Arias, Scandals, Analysis, and Rants

by Jay Nordlinger

On Friday, I recorded podcasts with two formidable women — very different from each other, but each brilliant, and a leader in her field.

My Q&A is with Angela Gheorghiu, here. She is a Romanian soprano, and one of the starriest, and most controversial, opera singers in the world. She is also a great interviewee — a journalist’s dream, really. Very blunt, for one thing, and often very funny. I did a piece on her in 2012, here.

For this Q&A, Gheorghiu was in Palermo and I in New York. She has a new album, Eternamente, which is stocked with verismo arias. We talk about the album and various other things. I tell her that I haven’t heard about any Gheorghiu scandals lately, which is disappointing. Has she slowed down? In response, she provides new material.

Let me also say this about Gheorghiu: She is a legend, yes, and a piece of work, yes, and great fodder for the media: but she is also a great singer, which is the thing that will be remembered — and heard on recordings, and seen on videos — after everything else has passed.

The other podcast from Friday: Need to Know, with Mona Charen (and me). She is in superb form, as usual. Among the topics are Trump, Kelly, Bush (43), Weinstein, Putin, and the Maltese journalist Daphne Caruana Galizia, murdered for reporting the truth about government officials.

Trump’s Call with a Soldier’s Widow

by Rich Lowry

I’ve said in the matter of the Trump’s call with the widow of Sgt. Johnson that it’s hard to know what to think without hearing the call. Well, we now have what is probably a rough approximation of what Trump said in that call — and the sentiment behind it — in a video of his call with Natasha De Alencar, the widow of Army Staff Sgt. Mark R. De Alencar, who was killed in Afghanistan in April. I defy anyone to listen to this call and not be moved:

A couple of things. In this case, it is the widow, Natasha De Alencar–obviously, an extremely strong person — who says, “It’s what my husband wanted.” Trump is very sympathetic and praises her fallen husband and her family in the highest possible terms. But he, also, toward the end of the call takes a slightly jocular tone, asking if some of her five children are good and some not quite so good. It’s entirely appropriate in context and she gets the joke and and plays along (“right?” she says, “there are always a couple in every group”). It’s easy to see how someone in a different frame of mind could have taken it differently, and how repeated in isolation — he questioned whether her children are good — it could be made into an attack.

Anyway, Natasha De Alencar took comfort in Trump’s call. She is rightly proud of her husband and her children — ages 20 to 5 — and we all should pray for this extraordinary family.

Seeing Stars

by Jay Nordlinger

Over the years, I have often said, “It’s not that William F. Buckley Jr. taught me what to think, it’s that he helped teach me how to think.” When I’ve mentioned this to audiences, people have sometimes said, “Could you explain what you mean? Could you give some examples?”

Well, I thought of Bill this morning. Something popped into my head, and I thought, “Sheer Bill.” This is what I mean by a thought process.

The president’s press secretary said to a reporter, “I think that, if you want to get into a debate with a four-star Marine general, I think that that’s something highly inappropriate.”

Here’s the Buckley thought that popped into my head: “Would it be less highly inappropriate to question a three-star general? Less inappropriate still to question a two-star? Approaching acceptability to question a mere one-star?”

Furthermore: Is this America? Or as Chevy Chase says to Danny in Caddyshack, “Is this Russia?” (WFB would not have cited Caddyshack.)

P.S. John Kelly is a retired general. So is Wesley Clark. He was an Army general, with four stars. I saw him on the street last night (New York). In 2004, he ran for the Democratic nomination for president. I knocked him six ways to Sunday. I would again.

What Real Resistance Looks Like:  A Lesson from Malta

by Carrie Lukas

While the self-styled “Resist” movement in the United States is fond of declaring Donald Trump is “literally Hitler” and fancies itself as taking a brave stance against looming oppression, it’s clear the outspoken critics of the president aren’t actually worried about consequences–which is a very good thing.  After all, how would an actual tyrant react to Web pages like this one?  Or this? In reality, and on balance, Trump seems to be more interested in restoring constitutional limits on the executive than dismantling them, which was more a specialty of his predecessor. 

But amidst the overheated rhetoric among the President’s critics here, it’s worth remembering what actual bravery looks like.

Earlier this week, in European Union state member Malta, investigative journalist Daphne Caruana Galizia was murdered by car bomb as she was leaving her home.   Caruana Galizia was one of the Maltese government’s most outspoken critics, regularly lambasting corruption and malfeasance among senior officials and highlighting their connections to shady businessmen.  This was a political assassination intended to silence that critical voice.  The U.K.’s Guardian newspaper wrote a good background piece on the killing. (Full disclosure:  I’ve met Daphne, though I didn’t know her well.)

To their great credit, Caruana Galizia’s family is refusing to be intimidated by the attack.  Her three sons have released the following statement – a slap in the face to the politicians now trying to score PR points off the murder of their mother:

After a day of unrelenting pressure from the President and Prime Minister of Malta for what’s left of our family to endorse a million-euro reward for evidence leading to the conviction of our mother’s assassins, this is what we are compelled to say.

We are not interested in justice without change. We are not interested in a criminal conviction only for the people in government who stood to gain from our mother’s murder to turn around and say that justice has been served. Justice, beyond criminal liability, will only be served when everything that our mother fought for – political accountability, integrity in public life and an open and free society – replaces the desperate situation we are in.

The government is interested in only one thing: its reputation and the need to hide the gaping hole where our institutions once were. This interest is not ours. Neither was it our mother’s. A government and a police force that failed our mother in life will also fail her in death. The people who for as long as we can remember sought to silence our mother cannot now be the ones to deliver justice.

The police may or may not find out who ordered the assassination of our mother but as long as those who led the country to this point remain in place, none of it will matter – the name of the person who did this will remain a footnote in the history of how our state was dismantled, taken apart piece by piece and devoured by the criminal and the corrupt.

The Prime Minister asked for our endorsement. This is how he can get it: show political responsibility and resign. Resign for failing to uphold our fundamental freedoms. Resign for watching over the birth of a society dominated by fear, mistrust, crime and corruption. Resign for working to cripple our mother financially and dehumanise her so brutally and effectively that she no longer felt safe walking down the street. And before resigning he can make his last act in government the replacement of the Police Commissioner and Attorney General with public servants who won’t be afraid to act on evidence against him and those he protects.

Then we won’t need a million-euro reward and our mother wouldn’t have died in vain.

When your mother has just been assassinated by car bomb, this is a brave statement to make.  And it’s a reminder what real government intimidation and the silencing of critics looks like. 

Helen DeVos, RIP

by Jack Fowler

Approximately a year ago, I had the honor to offer a eulogy to Lee Hanley, a conservative philanthropist who left a mark on behalf of freedom and Christian values due to decades of wisdom, leadership, involvement, and selfless generosity. I’m reminded of this with the passing away on Thursday of Helen DeVos, who leaves behind her husband, Rich, the co-founder of Amway, five children (her son Dick, husband of Betsy DeVos, is a trustee of National Review Institute), and many grandchildren — a family, quite special, which in toto has proven to be in love with God, with country, with freedom. And if you’ve been to delightful Grand Rapids, Mich., with that place too.

Mrs. DeVos’s 90 years were spent in pursuit of good things, for others. Philanthropic beyond anything normal, and maybe even beyond imagination, she and her husband, and then their children’s families, proved a bulwark of support for liberty — in particular for Christian schools of all levels — and of many charities often directed to the young, such as the Helen DeVos Children’s Hospital. And even to a struggling magazine, for which we remain profoundly grateful.

The generosity that Helen and Rich showed was (is!) one concerned with consequence, with results. There is an excellent example of that which we at National Review can speak to. Over the years, by fortune of proximity, we have benefitted by having many students and graduates of Manhattan’s The Kings College intern and work at NR. They are a smart bunch, well-developed young men and women, cheerful witnesses to their faith, friends of our shared principles. Kings was of particular concern to Helen and Rich DeVos, and, not by coincidence, to Lee Hanley and his wife, Allie. At the collegiate level, it is a wonderful thing to see conservative philanthropy truly work, to really matter. And it has at Kings. The education it offers, the results it achieves, is heartening. This comes, in no small part, courtesy of these committed families.

In John we are told: “Jesus wept.” If God can cry at the death of a friend, can’t we too? So we expect tears now, but, as with few others whom this institution has had the privilege to know, can we not also have the confidence that Helen DeVos has attained the true happiness, the eternal peace, which her life here and works here most earnestly sought?

Matthew 25 tells the Parable of the Talents. Let’s not kid ourselves: Helen DeVos was given many. Many! But what she was given, this good and faithful servant returned, many times over. And so, the Master has a promise to uphold. His end of the bargain is truly special. Eternally special. We offer the DeVos family, many of them our friends, our condolences, but we are cheerful for Helen’s fate, and grateful for the beautiful and inspiring life she led.

Special-Interest Politics: Real-Estate Lobby Edition

by Veronique de Rugy

Richard Rubin of the Wall Street Journal tweeted this quote from Doug Holtz-Eakin this week.

I assumed that Holtz-Eakin wasn’t talking about the tax provisions that allow businesses to deduct their business costs from their tax base, such as accelerated depreciation, or the ones that are meant avoid the double taxation of income, such as the deferral of taxes on non-repatriated business income earned (and taxed) overseas.

On the other hand, that quote made me think of the furor from the real-estate industry to the announcement that the Republicans’ tax framework plans to double the standard deduction. Why? Because while the mortgage-interest deduction was preserved in the plan, it would mean fewer taxpayers using the deduction. The Wall Street Journal reported this a few days ago:

One goal of the GOP framework is to simplify the tax code by eliminating preferences that distort economic behavior. Most itemized deductions other than mortgage interest and charitable contributions would be nixed. But the individual standard deduction would increase to $12,000 from $6,350 ($24,000 for married couples) to reduce taxes for most Americans.

The Realtors are upset because they say this middle-class tax cut would make fewer taxpayers use the mortgage-interest deduction. The National Association of Realtors trashed the framework in a statement, saying it “would all but nullify the incentive to purchase a home for most, amounting to a de facto tax increase” and ensure “that only the top 5 percent of Americans have have the opportunity to benefit from the mortgage interest deduction.”

There is so much wrong there that I don’t know where to start. First, notice the entitlement mentality on display here. It is true that for years government has taken it upon itself to prop up homeownership — with various degrees of success. Yet that doesn’t mean that this is a good idea or even within the proper scope of the role of government. So to the extent that the framework removes some of these distortions, it is a good thing.

Moving to a system where fewer people itemize is also a good thing. Tax simplification doesn’t simply bring more fairness to the tax code — it increases efficiency, and it saves taxpayers money and time by reducing their compliance costs.

Third, this quote implies that everyone benefits today and that losing this deduction would mean higher taxes for taxpayers. Wrong. Today, roughly a third of taxpayers itemize and claim the deduction. From MarketWatch:

In 2018, 35.4 million households are expected to claim itemized deductions for mortgage interest, according to a study released in May by the National Association of Realtors and auditing firm PwC. Comparatively, the report estimated that 40.7 million taxpayers will report itemized deductions in 2018 for property taxes. (The U.S. Census Bureau estimates that there are roughly 117 million households in the U.S., which would mean that just under a third claim the mortgage interest deduction).

This is a good read, too. Research has shown that the mortgage-interest deduction mostly benefits higher-income earners. This is from Mark Calabria back in January 2017 (he was at the White House):

Fully 75 percent of federal dollars — including tax expenditures — used to subsidize housing goes to high-income households through the mortgage interest deduction and other homeownership tax benefits. Seven million households with incomes of $200,000 or more receive a larger share of these resources than the 55 million households with incomes of $50,000 or less, even though lower-income families are far more likely to struggle to afford housing. Half of all homeowners receive no tax benefit from the mortgage interest deduction, and almost all of the tax break goes to households with incomes above $100,000. At the same time, only one in four of the poorest households that are eligible for housing assistance get the help they need because of chronic underfunding.

In addition, like most subsidies, the mortgage-interest deduction artificially inflates the price of homes. That means that homeowners don’t really benefit from it because, though they do sell their homes at higher prices than they would be worth without the subsidy, they also have to buy over-priced homes.

And as Jeff Dorman explains in this piece over at Forbes, the claims that the deduction, by encouraging homeownership, has a positive impact on the economy is dubious:

Yet, thanks to a new study out based on Danish data, many people are now wondering if there is anything positive about this tax break. While the debate is not settled, right now the answer appears to be no. The mortgage interest deduction is nothing more than rent seeking on behalf of the real estate industry. It confers no benefit to society as a whole.

What the new study by economists Jonathan Gruber, Amalie Jensen, and Henrik Kleven showed, at least in Denmark, is that the mortgage interest deduction did not boost home ownership rates, only prices and the amount of money that people borrowed when they bought houses. The official rationale for a tax code that favors debt related to houses is that home ownership creates benefits to society because it makes people feel more invested in their communities and should thus be encouraged. If the mortgage interest deduction only increases mortgage debt and home prices, not home ownership, then it is a failed policy and its repeal should be considered.

MarketWatch adds:

At the same time, the tax break doesn’t seem to incentivize homeownership a whole lot. Government data show that the homeownership rate in Canada (69%) is actually slightly higher than in the U.S. (63.7%), despite the fact that the Canadian tax code doesn’t include any deduction for mortgage interest paid. And rental households obviously don’t see the tax benefit, since they don’t have access to it. “It’s not clear that the U.S. has had a boon of homeownership because of the mortgage interest tax deduction,” Chacón said.

These results are consistent with the findings of many other studies, such as this one by my colleagues Jason Fichtner and Jacob Feldman. See this very recent study’s findings:

We simulate the effect of tax reform on the housing market. Eliminating the mortgage interest deduction causes house prices to decline, increases homeownership, decreases mortgage debt, and improves welfare. Our findings challenge the widely held view that repealing the preferential tax treatment of mortgages would depress homeownership.

There is so much more out there on the issue. While I have my issues with the doubling of the standard deduction (mostly I don’t like that it kicks more people off the tax rolls), I recognize that it will bring very needed simplification to the tax code. The furor of the real-estate lobby is evidence of that. Their criticism should be ignored for the benefit of all.

Wanted: An Intern

by Rich Lowry

I’m looking for an intern in our New York office to help with research and administrative work for a book project. If you are interested, please contact Rachel at [email protected]. Thank you.

The Out that Trump Never Permits Himself

by Rich Lowry

I know I’ve said the condolence controversy should go away, but since it isn’t, allow me to make another point.

We don’t know what exactly was said in the Trump call with the widow of Sgt. Johnson. We do know, pretty definitively, that she and the rest of the family took offense. Maybe what Trump said would have landed differently if he had said it to another family that, say, supports him politically and is inclined to believe in his good intentions. Or maybe how he delivered his message really was terribly inept. Whatever the case, all that should matter here is that the family was upset.

The normal thing to do in this situation would be for the person who said something that was taken the wrong way — especially when it is the president of the United States and the aggrieved party has just lost a loved one in uniform — to come back and say something like, “I really didn’t meant it the way you heard it and it pains me to think that I’ve in any way added to your distress. Please accept my apology and deepest condolences.”

If Trump could bring himself to do this, it would, 1) be the right thing to do; 2) instantly drain this controversy of much of its power; 3) win him praise, even from some unexpected quarters. But Trump can never give even a little ground, because any disagreement or criticism instantly becomes personal and the occasion for combat, no matter what the circumstance.

On Representative Wilson’s Cynical Slander of General Kelly

by Charles C. W. Cooke

Per the terminally naïve Chris Cillizza:

On Thursday afternoon in the White House, chief of staff John Kelly laid into Florida Democratic Rep. Frederica Wilson in harsh terms.

“A congresswoman stood up, and in a long tradition of empty barrels making the most noise, stood up there in all of that and talked about how she was instrumental in getting the funding for that building,” Kelly said.

In an interview on CNN’s “New Day” Friday morning, Wilson alleged that “empty barrel” is a “racist term.” She didn’t explain why.

All of which made me curious: Where does the phrase “an empty barrel makes the most noise” come from? And is there any sort of racial component to those origins? Or to its current usage?

As Cillizza quickly discovers in his post, the answer to the latter two questions is “No.” Indeed, the answer is not just “No,” it’s “You have to got to be kidding me.”

That being so, one would have expected his conclusion to be blunt and to the point: “Representative Wilson,” he should have written, “slandered General Kelly. I came across nothing in my investigation that suggests otherwise.”

For some reason, though, he wrote:

as far as I can tell, it’s wrong to call what Kelly said racist.

“As far as I can tell, it’s wrong”? As far as I can tell? A United States Representative tries to smear a Gold Star parent as a racist, and the response is a brief etymological adventure followed by a “probably not”?

Still, it could have been worse. At MSNBC, the usual suspects have found some interesting ways of justifying the claim. Lawrence O’Donnell, a man who could find racism in the heating element of a toaster, spent much of last night outdoing himself:

One theory: MSNBC host Lawrence O’Donnell devoted almost 20 minutes of his show on Thursday night to Kelly, Wilson and “empty barrel.” O’Donnell suggested that due to Kelly’s boyhood in a Boston neighborhood that was still largely segregated, his choice of words to describe Wilson was intentionally “dehumaniz(ing)” to the congresswoman.

“She was nothing but an empty barrel to him,” said O’Donnell. “He refused to give her the dignity of a name.”

Sure, Lawrence. That’ll be it.

On Twitter, meanwhile, Joy Reid chimed in with the class and sophistication that we’ve come to expect of her:

Thus it was that a phrase that has been attributed to Plato, and used by Plutarch, John Lydgate, William Shakespeare, and Abraham Lincoln — always outside of anything even approaching a racial context — became maybe, sort of, perhaps a racial slur, the best case against which from the ostensibly neutral press was “as far as I can tell . . .”

Shame. Shame on Representative Wilson. Shame on Lawrence O’Donnell. Shame on Joy Reid. And shame on Chris Cillizza, too, for lacking the guts to call this what it was: a slander. There is no quicker way to damage the fight against genuine racism than to suggest that everything you dislike is bigotry, that all criticism must be motivated by animus, and that even the most innocuous of commonly used phrases must, deep down, have sinister racial connotations. An empty barrel indeed.

Fighting to Retake Higher Ed in Wisconsin

by George Leef

The Left used to talk all the time about the need to “reform” everything, but now that they’ve been in the driver’s seat in many places, the reformers are conservatives who want to restore sanity. A good example is higher education, where “tenured radicals” have been running things for the most part. Now that the legislators who appropriate the money for state colleges and universities have begun looking at what’s going on, they are up in arms, complaining about interference in “their” business.

Consider the battle in Wisconsin over the Campus Free Speech Act. A bill to protect free speech and make the universities accountable for failures to do so has the Left furious in the Badger State. Professor Mark Zunac, who teaches at UW-Whitewater, discusses the fight in today’s Martin Center article. Ignoring the many ugly incidents of shouting-down, disinvitation, and violence, Wisconsin’s “progressives” declare it a phony controversy. One activist group goes so far as to claim that the bill is meant to give “safe spaces” for conservatives and would subject students to sanctions for speaking out. The bill has passed the state assembly and awaits action in the senate. Perhaps opponents will throw a tantrum the way they did over Governor Walker’s Act 10 reforms (that word again) back in 2010.

Another mini-war was fought over tenure in Wisconsin, which used to be the only state where having it was a matter of law. The Left wailed about that too, but now tenure policy is in the hands of the Board of Regents, not enshrined in law.

Zunac also discusses a reform that would allow students to opt out of paying fees that covered leftist campus stuff such as “Sex Out Loud” — too bad that proposal was removed. Campus organizations should raise their own money, not rely on money taken without the consent of students.

Returning to the free speech problem, Zunac mentions that back in May, Charles Murray spoke in Madison, but that the event was held at a private club to avoid the likelihood of a Middlebury type riot.

A closed forum such as this has the advantage of actually taking place, since the establishment where the event takes place can control who is admitted. However, as Murray himself noted, the format inhibits the kind of free and open exchange that was once the hallmark of liberal education. In the absence of institutional seriousness in addressing crises like that of free speech, this presently seems like a desirable option. But unless and until our public universities find seriousness, we will have politicians intervening in higher education.

That sums things up pretty well.

Republicans Against the 401(k)

by Andrew Stuttaford

Once again, the GOP is behaving as if it believes that it will be running Washington in perpetuity. Scrapping tax ‘breaks’ that have hitherto been thought to be politically untouchable, such as the mortgage interest tax deduction, a sensible deduction that is not only logical—if interest income is taxable (and it is), then interest expense should be deductible—but may even do some good, in exchange for what could quite easily be a short-term cut in tax rates makes little sense. Give the Democrats a chance—and sooner or later they will get the chance—and higher tax rates will return. The tax breaks will not.

And so (via the WSJ) we come to this idiocy (my emphasis added):

[L]awmakers are looking at proposals that would allow 401(k) participants to contribute significantly less than what is currently allowed in a traditional tax-deferred 401(k). An often mentioned amount is $2,400 a year. It isn’t clear whether that would only apply to 401(k)s or IRAs or both.

Currently, employees under age 50 can save up to $18,000 a year in a 401(k), while those 50 or older can set aside up to $24,000. In an IRA, the annual contribution limits are capped at $5,500 and $6,500 for the same age groupings. The 401(k) limits are scheduled to rise to $18,500 and $24,500 in 2018.

And there’s something else, which Rob Portman, at least, appears to understand:

Sen. Rob Portman (R., Ohio) said he was “skeptical” about the idea of lower pretax deferrals for retirement savings. Mr. Portman said Thursday that he didn’t want to make the decision just for revenue reasons.“I’m deeply concerned about it,” he said. “I don’t think you want to disincentivize retirement savings in any way right now.

No, you do not, especially as those most likely to be disincentivized are those at lower income levels.

Throw Another Gun Study on the Pile

by Robert VerBruggen

The Washington Post writes up a new one from a group of researchers centered around Boston University. It finds that “shall-issue” concealed-carry laws, which allow all citizens to carry guns provided they don’t have significant criminal records and meet any training requirements, “were significantly associated with 6.5% higher total homicide rates, 8.6% higher firearm homicide rates, and 10.6% higher handgun homicide rates, but were not significantly associated with long-gun or nonfirearm homicide.”

The study’s methods seem basically sound, and it differs in interesting ways from previous work, including using new statistical techniques and an additional year of data, as well as disaggregating homicides according to what type of gun they were committed with. Perhaps the biggest nit I can pick is that the overall and firearm-homicide results include justifiable homicides, but Michael Siegel, the study’s lead author, tells me those were removed for the analyses of handgun and long-gun homicides. (They rely on different data sets, one of which includes information on whether a homicide was justifiable and the other of which does not.) Some might also worry that it doesn’t account for homicide trends within states that had begun before right-to-carry laws were enacted, though that technical debate is a bit beyond my ken as a journalism major. And with these studies one can always argue about which variables the authors chose to “control” for and which were left out.

This is worth taking seriously, but it doesn’t push me away from my general skepticism of claims that concealed carry either increases or reduces crime. Here’s a brief explanation as to why.

I’ve been following this debate for more than a decade, during which time there’s been a fundamental shift in the literature. Back in the day, in general, some studies found that concealed carry reduced crime while others were unable to detect a difference. In 2005, the National Academies put out a report coming down with the agnostics, yet one member of the panel dissented, preferring the more-guns-less-crime view. But more recently, some concealed-carry states have seen increases in crime relative to other states, and the results in later work have thus shifted. Some studies now find an increase in violent crime, though until now, increases in murder have been a bit more elusive.

Here is an often-cited recent analysis, for example. Dig through the tables to see that, bizarrely, for the full period of 1977 to 2014, the results for overall violent crime are pretty consistent while the results for murder are usually statistically insignificant. (The results limited to 2000 to 2014 are if anything more chaotic and uncertain.) That study actually includes many more years of data than does the current one (which runs from 1991 to 2015).

The violent-crime trend might be real . . . but does that mean concealed carry becomes harmful over time, as more people acquire permits, or is something else going on today in the disproportionately red and rural states that enacted these laws years ago? The new study’s finding of a homicide increase concentrated among handgun homicides certainly buttresses the former possibility. But why is it able to find a result (increased homicide) that didn’t show up consistently in previous research using more data?

For the record, I generally respect Siegel’s work — and he’s proven willing to defy the consensus of his public-health field on vaping, another issue dear to us conservatarian types. But my jaded belief after spending far too much of my life reading these kinds of studies is that (A) there are many subjective decisions researchers have to make when they do this work and (B) the true effects of concealed carry are small enough that they will appear or disappear based on these subjective judgments, whether or not researchers are intentionally biased.

Freedom Partners All in against Corporate Welfare

by Jack Fowler

Here’s the commercial FP is airing as part of the tax-reform fight:

Time for a New Fed Chairman

by Iain Murray

The establishment is pulling out all the stops to demand that President Trump reappoint Janet Yellen as Federal Reserve chair. But a new chair of the Federal Reserve would help take the central bank in a direction that helps the economy.

One of the problems of Janet Yellen’s time as chair has been that huge amounts of business time and energy have been devoted to reading the tea leaves before each and every Fed meeting: Will she or won’t she raise interest rates? What is the Fed going to do about its huge pile of assets? The economy would be helped by less speculation and more certainty about what path the Fed will take.

That’s why a so-called “maverick” choice, such as John Taylor of Stanford University, would be better for the economy. What the Fed really needs is more rules about how it will handle its responsibilities — and Taylor is well known for the “Taylor Rule,” which adjusts interest rates counter-cyclically. That is, under the Taylor Rule, the Fed raises interest rates when the economy is possibly overheating (for instance, when inflation is high) and lowers rates if the economy looks like it’s cooling down.

What is important is not the exact form of the rule (there are other options besides the Taylor rule), but that it is predictable. The bank has a rule and follows it, in good times and in bad, regardless of political pressure. This is essentially how the Fed operated under Paul Volcker, Fed chair under Presidents Jimmy Carter and Ronald Reagan from August 1979 to August 1987. That predictable behavior made possible a huge increase in living standards.

Predictability is crucial because it keeps the price system honest. Entrepreneurs can make long-term plans knowing that the Fed isn’t going to freak out during a crisis and willy-nilly change course. They don’t have to build in unnecessary hedges against policy changes (costing them, their employees, and their customers more) or suddenly change their business practices, possibly laying off staff or shocking their customers.

It is ironic that economists such as Taylor who promote such predictability as a virtue are the ones nowadays described as mavericks. America’s entrepreneurs and businesses urgently need more stable government policies that encourage economic growth. A move to a rules-based Fed under a chair who can guarantee the Fed is going to stick to the rules will be good for the Fed, good for the economy, and good for America.

President Trump Should Visit the DMZ in Korea.

by Jim Geraghty

From the last Morning Jolt of the week:

President Trump Should Visit the DMZ in Korea.

President Donald Trump should visit the Demilitarized Zone during his visit to South Korea in early November. Those contending that a presidential visit would be “provocative” are urging the United States to conduct its foreign policy in a defensive crouch, terrified of causing offense to a regime that doesn’t hesitate to suddenly fire missiles over U.S. allies.

A presidential visit to the Demilitarized Zone is not only legal and protected under treaties, it is traditional: every president since Reagan has made the visit except George H.W. Bush, who visited when he served as vice president. Earlier this year, Vice President Mike Pence visited.

The advocates of scrapping the traditional visit don’t seem to realize what they’re advocating. They want the United States to limit its own activities out of fear of causing offense or angering a regime that A) seems to find everything to be an outrageous provocation, including the continued existence of South Korea, Japan, and the United States and B) demonstrates no concern about its own actions being perceived as “provocative”, including acts usually interpreted as acts of war, such as firing artillery shells into another country’s territory or sinking their naval vessels.

No other regime would seriously object to an American president visiting any location within the territorial borders of an ally. A presidential visit is only provocative because the North Koreans decree it is provocative.

This amounts to terms where the Pyongyang regime can do anything it wants without serious consequence and we meekly decide to rule out certain actions to avoid giving offense.

Not only will we never have peace under this approach, but it actually increases the likelihood of eventual all-out war. If you keep rewarding aggressive and threatening behavior, you only get more of it.

The other objection to a Trump visit is the fear that the president would not be safe there:

However, officials in both the U.S. and South Korean governments have raised concerns that Trump could become a target in the heavily fortified area that separates the two Koreas, according to a source familiar with U.S.-South Korea relations.

If the North Korean regime really is tempted to try to kill President Trump while he’s visiting South Korea… then the situation is even more dangerous than we thought. A regime that is willing to carry out a surprise attack on the commander-in-chief cannot be trusted to live with nuclear weapons.

It is worth remembering that Presidents Bush and Obama visited war zones in Iraq and Afghanistan and also countries with intense terrorist threats like Pakistan, and the U.S. Secret Service rose to the challenge.

William F. Buckey once said, “When the Soviet Union challenged America and our set of loyalties, it did so at gunpoint. It became necessary at a certain point to show them our clenched fist and advise them that we were not going to deal lightly with our primal commitment to preserve those loyalties.”

The North Koreans want to negotiate at gunpoint. The point of these visits is to remind them that we have a gun, too.

Friday links

by debbywitt

This short 1901 film has some surprisingly impressive special effects: The Fat and the Lean Wrestling Match.

The Mathematics Of Measuring Cups.

The Krakatoa volcanic eruption in 1883 was so loud it ruptured eardrums of people 40 miles away, traveled around the world four times, and was clearly heard 3,000 miles away.

Flowers Have Secret Blue Halos That Bumblebees Can See.

10 Fun Fashion Facts from the Middle Ages.

How The Princess Bride Built Film’s Most Beloved Sword Fight. Here’s the fight scene.

ICYMI, Tuesday’s links are here, and include ways in which Martian laws will differ from Earth laws, a set of 1860s photos of the five stages of inebriation, eating the world’s spiciest chip, and, for Rita Hayworth’s birthday, a compilation of her dancing.

Senator Paul Is Right about Government Spending

by Veronique de Rugy

Senator Rand Paul is getting a lot of grief for his complaint that the budget resolution going through the Senate right now is busting the Republicans’ own budget caps by over $40 billion. The reason why his obstruction is upsetting so many people is that it is seen as getting in the way of tax reform. Indeed, as everyone recognizes, “the budget is merely a vehicle for passing tax reform with 51 Senate votes.”

Ryan Ellis wrote over at Forbes:

Senator Paul is a key figure in this round of votes. He’s uncomfortable with the budget resolution because of the amount it sets aside for the “Overseas Contingency Operation” (OCO), originally a War on Terror supplemental defense package which has essentially become a way to get around the spending caps on the Pentagon. He is correct on this policy. However, let’s go back to the above — the FY 2018 budget resolution is a document which is wholly meaningless except in one gargantuan respect — it sets up a process for Congress to consider tax reform under the simple majority, expedited mechanism known as “reconciliation.”

This is probably true. And yet, considering the spending history of the Republican party when in power, which Dan Mitchell reminds us of here, we should be concerned that this supposedly wholly meaningless document will become wholly meaningful because it is a prediction of spending levels that will come to pass.

If that’s the case, we should care a great deal because failing to keep spending in check while cutting taxes will inevitably result in higher taxes down the road.

Now, is this a good reason to vote against the budget resolution? Probably not.

But I also know that arguments such as “We can’t address our debt levels by cutting defense spending” or “Only entitlement cuts matter, so who cares about defense caps?” or “No one wants to cut spending, so let’s just focus on tax reform” are not good arguments. They are the reason why we are in this fiscal mess in the first place. It is only a matter of time before too much spending and a failure to reform the drivers of our debt will come back to bite the Republicans where it hurts. Mark my words: One day, this refusal to address our spending issues will lead Republicans to accept a VAT, a carbon tax, and higher marginal tax rates on all Americans.

Ultimately, I am grateful that someone is willing to remind Republicans that they can’t continue to claim to be the party of fiscal responsibility if all they are willing to do is cut taxes.

The Adult in the Room

by Rich Lowry

John Kelly addressed the condolence flap today. Let’s hope his moving, impressive, highly informative statement puts an end to this whole thing:

Ex-Im Cronyism Redux

by Veronique de Rugy

If you look around, you’ll see that corporate welfare is everywhere. Occupational licensing, certificate-of-need laws, farm subsidies, and more. And boy, is it everywhere when the Export-Import Bank is involved.

Last week, Representative Charlie Dent (R., Pa.) introduced a bill trying the make the Export-Import Bank less accountable. This is yet another attempt by the lawmaker to get rid of the bank’s quorum requirements that there be three members on the board to approve loans of more than $10 million. Needless to say, this move is not meant to benefit the little guys but the Boeings and GEs of the world. The bank has only had two members for the last two years and yet, as you may have noticed, the sky didn’t fall. Exporters are exporting, foreign buyers are buying U.S. goods, Boeing is getting richer selling planes that don’t even have government support, and GE is still doing well too.

We shouldn’t be surprised by Dent’s support of cronyism. He has done this twice before. Also, back in 2015, he voted against requiring Ex-Im to use fair-value accounting principles, which would have made its cost more transparent. He voted against prohibiting Ex-Im transactions that aren’t competing with foreign export credit agencies, making it clear that his support for Ex-Im is not conditional to the usage excuses used by its advocates. He voted against increasing small-business mandates for the Bank, showing his support for big-business cronyism. He also voted against requiring Ex-Im customers to provide a guarantee and collateral, which would have reduced taxpayers’ exposure. He also voted against blocking Ex-Im deals where foreign countries have sovereign-wealth funds north of $100 billion. In other words, he is for lending large sums of money at lower rates to large and wealthy companies, even if they are state-owned ones where the state in question is wealthy, with plenty of access to capital.

There is more, but I would be remiss if I didn’t highlight this particular vote. Dent voted against prohibiting Ex-Im from lending to state sponsors of terrorism, including Iran. He was joined by a surprisingly large number of Republicans, including Representative Stephen Fincher (R., Tenn.), who is likely to run for Senator Bob Corker’s seat in Tennessee against Representative Marsha Blackburn. The bottom line is that all these lawmakers believe it is A-OK for Ex-Im to back deals for the sales of Boeing planes to Iran.

Finally, he was very eager to use a discharge petition in order to renew the bank’s charter after it expired on July 1, 2015. This was offensive in so many ways: With this move, not only was he going around the will of a majority of his own party, but also around Chairman Jeb Hensarling (R., Texas), who is both from his own party and head of the committee of jurisdiction.

I noted the other day that a Republican majority doesn’t guarantee more free-market and small-government policies. As a someone pointed out — I think it was Andrew McCarthy — the Republican party is more a coalition of interests than a party that represents a particular ideology. That’s right. Sadly, it is also a coalition where a majority of its members have very moderate free-market principles. The Obamacare repeal debacle is a good example of that. Mr. Dent’s behavior with Ex-Im and other issues got him a lifetime score of 48 from the Club for Growth. Hopefully, in his quest to revive cronyism for the big guys, he will be defeated once again.

Growth and the Fed

by Ramesh Ponnuru

George Schultz and John Cogan, two eminent scholars at the Hoover Institution, argue in the Wall Street Journal that the first criterion for a new Fed chairman is someone who recognizes that our economy is capable of higher growth:

The next leader of the Fed must recognize this potential for higher productivity and be willing to establish a monetary policy that accommodates a faster-growing economy. He must not mistake more-rapid economic growth for an overheated, inflation-prone economy that needs cooling off. A Fed that made such a mistake would only perpetuate the slow-growth, low-productivity, stagnant-wage economy of the past decade.

I assume that an example of what they have in mind is that the Fed should not see wage gains as a sign of incipient inflation that calls for higher interest rates, but instead see them as a sign of higher economic growth that does not require a monetary response at all. Similarly, higher-than-expected economic growth should be seen as an increase in our potential rather than as a sign of “overheating.”

One of the advantages of a monetary rule that seeks a stable growth path for nominal spending is that it has the properties Schultz and Cogan seek. Say the Fed is targeting 4 percent nominal-spending growth over a year, and expects 2 percent inflation and 2 percent real economic growth. If productivity rises, the Fed can stick to the 4 percent target — neither restraining the economic boom, as the authors say the Fed should avoid, nor trying to feed it. Only the composition of nominal spending will change. If the Fed hits its target, inflation will come in below 2 percent and real growth above 2 percent.

Even better, the Fed does not have to be able to predict whether the economy will be growing at 1, 2, or 3 percent in order to implement the rule. It does not have to determine exactly why wages are rising (when they are rising). It does not have to know whether inflation is falling because of productivity improvements or sagging demand. In that way, a nominal-spending target accounts for the knowledge problem that afflicts all monetary policymakers. And it makes for a monetary policy that is appropriate under many different sets of economic conditions.