Defense Secretary James Mattis is tired of European allies not carrying their weight in NATO:

In an ultimatum to America's allies, Defense Secretary Jim Mattis told fellow NATO members Wednesday to increase military spending by year's end or risk seeing the U.S. curtail its defense support — a stark threat given Europe's deep unease already over U.S.-Russian relations.

Echoing President Donald Trump's demands for NATO countries to assume greater self-defense responsibility, Mattis said Washington will "moderate its commitment" to the alliance if countries fail to fall in line. He didn't offer details, but the pressure is sure to be felt, particularly by governments in Europe's eastern reaches that feel threatened by Russian expansionism.

This is one of the few Trump policies that I mostly agree with. Of course, so has every president for the past two decades, both Republicans and Democrats. It's pretty easy to see why. NATO countries are supposed to spend at least 2 percent of GDP on defense, but only five of them actually do:

I don't have a solution for this problem, which is of long standing, but I do think the flat 2 percent requirement is unfair. A country with a per capita GDP of $4,000 (Albania) should hardly be expected to pony up as much as a country with a per capita GDP of $56,000 (the United States). Basically, as countries become wealthier, the percentage of GDP they're expected to contribute to defense should go up. Here's what that looks like:

There are still plenty of slackers, but they're different slackers. Most of NATO's poor countries are spending more than we should expect of them, while most of the rich countries are not even close to pulling their weight. Luxembourg is a basket case.1 The Nordic countries are seriously underspending. Portugal and France are doing OK, but the core European countries of Germany, the Netherlands, and Belgium are way under target.

I don't know what Mattis has in mind, but I assume he's suggesting that if Europe doesn't start spending more, we'll close some bases and reduce our overall footprint there. This is a tricky threat, though, since in most cases we want those bases as much or more than the host countries do. And domestic politics makes it all but impossible for most rich European countries to substantially increase defense spending anyway. Is there really any chance that Germany is going to double its defense budget anytime soon?

I'm curious to find out if this is just another in the dreary succession of US defense chiefs begging Europe to spend more, or if Mattis has real plans to make his threat stick. Stay tuned.

1I know: who cares, really? And anyway, what leverage do we have? If Russian tanks come storming through the Fulda Gap and manage to plow through Germany, it's not as if we're going to repel them everywhere else but let them into Luxembourg. Still, being a tax haven shouldn't be a free lunch. It makes you rich, but that also means you should be expected to contribute more to the common defense.

Ian Ostrander reminds us today that even if you can't filibuster, you can still filibuster:

It’s important to note that even though the 2013 Senate got rid of filibusters for most judicial nominees, the minority still has many ways to delay action. Under the new Senate rules a determined minority can still require 30 hours of debate even after a cloture vote, which closes the discussion. Using this procedure on every nomination would actually require more time than the Senate works in an average presidential term.

If Democratic senators use the full debate time on every nomination, the resulting logjam would enable only key nominations to pass — because every nominee would require cloture. That’s exactly the situation that President Barack Obama faced, after the Democratic leadership eliminated the filibuster. He could overcome obstruction on any individual nomination, but not on every nomination. The figure below shows the staggering increase in the use of cloture to overcome obstruction. This is the new normal for nominations in a post-nuclear Senate.

After Democrats eliminated the filibuster for judicial and executive nominees, Republicans began a campaign of epic delay on every nomination. This wasn't because they actually opposed all of Obama's nominees, it was because they wanted to use up floor time. There wasn't much they wanted to do that would survive Obama's veto pen anyway, so why not? Democrats are now doing the same thing, and since they're in the minority it's practically the only tool they still have available to influence legislation:

Every moment spent on confirming Cabinet nominees is a moment not spent on the Republican agenda. Every ounce of executive and legislative energy spent on a Cabinet nomination is effort taken from other priorities....Delay may be the Democrats’ best tool for bringing Republicans to the bargaining table.

This kind of delaying game gives Donald Trump a choice: accept that he won't be able to fill most of the lower-level position in his administration, or else make a deal with the Democrats. Eventually, something has to give.

From Politico, on Donald Trump's plan to increase defense spending:

Republicans are already drawing battle lines over whether the extra defense dollars should be added to the deficit or, as many in the party have long insisted, be matched with equal cuts elsewhere....“I think with any new spending, we ought to figure out ways of offsetting it or paying for it,” [Sen. Bob] Corker said. “I hope we’re not going to a place where all of the sudden, because we’re in office, we don’t think the deficit matters anymore.”

Gee, what could possibly have given anyone that idea?

Kurt Eichenwald writes today that US allies in Western Europe have been conducting intelligence operations against the US for months:

Sources said the interceptions include at least one contact between former National Security Adviser Michael Flynn and a Russian official based in the United States....The sources said the intercepted communications are not just limited to telephone calls: The foreign agency is also gathering electronic and human source information on Trump’s overseas business partners, at least some of whom the intelligence services now consider to be agents of their respective governments.

Moreover, a Baltic nation is gathering intelligence on officials in the Trump White House and executives with the president’s company, the Trump Organization, out of concern that an American policy shift toward Russia could endanger its sovereignty, according to a third person with direct ties to that nation’s government.

....These operations reflect a serious breakdown in the long-standing faith in the direction of American policy by some of the country’s most important allies. Worse, the United States is now in a situation that may be unprecedented—where European governments know more about what is going on in the executive branch than any elected American official....The information gathered by the Western European government has been widely shared among the NATO allies, although it is not clear how much has been provided to American intelligence officials.

Is this true? Who knows anymore? As with so many other stories these days, it's remarkable enough just that it's taken seriously.

Apparently Andrew Puzder has withdrawn his nomination to be Secretary of Labor. "He's very tired of the abuse," a friend said. This was awkward wording, since the withdrawal came after Oprah Winfrey handed over tape of Puzder's ex-wife on Oprah in 1990 claiming that he had abused her. Also after revelations that he had hired an illegal immigrant as a housekeeper and failed to submit payroll taxes for her. And after an increasing number of Republicans said they were "on the fence" and basically told President Trump his nomination was dead. Also after the Breitbart wing of the party kept up a steady campaign of complaints that Puzder was too damn soft on immigration.

The upshot is that Trump will now nominate someone who's probably just as anti-labor as Puzder, but also a fire-breathing wall supporter. Hooray.

So does President Trump support a two-state solution in the Middle East, which has been US policy for decades? Or has he given up on that and now endorses a one-state solution? Here's his answer:

So I'm looking at two-state and one-state, and I like the one that both parties like. [Netanyahu laughs.] I'm very happy with the one that both parties like. I can live with either one. I thought for a while the two-state looked like it may be the easier of the two, but honestly, if Bibi and the Palestinians — if Israel and the Palestinians are happy, I'm happy with the one they like the best.

Translation: I couldn't care less. I'm not even sure what all this one-state and two-state stuff is about. I just want to make a deal.

I wouldn't blame Trump if he ignored Israel entirely. It's pretty obvious that no peace deal is anywhere on the horizon, and there's nothing much the United States can do about it. But if he is going to talk about it, is it asking too much that he demonstrate even a minimal understanding of what the two sides disagree about?

Victor Davis Hanson is a native Californian who hates California because it's become too brown and too liberal. Today he takes to the LA Times to use the Oroville Dam disaster as a way of riding all his usual hobbyhorses:

The poor condition of the dam is almost too good a metaphor for the condition of the state as a whole; its possible failure is a reflection of California’s civic decline.

....The dam was part of the larger work of a brilliant earlier generation of California planners and lawmakers....The water projects created cheap and clean hydroelectric power...ensured that empty desert acreage on California’s dry west side of the Central Valley could be irrigated...spectacular growth in the San Francisco Bay Area and Los Angeles Basin.

....Yet the California Water Project and federal Central Valley Project have been comatose for a half-century....Necessary improvements to Oroville Dam, like reinforced concrete spillways, were never finished....A new generation of Californians — without much memory of floods or what unirrigated California was like before its aqueducts — had the luxury to envision the state’s existing water projects in a radically new light: as environmental errors....Indeed, pressures mounted to tear down rather than build dams. The state — whose basket of income, sales and gas taxes is among the highest in the country — gradually shifted its priorities from the building and expansion of dams, reservoirs, aqueducts, bridges and highways to redistributionist social welfare programs, state employee pensions and an enormous penal archipelago.

LOL. The reason the Oroville Dam wasn't upgraded ten years ago is because all those salt-of-the-earth farmers that Davis admires didn't want to pay for the upgrades via higher water rates. Here's the San Jose Mercury News:

Environmentalists noted Friday that they had tried in 2005 to persuade the federal government to require the state to cover the emergency spillway with concrete. But the agency that was relicensing the dam, the Federal Energy Regulatory Commission, declined after opposition from the state Department of Water Resources and the State Water Contractors, a group of 27 water agencies who were concerned about the cost.

Hanson should have listened to his initial instincts: the Oroville Dam is too good a metaphor for the condition of the state as a whole:

President Trump would like to destroy Obamacare. Reason suggests that he's made his first concrete achievement toward that goal:

Following President Donald Trump's executive order instructing agencies to provide relief from the health law, the Internal Revenue Service appears to be taking a more lax approach to the coverage requirement.

....The IRS was set to require filers to indicate whether they had maintained coverage in 2016 or paid the penalty by filling out line 61 on their form 1040s....For most filers, filling out line 61 would be mandatory. The IRS would not accept 1040s unless the coverage box was checked....Instead, however, filling out that line will be optional.

Earlier this month, the IRS quietly altered its rules to allow the submission of 1040s with nothing on line 61. The IRS says it still maintains the option to follow up with those who elect not to indicate their coverage status, although it's not clear what circumstances might trigger a follow up.

Basically, this means that if you skip coverage, you can elect to not tell the IRS about it and not pay the penalty. The implication is that the individual mandate is now dead—and probably Obamacare along with it.

This is getting a lot of coverage, but you have to read it very carefully to see that nothing has really changed. The IRS has never rejected "silent returns." However, last year—before Trump took office—they announced a plan to begin rejecting silent returns in 2017:

The IRS plans to reject electronically filed “silent returns” beginning in FS 2017....Silent returns filed by paper will go to the Error Resolution/Rejected Returns unit as the IRS issues Letter 12C, informing the taxpayer of the issue. If the taxpayer does not respond to the Letter 12C, the IRS will issue a notice to inform the taxpayer that the IRS estimated an ISRP and made an adjustment accordingly. If the taxpayer’s original return claimed a refund, the IRS will offset the refund with the ISRP balance.

A couple of weeks ago the IRS decided not to implement this change. Is this because of Trump's executive order? Or because they had second thoughts about how much extra work it would cause? There's no telling. Either way, though, all they're doing is maintaining the same policy they've had ever since Obamacare was passed. There's really not much going on here.

UPDATE: It turns out we do know why the IRS decided not to implement this change: "The Jan. 20, 2017, executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden.‎ Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status." So it was the executive order after all. The Reason article noted this, but I missed it.

National Review opposes the confirmation of Andrew Puzder as Secretary of Labor:

Puzder is not without his virtues, of course. He is a staunch opponent of knee-jerk demands to raise the federal minimum wage to $15, which he has rightly identified as a surefire way to send minimum-wage workers to the local unemployment office. He’s also unsympathetic to the bullying of organized labor, and it’s to his credit that the AFL-CIO, SEIU, and United Steelworkers have lined up to oppose him.

Gee. A Secretary of Labor who hates labor. What's not to like?

Well, it turns out he's soft on immigration: he supports comprehensive immigration reform rather than walls and high-profile raids. Can't have that. And just by coincidence, NR's opposition comes shortly after we learned that Puzder "employed an undocumented housekeeper for several years and failed to pay related taxes." I don't think NR actually cares about that, though. They only care that it gives Democrats a hook to fire up the opposition. Why give them a victory that will just make them even smugger than usual? Might as well pull the plug now and pretend that it was all because conservatives have such high moral standards.

The Wall Street Journal says that Wall Street is booming again:

Shares in America’s banks are booming again....Investor expectations of higher interest rates, lower taxes, lighter regulation and faster economic growth under the Trump administration have added $280 billion in combined market value to the nation’s six largest banks since Nov. 8.

....Bank stocks overall have outperformed broader stock markets since the election. The roughly 27% gain since Nov. 8 for the KBW Nasdaq Bank Index is around three times that of the S&P 500.

Yes...but. You can make almost any case you want for Wall Street depending on how you choose your starting and ending points. For example, here are five big bank stocks in the first month after the election:

Bank stocks kicked ass in the first month after the election. The S&P 500 is the thick dotted purple line, and big banks outperformed it by 15-30 percent. Now here are the same stocks in the two months since then:

Bank of America and JP Morgan have gone up an anemic 5 percent, about even with the market. The others haven't even done that well. But if you decide just to focus on the past two weeks, here's what bank stocks look like:

Once again, the big banks are all outperforming the market. So how is Wall Street doing? It all depends on how you look.