Good Friday Morning! After a hiatus the last few weeks, I’m back. It’s been busy for me, and I’m sure for you too as the Christmas season has set in and the year comes to a close. A lot has happened, so let’s jump right into the three big stories this week.
I’ll start off analyzing the Alabama Senate race where Democrat Doug Jones defeated Republican Roy Moore in a race that featured a rare win for Democrats in Alabama. Next up I’ll go over the highlights of the GOP tax bill working its way through Congress (I also include a link to a calculator that will tell you how you come out in the tax bill). Finally, I wrap things up with a look at the big net neutrality story out. Links follow.
New this week at the Conservative Institute
The NYT ran a profile piece of a self-described neo-Nazi living in the Midwest. They received considerable backlash for running such an article. I go into why it was good they ran the piece and why the criticism that this is normalizing evil is wrong.
In this piece, I cover what I consider a fundamental point: treating politicians the same as you would your TV hosts. This article was written in the wake of the Matt Lauer revelations, and no politician had been forced out of office at that point. Thankfully, it appears Congress is following this advice.
Finally, my latest column for the Conservative Institue covers the overall trend I believe we’re observing with all the sexual assault allegations in our culture: the implosion of the Sexual Revolution. I briefly trace the history of the sexual liberation movement from the 1920’s forward and show how we’re watching that faux-morality collapse before our eyes.
Alabama Turns Blue and Elects Doug Jones over Roy Moore
There’s nothing else you can call what happened in Alabama other than historical. Doug Jones, a Democrat, won a statewide Senate seat in Alabama. For reference, the last time that happened was 1992 when current Senator Richard Shelby was elected (Shelby switched parties two years later).
There are two broad questions about this election: 1) How did it happen? And 2) What does this tell us about 2018 and beyond? Let’s hit both.
First, Doug Jones won due to a perfect storm of circumstances: A) Republican voters, particularly those in the suburbs, didn’t show up. They didn’t like Roy Moore, for obvious reasons. B) Black turnout doubled from previous races, giving Jones a better lockdown of the major cities. C) Roy Moore and Donald Trump both had high unfavorable numbers. D) Democrats were, in the end, more energetic about voting than Republicans.
Alabama is a state that usually swings to the GOP by around 30 points, and Doug Jones will win with somewhere between 1-2 points after the votes are certified. That represents a 30+ point swing towards Democrats in this race, which is a seismic shift. Nate Silver probably has the best take here; you can say that 20 of those points were due to Moore’s general unlikeability (he’d lost statewide races in the past for a reason), and the last 10 points to election fundamentals favoring Democrats in general.
The critical point for me is that Republican voters sat out this race to such a degree, they gave the Democrat a win rather than vote for Roy Moore. Between those who sat out and 20+ thousand write-in voters, Republican voters vigorously protested their choices. Roy Moore marks the sixth time Republicans have lost an easily won Senate seat because the candidate was just too extreme or a gaffe-prone idiot.
The Alabama GOP got forced down this path by Steven Bannon and the Breitbart crowd. While it’s fashionable to blame Mitch McConnell, his and Trump’s choice, Luther Strange, would have won the race easily. Steve Bannon, who one House Representative called, a “Disheveled drunk who wandered onto the political stage,” pushed Roy Moore hard. The Bannonites didn’t get Trump elected, Trump and Hilary Clinton got Trump elected. Bannon is cancer to the GOP and conservatism at large.
As for 2018 and beyond, the GOP should be very scared and careful here. On the one hand, the general lesson is not to run a credibly accused child predator like Roy Moore. On the other side, Republicans are on the verge of a tidal wave where they could lose the House entirely. The Senate is a more hard push, but with Roy Moore’s loss, places like Tennessee will be harder to hold for Republicans (Phil Bredesen (D) opens with a two-point lead over Marsha Blackburn (R) in the TN Senate race).
Election fundamentals are entirely in line with a swing towards Democrats. That places Republicans on the defensive and, as such, Republicans have a smaller margin of error concerning bad candidates. Roy Moore is the worst case scenario, a lousy candidate losing in a very red state. The only way to win in an environment like that is to push the right candidates and localize the race, focusing on non-Trumpian issues.
If the GOP runs more bad candidates, they’ll only exacerbate the likelihood of a wave election.
The Republican Tax Bill – The Latest Version
The Senate is currently debating the latest piece of legislation to make it through the House, The Tax Cuts and Jobs Act. The two primary aims of this bill are to boost the number of jobs in the economy and increase wages. The last point is critical because wage stagnation is a real problem since the end of the great recession. As a recent Harvard Business Review piece put it:
Since the global financial crisis, wage growth (without adjusting for inflation) has continued to be slow. In part, this represents low inflation — real wage growth in recent years has actually surpassed the rates in the 1980s, 1990s, and 2000s, but is still low — and it may also represent the hangover from a severe recession. Labor market slack has been one reason for low wage growth earlier in the recovery and may still have some impact recently; the more available workers are out there, the less ability workers have to demand higher wages. The reintegration of unemployed or new workers into the workforce after a recession can also lead to slower wage growth, given that their wages are generally lower than those of already-employed workers.
In theory, if the Tax Reform Bill does increase the number of jobs in the marketplace, you should expect wages to go up. If there are more job openings than there are workers, that means workers become more valuable and can demand higher wages. As you’ll hear many people say, the US is near record-low unemployment. The problem is that even with record low unemployment, we’re not seeing wages increase, which makes me skeptical we’ll see increases under this legislation.
However, where income boost could happen is through tax cuts, for both corporations and income earners. If you give people more in their pockets, they can then turn around and spend it to boost the economy. Again, this is all theoretical.
The goal of lowering the corporate tax rate is to boost research and development projects here in the states. If corporate taxes are too high, corporations will move their businesses overseas to attain lower rates. Recently, we’ve seen this happen through whats called tax inversions. That’s where a company relocates its legal country of residence to achieve lower corporate tax rates while remaining in business in their country of origin. Ireland is a popular choice for this move.
Lowering the corporate tax rate is an attempt to make the US more tax friendly and competitive with other countries to encourage those businesses to pay taxes here, instead of using tax inversions. By cutting taxes, it’s also supposed to incentivize corporations to use that extra income for research and development and future job creation (or boost wages).
The tradeoff here is that through tax cuts, the US government will naturally run a higher deficit and run up more debt. Most Republicans are willing to accept this for the short term to boost growth long term. The idea is that if you increase growth, you’ll create more businesses and make everyone more prosperous in the process, which produces more taxable income. All of this takes time to materialize (Avik Roy goes through this in some detail).
The Wall Street Journal created a GOP tax plan calculator so you can see how the plan would benefit you, specifically. It’ll get you in the ballpark of how the program could affect you – with the primary caveat being that the idea hasn’t passed yet and is still being written/debated.
The million dollar question is: will all of this work? The answer: I don’t know. The corporate tax rates are long overdue for overhaul and reform. US tax rates in that regard have encouraged tax inversions to other countries. As the world has become more competitive in a rebuilt post-WWII/Cold War world, that competition puts a strain on states to lower their tax rates to compete, like any other market.
My primary concern is that companies will not use the money/capital they gain through tax breaks to invest in themselves and American jobs. Since the Great Recession, businesses have poured a lot of money into their savings accounts and stock buybacks. There are already some signs on Wall Street that investors are pouring money into companies they believe will use the extra tax savings to buy back stocks. So instead of investing the money, corporations will hoard the cash to save for a rainy day.
There are a variety of reasons for why companies are hoarding cash, but I think the primary one is that they’re risk-averse and terrified of the next recession. The principal lesson for most businesses in the Great Recession is that if you get caught with mountains of debt, you’ll end up going bankrupt because you won’t get bailed out. Only the companies that saved money and still suffered got bailouts. An article I featured a few weeks ago about the Retail Apocalypse underscores this point, companies strung out with debt are getting hammered.
How do we fix these problems? I don’t know. But I’m not convinced the Tax Cuts and Jobs Act will get us there. I can see this legislation boosting economic activity over the short term, but I don’t see it fixing some of the significant structural issues in the economy today. Hopefully, I’m wrong on this point. And if Donald Trump gets to sign this piece of legislation, we’ll find out for sure.
The FCC Reverses Net Neutrality Rules
Probably the most extensive story hitting your social media feeds was the FCC repealing net neutrality rules put out by the Obama-era FCC in 2015. The NYT reports:
The Federal Communications Commission voted on Thursday to dismantle rules regulating the businesses that connect consumers to the internet, granting broadband companies the power to potentially reshape Americans’ online experiences.
The agency scrapped the so-called net neutrality regulations that prohibited broadband providers from blocking websites or charging for higher-quality service or certain content. The federal government will also no longer regulate high-speed internet delivery as if it were a utility, like phone service.
The action reversed the agency’s 2015 decision, during the Obama administration, to have stronger oversight over broadband providers as Americans have migrated to the internet for most communications. It reflected the view of the Trump administration and the new F.C.C. chairman that unregulated business will eventually yield innovation and help the economy.
I’m sympathetic towards the net neutrality crowd and have posted and written favorably about them in the past. I’ve come around to the idea, however, that the net neutrality rules as put forward by the FCC were overbroad and potentially unconstitutional. The powers the FCC claimed in the 2015 ruling were expansive and, in my mind, usurped power that’s more appropriately the role of Congress.
To put a more fine point on that: rule by an agency is not how the United States is designed to run. Even if the Net Neutrality rules were perfect, they should be created by Congress. Treating internet providers like public utilities is not something a bureaucratic agency should be able to do without Congressional input. If Democrats mean what they say on net neutrality, they should be able to put together bipartisan legislation to fix it.
I’m by no means an expert in this area. I do, however, know one. Jordan Crenshaw is a friend of mine from law school and he’s written several pieces for the US Chamber of Commerce on net neutrality that I recommend:
- It’s the End of Internet Regulation as We Know It (And We’ll Be Fine)
- Here are the Facts. Congress Did Not Give Away Your Internet Privacy.
- Three Ways to Bring Communications Regulations into the Digital Age
Best links of the web
Paul Ryan Sees His Wild Washington Journey Coming to An End – Tim Alberta and Rachael Bade, Politico Magazine
Miss Israel: Iraqi contestant’s family forced to flee country over joint selfie: Photo taken with Israeli, along with bikini pose, led to death threats against Sarah Idan’s relatives in Baghdad, Israeli contestant Adar Gandelsman says – The Times of Israel
Berkeley’s Judith Butler wants to ban socially conservative speech – Tom Rogan, The Washington Examiner
A progressive push for more gun violence – Walter Olson, The New York Post
Mueller needs to make a change – Andrew C. McCarthy, The Washington Post
Alt-Right Hyped Sexual Harassment Hoax to Attack Schumer: The fake document accusing Sen. Chuck Schumer of sexual harassment copied language from a real document that exposed Rep. John Conyers. – Kelly Weill, The Daily Beast
Right-Sizing the Power of Republican Insurgents: The GOP must learn from the Alabama loss: Trump and Bannon are not indomitable. – Megan McArdle, Bloomberg View
Is Trump Driving Young Republicans Out of the Party? – Kristen Soltis Anderson, The New York Times
Alabama Stunner Reshapes Senate Map: Democrats now have a plausible path to retaking the upper chamber in a political environment that looks downright disastrous for Republicans. – Josh Kraushaar, The National Journal
Peter Strzok, FBI agent removed from Robert Mueller’s Russia probe, called Trump an ‘idiot’ – Kevin Johnson, USA Today
Bonfire of the academies: Two professors on how leftist intolerance is killing higher education – Heather Heying and Bret Weinstein, The Washington Examiner
Maureen Dowd Praises #MeToo—After Years of Slut-Shaming Monica Lewinsky: The Times columnist had praise for the women stepping forward on Capitol Hill—but let’s not forget how she repeatedly called Monica fat, stupid, and a sexual predator. – Erin Gloria Ryan, The Daily Beast
Firms reach $7.8-million settlement over allegations of selling fetal tissue – Daniel Langhorne, The LA Times
Jerusalem Denial Complex – Brett Stephens, The New York Times
The Case for the Baker in the Gay-Wedding Culture War – Andrew Sullivan, New York Magazine
Porn Star Commits Suicide After Mob Hounds Her For Refusing Partner Who Had Gay Sex: You really have to marvel at how fast we’ve progressed from ‘Bake the cake, bigot’ to ‘Take off your dress, bigot.’ – Mark Hemingway, The Federalist
The Undeath of Cinema: Why digital resurrection is so creepy — and how it’s hastening Hollywood’s decline into a soulless factory – Alexi Sargeant, The New Atlantis
Satire piece of the week
STUDIO CITY, CA—Everyone looks forward to the light, fluffy Christmas movies the Hallmark Channel airs non-stop for three months at the end of each year, but the cable channel is taking a dark turn this year with several gritty new films.
The first of these, The Christmas Slaughter, features a handsome young businessman (James Van Der Beek) forced to go home to the country for the holidays, where he meets a charming girl raised on a farm—but uh-oh!—she’s actually a demon-possessed axe murderer.
According to the Hallmark Channel, the young couple must learn how to deal with their differences, with the protagonist having trouble adjusting from life in the big city, and his love interest having trouble with her demon-influenced, insatiable desire to slaughter everyone she’s ever loved under the full moon. Add in the crazy hijinks of the couple’s nosy parents and old love interests coming to call, and you have yourself a recipe for holiday cheer and also lots of bloody, senseless slaughter!
Thanks for reading!