Donald Trump Is a Big Fat Idiot

For today's sermon, I have chosen a passage from Al Franken's Rush Limbaugh Is a Big Fat Idiot, written back when he was allowed to be funny. We no longer condone fat shaming, of course, but we do condone mockery of those who deserve it, especially when it allows me to make a strained point about the upcoming election. Here is today's text:

Limbaugh knows what's good for him. Whenever he's ventured outside the secure bubble of his studio, the results have been disastrous. In 1990, Limbaugh got what he thought was his chance at the big time, substitute hosting on Pat Sajak's ailing CBS late night show. But the studio wasn't packed with pre-screened dittoheads. When audience members started attacking him for having made fun of AIDS victims, he panicked, and they had to clear the studio. A CBS executive said, "He came out full of bluster and left a very shaken man. I had never seen a man sweat as much in my life."

Limbaugh later apologized for joking about AIDS and promised to "not make fun of the dying." But by early '94, he had forgotten the other lesson: he needs a stacked deck. This time disaster struck on the Letterman show. The studio audience turned hostile almost immediately after Rush compared Hillary Clinton's face to "a Pontiac hood ornament." Evidently, that's the kind of thing that kills with the dittoheads, but Letterman's audience wasn't buying.

So here's my question: Is this what's going to happen to Donald Trump? Obviously he's not going to panic the way Limbaugh did, but so far his carnival barker act has only had to appeal to a smallish subset of angry white conservatives. Like Limbaugh's dittohead radio audience, they think he's great. But when he goes out into the great wide world of the general election, he's going to learn that most people just aren't buying what he's selling. What will he do then? Change his tune? Dig himself an even deeper hole? Open an Instagram account? Claim that his private investigators have confirmed that Hillary Clinton is actually Canadian? Fire away in comments.

Spring Is Springing, and So Are Our Ducks

Spring is here, and that means everything is blooming—including our local ducks. Here is our first ducklet of the season. We also have a fine crop of Canada gooselets, but they were hiding this morning. Maybe I'll catch them tonight.

Consider this your respite from Donald Trump. Enjoy it while you can.

Via Steve Benen, I see that the Republican Party has released yet another autopsy of the past few elections. This one is written by Gingrich Productions, and Newt explains his thinking toward the end of the report:

At Gingrich Productions we felt that some very profound changes were underway and we knew we did not understand them. We had been as wrong as anyone else about the probable outcome of the 2012 election.

That's some welcome humility, which isn't really in character for Newt. Maybe someone else wrote that bit. In any case, what does Newt recommend? There are nods to minority outreach buried in the middle of the report, and lots of attention to the new technology of campaigning (micro-targeting, social media, etc.). But what's at the very top? What does Newt really want to make sure people see? Here you go:

1. The wrong words cripple or kill. At least 5 Republican Senate candidates (Delaware, Missouri, Nevada, Indiana, Colorado) were defeated in 2010 and 2012 because they used language in a way that isolated them and alienated voters....

2. The right big idea or ideas, expressed in clear and simple language with the right tone, can win campaigns. Larry Hogan's intense focus on cutting taxes while refusing to comment on controversial issues propelled him to a shockingly large and unexpected victory as Governor of Maryland....

3. Big Ideas can attract donations and the lack of ideas can make money irrelevant....

Yeesh. Big Ideas™ and Big Language™ have been Newt's stock in trade for decades. He could have written this in his sleep. And all the stuff about new technology and social media has been obvious for years. Everyone is gaga over this stuff and has been since 2008. I sure hope the RNC didn't pay very much for this report.

The head of the IRS is hiring more people to enforce the tax code, and Rep. Jason Chaffetz is outraged:

The chairman of a powerful House committee is demanding to know how IRS chief John Koskinen has found the money to hire up to 700 enforcement staff when he told Congress a short time ago his agency was more or less broke.

....“Now, less than three months later, without that increase, you have announced plans to increase enforcement activities,” Chaffetz wrote. “The inescapable conclusion is that your testimony to Congress was inaccurate, reflecting either an attempt to exaggerate IRS’s budget needs or a management failure in understanding the needs of your organization.”

The Utah Republican’s May 6 letter, first reported by FoxNews.com, is the latest attack by House Republicans on Koskinen’s management of the IRS since Congress launched a lengthy probe of the agency’s treatment of conservative groups. Chaffetz has been on a campaign since last October to impeach the tax collector.

FFS. These guys are still in a lather over the phony IRS scandal from three years ago? Give it up, guys: nothing happened except a very minor bit of bad judgment.

But I guess it is an election year, isn't it? And who better to go after in an election year than the IRS? Everyone hates the IRS, especially rich people who don't like the idea of enforcing the tax code. That's why Chaffetz and his fellow Republicans have been on a crusade for decades to slash the IRS budget and reduce its auditing staff.

As for Chaffetz's question, such as it is, apparently the answer is that Koskinen is mostly just replacing retiring workers with enforcement staff. Boring, isn't it?

Life at the Top Is Pretty Sweet

The top 25 hedge fund managers earned $13 billion in 2015—which made it something of a so-so year for them. But put that aside. My new favorite hedge fund manager is the guy who ranked #15 on this year's list:

Michael Platt, the founder of BlueCrest Capital Management, took home $260 million, according to Alpha. It was a difficult year for his firm, once one of the biggest hedge funds in Europe with $37 billion in investor money. He lost investors in his flagship fund 0.63 percent over the year and then told them he was throwing in the towel.

Platt's fund lost 0.63 percent and he basically shut it down in disgrace, and for this he earned a quarter of a billion dollars. Pretty sweet gig, no?

Over the weekend Donald Trump said that he's willing to consider higher tax rates on the rich, but he then clarified that he only meant higher rates than the ones in his tax plan. Since his tax plan is obviously just more buffoonery for the rubes, I understand why no one really feels like taking any of this seriously. But just in case a few of you are curious what he means, here is TPC's analysis of Trump's tax plan:

TPC figures the average gazillionaire will save $1.3 million per year under Trump's tax plan. So what Trump is saying is that he's willing to consider a plan in which the gazillionaires will only get a tax cut of, say, a million dollars per year.

Do you want percentages instead? Of course you do! Under Trump's plan—like all Republican tax plans—a middle-class worker gets a tax reduction of only 4.3 percentage points. The gazillionaires get a whopping reduction of 12.5 percentage points.

Quite the man of the people, no?

Over at the Washington Monthly, David Atkins accuses me of sustained contrarianism:

There is a growing amount of contrarian analysis these days suggesting that Americans really aren't so angry about the economy after all....Washington Monthly alum Kevin Drum hammers away at this theme again and again....In most cases, these writers are trying to use broad quantitative data about economic satisfaction to explain away what seems to be obvious on its face, which is that Sanders and Trump are both running economic populist campaigns that have resonated deeply with large and different sections of the electorate.

This is....absolutely correct. I have been doing this. And Atkins fights back with a strong case against my contrarianism, one that I've been expecting for quite a while but haven't really gotten until now:

The corollary to this argument is that it’s not economics but raw racism that is driving Trump’s success, and that Sanders’ success is a factor less of economic anger than some combination of sexism and cult of personality.

To believe these things, of course, you would have to assume that voters aren’t actually being inspired by the rhetoric and policy positions of Sanders and Trump but by other factors they’re subtly tapping into....You would, in essence, have to ignore all the qualitative data in front of you showing what people say in their own words, in favor of polling data about their generic feelings about the economy or their own current personal economic situation.

That would be a mistake.

One of the most important things to realize about economic anxiety in America today is that it is broadly independent from whether you have a job, or even whether you are doing well personally at the moment. I personally know many people who are making over $100K household income and are generally content with their employment situation personally, but are still angry about the unfairness and instability of the economy in general. Just because a college student is having a fairly good time and believes they can get a decent job coming out of school, doesn’t mean they aren’t upset and concerned about paying off tens of thousands of dollars in student loan debt. Just because a 1099 worker or independent contractor is doing OK financially now, doesn’t mean that their lack of stable health insurance and social safety net if something goes wrong isn’t a big concern to them.

Yes. Ignoring qualitative data is dangerous and dumb. If you talk to people and they tell you things, you need to pay attention. It doesn't mean you take everything they say at face value, but at the very least you have to take them seriously.

But here's the thing: this is what originally motivated my skepticism. There was tons of qualitative data suggesting a great deal of anger over economic unfairness, but the quantitative data showed nothing. Literally nothing. It's almost impossible to find any data, polling or otherwise, that suggests economic stress is significantly worse than usual.

This disconnect is precisely the thing I'm interested in. Sure, blue-collar workers are angry about the loss of manufacturing jobs. College grads are angry about high student debt. But there are always people who are angry about the economy. The question is whether there are more of them this year than usual. I'm not yet convinced there are.

What makes this worse is that every four years for my entire adult life I've been hearing this same story. Every election year, Time magazine sends Joe Klein or some other worthy out to the heartland to talk to real people, and every time they come back and write long cover stories about how angry people are. Every. Single. Election. I guess I've gotten a little jaded about it.

In any case, the reason I keep hammering on this is because I want to understand this disconnect between qualitative and quantitative assessments. If people really are angrier than usual, it ought to show up somewhere. Why doesn't it?

POSTSCRIPT: So what does account for the popularity of Bernie Sanders and Donald Trump? Here's my guess:

  • Middle-class wages have been stagnant for the past 15 years while the rich have gotten ever richer, and resentment over this really is growing.
  • In the case of Trump, there's extensive evidence that racial animus is at the heart of much of his popularity.
  • In the case of Sanders, I think it's a combination of a genuine leftward movement among young voters and an unfortunate but visceral dislike of Hillary Clinton. If someone like Obama were running again, Sanders would never have gotten any traction.

There's a lot more, of course. But if you asked me for a nickel summary, this would be it.

Politico interviewed "nearly five dozen Republicans" recently and heard a consistent message: nobody with even a trace of policy cred wants to work in a Donald Trump administration. "The A-level people, and there are not that many of them to begin with, mostly don’t want to work for Trump," said a former Bush official. "He will cut the A-level bench of available policy talent at least in half, if not more."

But not to worry. This is all part of the plan:

A source familiar with Trump’s thinking explained that the billionaire businessman was reluctant to add new layers of policy experts now, feeling it would only muddy his populist message that has been hyperfocused on illegal immigration, trade and fighting Islamic extremists.

“He doesn’t want to waste time on policy and thinks it would make him less effective on the stump,” the Trump source said. “It won’t be until after he is elected but before he’s inaugurated that he will figure out exactly what he is going to do and who he is going to try to hire.”

That's a confidence booster, isn't it? We'll all have to wait until after the election for Trump to tell us what he actually plans to do. In the meantime, he's just going to keep tossing out anti-Muslim, anti-Mexican, and anti-Chinese bombs because that seems to appeal to his fans. But once he wins, he'll be the most presidential president in the history of presidenting.

Donald Trump last week:

I’ve borrowed knowing that you can pay back with discounts. I’ve done very well with debt....Now we’re in a different situation with the country, but I would borrow knowing that if the economy crashed, you could make a deal. And if the economy was good it was good, so therefore, you can’t lose.

Donald Trump today:

It was reported in the failing New York Times and other places that I want to default on debt. You know, I'm the king of debt. I understand debt better probably than anybody....But let me just tell you, if there is a chance to buy back debt at a discount, in other words, interest rates up, and the bonds down, and you can buy debt, that’s what I'm talking about.

....But in the United States, with bonds that won't happen because in theory the market doesn't go down so that you default on debt and that's what happened. So here’s the story, just to have it corrected. If we have an opportunity where interest rates go up and you can buy debt back at a discount, I always like to be able to do that, if you can do it. But that’s all I was talking about. They have it like I'm going to go back to creditors, and I am going to renegotiate and restructure debt, it's ridiculous and they know it's ridiculous.

I'll give Trump this much: it was ridiculous and everyone knew it was ridiculous. It was pure Trump bullshittery. But here's the thing: even if you accept that this was what Trump was talking about, it's still ridiculous. The US government isn't a third party trading Treasury bonds. It's the issuer of the bonds. If interest rates go up, should the Treasury refinance? No: it should keep paying the lower interest rates on its outstanding bonds. But what if interest rates go down? The answer is still no. Let's hand the mic over to the Economist:

The interest rate on Treasury bonds is fixed. If the government issues debt during a low-rate period, that's good news. To refinance that debt in a period of higher bond yields [i.e., lower bond prices], the government would have to borrow from the market at much higher rates....Currently, most of the US's longer-term debt trades above par value because it was issued at a time when bond yields were higher. For example there is a bond with a 2030 maturity and a 6.25% coupon; it trades at 152 cents on the dollar. Would it be worth offering 155 cents on the dollar upfront, and refinancing the debt at today's lower rates? The dollar value of US debt would rise, not fall, in such circumstances.

In short, any voluntary deal with the market would require the government to pay fair value. And unless you think the Treasury bond market is mispriced (and it is the most liquid market on the planet), the government is unlikely to profit. It might be sensible for the government to alter the patterns of new Treasury issuance; borrowing long-term to lock in low rates for a generation. The Treasury has discussed the idea of refinancing illiquid bonds to improve market liquidity. But that is quite a different idea from Mr Trump's proposal; the interest savings would be trivial.

Here's the scary thing: debt really is one of the few things that Trump probably knows a bit about. It's certainly bitten him in the ass often enough. And yet he still has no idea how it works. He continues to think that the federal government is basically the same thing as a trader on the Goldman Sachs trading desk.

It's not. Whatever Trump is talking about, it won't work. Sovereign debt is sovereign debt, and it gets paid off at 100 cents on the dollar. Trump may think everyone except Trump is an idiot, but I'm pretty sure the folks at the Fed and the Treasury are already keenly aware of how to handle open market operations to maximize value for the US government. Someone at the Trump Organization needs to clue him in about how all this stuff works.

Obamacare Continues to Not Be Doomed

Veronique de Rugy predicts disaster for Obamacare once again:

The bottom line is that after slow start, insurance companies find themselves having to increase premiums a fair amount. It seems that while for now subsidies may cover the pain for individuals, they probably won’t be able to after this year, at which point insurance companies will have to stomach the full cost of their losses due to the expiration of the reinsurance and risk-corridor programs. There soon won’t be enough subsidies to offset the premium hikes.

We've heard this pretty much every year: insurers are requesting huge premium increases! We're doomed! Perhaps a bit of perspective would be helpful:

  • Insurers lowballed their Obamacare prices initially, coming in with premiums that were less costly than CBO projections. Higher prices were always inevitable.
  • Every year, insurers request big increases. They don't get them. They get moderate increases.
  • Whatever happens, this is the free market at work, not some defect in Obamacare. If high premiums are truly what conservatives care about, we can fix that any time we want. Just ask Canada how to do it—or Sweden or Germany or Spain or Japan or pretty much any other advanced country on the planet.

Life isn't perfect. Obamacare isn't perfect. Health care is an expensive service, and health care insurance is expensive too. But so far Obamacare has done a pretty good job of keeping costs reasonably well contained. I'd wait until the end of the year before yet again declaring that it's a failure and yet again being wrong.