Thursday, January 30, 2020

How Contagious Is It?

The World Health Organization has officially declared that the coronavirus outbreak emanating from China is a global emergency.

Tedros Adhanom Ghebreyesus, WHO director-general, told a news conference in Geneva that recent weeks have witnessed an unprecedented outbreak which has been met by an unprecedented response.
“Let me be clear, this declaration is not a vote of no confidence in China,” he said. “Our greatest concern is the potential for the virus to spread to countries with weaker health systems.”
The declaration of a global emergency triggers recommendations to all countries. It is aimed at preventing or reducing cross-border spread of disease.
Tedros said the WHO was not recommending limiting trade or travel to China due to the outbreak, however.

The WHO may not yet be recommending that travel be limited but it is already taking place. Russia a closed their borders to anyone traveling from China today. Hong Kong did the same three days ago. Other bordering countries such as Mongolia and North Korea have done the same.

Major airlines, including American, United, British Air, Air Canada, KLM and others are no longer flying routes to China.

A 6,000 passenger cruise ship docking at Civitavecchia, Italy was prohibited from having any passengers disembark the ship when a woman from Hong Kong showed signs of the virus. Later tests showed that it was a case of H1N1 flu and the embargo was lifted.

Venues all of China in which large groups of people congregate have closed. Disneyland Shanghai is closed. All 70,000 movie theaters in China are closed. Starbucks has closed 2,000 stores in the country.

In the meantime, China has embarked on a massive quarantine program involving 50 million people.

The human impact of the virus is enormous but if the outbreak of the virus cannot be contained the economic impact will soon add another dimension to the human suffering.

Food shortages are already starting to appear in Wuhan which is the epicenter of the outbreak. The city of 11 million is a virtual ghost town with no activity on the streets. Food is not being delivered and store shelves are not being stocked. Factories are not running. Storefronts are not open. The economic engine of the city is grinding away and it will soon be as big a risk to the citizenry as the virus is.

We often don't realize the precarious perch that our lives are built on. A lot of that is based on the confidence that underlies our economic system. It doesn't take much to disrupt that equilibrium and the confidence that goes with it. When people don't have the confidence to do business, shop, travel and interact, the economy quickly tanks.

For example, look at what has occurred to Hong Kong's GDP since the protests started.

And the protests are small potatoes in comparison to what is going on in China and Hong Kong right now.

We can only hope that one of China's top public health experts is correct when he predicts that the virus outbreak will peak within the next week to ten days.

“I estimate that it will reach its peak in around the next week or 10 days, after that there will be no more major increases,” said Zhong Nanshan, the respiratory disease scientist who played the pivotal role in China’s fight against the severe acute respiratory syndrome (Sars) coronavirus epidemic in 2002-03.

For now, the reported cases continue to increase but the good news is that the rate of increase has slowed the last few days as reported by the The Sydney Morning Herald.

Although more than 1700 new cases were reported on Thursday, bringing the global total to 7700 confirmed cases, the new figure is only a 30 per cent increase on Wednesday's total of 6000 cases.
In comparison, the number of cases confirmed globally increased by about 55 per cent on Saturday and Sunday last week.
It then rose a record 67 per cent on Tuesday this week before the rate of increase began to fall.

Of course, no one knows if this data is reliable. How many cases are there that are not being reported? How much can the Chinese be relied on to be completely truthful on what is the real story?

The key statistic that I want to keep my eye on are the reported deaths from the virus. Those numbers will undoubtedly tell us a lot more about the effects this virus will have on mankind.

After all, if we were to plot the number of cases of the flu in the United States each year we would undoubtedly see a scary graph of incidence.

For example, the CDC estimates that we have seen an annual range of  9.3 million-45 million cases of flu each year looking at the last nine years. This resulted in from 12,000 to 61,000 deaths. 2011/12 had the lowest level of flu cases. 2017/18 had the highest level.

The death rate from the flu is around 1 in 800 cases. More importantly, most people have had the flu and recovered, so it does not produce the fear that an unknown virus can cause.

So far, the death rate from the coronavirus is running at around 1 in every 50 cases (2%). Of course, that assumes the denominator (the number of total cases) is as accurate as the count on the deaths (which I assume is more accurate). That is a lot scarier than a normal case of the flu.

The Johns Hopkins Center for Health Security did an exercise last October in which it modeled the effects of a virulent virus that resulted in a worldwide pandemic. It was a sobering exercise to which we have to hope and pray we never see play out.

However, the beginnings of this viral outbreak in China matched the projections of that exercise a little too close for my comfort. It does clearly show the exponential compounding effects that can occur if a virulent virus is allowed to spread among humans in an unabated fashion.

If the 7,700 cases (and 171 deaths) as of today, that were reported in The Sydney Morning Herald, are accurate we are seeing a slowing of the spread of the virus compared to that cataclysmic Hopkins exercise. I would suggest paying attention to the actual numbers compared to the projection over the next week to get a better sense of where this is going.


The number of cases outside of China will also be particularly important. That will be vitally important to contain the virus and its potential global economic effects.

Notice how important that is because the Johns Hopkins projection that was done for a global pandemic quickly gets to 57 million cases worldwide and over 1 million deaths by February 21 with a 2% death rate assumption.

The bottom line is this. Potential pandemics are nothing to trifle with.

There is a reason that China has acted so aggressively in responding to the virus.

It is already clear that the economic cost of the virus outbreak in China will be significant.

The bigger question is how much of that economic contagion will spread to the rest of the world even if the virus is contained?

China has been leading the world's economy for the last 15 years. A good portion of global growth over that period was due to what has been going on in China.

It used to said that "when the United States sneezes the rest of the world catches a cold."

That may still be true but it may now be true of China as well.

The growth of China's economy and the sheer size of its population means that anything that occurs in China today will invariably have reverberations around the world.

Tuomas Malinen of GnS Economics is already predicting in an article in ZeroHedge that it is probable that the coronavirus will push China into recession this year. If that occurs it will undoubtedly affect the export-and-China dependent Eurozone next. This will then put significant pressure on many European banks that have weak balance sheets.

The final question then is can the United States avoid the economic contagion that might be on our way from China (and Europe) even if the viral contagion can be contained?

The year 2020 has barely started and we have an impeachment trial going on, a potential pandemic developing and an avowed Socialist staring to pull away in the Democrat Presidential race according to recent polls.

Is crazy contagious as well?

Tuesday, January 28, 2020

Middle Class Joe

A continuing theme that the Democrats have used against Donald Trump since he was elected is that he is using his office to advance his personal goals and financial interests. They consistently say he  is putting his interests above the interests of the  United States of America.

What is their core argument on impeachment? He pressured Ukraine and withheld foreign aid because he wanted them to investigate his political rival Joe Biden. They completely ignore the facts that corruption has been rampant in Ukraine for years and the suspicious fact that  his son, Hunter Biden, was paid millions of dollars as board member in Ukraine at the same time that Vice President Biden was responsible for overseeing U.S. aid to Ukraine in the Obama administration.

It has also been reported that Hunter Biden leveraged his father's position for business deals with many other countries that put a lot of money in his pocket. The same was true for other members of the Biden family. Hunter Biden also got seat on the Amtrak board. His experience to do that--"he had spent a lot of time on Amtrak trains".

Democrats shrug their shoulders and say it is just nepotism. It is just the way it is. Think for a minute if Donald Trump's sons announced a deal for a new real estate development in Shanghai, Moscow or Kiev? Would that just be called nepotism? Have the Trump's been able to do any significant deals since their father became President? Absolutely not because they would be put under the media microscope on anything they did. The double standard that applies as between Trump and Biden is outrageous.

I have previously documented the fact that Forbes recently reported that Trump has lost an estimated $1.4 billion in net worth since he became President. This is despite the fact that most Americans have gotten a lot better off since he became President.

Donald Trump did not need to be President in order to live a spectacular lifestyle. He already enjoyed the luxuries that most occupants of The White House only experience for the first time when they live there. If Trump ran for President because he wanted to enrich himself or burnish his brand, he made a very bad decision.

Let's compare Trump with "Middle Class Joe" Biden and see who has really enriched themselves (and their families) from public service.

Joe Biden was first sworn is as a United States Senator in 1973 at the age of 30. He held that office for 36 years before becoming Vice President under Barack Obama for eight years ending in 2017. Joe Biden did nothing but receive a federal government paycheck for 44 years.

Biden has always tried to portray himself as the blue collar, working man's friend with humble roots from Scranton, Pennsylvania. He likes to call himself "Middle Class Joe".

You might wonder how this man of humble origins, who also did nothing but take a public paycheck for 44 years fared in his first two years in the private sector?

I was curious so I recently took a look at Biden's tax returns for the last several years. His 2015 tax return can be found here.

Biden reported total income of $396,552 on his joint return with his wife Jill in his last year as Vice President in 2016.

In 2017, in Joe's first year in the private sector in 45 years, Joe and Jill reported $11,037,751 in total income. Not bad work if you can find it. It must have been due to the Trump economy.

In 2018, the Biden's income decreased to $4,580,459. I am guessing that Joe scaled back his speaking engagements, lobbying and consulting gigs as he already had his eye on announcing his Presidential campaign. After all, if you are going to run as "Middle Class Joe" it probably does not make sense to have a tax return showing an eight-figure income. Keep it to seven-figures or less.

How did Joe come into all of this income? Who paid him? What did he do?

The bulk of it is somewhat of a mystery based on his tax return filings. He used some intermediary corporations to hide the answers. The financial disclosure form he was required to file when he announced is candidacy for President answers some questions, but not all.

Biden clearly was getting paid for speeches. Look no further than what former Presidents like Clinton, Bush and Obama have gotten paid for an hour at the podium to know that it pays well.

Biden's campaign states that he has given less than 50 paid speeches since he left office. However, even if we assume he was getting $150,000 per speech, that would only amount to about half of the income that he has reported on his tax returns since he left office. His financial disclosure indicates that he received $1 million in payments for book tour events in 2018 alone.

Biden's tax returns do not provide the information as to the source of most of his income. That is because Biden set up two limited liability companies (S corporations) to shield the sources of his income. That structure also saves Biden taxes. This is how one report described how that works to Biden's advantage.

The Bidens have used their home state’s financial privacy laws to shield his income from public view, by setting up two tax-and transparency-avoidance vehicles known as S corporations.
The money Biden made from book deals and speeches flowed into the S corporations and was then remitted to Biden and his wife as “distributions” rather than salary. When money is funneled through an S corporation, the recipient doesn’t owe Social Security or Medicare taxes on it, nor can the source of revenue be traced. (In addition to the distributions, the Bidens drew relatively small salaries from the S Corporations: under half a million dollars, for which they owed self-employment taxes.)

Biden reported a $145,883 in salary as well as $9,490,857 in trade or business income from CelticCapri Corporation in 2017. He reported $100,000 in salary as well as $557,882 in trade or business income from Giacoppa Corporation.

Biden also reported a salary on his tax returns from the University of Pennsylvania for both 2017 ($371,159) and 2018 ($409,368). Biden is reported to be the Benjamin Franklin Presidential Practices professor at Penn.

The National Review reported that Biden is receiving this salary, that is two-and-a-half times the average Penn professor, despite the fact that he is not even teaching any classes. What did Biden do for the money? The Philadelphia Inquirer reported that is was “for a vaguely defined role that involved no regular classes and around a dozen public appearances on campus, mostly in big, ticketed events.”

Penn might have actually gotten a good deal compared to what other colleges and universities paid Biden for speeches. We may not be able to get info on Biden's speaking fees from his tax returns but some universities have disclosed what they paid Biden in their public filings.

The University of Buffalo paid Biden $200,000 for a 30 minute speech and a 45 minute Q&A in October, 2018. Other speaking fees from educational institutions in 2017/2018 that have been disclosed---Brown University ($92,642), Long Island University ($100,000), Southern Connecticut State University ($124,515), Vanderbilt University ($180,000) and Drew University ($190,000).

One humorous item I found in the 2017 tax return filing was that an amended return had to be filed over a year after the original return. The original return did not include Biden's income as the Vice President for the first 20 days of the year.

This is the exact disclosure in the amended return on why that was necessary.

They are saying that the U.S. Government did not send Biden a W-2? Seriously?

I think it is more likely Joe lost it.

However, the blame for failing to include this income on the return seems to fall more on the tax preparer. When I prepared and reviewed tax returns for a living I always had the prior year's return in front of me to compare to the current information. If something was on last year's return but missing from the current data my first question was always to ask, "What changed?"

One area Biden has improved on with his higher income is his charitable giving. Biden was famous in the past for his penurious charitable contributions that usually amounted to no more than 1%-2% of his income.

In 2016, Biden claimed a deduction for charitable contributions on his tax return that amounted to just 1.5% of his income. Since he left the White House his giving increased to a little over 8% in 2017 and 2018. Do I dare wonder how much of that increase was due to the fact that Biden knew he was going to run for President and knew that he would be releasing the information? I am not going to do that.

I also don't think it is fair to just make an example of Biden and the tremendous income and wealth that has come his way since he left office.

There is a well-established pattern for a number of public office holders in this regard. Look no further than Bill and Hillary Clinton or Barack and Michelle Obama. The Obama's just bought a $11.7 million summer home on Martha's Vineyard. I have chronicled the income the Clintons raked in a past BeeLine blog post.

It is no different with others who cash in with books, board seats, speeches, consulting or lobbying jobs. It is not just Democrats. Look no further than Republicans like George W. Bush, Paul Ryan, Newt Gingrich, John Boehner, John Kasich or Jason Chaffetz . Or CIA Director John Brennan or FBI Director James Comey. They have all cashed in on some form or fashion on their government service. Most recently, John Bolton wants to cash in with a "tell-all" book.

Biden's former boss, Barack Obama, was known for telling wealthier Americans that they should pay more in taxes. He famously stated in a 2016 speech that "you didn't build that" income and wealth by yourself.

"If you’ve got a business, you didn’t build that. Somebody else made that happen," 

Obama said that a lot of the success  of those who were better off was due to the American system of education, infrastructure and others who helped them along the way. Therefore, they should be willing to pay more in taxes.

This is a particularly popular talking point with Elizabeth Warren  and Bernie Sanders as well.

However, if you think about it, there is no one that argument applies to more than a former public official that goes into the private sector and capitalizes on their name, their contacts and their experience than people like Joe Biden, Barack Obama, Hillary Clinton, Paul Ryan or John Brennan.

In each case, their entire personal career or brand equity has been earned in a public sector job that the American taxpayers paid for. For these people it is really true that "somebody else made that happen." For most, everything that they earn after leaving the public sector would not have occurred but for the taxpayers funding that prior experience.

The Democrats seem to be desperate to raise more in taxes.

My suggestion is that we start first with a surtax on any earnings of former elected or Senate-confirmed executive branch appointments wherein a percentage of post-public sector earned income would be subject to an income tax surcharge.

That surcharge would be equal to 1% for each year of federal service. For example, Biden had 44 years of federal service before he started writing books and giving speeches. Under this proposal he would be subject to a 44% surcharge on this income.

Doesn't it seem fair that the taxpayers should get some return on the investment they made in Joe Biden over the years that allowed him to be so much in demand by the private sector?

After all, "the somebody else that made it happen" were the American taxpayers.

I can't think of anything that would be fairer when it comes to taxes.

How could "Middle Class Joe" object?

Sunday, January 26, 2020

Coronavirus and China

There is good and bad news about the coronavirus epidemic in China.

The bad news is that this appears to be a particularly virulent virus strain. It is also centered in Wuhan, China which is the home to 11 million people. We are talking about a city that is larger than any in the United States but chances are that 99% of Americans did not even know it existed until last week.

The virus also apparently has a long incubation period (14+ days) before any symptoms manifest themselves. In the meantime, the subject is contagious even if they do not know they are sick. In that 11 million people live in Wuhan it only takes a small percentage of those people to travel elsewhere for the virus to spread.

We are already seeing that effect as we see the confirmed cases spread out from Hubei province in China where Wuhan is located.

* As of Jan. 27 the death toll in China had risen to 80, with 76 in Hubei province, authorities reported. Another 2,744 people in China had been infected: As of the end of Jan. 26, there were 1,423 confirmed cases in Hubei province.
* Thailand and Hong Kong have each reported eight cases of infection; the United States and Macau have five each; Taiwan, Australia, Singapore and Malaysia each have reported four; France and Japan three each; Vietnam and South Korea two apiece, and one each in Canada and Nepal.
* No fatalities have been reported outside China.

The five suspected cases in the United States are in California (3), Washington state and Chicago,

The most effective way to stop an outbreak of a virus such as this one is to aggressively isolate and quarantine those that are ill so as to not infect other people. They need to be identified, treated aggressively by medical professionals, and isolated.

It always seems that new virus strains originate in China. Each year's flu strains are expected to start there.

A lot of that seems to be due to the massive number of people in China and the fact that there is often more daily exposure to animals in China compared to Western countries. Many of these viruses originate in animals and mutate to humans. That is why we have heard of the swine flu, bird flu and the like in the past.

Ground zero for the coronavirus is reportedly a seafood market in central Wushan in which unauthorized animals were also sold. There have been some reports that the virus has been traced to bats that were eaten with soup in that market.

I can't believe that I missed eating that when I was in China a year ago!

More troubling are reports that this virus may have escaped from a Chinese biolab that is located in Wuhan and was involved in studying the highest risk pathogens in the world.

U.S. scientists were worried about the risks that pathogens like this could escape from facilities like this one as evidenced by this article in The Scientist back in 2015.

As a result, the United States ceased funding any of this "gain-of-function" research back in 2013 because it determined the risk of creating a pandemic was much greater than any information gained from the research.

It is worthwhile to note that at that time this decision was made there was research being done in the U.S. on an engineered coronavirus. Note as well where the surface protein came for that virus.

Ralph Baric, an infectious-disease researcher at the University of North Carolina at Chapel Hill, last week (November 9) published a study on his team’s efforts to engineer a virus with the surface protein of the SHC014 coronavirus, found in horseshoe bats in China, and the backbone of to one that causes human-like severe acute respiratory syndrome (SARS) in mice. The hybrid virus could infect human airway cells and caused disease in mice, according to the team’s results, which were published in Nature Medicine.

One more piece of bad news is that fact that the Chinese Communists are not known to be the most transparent government on the planet. If they are admitting to 2,700 cases how many are we not being informed about?

Enough bad news.

What is the good news?

If there is any place on earth where a quarantine and mass mobilization can be carried out to combat this disease it is in China where the totalitarian government has total control of the population.

China has already banned all travel in and out of Wuhan. The city has become a ghost town. They have established quarantines in a dozen other cities cities as well such that some 50 million people are locked down.

China also has announced that they are going to build two hospitals each with over 1,000 beds in Wuhan.

What is in incredible is the Chinese say that these hospitals will be able to accept patients in a couple of weeks!

How is that possible?

Here is a photo of the site work on the first hospital taken on January 24..

Credit: Reuters

China's Wuhan city, the centre of the outbreak of the new coronavirus, will build a second dedicated hospital to treat patients.
Construction has already started on the first facility, with enough space for 1,000 patients, which is expected to be completed by 3 February.
The second, which is designed to have 1,300 beds, is due to be finished within three weeks. 
This may seem like an unrealistic time frame, however, China has a history of quickly building hospitals at times of crisis.
During the SARS outbreak in 2003, 7,000 people worked day and night in Beijing, taking just seven days to build the Xiaotangshan facility.  

The Chinese are known for being able to construct buildings and bridges very quickly.

Graham Allison in his book, “Destined for War: Can America and China Escape Thucydides’s Trap?" has some incredible examples of Chinese construction capabilities.

"Between 2011 and 2013 China both produced and used more cement than did the US in the entire twentieth century. In 2011, a Chinese construction firm built a 30-story skyscraper in just 15 days. Three years later, another firm built a 57-story skyscraper in 19 days” 

Allison also observed that it took nearly four years for a bridge near his office at Harvard University that crossed the Charles River to be replaced. The Chinese took only 43 hours to replace a substantially larger 1,300 ton bridge in China in November, 2015.

It just goes to show you have much you can accomplish when the government controls the entire labor supply and you don't need to worry about governmental regulations and permits and dealing with agencies like the EPA, OSHA, HHS and CMS to approve your projects.

Let's hope that China can control the spread of the virus. It is a significant challenge considering the population density in that country and the fact that this outbreak began over the Lunar New Year holiday when many people are traveling.

If the live in the United States some additional good news is that the 2019 Global Health Security Index ranks it as the best prepared in the world to deal with a pandemic although it found that the no country was fully prepared. These are the ten countries that are most prepared.

China ranks 51st out of 195 countries in the index.

If you want to be best prepared personally I thought this was a good article from a reporter who covered the SARS epidemic in China in 2003. It is has some good tips and precautions that you can use to protect yourself. These make good sense even if we are only talking about avoiding seasonal flu or colds.

Let's hope and pray that China and other countries around the world can keep the virus in check.

In the meantime, stay safe and be healthy.

Thursday, January 23, 2020

This and That

A little diversion from the impeachment trial since it appears not many people are paying much attention anyway.

The impeachment trial is only getting about half the viewers that the Brett Kavanaugh Supreme Court confirmation hearings did.

However, most of the viewers seem to be keeping up to date on the trial on Fox News Channel rather than on the other cable news networks. I thought this was something that Democrats across the country have been waiting to see for three years? Why are they not tuning in on their favorite cable news channels?

Another question---how does CNN stay in business with these ratings?

Cable News Ratings
Wednesday, January 22, 2020

Perhaps the following factoids I have come across recently will be a little more interesting than what is going on in the U.S. Senate right now.

Women in the Workforce

Women now make up 50.4% of the workers in non-farm payroll jobs.

Industry sector where women make up the highest percentage of employment.

Education and health services    77.4%
Government                                57.9%

Lowest percentages.

Construction                               13.1%
Mining and Logging                   13.8%

The Social Class Gap in Marriage

There is a lot of talk about the wealth and income class divide in the country but you don't hear anyone speaking about the social class gap in marriage. Marriage provides many benefits to society but an important one is that it is provides significant economic benefits to those in the union. Two cannot live as cheaply as one but two living in one household provides significant cost efficiencies.

Another reason that those with less education find it harder to make ends meet is that there is a widening gap in those who are married based on education levels. The gap is also widening with time.

Who is talking about this?


Space, Mountain and Sea

More humans have been in space than have summited Mt. Everest without oxygen or sailed non-stop around the world solo.

The NBA Proves That Incentives Drive Results

Incentives drive results. It is one absolute when considering human behavior.

Human beings respond to incentives. We quickly understand what is in our interest and what is not, and we respond accordingly. We will act in accordance with what is in our best interest. Period.

Fro example, look at this change in shot selection in the NBA (top 200 shot locations) between 2001-2002 and today.

You provide a 50% incentive for a shot from behind the arc and see what happens. The result--you either fire away from outside or take the layup or short bunny shot underneath. There is almost nothing in between.


Mike Bloomberg's Money

To put that in perspective, this is what the other leading Democrat candidates have spent on tv advertising thus far in this primary election cycle.

Berne Sanders        $6.9 million
Joe Biden                $2.0 million
Elizabeth Warren    $1.8 million

In other words, Bloomberg will spend more on that one 60 second ad than Sanders, Biden and Warren have spent on all their tv ads COMBINED thus far.

Bloomberg has already spent over $200 million on tv advertising. He also is funding a campaign staff that employs more than 1,000.

Where does he stand in recent polls? All of these surveys were released last week.

Survey USA                9%
Economist/YouGov     5%
The Hill/Harris X        7%
Morning Consult         8%

How can Adam Schiff and the other Democrat House Managers compete with facts like this (and that)?

Tuesday, January 21, 2020 Davos

The Senate impeachment trial of President Donald Trump began today. A big part of the Democrat strategy in doing all of this was clearly to create a distraction.

Democrats needed to create another narrative to try to convince voters that Trump is unfit and unworthy to be the President of the United States.

Quite frankly, they have to be very uncomfortable with the success he has had.

I wrote just before Trump was sworn in that, despite what the Democrats said, they were not really fearful that Trump would be a failure as President. There was one thing the Democrats feared the most about Donald Trump.

However, you would never hear anyone admit it.

"Their greatest fear is that Trump will be successful."

If their intent was to diminish Donald Trump by impeachment, and attempting to paralyze Trump from continuing to pursue his policy goals and objectives, it is not working very well.

He attended the BCS National Championship football game in New Orleans a week ago Monday.

Trump did a rally in Milwaukee last Tuesday in which more than 20,000 attended. These are the key stats from that rally as reported by Trump campaign manager Brad Parscale.

Note that 58% of the people who attended were not Republicans.

 On Wednesday President Trump signed the first phase of a China trade deal.

On Thursday the U.S. Senate passed the USMCA trade treaty with Canada and Mexico that will replace NAFTA and sent it to Trump for signature.

On Friday Trump hosted the National Champion LSU Tigers in The White House.

Credit: USA Today

In addition, it was reported by The Washington Post and The New York Time last week that Trump is planning to divert an additional $7 billion in Defense Department funds to further build the wall between Mexico and the U.S. This in keeping with a U.S. Court of Appeals ruling that held that an earlier diversion of Defense funds was permitted under the President's constitutional discretion.

That was quite a week for an impeached President.

In fact, it was quite a week for any President.

On Sunday President Trump was in Austin, Texas speaking to the American Farm Bureau Annual Convention.

That speech coincided with the release of a Farm Journal Pulse Poll that revealed that Trump had an 83% approval rating with American farmers. That is his highest approval rate ever with that group.

On Monday he was paying respects to Martin Luther King, Jr. at the MLK Memorial in Washington, DC.

President Trump and Vice President Pence at MLK Memorial

What was President Trump doing as the Senate impeachment convened for the impeachment trial today?

He was in Davos, Switzerland speaking at the World Economic Forum after flying there overnight.

When Trump last spoke at Davos two years ago many of the business and economic leaders there were skeptical of Trump's plans. The globalists at Davos believed that a nationalistic-centered economic philosophy was doomed for failure.

They did not think Trump would be able to renegotiate NAFTA. They did not think that tariffs on China would lead to any success on a trade deal. They did not think that Trump could keep the U.S. economy out of recession. They did not think that job growth would accelerate and that those at the bottom of the income scale would see rising incomes. They did not foresee record low unemployment. They did not think the stock market would continue to gain under Trump.

There were a lot more people in Davos paying attention to what Trump was saying than two years ago. The United States economy has been the envy of the world the last two years.

I doubt many saw or heard Trump's remarks today as all of the media attention was focused on the Senate impeachment trial. It is also rare to see or hear from the media a full accounting of exactly what President Trump has been doing for the American economy the last three years. He outlined some of the successes for the other global economic leaders in his remarks at Davos.

It is worth the time to read the small sample below that I took directly from the transcript of Trump's remarks. I have underlined a few of the key facts about the economy over the last three years if you just want to see the highlights.

America’s newfound prosperity is undeniable, unprecedented and unmatched anywhere in the world. America achieved this stunning turnaround not by making minor changes to a handful of policies, but by adopting a whole new approach centered entirely on the well-being of the American worker.

Every decision we make on taxes, trade, regulation, energy, immigration, education and more is focused on improving the lives of everyday Americans. Only when governments put their own citizens first will people be fully invested in their national futures.

When I took office three years ago, America’s economy was in a rather dismal state.  Under the previous administration, nearly 200,000 manufacturing jobs had vanished, wages were flat or falling, almost 5 million more Americans had left the labor force than had gotten jobs, and more than 10 million people had been added to the food stamp rolls.

The experts predicted a decade of very, very slow growth — or even maybe negative growth — high unemployment, and a dwindling workforce, and very much a shrinking middle class.  Millions of hardworking, ordinary citizens felt neglected, betrayed, forgotten.  They were rapidly losing faith in the system.

Since my election, America has gained over 7 million jobs — a number unthinkable.  I wouldn’t say it, I wouldn’t talk about it, but that was a number that I had in mind.  The projection was 2 million; we did 7 [million] — more than three times the government’s own projections.

The unemployment rate is now less than 3, 4, and 5 percent.  And at 3.5 percent, that’s a number that is the lowest in more than 50 years.  The average unemployment rate for my administration is the lowest for any U.S. President in recorded history.  We started off with reasonably high rate.

For the first time in decades, we are no longer simply concentrating wealth in the hands of a few.  We’re concentrating and creating the most inclusive economy ever to exist.  We are lifting up Americans of every race, color, religion, and creed.

Unemployment rates among African Americans, Hispanic Americans, and Asian Americans have all reached record lows.  African American youth unemployment has reached the lowest it’s ever been in the history of our country.  African American poverty has plummeted to the lowest rate ever recorded.  The unemployment rate for women reached the lowest level since 1953.  And women now comprise a majority of the American workforce; that’s for the first time.

The unemployment rate for veterans has dropped to a record low.  The unemployment rate for disabled Americans has reached an all-time record low.  Workers without a high school diploma have achieved the lowest unemployment rate recorded in U.S. history.  Wages are rising across the board.  And those at the bottom of the income ladder are enjoying the percentage, by far, largest gains.

Workers’ wages are now growing faster than management wages.  Earnings growth for the bottom 10 percent is outpacing the top 10 percent — something that has not happened.  Paychecks for high school graduates are rising faster than for college graduates.

Young Americans just entering the workforce are also sharing in America’s extraordinary prosperity.  Since I took office, more than 2 million millennials have gotten jobs, and their wages have grown by nearly 5 percent annually — a number that was unthinkable.  Nobody would have ever thought it was possible three years ago.  A record number of Americans between the ages of 25 and 34 are now working.

In the eight years before I took office, over 300,000 working-age people left the workforce.  In just three years in my administration, 3.5 million people have joined the workforce.  Ten million people have been lifted off welfare in less than three years.  Celebrating the dignity of work is a fundamental pillar of our agenda.

This is a blue-collar boom.  Since my election, the net worth of the bottom half of wage earners has increased by plus-47 percent — three times faster than the increase for the top 1 percent.  Real median household income is at the highest level ever recorded.

The American Dream is back — bigger, better, and stronger than ever before.  No one is benefitting more than America’s middle class.

We have created 1.2 million manufacturing and construction jobs — a number also unthinkable.  After losing 60,000 factories under the previous two administrations — hard to believe when you hear “60,000 factories” — America has now gained, in a very short period of time, 12,000 new factories under my administration.  And the number is going up rapidly.  We’ll be beating the 60,000 number that we lost, except these will be bigger, newer, and the latest.

Years of economic stagnation have given way to a roaring geyser of opportunity.  U.S. stock markets have soared by more than 50 percent since my election, adding more than $19 trillion to household wealth, and boosting 401(k)s, pensions, and college savings accounts for millions of hardworking families.

Doesn't all of this make you wonder just what we could accomplish if there was an effort in Washington, D.C. to work together rather than just try to score political points?

As you watch what goes on in the Senate trial consider the utter waste of time, talent and money that it represents. All of this to what end? Is this being done to serve the American people or is it motivated solely by a political party desperate to change the narrative because their worst fears of three years ago have been realized?

Fortunately, President Trump is not letting it distract him from the job he has to do.

The last eight days proves that.

I have just one more question.

When does this man sleep?

Sunday, January 19, 2020

A Most Momentous Week

In over 230 years of the nation's existence we have only witnessed it twice before.

In that time we have had 45 Presidents.

We have had 116 Congresses.

We are about to see a Senate trial on impeachment.

The coming week should feel very momentous and grave.

After all, we are talking about potentially removing a duly elected President of the United States through a trial and vote in the Senate. This is something that has never been done in the history of the United States.

The U.S. Constitution grants an impeachment power to the House and the responsibility to hear and try the charges to the Senate if the President is involved in treason, bribery or other high crimes and misdemeanors such that the public trust had been violated or abuse.

Does this moment feel momentous and grave to you?

Did House Speaker Nancy Pelosi give you that feeling last week when she signed the Articles of Impeachment with souvenir pens that she passed out to fellow Democrats?

Does this look like a sober and serious moment in the history of the United States?

Somber Speaker Pelosi and her souvenir pens
Credit: Getty Images

How about Pelosi fist bumping Bill Maher on his show on HBO after Maher thanked her for "waiting until we got back on the air before you started the impeachment". (Maher had been on a two month vacation).

Credit: HBO

Of course, all of this was after Pelosi waited almost a month to sign the Articles of Impeachment and transmit them to the Senate for a trial. This was after stating in December that Trump had to be impeached immediately because of the imminent and existential danger that existed for the nation if Trump remained in office one more day.

Does this seem more like a circus act than a solemn responsibility?

I can't help but notice how little most Americans seem to care about what is about to begin this week.

Perhaps it is because they do not believe that the President has violated their trust.

If people believe that the President has abused the public trust you would think we might see some evidence of that fact in other indicators?

You would think it might be evident in the stock market.

Where is the DJIA?  Closing in on 30,000. It is up over 60% since Trump was elected President. It is up over 2400 points since the impeachment inquiry began in late September. Notice that the stock market dropped right after Pelosi announced that the impeachment inquiry was going forward but it quickly recovered as an assessment was made about the substance of the charges against Trump became known.

Credit: Yahoo Finance

You might think you would see it in consumer confidence. However, consumer confidence just hit its highest level in 20 years.

You would think you might see it in Trump's approval ratings.

Rasmussen had Trump at a 51% approval rating the day after the Articles of Impeachment were delivered to the Senate.

Let's put that in context. That approval rating is higher than it was the day Trump was elected.

It is also 5 points higher than Barack Obama had on the same day of his Presidency.

Is this about public trust or is it that Democrats simply don't trust their ability to win a political battle with Donald Trump in 2020?

Donald Trump was impeached in the House without one Republican vote. He was impeached with 230 Democrat votes on "abuse of power" and 229 votes on "obstruction of Congress".

You get a better perspective on where all this is coming from when you look at this map of where Democrat and Republican members of Congress are from that I posted right after the 2018 mid-term elections.

Consider that 69 out of 230 votes (one-third) to impeach Trump came from representatives from just two states--California and New York. 20% came from California alone.

Adding the House Democrat reps from the Chicago, Detroit, Miami, Philadelphia, Boston and New York metro areas (outside of New York state) brings the total to over 50%.

The Democrat party has become a party of the coasts and big cities. Nothing more.

I still find it incredible that California alone has more Democrats in Congress (47 at last count) than 34 other states have in TOTAL. (Note: The chart above was drawn before all of the contested races in California were determined. It shows Democrats with 43 seats. They ended up with 47.)

The Democrats like to complain about using the electoral college to elect the President. How is that any worse than having representatives from a couple of states and several big cities attempting to reverse the last Presidential election.

Even worse, at this point just a little over nine months until the election, why not trust the voters to remove Trump if he has violated or abused the public trust?

Pelosi already told her colleagues they couldn't risk that. She said it would be "dangerous to let voters decide" because the President is "jeopardizing the integrity of the 2020 election." Really?

I don't know what to expect in this most momentous week to come.

Will the House managers appointed by Nancy Pelosi to prosecute the case against President Trump do any better job at the Senate trial presenting the evidence than was done in the House committees?

Here are the House impeachment managers who will bring the case for impeachment before the Senate. You should know a lot more about them by the end of the week.

In looking at their backgrounds it was interesting to me that only Adam Schiff has any experience as a prosecuting attorney in their prior careers. What legal experience they have has generally been as associates with law firms dealing with corporate issues. Val Demings isn't even an attorney although she was the Police Chief in Orlando.

Contrast the House group with Trump's legal team that will defend him in the Senate trial.

Most of those in this group served as prosecutors at one time in their careers. Starr was the Solicitor General of the United States as well as the Independent Counsel investigating President Clinton. Ray once also served as Independent Counsel. Bondi was a prosecutor as well as Florida's Attorney General. Cipollone is the White House Counsel and was previously a partner in one of the nation's largest law firms. Raskin formerly worked for the Justice Department and has a long record as a  criminal defense attorney. Of course, Alan Dershowitz is the famous Harvard law professor who is also known for his contribution on O.J. Simpson's defense team.

Nancy Pelosi says that the House has an "open and shut case" against the President. The Democrats better have that considering the imbalance I see in comparing the legal talent on each side

We are at the beginning of a most momentous week that may turn into several momentous weeks.

It will be interesting what twists and turns the trial takes. Will a motion to dismiss come early in the process? Will the Democrats behave respectfully or just try to make it a political spectacle? Will other witnesses be called? Does Trump have a surprise in store? He usually does.

One thing you can count on is one of the President's defenders in the Senate will rise at some point and make an impassioned speech with words like this.

It has shaken me that we stand at the brink of removing a President — not because of a popular groundswell to remove him and not because of the magnitude of the wrongs he’s committed — but because conditions in America today has made it possible for a small group of people who hate the President and hate his policies to very cleverly and very doggedly exploit the institutions of freedom that we hold dear and almost succeed in undoing him.

How am I so certain that these words will be spoken on the Senate floor?

Because they already have been.

These are the words in a statement given by Senator Chuck Schumer on February 11, 1999 the day before the Senate vote that acquitted Bill Clinton on his impeachment articles. The same Senator Schumer who is the Minority Leader for the Democrats today and who is now arguing just the opposite when Donald Trump is President.

History does not just rhyme. Sometimes it really does repeat.

If only the politicians like Schumer could remember that and keep their stories straight when the wheel of history returns from whence it came.

Thursday, January 16, 2020

A Lot Can Change In Two Generations

The ethnic make-up of the United States did not change a great deal in the first 200 years of the nation's existence.

If anything, it might surprise you to learn that the Black population in 1790 was much higher than it is today in percentage terms.

In 1790, 80% of the population was White and 20% Black. Today the African American population is around 13% of the total.

Source: US. Census

By the time of the Civil War, the White population had increased to 86% and the Black population was at 14%.

By 1870, the White population was 87% and that percentage did not vary from that level by more than two points for the next 100 years.

Source: U.S. Census

Interestingly, the Black population in 2010 (12.6%) was almost identical to what it was in the United States in 1870 (12.7%).

What really altered the ethnic make-up of the United States was the tremendous influx of people of other races and ethnicities to the country beginning in the early 20th century.

This trend accelerated as transportation alternatives widened in the mid-20th century.

Only 1.1% of the United States was populated by those other than White, Black or Native races in 1910.

In 1960 it was 3.7%.

In 1980 it was just 10.9%.

That number was 30.3% in 2010

In the upcoming 2020 census it is projected to be over 33%.

Let's put that into perspective.

In two generations, the share of people in the United States that are Hispanic, Asian or from other races has gone from under 4% to over 33%.

I doubt that any major country in the history of mankind has gone through a larger transformation in its ethnic composition than the United States of America over that short a time period.

If you doubt how quickly this transformation has come about, and how the trend is accelerating even faster due to demographic forces, look at the graph below that shows the changes in public school enrollment by race/ethnicity since 1995.

Whites are already a minority (47%) in public school enrollment in the United States. 2/3 of public school students were White in 1995.

By 2044, it is projected by the U.S. Census Bureau that Whites will be a minority of the total population in the United States.

This may occur even earlier once new projections are done after the 2020 census is completed.

One of the more interesting datasets  the Census Bureau produces is one that shows the component changes by race and Hispanic origin comparing the most recent population estimates to the 2010 census totals.

The population of the United States is estimated to have grown by 20 million between 2010 and 2018.

The white non-Hispanic population is estimated to have grown by only 219,000 out of that total population increase of 20 million between 2010 and 2018!

In other words, 99% of the population increase in the U.S. since 2010 has been in minority populations.

As meager as the growth of the non-Hispanic White population has been in the last decade, the reality is that this may be the last time we see any growth at all in this population in the United States. It is projected that the White population will decrease by 19 million people (from 198 million to 179 million) over the next 40 years.

No matter what your views on immigration, the numbers and the transformation in the racial and ethnicity composition of the United State in such a short period of time is remarkable.

The United States is a nation of immigrants. Those immigrants (and their descendants) created the greatest country in the history of the world.

The question that remains is whether the immigrants of the last 50 years will be able to sustain what they found when they got here? Might they be able to attain even more? We will know more in another two generations.

Tuesday, January 14, 2020

Golden No More

In my last post, "Chaos in California", I outlined how several laws on the books in California are certain to make it even more difficult to live in the state going forward.

I came across another data point recently that should cause alarm about the future of the state which carries the official state nickname of "The Golden State".

California has traditionally conjured up thoughts of a pleasant climate, Hollywood and a booming tech economy centered around Silicon Valley.

You might also think about the some of the famous institutions of higher learning in the state---Stanford, UC Berkeley, UCLA, USC and Cal Tech.

We often hear that California is the state most likely to set the trends for our future.

Let's hope that is not true when you look at the data below.

Would it surprise you to learn that California is actually the least educated state in the nation?

Consider these numbers that are in the  U.S. Census Bureau American Community Survey for 2014-2018 that was released recently.

2,471,189 California residents ages 25 and older have never completed the 9th grade.

Let's put that in context. That number is higher than the total population in 15 states! (New Mexico, Nebraska, West Virginia, Idaho, Hawaii, New Hampshire, Maine, Montana, Rhode Island, Delaware, South Dakota, North Dakota, Alaska, Vermont, Wyoming)

Another 2,004, 376 California residents have not completed high school.

Not only do both these numbers vastly exceed that of any other state but so do the percentages that these represent as a share of the adult population compared to other states.


This chart shows the % of adults in every state who have attained a high school diploma or higher. California is dead last.

That's right, almost 20% of California residents over age 25 have not graduated from high school.

Notice that Texas is right behind California on both of these measures.

What do they have in common?

Both states have the highest number of illegal immigrants. This data is from 2016, and is vastly understated today, but it gives you some context to understand why these states are in the position they are on educational attainment.


The economy of the United States is becoming more sophisticated and technology-driven. What realistic economic prospects do those without a high school diploma, let alone without a middle school education, have in the 2020's and beyond?

How is California going to deal with what will likely to be a permanent, and very dependent, underclass that will need to be supported with vast taxpayer resources for decades to come?

What is especially ironic about all of this is that there are many people working in Silicon Valley in California to develop new automation and technologies that are directly focused on making those people with the lowest educational attainment unemployable in the future.

In the meantime, as I was reviewing this data from California, this is what Joe Biden was saying coal workers in West Virginia and Pennsylvania should be doing to transform themselves for the economy of the future.

Is this the same message he is going to take to those 4.5 million people in California who do not even have a high school education?

What concerns me most about California's future is that state government funding is already so heavily dependent on an extremely small group of taxpayers.

The top 1% of taxpayers pay 50% of the income taxes collected in California.  Let's put that in context. We are talking about 152,000 households carrying that large share of the income tax burden for a state with a population of almost 40 million.

Income taxes are the single biggest revenue source for the state. The income tax in the state is also increasingly dependent on stock gains and stock option income from tech companies in the Bay area.

As a result, due to these factors, California is considered to be the state that has the most risk of volatility in its collection of tax revenues (along with Alaska which is heavily dependent on severance taxes on oil, gas and minerals).

What happens in California when the stock market is not hitting record highs every week, there are no tech IPO's coming to market, and a share of that tech money is no longer being paid in taxes?

What happens when more and more of these undereducated workers see their jobs eliminated by technology and automation?

What happens when those rich households stop spending the money that is the ultimate source of employment for those 4.5 million people with less than a high school education?

What also happens when more and more of those 152,000 households pulling the wagon in California decide they have had enough and decide to take their talents (and money) elsewhere?

As each one of these events occurs, we will be closer to California not being so golden any more.

The irony is that in a state that so openly despises Donald Trump, it is the Trump economy that is keeping the state solvent right now.

What is California going to be like when the gold is gone and all that is left are 4.5 million people who have not graduated from high school?

Sunday, January 12, 2020

Chaos in California

I often wonder how long it is going to take for California to descend into total anarchy and chaos.

Headlines like this tell me that it is coming sooner rather than later.

The full story is from in San Francisco.

Starting next school year, it will be illegal for public schools in the state to suspend students in first through fifth grade for willfully defying teachers or administrators.
Then, from 2021 through 2025, it will be temporarily extended to kids in grades six through eight.
Supporters say suspensions for willful defiance are disproportionately used against students of color.

Suspensions for willful defiance are disproportionately used against students of color?

What if the acts of willful defiance are disproportionately perpetrated by students of color?

Let's consider the demographics of California public schools.

Whites only comprise 23% of the enrollment in California public schools.

Students of color make up 77% of the enrollment. It is probably higher in the elementary grades than that due to the trend of the last decade with fewer white births and more immigrants entering the state.

Here are the total suspensions in California public schools in the 2018/2019 school year broken down by ethnicity.

Is it all students of color that are disproportionately being suspended or just some groups?

Why do Asians have such a low suspension rate relative to their enrollment numbers? Why do Filipinos? Aren't they also students of color?

Is it possible that the students who are willfully defiant in school might somehow lack proper parental guidance and discipline at home?

Might that be more likely in the case of single parent households?

Here are the most recent percentages for out of wedlock births to mothers in California by race/ethnicity.

Is it just a coincidence that those ethnicities with the highest levels of out of wedlock births have the highest relative levels of suspensions for disciplinary problems and those with the lowest levels of births outside marriage have the lowest number of discipline issues?

I don't care if a kid is white, black, brown, yellow, orange, purple or indigo. If a student is willfully defiant of a teacher they should be subject to discipline that includes suspension.

I can guarantee you that this new policy will only lead to bigger problems down the road for California.

If a child has not learned the proper boundaries of behavior at home, and the school is prohibited from holding a student accountable at school, where are these young people going to learn there are consequences for these types of actions? Where are they going to learn the proper respect of authority?

Is it merely a coincidence that the same week I am reading about California lawmakers passing laws that don't allow schools to suspend students for willfully disobeying teachers, I also see this headline?

That teen brawl occurred in Stockton, California.

I also came across this video that went viral on Twitter of some young people brazenly shoplifting clothing in a Sears store in Richmond, California right before Christmas.

Shoplifting has become rampant in California since the state's voters passed Proposition 47 five years ago that makes any theft of merchandise below $950 a mere misdemeanor rather than a felony.

Is it also a coincidence that the shoplifting shown in the video above involved merchandise that would have been valued at less than $950? did a recent report on the effects of Prop 47 in the state.

The decision to downgrade theft of property valued below the arbitrary figure from felony to misdemeanor, together with selective enforcement that focuses on more “serious” crimes, has resulted in thieves knowing they can brazenly shoplift and merchants knowing the police will not respond to their complaints, say critics.

All of this has helped San Francisco to have the distinction of now being the city with the highest level of property crime, which includes theft, shoplifting and vandalism, of the 20 largest cities in the United States.

I thought this California business owner summed it up pretty well.

In San Diego County, 7-Eleven franchise owner Jassi Dhillon told NBC 7 that he has to deal with shoplifters at all six of his store locations.
"It's happening every day, hour by hour," he said.
Dhillon said shoplifting isn't a priority to law enforcement and said when cops do show up, the shoplifter has left the store or isn't concerned about the citation they are issued.
"It's becoming a lifestyle for us now because we can't do anything much except take the loss," he said.

What is most interesting to me in all of this is that we are often told that we are supposed to look to California to the enlightened, progressive way the country should be run in the future.

Nancy Pelosi, Adam Schiff and Gavin Newsom are quick to tell us how President Trump and those of us in flyover country have got everything wrong.

Does California look or sound like any place you really would want to work, live and raise a family?

You can expect that the chaos will only become greater in the future in California.

It is written in the stars  laws that are being passed in the state.