This is just a short post to highlight something I've already mentioned. Here it is:

Donald Trump says he wants to increase the defense budget by $54 billion. He can't. That would bust through the sequester caps in the Budget Control Act of 2011, and can only be done if the BCA caps are increased. This, in turn, can't be done via reconciliation. It has to be done normally, which means it will require at least eight Democrats to join all the Republicans in order to get 60 votes in the Senate. There's zero chance of this happening if Republicans are also planning to slash every domestic program that Democrats care about.

That's all. I keep reading stories about how Trump is going to find "offsetting" cuts of $54 billion, but that's not how it works. The sequester caps apply separately to domestic and defense spending. Republicans can offset all they want, but they still can't bulldoze the defense cap unless they get a bunch of Democratic votes to help them.

Earlier today I noted that core PCE inflation—the measure used by the Fed—has been rising very, very slowly over the past two years. "At that rate, it should hit 2 percent by about 2019 or so," I snarked.

But that got me curious. How fast is core PCE rising? So naturally I put it into a chart:

It turns out that by 2019 it would actually hit 2.2 percent at its current rate. This is still not something we should be very worried about.1

Of course, inflation isn't just a trend independent of everything else. If the Fed changes interest rates, or President Trump balloons the deficit, or the dollar weakens and imports get a lot more expensive, then that will affect the inflation rate. But none of those things have happened yet, and until they do we still don't really have anything to be worried about.

1In fact, it would probably be helpful to see inflation rise to 3 percent for a year or two. If it rises above that, then it's might be time for the Fed to act.

This comes as no surprise to anybody, but here is Kaiser's analysis of tax subsidies under Obamacare vs. the discussion draft of the Republican health care plan that was leaked last week:

The difference is pretty obvious. Obamacare provides subsidies to those who need it most. The Republican plan provides subsidies to everyone, even if they're already well off.

Politically, you can see the attractiveness of the Republican plan. One of Obamacare's major failings is that its subsidies phase out too soon. The poor get Medicaid and the near-poor get generally decent subsidies, but the working class gets very little and the middle class is left out entirely. The Republican plan provides bigger subsidies for working and middle-class families, and does it by cutting subsidies for the poor.

In other words, it helps two groups who vote at high rates, and who often vote Republican.1 It hurts a group that doesn't vote much, and votes Democratic when it does. It's immoral on almost every level, but it's political genius. Luckily, thanks to the malignity of the tea party wing of the GOP, which views even this amount of government assistance as unacceptable, it will probably never see the light of day.

1The only downside is the cut in subsidies for older working-class voters, who Republicans very much care about. But I imagine that Paul Ryan can come up with some kind of hack that takes care of that.

Perhaps the most disgusting part of President Trump's speech last night was this:

I have ordered the Department of Homeland Security to create an office to serve American victims. The office is called Voice, Victims of Immigration Crime Engagement....Joining us in the audience tonight are four very brave Americans whose government failed them. Their names are Jamiel Shaw, Susan Oliver, Jenna Oliver and Jessica Davis. Jamiel’s 17-year-old son was viciously murdered by an illegal immigrant gang member who had just been released from prison. Jamiel Shaw Jr. was an incredible young man with unlimited potential who was getting ready to go to college, where he would have excelled as a great college quarterback.

But he never got the chance. His father, who is in the audience tonight, has become a very good friend of mine. Jamiel, thank you. Thank you.

This is pure demagoguery. Let's ask CIS if immigrants are more prone to crime than other groups:

We find that it would be a mistake to assume that immigrants as a group are more prone to crime than other groups, or that they should be viewed with more suspicion than others. Even though immigrant incarceration rates are high in some populations, there is no clear evidence that immigrants commit crimes at higher or lower rates than others.

CIS is the Center for Immigration Studies, one of the leading groups that opposes illegal immigration. If there were clear evidence that immigrants committed more crimes than native-born Americans, they'd be all over it. But in a long report, they conclude that the evidence is hopelessly mixed and simply doesn't support the idea that immigrants commit more crimes than anyone else.1

Unfortunately, the raw data for arrests, convictions, and incarceration doesn't include immigration status. This means you have to try to answer the question indirectly. For example, a BJS report suggests that 0.64 percent of immigrants are currently incarcerated vs. 0.51 percent of native-born Americans. But that doesn't tell you anything about the type of crime. Maybe a lot of those immigrants are in jail solely for immigration violations. Or maybe not. We don't know.

On another note, various studies have tried to correlate immigrant populations in different cities with crime rates. They've pretty consistently found that higher populations of immigrants don't correlate with higher rates of crime. As with any ecological study, though, these conclusions depend a lot on exactly what kind of model you set up, what kind of data you have, and what you control for. They're suggestive, but not conclusive.

All that said, there are lots of crime studies out there, and they come to lots of different conclusions about immigrants. But if you take them all together and look at them fair-mindedly, there's really no good reason for thinking that immigrants commit crimes at higher rates than natives. They might very well commit crimes at lower rates. They certainly have more motivation to be law-abiding than most of us.

But that doesn't mean they commit no crimes. And if you wave around enough bloody shirts, it's pretty easy to whip up hysteria about hardworking American citizens being murdered on the streets by rampaging immigrants. That's what Trump is doing, and it's vile.

1They also say this:

Nevertheless, it also would be a mistake to conclude that immigrant crime is insignificant or that offenders’ immigration status is irrelevant in local policing. The newer information available as a result of better screening of the incarcerated population suggests that, in many parts of the country, immigrants are responsible for a significant share of crime. This indicates that there are legitimate public safety reasons for local law enforcement agencies to determine the immigration status of offenders and to work with federal immigration authorities.

If they could say anything stronger, I'm sure they would. In any case, it's a pretty good report to read if you want to understand all the problems with existing data and existing studies. It's a few years old, but still provides a nice summary of a complex subject.

Inflation hawks are getting excited again!

U.S. inflation is closing in on the Federal Reserve’s long elusive 2% annual target, the latest evidence of firming price pressures that could bolster the case for the central bank to raise short-term interest rates as soon as this month.

....Headline prices are “almost in line with the Fed’s 2% target” and core inflation is “gradually closing in on that target, which partly explains why Fed officials appear to be making the case for a March interest-rate hike,” said Paul Ashworth, chief U.S. economist at Capital Economics, in a note to clients.

Almost! Just keep in mind that the Fed's preferred measure of inflation is core PCE, and "gradually closing in" on 2 percent is an understatement. In January 2015 it was 1.41 percent. In January 2016 it was 1.61 percent. In January 2017 it was 1.74 percent. At that rate, it should hit 2 percent by about 2019 or so.

There is evidence that core inflation is rising a bit, inflationary expectations are up, and wages are showing moderate gains, which means the labor market is finally starting to tighten. That said, inflation is still well controlled, one year of wage increases is hardly cause for panic, and the labor market is probably still about a million workers away from being at full capacity. Let's not get too excited yet.

Watching CNN after Trump's speech, I heard Gloria Borger talk about how authentic Trump's tribute to Ryan Owens was. Here's what Trump said:

We are blessed to be joined tonight by Carryn Owens, the widow of a U.S. Navy special operator, Senior Chief William “Ryan” Owens. Ryan died as he lived: a warrior, and a hero — battling against terrorism and securing our nation.

I just spoke to General [Jim] Mattis, who reconfirmed that, and I quote, “Ryan was a part of a highly successful raid that generated large amounts of vital intelligence that will lead to many more victories in the future against our enemies.” Ryan’s legacy is etched into eternity. For as the Bible teaches us, there is no greater act of love than to lay down one’s life for one’s friends. Ryan laid down his life for his friends, for his country and for our freedom — we will never forget him.

This was, perhaps, the most inauthentic part of Trump's entire speech. It was there for one reason only: to exonerate his own bad judgment by insisting yet again that the Yemen raid was "highly successful."

It wasn't. It was hastily planned because Trump wanted to show that he was tougher on terrorism than Obama. Instead of going over the plan in detail in the Situation Room, he casually approved it over dinner. The raid itself was a mess, apparently because the SEAL team was detected going in. Owens was killed, a helicopter was destroyed, none of the targets were killed, and contra Mattis, it seems to have produced hardly any worthwhile intelligence at all.

Instead of taking responsibility for this, Trump has done the usual: blamed everybody else. He's implied it was Obama's fault. He's implied it was the military's fault. And when he's not doing that, he simply claims that it was a huge success and only the FAKE MEDIA says otherwise.

So naturally it became part of his speech tonight. Was his respect for Owens genuine? Of course it was. Is that why he emphasized how successful the raid was? Of course not. That was purely calculated. He was covering up his own failure with the tears of a widow, nothing more.

I can't fault Trump too much for this speech. It was entirely aspirational, but I suppose you can't expect too much more after only a month in office. He mostly stuck to the prompter and kept his tone fairly level. He threw in a few whoppers, but really, not many by his standards. Anybody who disliked Trump beforehand probably still dislikes him, but my guess is that he didn't scare off very many folks in the middle who are still in "give him a chance" mode.

On the other hand, gesturing directly toward Nancy Pelosi when he ripped into the "imploding Obamacare disaster" sure wasn't designed to make him any friends among Democrats:

It's a funny thing. Trump doesn't seem to realize that Republicans can't just wave a magic wand and do anything they want. They're going to need Democratic support for most of his initiatives. But that doesn't stop him from insulting them at every turn. If this represents his crack negotiating skills, I wouldn't hold my breath for any great trade deals.

That said—and with the caveat that I faded out during his final 15 minutes—it was an OK speech. I'd give it a B or a B-.

Full transcript here.


I am keeping the old-school flame alive tonight with yet another display of liveblogging. This time, it's Donald Trump's first State of the Union address. Except it's not really a SOTU. Right? Anyway, here we go.

10:09 pm - And it's over after 60 minutes. It was pretty policy free, which is maybe understandable after only a month. But it was really nothing more than a statement of goals. You'd think maybe he could have talked a little bit about some details.

10:07 pm - Apologies. I sort of tuned out when Trump started the fearfest over immigrant crime.

9:50 pm - Trump says the murder rate increased in 2015 at highest rate in half a century. This is a brand new crime stat from Trump, but no better than his old ones. Murder was up 11% in 2015, but it was up a whole lot more in the 60s and 70s.

9:43 pm - Nancy Pelosi is not impressed when Trump points at her and demands that we get rid of the "imploding Obamacare disaster."

9:40 pm - No, Donald, the way to make health care available to everyone is not to reduce the price of insurance. It's to reduce the price of health care.

9:31 pm - Trump says American companies are the most heavily taxed in the world. I know Republicans love to say this, but it ain't true.

9:30 pm - Now it's time to blame Obama for everything wrong with America. And there's plenty wrong! However, the fact that 94 million people are out of the labor force isn't one of them, Donald.

9:28 pm - I knew this speech was going to be pretty policy free, but come on. So far it's just a slightly more decorous version of one of his rallies.

9:26 pm - We cannot allow a "beachhead of terrorism."

9:24 pm - Trump has the guts to say Radical. Islamic. Terrorism. It's about damn time. Now we'll finally get a handle on ISIS.

9:22 pm - China has a Great Wall. Trump says we'll have a Great Great Wall.

9:21 pm - Again with the billions and billions of dollars.

9:20 pm - Now he's going to wipe out the drug cartels and eliminate all the drugs pouring into the country. How? A task force, apparently.

9:18 pm - He's going to save additional billions on government contracts. Maybe. But so far his record is $0.

9:17 pm - "Billions and billions of dollars." Is this some kind of Carl Sagan riff? Does Trump realize that this is not really a lot of money for new jobs?

9:08 pm - Trump is at the lectern early! He's so punctual. Plus he didn't have to waste too much time being mobbed as he walked down the aisle.

9:06 pm - Trump is in the building.

9:04 pm - This afternoon my Twitter feed was all atwitter with a few excerpts from the speech released earlier today by the White House. Apparently Trump is going to suggest that we can cure all of our diseases if we just clap hard enough.

9:01 pm - For the record, I think it will be disgraceful if any member of Congress gets up and yells "You lie!" whenever Donald Trump lies. Which he will. You just know it. OTOH, I think it would be awesome if Nancy Pelosi and Chuck Schumer led a chant of the entire Democratic caucus yelling "You lie!" whenever Trump lies. That would be the greatest thing ever.

Just about every news outlet in the world has spent the day telling us that President Trump's address to Congress tonight isn't a State of the Union address. It's just an address to Congress. Tradition, you know. It seems like kind of a dumb tradition to me, but whatever. I'll be liveblogging it anyway. I'll be starting up around 9 pm Eastern if you want to follow along.

Over at the Equality of Opportunity Project, a group of scholars has ranked every college and university in the country on a measure of how good they are at producing income mobility. For each school, this is defined at the percentage of students who are in the bottom income quintile multiplied by the percentage who end up in the top quintile. For example:

CSU Los Angeles
33.1% of students are in the bottom quintile
29.9% end up in the top quintile
Mobility rate = 9.89%

After scanning the scores, there are two big takeaways:

  • If you're in the bottom quintile, head to Los Angeles or New York City, which absolutely dominate the top 100. The entire CUNY system is really strong, and outside the city, SUNY has a bunch of good campuses. In Los Angeles, both the CSU and the UC systems have a good selection of schools with high mobility rates. Texas isn't bad either, and it has good schools all over the state.
  • If you want the best chance of moving into the top quintile and don't much care about your field of study, apply to the Vaughn College of Aeronautics and Technology, right near beautiful La Guardia Airport in New York City. They have a spectacular mobility rate.

It's not uncommon for the best scoring school in a state to specialize in something. Welding in Oklahoma. Seamanship in Maine. Pharmacists in Massachusetts. And technical schools all over the place. Are you curious about the top-scoring school in your state? Here they are:

On Fox & Friends this morning, Brian Kilmeade asked President Trump why he's been so slow to fill the thousands of open government jobs that are presidential appointees. Trump said it was because he didn't want to fill them. "A lot of those jobs, I don't want to appoint someone because they're unnecessary to have," Trump said. "In government, we have too many people." Nancy LeTourneau comments:

That is an important admission as it reflects on both Trump and his so-called “shadow president,” Steve Bannon. As we’ve already noted, in his speech at CPAC, Bannon suggested that one of his main goals was the deconstruction of the administrative state. Leaving important policy positions open is step one in that process. Of course, that also leads to the kind of incompetence and chaos that we’ve already witnessed from this White House. But for Bannon, that is more likely a feature than a bug.

Hmmm. Do you think that's what's happening? When I first heard Trump say this, I took it for one of his standard off-the-cuff lies. In reality, his administration is just sluggish and incompetent, but he could hardly admit that. So he came up with some other explanation.1

But if he is telling the truth, he must be surrounded by morons. The open jobs are all relatively high-ranking positions that implement the president's will. If you don't fill them, the bureaucracy is likely to keep lumbering along out of sheer inertia, and that means doing whatever it's used to, not what Trump wants it to do. The more high-level positions you fill with loyalists, the better chance you have of pushing the bureaucracy in the direction you want it go.

I guess we'll have to wait and see. At this time next year, if Trump still hasn't filled a substantial number of positions, then he was telling the truth—and he's surrounded by morons. But if they are mostly filled, it means he was just making up the usual Trumpian hokum on the fly to cover up for his own managerial ineptitude.

1And a really good one, too! Credit where it's due, Trump's extemporaneous bullshitting skills are outstanding.