Defense Spending

The Pronk Pops Show 970, September 22, 2017: Breaking Story 1: Rocket Man Kim Jong-Un Promises To Explode Hydrogen Bomb Over Pacific Ocean — Story 2: The Democratic and Republican Party Failure To Completely Repeal Obamacare Including Repealing The Patient Protection and Affordable Care Act (ACA) and All Related Mandates, Regulations, Taxes, Spending and Subsidies — Obamacare Collapsing — Replace Obamacare With Free Enterprise Market Capitalism Health Insurance — Keep The Federal Government Out Of The Health Insurance and Health Care Business — Videos — Story 3: Obama’s Secret Surveillance Spy State Scandal — Misuse of Intelligence Community For Political Purposes — Gross Abuse of Power and Political Conspiracy — Violation of Fourth Amendment — Videos —

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Image result for rocket man kim h bomb in pacific

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Breaking Story 1: Rocket Man Kim Jong-Un Promises To Explode Hydrogen Bomb Over Pacific Ocean —

North Korea Threatens Nuclear Test in the Pacific Ocean

What could happen if NKorea tests hydrogen bomb over ocean?

Kim Jong-un makes unprecedented statement at Trump as N. Korea suggests future …

Panel on Kim Jong Un Calls President Trump ‘Dotard’ and ‘Frightened Dog’ #DonaldTrump #NorthKorea

“Rocket Man” : North Korea’s Kim Jong Un Calls President Trump ‘a Frightened Dog’ and ‘Dotard’

Putin warns US, North Korea on verge of conflict

Hydrogen Bomb vs. Atomic Bomb: What’s The Difference?

North Korea nuclear test: Hydrogen bomb ‘missile-ready’ – BBC News

Fareed Zakaria on North Korea hints at detonating H-Bomb in Pacific. #Breaking #FareedZakaria

LGM-30 Minuteman Launch – ICBM

Why Is It So Hard to Build an ICBM?

Why North Korea Can’t Build An ICBM (yet)

 

People in Pyongyang, North Korea, watched a television broadcast on Friday of Kim Jong-un’s response to President Trump’s speech at the United Nations. CreditEd Jones/Agence France-Presse — Getty Images

SEOUL, South Korea — North Korea has long cultivated an image of defiant belligerence, punctuating its propaganda and diplomacy with colorful threats, insults and bluster. But by addressing President Trump in a personal statement on Friday, the nation’s leader, Kim Jong-un, has pushed his government’s brinkmanship to a new, potentially more perilous level.

In a statement written in the first person, published on the front pages of state newspapers and read on national television, Mr. Kim called Mr. Trump a “mentally deranged U.S. dotard” who had “denied the existence of and insulted me and my country in front of the eyes of the world.”

Mr. Kim vowed to take the “highest level of hard-line countermeasure in history.”

In a country where the leader is essentially portrayed as a god, Mr. Kim’s decision to respond personally to Mr. Trump’s speech to the United Nations General Assembly and pledge reprisals escalated the standoff over the North’s nuclear program in a way that neither he nor his predecessors had done before.

Though the statement made no mention of nuclear weapons, in the context of a political system built on a cult of personality, Mr. Kim’s intervention appeared to sharply reduce the possibility that his government might retreat or compromise, even in the face of war.

Mr. Kim condemned Mr. Trump’s threat to “totally destroy” North Korea if the United States is forced to defend itself, and he declared that it had “convinced me, rather than frightening or stopping me, that the path I chose is correct and that it is the one I have to follow to the last.”

Mr. Ri could not have made such an alarming comment without approval from Mr. Kim, although some analysts question whether North Korea has the technology or political daring to conduct an atmospheric nuclear test, something the world has not seen for decades.

Mr. Trump responded on Friday by further personalizing the dispute. On Twitter, the president pronounced Mr. Kim to be “obviously a madman.”

North Korea has often issued statements in the names of its government and its People’s Army, and since taking power in late 2011, Mr. Kim has delivered an annual New Year’s Day speech. But Friday’s statement was the first by Mr. Kim directed openly at a foreign head of state. Mr. Kim’s father and grandfather, who ruled North Korea before him, never made such a statement, South Korean officials said.

In effect, Mr. Kim, whose cultlike leadership rests upon his perceived daring toward North Korea’s external enemies, has turned the nation’s standoff with the United States into a personal duel with Mr. Trump, analysts said.

The North Korean news media carried photographs of Mr. Kim sitting in his office and reading his statement, but his voice was not broadcast. On the country’s state-run Central TV, a female announcer read his statement.

“This is totally unprecedented,” said Paik Hak-soon, a longtime North Korea analyst at the Sejong Institute, a think tank outside Seoul, referring to Mr. Kim’s statement. “The way North Korea’s supreme leadership works, Kim Jong-un has to respond more assertively as its enemy gets more confrontational, like Trump has.

“There is no backing down in the North Korean rule book,” Mr. Paik said. “It’s the very core of their leadership identity and motive.”

Until now, Mr. Kim himself has appeared to refrain from personal attacks on the American president, even as Mr. Trump has called him a “maniac,” a “total nut job,” and, most recently, “Rocket Man.”

On Friday, Mr. Kim said he took Mr. Trump’s latest assault personally and accused him of making “the most ferocious declaration of a war in history.”

Mr. Kim also suggested Mr. Trump’s belligerent rhetoric signaled American weakness rather than resolve. “A frightened dog barks louder,” he said.

Koh Yu-hwan, a professor of North Korean studies at Dongguk University in Seoul, said that Mr. Kim, faced with Mr. Trump’s threat of annihilation, could respond only with equal force.

“When Trump stood before the United Nations General Assembly and threatened to totally destroy his country, Kim Jong-un had to take that as the United States telling the world of its intention for possible military action,” Mr. Koh said. “He had to respond in kind, launching the same kind of verbal bombs.”

Analysts said that by putting his reputation on the line with his statement, Mr. Kim was now far more unlikely to stand down. Instead, his government was likely to conduct more nuclear and missile tests, they said.

“Trump shot himself in the foot with his unabashedly undiplomatic United Nations General Assembly speech,” said Lee Sung-yoon, a Korea expert at the Fletcher School of Law and Diplomacy at Tufts University. “By threatening to totally destroy North Korea, he created the impression around the world that it is actually the United States — instead of North Korea — that’s motivated by aggression. In effect, Trump gave Kim Jong-un a freebie for another major provocation. Kim will oblige, and claim that it was in ‘self-defense’ against Trump’s unnerving threats.”

Daryl G. Kimball, executive director of the Arms Control Association, compared the Korean standoff to the October 1962 crisis over Soviet missiles in Cuba, urging the United Nations secretary general, António Guterres, to convene the six parties that were previously involved in talks on denuclearizing the Korean Peninsula — China, Japan, North Korea, Russia, South Korea and the United States — to discuss reducing fever-pitch tensions.

“We are in a cycle of escalation that leads to a very bad end,” Mr. Kimball said.

North Korea has conducted all of its six nuclear tests within deep underground tunnels to diminish the spread of radioactive materials, and has stepped up the pace of its missile tests. Some analysts fear that the next step might be for North Korea to try to prove that it can deliver a nuclear warhead on a long-range missile, no matter how dangerous and provocative that might be.

It has been 37 years since any nation tested a nuclear weapon in the planet’s atmosphere, reflecting the nearly universal opposition to such tests over fears of the effects of radioactive fallout on human health and the environment. The last atmospheric test took place in 1980, when China fired what experts believed to be a nuclear-tipped ballistic missile into a desert salt flat more than 1,300 miles west of Beijing.

Mr. Trump addressing the United Nations General Assembly on Tuesday. CreditChang W. Lee/The New York Times

Shin Beom-chul, a security expert at the government-run Korea National Diplomatic Academy in Seoul, said that even if North Korea wanted to conduct an atmospheric nuclear test in the Pacific, it did not have the ability to dispatch test-monitoring ships to the open ocean while the United States military was on the prowl.

Mr. Shin said North Korea probably would not risk the radioactive fallout and other grave dangers involved in a nuclear missile test. The country has yet to master the technologies needed to prevent the warhead at the tip of its long-range ballistic missile from burning up while re-entering Earth’s atmosphere, South Korean officials said.

“What if the nuclear missile goes wrong midflight and detonates over Japan? It would mean a nuclear war,” Mr. Shin said. “More likely, North Korea will graduate its provocations, as if moving on steppingstones.”

Analysts said North Korea had been escalating tensions in stages in what they called a “salami tactic,” as in slice by slice.

Kim Dong-yub, a defense analyst at the Seoul-based Institute for Far Eastern Studies of Kyungnam University, said that North Korea would probably try to disprove skeptics in the West over its ability to strike long-range targets by firing its Hwasong-14 intercontinental ballistic missile over Japan and farther into the Pacific — but without a nuclear payload.

Some analysts said the North Korean leader was acting more defensively than offensively, with his threats aimed at forcing the Trump administration to ease sanctions. On Thursday, Mr. Trump issued an executive order empowering his government to punish international banks and other entities that trade with North Korea.

But other analysts warned that North Korea’s determination to improve its nuclear capabilities — and act offensively — had long been underestimated.

“If we follow what North Korea has been doing, it will be almost certain that it will fire its missile sooner or later to demonstrate an ICBM range,” Mr. Kim, the Kyungnam University analyst, said. “I don’t think the missile will carry a nuclear warhead, but I can’t shake off the fear that it might, because North Korea has time and again carried things beyond my expectation.”

Story 2: Obamacare Collapsing– American People Be Damned — Democratic and Republican Parties Fail To Completely Repeal Obamacare Including Repealing Patient Protection and Affordable Care Act (ACA) and All Related Mandates, Regulations, Taxes, Spending and Subsidies — Replace Obamacare With Free Enterprise Market Capitalism Health Insurance — Keep The Federal Government Out Of The Health Insurance and Health Care Business — Videos

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Graham-Cassidy Will Probably Fail. McCain and Paul Announce No Votes

BREAKING NEWS: McCain kills Obamacare repeal for a second time and announces he’ll oppose his p…

Rand Paul a No Vote on Graham-Cassidy HC Bill. He Explains

RAND PAUL FULL ONE-ON-ONE EXPLOSIVE INTERVIEW WITH MARTHA MACCALLUM (9/18/2017)

Rand Paul Goes Off On Obamacare “Repeal”

Senator: Graham-Cassidy not an Obamacare repeal

Senator Rand Paul (R-KY) On Latest Obamacare Effort: This Is Not Repeal – The Five

RAND PAUL FULL ONE-ON-ONE EXPLOSIVE INTERVIEW WITH NEIL CAVUTO (9/14/2017)

 

Paul: ‘I won’t be bribed or bullied’ on repeal vote

Sen. Rand Paul (R-Ky.) pushed back on Friday against pressure from President Trump to vote for a last-ditch GOP effort in the Senate to repeal and replace the Affordable Care Act, saying that he “won’t be bribed or bullied.”

In an early-morning tweet, Trump warned Paul that if he failed to vote for Sens. Lindsey Graham (R-S.C.) and Bill Cassidy‘s (R-La.) health-care proposal, he would forever be known as “‘the Republican who saved ObamaCare.'”

But in a series of tweets following the president’s post, Paul contended that the Graham-Cassidy measure does not fulfill the GOP’s longtime promise to repeal the ACA, and ultimately keeps ObamaCare’s taxes and spending.

The Graham-Cassidy measure revives the GOP’s efforts to repeal and replace parts of the ACA after a slimmed-down repeal bill failed in July. It seeks to end ObamaCare’s insurance subsidies and the Medicaid expansion, and instead convert those pots of money to block grants for the states.

The new proposal needs at least 50 votes to pass the Senate with a tie-breaking vote from Vice President Pence, and backers are scrambling to round up the votes before a Sept. 30 procedural deadline, after which the measure would need a filibuster-proof 60 votes.

The White House has thrown its weight behind the measure and Trump has tweeted his support for it in recent days, casting the bill as a new opportunity for the GOP to fulfill its seven-year promise to do away with ObamaCare.

So far, Paul is the only GOP senator who has indicated he will vote against the Graham-Cassidy proposal. But three others — Sens. Susan Collins(Maine), Lisa Murkowski (Alaska) and John McCain (Ariz.) — are being closely watched.

The trio voted “no” on the “skinny” ObamaCare repeal bill in July leaving that bill one vote short of passing. All three remain undecided about the Graham-Cassidy proposal.

http://thehill.com/policy/healthcare/351865-paul-i-wont-be-bribed-or-bullied

3 red-flag provisions in the Graham-Cassidy health care bill

Posted September 21, 2017 08:36 AM

by Daniel Horowitz

Red flag storm warning

John-Kelly | Getty Images

Previously, I noted that while Graham-Cassidy does nothing to change the fundamentals of the current system of health care and medical insurance, it at least repeals the individual mandate, which will allow us to escape from the dumpster fire and potentially start a new system. But any “holding of the nose” to pass this bill should only be under the condition that the other provisions are not worse than the status quo. That’s the only way we can take “half a loaf rather than none” — or in this case, more like ten percent. That rationale breaks down if there are provisions that will make the system worse or further entrench Obamacare in current law.

Thus far, I have found three concerning provisions:

Protected class for insurance coverage

Page 13 of the bill stipulates that “a health insurance issuer may not vary premium rates based on an individual’s sex or membership in a protected class under the Constitution of the United States.”

Readers of Conservative Review are well aware that the radical king courts have already made foreign nationals and transgenders protected classes under the U.S. Constitution in many respects. Most certainly, once we codify such language into statute, there is no limit to what lower court judges and Anthony Kennedy will do to expand “constitutional” rights to all sorts of insurance coverage. They could use this provision to mandate coverage for illegal aliens. They could use this provision to carve out all sorts of coverage for homosexuals and for sex-change operations. Most certainly, it will give states trouble in cutting off subsidy funding for abortions.

This might possibly be worse than current law.

Forcing Texas and conservative states to expand government-run health care

Proponents of the bill are touting this system as an exercise in federalism because it devolves the subsidies and Medicaid expansion to the states in one giant pot. Some D.C. conservatives think it’s a good thing that red state that didn’t originally expand Medicaid will “get their fair share.” However, those who truly oppose Obamacare and understand free markets know that expanded Medicaid not only is costly and creates dependency but also distorts the market and inflates the cost of health care for everyone else. Furthermore, it hurts private practices because the programs pay hospital physicians more than private practice physicians. Medicaid expansion has been a boon for the hospital cartel and has destroyed any semblance of market-based health care.

Until now, we all celebrated the one silver lining of some red states not expanding Medicaid. Now, this bill brings this aspect of Obamacare, and its ensuing price inflation on the market, to the states that don’t currently have it. Worse, the bill (page 15) puts a gun to the heads of these states and says that if they want a waiver for even the few regulatory relief provisions offered in this bill, they must take and administer the federal Obamacare/Medicaid expansion grants.

Thus, to the extent a state can waive a regulation for an individual insurance contract, they must give subsidies to that individual — regardless of his status. He could be a millionaire!

As Chris Jacobs, noted health policy expert at the Texas Public Policy Institute, wrote, “Moreover, some conservatives may view provisions requiring anyone to whom a waiver applies to receive federal grant funding as the epitome of moral hazard—ensuring that individuals who go through health underwriting will receive federal subsidies, no matter their level of wealth or personal circumstances.” He further observed, “By requiring states to subsidize bad actors—for instance, an individual making $250,000 who knowingly went without health coverage for years—with federal taxpayer dollars, the bill could actually raise health insurance premiums, not lower them.”

Thus, this is not a “half a loaf,” this is a poisonous loaf. While blue states are free to move the funding further to the Left and create single-payer, in no way can red states move towards free markets, because for every step they make towards regulatory relief, they must add more market-distorting funding than even under the status quo. This will hook the politicians from the reddest of red states on the dope they didn’t fully embrace before now.

The bailout fund

It would be one thing to leave most of Obamacare in place, as opposed to leaving it all in place. But this bill adds a state bailout fund that entrenches Obamacare even further. Not only does it codify the illegal cost-sharing subsidies for three years (and we all know the three years will be expanded indefinitely), it creates an unaccountable $35 billion slush fund for HHS to dole out at their full discretion to “fund arrangements with health insurance issuers to address coverage and access disruption and respond to urgent health care needs within States.” And of course, rather than disappearing in 2020, this will create a funding cliff that will only expand the program thereafter.

As I mentioned before, the only saving grace of this bill is that repeal of the individual mandate will prompt consumers to leave the insurance cartel and create direct care and health-sharing associations as an alternative to this entire scheme. However, by creating an unaccountable bailout program, HHS bureaucrats will work with state bureaucrats and insurance cartel lobbyists (no elected officials involved!) to mask the price inflation to keep the insurance monopoly intact.

It will codify, enshrine, and expand Obamacare.

Overall, it’s understandable why conservatives would want to support something over nothing at this late hour. And with the right focus on supply-side market reforms, we could possibly make a partial repeal work, with the elimination of the mandates. But politicians must first focus on not making things worse. Moreover, they should at least negotiate to get rid of the bailout fund and these onerous provisions while working for some true health care reforms, such as price transparency and parity of tax treatment. If this requires using the reconciliation bill for next year to fix health care, then so be it.

The mother’s milk of the D.C. swamp is the false dichotomy of “take or leave it.” Don’t fall for the trick without first fighting for more.

https://www.conservativereview.com/articles/3-red-flag-provisions-in-the-graham-cassidy-health-care-bill

Story 3: Obama’s Secret Surveillance Spy State Scandal — Misuse of Intelligence Community For Political Purposes — Gross Abuse of Power and Political Conspiracy — Violation of Fourth Amendment — Videos —

Sharyl Attkisson speaks out about Obama-era surveillance

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Special Report : Krauthammer on FBI, CIA and NSA served subpoenas in unmasking probe : 5/31/2017

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Hannity : Circa News reports Obama’s FBI illegally shared spy data about Americans : 5/25/2017

James Clapper Admits To Unmasking Trump

President Obama went to British intelligence to spy on Trump for him! – Judge Napolitano

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It looks like Obama did spy on Trump, just as he apparently did to me

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The Pronk Pops Show 969, September 21, 2017, Story 1: President Trump Signs Executive Order Targeting Institutions and People Doing Business With North Korea — Communist China Trades With and Enabled North Korea Nuclear Weapon and Missile Programs — Waiting For Embargo Banning All Trade and Investment in Communist China — Videos — Story 2: Fed To Start Quantitative Tightening In October 2017 by Selling Some ($10 Billion Per Month or $120 Billion Per Year) of $4,500 Billion Bond Portfolio As U.S. Economic Slows in 2017? — Videos

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 Story 1: President Trump Signs Executive Order Targeting Institutions and People Doing Business With North Korea — Communist China Trades With and Enabled North Korea Nuclear Weapon and Missile Programs — Waiting For Embargo Banning All Trade and Investment in Communist China — Videos —

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BREAKING NEWS: President Donald Trump Announces New Sanctions on North Korea through Executive Order

Trump: China has told its banks to stop doing business with North Korea

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John Bolton calls for ‘sweeping’ set of sanctions on China

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John Bolton: We are at a ‘crisis point’ with North Korea

Trump administration undercuts his message on North Korea

Former CIA Director James Woolsey: North Korea Has Been Able To Hit Power Grid For Years | CNBC

Ralph Peters on North Korea: China will never help us

Peters: People don’t understand how desperate North Korea is

China getting away with ‘trade murder’: Ralph Peters

What Are Economic Sanctions?

Chinese sanctions will help US trade deficit, but could backfire: Andrew Peek

Gordon Chang: China understands the effects of US sanctions

Lou Dobbs : Is China helping North Korea create nuclear missiles? : 5/30/2017

Gordon Chang: NKorea is forcing the United States to act

Trump unplugging Chinese banks will end China’s economy: Gordon Chang

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What Is Life Really Like In North Korea?

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Trump signs order aiming to cut off funding for North Korean missile program

  • President Donald Trump signs an executive order to expand his authority to target people and institutions doing business with North Korea.
  • With the action, he aims to reduce funding going to the dictatorship’s nuclear and missile programs.

President Donald Trump speaking as he meets with South Korean president Moon Jae-in during the U.N. General Assembly in New York, September 21, 2017.

Trump unveils order aiming to cut off funding for North Korean missile program  

President Donald Trump on Thursday signed an executive order expanding his authority to target people and institutions that do business with North Korea.

Through the measure, the president aims to cut off the communist dictatorship’s funding and deter its nuclear and missile ambitions amid a string of recent tests and provocations.

“North Korea’s nuclear weapons and missile development is a grave threat to peace and security in our world and it is unacceptable that others financially support this criminal, rogue regime,” Trump said before a meeting with Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-in. “Our new executive order will cut off sources of revenue that fund North Korea’s efforts to develop the deadliest weapons known to humankind. The order enhances the Treasury Department’s authorities to target any individual or entity that conducts significant trade in goods, services or technology with North Korea.”

The isolated nation has tested ballistic missiles and an apparent hydrogen bomb in recent weeks in the face of international economic sanctions and warnings. On Tuesday, Trump told the U.N. General Assembly that the U.S. “will have no choice but to totally destroy North Korea” if it is forced to defend itself or its allies.

President Donald Trump speaking as he meets with South Korean president Moon Jae-in during the U.N. General Assembly in New York, September 21, 2017.

Kevin Lamarque | Reuters
President Donald Trump speaking as he meets with South Korean president Moon Jae-in during the U.N. General Assembly in New York, September 21, 2017.

Last week, the U.N. Security Council unanimously passed fresh measures to punish the communist dictatorship economically, with the support of China and Russia. Trump has repeatedly pressed China, North Korea’s only major ally, to do more to force Pyongyang to abandon its nuclear ambitions.

Trump on Thursday highlighted that China’s central bank has told its banks to strictly implement U.N. sanctions. He thanked President Xi Jinping for what he called a “bold” and “somewhat unexpected” move.

On Tuesday, he also commended Beijing for signing on to two recent sanctions packages enacted by the Security Council. The U.S. sees China’s commitment to sanctions as crucial to forcing Pyongyang to end its nuclear and missile programs.

Trump appeared to try to quash speculation that he is targeting China or other North Korean trading partners with the action.

“I want to be clear — the order targets only one country, and that country is North Korea,” he said.

Trump said the order identifies industries including textiles, fishing, information technology and manufacturing, which the Treasury Department can target with “strong sanctions.” The president added that the order includes “measures designed to disrupt” shipping and trade networks to reduce North Korea’s ability to avoid the sanctions.

Earlier, national security advisor H.R. McMaster said Trump would take more action to stop North Korea “short of war.” Trump’s advisors have repeatedly said they prefer to use diplomatic methods to curb North Korea’s aggression.

The president again said that he seeks the “complete denuclearization” of North Korea.

Trump had separate bilateral meetings scheduled with both Moon and Abe on Thursday.

https://www.cnbc.com/2017/09/21/trump-to-make-north-korea-announcement-mcmaster-says.html

 

Trump announces new economic sanctions targeting North Korea over nuclear program

 September 21 at 12:45 PM

President Trump announced an executive order on Sept. 21 to enforce economic sanctions on North Korea and countries that do business with the “rogue regime” of North Korea. (The Washington Post)

NEW YORK — President Trump announced an executive order Thursday granting the Treasury Department additional authority to enforce economic sanctions on North Korea and target foreign companies and individuals that do business with the rogue nation in Northeast Asia.

Trump said the new powers aim to cut off international trade and financing that dictator Kim Jong Un’s regime uses support its nuclear and ballistic missile weapons programs. The president also said that Chinese President Xi Jinping had ordered Chinese banks to cease conducting business with North Korean entities. Trump called the move “very bold” and “somewhat unexpected,” and he praised Xi.

“North Korea’s nuclear program is a grave threat to peace and security in our world, and it is unacceptable that others financially support this criminal, rogue regime,” Trump said in brief public remarks during a meeting with the leaders of South Korea and Japan to discuss strategy to confront Pyongyang.

He added that the United States continues to seek a “complete denuclearization of North Korea.”

He added that the order will give Treasury Secretary Steve Mnuchin the “discretion to target any foreign bank knowingly facilitating specific transactions tied to trade with North Korea.”


President Trump meets with South Korean president Moon Jae-in during the U.N. General Assembly in New York on Thursday. (REUTERS/Kevin Lamarque)

A White House fact sheet said the executive order imposes a ban on airplanes or ships that have visited North Korea will be banned for 180 days from visiting the United States, a move to crack down on illicit trade.

“This significantly expands Treasury’s authority to target those who enable this regime…wherever they are located,” Mnuchin said.

Trump’s announcement came as he has sought to rally international support for confronting Pyongyang during four days of meetings here at the United Nations General Assembly. In a speech to the world body on Tuesday, Trump threatened to “totally destroy” the North if necessary and referred derisively to Kim as “rocket man.” But the president and his aides have emphasized that they are continuing to do what they can to put economic and diplomatic pressure on the North in order to avoid a military conflict.

“We are witnessing a very dangerous confrontation spiral,” Russian Foreign Minister Sergey Lavrov said in a speech to the United Nations, filling in for President Vladimir Putin, who skipped the forum. “We resolutely condemn the nuclear missile adventures of Pyongyang in violation of Security Council resolutions. But military hysteria is not just an impasse, it’s disaster…There is no alternative to political and diplomatic ways of settling the nuclear situation on the Korean Peninsula.”

China is North Korea’s largest trading partner, but Mnuchin emphasized that “this action is in no way specifically directed at China,” and he said he called Chinese officials ahead of the announcement to give them a heads up.

In recent weeks, the U.N. Security Council has approved two rounds of economic sanctions but also left room for further penalties. For example, the sanctions put limits on the nation’s oil imports but did not impose a full embargo, as the United States has suggested it supports. The Trump administration has signaled it also wants a full ban on the practice of sending North Korean workers abroad for payments that largely go to the government in Pyongyang.

Sitting down with South Korean President Moon Jae-in before the trilateral discussion with Japan, Trump said the nations are “making a lot of progress.”

Moon praised Trump’s speech to the U.N., saying through a translator that “North Korea has continued to make provocations and this is extremely deplorable and this has angered both me and our people, but the U.S. has responded firmly and in a very good way.”

The Security Council had also applied tough new export penalties in August, and Secretary of State Rex Tillerson said Wednesday that there are signs those restrictions are having an economic effect.

“We have some indications that there are beginning to appear evidence of fuel shortages,” Tillerson said in a briefing for reporters. “And look, we knew that these sanctions were going to take some time to be felt because we knew the North Koreans…had basically stockpiled a lot of inventory early in the year when they saw the new administration coming in, in anticipation of things perhaps changing. So I think what we’re seeing is a combined effect of these inventories are now being exhausted, and the supply coming in has been reduced.”

There is no sign, however, that economic penalties are having any effect on the behavior of the Kim regime and its calculation that nuclear tests and other provocations will ensure its protection or raise the price of any eventual settlement with the United States and other nations.

All U.N. sanctions have to be acceptable to China, North Korea’s protector and chief economic partner. China’s recent willingness to punish its fellow communist state signals strong disapproval of North Korea’s international provocations, but China and fellow U.N. Security Council member Russia have also opposed some of the toughest economic measures that could be applied, such as banking restrictions that would affect Chinese and other financial institutions.

“We continue to call on all responsible nations to enforce and implement sanctions,” Trump said.

Trump said the United States had been working on the North Korea problem for 25 years, but he asserted that previous administrations had “done nothing, which is why we are in the problem we are in today.”

Through executive orders and other measures extending back to the Clinton administration, the United States has been trying to undermine the economic underpinnings of the North Korean nuclear weapons program.

Each new sanction from Washington has been followed by evasive measures by Pyongyang, and then another attempt from Washington to ramp up pressure. Earlier sanctions restricted trade between U.S. companies and businesses involved with the North Korean regime and its weapons efforts. Until recently, however, such sanctions had limited effects because North Korea continued an expansive trade with other countries, mainly China.

In recent years, the United States has sought to expand the economic pressure by working through the international banking system, where the country has particular leverage because so much of international trade is conducted in dollars. The “vast majority of international transactions are denominated in dollars, the world’s reserve currency,” a Congressional report found last year.

Even when the companies are outside the United States, trade conducted in dollars typically must run through U.S. banks, and last year, that provided the Obama administration an opportunity to interrupt such business.

In November 2016, a special measure implemented by the Treasury barred U.S. banks from providing the accounts that handle such transactions for any North Korean bank or any party acting on its behalf. The measure essentially cut off North Korean banks from any trade denominated in U.S. dollars.

North Korea, however, has continued to conduct such trades by using front companies located in third countries, at least some of which are in China.

The new executive order expands the U.S. pressure on the North by allowing the Treasury to single out those front companies, and any banks helping to finance any trade with North Korea, for sanctions. Those sanctions would cut off trade with those companies or forbid them from conducting transactions in dollars.

Anne Gearan in New York,  Abby Phillip in Washington and Peter Whorisky contributed to this report.

https://www.washingtonpost.com/news/post-politics/wp/2017/09/21/trump-says-the-u-s-will-impose-new-sanctions-on-north-korea/?utm_term=.f13cecf3e9e7

US-North Korea standoff could spark economic war with China

  • The escalating saber rattling between the U.S. and North Korea has raised the prospects of an economic confrontation between America and China.
  • So far, economic sanctions against Pyongyang have done little to convince North Korean leader Kim Jong Un to curb his ambitions to develop a nuclear missile capable of striking the U.S. mainland.
  • Now, critics of those measures are calling for stepped-up pressure on China, North Korea’s largest trading partner.

President Donald Trump (L) and Chinese President Xi Jinping (R) walk together at the Mar-a-Lago estate in West Palm Beach, Florida, April 7, 2017.

Jim Watson | AFP | Getty Images
President Donald Trump (L) and Chinese President Xi Jinping (R) walk together at the Mar-a-Lago estate in West Palm Beach, Florida, April 7, 2017.

The escalating saber rattling between the U.S. and North Korea has raised the prospects of an economic confrontation between America and China.

At issue are a series of sanctions against Pyongyang designed to convince North Korean leader Kim Jong Un to curb his ambitions to develop a nuclear missile capable of striking the U.S. mainland.

But those measures have had little impact on the increasingly bellicose stand-off, and on Thursday President Donald Trump repeated his complaint that Beijing needs to lean harder on Pyongyang to defuse rising tensions.

“I think they can do a lot more and I think they will do a lot more,” the president told reporters. “We lost hundreds of billions of dollars a year on trade with China. They know how I feel. It’s not going to continue like that.”

On Tuesday, Trump threatened to inflict “fire and fury” on North Korea if it continues to pursue its nuclear weapons program. A recent series of successful North Korean test launches were matched Wednesday by Kim’s threats to launch a missile at the U.S. territory of Guam.

The latest round of sanctions includes fresh restrictions, unanimously approved Saturday by the United Nation Security Council, that target North Korean exports of coal, iron, iron ore, lead, lead ore and seafood. The measures also ban countries from hiring more North Korean laborers, bar new joint ventures with North Korea and ban fresh investment in existing joint ventures.

“We say to China, ‘You have a choice whether you do business with North Korea or you do business with the U.S. but you can’t do both.'”-Sen. Chris Van Hollen, D-Md.

Economic sanctions so far have proved ineffective largely because North Korea has found ways to get around them with “evasion techniques that are increasing in scale, scope and sophistication,” according to a February U.N. report.

“Designated entities and banks have continued to operate in the sanctioned environment by using agents who are highly experienced and well trained in moving money, people and goods, including arms and related material, across borders,” the U.N. report found.

The widest flow of goods and cash, by far, crosses North Korea’s border with China. As North Korea’s largest trading partner, China accounted for roughly 85 percent of overall volume in 2015, according to data from the United Nations Comtrade database.

Coal and other minerals accounted for more than 40 percent of North Korean exports in 2015, followed by textiles (29 percent), metals (7 percent) and machinery (6 percent). North Korea’s biggest imports included textiles, machinery and raw materials including minerals, metals and plastics.

Though China has taken some steps to curb imports from North Korea, exports rose by nearly 30 percent in the first half of this year, according to Chinese customs data. During the six-month period, overall trade flows across the North Korean-China border rose 10 percent to $2.65 billion.

That’s why critics of the existing North Korean sanctions say the measures don’t go nearly far enough in cutting off the flow of cash and goods to the Pyongyang regime.

Some of those critics are calling for “secondary sanctions,” which would cut off trade and financial flows to any country doing business with North Korea.

“We say to China, ‘You have a choice whether you do business with North Korea or you do business with the U.S., but you can’t do both,'” Sen. Chris Van Hollen, D.-Md., told MSNBC on Thursday. “That is what got people’s attention with the Iran sanctions, and that’s what we need to do now.”

Last month, Van Hollen co-sponsored a bill with Sen. Pat Toomey, R.-Pa., that would impose secondary sanctions targeting third parties and countries that do business with North Korean companies and individuals.

Secondary sanctions offer a powerful financial weapon by allowing the U.S. government to bar foreign banks access to the U.S. financial system.

In late June, the White House imposed limited secondary sanctions on two Chinese citizens and a shipping company for helping North Korea develop nuclear weapons and also accused a regional Chinese bank, the Bank of Dandong, of laundering money for Pyongyang, Reuters reported.

Beyond cutting off cash and supplies to the North Korean regime, secondary sanctions squeeze the flow of cash to individuals, putting pressure on Kim’s political allies, according to David Cohen, a senior CIA official in the Obama administration.

“Imposing secondary sanctions would send a strong message to North Korean leader Kim Jong Un that the financial noose is tightening in a way that could drive a wedge between Kim and the Pyongyang elite critical to his continued hold on power,” Cohen wrote in a recent op-ed piece.

Imposing secondary sanctions that single out major Chinese banks and state enterprises comes with the risk of economic retaliation from Beijing.

To minimize that risk, the White House will need to build a much wider coalition of Asian countries, says Nicholas Burns, former U.S. ambassador to NATO during the George W. Bush administration.

But developing that coalition will be a tough task for an administration that has yet to fill dozens of key diplomatic positions. So far, the White House has filled fewer than half of the State Department positions that require Senate confirmation.

“It really is a time for diplomacy,” Burns told CNBC on Thursday. “But there’s no American ambassador to South Korea, there’s no secretary of State for East Asia. So, you’ve also got to fill out the ranks.”

https://www.cnbc.com/2017/08/10/us-north-korea-standoff-could-spark-economic-war-with-china.html

 

How did North Korea get nuclear weapons?

North Korea showed off its arsenal of missiles during this parade to celebrate the 105th birth anniversary of Kim Il-Sung in Pyongyang, North Korea, April 15, 2017.

North Korea showed off its arsenal of missiles during this parade to celebrate the 105th birth anniversary of Kim Il-Sung in Pyongyang, North Korea, April 15, 2017.

AP Photo/Wong Maye-E

North Korea is known for its bluster and outrageous propaganda, but the nuclear threat posed by the country is taken seriously by those in the know.

The “hermit kingdom” is estimated to have between 13 and 30 nuclear weapons, according to the Institute for Science and International Security. It could have up to 50 by the year 2020.

U.S. President Donald Trump has made it clear that he considers North Korea a legitimate threat. In early April, Trump dispatched the USS Carl Vinson aircraft carrier and its battle group to waters off the Korean Peninsula, and said “major, major conflict” was quite possible.

WATCH: Trump discusses military option for North Korea

Tensions have since soared over fears that North Korea may be about to conduct its sixth nuclear weapons test. On Friday, the country sent a letter to American lawmakers, saying any sanctions would only cause its nuclear testing program to “gather greater pace, beyond anyone’s imagination.”

But how did a country as isolated and impoverished as North Korea get its hands on nuclear weapons in the first place?

The Korean War

In 1950, a few months into the Korean War, U.S. President Harry Truman said in a press conference that the use of an atomic bomb was under “active consideration.”

Truman’s nuclear threat remained just that, with the Korean War formally ending in an armistice in 1953. But U.S. forces still laid waste to North Korean targets, dropping over 650,000 tons of bombs and napalm, according to The Korean War: A History.

U.S. Air Force Gen. Curtis LeMay estimated that the U.S. “killed off 20 per cent of the Korean population.”

WATCH: North Korea propaganda video puts White House in crosshairs, simulates strike on US Capitol

After the war, North Korea tried to convince its wartime ally China to share its nuclear weapons technologies. Supreme Leader Kim Il-Sung, grandfather of present-day leader Kim Jong-Un, twice asked Chinese ruler Mao Zedong for help but was refused both times, according to The Two Koreas: A Contemporary History.

Denied an easy path to a nuclear bomb, North Korea set about cobbling together an indigenous nuclear weapons program.

Soviet support

It helped that the country already had basic nuclear infrastructure in place.

As a founding member of the Soviet-led Joint Institute for Nuclear Research, North Korea had for years sent its scientists to the Soviet Union for nuclear energy training, according to a timeline compiled by the Nuclear Threat Initiative (NTI).

The Soviets even helped North Korea set up its first nuclear reactor in 1964. The reactor was used to produce radioactive isotopes for medicinal, industrial and research purposes.

READ MORE: Mike Pence urges China, Russia to pressure North Korea to abandon weapons program

But in the years that followed, the country began to explore weapons capabilities, summoning its best scientists home — including from Canada, according to NTI — to work on its fledgling nuclear weapons program.

But while North Korea’s scientists had the technical training, they lacked designs for the highly sophisticated facilities needed to produce nuclear weapons.

Path to a plutonium weapon

 In the ‘70s and ‘80s, North Korea set about acquiring sensitive nuclear technologies from Europe, taking advantage of the lack of adequate nuclear information safeguards at the time.

At one point, North Korean agents went to a conference in Vienna and chatted up some Belgian scientists who had a design for a plutonium separation plant, The Atlantic reported.

“Lo and behold, it wasn’t long before the North Koreans obtained the design information for that installation… and then eventually over a period of 10 to 15 years, they set that technology up, they deployed the plant, they started to experiment with it and use it,” Mark Hibbs, a senior fellow with the Carnegie Endowment for International Peace, told The Atlantic.

READ MORE: North Korea says it’s ready for war if Donald Trump wants

In 2003, CIA director George Tenet told the Senate Armed Services Committee that North Korea “probably” has one or two plutonium-based nuclear warheads, according to The Statesman’s Yearbook 2012.

The following year, second-generation Supreme Leader Kim Jong-Il invited a delegation of Western nuclear scientists to North Korea to see its plutonium extraction facility. One of them, American scientist Dr. Siegfried Hecker, revealed in a Google Tech Talk lecture that North Korean officials at one point brought out two marmalade jars of plutonium.

“Inside one was a plutonium powder and the other one had plutonium metal,” Hecker said.

He even held one of the jars in his hand, and concluded from its appearance, weight and warmth that it contained radioactive plutonium.

In 2006, two years after Hecker’s visit, North Korean state media announced the country’s first nuclear weapon test.

By then, the country’s scientists had increasingly begun redirecting their efforts away from plutonium-based nuclear weapons to uranium-based ones, according to NTI. This is because the facilities needed to produce weapons-grade uranium can more easily be hidden underground, away from prying satellites and weapons inspectors.

North Korea wanted to cover all its bases.

Pakistani proliferation

The groundwork for North Korea’s uranium nuclear weapons program was laid in the ‘90s, with substantial help from Dr. A.Q. Khan, the pioneer of Pakistan’s atomic bomb program.

Khan orchestrated the clandestine transfer of uranium centrifuges, enrichment machines and technical data to North Korea over a period of several years, according to the book Nuclear Black Markets: Pakistan, A.Q. Khan and the Rise of Proliferation Networks.

According to the book’s author, Mark Fitzpatrick, some of Khan’s deals were likely tied to existing official agreements between the two countries, wherein North Korea provided ballistic missile technologies to Pakistan.

WATCH: Pakistan test fires submarine-based cruise missile

In 2003, the U.S. learned of North Korea’s plans to build a uranium-enrichment facility with Pakistan’s help. The following year, Khan admitted to running a global nuclear proliferation ring, with Iran and Libya among his other clients.

Khan later told German magazine Der Spiegel that he was merely acting on behalf of the Pakistani leadership.

He even released what he claimed was a 1998 letter from Jon Pyong-ho, one of the architects of North Korea’s nuclear program, in which Pyong-ho assures that $3 million has been transferred to Pakistan’s army chief, and asks that Khan dispatch “the agreed documents, components, etc.” via a North Korean emissary.

READ MORE: Pakistan refuses to release doctor who helped US find Osama bin Laden

Khan was later pardoned by Pakistani leader Gen. Pervez Musharraf.

“By freely selling enrichment equipment and putting the designs on computer disks, Khan significantly lowered the technical barriers to nuclear weapons development,” Fitzpatrick wrote.

And no country benefited more from Khan’s largesse than North Korea.

READ MORE: Pakistan issues nuclear warning to Israel on Twitter after fake news story

In 2010, Dr. Siegfried Hecker was again invited to North Korea, and was this time taken on a tour of a uranium enrichment facility. He described what he saw as “truly mind-boggling” — around 2,000 centrifuges that appeared to contain highly enriched, weapons-grade uranium.

“[The North Koreans] take whatever they can get, and then they build things themselves, and they do it quite well,” Hecker concluded in his Google Tech Talks lecture.

The Nuclear Silk Road

In early 2015, debris from a North Korean satellite launch were analyzed by experts and found to contain components manufactured in the U.K. and routed through Chinese companies, according to a United Nations Panel of Experts report.

The following year, foreign journalists on a tour of a Pyongyang factory spotted a shipment of boxes from Calgary-based chemical producer Dow Canada, the Washington Post reported.

These are but two of several known instances of North Korea evading international sanctions and export controls to procure weapons components.

WATCH: China says it will impose more sanctions on North Korea if missile test conducted: Tillerson


“North Korea is very creative in the way that it goes about sanctions evasion, and the patterns in which it goes about it vary,” Andrea Berger, a senior researcher with the James Martin Center for Nonproliferation Studies, told Global News.

Berger says North Korea often sends trusted nationals to China to set up front companies, often in collaboration with Chinese citizens. These companies then import equipment from Western manufacturers, who often have no way of knowing that the companies are really fronts controlled by the North Korean regime.

“Let’s say you’re Siemens in Germany and you get a purchase request from ‘Golden Star General Trading Corporation’ in China. You look into that company and it doesn’t have a big web presence  —  because most Chinese small and medium-sized enterprises don’t  — and you assume, after some limited due diligence, that it’s probably fine,” Berger says.

READ MORE: China defends trade practices with North Korea after Chinese-made vehicles seen towing ballistic missiles

Even Chinese banks themselves often get deceived, she adds.

“The bank account might be under, say, ‘Golden Star General Trading Corporation’ or a Chinese director,” Berger says. “The Bank of China might not immediately be the wiser that there’s a North Korean beneficiary behind that account.”

By covering their tracks in this manner, front companies procure sensitive goods before re-exporting them to North Korea, evading Chinese export controls via misleading shipping labels or creative smuggling techniques.

READ MORE: U.S. mulls North Korea sanctions, targeting cash that flows through Chinese banks

The racket doesn’t exclusively involve surreptitious front operations, however.

In 2015, a large Chinese company called Shenyang Machine Tools bought equipment from a European manufacturer under the explicit condition that the items wouldn’t be re-sold to North Korea, according to the Institute for Science and International Security.

Shenyang Machine Tools promptly broke the agreement by embedding the products into its own line of industrial machines, which were then exported to North Korea.

The equipment in question is commonly used to manufacture missile parts and uranium centrifuges.

Financial skullduggery

So how does North Korea pay for the expensive parts that it acquires illegally?

Turns out it doesn’t just use front companies to buy  —  it also uses them to sell its own military products.

Earlier this year, the UN Panel of Experts reported the interception of a shipment of 45 military radios bound for Eritrea. The shipment was sent by a Malaysian-based company called Glocom — which investigators found to be controlled by the North Korean intelligence agency.

Glocom was selling the radios to developing countries at North Korea’s behest — for $8,000 per unit.

READ MORE: U.S. urges UN Security Council to increase economic pressure on North Korea over weapons program

Berger, who is familiar with the Glocom investigation, said the company was “being used to facilitate sales of that technology specifically.”

The combination of such clandestine military deals, the sale of missile technologies and the export of coal and minerals have enabled North Korea to fund its nuclear procurement, the UN report suggested.

The “disco ball” warhead

In March 2016, North Korean state media released photographs of Kim Jong-Un standing in front of what it claimed was a miniaturized nuclear warhead “standardized to be fit for ballistic missiles,” Reuters reported.

The object was silver, shiny and shaped like a giant orb. It was roundly mocked on Twitter for resembling a disco ball.

So you’re saying this new disco ball with old CDs stuck on the side will be more glittery? 

But experts aren’t laughing.

Melissa Hanham, a researcher who analyzes open source data and photos to assess North Korea’s weapons programs, says it’s “plausible” that the object is a working nuclear warhead.

“We can’t see inside it to say, ‘Yes, it is’ or ‘No, it isn’t’ a nuclear warhead,” Hanham told Global News. “But they’ve had five nuclear tests, so it wouldn’t be surprising for them to have that kind of compact warhead by that many tests.

READ MORE: North Korea’s latest missile launch could be 2nd test of new technology, experts say

“I can tell you that we’ve measured it a lot, and it does fit into the payload of many of their missiles.”

Hanham admits it’s bizarre that North Korea would let its Supreme Leader stand so close to the real thing, but points out that “there are other photographs of Kim Jong-Un engaging in really dangerous activities that confuse us as well” — referring to photos of him smoking next to a solid-fuel rocket engine and standing underneath a heavy object dangling from a crane.

A legitimate threat

The purported warhead may have been goofy-looking, but it represented one of many milestones in a ramped-up schedule of North Korean nuclear weapons development over the past year and a half.

“North Korea in 2016 spent a lot of time doing a point-for-point refutation of every major narrative of the things it ‘couldn’t do’ in its nuclear missile program,” Berger says.

“All the developments we’re seeing in the nuclear missile program are deeply serious, and the more we continue to laugh about it, the more North Korea will attempt to demonstrate that it has a credible military program that is making rapid advancement.”

WATCH: Should we be worried about North Korea?

That advancement is the result of over half a century of steadily accumulated scientific know-how and single-minded subterfuge, with North Korea taking advantage of lax regulations and shady foreign partners to hoodwink the international non-proliferation regime.

Berger says China’s “conscious negligence” — in relation to both clamping down on front companies and tightening export controls — has resulted in such a huge flow of illicit goods to North Korea that it would take “an enormous effort” to rein it in at this point.

“The problem we have is enormous policy inertia, and very few good ideas of how to address the situation,” Berger says.

READ MORE: Could North Korea’s nuclear missiles reach Canada?

Hanham agrees. “I think there are probably still opportunities to slow or disrupt their program, but they’ve already crossed a lot of important thresholds that make it unlikely that they will give up their [nuclear] program entirely,” she says.

“North Korea has shown that it’s dedicated to acquiring nuclear weapons, and it’s very hard to stop any country that’s completely dedicated.”

How did North Korea get nuclear weapons?

Story 2: Fed To Start Quantitative Tightening by Selling Its $4,500 Billion Bond Portfolio As U.S. Economic Slows in 2017? — Videos

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The Federal Reserve is leaving interest rates alone to give the economy room to keep growing.

But the central bank did take historic action on Wednesday: It will begin undoing the extraordinary steps it took to prop up the economy for almost a decade after the financial crisis. The Fed said it would begin shedding some of the $4.5 trillion in investments starting next month.

The announcement marks a milestone in the long recovery from 2008, and reflects confidence by Fed officials that the economy will continue to grow.

Starting in October, the Fed will begin unloading $10 billion of debt from its so-called balance sheet, including $6 billion in Treasury securities and $4 billion in agency debt each month through December.

For years, the central bank piled up purchases of Treasury and mortgage-backed securities, a strategy intended to stimulate the economy by reducing borrowing costs for everyone. At the time, it also reduced its benchmark interest rate to zero, and only began raising it in December 2015, seven year after the crisis.

On Wednesday, the Fed left rates unchanged, hovering between 1% and 1.25%.

Related: The CNNMoney Trump Jobs Tracker

The central bank has raised that rate three times since December as the economy has gradually improved. Raising rates too quickly could risk hobbling the recovery.

Still, the majority of Fed policymakers signaled on Wednesday that they expect to lift rates one more time this year.

Central bankers pointed to signs of strength in the U.S. economy, including a pickup in household spending and growth in business investments, in a statement following the Federal Open Market Committee’s two-day meeting.

“Job gains have remained solid in recent months, and the unemployment rate has stayed low,” the Fed said in a statement.

While Fed officials cautioned that the devastation of Hurricanes Harvey, Irma and Maria would hold back the U.S. economy in the “near term,” they said the storms would not “materially alter” the country’s economy overall.

“Within a few months, rebuilding activity has typically kicked in, returning economic growth to normal—or maybe even a little higher than normal,” wrote Eric Winograd, AB senior economist in a note. “So, despite the storms, we’re still confident the U.S. economy will keep its momentum, because the foundations are sound.”

Related: Fed Chair Janet Yellen warns – Monitor your credit report!

Some Fed officials have warned against raising interest rates until inflation — which reflects the prices of everything from meat and cheese to houses and cars — meets the goal of 2% that they consider healthy for the economy.

But inflation is still running below that target, even though the job market has picked up and other explanations have fallen away. In a press conference, Fed chair Janet Yellen described it as something of a “mystery.”

In past years, she said the Fed has been able to point to root causes of low inflation: the gap between those employed versus those that aren’t, energy prices and a rising dollar.

“This year’s inflation shortfall is more of a mystery,” Yellen told reporters at the press conference. “I will not say that the committee clearly understands what the causes are.”

Central bankers have been in a bind over when to lift rates again. Inflation has been stubbornly low for years, suggesting the Fed should hold off. But economic growth and low unemployment suggest they should act.

Fed officials cautioned that they do expect inflation to be higher than normal — at least for a little while — following the hurricanes that have devastated Texas, Florida and now Puerto Rico.

“Inflation remains the wild card of Fed policy and the temporary boost to gasoline prices following the hurricanes only clouds the picture further,” said Bankrate.com’s chief financial analyst Greg McBride. “Whether the Fed hikes in December will remain an open question until December.”

Along with one more rate hike this year, the Fed also predicted three more possible moves next year.

“It is too soon for the committee to conclude that the recent slowing in inflation was sufficiently permanent to alter the Fed’s plans,” Michael Gapen, a Barclay’s analyst wrote in a research note.

The Fed said it continues to expect inflation to remain at 1.6%, below its target, and the unemployment rate to be 4.3%, based on its updated economic projections.

The central bank did, however, offer a rosier picture of the overall economy, upping its economic growth forecast to 2.4% from 2.2%.

Yellen again declined to address speculation about whether President Trump will nominate her for a second four-year term leading the Fed. Her first term ends in February.

http://money.cnn.com/2017/09/20/investing/federal-reserve-janet-yellen/index.html

Fed prepares to cut $4.5 trillion portfolio: What it means
By Matthew Rocco Published July 12, 2017 The Fed FOXBusiness Opens a New Window.

USA-FED/ The Federal Reserve building in Washington, D.C (Kevin Lamarque / Reuters)
Federal Reserve Chairwoman Janet Yellen will be on Capitol Hill for two days of congressional testimony starting Wednesday, and investors will be closely watching the proceedings for any clues about the central bank’s plans to shrink its securities portfolio.

The Fed has begun to pave the way toward cutting its balance sheet, which grew from about $1 trillion to $4.5 trillion in five years. The large increase is the result of an aggressive bond-buying stimulus program known as quantitative easing. The program was implemented to keep interest rates low and support a collapsed housing market. Since December 2015, the Fed has gradually raised the benchmark fed funds rate from near zero amid an improved labor market and U.S. economy. But its large portfolio of Treasury bonds and mortgage-backed securities has remained in place.

With officials phasing out its crisis-era monetary policies, the Fed is now discussing a timeline to start winding down its portfolio to about half its current size.

“[The Fed] is in uncharted territory. They’ll be very cautious because they are committed to reducing interest rates and reducing the balance sheet. The first foray will be fairly limited,” said Nariman Behravesh, IHS Markit’s chief economist.

Investors have mostly prepared themselves for the Fed’s next move by anticipating an increase in interest rates. If anything, the Fed tends to “do less than the market expected,” Behravesh added.

“I think the good thing is the Fed is raising rates in an environment that’s not gangbusters, but it’s decent. Rates will go up, no question, but if they go gradually, it won’t do a great amount of damage to the economy,” he said, noting that the fed funds rate remains historically low. “Monetary policy is becoming tighter, but at the end of next year, it still won’t be tight.”

Fed members have already decided on a plan of action. Currently, the Fed purchases new bonds to replace the ones that come due. Once it starts the clock, the central bank will allow bonds to mature and roll off its balance sheet.

At their June policy-setting meeting, members of the Federal Open Market Committee set up a plan to shed as much as $6 billion worth of government bonds and $4 billion in mortgage-backed securities each month as a starting point. The Fed would raise the amount every quarter, eventually hitting a cap of $30 billion in Treasury and $20 billion in mortgage bonds per month.

Federal Reserve Board Chairwoman Janet Yellen holds a news conference after the Fed released its monetary policy decisions in Washington, U.S., June 14, 2017. TPX IMAGES OF THE DAY – RTS1750PExpand / Contract
Federal Reserve Board Chairwoman Janet Yellen holds a news conference after the Fed released its monetary policy decisions in Washington, U.S., June 14. (Joshua Roberts / Reuters)
Demand for bonds will weaken once the Fed stays on the sidelines, thus lowering prices and forcing interest rates to climb. (Bond yields move in the opposite direction as prices.) The magnitude of that rate increase will depend on how gradually the Fed sells off its holdings, Behravesh explained.

The benchmark 10-year Treasury yield has declined about 0.081 percentage points since the start of the year, hitting 2.36% in recent trading.

As for when the Fed will kick off the process, several officials prefer to “announce a start to the process within a couple of months,” according to minutes of their June meeting Opens a New Window. . Others believed that a decision later in 2017 would give the Fed more time to study inflation, which has fallen short of the central bank’s target, and U.S. economic activity.

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The general consensus is that the Fed will make an announcement in September. In her prepared remarks to Congress Opens a New Window. , Yellen affirmed that the Fed will “likely” implement the program this year, as long as the economy “evolves broadly as anticipated.”
“We do not intend to use the balance sheet as an active tool for monetary policy in normal times,” Yellen said, adding that the Fed is prepared to “resume reinvestments” if it sees a deterioration in the economic outlook.

No matter when the Fed begins to shrink its portfolio, economists expect it to move in the same way it raises interest rates: slowly.

“It’s hard to tell how slowly they are going to go,” Behravesh said, but the Fed is determined to move one step at a time. The impact on the financial and housing markets isn’t fully clear, and the Fed plans to raise the fed funds rate at the same time it dumps assets.

In June, the Fed raised the fed funds rate another quarter of a percentage point to a range of 1% to 1.25%. The next rate hike is expected in December.

http://www.foxbusiness.com/markets/2017/07/12/fed-prepares-to-cut-4-5-trillion-portfolio-what-it-means.html

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Image result for terrorist attack in London tube train Parsons green 14 September 2017Image result for North Korea launced missile over japan

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Image result for terrorist attack in London tube train Parsons green 14 September 2017

 

Breaking Story 1: Radical Islamic Terrorist Attack — Improvised Bucket Bomb Device Explodes In United Kingdom Parson Green Tube Train Station in West London During Morning Rush Hour — 29 Injured None Seriously including Children — Threat Level Raised From Severe To Critical By Prime Minister May — Videos —

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London police confirm Parsons Green explosion was terrorist attack

Eyewitnesses describe moments of explosion on London Tube

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Soldiers on the streets and extra armed police on patrol Theresa May raises terror level to CRITICAL

Trump Just Made HUGE Announcement To Americans Immediately After London Terror Attack Overnight

Parsons Green: ‘It’s a terrible thing’ – US President Donald Trump – BBC News

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Parsons Green: ‘There was a human stampede’ – BBC News

Parsons Green Explosion Tube Train Station at District Line London – Fulham 9/15/2017

Explosion on London tube train

Burning device filmed on tube carriage at Parsons Green station

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Parsons Green attack: 22 injured, UK terror threat remains at severe

#London #ParsonsGreen Bombing and the #MSM Usual Suspects Trained Seal Show: Repeat But Don’t Report

Idiots React to London Underground Attack

UPDATED

 Parsons Green attack: Police raid in west London as 18-year-old man arrested in Dover – latest news

Detectives investigating the terrorist attack at Parsons Green have made a “significant” arrest in connection with the attempted bombing.

The 18-year-old man was arrested by Kent Police in the port area of Dover on Saturday morning under section 41 of the Terrorism Act.

He remains in custody at a local police station from where he will be transferred to a south London police station.

 Deputy Assistant Commissioner Neil Basu, Senior National Co-ordinator for Counter Terrorism Policing, said: “We have made a significant arrest in our investigation this morning. Although we are pleased with the progress made, this investigation continues and the threat level remains at critical.

“The public should remain vigilant as our staff, officers and partners continue to work through this complex investigation. We are not, at this time, changing our protective security measures and the steps taken to free up extra armed officers remain in place.

“This arrest will lead to more activity from our officers. For strong investigative reasons we will not give any more details on the man we arrested at this stage.”

The development came after Prime Minister ordered troops onto the streets on Friday night after a suspected Islamist placed a powerful time bomb on a packed rush hour train heading towards Westminster.

Theresa May took the decision after the independent Joint Terrorism Assessment Centre (JTAC) recommended raising the terror threat to its highest level, Critical, meaning another attack is expected.

The white bucket that is said to have blown up on the Parsons Green carriage
The improvised explosive device in a white bucket blew up on the final carriage of the Parsons Green train CREDIT: PRICEY1983AA/TWITTER

The army will deploy troops at key locations around the capital in order to free up police who were last night involved in a huge manhunt to catch the terrorist responsible for the failed Parsons Green bomb attack, which Islamic State of Iraq and the Levant claimed responsibility.

At least 29 people were injured, including a boy believed to be aged about 10 when an improvised explosive device (IED) went off on a packed rush hour tube at Parsons Green in west London yesterday morning.

Witnesses described scenes of terror and panic after the blast sent a “fireball” and a “wall of flame” through a District line service in west London.

But the main device, which had been fitted with a crude timer using shop-bought fairy lights, failed to detonate, meaning hundreds of people were spared death and serious injury.

Anti-terror police are understood to be working on the theory that the bomb was detonated early by accident and that the intended target may have been the Tube station at Westminster.

Detectives have so far spoken to 45 witnesses and continue to receive information from the public to the confidential anti-terrorist hotline.

The public has sent 77 images and videos to investigators via the UK Police Image Appeal website.

A police officer at the entrance to Parsons Green after the station re-opened overnight
A police officer at the entrance to Parsons Green after the station re-opened overnight CREDIT: JONATHAN BRADY/PA WIRE

Detectives from the Met’s Counter Terrorism Command are continuing to urge anyone with information about the terrorist attack to contact police.

The attack – the fifth terrorist attack on the UK in just six months – caused a diplomatic row between Washington and London.

Donald Trump seemed to accuse the Metropolitan Police of knowing the identity of the attacker in advance but failing to prevent the bombing. Mr Trump posted on Twitter: “Another attack in London by a loser terrorist. These are sick and demented people who were in the sights of Scotland Yard. Must be proactive!”

His claim earned the US President a stiff rebuke from Theresa May. “I never think it’s helpful for anybody to speculate on what is an ongoing investigation,” said the prime minister. “The police and security services are working to discover the full circumstances of this cowardly attack and to identify all those responsible.”

Despite Mr Trump’s suggestion that the terrorist was known to police, counter-terrorism sources insisted that was not the case and that the hunt for the perpetrator of the bombing on a District Line train was ongoing.

An injured woman is assisted by a police officer close to Parsons Green station
An injured woman is assisted by a police officer close to Parsons Green station CREDIT: STEFAN ROUSSEAU/PA

Counter terrorism specialists from Scotland Yard were last night working to establish his identity from CCTV footage on the train and at stations on the line. They were also combing through records of payments with Oyster cards used to buy Tube tickets.

One theory is the suspected bomber may have fled the scene among the stampede of panicking passengers and escaped among the crowds.

They were also uncertain that Parsons Green was not the planned target, pointing to reports that the bomb, which was packed with shrapnel and contained a timing device, had apparently malfunctioned.

Witnesses reported seeing people “covered in blood” after a “flash and a bang” from the device, but sent a “fireball” through the packed Tube train.

Pictures and video posted on social media showed a flaming bucket – which appeared to have wires coming from it – inside a Lidl carrier bag on the floor of a carriage.

The device is not believed to have fully detonated and it is reported that it could have been set off on a timer.

More follows – stay with us for the latest updates through the day

Residents evacuated at Sunbury address

The Met Police said police officers had evacuated and were searching a residential address in Sunbury-on-Thames.

Scotland Yard said: “The evacuation is a precautionary measure following the arrest of a man in Dover, Kent, at approximately 07:50hrs this morning in connection with the investigation into the terrorist attack at Parsons Green Underground Station on Friday, 16 September.

Officers began evacuating the address at approximately 13:40hrs today.

Residents in the buildings immediately surrounding the address are also being evacuated as a precautionary measure.

Cordons are being put in place at a 100 metre radius to facilitate the Metropolitan Police Service’s operation, which is being supported by colleagues from Surrey Police.

A search of the address is ongoing and the cordons will remain in place until the operation is complete.

Police would like to thank the local residents directly affected for their cooperation and patience. Local officers are on duty in the immediate area to talk to the community and address any concerns that they may have.

No further arrests have been made.”

Police cordon set up after officers raid house in Sunbury-on-Thames

 00:35

Armed police raid west London address

Police investigating the Parsons Green bombing carried out a raid on an address in Sunbury-on-Thames, close to the start of the M3 in west London, on Saturday afternoon.

Residents described a house in Cavendish Road being evacuated by armed officers. Others reported bomb squad vehicles arriving as armed officers moved in.

Met Police Commissioner Cressida Dick says London “will not stop”

London will not be stopped by terror, Metropolitan Police Commissioner Cressida Dick has said as she highlighted an increased visible police presence on the capital’s streets.

Ms Dick spoke as she joined officers on some of the city’s busiest streets, travelling on the Tube to Waterloo Station and patrolling the tourist hot spot of the South Bank

She said: “London has not stopped after other terrible attacks and it will not stop after this one.”

The Commissioner said the public should feel “utterly reassured” by the presence of police.

Met chief says London "will not stop"

Met chief says London “will not stop”

02:38

She said: “I’ve been out and about today. The public seem to be very positive about the number of officers that we have.”

She added: “The great thing about London is that we don’t give in, we don’t give in to terrorists – we never have and we carry on.

“So the transport system is running just as it ever did and the events are going ahead today. People are out and about. I’ve spoken to lots of people, Londoners and tourists and business people. People are here and I would say, carry on about your business and secondly, of course, be vigilant.”

She added: “My main message is London is carrying on. Carry on with your business but be alert, don’t be alarmed but make sure you tell us anything that worries you.”

Scenes from Saturday morning

Armed police are making their presence felt in the capital following the news last night that Prime Minister Theresa May had raised the UK terror threat level to critical.

Armed police in Westminster
Increased security in Westminster CREDIT:  TOM NICHOLSON/LNP

Meanwhile, Tube passengers have been returning to Parsons Green.

A passenger walks into Parsons Green Underground station
The station reopened in the early hours CREDIT: PETER NICHOLLS/REUTERS

Scotland Yard describe the arrest as “significant”

The 18-year-old was arrested by Kent Police in the port area of Dover under section 41 of the Terrorism Act.

Deputy Assistant Commissioner Neil Basu, Senior National Co-ordinator for Counter Terrorism Policing, said: “We have made a significant arrest in our investigation this morning. Although we are pleased with the progress made, this investigation continues and the threat level remains at critical.

“The public should remain vigilant as our staff, officers and partners continue to work through this complex investigation. We are not, at this time, changing our protective security measures and the steps taken to free up extra armed officers remain in place.

“This arrest will lead to more activity from our officers. For strong investigative reasons we will not give any more details on the man we arrested at this stage.”

18-year-old arrested in Dover over London bombing

00:49

Man, 18, arrested in Dover

An 18-year-old man has been arrested in the Dover area under the Prevention of Terrorism Act in connection with the Parsons Green station bombing.

More information to follow as we receive it.

Tightened security ahead of Chelsea v Arsenal game

In a statement, Chelsea said:  “Following Friday morning’s incident at Parsons Green, and in order to help us fully prepare for the game, the majority of the Stamford Bridge site will remain closed until Sunday morning.

“This includes Stadium Tours, the Museum, Megastore and the Chelsea Health Club & Spa, while the ticket office will be operating via telephone and online only.

“During that time, entrance to the site will be via the Stamford Gate entrance only. On Sunday, we urge supporters to arrive at least one hour before kick-off to allow for extra security measures.

“We also request that supporters do not bring bags as this will delay your entry to the stadium. The club continues to monitor events and liaise with the police and relevant authorities on supporter safety.”

Trump under fire in US over London bombing comments

Ben Cardin, a Democratic member of the Senate Intelligence Committee, backed Theresa May in her rebuke of Donald Trump over the London  bombing David Millward reports.

“I think the Prime Minister of the UK was appropriate in calling the president out.”

John Cohen, former US counterterrorism official and now a professor at Rutgers University, also believed Mr Trump’s intervention was unhelpful.

“At this stage investigators are going to be doing everything they can to locate those involved in the attack, and in particular the bomb maker,”  he told the New York Times.

“These types of statements — at this stage of the investigation — can undermine law enforcement efforts because it discloses key information that the investigators may be using to locate the attackers, and it could put peoples’ lives at risk.”

Bomb ‘highly likely’ to be TATP – CNN

A source briefed by investigators told CNN that an initial assessment of the device indicates it is “highly likely” to have contained the explosive TATP but that this has not been confirmed. It also appeared to have been crude and poorly designed, the source said.

‘Excellent progress’ made in hunt for terrorist, police say

Met Assistant Commissioner, Mark Rowley, said the police were making “excellent progress” in the hunt for the terrorist.

He said officers were trawling through hundreds of hours of CCTV footage and 77 images and videos taken by members of the public at the scene were also being examined.

Mr Rowley said the IED had now been made safe and was being examined by specialist forensic scientists.

Threat level raised to ‘critical’

The UK’s terror threat level has been raised from severe to critical, indicating a further attack may be imminent, following the Parsons Green Tube bomb, Prime Minister Theresa May said.

Army troops will be assisting the police with their duties, freeing up officers to continue their investigation into the attack.

Islamic State claims responsibility for the attack

The Islamic State terror group has claimed responsibility for the attack, according to the Amaq news agency which has links to the group.

White House defends Trump’s comments on Parsons Green attack

Mr McMaster was asked about Donald Trump’s comments this morning, in which he said the suspect of the bombing was “in the sights” of Scotland Yard.

Theresa May called that speculation “unhelpful”.

National security adviser H.R. McMaster, right, and U.S. Ambassador to the UN Nikki Haley, participate in a news briefing at the White House, in Washington
National security adviser H.R. McMaster, right, and U.S. Ambassador to the UN Nikki Haley, participate in a news briefing at the White House, in Washington CREDIT: CAROLYN KASTER 

Mr McMaster said he thought the president was speaking in general terms, and did not have any specific information.

He said: “I think what the president was communicating was that all our law enforcement efforts are focused on this threat for years.

“Scotland Yard is a leader in this, and if it happened here in the US the FBI would also have the suspect in their sights.

“I think he means generally this kind of activity is what we are trying to prevent.”

President Trump calls for renewed effort to cut terror funding

H.R. McMaster, Donald Trump’s national security adviser, has just spoken about the Parsons Green attack in the White House, Harriet Alexander reports.

He said: “The US stands in solidarity with the people of the UK.

“We will defend our people and our values against these cowardly attacks, and we will always stand by countries who do the same.”

He said Mr Trump had been “unambiguous” in his policy on terrorism, urging a renewed effort at cutting financing for terrorist networks.

President Trump speaks to PM to express sympathy

The White House press secretary has revealed details of the phone call between Donald Trump and Theresa May. The US president phoned to “convey his sympathies and prayers for those injured in the terrorist attack today in London”, the White House said.

“The President pledged to continue close collaboration with the United Kingdom to stop attacks worldwide targeting innocent civilians and to combat extremism. ”

A Downing Street spokesman said: “President Trump called the Prime Minister earlier today to offer his condolences over this morning’s cowardly attack in London.

“They also discussed North Korea’s latest missile test, agreeing it was a reckless provocation and that China must now use all its leverage to bring pressure to bear on the North Korean regime to ensure they change course and end these illegal tests.”

Number of injured rises to 29

NHS England says 29 people have been treated after the explosion at Parsons Green tube station.

As of 5.30pm on Friday, NHS England said it was now treating 21 patients.

Eight others were discharged earlier in the day.

 

Soldiers on the streets and extra armed police on patrol as Theresa May raises terror level to CRITICAL after ISIS claim Tube bucket-bomb attack was carried out by a cell of several jihadis

  • Soldiers and armed police will be on the streets as the threat level is raised to critical, the highest possible 
  • Scotland Yard have identified the suspect behind the rush hour blast on District Line train at Parsons Green
  • Manhunt underway for bomber amid fears he may have left other devices and could be armed with knives 
  • Islamic State group claimed responsibility for the west London attack saying its ‘soldiers’ had ‘planted IEDs’
  • IED had timer attached meaning terrorist probably exited at an earlier station but bomb failed to detonate
  • Bloodied and burned commuters ‘ran for their lives’ after explosion on London Underground this morning 
  • Were you on the train, witness the bombing or know one of the injured? Email tips@dailymail.com

Soldiers are being deployed on London’s streets as the terror threat level is raised to critical amid fears the Parsons Green bomber could strike again, Theresa May announced tonight.

Operation Temperer will see military personnel replacing police at key sites such as nuclear power plants to free up extra armed officers for regular patrols.

Scotland Yard said it is making ‘excellent’ progress in hunting the suspected terrorist who set off an improvised bucket bomb on a packed commuter train by Parsons Green tube station in west London at 8.20am.

Mrs May said in a statement from Number 10: ‘The Joint Terrorism Analysis Centre has now decided to raise the national threat level from severe to critical – this means their assessment is that a further attack may be imminent.’

Minutes later Assistant Commissioner Mark Rowley suggested there may have been more than one person involved stating that police were ‘chasing down suspects’.

Police identified the suspected terrorist using CCTV but the investigation has been overshadowed by an extraordinary diplomatic row triggered by Donald Trump

The US President tweeted just hours after the rush hour blast that police had the attacker ‘in their sights’ and should have been ‘more proactive’ in catching ‘the loser’.

Scotland Yard hit back and said Mr Trump’s comments were ‘pure speculation’ while senior officers refused to name the suspect.

The Islamic State group claimed responsibility for the attack tonight, saying its ‘soldiers’ had ‘planted IEDs’.

Scroll down for videos.  

A photograph of the flaming white bucket taken just after it exploded around 8.20am shows a number of wires protruding out of the top and on to the train carriage floor

The majority of victims suffered 'flash burns' including to their heads (pictured)  and several have been taken to a specialist burns unit

A victim, believed to be a schoolchild, is carried from the station with charred legs as others were treated for burns in the street and neighbouring shops

Others were treated for burns in the street and neighbouring shops

an 11-year-old who was found on the floor asking for his brother

Theresa May gave a statement from within Downing Street in which she announced the terror threat level would be raised to critical, its highest level

Assistant Commissioner Mark Rowley suggested there may have been more than one person involved stating that police were 'chasing down suspects'

A well-dressed young woman was walked to safety by a Met officer after having her head bandaged after suffering a burn or wound to her cheek

Firefighters from the London Fire Brigade raced to the scene in west London and were there within five minutes

This photograph captured the moment the first members of the emergency services raced to the scene within five minutes of the explosion

Elite armed counter-terrorism police are at the scene amid reports of the suspect being on the run and claims of a second device

Peter Crowley had the hair burnt off his head in the attack

Mr Crowley before the attack

A traumatised and injured passenger on the ill-fated Parsons Green train is taken away by paramedics and firefighters

The majority of the victims have suffered 'flash burns' caused by the ignition - but it appears that the bomb did not properly detonate

A forensic officer outside Parsons Green station in West London where there remains a heavy police presence as the manhunt for the suspected terrorist continues

Security was stepped up at stations around London following this morning's attack. Pictured is a British Transport Police officers at Euston

A police officer watches on as commuters file into the underground at Euston Station amid newly tightened security

As Britain faced its fifth terror attack in a year it has emerged:

  • Bucket bomb left on Tube train – which had a timer – failed to explode properly at 8.20am but left 29 injured;
  • Most victims suffered ‘flash burns’ and others crush injuries in ‘human stampede’ as people fled the train;
  • Two hours after the explosion Metropolitan Police confirmed they were treating it as a terrorist incident; 
  • The IED used Christmas lights as a fuse, as recommended by ISIS magazines and online bomb manuals;
  • Police are looking for multiple suspects – and officers have told MailOnline that main suspect is armed;
  • Donald Trump insists he has been briefed on bombing and Scotland Yard knew of the suspect before attack;
  • The Metropolitan Police hit back at ‘pure speculation’ and refused to name the suspect they are looking for; 
  • Met spotters are watching back CCTV from the train and at Tube stations to trace the bomber’s steps; 
  • ISIS claimed responsibility for the attack through its Amaq news agency saying ‘soldiers’ had ‘planted IEDs’
  • Police asks the public to dial 999 or the anti-terror hotline on 0800 789 321 if they see anything suspicious.

The crude bucket bomb – which had a timer – went off at 8.20am inside a tube train packed with commuters, including children and a pregnant woman.

The device was hidden in a builder’s bucket and could have killed dozens but failed to properly detonate and sent a ‘wall of fire’ through the carriage at Parsons Green injuring at least 29 people.

Terrified passengers were seen covered in blood with scorched hands, legs, faces and hair – others suffered crush injuries during a stampede as they ‘ran for their lives’ over fears the ‘train would blow up’.

London Ambulance took 19 patients to hospitals, while the others went in themselves. The four hospitals dealing with patients were Imperial, Chelsea and Westminster, Guy’s and St Thomas’ and St George’s.

Officers are hunting for the bomber across London amid claims he could be armed and may have planted other explosive devices.

An officer at the scene told MailOnline: ‘We believe there is a second bomb – there is a man with knives on the loose.’

Theresa May raises terror threat level to its highest possible

Mrs May said in a statement from Number 10 –

 ‘The Joint Terrorism Analysis Centre has now decided to raise the national threat level from severe to critical – this means their assessment is that a further attack may be imminent.

‘The public will see more armed police on the transport network and on our streets, providing extra protection.

‘This is a proportionate and sensible step which will provide extra reassurance and protection while the investigation progresses.’

In a pre-recorded television statement, May said military personnel would replace police officers ‘on guard duties at certain protected sites which are not accessible to the public’.

She said: ‘The public will see more armed police on the transport network and on our streets, providing extra protection.

‘This is a proportionate and sensible step which will provide extra reassurance and protection while the investigation progresses.’

Speaking moments afterwards, Assistant Commissioner Mike Rowley said: ‘We are making excellent progress at the moment as we pursue our lines of inquiry to identify, locate and arrest those responsible.

‘We have hundreds of police officers trawling through CCTV footage, detectives have spoken to tens of witnesses and we have taken a large number of calls to the hotline… for members of the public.

‘Indeed members of the public have sent in so far 77 images and videos of the scene which they have sent in to our appeal website and these are now being assessed for evidential value.’

Mr Rowley said he was only aware of one device, and the remnants of that device are being examined by experts.

London Mayor Sadiq Khan told LBC radio ‘there is a manhunt under way as we speak’ and there have been no arrests.

ISIS claimed responsibility for the attack this evening through its Amaq News Agency, saying its ‘soldiers planted IEDs’. However, the group has often made false claims in the past.

Photographs show what experts believe is a ‘unsophisticated’ bomb in a flaming white bucket inside a Lidl freezer bag with Christmas lights protruding from the top – a type of fuse encouraged by ISIS in its online manuals.

Donald Trump tweeted just hours after the rush hour blast that police had the attacker ‘in their sights’ and should have been ‘more proactive’ in catching ‘the loser’.

Scotland Yard hit back and said Mr Trump’s comments were ‘pure speculation’ while senior officers refused to name the suspect.

Mrs May also hit out at the President’s tweet, calling it ‘unhelpful’, and has this evening discussed the intelligence sharing between the two countries with the President in a telephone call.

This image was taken from the platform in the minutes after the terror attack and it remained alight until the fire service arrived

This image was taken from the platform in the minutes after the terror attack and it remained alight until the fire service arrived

A forensics tent has been erected on the platform - although there have been no fatalities - and a single pair of shoes lies abandoned outside the door where the bomb ignited

Horrified witnesses on social media claim there was a stampede as people were 'screaming and running' off the trains, which was searched by heavily armed police officers today

A heavily armed officer wanders through the damaged train's carriages looking for more devices

The abandoned train at Parsons Green today after a terrorist left a bucket bomb on the carriage floor

Police believe the bomber may have exited the train (pictured) perhaps one or two stops before the bomb went off

Passengers on trains at Parsons Green were evacuated onto the track away to safety after London was hit by another terror attack

Passengers are ushered across the track by firefighters after getting trapped in the aftermath of the bombing

 Witnesses to the explosion said there was a loud ‘bang’, a flash and then a ball of flame engulfed surrounding passengers on the ‘packed’ District Line train.

Luke Warsmey said: ‘The explosion was like a large match going off at the end of the carriage. People just started sprinting. It was every man for himself when that happened. The burn victims had severe leg injuries.

HOW RELEASING INFORMATION HELPED CATCH BARCELONA ATTACKER

The failure of the Metropolitan Police to name the suspect contrasts sharply with the response to the last major terror attack in Europe, Barcelona in August.

Just over an hour after the attack took place, Spanish police tweeted the public to say they were searching for the attacker and to avoid the area.

Then, three hours after the attack, a photo of a suspect, Driss Oukabir, was released and circulated online.

The release of the image caused Oukabir to come forward to his local police and tell officers his documents had been stolen.

This was again revealed to the media as Oukabir’s younger brother Moussa became the prime suspect.

‘It was a very busy commuter train, young and old, school children going to their schools. I saw was nannies trying to look for kids, because of the rush of people just taking five and six year olds away from them and they were trying to look for them.

‘There were lots of injuries from people being trampled on and everyone who had been close to it had the same burns to their head.’

Prime Minister Theresa May chaired a meeting of the Government’s Cobra emergencies committee this afternoon to discuss the terrorist attack.

Mrs May later appealed to any members of the public with images of the incident to pass them to the police.

Armed Police, paramedics and firefighters were all said to be at the west London station within five minutes of the explosion today.

A 100 yard cordon was erected around the station and a police helicopter was also overhead.

The Met confirmed it was a terrorist attack around 40 minutes later.

Scotland Yard said the area surrounding Parsons Green Tube station has been evacuated so specialist officers could ‘secure the remnants of the improvised device and ensure it is stable’.

NHS England said 29 patients in total were being treated at Imperial, Chelsea and Westminster, Guy’s and St Thomas’ and the Central London Community Healthcare Urgent Care Centre. Of these 18 were taken by ambulance and four self-presented.

In the aftermath armed police swooped from the SO-15 counter-terrorism unit performed a hard-stop on a bus in nearby Chelsea Bridge Road. The call was linked to the terror attack but nothing suspicious was found on board.

A team of paramedics walk towards the station to treat victims and St Mary's Hospital in Paddington have declared an emergency

A team of paramedics walk towards the station to treat victims and St Mary’s Hospital in Paddington have declared an emergency

Sniffer dogs are also searching around the cordoned off area amid claims that there are other devices 

Specialist forensic officer, including some with expertise in dealing with bombings and chemical incidents, are combing the train for clues

Specialist forensic officer, including some with expertise in dealing with bombings and chemical incidents, are combing the train for clues

A police cordon remained outside Parsons Green Tube station on Friday afternoon following the blast during the morning rush hour

A forensic officer in blue overalls walks along the pavement near Parsons Green tube station as the investigation continues into the attack

Emma Stevie, 27, described a ‘human stampede’ after the bomb went off. She said: ‘I heard lots of screams and people saying ‘run, run’. We got out and then there was a human stampede, down the stairs.

‘There were people lying underneath getting crushed, a big human pile-on. I wedged myself in next to a railing. I put myself in the foetal position. I kept thinking, ‘I’ll be ok, I’ll be ok’.

‘There was a pregnant woman underneath me, and I was trying really hard not to crush her.’

Lidl will help police after their bag was used to house bomb

Supermarket Lidl has offered to assist a police investigation into the terrorist incident on the London Underground, after one of its bags was apparently used to hold the improvised bomb.

The German-owned grocery chain issued a statement just hours after social media photos of the affected District Line carriage showed a still-burning bucket inside a Lidl-branded reusable bag.

‘We are shocked and concerned to have learned of an incident at Parsons Green this morning and our thoughts are with those affected,’ Lidl UK said.

‘We will, of course, support the authorities should they need our assistance in their investigations. We are closely monitoring the situation as it develops over the course of the day.’

A spokesman for the supermarket also confirmed that what seemed to be an insensitive tweet, purportedly sent out by Lidl UK’s twitter account on Friday morning, was fake.

Twitter user @jesuiscanard appeared to retweet a Lidl UK tweet from 10:32am which read: ‘We are proud to officially have the strongest bags. Great value for just 10p.’

Richard Aylmer-Hall told Sky News: ‘There were a few crush injuries on the stairs. People got squashed and crushed going down the stairs. Police evacuated everyone from the scene pretty quickly.

‘There was screaming, pushing and shoving – it was a like there was a terrorist on the loose with a gun or something – lots of people were in tears. When it was all over lots of people were being comforted and looked after. It was total chaotic panic.

‘A lady who had been on the same carriage as the device described it going off – a puff of smoke and flames coming out of it.’

Couple Lucy, 24 and Fabin, 29, were on their way to work when the explosion happened.

Lucy, who works in PR, said: ‘We just heard screaming and sprinting, there was a stampede on the stairs and people were falling over, there was a schoolboy being lifted up after he had fallen down, he was in his school uniform, he must have been about ten, he was crying and distressed.’

Fulham fitness instructor Niyi Shokunbi, 24, was in the next carriage the moment the bomb went off.

He told MailOnline: ‘I have never seen anything like it was like something out of a film. I thought it was an acid attack. It happened like bang within ten seconds, i just wanted to run.

‘I went towards the carriage where the bomb went off a woman said you don’t want to go in there. I saw a little boy with scratches on his face crying for his brother. A woman was bleeding. Everyone was running. I’ve never seen anything like it.’

People suffered burns from the explosion and others were hurt in the crush as people fled.

Rob Partinton, 24, from Harrow told MailOnline: ‘We were literally about two minutes from Parsons Green when the train suddenly stopped.

‘I saw people running on the track opposite direction towards Fulham Broadway, I could hear no screams but a lot of people running. We’ve been held at the station for the last half an hour. It’s pretty busy, a lot of police around and police dogs.’

Another witness, Sham, said he saw a man with blood all over his face. ‘There were loads of people crying and shaking,’ he told 5 live.

‘There were a lot of people limping and covered in blood. One guy I saw, his face was covered in blood – I’ve never seen anything like it.’

There is terror and panic at the station this morning, with police officers consoling members of the public

An injured man is helped into an ambulance – one of 18 ferried by ambulance to hospitals across London. Four others went to A&E themselves

A family with young children look towards the station in the aftermath of the terror attack on London

Witnesses say people ran from the scene with 'blood on their face'

People were stranded after the bombing and the District Line is expected to be closed for at least today

Bomb disposal experts are at the scene amid fears there could be second bomb 

Passengers ran onto the rail tracks to get away from the train as a fireball engulfed the carriage

 Witnesses claim people were trampled on when they fled the train after hearing a ‘whoosh’ and seeing flames race towards them

Flames engulfed one carriage and raced along a train on a west London route to Parsons Green, forcing passengers to trample others as they rushed for an exit 

At the scene dozens of police and ambulances have continued to be called into the cordoned area. It is not known at this stage how many people are injured.

Specialist armed anti-terror units also swamped the area.

Fairy lights have been used as detonators by extremist bombers before

Pictures of the apparent home-made bomb seen after the explosion show a Lidl coolbag with a large paint tub inside and a string of Christmas tree lights hanging over the top.

If the device does turn out to be a terrorist bomb, it would not be the first time extremists have used so-called ‘fairy lights’ to build a device.

In May this year, a radicalised former doorman Zahid Hussain was found to have built an explosive device in his bedroom with fairy lights, shrapnel and a pressure cooker.

He is said to have researched bomb-making techniques online, with police finding a wealth of notes and instructions at his home in Birmingham when he was arrested in 2015.

Chief Superintendent Matt Ward, of West Midlands Police, said of Hussain’s bomb at the time: ‘Forensic examination of the pressure cooker found it contained mixed urea, nails, drills bits, nuts, bolts, steel sockets and diesel fuel.

‘The Christmas tree lights also found at his address had been adapted so each one could be used as an explosive initiator or detonator.

‘Examination of his computer discovered browsing history relating to terrorism including bomb making and bomb blast injuries, showing he had a consistent and continued interest in

Chris Wildish, who was on the train, said he saw a ‘device’ in the last carriage.

‘It was a white bucket, a builder’s bucket, in a white Aldi bag or Lidl bag,’ he told 5live.

‘Flames were still coming out of it when I saw it and had a lot of wires hanging out of it – I can only assume it was done on purpose.

‘It was standing against the door of the rear-most carriage.’

Chris Wildish, who was on the train, said he saw a ‘device’ in the last carriage.

‘It was a white bucket, a builder’s bucket, in a white Aldi bag or Lidl bag,’ he told 5live.

‘Flames were still coming out of it when I saw it and had a lot of wires hanging out of it’.

Sylvain Pennec, a software developer from Southfields, near Wimbledon, was around 10 metres from the source of the explosion when fire filled the carriage.

‘I heard a boom and when I looked there were flames all around,’ he said. ‘People started to run but we were lucky to be stopping at Parsons Green as the door started to open.’

He described the scene of panic as commuters struggled to escape the carriage, ‘collapsing and pushing’ each other.

Mr Pennec stayed behind to take a closer look at what he believed was the source of the explosion.

‘It looked like a bucket of mayonnaise,’ he said. ‘I’m not sure if it was a chemical reaction or something else, but it looked homemade. I’m not an expert though.’

Passengers on the train behind the affected Tube witnessed terrified passengers sprinting away up the tracks.

They were then held in their train for over an hour before being evacuated on to the tracks themselves.

Nicole Linnell, 29, who works for a fashion label, said: ‘We saw people running down the tracks. About 30 or 40 people.

‘They were running down the tracks outside our train.

‘It was absolutely terrifying. Running on the tracks is the last thing you want to do so we were like ‘What’s going on?’

‘After about an hour we were evacuated off the train on to the tracks. About 10 to 15 people at a time.’

Melanie Heyside had been at a gym nearby and intended to get on a District Line train to go to work.

She told Sky News: ‘I just was about to open the doors to leave the studio and then all of a sudden Swat cars completely stormed and blocked the street and police jumped out with their armour and were telling people to ‘move, to move’.

‘So I was inside with a group of other people and we weren’t really sure what to do.’

She said they were told to leave the area, which she added was populated by schoolchildren and others going to work, as quickly as possible.

Lady Margaret’s School, next to Parson’s Green tube station, has put an alert out to concerned parents to say all children are okay and there are no absences.

‘Crude’ bucket bomb made with fairy lights could have killed DOZENS say experts as police reveal 21/7-style device failed to properly detonate

Explosives experts say the Parsons Green bomb could have killed dozens if it had properly detonated at rush-hour this morning.

Anti-terror police are now examining the bucket bomb which failed to fully go off on a tube train in west London as they try to track down the bomber.

Photos of the explosive show a large builder’s tub – believed be packed with explosives – inside a Lidl coolbag, with a string of Christmas tree lights, thought to have been a crude detonator, hanging over the top.

Officers compared the device to those used in the failed 21/7 bombings, in which jihadis attempted to blow up tube trains. In that case, the bombs’ detonators went off but the explosives themselves were not ignited.

It is believed the bomb was left on the busy district line train from Wimbledon this morning before the bomber escaped. Police are analysing the device to track down the terrorist

ISIS have encouraged followers to use the lights in bomb guides they post online, but the terror group have yet to claim responsibility for the attack.

A timer is understood to have been found on the device, suggesting the terrorist left it on board the train and then got off. It also suggests it was intended to go off at busier stations further down the line.

Terror expert Will Geddes said:  ‘My suspicion is that Parsons Green was not the intended target.

‘Unless a person knows it, it is not going to mean a great deal to you – if it was Paddington or Notting Hill, they are internationally recognised names.’

‘I think it was more a premature detonation than anything else. This could have been a lot worse. It could have killed a significant number of people.’

Others say the bomb probably didn’t detonated properly because it was badly made.

Explosives expert Dr Sidney Alford told MailOnline: ‘The fact that an initial bang was heard but the bomb did not even shatter the plastic bucket it was contained in suggests to me this could have been hydrogen peroxide.

‘I can rule out other types of explosives as if the initial bang was heard with those they would have gone off completely and destroyed the bucket.’

Flames engulfed one carriage and raced along a train on a west London route to Parsons Green, forcing passengers to trample others as they rushed for an exit 

Dr Alford said the bomb properly did not go off because it was poorly designed.

Witnesses reported a ‘strong, acrid chemical smell’ in the carriage after the explosion.

Major General Chip Chapman told Sky News: ‘This doesn’t look like a high-end explosive from ISIS such as TATP (triacetone triperoxide) or, if it was, it failed significantly, the booster or detonator didn’t go off.’

‘That said of course, the most devastating land-based terror attack in Europe, in Madrid, had a similar modus operandi.’

He added: ‘It’s not a high explosive that functioned because the blast and shockwave would have killed multiple people.’

Former Army bomb squad expert Chris Hunter told the channel the pictures reminded him of the devices which failed to go off during botched the 21/7 attacks.

In that instance, a group of Islamic terrorists planned to carry out a copy-cat attack to 7/7, but although the detonator part of the bombs went off, they did not ignite the explosives and only one person was injured.

Examining the image of the bomb, chemical weapons expert Hamish de Bretton-Gordon told MailOnline: ‘It looks pretty unsophisticated.

‘It could be an incendiary device with some sort of detonator in a big white plastic bucket, perhaps with some sort of chemical like ammonia nitrate, fertiliser bomb to cause an explosion.’

He said the attack looked like ‘classic jihadi terrorism’ and the bomb could have been ‘devastating’ if it had detonated properly.

Mr de Bretton-Gordon said the attack would raise further questions over whether the sale of certain chemicals should be more heavily regulated.’

Describing the device, witness Sylvain Pennec said: ‘It looked like a bucket of mayonnaise. I’m not sure if it was a chemical reaction or something else, but it looked home made.’

The incident has been compared to the 21/7 attacks in which bombs were placed on the underground and the detonators went off, but did not ignite the explosives

In that instance, the bombers Muktar Said Ibrahim (left) and Ramzi Mohammed were tracked down by police and convicted of terror offences

It is not be the first time extremists have used so-called them to build a device.

In May this year, a radicalised former doorman Zahid Hussain was found to have built an explosive device in his bedroom with fairy lights, shrapnel and a pressure cooker.

He is said to have researched bomb-making techniques online, with police finding a wealth of notes and instructions at his home in Birmingham when he was arrested in 2015.

Similarities between the device and that used in the Boston Marathon bombing in 2013 have also been drawn.

In that case, timers were also used to allow the bombers to get away. However, in that case the explosives were in a pressure cooker.

Members of a bomb disposal squad stand in the street near Parsons Green tube station

There were reports of a man at the station with a knife in the aftermath of the explosion. Scotland Yard said they believe this is unrelated to the Tube incident

Pictures from the District Line train appear to show a burning plastic bucket stashed in a Lidl carrier bag, which exploded

A police officer and a sniffer dog stand in the street near Parsons Green tube station

People at the chaotic scene have been frantically calling relatives in the aftermath of the explosion 

Police at the scene are keeping people away, moving them up Fulham Road and away from the station

Emergency services at the scene following a blast on an underground train at Parsons Green tube station in West London

Peter Crowley tweeted this photograph, with the caption: 'Charred head from the fireball at Parsons Green'

Dozens of police vehicles are at the scene as people are being urged to avoid the area

A London Fire Brigade spokeswoman said: 'We were called at 8.21am and we have information there was a fire on a train eastbound at the platform at Parsons Green'

A London Fire Brigade spokeswoman said: ‘We were called at 8.21am and we have information there was a fire on a train eastbound at the platform at Parsons Green’

Armed police are at the scene in London, as commuters have been evacuated

 Armed police are at the scene in London, as commuters have been evacuated

Images from the scene show emergency services and armed police 

Social media users reported a 'stampede' around the underground station at rush hour 

The London Ambulance Service was called at 8:20am and sent single responders in cars, ambulance crews, incident response officers and a hazardous area response team

People fled the Underground station in panic, amid reports there was an explosion 

May confronts Trump in a direct phone call after the US President sparked a diplomatic row by claiming Scotland Yard had the Parsons Green bomber ‘in their sights’ before the terror attack 

Theresa May today confronted Donald Trump to vent her anger after he claimed Scotland Yard had the Parsons Green bomber ‘in their sights’ before the attack.

The US President sparked a major diplomatic row by suggesting British police knew the extremist behind the bucket bomb in the second major intelligence sharing breach in just five months.

Both Mrs May and the Met Police reacted with fury to the intervention slamming Mr Trump for speculating about the fast moving terror investigation.

And in a direct call with the US leader late this afternoon, the Prime Minister raised her concerns over the comment directly with him.

The row is a revival of damaging split between London and Washington in May when shared intelligence about the Manchester bombing was handed to US media.

In a brief statement after the call a Downing Street spokeswoman said: ‘President Trump called the Prime Minister earlier today to offer his condolences over this morning’s cowardly attack in London.’

The White House said Mr Trump ‘pledged to continue close collaboration with the United Kingdom to stop attacks worldwide targeting innocent civilians and to combat extremism’.

Mr Trump sparked a furious reaction from British police and politicians after he wrote on Twitter: ‘Another attack in London by a loser terrorist. These are sick and demented people who were in the sights of Scotland Yard. Must be proactive!’

Angry MPs told the Mail Online his careless words risked endangering the crucial manhunt to find the extremist behind the attack.

After risking a new diplomatic row with Britain, Mr Trump insisted he had been briefed on intelligence about the attack and called Mrs May.

Donald Trump on the White House lawn today where he insisted he had been briefed about Parsons Green and said the suspect was known to police

Theresa May (pictured in No 10 this afternoon) said any speculation was unhelpful when asked about the President's tweets on the Parsons Green attack  

Trump tweeted: 'Another attack in London by a loser terrorist. These are sick and demented people who were in the sights of Scotland Yard. Must be proactive!'

 Trump tweeted: ‘Another attack in London by a loser terrorist. These are sick and demented people who were in the sights of Scotland Yard. Must be proactive!’

Met terror chief Mark Rowley updated the media on the investigation this morning (pictured) but has not given any details of any man hunt

But in an afternoon press briefing, US National Security Advisor H.R. McMaster insisted that Trump wasn’t conveying information about Friday’s attack in particular.

‘I think what the president was communicating is that obviously all of our law enforcement efforts are focused on this terrorist threat from, you know – for years,’ McMaster told reporters at the White House. ‘Scotland Yard has been a leader, as our FBI has been a leader.’

‘So I think if there was a terrorist attack here, God forbid, that we would say that they were in the sights of the FBI. So I think he didn’t mean anything beyond that. … I think he means generally that this kind of activity is what we’re trying to prevent. And so these organizations that are responsible for it, whatever comes out of this investigation that remains to be seen, it is likely that law enforcement had been orking on that problem set.’

Mr Trump’s initial Tweets came at almost exactly the same time as Met Assistant Commissioner Mark Rowley gave an initial update on the attack in a TV statement.

Standard UK police procedure in the aftermath of any terror attack is to keep the identity of any suspects confidential. The tactic allows rapid arrests to be carried out without alerting the prime suspect or their family and friends.

Mr Trump’s used today’s tirade to promote his plans for a travel crackdown on Muslims wanting to visit the United States.

Speaking from Downing Street after chairing a meeting of the Government’s emergency ‘Cobra’ committee, Mrs May said: ‘I never think it’s helpful for anybody to speculate on what is an ongoing investigation.’

A Met Police spokesman said: ‘The comments are unhelpful and pure speculation.

‘If anyone has got any evidence or information, please contact the anti-terrorism hotline.’

President Donald Trump has claimed Scotland Yard knew ahead of time about a bomber or bombers who set off a crude incendiary bomb Friday morning on London's 'Tube' subway

Trump added: 'Loser terrorists must be dealt with in a much tougher manner. The internet is their main recruitment tool which we must cut off & use better!'

Trump added: ‘Loser terrorists must be dealt with in a much tougher manner. The internet is their main recruitment tool which we must cut off & use better!’

The force declined to give details when asked by MailOnline if they had a suspect, evidence of a wider plot or if any suspect was seen on CCTV.

Liberal Democrat home affairs Sir Ed Davey told MailOnline Mr Trump could undermine the police investigation

He said: ‘It is insulting to the victims of this attack that Donald Trump is already using it to try and further his divisive political agenda.

‘Once again, Trump has shown he is not fit for the office of US President.’

Labour MP Stephen Doughty, a member of the Home Affairs Select Committee, told the MailOnline the President should not have intervened.

He said: ‘The full focus must be on allowing the police and security services to do their job, and those responding at the scene to the emergency and tending to those injured.’

Mr Doughty warned the United States was endangering the special relationship by interfering in British investigations.

He said: ‘It has the potential to not only undermine a vital relationship, but also to prejudice investigations into this and other incidents.’

Theresa May's former adviser Nick Timothy reacted to Trump's intervention by saying the president 'doesn't know' anything: 'This is so unhelpful from leader of our ally and intelligence partner'

Theresa May’s former adviser Nick Timothy reacted to Trump’s intervention by saying the president ‘doesn’t know’ anything: ‘This is so unhelpful from leader of our ally and intelligence partner’

Mr Doughty said it is ‘obviously not the first time’ key pieces of information about a terror attack have been leaked by the US, after details of the Manchester bombing investigation were printed in American newspapers.

Mr Timothy tweeted: ‘True or not – and I’m sure he doesn’t know – this is so unhelpful from leader of our ally and intelligence partner.’

London Mayor Sadiq Khan – who has clashed publicly with Mr Trump before over London terrorism – told LBC today he had not seen the tweets but insisted the focus must be on allowing the police to get on with their job.

He said: ‘What is important is cool, calm heads are heard now.’

Mr Trump’s tweets could reignite the diplomatic row between the UK and the US over the leaking of sensitive police information.

In May the UK police temporarily stopping sharing intelligence about the terror investigation with America over a series of leaks about the Manchester bombing.

The president linked Friday's attack to his controversial travel ban, saying it 'should be far larger, tougher and more specific ¿ but stupidly, that would not be politically correct!'

He also drew attention to the military action against ISIS and should the US should get 'nasty'

He also drew attention to the military action against ISIS and should the US should get ‘nasty’

It is understood American law enforcement agencies had the pictures for only a matter of hours before they were handed to a journalist from the New York Times.

The leak was the way Britons discovered the identity of the bomber Salman Abedi. Greater Manchester Police did not confirm his name until later.

At the time, Mrs May warned continued leaking would undermine the special relationship.

She told reporters the ties between Britain and America was the ‘deepest defense and security partnership that we have’ but she warned it was ‘built on trust’.

‘Part of that trust is knowing that intelligence can be shared confidently and I will be making clear to President Trump today that intelligence that is shared between law enforcement agencies must remain secure,’ she added.

The latest version of Trump’s travel ban, initially announced in a botched late-January rollout, calls for a ban on people entering the U.S. from six terror-prone countries that are also Muslim-majority nations.

It also bars the entry of most refugees from anywhere in the world.

Federal court challenges have resulted in exceptions being made for travelers who already have established ties to the U.S., including a broad definition of what counts as a close family member.

The U.S. Supreme Court is expected to hear oral arguments to decide the ban’s constitutionality in October, but allowed it to go into effect last month while the case is pending.

Timeline of terror: Parsons Green train bombing is FIFTH attack to hit Britain in 2017

March 22: Five people are killed in a car and knife attack in Westminster.

Khalid Masood drove a hire car over Westminster Bridge, near the Houses of Parliament, mounted the pavement and hit pedestrians before crashing into railings outside the Palace of Westminster.

He stabbed Pc Keith Palmer, 48, to death.

Also killed in the atrocity were US tourist Kurt Cochran, Romanian tourist Andreea Cristea, 31, and Britons Aysha Frade, 44, and 75-year-old Leslie Rhodes. Masood was shot dead by police.

March 22: Five people were killed in a car and knife attack in Westminster, London

May 22: Twenty-two people – including children – are killed in a bombing at a pop concert in Manchester.

Lone suicide attacker Salman Abedi detonated an explosive device as crowds of music fans, many of them youngsters, left Manchester Arena following a performance by US singer Ariana Grande.

May 22: Twenty-two people - including children - are killed in a bombing at a pop concert in Manchester

Lone suicide attacker Salman Abedi detonated an explosive device as crowds of music fans, many of them youngsters, left Manchester Arena

June 3: Eight people are killed in a terror attack around London Bridge.

A van ploughed into people on the bridge before the three attackers carried out a knife rampage in Borough Market.

The perpetrators – Khuram Butt, 27, Rachid Redouane, 30, and Youssef Zaghba, 22 – were shot dead by police.

Khuram Butt, 27, Rachid Redouane, 30, and Youssef Zaghba, 22 - were shot dead by police

June 19: One man dies and several others are injured after a man allegedly rams his van into worshippers in north London.

Darren Osborne, 47, of no fixed address in Cardiff, is charged with murder and attempted murder after being accused of carrying out a premeditated attack on Muslims as they left a mosque on Seven Sisters Road, Finsbury Park.

June 19: One man dies and several others are injured after a man allegedly rams his van into worshippers in north London

Police warned there is no such thing as a ‘typical terrorist’ after official statistics showed rises in numbers detained across ethnicities and age groups.

There were 379 arrests for terrorism-related offences in the year ending June 2017, the highest number in a 12-month period since data collection began in 2001.

Police and MI5 are running 500 investigations involving 3,000 individuals at any one time, while there are also 20,000 former ‘subjects of interest’ whose risk must be kept under review.

 The fairy lights bomber: Jihadi used similar device in plot two years ago

When officers raided his home in the Alum Rock area of the city, they found his room littered with text books detailing guerrilla warfare techniques and small arms combat, further bomb making instructions and dismantled electrical items such as doorbells and alarm clocks.

He bought most of the items he used for his bombs over the internet.

Chief Superintendent Matt Ward, of West Midlands Police, said of Hussain’s bomb at the time: ‘Forensic examination of the pressure cooker found it contained mixed urea, nails, drills bits, nuts, bolts, steel sockets and diesel fuel.

‘The Christmas tree lights also found at his address had been adapted so each one could be used as an explosive initiator or detonator.

‘Examination of his computer discovered browsing history relating to terrorism including bomb making and bomb blast injuries, showing he had a consistent and continued interest in terrorism and conflict.’

The Christmas tree lights found at Hussain's address, in the Alum Rock area of Birmingham, had been adapted so each one could be used as an explosive initiator or detonator

 ‘I feared the whole train would blow up’: Man whose hair was burned in tube explosion says he was ‘lucky to get away’ as victims describe human stampede to flee bucket bomb aftermath

Horrified witnesses have reported passengers fleeing a London tube carriage in terror as they feared the ‘whole train would blow up’.

Peter Crowley, who was travelling on the District Line this morning, said his head has been ‘charred’ after a fireball engulfed his train at Parsons Green in west London.

Emma Stevie, 27, was on the train when the explosion happened at Parsons Green, in south-west London, and was caught in a ‘stampede’ and crush on the station steps.

Other commuters at the scene said they were ‘thrown around and crushed’ by panicked crowds shouting ‘there’s a man, there’s a man’ before running from the area.

Police have evacuated Parsons Green Underground Station after reports of a man wielding a knife and a second explosive device.

Emergency services have been on the scene at the London Underground station since around 8.20am this morning when a ‘fireball’ engulfed a train.

Peter Crowley, who was travelling on the District Line this morning, said his head has been 'charred' after a fireball engulfed his train

Peter Crowley, who was travelling on the District Line this morning, said his head has been ‘charred’ after a fireball engulfed his train

A police officer escorts an injured woman from the scene at Parsons Green Underground Station

Other commuters at the scene said they were 'thrown around and crushed' by panicked crowds shouting 'there's a man, there's a man' before running from the area

Other commuters at the scene said they were ‘thrown around and crushed’ by panicked crowds shouting ‘there’s a man, there’s a man’ before running from the area

Witnesses claim at least 30 commuters including school children were injured after a homemade bomb exploded on a packed commuter train.

Dozens of commuters made a ‘100 metre sprint’ after a large flash engulfed the 8.20am train as it pulled into Parsons Green station.

Video editor Luke Walmsley, 33, saw a woman with the skin of both her legs removed by the fire.

He also claims a ten-year-old boy suffered injuries and everybody had similar burns to their faces and hair.

In the moments after the incident photos of a burning white bucket, similar to a pot of paint inside a Lidl bag, with wires coming from the top were posted on social media.

Emma Stevie told the BBC: ‘We got on the train at Parsons Green, then I heard lots of screams and people saying ‘run, run’.

‘We got out and then there was a human stampede, down the stairs.

‘There were people lying underneath getting crushed, a big human pile-on. I wedged myself in next to a railing. I put myself in the foetal position. I kept thinking, ‘I’ll be ok, I’ll be ok’.

‘There was a pregnant woman underneath me, and I was trying really hard not to crush her.

‘The fire brigade was telling us to get back on the platform, but no-one was.

‘The injuries from the stampede seemed the worst. I’m outside now, there are women crying and people sitting on the floor.’

Dozens of commuters made a '100 metre sprint' after a large flash engulfed the 8.20am train as it pulled into Parsons Green station

Peter Crowley told the BBC: ‘I heard a large bang from the doors on the other side of the tube train and this fireball came towards my heard and singed off all my hair – I have got burn marks at the top of my head. Everyone just ran off the train, it was quite scary.

‘It was a really hot intense fireball above my head, I’ve just got red marks and burns to the top of my head. There were a lot of people a lot worse than me.

‘I saw a gentleman opposite me in a puffer jacket and the whole back of that had been burned where the intense heat had got to it – he had burn marks across his face which are looking a lot worse than mine.

‘There were a lot of people in shock, a lot of people visibly upset. Mostly it was facial injuries, burns rather than cuts.

‘It was like nothing I have ever seen before – sheer panic. Everyone jumped off the train, everyone initial reaction was to look back and assess the situation. It was just sheer panic.

‘It was busy but it was movable, it was busy for that time of day. I am just going to the hospital shortly.’

Emergency services were at the scene within minutes of the terror attack 

People stand by an ambulance near Parsons Green tube station

Mr Charley said: 'I saw passengers with facial burns, they had been exposed to a very, very hot fire for a nano second, it was lucky doors were open because everyone just got off the tube'

Mr Crowley, seen here in a social media picture, described the chaos on the train this morning

He added: 'It was a terrifying experience, I am lucky I got away with just a bit of charred hair'

Accountant Sarah Hickson, 31, who was on her way to work said she was ‘thrown around and crushed’ by panicked crowds.

She said: ‘People just started shouting ‘there’s a man, there’s a man’ and everyone started running. It was just sheer panic.

‘There were two people in front of me, a pregnant woman and a schoolboy.

‘They were being crushed on the concrete stairs, TfL staff were doing their best to get control but everyone was screaming trying to get out.

‘Eventually they managed to get some calm and people moved ever so slightly back allowing the boy and pregnant woman to get up.’

She added: ‘I am physically okay but shaken up, it was a scary experience.’

People reported being crushed on the concrete stairs with TfL staff were doing their best to get control

Witnesses said 'In the immediate seconds there were people running and shouting, it was just like where do you run to?'

Witnesses said ‘In the immediate seconds there were people running and shouting, it was just like where do you run to?’

People on their way to work were 'thrown around and crushed' by panicked crowds

Mr Walmsley, 33, said: ‘There was a really acrid burning smell that came out of the carriage.

‘We were three-quarters of a carriage away; there was screaming and then running as it pulled into Parsons Green – that was when it happened. It was coming to a standstill.

‘In the immediate seconds there were people running and shouting, it was just like where do you run to?

‘We did not know what was going on, there was a girl who had serious burns to her leg and there was a 10-year-old boy who had burns to his ankle.

‘People were rushing down the platform, everyone was doing a 100m sprint.

‘There was a flash at the end of the carriage that came down the train.

‘There were lots of injuries from people being trampled on and everyone who had been close to it had the same burns to their head.

‘We heard the first scream and then looked down and saw a flash and then the smoke and people running.

‘It was complete pandemonium, complete terror. They didn’t open the gates and the underground did not understand what was going on.

‘People were shouting ‘he’s got a knife! He’s got a knife!’ I didn’t see anyone with a knife.

‘It was the school run and there were a lot of kids in school uniform and mums and nannies trying to work out where their kids were.

‘The explosion was like a large match going off at the end of the carriage.

‘When people started running there was then the smell of burnt people.

‘There were more than 30 people injured, it was a full carriage and everyone had something wrong with them.

‘There was this girl who had no skin on her leg, whatever she had been wearing was just gone.

‘And there was another girl whose back garment was gone and her hair was gone.

‘It was a packed commuter train.’

Witnesses claim at least 30 commuters including school children were injured after a homemade bomb exploded on a packed commuter train

Couple Lucy, 24 and Fabin, 29, were on their way to work when the explosion happened.

Lucy, who works in PR, said: ‘We just heard screaming and sprinting, there was a stampede on the stairs and people were falling over, there was a schoolboy being lifted up after he had fallen down, he was in his school uniform, he must have been about ten, he was crying and distressed.’

Olaniyi Shokunbi, 24, boarded the train the bomb had been planted on at Putney Bridge and had been listening to music when he saw people scrambling off the train.

He said: ‘I thought the train was leaving Parsons Green but then I saw lots of people running up.

‘My first instinct was to get out of the train myself.

‘It’s a small station. There’s only two exits and a lot of people were struggling over each other. Some people just jumped over.

‘I thought it was an acid attack. It was early morning and people were drinking coffee and I felt some [liquid] on me and I thought ‘that better not go on my face’.’

Mr Shokunbi, a fitness instructor, said he had seen people lying on the floor covered in blood.

He said: ‘There were people on the floor, there was a little boy, I really felt sorry for him, he couldn’t have been more than 11.

‘He had scratches on his head, he was looking for his little brother.

‘I was going to go back into the train station but a woman said ‘don’t go back in there, there’s people on the floor’.’

He added: ‘There was a woman on the floor. She couldn’t breathe. People were screaming and crying.’

One man said he had seen people lying on the floor covered in blood

Flames engulfed one carriage and raced along a train on a west London route to Parsons Green, forcing passengers to trample others as they rushed for an exit 

Speaking to local radio Mr Crowley added: ‘I would personally say roughly about 20 who had physical injuries a lot of people who were shaken by the incident.

‘I wasn’t aware of the bag, I tend to keep myself to myself, I was side on to where I believe the incident happened.

‘That side of my hair is charred. There was a lot powder as if it was a high pressure tube that had some coating on it.’

He added: ‘Everyone ran off the tube, it was panic stations, my initial thought was that the whole train would blow up.

‘I saw passengers with facial burns, they had been exposed to a very, very hot fire for a nano second, it was lucky doors were open because everyone just got off the tube.

‘It was a terrifying experience, I am lucky I got away with just a bit of charred hair.’

The incident is ongoing, said police at the scene as police helicopters hover ahead where the suspect is thought to still be on the loose.

Counter terror police confirmed this morning the incident at Parson’s Green is being treated as a terror attack.

At the scene dozens of police and ambulances have continued to be called into the cordoned area.

A police officer told MailOnline: ‘We believe there is a second bomb, people need to stay back there is a man with knives on the loose.’

Armed Police, paramedics and firefighters were all said to be at the west London station within five minutes of the explosion

Merton Council Councillor Daniel Holden was on the train that exploded this morning said there are ‘quite a few people injured.’

UBER HELPS STRICKEN RAIL PASSENGERS

Uber has confirmed it is helping people affected by tube cancellations.

The company tweeted this morning: ‘We are aware of an incident at Parsons Green.

‘We have turned off dynamic pricing and will refund all journeys from the affected area. ‘

He said: ‘I was one carriage away when it happened.

‘It was like a fireball had just hit, everyone was screaming and panicking. Everyone was trying to push their way off the train.’

‘There’s hundreds of police, fire brigade and ambulance here now.’

Mr Holden said he wasn’t injured in the explosion, but saw a few people who were.

‘They’re treating a few people who look quite injured,’ he said.

Former London Mayor and Foreign Secretary Boris Johnson said: ‘It really is important not to spectacle at the moment, obviously everyone should keep calm and go about their lives in a normal way.

‘As far as I understand the British Transport Police and TFL are on it and will be updating their websites as and when we get information.’

Chaos on the London Underground as District Line is shut down and police confirm Parsons Green explosion was terror attack

There is chaos on the London Underground after an explosion sent a fireball cascading through a packed commuter train this morning.

Transport for London said Tube services are suspended between Earls Court and Wimbledon.

Parsons Green station in west London remains closed with members of the public being urged to avoid area after a device exploded on the rush hour train.

Police have confirmed they are treating it as a terror-related incident.

Flames engulfed one carriage and raced along a train on a west London route to Parsons Green, forcing passengers to trample others as they rushed for an exit 

Horrified witnesses on social media claim there was a stampede as people were 'screaming and running off trains'

There was a stampede as a ‘fireball flew down the carriage’, leaving several passengers with serious facial burns on the packed rush hour train in Parsons Green, west London at 8.20am.

The doors opened on the District Line train and the commuters, many of them with scorched faces and hair, ran off screaming.

Transport for London said it was ‘investigating an incident at Parsons Green’ and urged customers travelling between Wimbledon and Earls Court to use alternative routes.

There is no service on the District Line from Earls Court to Wimbledon, with severe delays from Earls Court to Edgware Road.

TfL says there are also minor delays from Ealing Broadway to Turnham Green.

London Buses, South Western and London Overground are accepting London Underground tickets via any reasonable route.

TfL said passengers are being urged to avoid Earls Court, adding it remains unclear when the line will re-open with delays expected into the evening.

Armed Police, paramedics and firefighters were all said to be at the west London station within five minutes of the explosion

Nigel Holness, London Underground’s director of network operations, said: ‘Our staff have worked to assist the emer-gency services and to ensure the safety of our customers during this morning’s incident at Parsons Green.

‘We are focussed on assisting the police investigation into what happened and providing support for our customers and staff.

‘Our Sarah Hope Line is available to offer help and support to anyone affected by this morning’s incident.’

Officers said the incident is ongoing, as police helicopters hover ahead where the suspect is thought to still be on the loose.

Counter terror police confirmed this morning the incident at Parson’s Green is being treated as a terror attack.

At the scene dozens of police and ambulances have continued to be called into the cordoned area.

A police officer told MailOnline: ‘We believe there is a second bomb, people need to stay back there is a man with knives on the loose.’

 ‘Come round, the kettle’s on!’ Unfazed Londoners are praised for ‘beautiful response’ to Parsons Green bucket bomb by offering to make cups of tea and opening their homes for survivors

Defiant Londoners have reached out and offered to help anyone caught up in a bomb blast which hit an underground train this morning.

People across the capital have offered to make tea and open up their homes to anyone wounded in the blast on a train at Parsons Green in west London.

Taxi drivers have also come to the aid of those affected, offering free journeys while Facebook users are inviting victims in to shelter, rest and charge their phones.

Social media awash with people offering to 'put the kettle on' for those affected by the Parsons Green bomb blast

Nearby taxi company Hayber Cars has offered its services free of charge, while Chelsea and Fulham Dentist, has also offered people a place to shelter.

Jan Ståhlberg‏ tweeted: ‘Classic British response to an emergency & major incident: ‘I’ll put the kettle on’. Compassion and Communities come together.’

Anthony J Myers added: ‘Thank you to TfL staff, emergency services, security services and the Londoners of #ParsonsGreen who have offered to put the kettle on.’

Kind-hearted Debbie Clark, 57, has opened up her home on Kelvedon Road as a makeshift hospital while a police hunt is underway for the perpetrators behind the terror incident.

The mother of two woke up to hear banging at her front door from her neighbour Princess Stafford, who is deaf and mute and had been badly injured in a stampede as hundreds rushed out of the station following an explosion.

Ms Clark said: ‘I woke up to banging and she was at my door crying and distressed.’

People across the capital have offered to make tea and open up their homes to anyone wounded in the blast on a train at Parsons Green in west London
 People across the capital have offered to make tea and open up their homes to anyone wounded in the blast on a train at Parsons Green in west London

Across the road, Ms Clark said she saw three girls opposite her home, one was crying and said there were all ‘as white as a sheet’.

Taking them into her home, she gave them water and called their parents. She said: ‘they are just in shock. They said it happened so quickly, they just wanted to get out of there. One was from Sheffield, another from Surrey.’

She said: ‘I brought them all into my home, called the police and their parents. I just wanted to do something, you feel so helpless. I’ve lived here all my life and was born in Parson’s Green, you never expect something like this to happen.’

Flames engulfed one carriage and raced along a train on a west London route to Parsons Green, forcing passengers to trample others as they rushed for an exit 

Armed Police, paramedics and firefighters were all said to be at the west London station within five minutes of the explosion

Her neighbour Princess is currently on Ms Clark’s balcony with two chairs creating a makeshift stretcher with a suspected leg injury.

The 32-year-old was pushed to the floor by panicked commuters this morning as she waited to board a train at Parson’s Green to take her to work.

She told MailOnline how she was knocked to the ground and trapped. She said: ‘I couldn’t move, there were people on top of me and walking over me.’

The rush was so great she was pushed back to the stairwell, she said.

With tears in her eyes, she told MailOnline how she couldn’t breathe because of the number of people passing over her.

This afternoon she waits to be taken to hospital at Ms Clark’s home. She was told by London Ambulance they could be waiting for up to four hours.

Ms Clark said: ‘They are going to send a non emergency could take two to four hours because there have been serious injuries we understand. She can’t communicate she can’t hear and talk, good job I was in I am so glad I was in for her.’

‘Stay calm and go about your lives’: Boris Johnson urges Londoners not to panic as security is ramped up across the capital 

Foreign Secretary Boris Johnson has called on Londoners to remain calm as security is stepped up in the capital in the wake of the Parsons Green explosion.

Officers from the Metropolitan Police’s counter-terrorism command have launched an investigation following the explosion in west London during the Friday morning rush hour.

Mr Johnson says people should ‘keep calm and go about their normal lives’ as emergency services respond to the  incident.

A number of commuters have been taken to hospital with serious facial burns, as police remain at the scene

Speaking this morning, government minister Boris Johnson called on people to remain calm

Mr Johnson says it would be ‘wrong to speculate’, but that police and transit authorities ‘are on it.’

Mayor of London Sadiq Khan said London ‘will never be intimidated or defeated by terrorism’.

A Scotland Yard spokesman added: ‘We urge the public to remain calm but alert and if you have any concerns, see or hear anything suspicious then contact police.’

Prime Minister Theresa May is to chair a meeting of the Government’s Cobra emergencies committee this afternoon to discuss the incident.

Commuters fled in terror after the blast and witnesses reported seeing several people hurt and ‘covered in blood’ after a ‘flash and a bang’ on the District Line Tube.

Emergency services including armed police rushed to the scene and cordoned off the station.

Bomb disposal experts are among emergency services at the scene amid fears of more bombs

Transport for London said Tube services were suspended on that section of the underground

A woman walks with a young boy through west London as armed police stand guard nearby

Pictures posted on social media showed wires protruding from a flaming bucket inside a plastic carrier bag on the floor of a carriage.

The Met added: ‘It is too early to confirm the cause of the fire, which will be subject to the investigation that is now under way by the Met’s Counter Terrorism Command.’

Investigators will be scouring CCTV and taking statements from dozens of witnesses as they attempt to piece together the lead-up to the explosion.

The device will be forensically assessed after being made safe, while police will be urgently trying to establish whether someone attempted to detonate it, and whether they were present at the scene.

Heavily-armed police were drafted in to assist the investigation at Parsons Green today

Armed police boarded the train in the incident as the hunt for the bomber was stepped up

Paramedics in bullet-proof vests were guarded by armed police at the scene this morning

The scenes of panic evoked memories of the July 7 atrocities in 2005, when suicide bombers killed 52 people in a series of co-ordinated attacks across the transport network.

Two weeks later, a group of men attempted to set off rucksack devices but the bombs failed to go off.

The emergency at Parsons Green will spark another huge counter-terrorism probe as security services confront an unprecedented threat.

Four attacks – at Westminster, Manchester, London Bridge and Finsbury Park – have hit Britain already this year.

Authorities have foiled 19 plots since the middle of 2013 – including six since the Westminster atrocity in March.

An armed police officer stands guard after an incident on a tube train at Parsons Green station

 

Story 2: North Korea Fires Another Ballistic Missile Over Japan — Videos —

Image result for North Korea launced missile over japan

Image result for North Korea launced missile over japan

Image result for North Korea launced missile over japan

Image result for North Korea launced missile over japan

Report: North Korea’s missile flew over Japan

North Korea sends message to U.S. by launching another missile towards Japan

North Korea fires missile over Japan

North Korea Fires A

North Korea fires missile over Japan in ‘unprecedented threat’- BBC News

Another Missile Over Japan

North  Korea fires another Intemediate Ballistic missile over Japan

The Repeated Mistake That’s Always Made When Dealing With North Korea

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Story 3: Conservative Commentator Allowed To Speak At University of California, Berkeley, Police Arrested Some of The Protesters –Videos

North Korea fires missile over Japan in longest-ever flight

SEOUL, South Korea (AP) — North Korea fired an intermediate-range missile over Japan into the northern Pacific Ocean on Friday, U.S. and South Korean militaries said, its longest-ever such flight and a clear message of defiance to its rivals.

Since President Donald Trump threatened the North with “fire and fury” in August, Pyongyang has conducted its most powerful nuclear test, threatened to send missiles into the waters around Guam and launched two missiles of increasing range over U.S. ally Japan. It tested its first-ever intercontinental ballistic missiles in July.

The growing frequency, power and confidence displayed by these tests seem to confirm what governments and outside experts have long feared: North Korea is closer than ever to its goal of building a military arsenal that can viably target both U.S. troops in Asia and the U.S. homeland. This, in turn, is meant to allow North Korea greater military freedom in the region by raising doubts in Seoul and Tokyo that Washington would risk the annihilation of a U.S. city to protect its Asian allies.

South Korea’s Joint Chiefs of Staff said the missile traveled about 3,700 kilometers (2,300 miles) and reached a maximum height of 770 kilometers (478 miles).

North Korea fired an intermediate-range missile over Japan into the northern Pacific Ocean on Friday, U.S. and South Korean militaries said, its longest-ever such flight and a clear message of defiance. (Sept. 15)

North Korea has repeatedly vowed to continue these tests amid what it calls U.S. hostility — by which it means the presence of tens of thousands of U.S. troops in Japan and South Korea. Robust diplomacy on the issue has been stalled for years, and there’s little sign that senior officials from Pyongyang and Washington might sit down to discuss ways to slow the North’s determined march toward inclusion among the world’s nuclear weapons powers.

Friday’s missile, which Seoul said was the 19th ballistic missile launched by North Korea this year, triggered sirens and warning messages in northern Japan but caused no apparent damage to aircraft or ships. It was the second missile fired over Japan in less than a month. North Korea conducted its sixth and most powerful nuclear test on Sept. 3.

The missile was launched from Sunan, the location of Pyongyang’s international airport and the origin of the earlier missile that flew over Japan. Analysts have speculated the new test was of the same intermediate-range missile launched in that earlier flight, the Hwasong-12.

That missile is linked to North Korea’s declaration that it means to contain the U.S. Pacific island territory of Guam, which is the home of important U.S. military assets and appears well within the Hwasong-12′s range.

Friday’s missile test was met with the usual outrage. South Korean President Moon Jae-in ordered his military to conduct a live-fire ballistic missile drill in response to the North Korean launch and instructed government officials to pursue “stern” measures to discourage Pyongyang from further provocations. South Korea’s Joint Chiefs of Staff said one of the two missiles fired in the drill hit a sea target about 250 kilometers (155 miles) away, which was approximately the distance to Pyongyang’s Sunan, but the other failed in flight shortly after launch.

Japanese Prime Minister Shinzo Abe and U.S. Defense Secretary Jim Mattis both called the North Korean launch a reckless act.

The U.N. Security Council scheduled an emergency closed-door meeting to be held Friday afternoon in New York. Trump has not commented.

The North American Aerospace Defense Command and the U.S. Pacific Command said the missile posed no threat to North America or to Guam.

South Korean experts have said North Korea wants to make missiles flying over Japan an accepted norm as it seeks to win more military space in a region dominated by its enemies.

North Korea initially flight-tested the Hwasong-12 and the ICBM model Hwasong-14 at highly lofted angles to reduce their range and avoid neighboring countries.

The two launches over Japan indicate North Korea is moving toward using angles close to operational to determine whether its warheads can survive the harsh conditions of atmospheric re-entry and detonate properly.

North Korea’s August launch over Japan came weeks after it threatened to fire a salvo of Hwasong-12s toward Guam and bracket the island with “enveloping” missile fire. The North’s latest launch might be an attempt to demonstrate its ability to fire a missile close to Guam, which is 3,400 kilometers (2,112 miles) away from North Korea, said Kim Dong-yub, a former South Korean military official who is now an analyst at Seoul’s Institute for Far Eastern Studies.

https://apnews.com/9d5be2ad4dd44c6082a7982d17b84b2f/North-Korea-fires-missile-over-Japan-in-longest-ever-flight

NKOREA LEADER SAYS HE WILL COMPLETE NUKE PROGRAM

AP Photo
AP Photo/Eugene Hoshiko

SEOUL, South Korea (AP) — North Korea leader Kim Jong Un said the country is nearing its goal of “equilibrium” in military force with the United States, as the United Nations Security Council strongly condemned the North’s “highly provocative” ballistic missile test on Friday.

The North’s official Korean Central News Agency carried Kim’s comments on Saturday – a day after U.S. and South Korean militaries detected the missile launch from the North Korean capital of Pyongyang.

It traveled 3,700 kilometers (2,300 miles) as it flew over Japan before landing in the northern Pacific Ocean. It was the country’s longest-ever test flight of a ballistic missile.

The North has confirmed the missile as an intermediate range Hwasong-12, the same model launched over Japan on Aug. 29.

The KCNA said Kim expressed great satisfaction over the launch, which he said verified the “combat efficiency and reliability” of the missile and the success of efforts to increase its power.

While the English version of the report was less straightforward, the Korean version quoted Kim as declaring the missile as operationally ready. He vowed to complete his nuclear weapons program in the face of strengthening international sanctions, the agency said.

The U.N. Security Council accused North Korea of undermining regional peace and security by launching its latest missile over Japan and said its nuclear and missile tests “have caused grave security concerns around the world” and threaten all 193 U.N. member states.

Kim also said the country, despite “limitless” international sanctions, has nearly completed the building of its nuclear weapons force and called for “all-state efforts” to reach the goal and obtain a “capacity for nuclear counterattack the U.S. cannot cope with.”

“As recognized by the whole world, we have made all these achievements despite the UN sanctions that have lasted for decades,” the agency quoted Kim as saying.

Kim said the country’s final goal “is to establish the equilibrium of real force with the U.S. and make the U.S. rulers dare not talk about military option for the DPRK,” referring to North Korea’s official name, the Democratic People’s Republic of Korea.

He indicated that more missile tests would be forthcoming, saying that all future drills should be “meaningful and practical ones for increasing the combat power of the nuclear force” to establish an order in the deployment of nuclear warheads for “actual war.”

Prior to the launches over Japan, North Korean had threatened to fire a salvo of Hwasong-12s toward Guam, the U.S. Pacific island territory and military hub the North has called an “advanced base of invasion.”

The Security Council stressed in a statement after a closed-door emergency meeting that all countries must “fully, comprehensively and immediately” implement all U.N. sanctions.

Japan’s U.N. Ambassador Koro Bessho called the missile launch an “outrageous act” that is not only a threat to Japan’s security but a threat to the world as a whole.”

Bessho and the British, French and Swedish ambassadors demanded that all sanctions be implemented.

Calling the latest launch a “terrible, egregious, illegal, provocative reckless act,” Britain’s U.N. Ambassador Matthew Rycroft said North Korea’s largest trading partners and closest links – a clear reference to China – must “demonstrate that they are doing everything in their power to implement the sanctions of the Security Council and to encourage the North Korean regime to change course.”

France’s Foreign Ministry said in a statement that the country is ready to work on tougher U.N. and EU measures to convince Pyongyang that there is no interest in an escalation, and to bring it to the negotiating table.

Friday’s launch followed North Korea’s sixth and most powerful nuclear test on Sept. 3 in what it described as a detonation of a thermonuclear weapon built for its developmental intercontinental ballistic missiles.

The North flight tested its Hwasong-14 ICBMs twice in July and analysts say the missiles could potentially reach deep into the U.S. mainland when perfected.

The growing frequency, power and confidence displayed by Pyongyang’s nuclear and missile tests seem to confirm what governments and outside experts have long feared: North Korea is closer than ever to its goal of building a military arsenal that can viably target U.S. troops both in Asia and in the U.S. homeland.

This, in turn, is meant to allow North Korea greater military freedom in the region by raising doubts in Seoul and Tokyo that Washington would risk the annihilation of a U.S. city to protect its Asian allies.

South Korean President Moon Jae-in, a liberal who initially pushed for talks with North Korea, said its tests currently make dialogue “impossible.”

“If North Korea provokes us or our allies, we have the strength to smash the attempt at an early stage and inflict a level of damage it would be impossible to recover from,” he said.

Robust international diplomacy on the issue has been stalled for years, and there’s so far little sign that senior officials from North Korea and the U.S. might sit down to discuss ways to slow the North’s determined march toward inclusion among the world’s nuclear weapons powers.

Lederer reported from the United Nations.

Story 3: Conservative Commentator Ben Shapiro Allowed To Speak At University of California, Berkeley, Police Arrested Nine of The Protesters –Videos

 

Image result for ben shapiro speacks at berkeley september 14, 2017

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“Berkeley Students Need COUNSELING for My Talk?” Ben Shapiro RIPS Berkeley Snowflakes

Unprecedented measures at Berkeley for conservative writer’s speech

To see what free speech looks like in 2017 at the birthplace of the famed movement, consider the elaborate preparations underway for a talk Thursday by a conservative writer.

Ben Shapiro isn’t nearly as controversial as some right-wing speakers who have roiled the campus over the last year.

Nonetheless, UC Berkeley has told students that counseling is available to those stressed by all the commotion. A large swath of the campus will be closed off, including the plaza where the free speech movement began in the 1960s. Hundreds of thousands of dollars have been spent on security, and police now can use pepper spray on protesters after a 20-year-old ban was lifted by the City Council this week.

Students and Black Panther supporters listen to Eldridge Cleaver, Black Panther minister of information, at Sproul Plaza on Oct. 3, 1968.
Students and Black Panther supporters listen to Eldridge Cleaver, Black Panther minister of information, at Sproul Plaza on Oct. 3, 1968. (Pirkle Jones / University of California Press)

Shapiro’s appearance is a key test for Berkeley, which has been hit by a series of violent clashes between far-left and far-right agitators that have sparked soul-searching in this liberal community about the line between protest and criminal behavior. Berkeley has become a favorite spot for far-right demonstrators to speak out, knowing they can get attention and push buttons in enemy territory.

The Thursday event marks the start of a parade of right-wing speakers who may be coming to campus over the next month. They include former White House chief strategist Stephen K. Bannon and right-wing provocateur Milo Yiannopoulos, who announced that they will appear as part of a “Free Speech Week” event on campus.

The event is organized by Yiannopoulos and a student group. On Tuesday, Berkeley spokesman Dan Mogulof stressed that this event is far from a done deal — the student group hadn’t yet satisfied the requirements for bringing a speaker or followed proper procedure.

UC BERKELEY BRACES

‘We’ve never seen a situation like this’

But UC Berkeley’s new chancellor, Carol T. Christ, has said allowing these talks is essential, trumpeting the belief that the best response to hate speech is “more speech” rather than trying to shut down others.

That leaves officials with the task of keeping the peace — and trying to keep the various warring sides under control. They hope to do it with what officials say are unprecedented security measures.

“We’ve never seen a situation like this. It’s very unique. It’s a very different political dynamic where free speech … at Berkeley has become the occasion for the right and left to confront each other,” Christ said Wednesday. “I believe very strongly in Ben Shapiro’s right to speak on campus. I don’t agree with Ben Shapiro; in fact I profoundly disagree with him. But I believe he was legitimately invited by a student group and that he has the right to speak. It’s a really troubling situation.”

City and campus officials are taking heightened steps to prevent the sort of chaos that descended on campus when Yiannopoulos tried to speak in February.

Police officers and physical barriers will be set up in a roughly half-mile-long perimeter around six campus buildings Thursday afternoon, cutting off access to Sproul Plaza, the site of Mario Savio’s famous 1964 address during the free speech movement and a common meeting ground for activists of all stripes.

Mario Savio stands atop a police car in front of Sproul Hall on Oct. 1, 1964.
Mario Savio stands atop a police car in front of Sproul Hall on Oct. 1, 1964. (The Bancroft Library / Courtesy of UC Berkeley)

In order to pass through the security perimeter, people will have to show tickets for the speech. Those who show up to protest will encounter an “increased and highly visible police presence,” Provost Paul Alivisatos said in a letter to the campus last week.

If protesters spill into the city business district south of campus, along Telegraph Avenue, they will encounter the city’s police force — which is now free to use pepper spray on individual protesters officers deem are committing acts of violence.

Berkeley police officers make arrests during protests several weeks ago.
Berkeley police officers make arrests during protests several weeks ago. (Los Angeles Times)

PEPPER SPRAY AND CLOSED STREETS

Berkeley police try to keep order

Berkeley police have come under criticism for not doing enough to break up the violence that has marred past protests.

Berkeley Police Chief Andrew Greenwood successfully pitched the City Council on Tuesday to adjust a 1997 ban on the use of pepper spray as a crowd-control technique.

Greenwood argued that police needed another tool — besides batons and tear gas — to deal with the violence that has come with the new wave of protests.

Councilwoman Linda Maio, who voted for the measure, agreed, citing the prospects of large protests if Yiannopoulos and Bannon come to campus in the coming weeks.

“This is a new phenomenon that is evolving, and we really don’t know what to expect,” she said of the protests over the last few months.

On Wednesday, the city also announced it was banning a wide range of weapons, including bricks, Mace and dynamite in a square-mile area centered around UC Berkeley’s campus.

Since the election, Berkeley residents have seen months of clashes between activists on the left who employ black-bloc militant tactics and once-obscure far-right organizations such as the Proud Boys and the Fraternal Order of Alt-Knights.

The skirmishes have resulted in thousands of dollars of property damage in Berkeley and a handful of criminal charges.

The situation at Berkeley on Thursday will be a far cry from Shapiro’s visit to the campus in April 2016.

SHAPIRO’S STORY

A conservative voice that fights Trump, Bannon

Shapiro was met with little, if any, controversy then. The website he edits, the Daily Wire, wrote at the time that “the audience at Berkeley was civil and polite, perhaps more so than any other university Shapiro has visited in the last few weeks.”

The month before that speech, Shapiro resigned from the Bannon-led BreitbartNews after a colleague of his accused then-Trump campaign manager Corey Lewandowski of assaulting her.

“Steve Bannon is a bully, and has sold out Andrew [Breitbart]’s mission in order to back another bully, Donald Trump; he has shaped the company into Trump’s personal Pravda,” Shapiro wrote in a statement at the time.

During the election, his lashing critiques of Trump made him one of the more prominent opponents of the then-Republican nominee in the conservative movement.

This opposition to candidate Trump also made him the target of anti-Semitic harassment. The Anti-Defamation League released a report last fall detailing anti-Semitic harassment of journalists on Twitter during the first half of the 2016 election cycle. It found Shapiro to be the No. 1 target.

Shapiro was frustrated by a Berkeley decision earlier this month to shrink the number of seats in the audience for his address. Fitting in with a broader critique he’s offered in his writing, Shapiro also ridiculed the idea that anyone would need to seek counseling because he was speaking.

“As far as them ensuring that I have a venue trying to make sure that it’s secure, I’m not sure all of what they’re doing makes sense, but I’m appreciative that they’re at least trying,” Shapiro said.

“It’s very easy to get kids riled up by doing the shtick Yiannopoulos does, but that’s not my game, and it’s always why the comparisons are weird for me.”

It is unclear what level of protests will greet Shapiro.

Organizers with the group RefuseFacism.org were busy on campus Wednesday handing out fliers promoting a demonstration against Shapiro set for Thursday evening.

At Tuesday’s packed City Council meeting, Raphael Kadaris, an organizer with the group, drew loud applause from the audience when he said the council members were acting as “collaborators” with what he claims is a growing fascist movement in the nation for allowing the police use of pepper spray.

“These people don’t care about free speech,” he said, referring to the conservative speakers coming to campus. “They are using free speech as a pretext to get a foothold, to normalize fascism on these college campuses and to recruit a new generation of fascist youth into their movement.”

Some faculty members have called for a boycott during the “free speech” week.

Christ said Wednesday the challenge is to protect free speech in this charged environment.

“I think we’re in an area which presents both challenges to the law and challenges to university policy when a speaker occasions the university to first of all spend extraordinary amounts of money and take extraordinary measures that are quite disruptive to the university’s main business in order to protect the right of free speech.”

http://www.latimes.com/local/lanow/la-me-berkeley-protests-far-right-shapiro-20170914-htmlstory.html

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The Pronk Pops Show 956, August 31, 2017, Part 2 of 2, Story 1: President Trump’s Tax Speech — Very Light On Specifics — Let Congress Fill in The Details — Formula For Failure — Tax Rate Cuts Are Not Fundamental Tax Reform — A Broad Based Consumption Tax Such as The FairTax or Fair Tax Less Not Even Mentioned — What Good Is Dreaming It If You don’t actually do it! — Videos —

Posted on September 1, 2017. Filed under: American History, Banking System, Breaking News, Budgetary Policy, Communications, Congress, Constitutional Law, Corruption, Countries, Defense Spending, Donald J. Trump, Donald J. Trump, Donald Trump, Economics, Education, Elections, Employment, Energy, Federal Government, Fiscal Policy, Foreign Policy, Free Trade, Freedom of Speech, Government, Government Dependency, Government Spending, Health, Health Care Insurance, History, House of Representatives, Human Behavior, Illegal Immigration, Immigration, Independence, Investments, IRS, Labor Economics, Language, Law, Legal Immigration, Life, Media, Medicare, Monetary Policy, National Interest, Natural Gas, Oil, People, Philosophy, Photos, Politics, Polls, President Trump, Progressives, Radio, Raymond Thomas Pronk, Resources, Rule of Law, Scandals, Senate, Social Security, Success, Tax Policy, Taxation, Taxes, Trade Policy, U.S. Dollar, Unemployment, United States Constitution, United States of America, Videos, Violence, Wall Street Journal, War, Wealth, Welfare Spending, Wisdom | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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Part 2 of 2 Story 1: President Trump’s Tax Speech — Very Light On Specifics — Let Congress Fill in The Details — Formula For Failure — Tax Rate Cuts Are Not Fundamental Tax Reform — A Broad Based Consumption Tax Such as The FairTax or Fair Tax Less Not Even Mentioned — What Good Is Dreaming It If You don’t actually do it! — Videos —

FULL. President Trump speech on tax reform in Springfield, Missouri. August 30, 2017.

Special Report with Bret Baier 8/30/17 – Special Report Fox News August 30, 2017 TRUMP TAX REFORM

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Mark Levin: Donald Trump gave a good speech on tax reform (August 30 2017)

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Milton Friedman – Why Tax Reform Is Impossible

Honda – “Impossible Dream” Power of Dreams Advert Full

 

Trump’s Tax Reform Plan Targets Middle-Class Tax Complexity

Policy director at Competitive Enterprise Institute

President Trump visited Missouri to talk about tax reform, stressing simplicity and middle-class tax relief and “plans to bring back Main Street by reducing the crushing tax burden on our companies and on our workers.”

Noting the elimination of “dozens of loopholes,” special interest carve-outs, and the reduction of brackets and rates that Congress achieved three decades ago, Trump said, “the foundation of our job creation agenda is to fundamentally reform our tax code for the first time in more than 30 years. I want to work with Congress, Republicans and Democrats alike, on a plan that is pro-growth, pro-jobs, pro-worker — and pro-American.”

We’re about to re-enter Obamacare repeal-style complexity and venom, but it’s important, I think, for the public to see the tax reform debate as something other than a campaign to benefit business. The U.S. does have comparatively high corporate tax rates. And the Econ 101 lesson on tax incidence shows that consumers pay much of the corporate tax, not the company.

It’s probable some Democrats would like to reform the tax code, especially come 2016, but the zero-tolerance of Trump, such as that seen at the Commonwealth Club when Sen. Diane Feinstein was barely favorable toward him, prevails.

But things can turn on a dime, as the response, likely bipartisan, to Hurricane Harvey may further show. And separately the controversial debt limit needs to be addressed no matter what (hopefully with parallel cuts in regulatory costs), and that debate will influence the trajectory of tax reform.

My broader point here though is is that taxation is just the beginning of the story when it comes to the complexity of regulatory compliance. The economy marinates in compliance burdens to service noble ends, but sometimes serve regulators instead. Trump characterized the Internal Revenue Service’s unfairness to the typical taxpayer like this:

The tax code is now a massive source of complexity and frustration for tens of millions of Americans.

In 1935, the basic 1040 form that most people file had two simple pages of instructions. Today, that basic form has one hundred pages of instructions, and it’s pretty complex stuff. The tax code is so complicated that more than 90 percent of Americans need professional help to do their own taxes.

This enormous complexity is very unfair. It disadvantages ordinary Americans who don’t have an army of accountants while benefiting deep-pocketed special interests. And most importantly, this is wrong.

There’s solid backup for what Trump’s talking about in terms of pubic burdens, even if some are disinclined  to reckon with it, or if their allegiances require professing public disdain for corporations (one of the great democratizing forces in human history, but that’s another story).

The Government Accountability Office (GAO) agrees, I think, that Trump’s example of the IRS is a good one. In the course of a project I have of compiling examples of government proclamationsthat are not laws from Congress, nor even formal regulations from agencies, but instead “memoranda” and “guidance,” the IRS emerged as a leading “offender.”

A September 2016 GAO report called  “Regulatory Guidance Processes: Treasury and OMB Need to Reevaluate Long-standing Exemptions of Tax Regulations and Guidance,” looked at the Internal Revenue Service’s hierarchy of law, regulations, guidance, and explanatory material with respect to communicating interpretation of tax laws to the public.

It’s an eye-opener.

A pyramid diagram presented by GAO was topped by the Internal Revenue Code, as passed by Congress. Beneath that, in widening stages, one finds “Treasury Regulations,” “Internal Revenue Bulletins,” (IRB), “Written Determinations,” and “Other IRS Publications and Information.” The IRS regards the bulletins as generally authoritative, while determinations tend to apply to individual taxpayers.

That’s a lot of public guidance, difficult to absorb.

As the GAO explains:

Treasury and IRS are among the largest generators of federal agency regulations and they issue thousands of other forms of taxpayer guidance. IRS publishes tax regulations and other guidance in the weekly IRB. Each annual volume of the IRB contains about 2,000 pages of regulations and other guidance documents.

From 2013 to 2015, each annual Internal Revenue Bulletin edition contained some 300 guidance documents; back in 2002-2008, about 500.

When one sees such document proliferation from the IRS, an impartial observer might surmise the time for tax reform and simplification has arrived.

Likewise, when regulatory guidance multiplies that applies to various sectors—like finance, Internet, health care—one might similarly conclude the time has come for Congress to enact regulatory liberalization. Trump mentioned cutting the overall federal regulatory burden in the Missouri speech, too.

We knew it all along, but paying taxes also requires paying a lot of attention to regulations. In more ways than one, tax reform and regulatory reform go hand in hand.

https://www.forbes.com/sites/waynecrews/2017/08/30/trumps-tax-reform-plan-targets-middle-class-tax-complexity/#31fda3736ef8

Ann Coulter goes off on Trump over taxes, saying he delivered his ‘worst, most tone-deaf speech’

Conservative author Ann Coulter rebuked President Donald Trump over his speech on Wednesday in which he rolled out the broad outline of his tax reform plan.

In a slew of tweets on Wednesday, the firebrand conservative pundit said the president’s focus on simplifying the tax code and lowering business taxes to 15% was missing an opportunity to prioritize some of his more incendiary, but unique, policy objectives, including building a southern border wall and deporting immigrants living in the US without permission.

This isn’t a “once in a lifetime” shot at tax cuts! EVERY GOP cuts taxes! This is “once in a lifetime” shot to save US: Wall & deportations!

Bush cut taxes! Did it create millions of jobs? Nope. The rich pocketed their tax cut & sent jobs abroad, hired guest workers. F– them.

It’s so obvious Trump’s only getting polite applause for tax cuts. Want to get the crowd hollering, @realDonaldTrump? Talk about THE WALL!

It’s like Night of the Living Dead watching our beloved @realDonaldTrump go to DC & start babbling the same old GOP nonsense on tax cuts.

Tax cuts are a 2d term issue. 1st term: BUILD THE WALL, End DACA, Deport Illegals, No Refugees, No Muslims, Immigrn Moratorium. SAVE USA!

Cutting taxes doesn’t do a damn thing for wages if you allow businesses to keep bringing in cheap foreign labor!

To create jobs for AMERICANS, no more cheap foreign workers, CUT REGULATIONS & cut corporate taxes. (NOT income taxes.)

Coulter particularly singled out the similarities between Trump’s plan and a hypothetical plan that other Republicans like former Florida Gov. Jeb Bush would’ve put forward.

This speech could have been given by Jeb! — except even he wouldn’t have talked about the govt helping yuppie women with child care costs.

Oh stop pretending this is about letting “families” keep more of their money. HALF OF AMERICANS DON’T PAY TAXES! This is for Wall Street.

Indeed, beyond the prominent former Wall Street figures playing key roles in overhauling the tax code, Trump’s administration has absorbed some financial figures from Bush’s policy world.

Notably, Bush’s former senior policy director Justin Muzinich joined the Treasury Department in March to work closely with Treasury Secretary Steve Mnuchin on “major policy initiatives” and on tax reform.

Over the past several months, Coulter has increasingly criticized Trump and mocked him on social media and in interviews, saying that he has not fulfilled his anti-immigration campaign promises.

“The millions of people who haven’t voted for 30 years and came out to vote for Trump, thinking, ‘Finally, here’s somebody who cares about us’ — Nope!” Coulter told The Daily Beast after former chief strategist Steve Bannon left the White House earlier this month. “Republicans, Democrats — doesn’t matter. Jeb exclamation point, Donald Trump, Hillary Clinton — doesn’t matter. Goldman Sachs is running the country.”

http://www.businessinsider.com/ann-coulter-trump-taxes-speech-2017-8

 

Who Pays Income Taxes?

The charts below illustrate the share of taxes paid by income percentiles for Tax Year 2014, the most recent set of data available from the IRS. NTUF has broken down the federal share of income taxes by gross income to show how much each bracket contributes yearly.

For more information:

 

https://e.infogr.am/38b876d9-6c59-4a84-8b02-1ed223f6a454?src=embed

https://www.ntu.org/foundation/page/who-pays-income-taxes

Trump Hits The Road To Promote Tax Cuts (Details To Come)

President Trump participates in a tax overhaul kickoff event at the Loren Cook Company in Springfield, Mo., on Wednesday.

Jim Watson/AFP/Getty Images

Updated at 5:25 p.m. ET

President Trump called for a major rewrite of the U.S. tax code during a visit to Springfield, Mo., on Wednesday afternoon. The speech came a day after Trump’s trip to Harvey-hit Texas and is the first in what is expected to be a series of traveling sales pitches on taxes from the president.

But the White House is not ready to spell out what the rewrite will look like or what kind of price tag it will carry. Trump spoke in broad terms about creating a tax system that favors middle-class Americans and keeps business in the U.S.

“First and foremost our tax system should benefit loyal, hardworking Americans and their families. That is why tax reform must dramatically simplify the tax code, eliminate special-interest loopholes,” he said.

Trump called on Congress to join him and “unite in the name of common sense and the name of common good” to create jobs and improve America’s “competitive advantage.”

“I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress,” he said.

Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn have been meeting regularly with Republican congressional leaders to discuss tax policy. Thus far, though, they’ve committed only to a vague statement of principles that calls for lower tax rates on both individuals and businesses. Cohn said it will be up to lawmakers to fill in the details.

“We’ve got a great, I would say, skeleton,” Cohn told reporters earlier this month. “We need the Ways and Means Committee to put some muscle and skin on the skeleton and drive tax reform forward. And it’s our objective to do that between now and the end of the year.”

With Republicans in control of the House, Senate and the presidency, supporters have described this as a once-in-a-generation opportunity to overhaul the tax code in accordance with GOP principles. But after Trump’s insistence on swift, ultimately unsuccessful bids to repeal the Affordable Care Act, some observers are skeptical that Trump has the patience or discipline to see a tax overhaul through to completion.

Mnuchin insists tax cuts are now Trump’s No. 1 priority.

“He’s going to go on the road,” Mnuchin said. “The president is 100 percent supportive of us passing legislation this year.”

The White House has been promising such a sales campaign for weeks, only to see much of August consumed with controversy over the president’s Charlottesville, Va., remarks and his intraparty carping with fellow Republicans, including Senate Majority Leader Mitch McConnell, R-Ky.

Mnuchin conceded that rewriting the tax code is a taller order than he initially imagined.

“Earlier in the year I said I thought we’d get it done by August, and I was wrong,” the Treasury secretary said. “I am now going to say that I’m very hopeful, and I think we can get this done by the end of the year, but we will continue to revisit it.”

“The president’s leadership on this is critical,” said a senior White House official who briefed reporters on the Springfield trip. “Everybody involved understands that and believes that. And he is ready to really take this conversation where it belongs and that’s the heartland of America.”

The official spoke on condition of anonymity.

“The president now feels that it’s the right time to begin engaging directly with the American people on tax reform,” he said.

The administration argues the current tax code is too complicated and rates are too high to encourage investment in the U.S.

“We are not competitive with the rest of the world on the business tax and on the personal income tax,” Cohn said.

Neither the White House nor congressional leaders have spelled out how much lower tax rates should go, nor have they specified how the government would make up the lost revenue. They’re counting on faster economic growth to help close the gap. They’ve also promised to eliminate unspecified tax “loopholes,” which Trump called out multiple times in his speech on Wednesday.

Back in April, the White House proposed lowering the corporate tax rate from 35 percent to 15 percent while reducing the top individual tax rate from 39.6 percent to 35 percent. That’s broadly similar to a proposal Trump put forward during the presidential campaign. The nonpartisan Tax Policy Center said at the time 78 percent of the tax savings in Trump’s campaign plan would go to people on the top 20 percent of the income ladder. (Nearly a quarter would go to the top one-tenth of 1 percent.)

The campaign plan was also forecast to reduce government revenue by more than $6 trillion over a decade — a gap that would be difficult to erase through growth and loophole closings.

The White House has said it wants to preserve deductions for charitable contributions, retirement savings and mortgage interest.

One popular tax break that could be on the chopping block is the deduction for state and local taxes. That’s one of the biggest loopholes in the tax code. Eliminating it would boost federal revenues by an estimated $1.3 trillion over a decade. The tax break is particularly popular with residents in the Northeast and West Coast, typically blue states with relatively high tax rates.

House Speaker Paul Ryan, R-Wis., favored a so-called border adjustment tax on imports as another way to raise revenue and offset the cost of income tax cuts. But lawmakers ultimately scrapped that idea after consultation with the administration.

Senate Republicans plan to use a procedural tactic to prevent Democrats from blocking the tax overhaul with a filibuster. Under Senate rules, though, any measure passed with that tactic must not add to the federal deficit for more than 10 years.

This presents a choice for Republicans: Go with a more modest tax cut that can be offset by growth and closing loopholes, or opt for a more ambitious cut but allow it to sunset after a decade.

For all the challenges, GOP lawmakers are under political pressure to pass something they can brand as “tax reform.” Otherwise, they’ll have to face voters in 2018 with little to show for two years of single-party rule.

http://www.npr.org/2017/08/30/547114024/trump-hits-the-road-to-promote-tax-cuts-details-to-come

 

Trump’s Fill-in-the-Blanks Tax Reform Plan

The president is leaving the details to Republicans in Congress. Only they haven’t figured them out yet, either.

Alex Brandon / AP

notable

On Wednesday, President Trump traveled to Missouri to expand on the need for tax reform, to lay the groundwork for a major legislative push in Congress this fall. But more than anything else, what Trump’s speech revealed was that despite months of behind-the-scenes negotiations, Republicans aren’t much closer to enacting the most significant overhaul of the tax code in 30 years than they were back in April.

Trump was pitching a plan that doesn’t exist and demanding votes for a bill that hasn’t been written. If anything, the address the president delivered was even less detailed than the skimpy blueprint the White House issued in the spring. The most specific item Trump mentioned—a 15 percent corporate tax rate, down from the current 35 percent—is something that Republican tax-writers on Capitol Hill believe is impossible to achieve under the parameters with which they must work. He talked in broad terms about simplifying the code so that it’s easier for people to file their taxes, removing unspecified special interest loopholes, and encouraging businesses to bring back profits they’ve parked overseas—all policies that have been central to GOP proposals for years and offer little indication of the particular direction the party plans to go.

This was a bully pulpit speech. Having laid down his principles, Trump is once again leaving the dirty work to Congress, a strategy that even he seemed to acknowledge was as risky as it is politically necessary. “I don’t want to be disappointed by Congress, do you understand me? Do you understand?” he warned at one point, a none-too-subtle reference to his recent hectoring over the GOP’s failure to deliver on health care.

To the delight of Republican leaders, the one lawmaker Trump singled out for pressure was not one of their own; for the first time in weeks, the president picked on a Democrat, Missouri Senator Claire McCaskill, who is up for reelection in a state he won easily in November. If McCaskill doesn’t vote for tax reform—whatever it turns out to be—“you have to vote her out of office,” Trump demanded of the crowd.

Top Republicans were evidently pleased with the speech, or at least with the fact that the president stuck to the message they were told beforehand he would deliver. Within minutes after it ended, statements (undoubtedly prewritten) flowed in with glowing reviews. “President Trump is taking the case for tax reform straight to Main Street,” House Speaker Paul Ryan said. “We are united in our determination to get this done.” Representative Kevin Brady, the chairman of the Ways and Means Committee, said his remarks were “excellent.” Even members of Trump’s Cabinet that have no role in tax reform, like Health and Human Services Secretary Tom Price, or in domestic politics whatsoever, like Secretary of State Rex Tillerson, chimed in with praise.Yet while Trump talked at length about the need for tax reform, he said little about how Republicans would get it done. And that’s because they still don’t know themselves. GOP leaders haven’t made several crucial decisions. Will the legislation be a revenue-neutral tax reform that fully offsets the reduction in rates by eliminating costly—and popular—exemptions and deductions? Or will it be a more straightforward tax cut, that would likely have to expire within a decade to comply with Senate rules? How low will they try to push down the corporate rate? About all they’ve determined is that 15 percent is too low, but will it be closer to 20 percent or 25 percent? And on, and on.
The Ways and Means Committee is currently writing the tax bill, but the only timeline they’ve set is to get it done by the end of 2018. The longer they take to write it, however, the less realistic that deadline becomes. And as I explainedearlier this month, Republicans must first pass a budget before they can even get to tax reform, which, to this point, has been no easy task.These unresolved details have also tripped up Trump’s messaging toward Democrats. Does he want their support, or are Republicans planning to do it alone as they tried to do on health care? In his speech, the president started out by saying he wanted to work with both parties to enact tax reform. Later on, however, he attacked Democrats as “obstructionists” and called out McCaskill. By the end, he was back where he began, saying tax reform was an issue on which lawmakers should put aside partisanship.Democrats say there’s been no outreach from the administration on taxes, and they’ve noted that Republicans are, for now, planning to use the same budget reconciliation process on tax reform that they used in trying to repeal the Affordable Care Act. That would allow them to skirt a Democratic filibuster and pass tax reform with a simple majority of 51 votes in the Senate. Unlike Obamacare repeal, some Democrats have expressed a willingness to work with the administration on taxes, so long as the GOP plan is not skewed to benefit the wealthy. With so few details, they were unimpressed with Trump’s speech in Missouri. “Stepping to the podium to declare that we need tax reform does not signal leadership on this issue; rather, doing so without offering any proposals on how to achieve it is an abdication,” said Representative Steny Hoyer of Maryland, the second-ranking House Democrat. “If the president is serious about tax reform, he should focus on the how, not the why.”Trump is not a detail-oriented president. That much is clear. But while he may be able to stick to broad strokes in rally-the-public speeches and leave the rest to Congress, his party will eventually have to make the tough decisions about who’s going to pay more, who gets to pay less, and by how much. Until that happens, tax reform isn’t going anywhere.

https://www.theatlantic.com/politics/archive/2017/08/trumps-fill-in-the-blanks-tax-reform-plan/538509/

Trump’s populist message on taxes comes with heavy dose of corporate rate cuts

Trump’s speech didn’t mask the fact that lawmakers still face a wide range of knotty questions when they return to Washington next week.

08/30/2017 01:59 PM EDT

Updated 08/30/2017 04:08 PM EDT

Trump maintained that a new tax system was crucial to ushering in a new prosperity in the U.S., in a speech that White House officials acknowledged beforehand would be light on policy details.

“Instead of exporting our jobs, we will export our goods. Our jobs will both stay here in America and come back to America. We’ll have it both ways,” Trump said at a Springfield, Mo., manufacturer, adding that millions of people would move from welfare to work and “will love earning a big fat beautiful paycheck.”

“We believe that ordinary Americans know better than Washington how to spend their own money and we want to help them take home as much of their money as possible and then spend it,” he said. “So they’ll keep their money, they’ll spend their money, they’ll buy our product.”

But Trump’s speech also underscored just how big a challenge he and a Republican Congress will face in pulling off a true overhaul of the tax code. The president only briefly touched on policy details, saying that businesses would “ideally” be taxed at a top rate of 15 percent and that the tax code would contain incentives for child care — a top priority of his daughter, Ivanka Trump.

“I am fully committed to working with Congress to get this job done,” Trump said. “And I don’t want to be disappointed by Congress. Do you understand me?”

Trump’s speech was aimed at showing that Republicans have the message down on tax reform, but lawmakers have yet to confront the monumental task of turning the rhetoric into reality.

Senior White House officials this week repeatedly billed the president’s speech as an address focused on why tax reform needs to happen, not how it will materialize. That’s the sort of big-picture cover on taxes that Trump didn’t offer congressional leaders in their doomed efforts to repeal and replace Obamacare.

But while congressional leaders undoubtedly welcome the president making the broad case for a tax revamp, Trump’s speech doesn’t mask the fact that lawmakers still face a wide range of knotty questions when they return to Washington next week.

Republicans still have to figure out how to pass a budget this fall, a process that will play a big role in deciding how generous a tax plan they can write. They also have to decide whether tax changes should be permanent or temporary, or a mix of the two, and whether their plan should be a net tax cut that would add to the deficit.

And that’s before they will feel the full brunt of a massive lobbying push on what would be the first major tax overhaul in more than 30 years. Already, GOP lawmakers are starting to hear from industries that might be the losers in a tax overhaul, such as big corporations that don’t want a minimum tax on foreign earnings and a retirement sector wary of potential changes to savings plans.

The hurdles won’t be limited to policy, either, after a summer that saw both sides of Pennsylvania Avenue grow increasingly wary of the other as the GOP’s health care efforts imploded. Republicans on Capitol Hill steamed privately in July that Trump’s obsession with White House infighting and the Russia controversy was a major factor in the death of the repeal effort. They’re crossing their fingers that he won’t be so easily distracted on tax reform.

 

Fact-checking President Trump’s speech on his tax plan

 August 31 at 3:00 AM
The Fact Checker’s round-up of five fishy claims made by President Trump in his speech on Aug. 30. (Meg Kelly/The Washington Post)

President Trump on Wednesday delivered an address on his “principles” for a tax plan in Springfield, Mo., though he provided few details. He also shifted from extolling how well the economy is doing to language that suggested the United States was suffering terribly. As usual, some of the president’s  facts and figures were a bit fishy, so here’s a roundup of 10 of his claims.

“In the last 10 years, our economy has grown at only around 2 percent a year.”

This is misleading. By going back 10 years, Trump includes the worst recession since the Great Depression, which brings down the 10-year average. This chart shows that that quarterly average since the recession was well above 2 percent, even hitting 5 percent in the third quarter of 2014. The GDP growth rate for the United States averaged 3.22 percent from 1947 to 2017.


Source: Bureau of Economic Analysis via Federal Reserve Bank of St. Louis

“We just announced that we hit 3 percent in GDP. Just came out. And on a yearly basis, as you know, the last administration, during an eight-year period, never hit 3 percent.

Trump plays some sleight-of-hand with the numbers. He first cites an annualized quarterly figure — 3 percent GDP growth in the second quarter of 2017 — and then compares it to what appears to be calendar-year figures for former president Barack Obama.

As the chart above shows, the economy grew better than 3 percent in eight quarters during Obama’s presidency, most recently in the third quarter of 2016. (Technically, this is known as “annualized quarterly change” or SAAR — seasonally adjusted at annual rate.) Trump gets his terminology wrong, using the phrase “yearly basis,” which could mean from the third quarter of 2015 to the the third quarter of 2016, in which case Obama easily exceeded 3 percent numerous times. On an annual basis, Obama’s best year was 2015, when annual growth was 2.6 percent.

“If we achieve sustained 3 percent growth, that means 12 million new jobs and $10 trillion of new economic activity over the next decade. That’s some numbers.”

With this statement, Trump downgrades promises he made during the 2016 campaign — he said he would achieve 4 percent GDP growth and 25 million jobs over 10 years.

“In 1935, the basic 1040 form that most people file had two simple pages of instruction. Today, that basic form has 100 pages of instructions, and it’s pretty complex stuff.”

Trump is correct that in 1935, the basic 1040 individual income tax form had two pages of instructions, but this claim needs historical context.

There are many reasons the instructions were so simple back then — including that just about 4 percent of the population paid the federal individual income tax. In 1935, the individual income tax largely was a tax on the wealthy. In fact, the top rate in 1935 was 63 percent — and President Franklin D. Roosevelt raised it to 75 percent later that year.

This changed with World War II. “Driven by staggering revenue needs, lawmakers in both parties agreed to raise taxes on everyone: rich, poor, and — especially — the middle class,” wrote Joseph Thorndike, director of the Tax History Project.

“The tax code is so complicated that more than 90 percent of Americans need professional help to do their own taxes.”

This is misleading. The 90 percent figure he is referring to includes people using tax software, such as Turbo Tax, which helps people file their taxes on their own. According to the National Taxpayer Advocate’s 2016 report, 54 percent of individual taxpayers pay preparers and about 40 percent of individual taxpayers use software that costs about $50 or more.

Yet later during the speech, he made it sound as if the “professional help” is only referring to hired accountants: “That is why tax reform must dramatically simplify the tax code … and allow the vast majority of our citizens to file their taxes on a single, simple page without having to hire an accountant.”

“Our last major tax rewrite was 31 years ago. It eliminated dozens of loopholes and special interest tax breaks, reduced the number of tax brackets from 15 to two, and lowered tax rates for both individuals and businesses. At the time it was really something special … In 1986, Ronald Reagan led the world by cutting our corporate tax rate to 34 percent. That was below the average rate for developed countries at the time. Everybody thought that was a monumental thing that happened. But then, under this pro-America system, our economy boomed. It just went beautifully right through the roof. The middle class thrived, and median family income increased.”

Trump heaped praise on Reagan’s Tax Reform Act of 1986, which simplified tax brackets and eliminated tax shelters; it also lowered the top individual tax rate to 28 percent but raised the capital gains rate to the same level, giving them parity. But this is a rather strange flip-flop because Trump always has been a fierce critic of the bill, blaming it repeatedly for the savings and loan crisis, a decline in real estate investing and the 1990-1991 recession.

“This tax act was just an absolute catastrophe for the country, for the real estate industry, and I really hope that something can be done,” Trump told Congress in 1991. In a television interview with Joan Rivers, he said: “What caused the savings and loan crisis was the 1986 tax law change. It was a disaster. It took all of the incentives away from investors.”

Trump also frequently attacked one of the Democratic sponsors of the bill, Sen. Bill Bradley (D-N.J.), such as in a Wall Street Journal commentary in 1999. “Mr. Bradley’s last big idea to be enacted into legislation was also one of the worst ideas in recent history,” Trump wrote, saying Bradley was responsible for the elimination of a tax shelter for real estate investments. (He said the good parts of the bill could be attributed to Reagan.)

“We lost the jobs. We lost the taxes. They closed the buildings. They closed the plants and factories. We got nothing but unemployment. We got nothing.”

As Trump frequently notes, the unemployment rate in July was 4.3 percent — the lowest level in 16 years. So this overwrought language seems misplaced.

“We have gone from a tax rate that is lower than our economic competitors, to one that is more than 60 percent higher. … In other words, foreign companies have more than a 60 percent tax advantage over American companies.”

The United States certainly has one of the highest statutory corporate tax rates in the world, currently pegged as high as 39.1 percent when including state taxes. (The federal rate is 35 percent.) Trump says it is 60 percent higher than “our economic competitors,” comparing 39.1 percent to the average rate for the other members of the Organization for Economic Co-operation and Development, which is 25.5 percent when not weighted for GDP. (It is 29.6 percent when weighted for GDP.)

But the official rate does not necessarily tell the whole story. What also matters is the actual tax a company pays, after deductions and tax benefits. That is known as the effective tax rate, which can be calculated differently depending on the survey. According to the Congressional Research Service, the effective rate for the United States is 27.1 percent, compared to an effective GDP-weighted average of 27.7 percent for the OECD. “Although the U.S. statutory tax rate is higher, the average effective rate is about the same, and the marginal rate on new investment is only slightly higher,” the CRS says.

The Congressional Budget Office, when it examined the issue, said the U.S. effective tax rate was 18.6 percent, which it said was among the highest of the biggest economic powers, the Group of 20.

Trump, naturally, used the numbers that suggest the difference is really huge.

“Today, we are still taxing our businesses at 35 percent, and it’s way more than that. And think of it, in some cases, way above 40 percent when you include state and local taxes in various states. The United States is now behind France, behind Germany, behind Canada, Ireland, Japan, Mexico, South Korea and many other nations.”

As we noted, the statutory federal corporate tax rate in the United States is 35 percent, making the United States the highest among G-20 countries, including the countries Trump listed. But the effective corporate tax rate in the United States in 2012 was 18.6 percent, making it the fourth highest among G-20 countries, behind Argentina, Japan and Britain, according to the CBO.

“Because of our high tax rate and horrible, outdated, bureaucratic rules, large companies that do business overseas will often park their profits offshore to avoid paying a high United States tax if the money is brought back home. So they leave the money over there. The amount of money we’re talking about is anywhere from $3 trillion to $5 trillion.”

There are no official, current numbers on the profits held overseas by U.S. companies, just estimates. The White House would not respond to a query on where Trump is getting these numbers, but his high-end figure appears to be an exaggeration. The Internal Revenue Service in 2012 said the figure was $2.3 trillion, and the Joint Committee on Taxation estimated that it had risen to $2.6 trillion in 2015. There are other estimates as well, but none top $2.8 trillion, according to PolitiFact.

https://www.washingtonpost.com/news/fact-checker/wp/2017/08/31/fact-checking-president-trumps-speech-on-his-tax-plan/?utm_term=.8ea0dc0c4d24

 

Story 2: Revised Second Estimate of Real GDP Growth in Second Quarter of 2017 Is 3 Percent — Videos

Economic growth hits 3% in Q2

Growth Rates Are Crucial

Nightly Business Report – August 30, 2017

Can Trump’s plan double U.S. economic growth?

How Trump’s economic proposals offer a vision from the past

What is Gross Domestic Product (GDP)?

Nominal vs. Real GDP

Real GDP Per Capita and the Standard of Living

EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Wednesday, August 30, 2017
BEA 17—42

* See the navigation bar at the right side of the news release text for links to data tables, contact personnel and their telephone numbers, and supplementary materials.

Lisa Mataloni: (301) 278-9083 (GDP) gdpniwd@bea.gov
Kate Pinard: (301) 278-9417 (Corporate Profits) cpniwd@bea.gov
Jeannine Aversa: (301) 278-9003 (News Media) Jeannine.Aversa@bea.gov
National Income and Product Accounts
Gross Domestic Product: Second Quarter 2017 (Second Estimate)
Corporate Profits: Second Quarter 2017 (Preliminary Estimate)
Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the second quarter of
2017 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the
first quarter, real GDP increased 1.2 percent.

The GDP estimate released today is based on more complete source data than were available for the
"advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6
percent. With this second estimate for the second quarter, the general picture of economic growth
remains the same; increases in personal consumption expenditures (PCE) and in nonresidential fixed
investment were larger than previously estimated. These increases were partly offset by a larger
decrease in state and local government spending (see "Updates to GDP" below).

Real GDP: Percent Change from Preceding Quarter
Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an
increase of 2.7 percent (revised) in the first. The average of real GDP and real GDI, a supplemental
measure of U.S. economic activity that equally weights GDP and GDI, increased 3.0 percent in the
second quarter, compared with an increase of 2.0 percent in the first quarter (table 1).

The increase in real GDP in the second quarter reflected positive contributions from PCE, nonresidential
fixed investment, exports, federal government spending, and private inventory investment that were
partly offset by negative contributions from residential fixed investment and state and local government
spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The acceleration in real GDP in the second quarter primarily reflected upturns in private inventory
investment and federal government spending and an acceleration in PCE that were partly offset by
downturns in residential fixed investment and state and local government spending and a deceleration
in exports.

Current-dollar GDP increased 4.0 percent, or $189.0 billion, in the second quarter to a level of $19,246.7
billion. In the first quarter, current-dollar GDP increased 3.3 percent, or $152.2 billion (table 1 and table
3).

The price index for gross domestic purchases increased 0.8 percent in the second quarter, compared
with an increase of 2.6 percent in the first quarter (table 4). The PCE price index increased 0.3 percent,
compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index
increased 0.9 percent, compared with an increase of 1.8 percent (appendix table A).


Updates to GDP

The percent change in real GDP was revised up from the advance estimate, reflecting upward revisions
to PCE and to nonresidential fixed investment that were partly offset by a downward revision to state
and local government spending. For more information, see the Technical Note. A detailed "Key Source
Data and Assumptions" file is also posted for each release.  For information on updates to GDP, see the
“Additional Information” section that follows.

                                    Advance Estimate        Second Estimate
			           (Percent change from preceding quarter)
Real GDP                                  2.6                  3.0
Current-dollar GDP                        3.6                  4.0
Real GDI                                   …                   2.9
Average of Real GDP and Real GDI           …                   3.0
Gross domestic purchases price index      0.8                  0.8
PCE price index                           0.3                  0.3


For the first quarter of 2017, the percent change in real GDI was revised from 2.6 percent to 2.7 percent
based on revised first-quarter tabulations from the BLS Quarterly Census of Employment and Wages
program.

Corporate Profits (table 12)

Profits from current production (corporate profits with inventory valuation adjustment and capital
consumption adjustment) increased $26.8 billion in the second quarter, in contrast to a decrease of
$46.2 billion in the first quarter.

Profits of domestic financial corporations decreased $29.4 billion in the second quarter, compared with
a decrease of $40.7 billion in the first quarter. Profits of domestic nonfinancial corporations increased
$64.8 billion, compared with an increase of $3.8 billion. The rest-of-the-world component of profits
decreased $8.6 billion, compared with a decrease of $9.3 billion. This measure is calculated as the
difference between receipts from the rest of the world and payments to the rest of the world. In the
second quarter, receipts increased $8.5 billion, and payments increased $17.1 billion.





                                       *          *          *




                           Next release:  September 28, 2017 at 8:30 A.M. EDT
                     Gross Domestic Product:  Second Quarter 2017 (Third Estimate)
                      Corporate Profits:  Second Quarter 2017 (Revised Estimate)




                                       Additional Information

Resources

Additional resources available at www.bea.gov:
•	Stay informed about BEA developments by reading the BEA blog, signing up for BEA’s email
        subscription service, or following BEA on Twitter @BEA_News.
•	Historical time series for these estimates can be accessed in BEA’s Interactive Data Application.
•	Access BEA data by registering for BEA’s Data Application Programming Interface (API).
•	For more on BEA’s statistics, see our monthly online journal, the Survey of Current Business.
•	BEA's news release scheduleNIPA Handbook:  Concepts and Methods of the U.S. National Income and Product Accounts

Definitions

Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy
less the value of the goods and services used up in production. GDP is also equal to the sum of personal
consumption expenditures, gross private domestic investment, net exports of goods and services, and
government consumption expenditures and gross investment.

Gross domestic income (GDI) is the sum of incomes earned and costs incurred in the production of GDP.
In national economic accounting, GDP and GDI are conceptually equal. In practice, GDP and GDI differ
because they are constructed using largely independent source data. Real GDI is calculated by deflating
gross domestic income using the GDP price index as the deflator, and is therefore conceptually
equivalent to real GDP.

Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is,
at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.”
Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes.
The gross domestic purchases price index measures the prices of final goods and services purchased by
U.S. residents.

The personal consumption expenditure price index measures the prices paid for the goods and services
purchased by, or on the behalf of, “persons.”

Profits from current production, referred to as corporate profits with inventory valuation adjustment
(IVA) and capital consumption adjustment (CCAdj) in the NIPAs, is a measure of the net income of
corporations before deducting income taxes that is consistent with the value of goods and services
measured in GDP. The IVA and CCAdj are adjustments that convert inventory withdrawals and
depreciation of fixed assets reported on a tax-return, historical-cost basis to the current-cost economic
measures used in the national income and product accounts.

For more definitions, see the Glossary: National Income and Product Accounts.


Statistical conventions

Annual rates. Quarterly values are expressed at seasonally-adjusted annual rates (SAAR), unless
otherwise specified. Dollar changes are calculated as the difference between these SAAR values. For
detail, see the FAQ “Why does BEA publish estimates at annual rates?”

Percent changes in quarterly series are calculated from unrounded data and are displayed at annual
rates, unless otherwise specified. For details, see the FAQ “How is average annual growth calculated?”

Quantities and prices. Quantities, or “real” volume measures, and prices are expressed as index
numbers with a specified reference year equal to 100 (currently 2009). Quantity and price indexes are
calculated using a Fisher-chained weighted formula that incorporates weights from two adjacent
periods (quarters for quarterly data and annuals for annual data). “Real” dollar series are calculated by
multiplying the published quantity index by the current dollar value in the reference year (2009) and
then dividing by 100. Percent changes calculated from real quantity indexes and chained-dollar levels
are conceptually the same; any differences are due to rounding.

Chained-dollar values are not additive because the relative weights for a given period differ from those
of the reference year. In tables that display chained-dollar values, a “residual” line shows the difference
between the sum of detailed chained-dollar series and its corresponding aggregate.


Updates to GDP

BEA releases three vintages of the current quarterly estimate for GDP:  "Advance" estimates are
released near the end of the first month following the end of the quarter and are based on source data
that are incomplete or subject to further revision by the source agency; “second” and “third” estimates
are released near the end of the second and third months, respectively, and are based on more detailed
and more comprehensive data as they become available.

Annual and comprehensive updates are typically released in late July. Annual updates generally cover at
least the 3 most recent calendar years (and their associated quarters) and incorporate newly available
major annual source data as well as some changes in methods and definitions to improve the accounts.
Comprehensive (or benchmark) updates are carried out at about 5-year intervals and incorporate major
periodic source data, as well as major conceptual improvements.
The table below shows the average revisions to the quarterly percent changes in real GDP between
different estimate vintages, without regard to sign.

Vintage                               Average Revision Without Regard to Sign
                                         (percentage points, annual rates)
Advance to second                                     0.5
Advance to third                                      0.6
Second to third                                       0.2
Advance to latest                                     1.1
Note - Based on estimates from 1993 through 2015. For more information on GDP
updates, see Revision Information on the BEA Web site.

The larger average revision from the advance to the latest estimate reflects the fact that periodic
comprehensive updates include major statistical and methodological improvements.

Unlike GDP, an advance current quarterly estimate of GDI is not released because data on domestic
profits and on net interest of domestic industries are not available. For fourth quarter estimates, these
data are not available until the third estimate.

https://www.bea.gov/newsreleases/national/gdp/2017/gdp2q17_2nd.htm

 

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The Pronk Pops Show 755, Part 1 of 2, Story 1: President Trump’s Tax Speech — Very Light On Specifics — Let Congress Fill in The Details — Formula For Failure — Tax Rate Cuts Are Not Fundamental Tax Reform — A Broad Based Consumption Tax Such as The FairTax or Fair Tax Less Not Even Mentioned — What Good Is Dreaming It If You don’t actually do it! — Videos — Story 2: Revised Second Estimate of Real GDP Growth in Second Quarter of 2017 Is 3 Percent — Videos

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Image result for branco cartoons on trump tax reformImage result for fairtax

Image result for branco cartoons on trump tax reform

Image result for branco cartoons on trump tax reform

Image result for branco cartoons on trump tax reform

Image result for branco cartoons on trump tax reform

 

Image result for average quarter to quarter real gdp growth

Image result for average quarter to quarter real gdp growth

Image result for annual real gdp growth 1950-2017

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Image result for annual real gdp growth 1950-2017 u.S. economy

Image result for annual real gdp growth 1950-2017 u.S. economy

Story 1: President Trump’s Tax Speech — Very Light On Specifics — Let Congress Fill in The Details — Formula For Failure — Tax Rate Cuts Are Not Fundamental Tax Reform — A Broad Based Consumption Tax Such as The FairTax or Fair Tax Less Not Even Mentioned — What Good Is Dreaming It If You don’t actually do it! — Videos —

FULL. President Trump speech on tax reform in Springfield, Missouri. August 30, 2017.

Special Report with Bret Baier 8/30/17 – Special Report Fox News August 30, 2017 TRUMP TAX REFORM

Destroy Trump Media – President Trump Pitches Tax Reform Plan – Kellyanne Conway – Hannity

President Trump’s tax plan

Will US Markets Finally Get Tax Reform – 29 Aug 17 | Gazunda

Keiser Report: The bizarre decade (E1117)

Dan Mitchell on GOP Tax Reform Wrangling, Part I

Dan Mitchell on GOP Tax Reform Wrangling, Part II

Dan Mitchell Discussing the Fate of Tax Cuts and Tax Reform

How Trump’s tax plan impacts average Americans

Trump’s Tax Cut Plan Alienates His Base

Cohn Says White House Is Concerned About U.S. Wages

Gary Cohn on the Trump administration taking on tax loopholes

As White House Cracks Show, Are Rex Tillerson and Gary Cohn Headed Out? | Morning Joe | MSNBC

Gary Cohn’s take on tax reform

Limbaugh Airs Montage Of The ‘3 LIES’ Media Said After Trump’s Tax Speech

Trump’s tax cuts will be done before Thanksgiving: Grover Norquist

Donald Trump Is To Give Speech On Tax Reform But He Has No Tax Reform Plan | The 11th Hour | MSNBC

Freedom from the IRS! – FairTax Explained in Detail

Mark Levin: Donald Trump gave a good speech on tax reform (August 30 2017)

Why U.S. Tax Reform Isn’t Likely in 2017

Milton Friedman – Why Tax Reform Is Impossible

Honda – “Impossible Dream” Power of Dreams Advert Full

 

Trump’s Tax Reform Plan Targets Middle-Class Tax Complexity

Policy director at Competitive Enterprise Institute

President Trump visited Missouri to talk about tax reform, stressing simplicity and middle-class tax relief and “plans to bring back Main Street by reducing the crushing tax burden on our companies and on our workers.”

Noting the elimination of “dozens of loopholes,” special interest carve-outs, and the reduction of brackets and rates that Congress achieved three decades ago, Trump said, “the foundation of our job creation agenda is to fundamentally reform our tax code for the first time in more than 30 years. I want to work with Congress, Republicans and Democrats alike, on a plan that is pro-growth, pro-jobs, pro-worker — and pro-American.”

We’re about to re-enter Obamacare repeal-style complexity and venom, but it’s important, I think, for the public to see the tax reform debate as something other than a campaign to benefit business. The U.S. does have comparatively high corporate tax rates. And the Econ 101 lesson on tax incidence shows that consumers pay much of the corporate tax, not the company.

It’s probable some Democrats would like to reform the tax code, especially come 2016, but the zero-tolerance of Trump, such as that seen at the Commonwealth Club when Sen. Diane Feinstein was barely favorable toward him, prevails.

But things can turn on a dime, as the response, likely bipartisan, to Hurricane Harvey may further show. And separately the controversial debt limit needs to be addressed no matter what (hopefully with parallel cuts in regulatory costs), and that debate will influence the trajectory of tax reform.

My broader point here though is is that taxation is just the beginning of the story when it comes to the complexity of regulatory compliance. The economy marinates in compliance burdens to service noble ends, but sometimes serve regulators instead. Trump characterized the Internal Revenue Service’s unfairness to the typical taxpayer like this:

The tax code is now a massive source of complexity and frustration for tens of millions of Americans.

In 1935, the basic 1040 form that most people file had two simple pages of instructions. Today, that basic form has one hundred pages of instructions, and it’s pretty complex stuff. The tax code is so complicated that more than 90 percent of Americans need professional help to do their own taxes.

This enormous complexity is very unfair. It disadvantages ordinary Americans who don’t have an army of accountants while benefiting deep-pocketed special interests. And most importantly, this is wrong.

There’s solid backup for what Trump’s talking about in terms of pubic burdens, even if some are disinclined  to reckon with it, or if their allegiances require professing public disdain for corporations (one of the great democratizing forces in human history, but that’s another story).

The Government Accountability Office (GAO) agrees, I think, that Trump’s example of the IRS is a good one. In the course of a project I have of compiling examples of government proclamationsthat are not laws from Congress, nor even formal regulations from agencies, but instead “memoranda” and “guidance,” the IRS emerged as a leading “offender.”

A September 2016 GAO report called  “Regulatory Guidance Processes: Treasury and OMB Need to Reevaluate Long-standing Exemptions of Tax Regulations and Guidance,” looked at the Internal Revenue Service’s hierarchy of law, regulations, guidance, and explanatory material with respect to communicating interpretation of tax laws to the public.

It’s an eye-opener.

A pyramid diagram presented by GAO was topped by the Internal Revenue Code, as passed by Congress. Beneath that, in widening stages, one finds “Treasury Regulations,” “Internal Revenue Bulletins,” (IRB), “Written Determinations,” and “Other IRS Publications and Information.” The IRS regards the bulletins as generally authoritative, while determinations tend to apply to individual taxpayers.

That’s a lot of public guidance, difficult to absorb.

As the GAO explains:

Treasury and IRS are among the largest generators of federal agency regulations and they issue thousands of other forms of taxpayer guidance. IRS publishes tax regulations and other guidance in the weekly IRB. Each annual volume of the IRB contains about 2,000 pages of regulations and other guidance documents.

From 2013 to 2015, each annual Internal Revenue Bulletin edition contained some 300 guidance documents; back in 2002-2008, about 500.

When one sees such document proliferation from the IRS, an impartial observer might surmise the time for tax reform and simplification has arrived.

Likewise, when regulatory guidance multiplies that applies to various sectors—like finance, Internet, health care—one might similarly conclude the time has come for Congress to enact regulatory liberalization. Trump mentioned cutting the overall federal regulatory burden in the Missouri speech, too.

We knew it all along, but paying taxes also requires paying a lot of attention to regulations. In more ways than one, tax reform and regulatory reform go hand in hand.

https://www.forbes.com/sites/waynecrews/2017/08/30/trumps-tax-reform-plan-targets-middle-class-tax-complexity/#31fda3736ef8

Ann Coulter goes off on Trump over taxes, saying he delivered his ‘worst, most tone-deaf speech’

Conservative author Ann Coulter rebuked President Donald Trump over his speech on Wednesday in which he rolled out the broad outline of his tax reform plan.

In a slew of tweets on Wednesday, the firebrand conservative pundit said the president’s focus on simplifying the tax code and lowering business taxes to 15% was missing an opportunity to prioritize some of his more incendiary, but unique, policy objectives, including building a southern border wall and deporting immigrants living in the US without permission.

This isn’t a “once in a lifetime” shot at tax cuts! EVERY GOP cuts taxes! This is “once in a lifetime” shot to save US: Wall & deportations!

Bush cut taxes! Did it create millions of jobs? Nope. The rich pocketed their tax cut & sent jobs abroad, hired guest workers. F– them.

It’s so obvious Trump’s only getting polite applause for tax cuts. Want to get the crowd hollering, @realDonaldTrump? Talk about THE WALL!

It’s like Night of the Living Dead watching our beloved @realDonaldTrump go to DC & start babbling the same old GOP nonsense on tax cuts.

Tax cuts are a 2d term issue. 1st term: BUILD THE WALL, End DACA, Deport Illegals, No Refugees, No Muslims, Immigrn Moratorium. SAVE USA!

Cutting taxes doesn’t do a damn thing for wages if you allow businesses to keep bringing in cheap foreign labor!

To create jobs for AMERICANS, no more cheap foreign workers, CUT REGULATIONS & cut corporate taxes. (NOT income taxes.)

Coulter particularly singled out the similarities between Trump’s plan and a hypothetical plan that other Republicans like former Florida Gov. Jeb Bush would’ve put forward.

This speech could have been given by Jeb! — except even he wouldn’t have talked about the govt helping yuppie women with child care costs.

Oh stop pretending this is about letting “families” keep more of their money. HALF OF AMERICANS DON’T PAY TAXES! This is for Wall Street.

Indeed, beyond the prominent former Wall Street figures playing key roles in overhauling the tax code, Trump’s administration has absorbed some financial figures from Bush’s policy world.

Notably, Bush’s former senior policy director Justin Muzinich joined the Treasury Department in March to work closely with Treasury Secretary Steve Mnuchin on “major policy initiatives” and on tax reform.

Over the past several months, Coulter has increasingly criticized Trump and mocked him on social media and in interviews, saying that he has not fulfilled his anti-immigration campaign promises.

“The millions of people who haven’t voted for 30 years and came out to vote for Trump, thinking, ‘Finally, here’s somebody who cares about us’ — Nope!” Coulter told The Daily Beast after former chief strategist Steve Bannon left the White House earlier this month. “Republicans, Democrats — doesn’t matter. Jeb exclamation point, Donald Trump, Hillary Clinton — doesn’t matter. Goldman Sachs is running the country.”

http://www.businessinsider.com/ann-coulter-trump-taxes-speech-2017-8

 

Who Pays Income Taxes?

The charts below illustrate the share of taxes paid by income percentiles for Tax Year 2014, the most recent set of data available from the IRS. NTUF has broken down the federal share of income taxes by gross income to show how much each bracket contributes yearly.

For more information:

 

https://e.infogr.am/38b876d9-6c59-4a84-8b02-1ed223f6a454?src=embed

https://www.ntu.org/foundation/page/who-pays-income-taxes

Trump Hits The Road To Promote Tax Cuts (Details To Come)

President Trump participates in a tax overhaul kickoff event at the Loren Cook Company in Springfield, Mo., on Wednesday.

Jim Watson/AFP/Getty Images

Updated at 5:25 p.m. ET

President Trump called for a major rewrite of the U.S. tax code during a visit to Springfield, Mo., on Wednesday afternoon. The speech came a day after Trump’s trip to Harvey-hit Texas and is the first in what is expected to be a series of traveling sales pitches on taxes from the president.

But the White House is not ready to spell out what the rewrite will look like or what kind of price tag it will carry. Trump spoke in broad terms about creating a tax system that favors middle-class Americans and keeps business in the U.S.

“First and foremost our tax system should benefit loyal, hardworking Americans and their families. That is why tax reform must dramatically simplify the tax code, eliminate special-interest loopholes,” he said.

Trump called on Congress to join him and “unite in the name of common sense and the name of common good” to create jobs and improve America’s “competitive advantage.”

“I am fully committed to working with Congress to get this job done, and I don’t want to be disappointed by Congress,” he said.

Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn have been meeting regularly with Republican congressional leaders to discuss tax policy. Thus far, though, they’ve committed only to a vague statement of principles that calls for lower tax rates on both individuals and businesses. Cohn said it will be up to lawmakers to fill in the details.

“We’ve got a great, I would say, skeleton,” Cohn told reporters earlier this month. “We need the Ways and Means Committee to put some muscle and skin on the skeleton and drive tax reform forward. And it’s our objective to do that between now and the end of the year.”

With Republicans in control of the House, Senate and the presidency, supporters have described this as a once-in-a-generation opportunity to overhaul the tax code in accordance with GOP principles. But after Trump’s insistence on swift, ultimately unsuccessful bids to repeal the Affordable Care Act, some observers are skeptical that Trump has the patience or discipline to see a tax overhaul through to completion.

Mnuchin insists tax cuts are now Trump’s No. 1 priority.

“He’s going to go on the road,” Mnuchin said. “The president is 100 percent supportive of us passing legislation this year.”

The White House has been promising such a sales campaign for weeks, only to see much of August consumed with controversy over the president’s Charlottesville, Va., remarks and his intraparty carping with fellow Republicans, including Senate Majority Leader Mitch McConnell, R-Ky.

Mnuchin conceded that rewriting the tax code is a taller order than he initially imagined.

“Earlier in the year I said I thought we’d get it done by August, and I was wrong,” the Treasury secretary said. “I am now going to say that I’m very hopeful, and I think we can get this done by the end of the year, but we will continue to revisit it.”

“The president’s leadership on this is critical,” said a senior White House official who briefed reporters on the Springfield trip. “Everybody involved understands that and believes that. And he is ready to really take this conversation where it belongs and that’s the heartland of America.”

The official spoke on condition of anonymity.

“The president now feels that it’s the right time to begin engaging directly with the American people on tax reform,” he said.

The administration argues the current tax code is too complicated and rates are too high to encourage investment in the U.S.

“We are not competitive with the rest of the world on the business tax and on the personal income tax,” Cohn said.

Neither the White House nor congressional leaders have spelled out how much lower tax rates should go, nor have they specified how the government would make up the lost revenue. They’re counting on faster economic growth to help close the gap. They’ve also promised to eliminate unspecified tax “loopholes,” which Trump called out multiple times in his speech on Wednesday.

Back in April, the White House proposed lowering the corporate tax rate from 35 percent to 15 percent while reducing the top individual tax rate from 39.6 percent to 35 percent. That’s broadly similar to a proposal Trump put forward during the presidential campaign. The nonpartisan Tax Policy Center said at the time 78 percent of the tax savings in Trump’s campaign plan would go to people on the top 20 percent of the income ladder. (Nearly a quarter would go to the top one-tenth of 1 percent.)

The campaign plan was also forecast to reduce government revenue by more than $6 trillion over a decade — a gap that would be difficult to erase through growth and loophole closings.

The White House has said it wants to preserve deductions for charitable contributions, retirement savings and mortgage interest.

One popular tax break that could be on the chopping block is the deduction for state and local taxes. That’s one of the biggest loopholes in the tax code. Eliminating it would boost federal revenues by an estimated $1.3 trillion over a decade. The tax break is particularly popular with residents in the Northeast and West Coast, typically blue states with relatively high tax rates.

House Speaker Paul Ryan, R-Wis., favored a so-called border adjustment tax on imports as another way to raise revenue and offset the cost of income tax cuts. But lawmakers ultimately scrapped that idea after consultation with the administration.

Senate Republicans plan to use a procedural tactic to prevent Democrats from blocking the tax overhaul with a filibuster. Under Senate rules, though, any measure passed with that tactic must not add to the federal deficit for more than 10 years.

This presents a choice for Republicans: Go with a more modest tax cut that can be offset by growth and closing loopholes, or opt for a more ambitious cut but allow it to sunset after a decade.

For all the challenges, GOP lawmakers are under political pressure to pass something they can brand as “tax reform.” Otherwise, they’ll have to face voters in 2018 with little to show for two years of single-party rule.

http://www.npr.org/2017/08/30/547114024/trump-hits-the-road-to-promote-tax-cuts-details-to-come

 

Trump’s Fill-in-the-Blanks Tax Reform Plan

The president is leaving the details to Republicans in Congress. Only they haven’t figured them out yet, either.

Alex Brandon / AP

notable

On Wednesday, President Trump traveled to Missouri to expand on the need for tax reform, to lay the groundwork for a major legislative push in Congress this fall. But more than anything else, what Trump’s speech revealed was that despite months of behind-the-scenes negotiations, Republicans aren’t much closer to enacting the most significant overhaul of the tax code in 30 years than they were back in April.

Trump was pitching a plan that doesn’t exist and demanding votes for a bill that hasn’t been written. If anything, the address the president delivered was even less detailed than the skimpy blueprint the White House issued in the spring. The most specific item Trump mentioned—a 15 percent corporate tax rate, down from the current 35 percent—is something that Republican tax-writers on Capitol Hill believe is impossible to achieve under the parameters with which they must work. He talked in broad terms about simplifying the code so that it’s easier for people to file their taxes, removing unspecified special interest loopholes, and encouraging businesses to bring back profits they’ve parked overseas—all policies that have been central to GOP proposals for years and offer little indication of the particular direction the party plans to go.

This was a bully pulpit speech. Having laid down his principles, Trump is once again leaving the dirty work to Congress, a strategy that even he seemed to acknowledge was as risky as it is politically necessary. “I don’t want to be disappointed by Congress, do you understand me? Do you understand?” he warned at one point, a none-too-subtle reference to his recent hectoring over the GOP’s failure to deliver on health care.

To the delight of Republican leaders, the one lawmaker Trump singled out for pressure was not one of their own; for the first time in weeks, the president picked on a Democrat, Missouri Senator Claire McCaskill, who is up for reelection in a state he won easily in November. If McCaskill doesn’t vote for tax reform—whatever it turns out to be—“you have to vote her out of office,” Trump demanded of the crowd.

Top Republicans were evidently pleased with the speech, or at least with the fact that the president stuck to the message they were told beforehand he would deliver. Within minutes after it ended, statements (undoubtedly prewritten) flowed in with glowing reviews. “President Trump is taking the case for tax reform straight to Main Street,” House Speaker Paul Ryan said. “We are united in our determination to get this done.” Representative Kevin Brady, the chairman of the Ways and Means Committee, said his remarks were “excellent.” Even members of Trump’s Cabinet that have no role in tax reform, like Health and Human Services Secretary Tom Price, or in domestic politics whatsoever, like Secretary of State Rex Tillerson, chimed in with praise.Yet while Trump talked at length about the need for tax reform, he said little about how Republicans would get it done. And that’s because they still don’t know themselves. GOP leaders haven’t made several crucial decisions. Will the legislation be a revenue-neutral tax reform that fully offsets the reduction in rates by eliminating costly—and popular—exemptions and deductions? Or will it be a more straightforward tax cut, that would likely have to expire within a decade to comply with Senate rules? How low will they try to push down the corporate rate? About all they’ve determined is that 15 percent is too low, but will it be closer to 20 percent or 25 percent? And on, and on.
The Ways and Means Committee is currently writing the tax bill, but the only timeline they’ve set is to get it done by the end of 2018. The longer they take to write it, however, the less realistic that deadline becomes. And as I explainedearlier this month, Republicans must first pass a budget before they can even get to tax reform, which, to this point, has been no easy task.These unresolved details have also tripped up Trump’s messaging toward Democrats. Does he want their support, or are Republicans planning to do it alone as they tried to do on health care? In his speech, the president started out by saying he wanted to work with both parties to enact tax reform. Later on, however, he attacked Democrats as “obstructionists” and called out McCaskill. By the end, he was back where he began, saying tax reform was an issue on which lawmakers should put aside partisanship.Democrats say there’s been no outreach from the administration on taxes, and they’ve noted that Republicans are, for now, planning to use the same budget reconciliation process on tax reform that they used in trying to repeal the Affordable Care Act. That would allow them to skirt a Democratic filibuster and pass tax reform with a simple majority of 51 votes in the Senate. Unlike Obamacare repeal, some Democrats have expressed a willingness to work with the administration on taxes, so long as the GOP plan is not skewed to benefit the wealthy. With so few details, they were unimpressed with Trump’s speech in Missouri. “Stepping to the podium to declare that we need tax reform does not signal leadership on this issue; rather, doing so without offering any proposals on how to achieve it is an abdication,” said Representative Steny Hoyer of Maryland, the second-ranking House Democrat. “If the president is serious about tax reform, he should focus on the how, not the why.”Trump is not a detail-oriented president. That much is clear. But while he may be able to stick to broad strokes in rally-the-public speeches and leave the rest to Congress, his party will eventually have to make the tough decisions about who’s going to pay more, who gets to pay less, and by how much. Until that happens, tax reform isn’t going anywhere.

https://www.theatlantic.com/politics/archive/2017/08/trumps-fill-in-the-blanks-tax-reform-plan/538509/

Trump’s populist message on taxes comes with heavy dose of corporate rate cuts

Trump’s speech didn’t mask the fact that lawmakers still face a wide range of knotty questions when they return to Washington next week.

08/30/2017 01:59 PM EDT

Updated 08/30/2017 04:08 PM EDT

Trump maintained that a new tax system was crucial to ushering in a new prosperity in the U.S., in a speech that White House officials acknowledged beforehand would be light on policy details.

“Instead of exporting our jobs, we will export our goods. Our jobs will both stay here in America and come back to America. We’ll have it both ways,” Trump said at a Springfield, Mo., manufacturer, adding that millions of people would move from welfare to work and “will love earning a big fat beautiful paycheck.”

“We believe that ordinary Americans know better than Washington how to spend their own money and we want to help them take home as much of their money as possible and then spend it,” he said. “So they’ll keep their money, they’ll spend their money, they’ll buy our product.”

But Trump’s speech also underscored just how big a challenge he and a Republican Congress will face in pulling off a true overhaul of the tax code. The president only briefly touched on policy details, saying that businesses would “ideally” be taxed at a top rate of 15 percent and that the tax code would contain incentives for child care — a top priority of his daughter, Ivanka Trump.

“I am fully committed to working with Congress to get this job done,” Trump said. “And I don’t want to be disappointed by Congress. Do you understand me?”

Trump’s speech was aimed at showing that Republicans have the message down on tax reform, but lawmakers have yet to confront the monumental task of turning the rhetoric into reality.

Senior White House officials this week repeatedly billed the president’s speech as an address focused on why tax reform needs to happen, not how it will materialize. That’s the sort of big-picture cover on taxes that Trump didn’t offer congressional leaders in their doomed efforts to repeal and replace Obamacare.

But while congressional leaders undoubtedly welcome the president making the broad case for a tax revamp, Trump’s speech doesn’t mask the fact that lawmakers still face a wide range of knotty questions when they return to Washington next week.

Republicans still have to figure out how to pass a budget this fall, a process that will play a big role in deciding how generous a tax plan they can write. They also have to decide whether tax changes should be permanent or temporary, or a mix of the two, and whether their plan should be a net tax cut that would add to the deficit.

And that’s before they will feel the full brunt of a massive lobbying push on what would be the first major tax overhaul in more than 30 years. Already, GOP lawmakers are starting to hear from industries that might be the losers in a tax overhaul, such as big corporations that don’t want a minimum tax on foreign earnings and a retirement sector wary of potential changes to savings plans.

The hurdles won’t be limited to policy, either, after a summer that saw both sides of Pennsylvania Avenue grow increasingly wary of the other as the GOP’s health care efforts imploded. Republicans on Capitol Hill steamed privately in July that Trump’s obsession with White House infighting and the Russia controversy was a major factor in the death of the repeal effort. They’re crossing their fingers that he won’t be so easily distracted on tax reform.

 

Fact-checking President Trump’s speech on his tax plan

 August 31 at 3:00 AM
The Fact Checker’s round-up of five fishy claims made by President Trump in his speech on Aug. 30. (Meg Kelly/The Washington Post)

President Trump on Wednesday delivered an address on his “principles” for a tax plan in Springfield, Mo., though he provided few details. He also shifted from extolling how well the economy is doing to language that suggested the United States was suffering terribly. As usual, some of the president’s  facts and figures were a bit fishy, so here’s a roundup of 10 of his claims.

“In the last 10 years, our economy has grown at only around 2 percent a year.”

This is misleading. By going back 10 years, Trump includes the worst recession since the Great Depression, which brings down the 10-year average. This chart shows that that quarterly average since the recession was well above 2 percent, even hitting 5 percent in the third quarter of 2014. The GDP growth rate for the United States averaged 3.22 percent from 1947 to 2017.


Source: Bureau of Economic Analysis via Federal Reserve Bank of St. Louis

“We just announced that we hit 3 percent in GDP. Just came out. And on a yearly basis, as you know, the last administration, during an eight-year period, never hit 3 percent.

Trump plays some sleight-of-hand with the numbers. He first cites an annualized quarterly figure — 3 percent GDP growth in the second quarter of 2017 — and then compares it to what appears to be calendar-year figures for former president Barack Obama.

As the chart above shows, the economy grew better than 3 percent in eight quarters during Obama’s presidency, most recently in the third quarter of 2016. (Technically, this is known as “annualized quarterly change” or SAAR — seasonally adjusted at annual rate.) Trump gets his terminology wrong, using the phrase “yearly basis,” which could mean from the third quarter of 2015 to the the third quarter of 2016, in which case Obama easily exceeded 3 percent numerous times. On an annual basis, Obama’s best year was 2015, when annual growth was 2.6 percent.

“If we achieve sustained 3 percent growth, that means 12 million new jobs and $10 trillion of new economic activity over the next decade. That’s some numbers.”

With this statement, Trump downgrades promises he made during the 2016 campaign — he said he would achieve 4 percent GDP growth and 25 million jobs over 10 years.

“In 1935, the basic 1040 form that most people file had two simple pages of instruction. Today, that basic form has 100 pages of instructions, and it’s pretty complex stuff.”

Trump is correct that in 1935, the basic 1040 individual income tax form had two pages of instructions, but this claim needs historical context.

There are many reasons the instructions were so simple back then — including that just about 4 percent of the population paid the federal individual income tax. In 1935, the individual income tax largely was a tax on the wealthy. In fact, the top rate in 1935 was 63 percent — and President Franklin D. Roosevelt raised it to 75 percent later that year.

This changed with World War II. “Driven by staggering revenue needs, lawmakers in both parties agreed to raise taxes on everyone: rich, poor, and — especially — the middle class,” wrote Joseph Thorndike, director of the Tax History Project.

“The tax code is so complicated that more than 90 percent of Americans need professional help to do their own taxes.”

This is misleading. The 90 percent figure he is referring to includes people using tax software, such as Turbo Tax, which helps people file their taxes on their own. According to the National Taxpayer Advocate’s 2016 report, 54 percent of individual taxpayers pay preparers and about 40 percent of individual taxpayers use software that costs about $50 or more.

Yet later during the speech, he made it sound as if the “professional help” is only referring to hired accountants: “That is why tax reform must dramatically simplify the tax code … and allow the vast majority of our citizens to file their taxes on a single, simple page without having to hire an accountant.”

“Our last major tax rewrite was 31 years ago. It eliminated dozens of loopholes and special interest tax breaks, reduced the number of tax brackets from 15 to two, and lowered tax rates for both individuals and businesses. At the time it was really something special … In 1986, Ronald Reagan led the world by cutting our corporate tax rate to 34 percent. That was below the average rate for developed countries at the time. Everybody thought that was a monumental thing that happened. But then, under this pro-America system, our economy boomed. It just went beautifully right through the roof. The middle class thrived, and median family income increased.”

Trump heaped praise on Reagan’s Tax Reform Act of 1986, which simplified tax brackets and eliminated tax shelters; it also lowered the top individual tax rate to 28 percent but raised the capital gains rate to the same level, giving them parity. But this is a rather strange flip-flop because Trump always has been a fierce critic of the bill, blaming it repeatedly for the savings and loan crisis, a decline in real estate investing and the 1990-1991 recession.

“This tax act was just an absolute catastrophe for the country, for the real estate industry, and I really hope that something can be done,” Trump told Congress in 1991. In a television interview with Joan Rivers, he said: “What caused the savings and loan crisis was the 1986 tax law change. It was a disaster. It took all of the incentives away from investors.”

Trump also frequently attacked one of the Democratic sponsors of the bill, Sen. Bill Bradley (D-N.J.), such as in a Wall Street Journal commentary in 1999. “Mr. Bradley’s last big idea to be enacted into legislation was also one of the worst ideas in recent history,” Trump wrote, saying Bradley was responsible for the elimination of a tax shelter for real estate investments. (He said the good parts of the bill could be attributed to Reagan.)

“We lost the jobs. We lost the taxes. They closed the buildings. They closed the plants and factories. We got nothing but unemployment. We got nothing.”

As Trump frequently notes, the unemployment rate in July was 4.3 percent — the lowest level in 16 years. So this overwrought language seems misplaced.

“We have gone from a tax rate that is lower than our economic competitors, to one that is more than 60 percent higher. … In other words, foreign companies have more than a 60 percent tax advantage over American companies.”

The United States certainly has one of the highest statutory corporate tax rates in the world, currently pegged as high as 39.1 percent when including state taxes. (The federal rate is 35 percent.) Trump says it is 60 percent higher than “our economic competitors,” comparing 39.1 percent to the average rate for the other members of the Organization for Economic Co-operation and Development, which is 25.5 percent when not weighted for GDP. (It is 29.6 percent when weighted for GDP.)

But the official rate does not necessarily tell the whole story. What also matters is the actual tax a company pays, after deductions and tax benefits. That is known as the effective tax rate, which can be calculated differently depending on the survey. According to the Congressional Research Service, the effective rate for the United States is 27.1 percent, compared to an effective GDP-weighted average of 27.7 percent for the OECD. “Although the U.S. statutory tax rate is higher, the average effective rate is about the same, and the marginal rate on new investment is only slightly higher,” the CRS says.

The Congressional Budget Office, when it examined the issue, said the U.S. effective tax rate was 18.6 percent, which it said was among the highest of the biggest economic powers, the Group of 20.

Trump, naturally, used the numbers that suggest the difference is really huge.

“Today, we are still taxing our businesses at 35 percent, and it’s way more than that. And think of it, in some cases, way above 40 percent when you include state and local taxes in various states. The United States is now behind France, behind Germany, behind Canada, Ireland, Japan, Mexico, South Korea and many other nations.”

As we noted, the statutory federal corporate tax rate in the United States is 35 percent, making the United States the highest among G-20 countries, including the countries Trump listed. But the effective corporate tax rate in the United States in 2012 was 18.6 percent, making it the fourth highest among G-20 countries, behind Argentina, Japan and Britain, according to the CBO.

“Because of our high tax rate and horrible, outdated, bureaucratic rules, large companies that do business overseas will often park their profits offshore to avoid paying a high United States tax if the money is brought back home. So they leave the money over there. The amount of money we’re talking about is anywhere from $3 trillion to $5 trillion.”

There are no official, current numbers on the profits held overseas by U.S. companies, just estimates. The White House would not respond to a query on where Trump is getting these numbers, but his high-end figure appears to be an exaggeration. The Internal Revenue Service in 2012 said the figure was $2.3 trillion, and the Joint Committee on Taxation estimated that it had risen to $2.6 trillion in 2015. There are other estimates as well, but none top $2.8 trillion, according to PolitiFact.

https://www.washingtonpost.com/news/fact-checker/wp/2017/08/31/fact-checking-president-trumps-speech-on-his-tax-plan/?utm_term=.8ea0dc0c4d24

973 oil crisis

From Wikipedia, the free encyclopedia

The 1973 oil crisis began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo. The embargo was targeted at nations perceived as supporting Israel during the Yom Kippur War.[1] The initial nations targeted were CanadaJapan, the Netherlands, the United Kingdom and the United States with the embargo also later extended to PortugalRhodesia and South Africa. By the end of the embargo in March 1974,[2] the price of oil had risen from US$3 per barrel to nearly $12 globally; US prices were significantly higher. The embargo caused an oil crisis, or “shock”, with many short- and long-term effects on global politics and the global economy.[3] It was later called the “first oil shock”, followed by the 1979 oil crisis, termed the “second oil shock.”

Summary

The embargo was a response to American involvement in the 1973 Yom Kippur War. Six days after Egypt and Syria launched a surprise military campaign against Israel, the US supplied Israel with arms. In response to this, the Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced an oil embargo against CanadaJapan, the Netherlands, the United Kingdom and the United States.[4]

The crisis had a major impact on international relations and created a rift within NATO. Some European nations and Japan sought to disassociate themselves from United States foreign policy in the Middle East to avoid being targeted by the boycott. Arab oil producers linked any future policy changes to peace between the belligerents. To address this, the Nixon Administration began multilateral negotiations with the combatants. They arranged for Israel to pull back from the Sinai Peninsula and the Golan Heights. By January 18, 1974, US Secretary of State Henry Kissinger had negotiated an Israeli troop withdrawal from parts of the Sinai Peninsula. The promise of a negotiated settlement between Israel and Syria was enough to convince Arab oil producers to lift the embargo in March 1974.[2]

Graph of oil prices from 1861–2015, showing a sharp increase in 1973 and again during the 1979 energy crisis. The orange line is adjusted for inflation.

Independently, OAPEC members agreed to use their leverage over the world price-setting mechanism for oil to stabilize their incomes by raising world oil prices after the recent failure of negotiations with Western oil companies.

The embargo occurred at a time of rising petroleum consumption by industrialized countries and coincided with a sharp increase in oil imports by the world’s largest oil consumer, the United States. In the aftermath, targeted countries initiated a wide variety of policies to contain their future dependency.

The 1973 “oil price shock”, with the accompanying 1973–74 stock market crash, was regarded as the first discrete event since the Great Depression to have a persistent effect on the US economy.[5]

The embargo’s success demonstrated Saudi Arabia‘s diplomatic and economic power. It was the largest oil exporter and a politically and religiously conservative kingdom.

Background

US oil production decline

In 1970, US oil production started to decline, exacerbating the embargo’s impact.[6] Following this, Nixon named James E. Akins as US Ambassador to Saudi Arabia to audit US production capacity. The confidential results were alarming—no spare capacity was available and production could only decrease.

USA oil production and imports. As shown, the import spike starts from the US production peak, and the embargo has little effect.

The oil embargo had little effect on overall supply, according to Akins.[7]

OPEC

The Organization of the Petroleum Exporting Countries (OPEC), which then comprised 12 countries, including Iran, seven Arab countries (IraqKuwaitLibyaQatarSaudi Arabia and the United Arab Emirates), plus VenezuelaIndonesiaNigeria and Ecuador, was formed at a Baghdad conference on September 14, 1960. OPEC was organized to resist pressure by the “Seven Sisters” (seven large, Western oil companies) to reduce oil prices.

At first, OPEC operated as an informal bargaining unit for resource-rich third-world countries. OPEC confined its activities to gaining a larger share of the profits generated by oil companies and greater control over member production levels. In the early 1970s it began to exert economic and political strength; the oil companies and importing nations suddenly faced a unified exporter bloc.

End of the Bretton Woods currency accord

On August 15, 1971, the United States unilaterally pulled out of the Bretton Woods Accord. The US abandoned the Gold Exchange Standard whereby the value of the dollar had been pegged to the price of gold and all other currencies were pegged to the dollar, whose value was left to “float” (rise and fall according to market demand).[8] Shortly thereafter, Britain followed, floating the pound sterling. The other industrialized nations followed suit with their respective currencies. Anticipating that currency values would fluctuate unpredictably for a time, the industrialized nations increased their reserves (by expanding their money supplies) in amounts far greater than before. The result was a depreciation of the dollar and other industrialized nations’ currencies. Because oil was priced in dollars, oil producers’ real income decreased. In September 1971, OPEC issued a joint communiqué stating that, from then on, they would price oil in terms of a fixed amount of gold.[9]

This contributed to the “Oil Shock”. After 1971, OPEC was slow to readjust prices to reflect this depreciation. From 1947 to 1967, the dollar price of oil had risen by less than two percent per year. Until the oil shock, the price had also remained fairly stable versus other currencies and commodities. OPEC ministers had not developed institutional mechanisms to update prices in sync with changing market conditions, so their real incomes lagged. The substantial price increases of 1973–1974 largely returned their prices and corresponding incomes to Bretton Woods levels in terms of commodities such as gold.[10]

Yom Kippur War

On October 6, 1973, Syria and Egypt, with support from other Arab nations, launched a surprise attack on Israel, on Yom Kippur.[11] This renewal of hostilities in the Arab–Israeli conflict released the underlying economic pressure on oil prices. At the time, Iran was the world’s second-largest oil exporter and a close US ally. Weeks later, the Shah of Iran said in an interview: “Of course [the price of oil] is going to rise… Certainly! And how!… You’ve [Western nations] increased the price of the wheat you sell us by 300 percent, and the same for sugar and cement… You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you’ve paid us… It’s only fair that, from now on, you should pay more for oil. Let’s say ten times more.”[12]

On October 12, 1973, US president Richard Nixon authorized Operation Nickel Grass, a strategic airlift to deliver weapons and supplies to Israel, after the Soviet Union began sending arms to Syria and Egypt.

Embargo

In response to American aid to Israel, on October 16, 1973, OPEC raised the posted price of oil by 70%, to $5.11 a barrel.[13] The following day, oil ministers agreed to the embargo, a cut in production by five percent from September’s output and to continue to cut production in five percent monthly increments until their economic and political objectives were met.[14] On October 19, Nixon requested Congress to appropriate $2.2 billion in emergency aid to Israel, including $1.5 billion in outright grants. George Lenczowski notes, “Military supplies did not exhaust Nixon’s eagerness to prevent Israel’s collapse…This [$2.2 billion] decision triggered a collective OPEC response.”[15] Libya immediately announced it would embargo oil shipments to the United States.[16] Saudi Arabia and the other Arab oil-producing states joined the embargo on October 20, 1973.[17] At their Kuwait meeting, OAPEC proclaimed the embargo that curbed exports to various countries and blocked all oil deliveries to the US as a “principal hostile country”.[15]

Price increases were also imposed greatly. Since short-term oil demand is inelastic, immediate demand falls little when the price rises. Thus, market prices rose from $3 per barrel to $12 per barrel to reduce demand to the new, lower level of supply.[18] The world financial system, which was already under pressure from the Bretton Woods breakdown, was set on a path of recessions and inflation that persisted until the early 1980s, with oil prices remaining elevated until 1986.

The price of oil during the embargo. The graph is based on the nominal, not real, price of oil, and so overstates prices at the end. However, the effects of the Arab Oil Embargo are clear—it effectively doubled the real price of crude oil at the refinery level, and caused massive shortages in the U.S.

Over the long term, the oil embargo changed the nature of policy in the West towards increased exploration, alternative energy research, energy conservation and more restrictive monetary policy to better fight inflation.[19]

Chronology

  • January 1973—The 1973–74 stock market crash commences as a result of inflation pressure and the collapsing monetary system.
  • August 23, 1973—In preparation for the Yom Kippur War, Saudi king Faisal and Egyptian president Anwar Sadat meet in Riyadh and secretly negotiate an accord whereby the Arabs will use the “oil weapon” as part of the military conflict.[20]
  • October 6—Egypt and Syria attack Israeli-occupied lands in the Sinai Peninsula and Golan Heights on Yom Kippur, starting the 1973 Arab–Israeli War.
  • Night of October 8—Israel goes on full nuclear alert. Kissinger is notified on the morning of October 9. United States begins to resupply Israel.
  • October 8–10—OPEC negotiations with major oil companies to revise the 1971 Tehran price agreement fail.
  • October 12—The United States initiates Operation Nickel Grass, a strategic airlift to provide replacement weapons and supplies to Israel. This followed similar Soviet moves to supply the Arab side.
  • October 16—Saudi Arabia, Iran, IraqAbu DhabiKuwait and Qatar raise posted prices by 17% to $3.65 per barrel and announce production cuts.[21]
  • October 17—OAPEC oil ministers agree to use oil to influence the West’s support of Israel. They recommended an embargo against non-complying states and mandated export cuts.
  • October 19—Nixon requests Congress to appropriate $2.2 billion in emergency aid to Israel, which triggers a collective Arab response.[15] Libya immediately proclaims an embargo on oil exports to the US.[16] Saudi Arabia and other Arab oil-producing states follow the next day.[16]
  • October 26—The Yom Kippur War ends.
  • November 5—Arab producers announce a 25% output cut. A further 5% cut is threatened.
  • November 23—The Arab embargo is extended to PortugalRhodesia and South Africa.
  • November 27—Nixon signs the Emergency Petroleum Allocation Act authorizing price, production, allocation and marketing controls.
  • December 9—Arab oil ministers agree to another five percent production cut for non-friendly countries in January 1974.
  • December 25—Arab oil ministers cancel the January output cut. Saudi oil minister Ahmed Zaki Yamani promises a ten percent OPEC production rise.
  • January 7–9, 1974—OPEC decides to freeze prices until April 1.
  • January 18—Israel signs a withdrawal agreement to pull back to the east side of the Suez Canal.
  • February 11—Kissinger unveils the Project Independence plan for US energy independence.
  • February 12–14—Progress in Arab-Israeli disengagement triggers discussion of oil strategy among the heads of state of Algeria, Egypt, Syria and Saudi Arabia.
  • March 5—Israel withdraws the last of its troops from the west side of the Suez Canal.
  • March 17—Arab oil ministers, with the exception of Libya, announce the end of the US embargo.
  • May 31—Diplomacy by Kissinger produces a disengagement agreement on the Syrian front.
  • December 1974—The 1973–74 stock market crash ends.

Effects

Immediate economic effects

A man at a service station reads about the gasoline rationing system in an afternoon newspaper; a sign in the background states that no gasoline is available. 1974

The effects of the embargo were immediate. OPEC forced oil companies to increase payments drastically. The price of oil quadrupled by 1974 to nearly US$12 per barrel (75 US$/m3).[3]

This price increase had a dramatic effect on oil exporting nations, for the countries of the Middle East who had long been dominated by the industrial powers seen to have taken control of a vital commodity. The oil-exporting nations began to accumulate vast wealth.

Some of the income was dispensed in the form of aid to other underdeveloped nations whose economies had been caught between higher oil prices and lower prices for their own export commodities, amid shrinking Western demand. Much went for arms purchases that exacerbated political tensions, particularly in the Middle East. Saudi Arabia spent over 100 billion dollars in the ensuing decades for helping spread its fundamentalist interpretation of Islam, known as Wahhabism, throughout the world, via religious charities such al-Haramain Foundation, which often also distributed funds to violent Sunni extremist groups such as Al-Qaeda and the Taliban.[22]

Control of oil became known as the “oil weapon.” It came in the form of an embargo and production cutbacks from the Arab states. The weapon was aimed at the United States, Great Britain, Canada, Japan and the Netherlands. These target governments perceived that the intent was to push them towards a more pro-Arab position.[23] Production was eventually cut by 25%.[24] However, the affected countries did not undertake dramatic policy changes.[25]

In the United States, scholars argue that there already existed a negotiated settlement based on equality between both parties prior to 1973. The possibility that the Middle East could become another superpower confrontation with the USSR was of more concern to the US than oil. Further, interest groups and government agencies more worried about energy were no match for Kissinger’s dominance.[26] In the US production, distribution and price disruptions “have been held responsible for recessions, periods of excessive inflation, reduced productivity, and lower economic growth.”[27]

The embargo had a negative influence on the US economy by causing immediate demands to address the threats to U.S. energy security.[28] On an international level, the price increases changed competitive positions in many industries, such as automobiles. Macroeconomic problems consisted of both inflationary and deflationary impacts.[29] The embargo left oil companies searching for new ways to increase oil supplies, even in rugged terrain such as the Arctic. Finding oil and developing new fields usually required five to ten years before significant production.[30]

Gas stealers beware, 1974

OPEC-member states raised the prospect of nationalization of oil company holdings. Most notably, Saudi Arabia nationalized Aramco in 1980 under the leadership of Saudi oil minister Ahmed Zaki Yamani. As other OPEC nations followed suit, the cartel’s income soared. Saudi Arabia undertook a series of ambitious five-year development plans. The biggest began in 1980, funded at $250 billion. Other cartel members also undertook major economic development programs.

US retail price gas prices rose from a national average of 38.5 cents in May 1973 to 55.1 cents in June 1974. State governments requested citizens not to put up Christmas lightsOregon banned Christmas and commercial lighting altogether.[18] Politicians called for a national gas rationing program.[31] Nixon requested gasoline stations to voluntarily not sell gasoline on Saturday nights or Sundays; 90% of owners complied, which produced long queues.[18]

The embargo was not uniform across Europe. Of the nine members of the European Economic Community (EEC), the Netherlands faced a complete embargo, the UK and France received almost uninterrupted supplies (having refused to allow America to use their airfields and embargoed arms and supplies to both the Arabs and the Israelis), while the other six faced partial cutbacks. The UK had traditionally been an ally of Israel, and Harold Wilson‘s government supported the Israelis during the Six-Day War. His successor, Ted Heath, reversed this policy in 1970, calling for Israel to withdraw to its pre-1967 borders.

The EEC was unable to achieve a common policy during the first month of the War. It issued a statement on November 6, after the embargo and price rises had begun. It was widely viewed as pro-Arab supporting the Franco-British line on the war. OPEC duly lifted its embargo from all EEC members. The price rises had a much greater impact in Europe than the embargo.

Despite being relatively unaffected by the embargo, the UK nonetheless faced an oil crisis of its own—a series of strikes by coal miners and railroad workers over the winter of 1973–74 became a major factor in the change of government.[32] Heath asked the British to heat only one room in their houses over the winter.[33] The UK, Germany, Italy, Switzerland and Norway banned flying, driving and boating on Sundays. Sweden rationed gasoline and heating oil. The Netherlands imposed prison sentences for those who used more than their ration of electricity.[18]

A few months later, the crisis eased. The embargo was lifted in March 1974 after negotiations at the Washington Oil Summit, but the effects lingered throughout the 1970s. The dollar price of energy increased again the following year, amid the weakening competitive position of the dollar in world markets.

Price controls and rationing

United States

Price controls exacerbated the crisis in the US. The system limited the price of “old oil” (that which had already been discovered) while allowing newly discovered oil to be sold at a higher price to encourage investment. Predictably, old oil was withdrawn from the market, creating greater scarcity. The rule also discouraged development of alternative energies.[31] The rule had been intended to promote oil exploration.[34] Scarcity was addressed by rationing (as in many countries). Motorists faced long lines at gas stations beginning in summer 1972 and increasing by summer 1973.[31]

In 1973, Nixon named William E. Simon as the first Administrator of the Federal Energy Office, a short-term organization created to coordinate the response to the embargo.[35] Simon allocated states the same amount of domestic oil for 1974 that each had consumed in 1972, which worked for states whose populations were not increasing.[36] In other states, lines at gasoline stations were common. The American Automobile Association reported that in the last week of February 1974, 20% of American gasoline stations had no fuel.[36]

Oregon gasoline dealers displayed signs explaining the flag policy in the winter of 1973–74

Odd–even rationing allowed vehicles with license plates having an odd number as the last digit (or a vanity license plate) to buy gas only on odd-numbered days of the month, while others could buy only on even-numbered days.[37]

In some states, a three-color flag system was used to denote gasoline availability at service stations—green for unrationed availability, yellow for restricted/rationed sales and red for out of stock.[38]

Gasoline ration stamps printed by the Bureau of Engraving and Printing in 1974, but not used.

Rationing led to violent incidents, when truck drivers chose to strike for two days in December 1973 over the limited supplies Simon had allocated for their industry. In Pennsylvania and Ohio, non-striking truckers were shot at by striking truckers, and in Arkansas, trucks of non-strikers were attacked with bombs.[36]

America had controlled the price of natural gas since the 1950s. With the inflation of the 1970s, the price was too low to encourage the search for new reserves.[39] America’s natural gas reserves dwindled from 237 trillion in 1974 to 203 trillion[clarification needed] in 1978. The price controls were not changed despite president Gerald Ford‘s repeated requests to Congress.[39]

Conservation and reduction in demand

United States

To help reduce consumption, in 1974 a national maximum speed limit of 55 mph (about 88 km/h) was imposed through the Emergency Highway Energy Conservation Act. Development of the Strategic Petroleum Reserve began in 1975, and in 1977 the cabinet-level Department of Energy was created, followed by the National Energy Act of 1978.[citation needed] On November 28, 1995, Bill Clinton signed the National Highway Designation Act, ending the federal 55 mph (89 km/h) speed limit, allowing states to restore their prior maximum speed limit.

Year-round daylight saving time was implemented from January 6, 1974, to February 23, 1975. The move spawned significant criticism because it forced many children to travel to school before sunrise. The prior rules were restored in 1976.[citation needed]

Gas stations abandoned during the crisis were sometimes used for other purposes. This station at Potlatch, Washington, was turned into a revivalhall.

The crisis prompted a call to conserve energy, most notably a campaign by the Advertising Council using the tagline “Don’t Be Fuelish”.[40] Many newspapers carried advertisements featuring cut-outs that could be attached to light switches, reading “Last Out, Lights Out: Don’t Be Fuelish.”[citation needed]

By 1980, domestic luxury cars with a 130-inch (3.3 m) wheelbase and gross weights averaging 4,500 pounds (2,041 kg) were no longer made. The automakers had begun phasing out the traditional front engine/rear wheel drivelayout in compact cars in favor of lighter front engine/front wheel drive designs. A higher percentage of cars offered more efficient 4-cylinder engines. Domestic auto makers also began offering more fuel efficient diesel powered passenger cars as well.

Though not regulated by the new legislation, auto racing groups voluntarily began conserving. In 1974, the 24 Hours of Daytona was cancelled and NASCAR reduced all race distances by 10%; the 12 Hours of Sebring race was cancelled.[citation needed]

In 1976, Congress created the Weatherization Assistance Program to help low-income homeowners and renters reduce their demand for heating and cooling through better insulation.[citation needed]

Alternative energy sources

A woman uses wood in a fireplacefor heat. A newspaper headline before her tells of the community’s lack of heating oil.

The energy crisis led to greater interest in renewable energynuclear power and domestic fossil fuels.[41] According to Peter Grossman, American energy policies since the crisis have been dominated by crisis-mentality thinking, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities. He wrote that instead of providing stable rules that support basic research while leaving plenty of scope for entrepreneurshipand innovation, congresses and presidents have repeatedly backed policies which promise solutions that are politically expedient, but whose prospects are doubtful.[42]

The Brazilian government implemented its “Proálcool” (pro-alcohol) project in 1975 that mixed ethanol with gasoline for automotive fuel.[43]

Israel was one of the few countries unaffected by the embargo, since it could extract sufficient oil from the Sinai. But to supplement Israel‘s over-taxed power grid, Harry Zvi Tabor, the father of Israel’s solar industry, developed the prototype for a solar water heater now used in over 90% of Israeli homes.[44]

Macroeconomy

The crisis was a major factor in shifting Japan’s economy away from oil-intensive industries. Investment shifted to industries such as electronics. Japanese auto makers also benefited from the crisis. Increased fuel costs allowed their small, fuel-efficient models to gain market share from the “gas-guzzling” American competition. This triggered a drop in American auto sales that lasted into the 1980s.

Western central banks decided to sharply cut interest rates to encourage growth, deciding that inflation was a secondary concern. Although this was the orthodox macroeconomic prescription at the time, the resulting stagflationsurprised economists and central bankers. The policy is now considered by some to have deepened and lengthened the adverse effects of the embargo. Recent research claims that in the period after 1985 the economy became more resilient to energy price increases.[45]

The price shock created large current account deficits in oil-importing economies. A petrodollar recycling mechanism was created, through which OPEC surplus funds were channeled through the capital markets to the West to finance the current account deficits. The functioning of this mechanism required the relaxation of capital controls in oil-importing economies. It marked the beginning of an exponential growth of Western capital markets.[46]

Many in the public remain suspicious of oil companies, believing they profiteered, or even colluded with OPEC.[citation needed] In 1974, seven of the fifteen top Fortune 500 companies were oil companies, falling to four in 2014.[47]

International relations

United States

America’s Cold War policies suffered a major blow from the embargo. They had focused on China and the Soviet Union, but the latent challenge to US hegemony coming from the third world became evident.

In 2004, declassified documents revealed that the U.S. was so distraught by the rise in oil prices and being challenged by under-developed countries that they briefly considered military action to forcibly seize Middle Eastern oilfields in late 1973. Although no explicit plan was mentioned, a conversation between U.S. Secretary of Defense James Schlesinger and British Ambassador to the United States Lord Cromer revealed Schlesinger had told him that “it was no longer obvious to him that the U.S. could not use force.” British Prime Minister Edward Heath was so worried by this prospect that he ordered a British intelligence estimate of U.S. intentions, which concluded America “might consider it could not tolerate a situation in which the U.S. and its allies were at the mercy of a small group of unreasonable countries,” and that they would prefer a rapid operation to seize oilfields in Saudi Arabia and Kuwait, and possibly Abu Dhabi in military action was decided upon. Although the Soviet response to such an act would likely not involve force, intelligence warned “the American occupation would need to last 10 years as the West developed alternative energy sources, and would result in the ‘total alienation’ of the Arabs and much of the rest of the Third World.”[48]

NATO

Western Europe began switching from pro-Israel to more pro-Arab policies.[49][50][51] This change strained the Western alliance. The US, which imported only 12% of its oil from the Middle East (compared with 80% for the Europeans and over 90% for Japan), remained staunchly committed to Israel. The percentage of U.S. oil which comes from the nations bordering the Persian Gulf remained steady over the decades, with a figure of a little more than 10% in 2008.[52]

With the embargo in place, many developed countries altered their policies regarding the Arab-Israeli conflict. These included the UK, which refused to allow the United States to use British bases and Cyprus to airlift resupplies to Israel along with the rest of the members of the European Community.[53]

Canada shifted towards a more pro-Arab position after displeasure was expressed towards Canada’s mostly neutral position. “On the other hand, after the embargo the Canadian government moved quickly indeed toward the Arab position, despite its low dependence on Middle Eastern oil”.[54]

Japan

Although lacking historical connections to the Middle East, Japan was the country most dependent on Arab oil. 71% of its imported oil came from the Middle East in 1970. On November 7, 1973, the Saudi and Kuwaiti governments declared Japan a “nonfriendly” country to encourage it to change its noninvolvement policy. It received a 5% production cut in December, causing a panic. On November 22, Japan issued a statement “asserting that Israel should withdraw from all of the 1967 territories, advocating Palestinian self-determination, and threatening to reconsider its policy toward Israel if Israel refused to accept these preconditions”.[54] By December 25, Japan was considered an Arab-friendly state.

Nonaligned nations

The oil embargo was announced roughly one month after a right-wing military coup in Chile led by General Augusto Pinochet toppled socialist president Salvador Allende on September 11, 1973. The response of the Nixon administration was to propose doubling arms sales. As a consequence, an opposing Latin American bloc was organized and financed in part by Venezuelan oil revenues, which quadrupled between 1970 and 1975.

A year after the start of the embargo, the UN’s nonaligned bloc passed a resolution demanding the creation of a “New International Economic Order” under which nations within the global South would receive a greater share of benefits derived from the exploitation of southern resources and greater control over their self-development.[55]

Arab states

Prior to the embargo, the geo-political competition between the Soviet Union and the United States, in combination with low oil prices that hindered the necessity and feasibility of alternative energy sources, presented the Arab States with financial security, moderate economic growth, and disproportionate international bargaining power.[56]

The oil shock disrupted the status quo relationships between Arab countries and the US and USSR. At the time, Egypt, Syria and Iraq were allied with the USSR, while Saudi Arabia, Turkey and Iran (plus Israel) aligned with the US. Vacillations in alignment often resulted in greater support from the respective superpowers.

When Anwar Sadat became president of Egypt in 1970, he dismissed Soviet specialists in Egypt and reoriented towards the US. Concerns over economic domination from increased Soviet oil production turned into fears of military aggression after the 1979 Soviet invasion of Afghanistan, turning the Persian Gulf states towards the US for security guarantees against Soviet military action.

The USSR’s invasion of Afghanistan was only one sign of insecurity in the region, also marked by increased American weapons sales, technology, and outright military presence. Saudi Arabia and Iran became increasingly dependent on American security assurances to manage both external and internal threats, including increased military competition between them over increased oil revenues. Both states were competing for preeminence in the Persian Gulf and using increased revenues to fund expanded militaries. By 1979, Saudi arms purchases from the US exceeded five times Israel’s.[57]

In the wake of the 1979 Iranian Revolution the Saudis were forced to deal with the prospect of internal destabilization via the radicalism of Islamism, a reality which would quickly be revealed in the Grand Mosque seizure in Mecca by Wahhabi extremists during November 1979, and a Shiite Muslim revolt in the oil rich Al-Hasa region of Saudi Arabia in December of the same year, which was known as the 1979 Qatif Uprising.[58] Saudi Arabia is a near absolute monarchy, an Arabic speaking country, and has a Sunni Muslim majority, while Persian speaking Iran since 1979 is an Islamist theocracy with a Shiite Muslim majority, which explains the current hostility between Saudi Arabia and Iran.[59]

In November 2010, Wikileaks leaked confidential diplomatic cables pertaining to the United States and its allies which revealed that the late Saudi King Abdullah urged the United States to attack Iran in order to destroy its potential nuclear weapons program, describing Iran as “a snake whose head should be cut off without any procrastination”.[60]

Automobile industry

The oil crisis sent a signal to the auto industry globally, which changed many aspects of production and usage for decades to come.

Western Europe

After World War II, most West European countries taxed motor fuel to limit imports, and as a result most cars made in Europe were smaller and more economical than their American counterparts. By the late 1960s increasing incomes supported rising car sizes.

The oil crisis pushed West European car buyers away from larger, less economical cars.[61] The most notable result of this transition was the rise in popularity of compact hatchbacks. The only notable small hatchbacks built in Western Europe before the oil crisis were the Peugeot 104Renault 5 and Fiat 127. By the end of the decade, the market had expanded with the introduction of the Ford FiestaOpel Kadett (sold as the Vauxhall Astra in Great Britain), Chrysler Sunbeam and Citroën Visa.

Buyers looking for larger cars were increasingly drawn to medium-sized hatchbacks. Virtually unknown in Europe in 1973, by the end of the decade they were gradually replacing saloons as the mainstay of this sector. Between 1973 and 1980, medium-sized hatchbacks were launched across Europe: the Chrysler/Simca HorizonFiat Ritmo (Strada in the UK), Ford Escort MK3Renault 14Volvo 340 / 360Opel Kadett, and Volkswagen Golf.

These cars were considerably more economical than the traditional saloons they were replacing, and attracted buyers who traditionally bought larger vehicles. Some 15 years after the oil crisis, hatchbacks dominated most European small and medium car markets, and had gained a substantial share of the large family car market.

United States

Before the energy crisis, large, heavy, and powerful cars were popular. By 1971, the standard engine in a Chevrolet Caprice was a 400-cubic inch (6.5 liter) V8. The wheelbase of this car was 121.5 inches (3,090 mm), and Motor Trend‘s 1972 road test of the similar Chevrolet Impala achieved no more than 15 highway miles per gallon. In the fifteen years prior to the 1973 oil crisis, gasoline prices in the U.S. had lagged well behind inflation.[62]

The crisis reduced the demand for large cars.[39] Japanese imports, primarily the Toyota Corona, the Toyota Corolla, the Datsun B210, the Datsun 510, the Honda Civic, the Mitsubishi Galant (a captive import from Chrysler sold as the Dodge Colt), the Subaru DL, and later the Honda Accord all had four cylinder engines that were more fuel efficient than the typical American V8 and six cylinder engines. Japanese imports became mass-market leaders with unibody construction and front-wheel drive, which became de facto standards.

From Europe, the Volkswagen Beetle, the Volkswagen Fastback, the Renault 8, the Renault LeCar, and the Fiat Brava were successful. Detroit responded with the Ford Pinto, the Ford Maverick, the Chevrolet Vega, the Chevrolet Nova, the Plymouth Valiant and the Plymouth Volaré. American Motors sold its homegrown GremlinHornet and Pacer models.

Some buyers lamented the small size of the first Japanese compacts, and both Toyota and Nissan (then known as Datsun) introduced larger cars such as the Toyota Corona Mark II, the Toyota Cressida, the Mazda 616 and Datsun 810, which added passenger space and amenities such as air conditioning, power steering, AM-FM radios, and even power windows and central locking without increasing the price of the vehicle. A decade after the 1973 oil crisis, Honda, Toyota and Nissan, affected by the 1981 voluntary export restraints, opened US assembly plants and established their luxury divisions (Acura, Lexus and Infiniti, respectively) to distinguish themselves from their mass-market brands.

Compact trucks were introduced, such as the Toyota Hilux and the Datsun Truck, followed by the Mazda Truck (sold as the Ford Courier), and the Isuzu-built Chevrolet LUV. Mitsubishi rebranded its Forte as the Dodge D-50 a few years after the oil crisis. Mazda, Mitsubishi and Isuzu had joint partnerships with Ford, Chrysler, and GM, respectively. Later the American makers introduced their domestic replacements (Ford Ranger, Dodge Dakota and the Chevrolet S10/GMC S-15), ending their captive import policy.

An increase in imported cars into North America forced General Motors, Ford and Chrysler to introduce smaller and fuel-efficient models for domestic sales. The Dodge Omni / Plymouth Horizon from Chrysler, the Ford Fiesta and the Chevrolet Chevette all had four-cylinder engines and room for at least four passengers by the late 1970s. By 1985, the average American vehicle moved 17.4 miles per gallon, compared to 13.5 in 1970. The improvements stayed even though the price of a barrel of oil remained constant at $12 from 1974 to 1979.[39] Sales of large sedans for most makes (except Chrysler products) recovered within two model years of the 1973 crisis. The Cadillac DeVille and FleetwoodBuick ElectraOldsmobile 98Lincoln ContinentalMercury Marquis, and various other luxury oriented sedans became popular again in the mid-1970s. The only full-size models that did not recover were lower price models such as the Chevrolet Bel Air and Ford Galaxie 500. Slightly smaller models such as the Oldsmobile CutlassChevrolet Monte CarloFord Thunderbird and various others sold well.

Economical imports succeeded alongside heavy, expensive vehicles. In 1976 Toyota sold 346,920 cars (average weight around 2,100 lbs), while Cadillac sold 309,139 cars (average weight around 5,000 lbs).

Federal safety standards, such as NHTSA Federal Motor Vehicle Safety Standard 215 (pertaining to safety bumpers), and compacts like the 1974 Mustang I were a prelude to the DOT “downsize” revision of vehicle categories.[63] By 1977, GM’s full-sized cars reflected the crisis.[64] By 1979, virtually all “full-size” American cars had shrunk, featuring smaller engines and smaller outside dimensions. Chrysler ended production of their full-sized luxury sedans at the end of the 1981 model year, moving instead to a full front-wheel drivelineup for 1982 (except for the M-body Dodge Diplomat/Plymouth Gran Fury and Chrysler New Yorker Fifth Avenue sedans).

Decline of OPEC

Fluctuations of OPEC net oil export revenues since 1972[65][66]

OPEC soon lost its preeminent position, and in 1981, its production was surpassed by that of other countries. Additionally, its own member nations were divided. Saudi Arabia, trying to recover market share, increased production, pushing prices down, shrinking or eliminating profits for high-cost producers. The world price, which had peaked during the 1979 energy crisis at nearly $40 per barrel, decreased during the 1980s to less than $10 per barrel. Adjusted for inflation, oil briefly fell back to pre-1973 levels. This “sale” price was a windfall for oil-importing nations, both developing and developed.

The embargo encouraged new venues for energy exploration including Alaska, the North Sea, the Caspian Sea, and the Caucasus.[67] Exploration in the Caspian Basin and Siberia became profitable. Cooperation changed into a far more adversarial relationship as the USSR increased its production. By 1980 the Soviet Union had become the world’s largest producer.[68][69]

Part of the decline in prices and economic and geopolitical power of OPEC came from the move to alternate energy sources. OPEC had relied on price inelasticity[70] to maintain high consumption, but had underestimated the extent to which conservation and other sources of supply would eventually reduce demand. Electricity generation from nuclear power and natural gas, home heating from natural gas, and ethanol-blended gasoline all reduced the demand for oil.

The drop in prices presented a serious problem for oil-exporting countries in northern Europe and the Persian Gulf. Heavily populated, impoverished countries, whose economies were largely dependent on oil—including MexicoNigeriaAlgeria, and Libya—did not prepare for a market reversal that left them in sometimes desperate situations.

When reduced demand and increased production glutted the world market in the mid-1980s, oil prices plummeted and the cartel lost its unity. Mexico (a non-member), Nigeria, and Venezuela, whose economies had expanded in the 1970s, faced near-bankruptcy, and even Saudi Arabian economic power was significantly weakened. The divisions within OPEC made concerted action more difficult. As of 2015, OPEC had never approached its earlier dominance.

See also

References

https://en.wikipedia.org/wiki/1973_oil_crisis

 

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