Donald Trump ran on the promise to make America great again. Though hardly central to that promise, tax reform has been presented as part of the path back to such greatness, however that greatness may be defined. Unfortunately, perhaps due to the President's populist urges, perhaps due to pressure brought to bear on GOP legislators by wealthy donors, perhaps due to mere desperation to pass something, tax reform has morphed into little more than supply side-style tax cuts that once again make the dubious promise to pay for themselves through the enhanced economic growth they are expected to unleash. That is not a path to greatness. In fact, it is almost certain to hasten our decline as the promised growth turns out to be a mirage and budget deficits instead balloon to even more dangerous levels.
The reasons the proposed cuts are so ill-advised are twofold. First, growth expected as a result of tax cuts is premised on the belief that lack of capital is the cause of our anemic and uneven economic performance. It is not. Quite simply, the U.S. economy has unprecedented cash at its disposal for investment purposes. The challenge is not finding investment capital, it is finding worthwhile places to invest it. As it is, as of last year, U.S. companies held over $1.9 trillion in cash domestically, in addition to the $2.5 trillion they hold overseas. Furthermore, investors hold another $2.66 trillion in essentially interest-free money market accounts, while banks have another $2.15 in excess capital residing at the Federal Reserve. In all, this amounts to more than $9.2 trillion, $6.71 trillion of which sits within our shores, available to fund economic growth. That this cash is sitting in accounts that essentially pay zero interest should suffice as proof that businesses cannot find better uses for it. A recent show of hands at a gathering of CEOs proved as much when only a smattering of hands went up when asked who expected to increase capital investment if tax cuts became law, perplexing White House Chief Economic Advisor Gary Cohn.
This is borne out elsewhere in any discussion one has with corporations, venture capitalists or private equity investors, who uniformly report that the most difficult task they have is finding worthwhile uses for their cash. The corollary to this story comes from startups and businesses who repeatedly state that finding cash is the least of their challenges. In fact, nearly any viable small to medium-sized business will speak of the steady stream of investors offering to acquire them or take them private. All of which exposes the fallacy behind any of the current tax proposals. Far from fueling growth, they are likely to simply fuel inflation, asset bubbles and eventually, higher interest rates that will choke, rather than fuel, economic growth.
Worse yet, any such strangling of our financial position could not come at a more dangerous time for the U.S. economy, which, already facing record levels of public debt and the Social Security and Medicare obligations for a wave of retiring baby boomers, finds itself competing with an ascendant China that will control much of the debt we owe. That our greatest economic rival will not only hold an increasingly strong global economic position, but also great sway over our ability to finance our debt, is likely to bring back the specter of 1970's style stagflation, where growth is impeded as prices rise.
Now is not the time to reduce taxes in the misbegotten belief that it will fuel future growth. Go ahead and encourage the return of overseas cash by offering a temporary tax amnesty, but we should not risk the financial future of the United States by pursuing tax policies that are questionable at best and dangerous at worst. We have been lulled into a false sense of security by artificially low interest rates resulting from the Federal Reserve's quantitative easing. However, the day draws nearer when such schemes will no longer be able to keep market forces at bay and interest rates will once again accurately reflect faith in our willingness and ability to meet our debt obligations. Given our record of fiscal irresponsibility the past few decades, we can expect that faith to be severely tested. As of this writing, the U.S. is still seen as the world's safest haven for investment, but once that faith teeters, we are likely to find ourselves no longer in control of our economic destiny as those who hold our debt will determine how much we'll be allowed to borrow and at what rates.
A world where Russia manipulates our elections while China holds the strings to our finances hardly sounds like the recipe for greatness, because it is not. It is a recipe for disaster that threatens our sovereignty as no foreign invader ever could. We should not - must not - give in to desires to deliver a political victory that ignores the long-term economic, political and human cost such poorly conceived tax policy would deliver, lest we want this era to be central in historians’ search for the inflection point that signaled the decline of the United States. It is that serious. The time to act is now and it is time to say enough. Let this be the moment that fiscal responsibility returns to the U.S. economy.
11/19/2017
Millennials: Love ‘Em or Hate ‘Em, I Love Them
There are two kinds of people in this world – those who believe there are two kinds of people, and those who don’t. I am among the former, and so, I believe there are two kinds of people when it comes to Millennials – those who love them, and those who don’t. Again, I am among the former.
Not sure what it is about this particular generation that generates such angst, but it does. Conversations about them are like old Vaudeville comedy routines – “and how about those Millennials?” The challenge is in guessing which direction that conversation will lead. One person will complain about the work hours they keep, the next will laud them for their work ethic. How’s one to know what to think?
Well, here’s what I think: On whole, Millennials work harder at everything than we (Boomers) worked at anything.
Think about it. When we were twelve, baseball meant fifteen Little League games at local schoolyards spread over 6-8 weeks, with maybe a practice thrown in on Saturday. The season began when it stopped snowing and ended before it interfered with Memorial Day picnics. Today, baseball means 50-60 games (more if one’s in their teens) that begin in March and run well into the summer. Vacations revolve around where the tournaments are. Team workouts begin in winter and players often work with private instructors to hone their craft. The story is similar for basketball, volleyball, soccer, golf or any manner of athletic endeavor.
And that’s just sports. Today’s young adults also spent more time taking high school courses that many of us Boomers passed up in college. To paraphrase an old U.S. Army slogan, thanks to everything from Advanced Placement courses in calculus, chemistry, physics and writing to traveling debate and robotics teams, Millennials have done more by age twenty than most people do their whole lives.
Yes, they were brought up with participation trophies and they resist set work hours, but as a Millennial recently stated to an audience of job-seeking Boomers, perhaps that’s because those are the things we longed for. That’s another thing to think about – do we not all prefer flexibility in our work lives in order to attend to life’s needs? Part of that is due to the workplace catching up to the reality of dual-income families who require time to take kids to the doctor, stop by a school or deal with life’s everyday challenges. Millennials were not only the drivers behind that evolution, but were witnesses to its implementation. Should we be surprised they see workplace flexibility as a necessity, if not a birthright? Yes, Millennials may not be at their desks from 8 to 5, but they are the ones working on their laptops Saturdays at Starbucks and are never out-of-touch. The schedule may be lax, the effort is not.
Even as the participation trophy generation, Millennials may have a thing or two to teach us. Aren’t we learning that positive workplace environments that offer reinforcement rather than retribution are more effective in furthering organizational objectives? We have recognized the type of work environment we wish for and have simply adapted it to our child-rearing. Far from creating monsters, we have prepared them for a lifetime of effective leadership.
And none of this even takes into account that, by and large, Millennials have been fighting our war on terror. From Iraq and Afghanistan to Libya and Niger, this generation has proven itself in ways those of us who came of age after Vietnam can never claim. Yes, they may be soft when it comes to uncomfortable opinions on college campuses, but on whole these are not soft people.
So, count me among those who love ‘em. Lord knows, I'd love to have been one.
Not sure what it is about this particular generation that generates such angst, but it does. Conversations about them are like old Vaudeville comedy routines – “and how about those Millennials?” The challenge is in guessing which direction that conversation will lead. One person will complain about the work hours they keep, the next will laud them for their work ethic. How’s one to know what to think?
Well, here’s what I think: On whole, Millennials work harder at everything than we (Boomers) worked at anything.
Think about it. When we were twelve, baseball meant fifteen Little League games at local schoolyards spread over 6-8 weeks, with maybe a practice thrown in on Saturday. The season began when it stopped snowing and ended before it interfered with Memorial Day picnics. Today, baseball means 50-60 games (more if one’s in their teens) that begin in March and run well into the summer. Vacations revolve around where the tournaments are. Team workouts begin in winter and players often work with private instructors to hone their craft. The story is similar for basketball, volleyball, soccer, golf or any manner of athletic endeavor.
And that’s just sports. Today’s young adults also spent more time taking high school courses that many of us Boomers passed up in college. To paraphrase an old U.S. Army slogan, thanks to everything from Advanced Placement courses in calculus, chemistry, physics and writing to traveling debate and robotics teams, Millennials have done more by age twenty than most people do their whole lives.
Yes, they were brought up with participation trophies and they resist set work hours, but as a Millennial recently stated to an audience of job-seeking Boomers, perhaps that’s because those are the things we longed for. That’s another thing to think about – do we not all prefer flexibility in our work lives in order to attend to life’s needs? Part of that is due to the workplace catching up to the reality of dual-income families who require time to take kids to the doctor, stop by a school or deal with life’s everyday challenges. Millennials were not only the drivers behind that evolution, but were witnesses to its implementation. Should we be surprised they see workplace flexibility as a necessity, if not a birthright? Yes, Millennials may not be at their desks from 8 to 5, but they are the ones working on their laptops Saturdays at Starbucks and are never out-of-touch. The schedule may be lax, the effort is not.
Even as the participation trophy generation, Millennials may have a thing or two to teach us. Aren’t we learning that positive workplace environments that offer reinforcement rather than retribution are more effective in furthering organizational objectives? We have recognized the type of work environment we wish for and have simply adapted it to our child-rearing. Far from creating monsters, we have prepared them for a lifetime of effective leadership.
And none of this even takes into account that, by and large, Millennials have been fighting our war on terror. From Iraq and Afghanistan to Libya and Niger, this generation has proven itself in ways those of us who came of age after Vietnam can never claim. Yes, they may be soft when it comes to uncomfortable opinions on college campuses, but on whole these are not soft people.
So, count me among those who love ‘em. Lord knows, I'd love to have been one.
11/12/2017
There's Nothing Manly About Immature Retorts
Last week, the Cincinnati Bengals' AJ Green justified punching Jacksonville Jaguars defensive back Jalen Ramsey on grounds that he had to set an example for his young son. That sentiment was backed up by an ESPN anchor, who agreed that anyone disrespected as AJ was needs to defend his honor. Today, we have White House spokesperson Kellyanne Conway justifying the President's childish tweet directed at North Korea's Kim Jong Un, asking why he'd call the President "old" when the President wouldn't call him "short and fat," by claiming, "That was just the president responding the way that he does when someone insulted him first."
We've seen similar defenses before. In 2004, another batch of ESPN commentators defended Indiana Pacer Ron Artest's charge into the stands to deliver retribution for a tossed beverage, saying that any "man" was not only justified, but required under some unwritten code, to defend his honor.
Let's be clear. These men and their defenders have it completely wrong. Strong, secure adults do not feel the need to respond to insults. In fact, the sign of strength and maturity is to do just the opposite and turn away. Unfortunately, this macho mindset has plagued us for too long and has been responsible for everything from gang wars to world wars. And if such thinking is irresponsible when the projectile in question is a carbonated beverage, it is clearly far more serious when the potential projectile could be nuclear-tipped.
It doesn’t have to be this way. In "The Better Angels of Our Nature," about the decline in violence over the course of human history, author Steven Pinker compares the outcomes of the 1914 killing of Archduke Ferdinand, setting off a chain of events that led to WWI and millions of unnecessary deaths, with the Cuban Missile Crisis, which ended without a single casualty. One factor in the different outcomes was that John F. Kennedy had recently read a history of WWI entitled "The Guns of August," with its lesson on how "personal complexes of inferiority and grandeur" led to an escalating game of one upsmanship that resulted in calamity. Thus, against the advice of every advisor and general in the room, he sought to provide Soviet Premier Nikita Kruschev a way to save face by trading removal of obsolete U.S. missiles in Turkey in exchange for complete removal of Soviet missiles in Cuba.
Such is how studying history can avoid fatal reruns. Unfortunately, from our playing fields to our highest office, our society is brimming with emotionally-stunted macho men who refuse to study history, let alone learn its lessons. Instead, they seek to risk the safety of all those around in the name of personal “honor.” On a street corner, the risk is to innocent passersby. On a nuclear-armed world stage, the risk is to humanity itself.
Perhaps we’d be well-served to recall the childhood lesson about sticks and stones and how words can never hurt us – unless we let them. If a child can learn that lesson, then perhaps so can grown men.
Why would Kim Jong-un insult me by calling me "old," when I would NEVER call him "short and fat?" Oh well, I try so hard to be his friend - and maybe someday that will happen!— Donald J. Trump (@realDonaldTrump) November 12, 2017
We've seen similar defenses before. In 2004, another batch of ESPN commentators defended Indiana Pacer Ron Artest's charge into the stands to deliver retribution for a tossed beverage, saying that any "man" was not only justified, but required under some unwritten code, to defend his honor.
Let's be clear. These men and their defenders have it completely wrong. Strong, secure adults do not feel the need to respond to insults. In fact, the sign of strength and maturity is to do just the opposite and turn away. Unfortunately, this macho mindset has plagued us for too long and has been responsible for everything from gang wars to world wars. And if such thinking is irresponsible when the projectile in question is a carbonated beverage, it is clearly far more serious when the potential projectile could be nuclear-tipped.
It doesn’t have to be this way. In "The Better Angels of Our Nature," about the decline in violence over the course of human history, author Steven Pinker compares the outcomes of the 1914 killing of Archduke Ferdinand, setting off a chain of events that led to WWI and millions of unnecessary deaths, with the Cuban Missile Crisis, which ended without a single casualty. One factor in the different outcomes was that John F. Kennedy had recently read a history of WWI entitled "The Guns of August," with its lesson on how "personal complexes of inferiority and grandeur" led to an escalating game of one upsmanship that resulted in calamity. Thus, against the advice of every advisor and general in the room, he sought to provide Soviet Premier Nikita Kruschev a way to save face by trading removal of obsolete U.S. missiles in Turkey in exchange for complete removal of Soviet missiles in Cuba.
Such is how studying history can avoid fatal reruns. Unfortunately, from our playing fields to our highest office, our society is brimming with emotionally-stunted macho men who refuse to study history, let alone learn its lessons. Instead, they seek to risk the safety of all those around in the name of personal “honor.” On a street corner, the risk is to innocent passersby. On a nuclear-armed world stage, the risk is to humanity itself.
Perhaps we’d be well-served to recall the childhood lesson about sticks and stones and how words can never hurt us – unless we let them. If a child can learn that lesson, then perhaps so can grown men.
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