader issues of under-employment and poverty. The welfare programs, without an expanding economy, make the poor people permanently dependent on the government which is hardly an ideal outcome. This approach actually locks the poor people in perpetual poverty without any realistic hope to get out of the sink hole. What we need right now is to find a way to grow economy at a faster clip and create high-paying jobs, and at the same time train the chronically unemployed people to fill those jobs. What makes a country thrive is if people are self-reliant and they are productive members of society.

Obama was a failed president because he never understood how to create opportunities for poor people so they could have a better life. President Bill Clinton understood that and that's why he methodically dismantled welfare programs and created more job opportunities so people could be self-supportive. Unfortunately, Obama moved the Democratic Party so far to the left that poor people never had a chance like they did under President John F. Kennedy and Clinton.

Today, Democratic Party is full of people who just want to be elected by promising free stuff to their constituents. These politicians think about themselves and not about the people they pretend to be serving. In the process, they are killing any chance poor people have to get out of poverty. Democrats prefer to have lots of poor people so they can get elected and then re-elected, without really changing anything for the people living in poverty.

What would make Democratic Party a viable force is if they had strong leaders who understood that poor people can have a better life only if they work hard and become self-reliant and not wait for monthly welfare checks or weekly food stamps. Unfortunately, at the moment, Democrats don't have such leaders, so the political deception continues.

Pitfalls of Trump’s “Cut Cut Cut Act"

Posted by Shyam Moondra

During the presidential campaign, then candidate
Donald J. Trump often talked about unprecedented tax cuts for the middle class and tax reform, as one of his goals for the first 100 days of his presidency. However, the bruising infighting among the Congressional Republicans on repealing and replacing Obamacare wasted a lot of time and ultimately their attempt failed in the Senate. The Congress then started the process of passing a legislation on tax cuts and tax reform. The House passed the “Tax Cuts and Jobs Act” and the Senate is only days away from passing their own version of the law which widely differs from the House version in many aspects. Of course, President Trump coined his own name for the eventual bill as “Cut Cut Cut Act” to emphasize his claim that his tax cuts would be even bigger than the record tax cuts enacted by President Ronald Reagan. The Congress, however, is unlikely to adopt Trump’s suggested name. After the failed attempt to repeal and replace Obamacare, the Congressional Republicans are under tremendous pressure to pass a tax cut legislation to show to the Trump supporters that they can govern. After the Senate passes its own tax cut bill, the House and Senate conferees will then try to sort out the differences between the two versions and have a bill ready for President Trump’s signature before the end of the year.

Currently, economy is operating at “full employment” level and GDP is growing at 3% per year with modest inflation. The tax bill passed by the House will will undoubtedly add to the inflationary expectations. Tax cuts are usually used as a fiscal policy tool at the bottom of economic cycle to stimulate economy, but this time around tax cuts are being proposed at a time when economy is operating at the peak level. If tax cuts lead to higher inflation, the Federal Reserve Board (FED) will be forced to increase interest rates at a higher rate than originally planned and if FED is not able to fine tune rate increases, they could even trigger recession. Besides, Trump has ambitious plans for infrastructure improvements and military upgrades that will add additional trillions of dollars to the budget deficit over 10 years. The timing and magnitude of the proposed tax cuts are thus very risky.

The Trump administration is relying on increased economic activity to generate enough additional tax revenues which will offset the anticipated budget deficit caused by tax cuts. However, most economists believe Trump’s claim of growth are overstated and they estimate that there would be a net increase in national debt by at least $1.5 trillion. Higher budget deficit and national debt will put additional pressure on FED to increase interest rates. Higher interest rates will slow down housing market and demand for durable goods such as automobiles, possibly triggering crash of financial markets which could lead to recession.

During the campaign, Trump emphasized tax cuts for the middle class and tax simplification, but the proposed legislation does neither. By most estimates, the bulk of the tax cuts will go to the corporations and rich people and the proposed tax plan wouldn’t really do much in terms of simplification. The tax code is riddled with special interest provisions that make the tax return more complicated for most people than is necessary.

Given the political necessity to pass something on taxes, after having failed to repeal and replace Obamacare, Republicans have no choice but to do something, anything, on taxes. Hopefully, the conferees from House and Senate would iron out the differences and make tax cuts targeted more at the middle class and scale back corporate tax cuts to reduce budget deficit. Politically, it’s hard to justify big tax cuts for the rich at a time when rich individuals have done so well since the financial crisis and income inequality among the population is at a record level. Congressional Republicans need to go back to Trump’s original twin objectives: create high-paying jobs and give a boost to wage growth for the middle class that accounts for two-third of economy.

Trump found a winning formula - partner with Congressional Democrats

Posted by Shyam Moondra

When President Donald J. Trump was inaugurated last January, the business community was full of confidence that the federal tax code would finally be reformed. Optimism about higher economic and jobs growth propelled the stock market to record levels. However, in the last eight months, Republicans couldn’t even deliver on their long standing promise to repeal and replace Obamacare which was utterly shocking. The sharply divided Republicans in the House and Senate made it almost impossible to move on the Trump campaign promises. While Trump issued a series of Executive Orders to undo President Barack Obama’s legacy, legislative victories were nowhere to be found. Most Trump supporters are in total disbelief that Republicans can’t seem to get anything done in spite of the fact that Republicans control the White House, House of Representatives, and Senate.

With the possible government shutdown and default on federal debt looming large, Trump had no choice but to negotiate directly with the Congressional Democrats on the extension of federal debt ceiling and to provide funds for the victims of hurricane Harvey. There are twenty five or so House Republicans and five or so Republican senators that were proving to be obstructionists and Trump badly needed the support of Democrats to avoid fiscal catastrophe on debt ceiling and to immediately provide badly needed funds for the hurricane victims.

Trump should have sought help of Democrats right from the beginning; if he did that, these first few months of his presidency would have been more productive. The Republican Party is badly divided and it doesn't look like it will get any better. Republican leaders are the "swamp" in its truest sense of the word because they are controlled by the lobbyists. It’s important for Trump to demonstrate that he can get things done, so it was a good strategic move on his part to make a deal with House Leader Nancy Pelosi (D-California) and Senate Minority Leader Chuck Schumer (D-New York).

Trump can work with Pelosi and Schumer to accomplish the following that involve common interests:

1. Make debt ceiling extension automatic as needed. In the corporate world, we don't have a ceiling on debt, so there is no reason for the government to have it either. Let the free market and voters decide what should be the government debt ceiling; if debt is too high, government would have to pay higher interest to raise new funds which by itself will induce the government to live within its means. Also, whoever pile up debt excessively will be thrown out of office by the voters. So let these built-in mechanisms decide what level of debt is appropriate. Trump has used debt as a primary instrument for growing his businesses in the private sector (which at times worked against him and he had to seek bankruptcy protection more than once). Trump’s agenda includes massive increase in military expenditures and $1 trillion worth of investments in his ambitious infrastructure plan. Therefore, Trump wouldn’t want debt ceiling getting in the way to fulfill his campaign promises. In general, Democrats like to spend beyond government means (e.g., Obama doubled the national debt to $20 trillion during his presidency). So there is a collusion of interest between Trump and Democrats to get rid of the whole concept of debt ceiling for good. This, of course, would be opposed vehemently by conservative Republicans, especially the “Freedom Caucus” in the House, but Trump could put together a coalition of Democrats and moderate Republicans to sideline conservative Republicans and neutralize the issue of debt ceiling.

2. Fix the health care system. Obamacare didn't last because it was passed by only Democrats. We need a bi-partisan effort to come up with something that would endure. Trump could work with Democrats to come up with a new health care plan, which is better than Obamacare but at a higher cost to the government (in terms of subsidies via Medicaid for the poor) than what conservative Republicans would want. But the passage of a new health care plan would afford Trump to put a check mark against one of his prominent campaign promises.

3. Get going with the $1 trillion infrastructure investment to fix our roads, highways, bridges, tunnels, schools, airports, etc. Democrats tried unsuccessfully for years to get concurrence of Republicans on a huge infrastructure improvement plan. During the presidential campaign, Trump proposed a massive $1 trillion investment (much of which could be financed by the private sector), which he considers essential for the U.S. to be competitive in the global marketplace. Again, Trump could easily forge a bi-partisan infrastructure plan with the help of Democrats.

4. Reform the tax code to make it simpler and fairer. Reduce taxes for the middle class, but keep the taxes on the rich the same (may even increase a little for super rich as advocated by billionaires such as Warren Buffett and others). Corporate taxes should be reduced only to the extent loopholes are eliminated, so as to make it revenue-neutral. Again, Trump could easily make a deal with Democrats to get this done.

Trump and Democrats have a real opportunity to do away with the Washington, DC gridlock that has paralyzed the Congress for almost a decade with its approval rating plunging to single digits. In the last presidential election, the voters made it abundantly clear by electing a non-politician outsider that they want the gridlock to end. If Trump’s coalition with Democrats and moderate Republicans is able to get the above things done, the people would begin to have more faith in the government and businesses would have more confidence which is needed if we ever going to achieve 3-4% GDP growth and create millions of new high-paying jobs. Trump should move quickly to replicate his success in dealing with a short-term fix of debt ceiling issue and achieve bigger things that will guarantee him an easy win for the second-term.

Trump’s war on liberal media, “Do Nothing” Congressional Republicans, and Alt-Left’s dead-end are all inter-connected

Posted by Shyam Moondra


Soon after Donald J. Trump was inaugurated as the 45^th president of the United States, he moved swiftly to fulfill his campaign promises through a series of executive orders that didn’t require Congressional approval. Even though he stumbled on the legal front on limiting immigration from seven predominately Muslim countries, infested with Al-Qaeda, ISIS and other terrorists, it did look like that the government was finally working, compared with the Obama days of gridlock in Washington, DC when nothing would ever get done. Then came the firing of Gen. Michael Flynn as National Security Advisor and withdrawal of Andrew Puzder as the nominee for Secretary of Labor that gave the perception that Trump Administration was in chaos. These twin mishaps seem to have lifted the spirits of demoralized Democrats and given them a feeling of relevance in political discourse. And, the liberal anti-Trump media finally got an upper hand in their fight against Trump with their non-stop attacks and going as far as predicting his imminent downfall, just as they erroneously did about his presidential candidacy not long ago. While all this was going on, Republicans seemed to be in hiding; they are quiet on Democrats’ accusations of Russian links to Trump’s aides and they have not produced any significant legislation to implement Trump’s promises.

While Trump’s team could have handled the debacles better, given that most of his aides have had no prior government experience it seemed inevitable that Trump’s desire to fulfill his campaign promises quickly would lead to hiccups along the way. However, media’s prediction of imminent fall of Trump is more of a wishful thinking than reality. Judging from the lopsided number of negative stories about Trump by Washington Post, New York Times, CNN, and MSNBC, it does appear that the media is engaged in unfair reporting which is supported by a recent poll that shows media's approval rating at 16%. In this age of instant social media, fake news has become a real problem and often mainstream media look more and more like sensational tabloids. There was a time when journalists would find at least two independent sources corroborating a story before printing it, but now they go with a story even without a single corroboration and that’s fake news. Trump has a point when he says that the media has become enemy of the people. Freedom of press is an integral part of our democratic principles, but with the inception of fake news phenomenon during the 2016 election cycle, the media seems to be abusing that right. It seems inevitable that the Republican controlled House of Representatives and Senate would impose some sort of checks-and-balances against the abusive media by passing a law that allows lawsuits against the media that  disseminate fake news.

Trump’s stumbles got amplified because the Congressional Republicans have failed to produce a single bill on tax reform, infrastructure spending, repealing and replacing Affordable Care Act (Obamacare), securing the border, reforming immigration laws, and strengthening the military. Trump won based on promises he made on campaign trail on those scores and yet Republican majorities in both houses have failed to act since November 8, 2016. If Republicans had shredded their decade-long “Do Nothing” attitude and worked hard through their various committees, by now they would have passed a series of bills to be signed by Trump. Had Congressional Republicans done that, the media would have been busy talking about those bills rather than engaging in an all-out war with Trump. Republican led Congress has created a vacuum because of their slow pace in achieving their goals and the media is filling that vacuum by going after Trump at full speed. Lackluster performance of Republicans points to either sharp divisions within the Republican caucus or weak leadership skills on the part of House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. If Trump presidency fails, it would be a no-brainer to blame the Congressional Republicans for the lost opportunity. It’s amazing that House Republicans tried to repeal Obamacare dozens of times when they knew that Obama would never sign it, but now that they know that Trump would sign it, they still have not passed the repeal bill.

That brings us to the last piece of the puzzle – the Congressional Democrats. Democrats lost because their welfare approach to governing proved to be a dead-end and it couldn’t possibly be sustained at a rate of $1 trillion a year. The Democratic Party did much better nationally and locally, when its political philosophy was centered. But then came Obama who moved the party so much to the left that it’s hard to believe that this party was once led by such people as John F. Kennedy and William J. Clinton. The focus of the Democrats is to give away things “free” to the masses at the low end of society. Free or subsidized health care, housing, education, child care, and food via a variety of welfare programs are funded by the rich and the middle-class that can barely make it. The system is based on disincentive to work rather than giving people a reason to work hard for better life. That kind of society can never prosper and it only increases the number of people falling below the poverty level. The brand of progressive leaders such as Sen. Elizabeth Warren or Sen. Bernie Sanders think of hard working successful people as criminals and the people who don’t want to work as victims. As more and more people lose ground, progressive leaders double-down on their welfare approach which sets in a downward spiral to ruins rather than prosperity. Europe is decaying because of socialistic attitudes and more and more countries there are now close to being bankrupt (Greece, Portugal, Spain, Italy,…). Unless Democratic Party has a strong centrist leader, the Democratic Party is finished. Democrats need to move back to the center where Bill Clinton was, if they want prosperity for all. Warren and Sanders are not the answers - they will put the final nail in Democrats' coffin....moreSee More

If Republicans in the Congress can get their act together and get on with their agenda of rapid economic growth and faster job creation, Trump’s stumbles would soon be forgotten and Trump's and Congress' approval ratings would zoom up nicely (Congress has had approval rating of 7-15% over the last ten years). Trump should lead and meet with Republicans and Democrats to hammer out compromises on health care and tax reforms. The voters elected Trump as the president because they were tired of gridlock in Congress, Obama’s welfare state, slow-growth economy, and stagnated wages. Obama made a mistake of passing Obamacare without Republican votes; Trump would be foolish to repeat that mistake and rely only on Republicans to implement his agenda. Trump is not viewed as a hard-core ideologue, which makes it feasible for him to use his renowned negotiations skills in moving country forward on tax reforms, infrastructure repairs, securing our borders, defeating ISIS, and reducing health care cost in a bi-partisan way.