Author: haroldblackphd

The Westminster Dog Show and a few random thoughts 

Penny, a Doberman pinscher, won the Westminster Dog Show — the first of her breed to receive the best in show honor since 1989. Well it is about time a real dog won best of show! Apologies to all those poodle owners but that poodle cut is awful and must be embarrassing to the dog. I favor the German Shorthaired pointers first and Scottish Terriers second. There is no better looking dog than a GSP.

The American Society of Plastic Surgeons just broke ranks with other US medical groups by recommending that gender altering surgeries be delayed until a patient is at least 19 years old. Hallelujah! The statement applies to facial, chest, and genital procedures performed for “transgender” and “nonbinary” patients. The ASPS report says that 23,000 people aged 19 and under received some sort of plastic surgery in 2024 while between 2016 and 2020 only about 4,000 people total received any gender altering surgery. Something to ponder.

Another one of Trump’s tariff deals was just announced with India. Trump says that India will stop buying Russian oil and its tariffs will be magnanimously reduced from 50% to “only” 18 percent. But the Indian government has not confirmed that and the details have not been released. With Russian oil being embargoed India rushed in to fill the void buying Russian oil at a significant discount from world prices. If they really stop buying it, they will be forced to pay about $7 a barrel more for oil. They currently import 1.1 million barrels a day from Russia. Trump says they will buy US oil but not so fast my friends. India’s refineries process Russian heavy crude not American light and would have to be retooled. Moreover, it takes twice as long to transport American oil than Russian oil. Trump issued the customary ransom note saying that India will “‘BUY AMERICAN’, at a much higher level, in addition to over $500 BILLION DOLLARS of U.S. Energy, Technology, Agricultural, Coal, and many other products”. I wonder how much of that $500 billion will go into his businesses or businesses headed by his buddies? Meanwhile, we await the fine print. But I guess that China could step up and buy the Russian oil instead.

Remember when the president was demanding a $200 million ransom from Harvard? Well since that haven’t forked over the money, Trump is now demanding $1 billion and is going to sic his “Justice” Department on them tweeting “This should be a Criminal, not Civil, event, and Harvard will have to live with the consequences of their wrongdoings.”  I guess the $1 billion would go into his personal account. Of course, Harvard will eventually have to cut a deal since Trump is threatening to cut off federal funding and ban foreign students, both of which are vital parts of the university. Apparently, Harvard is willing to spend more on certain programs and projects but does not want to make a direct payment to the president, er government, which is what Trump is demanding.

While Trump has threatened to have the Census Bureau count only citizens, the state of Missouri has sued to make it so. The state has filed suit against the Commerce Department and the Census Bureau to end the counting of illegal aliens. Interestingly, the state is also seeking a recount of the 2020 Census and 2021 apportionment. Recall that the census count is used to dole out federal handouts to the states and importantly to determine congressional seats. Missouri has 6 republicans and 2 democrats in its congressional delegation. Maybe they are trying to get rid of the two dems. Since democrat states may lose up to 10 seats in the 2030 census due to outmigration of illegals from the US and legal residents to republican run states, this would mean an additional decrease in the number of seats in democrat-controlled states.

Finally, I had earlier reported on Trump ending several wind projects in democrat states. Well federal judges have overturned his edit for all five projects. Of course the president who hates windmills (as do I) used the justification that the windmills were a threat to national security. The courts are not convinced and have allowed the projects to continue while the cases are being appealed.

A Laffer curve for tariffs

There a Laffer curve for tariffs. You may recall that the Laffer curve shows that at some point, raising taxes results in less tax revenue. This is also true for tariffs. If you raised tariffs to 100 percent you would get less tariff revenue than at 10 percent because of less trade. That is why the logic of punitive taxes escapes me. When Trump lashes out at a country and increases tariffs that means only fewer and higher priced goods to Americans. Why is dramatically raising taxes punishing those that dare incur Trump’s wrath especially if they are just motivated to find trading partners elsewhere? Instead the tariffs are punishing Americans.

Trump wants us to import less. Well he is succeeding. But will importing less goods make us better off? That is virtually impossible as consumer prices go up and real incomes go down. Prices go up because there are fewer less costly goods available – that is what comparative advantage is all about. Domestic producers of competing goods find demand (and prices) rise for their goods. They have less competition and hence have less incentive to innovate and economize.  The tariffs have a disproportionate impact on small businesses and on low and moderate income households. Let them eat cake!

Tariffs will not bring in the revenue that Trump trumpets. To do so would assume that as prices increase due to the tariffs that demand stays unchanged. Instead as prices increase – and we pay 96% of the increase – imports fall decreasing tariff revenues. Raising tariffs even more would decrease – not increase – revenues. So if raising revenues is a motive for tariffs, it is a failed one. So tariffs will not make us rich as hell. It cannot replace the income tax. There is not enough to give everyone $2,000. It won’t get rid of trade deficits – if he wanted to do that then he should simply ban all imports. It was never “reciprocal” because it was levied on countries with tariffs lower than our and on countries with which we had a surplus. Foreigners do not pay the tariffs, we do – whether at the consumer level or the importer level. Trump’s tariffs have had the equivalency of a 16 percent tax hike. Foreign central banks have been replacing dollar and Treasury holdings with gold. Foreigners have been restructuring their supply chains and making other trade agreements. Trump has brought the world closer together and has made China’s trade surplus bigger than ever, having topped $1 trillion as the Chinese have broadened their trading worldwide. Why would Trump want to help the Chinese and hurt Americans is beyond me.

If tariffs were to rebuild American manufacturing then why has manufacturing fallen over the past year? Trump seems to forget that half of our imports are intermediate goods. Thanks to the president we are now facing record high prices on aluminum. Industries such as automotive, aerospace, packaging and construction have seen dramatic increases in their costs, lower margins, profit squeeze and a struggle to survive. Small businesses have been particularly affected. Trump doubled tariffs on U.S. aluminum imports to 50% and aluminum costs for U.S. consumers have risen by 40% to above $5,200 a metric ton. The tariffs resulting in a drop in imports which reduced aluminum stocks, increasing prices even more. Foreign producers sent their aluminum elsewhere. Also the high tariff meant that importers were actually losing money on importing aluminum and ratcheted down their purchases further reducing US stocks and increasing US prices. In the national security argument why impose tariffs on aluminum (or steel) if it is vital to national security? Wouldn’t it more sense to impose no tariffs on imported aluminum while subsidizing the domestic aluminum industry?

Isn’t it ironic that Trump wants to rebuild American manufacturing while he has actually instituted policies that have done the opposite? Don Boudreaux points out that US manufacturing has declined under Trump’s protectionist policies. I cannot think of hardly any circumstance where I would support tariffs because almost without fail they increase the prices to American consumers and make us worse off. US manufacturers facing less competition become less efficient. 

What about the argument that the Chinese heavily subsidize their export industries so that they can price in local markets at below cost leading to unfair prices competition? This means that the Chinese government bears the cost of below market pricing and causes the Chinese to be worse off while making the rest of the world better off. It is no wonder that the Chinese economy is actually in trouble with heavily subsidized export industries producing at excess capacity. Huge trade surpluses are symptomatic of declining investments – especially foreign investment. Business investment in China’s private economy fell 6.9 percent last year. Retail sales depend on subsidies as well also leading to overproduction and more losses. Then there is the property bubble. High levels of debt exist at the national and local levels. Overcapacity is leading to price deflation at home and in the export sector. China may be exporting more but at losses that are not sustainable. And Trump wants us to be an export economy?

There a Laffer curve for tariffs. As Trump’s tariffs increase, we become worse off. Also his threats are running into diminishing returns. Not only will tariff revenue fall as imports drop, countries will find other trading partners if it is rational to do so. I know that the president frets about slow economic growth and blames the Fed. But what would happen if suddenly he completely lifted all of his tariffs? Can you imagine the impact on growth if all of a sudden there was a universal tariff of zero?

February is Black History Month

On MLK, Jr Day a close friend said “Happy MLK Day.” Well February is Black History Month and although the president issued a proclamation for MLK, Jr Day, I don’t think he has issued a proclamation for Black History Month this year, as he did last year. I don’t really care but I am certain that all the legions of Trump haters will make a note of it.

I wrote these words last year.

When I was young we observed Black History Week. In 1926 the eminent historian Carter Woodson proclaimed the second week in February “Black History Week.” This was chosen because Abraham Lincoln’s birthday is February 12 and Frederick Douglass was born on February 14. Being me, I asked my sainted mother “Why is there a Black History Week?” She said “Because they have the other 51.” In 1976, the week was extended to the entire month. Gerald Ford proclaimed it and every subsequent president, including Donald Trump observed it. So in 1976, I asked my sainted mother why was February chosen as Black History Month? She answered “Because it has the fewest days.” Love you Mom.

Black history still is not fully integrated into our US history and I don’t know how to address that issue. The history books are far from being unbiased. Growing up in the segregated south, the history books in our schools made little mention of the achievement against the odds of black scholars, inventors, soldiers and industrialists. Much the same can be said today. While the revisionist history of the 1619 Project has gotten much press and is even included in some school curricula, the Woodson Center’s 1776 Unites (1776unites.com) project has received scant attention. Yet this website fully explores all those pioneers that have been forgotten by the writers of (mostly white) history. But 1776 Unites does not wallow in blaming racism and slavery for racial disparities because pointing fingers will not close those disparities. Disclosure: I am one of the contributors to 1776 Unites.

I know that many on the right, and some readers of this blog, do not care for Dr. King. I urge them to read Taylor Branch’s “Parting the Waters.” I fully credit King for there not being a shooting race war in the 1960s. People tend to forget that we black southerners had guns too – despite gun control laws written to deny blacks the right to bear arms. My Dad and Dr. King were denied handgun permits. But Dad had a handgun anyway. King preaching that nonviolent resistance was the best way to achieve civil rights, kept a lid on a volatile environment. Those were truly scary days. There is even a lynching in my family history. My Dad once said that he would not live to see the day when the schools were integrated because whites would start shooting black kids first. It was somewhat fitting that he and Mom were among the first blacks to integrate public school faculties in Atlanta. 

At Georgia, I was cautioned not to walk past two fraternity houses for fear of being cursed, having things thrown at me or worse. I was warned not to carry my books when walking on the perimeter of the campus for fear of being shot. These were days where white politicians race baited. I remember when Atlanta got their first black policemen – who couldn’t arrest whites. There were no black legislators, no black judges, all white juries and all white boards of education. That was the American deep south and Dr. King in his famous “I have a dream” speech said

“I have a dream that one day in Alabama, with its vicious racists, with its governor having his lips dripping with the words of interposition and nullification, one day right here in Alabama little black boys and black girls will be able to join hands with little white boys and white girls as sisters and brothers.

This will be the day when all of God’s children will be able  to sing with new meaning: ‘My country, ’tis of thee, sweet land of liberty, of thee I sing. Land where my fathers died, and of the pilgrim’s pride, from every mountain side, let freedom ring.’”

There were two silos, one white and one black. As long as blacks stayed in their silo, we were basically left alone. But going outside of it was often met with violence. The Freedom Rides, the lunch counter sit-ins, the voter registration drives, the boycotts and marches and pictures of little black children going to school being spit on by screaming whites filled the news as the blacks were trying to move from one silo into the other. One of the most poignant pictures of the day was of a little black girl (Ruby Bridges) having to be escorted by marshals to school in New Orleans. Also on the news was the violent response of some whites – beatings, lynchings and murders. Once more recall the civils rights anthem “We shall overcome.” We used to say that white folks didn’t mind us overcoming so long as we didn’t come over.

Again, I never talked to a white person before I went to the University of Georgia in 1962. I recall a university administrator was perplexed saying to me that we (blacks) had perfectly good schools (my mother graduated from Fort Valley State and my father from Savannah State) so why did we want to come to the University of Georgia? Well we did crossing over from one silo to the other. But Dr. King set an example that gave us all strength and hope.

Some call King a leftist or even worse a communist. But those labels were put on anyone in those days who defied the status quo of segregation. Yes King favored affirmative action. But he saw it as temporary. More importantly, King loved America. Today, that love would not brand him as “communist”. Would it? Can you say that anyone on the far left loves America? I have yet to hear any of them say it.

Here is part of the president’s proclamation on MLK, Jr Day.

Today, we honor the noble work of the Reverend Dr. Martin Luther King, Jr., whose commitment to justice paved the way to the full realization of the American promise.  Inspired by the tenets enshrined in our Declaration of Independence, we proudly renew our pledge to uphold our Nation’s long-cherished principles of liberty, equal justice under the law, and the God‑given dignity of the human person.

Again here are words from Dr. King’s “I have a dream” speech. Words that we should all heed.

“In a sense we’ve come to our nation’s capital to cash a check. When the architects of our Republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a promise that all men — yes, black men as well as white men — would be guaranteed the unalienable rights of life, libertyand the pursuit of happiness. 

I say to you today, my friends, though, even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream. I have a dream that one day this nation will rise up, live out the true meaning of its creed: ‘We hold these truths to be self- evident, that all men are created equal.’”

Amen.

Trump versus Carney: Redux

The president seemed to be taken by surprise that Canada is acting like an independent country rather than the 51^st state. Is he really surprised that his tariffs have driven the Canadians to cozy up to the Chinese rather than bend to his will? Canada and China resolved a trade dispute and pledged more economic cooperation, causing the president to go bonkers.  Trump said “Carney thinks he is going to make Canada a ‘Drop Off Port’ for China to send goods and products into the United States, he is sorely mistaken. China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life.” He then threatened to impose a 100 percent tariff on all Canadian goods and services if Canada secures a trade deal with China. He has also threatened to ground all Canadian made jets over a dispute with Gulfstream whose jets are manufactured in Savannah, Georgia.

Canada also declined to join Trump’s so-called “Board of Peace” – saving the Canadians the $1 billion buy in – the president then rescinded the invitation writing “Dear Prime Minister Carney,” Trump wrote on his Truth Social platform late Thursday. “Please let this Letter serve to represent that the Board of Peace is withdrawing it’s invitation to you regarding Canada’s joining, what will be, the most prestigious Board of Leaders ever assembled, at any time.””

I wonder if Trump will rescind the tariffs on the countries that come bearing him the gift of $1 billion? 

Canada’s prime minister Carney had delivered a speech at the World Economic Forum in Davos, Switzerland urging smaller powers to unite against economic coercion from the world’s great powers. Carney the said that China was now a more reliable trading partner than the US. Again the president was furious saying “Canada lives because of the United States” and “Remember that Mark, the next time you make your statements.” 

Apparently the president and his team did not like Carney’s use of the term “economic coercion.” Commerce Secretary Howard Lutnick accused Carney of “an arrogant kind of thought,” and said that Carney was whining and complaining. Lutnick, ever the deep thinker, intimated that the US might even end the U.S.-Mexico-Canada free-trade pact. Huh? Wouldn’t a 100 percent tariff on all Canadian goods and services end that agreement? 

Treasury Secretary Bessent who has emerged as the president’s major interpreter called Carney’s speech “value-signaling.”  Carney realizes that China cannot replace the US as Canada’s major trading partner and later said that Canada had no intention of proceeding with a trade deal with China or “any other nonmarket economy.” So it might seem that Carney was all bluster and folded in the face of Trump’s threat of 100 percent tariffs. However, the EU and India have reached a free trade agreement so watch for Carney to pivot in that direction also.

Bessent also said that the president’s attempt to seize Greenland had nothing to do with his not receiving the Nobel Peace Prize despite Trump’s letter to Norway’s prime minister. He said that Trump’s threat to increase the tariffs on the NATO allies supporting Greenland was to avoid a future national emergency saying “It is a strategic decision by the president. This is a geopolitical decision, and he is able to use the economic might of the U.S. to avoid a hot war.” Go figure out that one. When the president said that he had reached an agreement on Greenland (we have not seen the details) and had withdrawn the tariff threat, Bessent said that was the president’s objective all along and that the president didn’t really back down as all the media had reported. Sure. Obviously, Bessent is trying to couch the tariff use as a national emergency but the threat to Canada hurts Trump’s argument that his tariffs come under the International Emergency Economic Powers Act.

But speaking of Canada, Alberta may vote on independence from Canada – much like Quebec once did. Alberta is resource oil rich and conservative, unlike the Canadian government. It has been at odds with the government about the utilization of its resources and the building of pipelines. A delegation from Alberta actually recently met with US officials. What was discussed? Perhaps Alberta as the 51^st state? Well Carney has told the US to not meddle in Canadian business and to stay out of aiding Alberta’s independence movement saying “We expect the U.S. administration to respect Canadian sovereignty,” 

Where does spat end? Is there any doubt that the president is using the US’s economic might to force Canada to do his bidding? Is there any doubt that most Canadians want to remain Canadians? Will it take a Supreme Court ruling on tariffs to bring back our trading relationships – the American distilling industry certainly hopes so.

I hope so too.

Frank L. Stanton Elementary School is still standing!

From the mouth of babes.

What’s in a name? On a visit to my son’s home in north Atlanta, his grandson (my great grandson) and I had a pleasant talk. He (my great grandson) is living in my old home house and I was shocked to find out that he was going to my old elementary school. My son said “Yes Dad it is still standing. But they have renovated it a couple of times since you left.” I certainly hope so. When we moved to Atlanta our newly built neighborhood bordered on all-white neighborhoods and the nearest elementary school, Frank L. Stanton, was white only. So I had to go five miles away to E.R. Carter, an all-black school which was adjacent to the Morris Brown college campus. I spent two years there before Atlanta made Stanton all-black. So in 1953, my third grade year, I went to Stanton which was less than a mile away. I have no idea where the white students and teachers were sent because in those days the schools were totally segregated. 

One bit of silliness was the debate over whether the school should be re-named. Frank L. Stanton had been a columnist for the Atlanta Constitution and was designated in 1925 as the first poet laureate of the state of Georgia. Some blacks insisted that the school be named after a black – like all the other black schools in the city (I later went to Booker T. Washington High School). Whites were also in favor of a name change as well, being aghast that black kids could go to a school named after a white person. However, because the Stanton family wanted the name to remain on the school, the school board – which was all white – opted to keep the name. 

I told my great grandson that story and his reply was “That was stupid.” So it was.

The new Fed chairman and Trump sues the IRS

The president says that he will nominate former Fed governor Kevin Warsh to be the next Fed chairman. First, however, he will have to nominate Warsh to be a governor to the fourteen year term just coming open. I wonder about the logistics of this. Warsh will face senate hearings on the governor position but I presume he can’t face hearings on the chairmanship until Powell’s term as chairman expires in May. That actually allows for some mischief in that if Powell also resigns as a governor, then Trump could then nominate someone else to fill both vacancies and nominate someone else as chairman. That possibility exists if Marsh has to have two hearings, one for the governor and one for the chairman.

Although Warsh was the early betting favorite, I was skeptical of the president’s appointing him. Warsh has an independent streak and is only in sync with the president in thinking that interest rates can be a bit lower than they are presently. However, Warsh left the Fed supposedly in disagreement with Bernanke who started using the Fed as a tool of fiscal policy instead of concentrating on monetary policy. It was Bernanke who conducted quantitative easing transforming the purchasing of assets from an emergency tool to one of everyday policy. The Fed’s balance sheet was $800 billion when Warsh first got there and ballooned up to over $8 trillion. It has been run down to $6.58 trillion which has been halted due to its impact on bank reserves. If Warsh is consistent he will favor decreasing it further and likely will face resistance from the other governors and some of the reserve bank presidents.

The president had tweeted “Anybody that disagrees with me will never be the Fed Chairman!” So look for Warsh to vote for lowering the Fed funds rate while he serves only as a governor prior to Powell’s exit as chair. The question is what will he do about the Fed’s balance sheet after he becomes chairman? Warsh has been saying for the last 15 years that the Fed has lost its way and gone astray. He has accused the Fed of institutional drift saying “In my view, forays far afield—for all seasons and all reasons—have led to systemic errors in macroeconomic policy. The Fed has acted more as a general-purpose agency of government than a narrow central bank.” Warsh is known as an inflation hawk which may conflict with his endorsing of lower interest rates to please the president. He has said the Fed has lost sight of its main goal which is price stability (on that I completely agree). The Fed has gone off the rails into fiscal policy with its bond buying that has underwritten the excessive federal spending and asset purchases (see the Inflation Reduction Act) that contributed to inflation and the misallocation of capital. He is also critical of the Fed paying lip service to climate change and DEI with workshops at various Federal Reserve banks rather than concentrating on monetary policy. Warsh contends that these have led the Fed to compromise its own independence.

I like this pick. This reversion to the old Fed will cause a conflict with the president. He probably would expect the Fed to continue to be an agent of fiscal policy (see the One Big Beautiful Bill). So he must have worked out something with Warsh or else he will soon be blasting him like he has Powell.

Yes the Fed has a history of making mistakes but I would contend that the major mistakes are all a product of the Fed necessarily being influenced by the politics of Washington. It is difficult to maintain independence when being hammered all day by the president, the congress, the lobbyists, the media and the public. The Fed is being assaulted all day by the slings and arrows of the toxic DC environment. I have long suggested moving the Fed to Kansas City if you want more Fed independence. In Washington, when a Fed governor walks his dog, his next door neighbor says “what’s happening to rates?” When the president of the Atlanta Fed walks his dog, his neighbor says “How bout them dawgs?”

Trump sues the IRS?

Finally, did you see where the president has sued his own Internal Revenue Service and Treasury Department? It is true. Trump along with his two eldest sons have sued the IRS for $10 million alleging that the agency didn’t do enough to stop his tax returns from being leaked to the press in 2019. The IRS employee who leaked the returns was convicted and sentenced to five years in prison. Trump’s suit claims that the leak was done to “improperly influence the results of the 2020 presidential election.” OK. Since the president is the boss of all the officials at the IRS and that Treasury secretary Bessent is acting IRS commissioner there is an obvious conflict of interest for every party. This is just bizarre. Trump never ceases to amaze but then again he loves to sue being the plaintiff in over 1,600 cases.

Trump’s forces invade the ATL

Trump has never gotten over his loss to Joe Biden. I can’t blame him. I would also be embarrassed losing to Joe Biden. He talks about it over and over and is obsessed with it. I guess this means that he will endorse the “Pillow Man” in his race to be governor of Minnesota. You do remember that MyPillow CEO Mike Lindell was all over Fox claiming that there was widespread fraud and accused a Dominion Voting Systems employee as personally involved. That employee sued Lindell and was awarded a $2.3 million verdict when no evidence of fraud was found. One of Trump’s lawyers, Rudy Giuliani, also claimed that Dominion manipulated its results in favor of Biden. Dominion sued Giuliani for defamation. Giuliani reached a settlement in 2025. Giuliani was disbarred in New York and Washington, D.C. for repeating false statements regarding the 2020 elections. Meanwhile, nationwide Trump and his allies filed over 60 legal cases to overturn the 2020 election results.  All failed, even those before Trump-appointed judges.

None of any of this matters to Trump who still is obsessed with his loss. In his speech in Davos at the World Economic Forum – of all places – the president again asserted that the war in Ukraine “wouldn’t have started” if the 2020 U.S. presidential election “weren’t rigged.” “It’s a war that should have never started and it wouldn’t have started if the 2020 US presidential election weren’t rigged. It was a rigged election. Everybody now knows that. They found out. People will soon be prosecuted for what they did.” Although there was circumstantial evidence pointing to election irregularities there leading to multiple investigations no voter fraud was found. 

Well still furious at Georgia where he lost to Biden by 12,000 votes, Trump had his forces invade the ATL. Here there were valid questions raised about voter fraud occurring in Fulton County (Atlanta) where the voter count was suspended for several hours and then restarted. Trump had demanded that both the governor and secretary of state – both republicans – investigate the case. Trump also famously called the secretary of state asking that he “find” him enough votes to win. Trump subsequently railed at both the governor and the secretary of state and is credited with dissuading his supporters from voting in a runoff election that resulted in the defeat of two incumbent republican senators. Trump was also indicted in Fulton County, arrested and booked in the Fulton County jail on thirteen charges relating to his efforts to overturn Georgia’s election results – remember that famous mug shot? Trump had to have been humiliated. This might explain, in a part, his actions. I wonder why he didn’t try to indict Fani Willis, the Fulton County DA who prosecuted the case. Maybe that comes next.

Trump had his “Justice” Department sue the Fulton County clerk over the election records. Trump’s attorney general Pam (Blondie) sent letters to Fulton County demanding records and citing “anomalies” in counting the votes. Fulton County Clerk Ché Alexander didn’t respond to the letters but said in a court filing that the federal government had no right to the ballots and documents, which were under seal because of ongoing cases related to the election. Alexander said that if Bondi could “identify a legitimate basis” for accessing the election materials, then she should seek an order from a Fulton County Superior Court judge to unseal them. So the FBI executed a warrant to obtain the election records in Fulton County. FBI agents then descended on the warehouse containing the documents and seized them. Remember I had been wondering “where’s Tulsi”? Well she – the director of National Intelligence – was with the FBI agents who served the warrant. Go figure.

I think this is an unprecedented action. The warrant was for ballots, tabulator tapes, digital data and voter rolls which the warrant alleges provide “evidence of the commission of a criminal offense.” Was there evidence of a criminal offense? Well Fulton County Commission Chair Robb Pitts (one of my many cousins) said that the ballots had been “safe” in the county’s custody and that the election results were “fair and accurate”. But then he cautioned that now that the ballots had been seized and are in the hands of the Feds that the county “can no longer satisfy that those ballots are still secure.” Ouch! Pitts also said “Every audit, every recount, every court ruling has confirmed what we the people of Fulton County already knew: Our elections were fair and accurate and every legal vote was counted. These ongoing efforts are about intimidation and distraction, not facts.”

Just like all the economic data paints a rosy picture now that Trump’s people are in place, will the ballots now show that Trump “won” Georgia now that his “Justice” department has the ballots? Stay tuned.

The Fed holds

In spite of Trump or maybe because of Trump, the Fed’s Open Market Committee just finished meeting and left its Fed funds target range unchanged. Two members voted to lower the rate. Not surprisingly they were Trump’s man at the Fed, Stephen Miran who for the first time didn’t vote for a 50 basis point drop. He voted for a fall of 25 basis points. The other was Christopher Waller who is still being discussed as the new Fed chairman who likely voted for the 25 basis point decrease knowing that if he didn’t, Trump would never nominate him. Of course, I think that Trump is only stringing Waller along to get him to vote his way and even though Waller is the best choice for chairman for reasons I have previously stated, Trump will likely pick someone else. It is interesting that Bowman voted to hold. When she was being interviewed for the chairmanship, she voted to lower the rate and when she was out of contention, she voted to hold. Just a coincidence I’m sure.

Right now there are supposed to be four finalists for the job, Kevin Warsh, Kevin Hassett, Waller and BlackRock’s Rick Rieder. Although somehow the media wants you to know that Trump’s pick will do his bidding much like Miran, I would not bet on it. Miran wants his cozy job at the Council of Economic Advisors back. So he would do anything that Trump wanted. However, once confirmed, look for whoever gets the job to assert his independence from the president. A lackey chairman would roil world markets and drive Treasury yields through the roof. A Supreme Court ruling that the president cannot fire willy nilly a Fed governor will give the new chairman even more resolve than the outgoing one. Trump of course knows this. At Davos he said that the candidates “say everything I want to hear” during interviews, only to assert their independence once they have been confirmed. It’s amazing how people change once they have the job. It’s too bad, sort of disloyalty, but they got to do what they think is right.” Also keep in mind that Trump is only around for another three years and the new chairman will have a 14 year term as governor and four as chairman.

Miran’s term ends at the end of January so he can return to his other day job – chair of Trump’s Council of Economic Advisors. His short tenure at the Fed likely meant that no one at the Fed took him seriously with his constant whining about lowering the Fed funds rate by 50 basis points or more. All the headlines about the January meeting were that the Fed is resisting the pressure from Trump to lower rates. Why is that news? If anything Trump’s bellicosity, name calling, attempts to fire a governor, conducting a farcical investigation of the chairman and badgering caused the Open Market Committee to be less receptive to rushing to lower rates. Powell said as much when he released a video statement that the president was pursuing the investigation as a pretext to get him to lower rates at January’s meeting. Instead, the Fed held steady. It had lowered rates in three steps of 25 basis points and given the stubborn inflation rates and weakening dollar, paused at this meeting.

I actually think that if the president could have shut up for once and toned down the threats (highly unlikely) the members of the Board who are more focused on employment than on inflation – Jefferson and Cook – might have voted to lower. Job growth has slowed and most likely is negative. However, the Fed takes its independence seriously and a lowering of the rates would have been perceived as the Fed bending to Trump’s will and would have shaken markets worldwide. Again, the Fed is more effective at fighting inflation than joblessness where in essence it can only lead a horse to water. 

Tax Mitt Romney. Defund ICE?

Tax Mitt Romney!

Can we tax our way out of our national debt crisis? In a word, no although many on the left – and Mitt Romney – think that raising the taxes on the rich might help. Already the top 1 percent pay 40 percent of income-tax revenues while the top 10 percent pay two-thirds. So the question is whether there is enough taxable income amongst the rich to get rid of the deficit. Again in a word no. The Manhattan Institute has done an extensive study and says at most a maximum tax would yield only about 2 percent of GDP and that the oppressive 90 percent tax rates of the 1960s produced “miniscule increases in additional revenues.” Of course such tax rates led to avoidance and encountered the famous Laffer curve where increases in taxes yield lower revenues to the government. 

Mamdani says he wants to get rid of billionaires. Of course he can do that if he gets the state to confiscate further their wealth. They will all leave – see what is happening in California in response to the proposed 5% levy on billionaires. There are 924 billionaires in America with a total wealth of $8.2 trillion. So if you confiscated 100 percent of that you would fall about $30 trillion bit short of the $38 trillion outstanding in national debt. I have always said that if rich folk like Mitt Romney feel guilty about their wealth they can always unilaterally make a donation to the Treasury. But poor Mitt’s net worth is only $300 million so maybe he is talking about taxing the real billionaires.

https://manhattan.institute/article/the-limits-of-taxing-the-rich

Of course, one way to reduce the deficit is to reduce federal spending. Wasn’t that the purpose of Elon Musk and DOGE? Well it didn’t work. Federal spending continues unabated and actually rose this fiscal year along with the deficit. Maybe that is why Trump seems to have shifted from cutting costs to raising revenues (tariffs anyone?). Are we going to get additional revenues from the sale of Venezuelan oil, from Nvidia and Intel chip sales, from Trump’s gold card visa, from the increase in H1-B visa, from the agreements from tariff negotiations, from the fees paid by universities to settle DEI inquiries and all the rest? Well all of those won’t offset the additional $2 trillion that Trump added to the deficit last year. Again, since total income tax receipts are equal to nondiscretionary spending, it is impossible to ever decrease the deficit.

Defund ICE?

Our regular funding crisis is about to reappear. It is the periodic kabuki dance performed by the congress for our entertainment. Last time the red line was the “temporary” Obamacare subsidies. This time it may well be the funding for ICE as Homeland Security comes up for funding. With democrats like California’s Pete Aguilar referring to ICE as the gestapo and Bernie Sanders calling ICE a domestic army for Donald Trump, there is little appetite on the left for supporting any funding of ICE in the bill for Homeland Security. I doubt if that bill will get a single democrat vote and would not be surprised if there were not major defections from the republican ranks as well. The House actually passed a bill on January 14 funding national security and the State Department but only after funding for Homeland Security and ICE were removed from the bill.

On the Senate side, there is no way that an ICE funding bill would get 60 votes. Every democrat except Pennsylvania’s Fetterman are openly hostile to it. Fetterman said “I reject the calls to defund or abolish ICE. I strongly disagree with many strategies and practices ICE deployed in Minneapolis, and believe that must change.” He added “The operation in Minneapolis should stand down and immediately end. It has become an ungovernable and dangerous urban theatre for civilians and law enforcement that is incompatible with the American spirit.” 

Chris Murphy of Connecticut said “I think it is reasonable for Democrats speaking on behalf of the majority of the American public who don’t approve of what ICE is doing to say, ‘If you want to fund the Department of Homeland Security, I want to fund a Department of Homeland Security that is operating in a safe and legal manner.’” Chuck Schumer has asked that the Homeland Security appropriations bill be dropped from the funding package entirely saying “People should be safe from abuse by their own government.” By the way although Minneapolis has galvanized the opposition to ICE and its tactics, Angus King (I-ME) noted ICE’s operation in Maine saying I can’t vote for a bill that includes ICE funding under these circumstances.” He added The people that are being terrorized in Maine, are being terrorized by ICE. Here’s what’s happening in Portland. People are afraid to send their kids to school, people are afraid to go to work, businesses are suffering because their workers can’t come in.”

Translation: ICE will be left out in the cold.

Lisa Cook at the Supreme Court

The Supreme Court is hearing arguments regarding the president’s attempt to fire Fed governor Lisa Cook. Fed governors are nominated by the president and confirmed by the Senate to fixed terms. A governor cannot be fired by the president except “for cause.” Prior to this president, it has been understood if there were a legitimate “for cause” then the governor would be impeached by the Senate rather than fired by the president. However, this president loves to test the boundaries of the power of the executive and “fired” Cook. The reason was an alleged misrepresentation of primary residence on a mortgage application. Mind you, the president had done exactly the same thing on two mortgage applications himself. But never mind. The allegations were that in doing so Cook (and Trump) received a lower mortgage interest rate.

When Trump’s attack dog Bill Pulte head of the Federal Housing Financing Agency produced copies of Cook’s mortgage documents, Trump “fired” Cook who, of course, ignored it all saying that the president did not have the authority to fire her. Cook actually was not being fired “for cause” but “because” the president wanted to intimidate and take over the Fed. The lower courts allowed her to stay in place while the matter was being adjudicated.

There are two issues here. The first is whether the president can fire a member of the Fed’s Board of Governors. The second is whether the governor can be relieved of duties prior to a court hearing and due process. At the Supreme Court all the justices appeared skeptical of the arguments made by the president’s attorneys. First it appeared that they all rejected the assertion that Cook could be fired and removed from office without due process. So the fact that she remained at the Fed conducting her duties while the case was being litigated seemed reasonable to the justices despite Trump’s arguments to the contrary. 

Thus, an allegation of mortgage fraud did not rise to immediate removal. Justice Alito questioned the “hurried manner” of the “firing” without a substantive review of the fraud allegations saying that Trump’s attempt to fire Cook was “handled in a very cursory manner.” Chief Justice John Roberts appeared to also rule on what constitutes “for cause.” Other justices questioned about clarity regarding due process and whether an accused could remain in position while the case was being litigated. Justice Kavanaugh worried about Fed independence and Trump’s attempt to fire Cook “at will” saying that a newly elected president could then attempt to fire all of the governors that did not support his economic objectives. 

As to the gravity of the charges, the president’s attorney said that Cook’s mortgage applications showed “deceit” or “gross negligence” and that “Even if it was inadvertent or a mistake, it’s quite a big mistake.”  He also said “The governors set interest rates for ordinary Americans all across the country. And, here, there’s the appearance of having played fast and loose or at least been grossly negligent in getting favorable interest rates for herself.” It is difficult to believe that Trump’s attorney even took his own arguments seriously and said this with a straight face. The savings amounted to only a few thousand dollars and the “crime” is rarely, if ever, prosecuted. The court rightly viewed that comment with skepticism. That such a frivolous charge would rise to the firing of a Fed governor is laughable. By the way, if this were really an impeachable offense don’t you think Al (Full of Fire) Green, Bernie Sanders and Elizabeth Warren wouldn’t be filing articles of impeachment against the president who in the words of Trump’s own attorney committed mortgage fraud himself?

Fed chairman Powell attended the hearing and was promptly criticized by Trump’s new spokesman, Treasury secretary Bessent who said of Powell’s presence, “I actually think that’s a mistake. Because if you’re trying not to politicize the Fed, for the Fed chair ⁠to be sitting there, ​trying to put ​his thumb on the scale is a real mistake.” I guess Bessent conveniently forgot that he, himself, had attended a court hearing on Trump’s tariffs. Bessent sat in the front row of the gallery during Supreme Court arguments in November about Trump’s authority to impose sweeping tariffs alongside Commerce secretary Lutnick and trade negotiator Jamieson Greer. Clearly, the administration is grasping at straws.

What’s that saying about glass houses?

I fully expect the court will be unanimous in its decision and it will be to rule against Trump specious argument.