Story 1: Federal Reserve Open Market Committee (FOMC) Lowers The Federal Funds Target Rate by .25% with New Range of 1.75% to 2.00% Reflecting Slowing Moderate Rate of Growth of Real Gross Domestic Product (GDP) of 2.5% Below The Historical Average of Between 3.0% to 3.5% GDP Growth Rate — Trump Panics Wants Return To Irresponsible Near Zero Interest Rate Policy and Financial Repression of The Great Recession — Trump Just Another Big Government Bubble Blower Inflating Stock Market Prices — Videos —
Fed Chairman Powell faces dilemma as Trump continues his public criticism
Powell Says Fed Rate Cut Is Insurance Against Ongoing Risks
Borrowing rates skyrocketed on Tuesday in a corner of the markets the public rarely notices but that is critical to the functioning of the global financial system.
The spike in overnight borrowing rates forced the New York Federal Reserve to come to the rescue with a special operation aimed at easing stress in financial markets.
It was the NY Fed’s first such rescue operation in a decade, the last occurring in late 2008.
“It’s unprecedented, at least in the post-crisis era,” said Mark Cabana, rates strategist at Bank of America Merrill Lynch.
On Tuesday morning, the NY Fed launched what’s called an “overnight repo operation,” during which the central bank attempts to ease pressure in markets by purchasing Treasuries and other securities. The goal is to pump money into the system to keep borrowing costs from creeping above the Fed’s target range.
The first attempt by the NY Fed was canceled because of “technical difficulties.” Minutes later, the NY Fed successfully injected $53 billion into the system.
The episode demonstrates evidence of emerging strains in financial markets and raises concern that the Federal Reserve could be losing its grip on short-term rates.
“The funding markets are clearly stressed,” said Guy LeBas, managing director of fixed income strategy at Janney Capital Markets. “It’s going to require Fed action.”
The NY Fed announced plans late Tuesday to hold another repurchase agreement operation on Wednesday that would aim to repurchase up to an additional $75 billion.
Rates spike
The rate on overnight repurchase agreements hit 5% on Monday, according to Refinitiv data. That’s up from 2.29% late last week and well above the target range set in July by the Federal Reserve, which is 2% to 2.25%. The surge continued Tuesday, with the overnight rate hitting a high of 10% before the NY Fed stepped in.
Although it doesn’t get as much attention as the Dow or the 10-year Treasury rate, this overnight market plays a central role in modern finance. It allows banks to quickly and cheaply borrow money, for short periods of time, often to buy bonds like Treasuries. This market broke down during the 2008 financial crisis.
However, analysts drew a distinction between the current period of stress and what happened during the crisis. Back then, investors were deeply worried about the financial health of banks. Today, banks are hauling in record profits and balance sheets look sturdy.
It’s unclear what exactly is causing the stress in the overnight market, or how long it will last.
“No one knows why this is happening,” Jim Bianco CEO of Bianco Research, said on Twitter. “If it persists more than another day or two, it will be a problem.”
$1 trillion deficits and paying Uncle Sam
There are some theories.
Cabana, the Bank of America analyst, blamed the spike in overnight lending rates on the Fed badly underestimating the amount of cash needed to keep the financial system operating smoothly.
“The Fed just made a policy mistake,” Cabana said. “There is not enough cash in the banking system for the banks to meet all of their liquidity and regulatory needs. I’m not that worried, because the Fed will fix it.”
The catalyst for the stress, according to Cabana, was the fact that US companies withdrew vast sums of money from banks to make quarterly tax payments to the US Treasury Department. That forced banks to draw down their reserves at the Fed.
The rate spike may also be a symptom of the sharp increase in Treasury bonds being issued to fund the federal government. The federal deficit has spiked to $1 trillion this fiscal year because of the tax cuts and surge in government spending.
Banks typically buy Treasuries by borrowing in the overnight market. The jump in Treasury issuance caused a large increase in demand for short-term financing.
“The fundamental issue is there are just too many darn Treasuries out there,” Cabana said. “Both parties are to blame. The $1 trillion deficit will keep this an issue.”
The return of QE?
No matter the cause, more Fed action may be needed, including additional temporary NY Fed operations.
“They may have to do the same thing tomorrow morning,” said LeBas.
The Fed may also need to lower the interest it pays on excess bank reserves, or IOER. Bank of America Merrill Lynch predicted the Fed will cut this rate slightly on Wednesday.
“That’s like a Band-Aid,” Cabana said.
As a longer-term solution, Barclays and Bank of America expect the Fed to begin expanding its balance sheet again by purchasing Treasuries. The Fed’s bond buying program, known as quantitative easing, or QE, was launched during the financial crisis to keep borrowing costs extremely low. As the economy healed, the Fed reversed course and started to shrink its balance sheet.
Cabana doesn’t think the Fed will call this QE, though he said it will work the same way. The central bank will grow its balance sheet by purchasing Treasuries.
“The Fed won’t admit this,” Cabana said, “but it looks and smells an awful lot like the monetary authority is financing the fiscal authority.”
The interest rate targeted by the Federal Reserve, the federal funds rate, is currently 1.75% to 2%. That’s after the Fed cut it a quarter of a percentage point on Sept. 18, 2019.1 The federal funds rate is the benchmark interest rate banks charge each other for overnight loans. It generally reflects the health of the economy and has a big impact on other interest rates. The Sept. 18 cut was the second rate drop in 2019, after years of steady increases following the Great Recession.2
The Federal Reserve is the central bank of the United States and it is mandated by Congress to promote economic stability, mainly by raising or lowering the cost of borrowing.3 The Fed said it lowered interest rates because, although the U.S. economy is strong and unemployment is low, business investments and exports have “weakened” since the last meeting of the Federal Open Market Committee.4 The FOMC is the Fed’s rate-setting body, and it votes on interest rate changes every six weeks or so.
The FOMC looks at where it thinks the economy is headed and sets interest rates to help the economy reach or maintain full employment, moderate long-term interest rates, and an inflation rate of 2%.5
The fed funds rate is critical in determining the U.S. economic outlook. It is used to set short-term interest rates, including banks’ prime rate (the rate banks charge customers for loans), most adjustable-rate mortgages, and credit card rates.
Why the Fed Raises or Lowers Interest Rates
The Fed uses interest rates as a lever to grow the economy or put the brakes on it. If the economy is slowing, the Fed can lower interest rates to make it cheaper for businesses to borrow money, invest, and create jobs. Lower interest rates also tend to make consumers more eager to borrow and spend, which helps spur the economy.
On the other hand, if the economy is growing too fast and inflation is heating up, the Fed may raise interest rates to curtail spending and borrowing.
In December 2008, the Fed cut the fed funds rate to 0.25%. That’s effectively nothing. It did so amid the worst financial crisis since the Great Depression, in an effort to light a spark under the economy. The rate stayed unchanged until 2015, and rose steadily through 2018 as the economy picked up steam.6 The 2019 cuts are a sign that growth is beginning to slow.
How the Fed Funds Rate Works
The FOMC targets a specific level for the fed funds rate, which determines the interest rates banks actually charge one another for overnight loans. Banks use these loans to help them meet cash reserve requirements: Banks that are short borrow from banks that have excess.
A reserve requirement is the amount of cash a bank must keep overnight. It’s set by the Fed and is a percentage of the bank’s deposits. The current top reserve requirement is 10% for banks with more than $124.2 million on deposit.
Prior to the financial crisis, the Fed controlled the fed funds rate by buying and selling U.S. government securities on the open market. When the Fed buys a security, that increases the reserves of the bank associated with the sale, which makes the bank more likely to lend. To attract borrowers, the bank lowers interest rates, including the rate it charges other banks.
When the Fed sells a security, the opposite happens. Bank reserves fall, making the bank more likely to borrow, causing the fed funds rate to rise.7 These shifts in the fed funds rate ripple through the rest of the credit markets, influencing other short-term interest rates such as savings, bank loans, credit card interest rates, and adjustable-rate mortgages.
Actions the Fed took during the financial crisis and throughout the recession that followed had the effect of ballooning banks’ reserve balances, and as a result, banks didn’t need to borrow from one another to meet reserve requirements.8 The Federal Reserve could no longer rely on reserve balance manipulation to control interest rates. Because of that, the Fed has developed other tools to affect the rate.
How the Fed Now Sets the Fed Funds Rate
Today, the Fed sets a target range for the fed funds rate. It started back in October 2008, when the Fed began paying interest on reserves (IOR), but to a limited number of institutions. This was intended as the floor on the fed funds rate.9 After all, banks won’t lend to each other at a lower rate than what they’re getting from the Fed.
But eventually, the Fed realized the IOR wasn’t sufficient. It needed a sub-floor, so in 2013 it added another tool to help it control the target rate: the overnight reverse repurchase agreement facility (ON RRP, or “reverse repo”).10 This program is available to a broader range of financial institutions than IOR.11
With the ON RPP, the Fed agrees to sell a security and buy it back at a higher price, which is effectively the interest rate. This rate is set high enough to attract buyers, but below IOR. When banks need to borrow from one another, they do so within the range bounded by IOR and ON RPP. And when the Fed acts to raise or lower interest rates, it adjusts both IOR and ON RPP.
How Other Interest Rates Are Determined
The fed funds rate is one of the most significant leading economic indicators in the world. Its importance is psychological as well as financial, as many of the interest rates businesses and consumers pay are based on it, if only indirectly. For example, the prime lending rate is determined by individual banks themselves, who base their rates on the fed funds rate.12
Variable interest rates for credit cards and other consumer loans, for example, rely on the prime rate, which means they’re also affected by the fed funds rate.
However, not all loans rely on the prime lending rate. In fact, the interest rates for 30-year mortgages correlate with the yield on the 10-year Treasury note. That’s because investors who are interested in safe long-term returns on their investments see lots in common between the two—but not because one rate is determined by the other.13 Ultimately, supply and demand determine the rates for both.
Another important benchmark interest rate that is not set by the Fed is the London Interbank Offered Rate (LIBOR). It is the average interest rate major global banks charge each other to borrow. LIBOR is calculated daily, and is the basis for a host of commercial and consumer interest rates, from corporate bonds to adjustable-rate mortgages.14
WASHINGTON—The Federal Reserve voted to cut interest rates by a quarter-percentage point for the second time in as many months to cushion the economy against a global slowdown amplified by the U.S.-China trade conflict.
While the central bankers left the door open to additional cuts, they were split over Wednesday’s decision and the outlook for further reductions.
Seven of 10 officials voted in favor lowering the short-term benchmark to a range between 1.75% and 2%. As in July, two reserve bank presidents dissented from the decision in favor of holding rates steady. This time, Fed Chairman Jerome Powell faced a third dissent from a bank president who preferred a larger, half-point cut.
“We took this step to keep the economy strong,” said Mr. Powell in a news conference after the decision.
He also indicated rates could be cut further if the economy weakened further, even though he said officials still have a positive outlook for the U.S. economy.
U.S. stocks wobbled, then pared declines after the Fed’s decision. Treasury yields, which move inversely to prices, ticked higher though held their recent range.
The policy statement released after the meeting was little changed from July, when officials held the door open to future rate cuts. As the rate-setting committee “contemplates the future path” of its policy rate, “it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,” the statement said, repeating language from July.
The statement noted household spending had been rising at a strong pace while business investment and exports had weakened.
Projections released after Wednesday’s two-day meeting showed the extent of the split over the policy outlook, complicating the challenge facing Mr. Powell.
Seven of 17 officials penciled in one more rate cut this year. The other 10 were split evenly between those who thought the new level of rates, after Wednesday’s cut, would be appropriate and those who thought rates shouldn’t have to go any lower.
Lowered Expectations
The Fed’s forecasts of the federal-funds rate for the end of 2019 have changed over time. Circles below are sized according to the number of officials who set their projections to the corresponding rate for each release.
Projected midpoint for rate at end of 2019
Target range following
this quarter’s release
10 officials
5
Seven of 17 officials projected one more quarter-point cut this year
4.0%
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Sept. ’17
Dec.
March ’18
June
Sept.
Dec.
March ’19
June
Sept.
PROJECTION RELEASE DATE
Source: Federal Reserve
Those divides are even sharper in projections for next year. Roughly half of officials projected rates by December 2020 would sit one-quarter point below the new level, while another half thought it would be appropriate to reverse at least one of the two recent cuts.
Officials cited three reasons—weakening global growth, rising trade-policy uncertainty and muted inflation—for cutting rates at their July 30-31 meeting. The U.S.-China trade conflict worsened immediately after the July meeting, and the global industrial downturn shows no sign of bottoming out.
The Fed faces an unusual challenge setting policy given the volatile outlook for the global trading environment, that has chilled business investment. “There is a piece of this that we really can’t address,” said Mr. Powell. “It’s an unusual situation… It’s a challenging time, I admit it.”
Officials expected the U.S. economy to slow this year, but increased uncertainty means officials aren’t sure if the economy is going to cool a little bit or a lot.
U.S. economic data paint a mixed picture. Consumer spending has been solid, but manufacturing has weakened. Recent revisions to employment and profit growth show that the economy over the past year wasn’t as strong as previously thought.
Some Fed officials have warned that waiting for signs of consumer spending and hiring to slow more sharply could require the Fed to deliver more aggressive stimulus at a time when its policy rate is already historically low.
Hiring has slowed this year. The private sector added 129,000 jobs on average over the three months ended August, down from 236,000 for the three-month period ended December.
One challenge for the Fed in reading these numbers is that for years, officials have expected hiring to slow as the economic expansion matures. At the same time, wage growth hasn’t accelerated substantially this year, as would occur when the demand for workers outstrips supply.
Meantime, the Fed has come under growing pressure from President Trump to aggressively cut interest rates—to boost stock markets and weaken the U.S. dollar—after the White House’s trade talks with China hit an impasse this spring. Mr. Trump had called for the Fed to cut rates by a half-point in April, but he has since said the Fed should lower rates more aggressively.
Soon after the Fed announced its rate cut, Mr. Trump lashed out at Mr. Powell on Twitter. “Jay Powell and the Federal Reserve Fail Again,” he wrote, one of 30 such statements about Fed policy since the July meeting. “No ‘guts,’ no sense, no vision! A terrible communicator!”
Mr. Powell has said the Fed doesn’t make policy decisions based on demands from political leaders and instead focuses on its congressional mandate to boost employment while keeping inflation stable. The unemployment rate, at 3.7%, is near a half-century low, while inflation, excluding volatile food and energy categories, has been running around 1.6%, according to the Fed’s preferred gauge, below its 2% target.
Donald J. Trump
✔@realDonaldTrump
Jay Powell and the Federal Reserve Fail Again. No “guts,” no sense, no vision! A terrible communicator!
The Fed’s benchmark rate rose to 2.3% on Tuesday, trading outside of its range of 2% to 2.25%, after technical factors and monetary and regulatory changes created shortages of funds for banks.
Earlier Wednesday, the New York Fed injected $75 billion in cash into money markets, following a $53 billion infusion on Tuesday.
At the two-day meeting, the Fed’s rate-setting committee lowered a separate interest rate paid to banks on deposits, known as reserves, held at the Fed, which could reduce banks’ demand for that cash and increase their lending in other money markets. The committee cut that rate and another borrowing rate by 0.3 percentage point, larger than the 0.25 percentage-point reduction in the fed-funds target.
Trump Says Fed Should Cut Rates to ‘Zero, or Less,’ Attacks Jerome Powell Again
Some economists warn president’s push might send up long-term Treasury yields, making it harder to achieve goal of locking in low rates
By
Kate Davidson and
Catherine Lucey
WASHINGTON—President Trump renewed his call for lower interest rates and his criticism of the Federal Reserve on Wednesday, by pressing for the central bank to cut short-term rates to “ZERO, or less,” negative rates that the U.S. avoided even after the 2008 financial crisis.
For weeks, Mr. Trump has pushed for lower rates to help cushion the economy against fears of a broader global slowdown. On Wednesday, he introduced a different argument for rate cuts by saying it would allow the U.S. to lock in lower interest rates for a longer period of time.
“We should then start to refinance our debt,” he wrote on Twitter, arguing it would reduce interest costs “while at the same time substantially lengthening the term.”
But some economists, including one of Mr. Trump’s former advisers, warned that his push for lower short-term interest rates might make it harder to achieve the stated goal of locking in lower rates, because it could send up long-term Treasury yields.
The tweets marked the latest escalation of Mr. Trump’s pressure on the Fed and attacks on Chairman Jerome Powell, whom the president picked for the post in 2017. Mr. Trump said the U.S. should always be paying the lowest rate and complained that the “naivete” of Mr. Powell and the Fed means that this was a “once in a lifetime opportunity that we are missing because of ‘Boneheads.’ ”
A Fed spokeswoman declined to comment on the tweets. Mr. Powell has previously defended the Fed’s tradition of independence from political pressure.
Donald J. Trump
✔@realDonaldTrump
·
The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet…..
Donald J. Trump
✔@realDonaldTrump
….The USA should always be paying the the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads.”
After cutting their benchmark interest rate in July by a quarter percentage point, Fed officials are gearing up to cut rates again, likely by another quarter point, at their Sept. 17-18 policy meeting.
Mr. Powell framed the July decision to lower the Fed’s benchmark short-term rate to a range between 2% and 2.25% as a “mid-cycle adjustment.” The global growth and trade outlook has deteriorated since then amid an escalation in Mr. Trump’s trade war with China.
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Economists warn that pushing short-term interest rates to near zero could signal that Fed officials expect a much deeper economic downturn.
“That could have the unintended consequence of triggering a major drop in confidence in the economy that could precipitate a recession, which would have the opposite effect,” said Diane Swonk, chief economist at Grant Thornton.
Lowering rates all the way to zero now, when the economy is still on solid footing, could also leave the Fed without any ammunition if an actual recession hits, Ms. Swonk said.
Some economists were also skeptical that pushing interest rates to zero would actually lead to lower interest costs on government debt.
Mr. Trump has previously floated the idea of refinancing the U.S.’s nearly $17 trillion in publicly held debt, which has jumped in the wake of Republican tax cuts and bipartisan budget deals that boosted federal deficits.
“I would like to see the rates be low and pay amortization, pay off debt,” Mr. Trump said in an October 2018 interview with The Wall Street Journal, complaining that the Fed had made this difficult by raising rates several times in recent years.
Debt-servicing costs are one of the fastest growing drivers of federal spending: Interest payments have increased nearly 10% so far this fiscal year, totaling $497.2 billion through July, roughly $1.6 billion a day, according to the Treasury Department.
It isn’t exactly clear what Mr. Trump envisions. Sovereign debt is different from mortgage debt, and can’t be renegotiated to reduce monthly payments or pay debt off early. But the Treasury can replace maturing government securities with new, long-term debt at lower interest rates, which could bring down costs.
“The Treasury should start issuing debt in much longer terms,” said Stephen Moore, an economic adviser to Mr. Trump’s 2016 campaign who at one point was under consideration for a slot on the Fed board, in a Wall Street Journal op-ed last month. “This would lock in today’s low interest rates on the national debt for 10, 20, 30 years or perhaps even longer.”
Ernie Tedeschi, an economist at Evercore ISI, said such an idea makes sense, but it is something that the Treasury is already doing. The average length to maturity of publicly held federal debt has risen to 66 months, from 46 months at the height of the 2008 financial crisis.
The Treasury has also asked an advisory group to reconsider the potential benefits of issuing ultra-long bonds, as other countries have done.
Lowering the Fed’s benchmark federal-funds rate to zero wouldn’t automatically translate to lower interest rates on government debt, which is determined by bond markets, Mr. Tedeschi said. While short-term interest costs would likely fall, “it could be that the 10-year [Treasury note] goes up because markets are more confident in the Fed management of the economy,” he said, a shift that would lead to higher interest costs.
Paul Winfree, the director of the Heritage Foundation’s Roe Institute for Economic Policy Studies and a former budget adviser to Mr. Trump, said the president’s argument is “economically inaccurate.”
“Treasury has to offer interest rates that will attract buyers,” he said. “If all of a sudden we decide to roll over all of our debt, well, that will surely influence the interest rate on the debt. Like if all of a sudden every household in America decided to refinance.”
Mr. Trump said last month that the Fed should cut its benchmark interest rate by at least a full percentage point and resume its crisis-era program of buying bonds to lower long-term borrowing costs. Such moves would typically be considered only when the economy faces a substantial downturn.
Wednesday’s comments are the first time Mr. Trump has called for rates below zero. In response to a reporter’s question several weeks ago, Mr. Trump said he didn’t want negative rates.
Yields in some countries, including Germany, France and the Netherlands, have fallen below zero already. On Tuesday, JPMorgan Chase & Co. Chief Executive James Dimon said the bank has begun discussing what fees and charges it could introduce if interest rates go to zero or lower. Even during the last recession, the Fed didn’t employ negative rates.
Mr. Trump and White House officials have said they don’t believe the U.S. is headed toward a slowdown, but also have floated other ideas, such as tax cuts, to boost the economy.
A rate cut of the magnitude Mr. Trump is calling for hasn’t happened since the global financial crisis in late 2008.
In comments last week, Mr. Powell said the U.S. economy faced a favorable outlook despite significant risks from weaker global growth and trade uncertainty.
Borrowing rates skyrocketed on Tuesday in a corner of the markets the public rarely notices but that is critical to the functioning of the global financial system.
The spike in overnight borrowing rates forced the New York Federal Reserve to come to the rescue with a special operation aimed at easing stress in financial markets.
It was the NY Fed’s first such rescue operation in a decade, the last occurring in late 2008.
“It’s unprecedented, at least in the post-crisis era,” said Mark Cabana, rates strategist at Bank of America Merrill Lynch.
On Tuesday morning, the NY Fed launched what’s called an “overnight repo operation,” during which the central bank attempts to ease pressure in markets by purchasing Treasuries and other securities. The goal is to pump money into the system to keep borrowing costs from creeping above the Fed’s target range.
The first attempt by the NY Fed was canceled because of “technical difficulties.” Minutes later, the NY Fed successfully injected $53 billion into the system.
The episode demonstrates evidence of emerging strains in financial markets and raises concern that the Federal Reserve could be losing its grip on short-term rates.
“The funding markets are clearly stressed,” said Guy LeBas, managing director of fixed income strategy at Janney Capital Markets. “It’s going to require Fed action.”
The NY Fed announced plans late Tuesday to hold another repurchase agreement operation on Wednesday that would aim to repurchase up to an additional $75 billion.
Rates spike
The rate on overnight repurchase agreements hit 5% on Monday, according to Refinitiv data. That’s up from 2.29% late last week and well above the target range set in July by the Federal Reserve, which is 2% to 2.25%. The surge continued Tuesday, with the overnight rate hitting a high of 10% before the NY Fed stepped in.
Although it doesn’t get as much attention as the Dow or the 10-year Treasury rate, this overnight market plays a central role in modern finance. It allows banks to quickly and cheaply borrow money, for short periods of time, often to buy bonds like Treasuries. This market broke down during the 2008 financial crisis.
However, analysts drew a distinction between the current period of stress and what happened during the crisis. Back then, investors were deeply worried about the financial health of banks. Today, banks are hauling in record profits and balance sheets look sturdy.
It’s unclear what exactly is causing the stress in the overnight market, or how long it will last.
“No one knows why this is happening,” Jim Bianco CEO of Bianco Research, said on Twitter. “If it persists more than another day or two, it will be a problem.”
$1 trillion deficits and paying Uncle Sam
There are some theories.
Cabana, the Bank of America analyst, blamed the spike in overnight lending rates on the Fed badly underestimating the amount of cash needed to keep the financial system operating smoothly.
“The Fed just made a policy mistake,” Cabana said. “There is not enough cash in the banking system for the banks to meet all of their liquidity and regulatory needs. I’m not that worried, because the Fed will fix it.”
The catalyst for the stress, according to Cabana, was the fact that US companies withdrew vast sums of money from banks to make quarterly tax payments to the US Treasury Department. That forced banks to draw down their reserves at the Fed.
The rate spike may also be a symptom of the sharp increase in Treasury bonds being issued to fund the federal government. The federal deficit has spiked to $1 trillion this fiscal year because of the tax cuts and surge in government spending.
Banks typically buy Treasuries by borrowing in the overnight market. The jump in Treasury issuance caused a large increase in demand for short-term financing.
“The fundamental issue is there are just too many darn Treasuries out there,” Cabana said. “Both parties are to blame. The $1 trillion deficit will keep this an issue.”
The return of QE?
No matter the cause, more Fed action may be needed, including additional temporary NY Fed operations.
“They may have to do the same thing tomorrow morning,” said LeBas.
The Fed may also need to lower the interest it pays on excess bank reserves, or IOER. Bank of America Merrill Lynch predicted the Fed will cut this rate slightly on Wednesday.
“That’s like a Band-Aid,” Cabana said.
As a longer-term solution, Barclays and Bank of America expect the Fed to begin expanding its balance sheet again by purchasing Treasuries. The Fed’s bond buying program, known as quantitative easing, or QE, was launched during the financial crisis to keep borrowing costs extremely low. As the economy healed, the Fed reversed course and started to shrink its balance sheet.
Cabana doesn’t think the Fed will call this QE, though he said it will work the same way. The central bank will grow its balance sheet by purchasing Treasuries.
“The Fed won’t admit this,” Cabana said, “but it looks and smells an awful lot like the monetary authority is financing the fiscal authority.”
John Bolton, President Donald Trump’s fired national security adviser, harshly criticized Trump’s foreign policy on Wednesday at a private lunch, saying inviting the Taliban to Camp David sent a “terrible signal” and that it was “disrespectful” to the victims of 9/11 because the Taliban had harbored al Qaeda.
Bolton also said that any negotiations with North Korea and Iran were “doomed to failure,” according to two attendees.
All the North Koreans and Iranians want to do is negotiate for relief from sanctions to support their economies, said Bolton, who was speaking before guests invited by the Gatestone Institute, a conservative think tank.
“He ripped Trump, without using his name, several times,” said one attendee. Bolton didn’t immediately respond to a request for comment.
Bolton also said more than once that Trump’s failure to respond to the Iranian attack on an American drone earlier this summer set the stage for the Islamic Republic’s aggression in recent months.
At one point, Bolton, a previous chairman of Gatestone, suggested that had the U.S. retaliated for the drone shootdown, Iran might not have damaged the Saudi oil fields.
Bolton called the alleged attack on Saudi Arabia, which U.S. and Saudi officials have blamed on Iran, “an act of war” by anyone’s definition.
The former national security adviser’s comments come on the same day Trump named his successor, hostage negotiator Robert C. O’Brien.
Speaking on an airport tarmac in Los Angeles, Trump introduced his new top foreign policy aide as “highly respected” and hailed their “good chemistry.” The remarks indicated that in O’Brien, Trump sees a more compatible adviser than Bolton, whose disagreements with the president and clashes with other senior officials often spilled into public view.
After the attack in June, Trump was poised to launch a military response against the Iranians — strongly urged by Bolton — but pulled back after Fox News host Tucker Carlson and others warned him that it was a bad idea.
During Wednesday’s luncheon, Bolton said the planned response had gone through the full process and everybody in the White House had agreed on the retaliatory strike.
But “a high authority, at the very last minute,” without telling anyone, decided not to do it, Bolton complained.
Bolton spoke to around 60 Gatestone donors at the exclusive restaurant Le Bernardin in Manhattan. Attendees included noted lawyer Alan Dershowitz and his wife Carolyn, former attorney general Michael Mukasey, Newsmax CEO Chris Ruddy, First Amendment lawyer Floyd Abrams, former Fox News host John Stossel, former New York Lt. Gov. Betsy McCaughey and New York billionaire John Catsimadis.
Billionaire Rebekah Mercer introduced Bolton as “the best national security adviser our country could have hoped for,” garnering her very loud applause. Bolton had been scheduled to speak to the group before Trump fired him.
In his talk and the Q&A session that followed, Bolton took attendees through a number of global issues.
On Afghanistan, another frequent subject of disagreement with the president, Bolton said that the U.S. should not have pursued a peace deal with the Taliban.
Instead, he said, the U.S. should keep 8,600 troops in Afghanistan with intelligence support and other support elements. He called the proposed deal that was on the table similar to the agreement the Taliban offered the U.S. after 9/11, but said “it doesn’t make any sense.”
More than once, Bolton said, Israel would “sooner or later” see a new government, even though he personally liked Israeli Prime Minister Benjamin Netanyahu.
On Venezuela, a focus of his short White House tenure, Bolton claimed there were 20,000 to 25,000 Cuban troops in the South American country. The day they left, he predicted, the Nicholas Maduro regime would fall by midnight.
He also said that if British Labour leader Jeremy Corbyn were to become prime minister, it would be “fatal to the special relationship” between the U.S. and Britain.
During the Q&A session, Dershowitz told the crowd that it was “a national disaster” that Bolton had been booted from the White House, to what the attendee described as “thunderous applause.”
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Live: Trump tours border wall site in San Diego, California
Representative Adam Schiff, the chairman of the House Permanent Select Committee on Intelligence, has hired a veteran prosecutor with experience fighting Russian organized crime to lead his investigation of the Trump Administration. Last month, according to a committee source, Daniel Goldman, who served as an Assistant United States Attorney in the Southern District of New York from 2007 to 2017, joined the committee’s staff as a senior adviser and the director of investigations.
The hiring of Goldman, who will be joined by two other former federal prosecutors on Schiff’s staff, underlines Schiff’s decision to conduct an aggressive investigation of the Trump campaign’s ties to Russia during the 2016 Presidential campaign. In the rough division of labor among the various committees in the House of Representatives, Schiff’s panel is tackling the most provocative and, so far, most elusive subject related to the President: whether so-called collusion occurred between the Trump campaign and Moscow. In public comments, Schiff has suggested that Trump’s interest as a private citizen in building a tower in Moscow led him to curry favor with Vladimir Putin, the Russian President. American intelligence agencies long ago concluded that the Russian government made significant efforts, through the hacking of e-mails and use of social media, to help elect Trump over Hillary Clinton. The question of whether the Trump campaign facilitated, assisted, or knew about these efforts has been at the heart of the investigation by the special counsel, Robert Mueller—and will also be central to Schiff’s inquiry.
Goldman seems well suited to lead this effort. As deputy chief of the organized-crime section of the Manhattan U.S. Attorney’s office, Goldman supervised the prosecution of more than thirty defendants accused of racketeering, gambling, and money laundering. During his decade in the office, Goldman convicted individuals associated with Russian organized crime of securities fraud and health-care fraud, and convicted leading figures in the Genovese crime family of racketeering and murder.
One of Schiff’s previous committee hires drew a critical comment from the President. Last month, Schiff hired Abigail C. Grace, who served as an Asia-policy staffer on the National Security Council during the early part of the Trump Administration. In response, President Trump tweeted that the Democrats were going “nuts” and that Schiff was “stealing people who work at the White House.” In response, Schiff pointed out that congressional committees often employ individuals with experience in the executive branch.
The conflict between Trump and Schiff dates back to well before the Democrat took over as the chair of the Intelligence Committee, after the midterm elections. In a tweet, Trump once rendered Schiff’s name as “Schitt,” and, in his recent speech at the Conservative Political Action Conference, the President bestowed the congressman with the nickname Shifty Schiff.
Goldman’s hiring comes amid a flurry of investigative activity by Democrats on Capitol Hill. Schiff and Representative Maxine Waters, the chair of the House Financial Services Committee, have agreed to coördinate an investigation of Trump’s long-standing ties to Deutsche Bank, which has paid multimillion-dollar penalties for facilitating the work of Russian money launderers. On Monday, the House Judiciary Committee, led by Representative Jerrold Nadler, revealed that it had demanded testimony and documents from eighty-one people and entities close to Trump relating to the issues of obstruction of justice and abuse of power. And, of course, Michael Cohen, Trump’s former personal attorney, gave damning testimony to the House Committee on Oversight and Reform last week. All of these investigations appear to be much closer to the beginnings of their efforts than their ends.
A CNN focus group comprised of Democratic voters has rejected former Vice President Joe Biden as their presidential nominee.
The focus group’s dismissal of Biden is notable since the former vice president, who is expected to join the Democratic primary soon, has been leading a number of public opinion polls and is seen as the potential front-runner.
The Democrats gathered by CNN, however, said they weren’t interested in Biden. Some said they wanted a candidate who was further to the left.
“I think we need a bold, strong leadership, and you’ll find that in the progressives,” Democratic voter Carol Evans said.
“We had the standard-bearer for the kind of pragmatic centrist candidate in Hillary Clinton in 2016 and Donald Trump is now president. He is not your average political candidate, so we really need to try to think outside the box because, you know, it seems like the dude is made of rubber. Anything you throw at him just bounces off, there’s nothing that sticks,” said focus group member Michael Milisits.
The focus group was moderated by “New Day” co-anchor Alisyn Camerota at CNN’s New York City bureau.
When she asked if any of the focus group members would like Biden to enter the race, none of the six people raised their hands.
“His time is done,” Evans said.
“I will be honest. He was riding the Obama wave and I thought he was a person that would unite the party, but to be honest, Sen. Biden really comes from kind of the good old boy politics of the past,” Democrat Russel Banks said.
“I don’t think Joe Biden represents that new thing that we need. We need a new economy, we need new politics and we need someone different,” Democrat Owen Evans added.
Biden currently leads most early polls over the other 13 declared candidates in the field, with political pollsters citing name recognition as the primary reason due to his long tenure in the Senate and eight years as President Obama’s vice president.
CNN has made the 2020 campaign one of its top priorities and has already featured several candidates in prime-time town hall events, including Sens. Kamala Harris (D-Calif.), Amy Klobuchar (D-Minn.) and Sanders, as well as former Starbucks CEO Howard Schultz, who is considering an independent run for president.
The network is set to host a town hall this Sunday night with three more Democratic presidential hopefuls — former Rep. John Delaney (Md.), Rep. Tulsi Gabbard (Hawaii) and South Bend, Ind., Mayor Pete Buttigieg — at the South by Southwest conference in Texas.
The event will be moderated by “The Lead” host Jake Tapper and CNN chief political correspondent Dana Bash in Austin, Texas.
Michelle Obama talks 2020 Trump challengers, gives update on Malia and Sasha
Jayme Deerwester, USA TODAYPublished 8:41 a.m. ET Nov. 13, 2018 | Updated 3:00 p.m. ET Nov. 13, 2018
On Tuesday, former first lady Michelle Obama officially became a published author with the release of her memoir “Becoming.”But one thing she has no interest in becoming is a presidential candidate.
Roberts acknowledged that the Princeton and Harvard Law grad has no interest in “returning to public service like that,” but she did want to know whether Obama thinks Hillary Clinton should run again and if not, who she believes is capable of challenging the Trump.
“I think, at this point, everybody’s qualified and everyone should run,” the former first lady said to peals of laughter. “I might even tap (her younger daughter) Sasha!”
Good Morning America
✔@GMA
.@MichelleObama on whether Hillary Clinton should run for president in 2020: “I think at this point everybody is qualified and everybody should run. I might even tap Sasha!” http://gma.abc/2Tc7FMi
Turning a bit more serious, Obama explained, “Where I’m at right now is that we should see anybody who feels the passion to get in this race, we need them in there. I think the process will play itself out. I haven’t really been paying attention and looking at the candidates. I think there’s just a lot of noise and talk, but it’s still pretty early. Let’s see who wants to roll up their sleeves and get in the race. That’s what the primary process is for.”
Obama’s bottom line? “I think this (Democratic nomination) is open to any and everybody who has the courage to step up and serve.”
She also provided an update on daughters Malia, a sophomore at Harvard, and Sasha, who will graduate from high school this spring.
“They are thriving,” Obama told Roberts. “I am so proud of those little girls. They have managed the situation with poise and grace. They are normal, kind, smart, friendly and open. Gosh, and it could have gone so wrong.”
Good Morning America
✔@GMA
.@MichelleObama on Sasha and Malia: “They had support from a lot of the other first kids – Jenna and Barbara and Chelsea. I love those girls. I will love them forever for what kind of support they provided to my daughters. They always had their back.” https://gma.abc/2PShoZC
She extended her enduring gratitude to former first daughters Jenna and Barbara Bush and Chelsea Clinton for having her daughters’ backs throughout their time in the White House.
“I love those girls,” Obama gushed. “I will love them forever for the kind of support they provided to my daughters … If someone went after them in the press, Jenna would get in there and say something and Chelsea would send a tweet out. That made a big, big difference.”
Sitting next to her older brother, New York Knicks executive Craig Robinson, Obama also dished on her mom Marian, who lived with the family in the White House but is still very much a Chicagoan at heart.
“My mom is a South Side mother,” she said, noting she is still a bit stuck in her ways. “It was like, ‘Mom, you want to go to China with us?’ She’d be like, ‘Why do I want to go to China?’ Then she’d go to China and be like, ‘China’s great!’ But you have to push. These black mothers on the South Side, you gotta push ’em to try some new stuff!”
PUBLISHED: 14:36 EST, 5 March 2019 | UPDATED: 14:56 EST, 5 March 2019
Rep. Alexanadria Ocasio-Cortez is denying any violation in campaign finance law after a conservative watchdog group filed a complaint charging that her top aide funneled $1 million in contributions from a PAC he controlled to his own companies.
‘There is no violation,’ the first-term lawmaker told Fox News as she arrived in Washington, D.C. for a day when votes in the House are scheduled.
She also denied that the Federal Election complaint, filed against her and her chief of staff, connected her to ‘dark money’ in her campaign. ‘No, no,’ she responded.
Ocasio-Cortez responded after the National Legal and Policy Center’s Government Integrity Project filed an FEC complaint saying her top aide shifted the funds in what it argued could have been a bid to avoid disclosure.
The aide, chief of staff Saikat Chakrabarti, set up the Brand New Congress PAC as a way to collect contributions to boost new members of Congress.
Rep. Alexanadria Ocasio-Cortez’s chief of staff Saikat Chakrabarti set up the Brand New Congress PAC as a way to collect contributions to boost new members of Congress
PACs face disclosure requirements beyond what a company would be required to reveal about how funds get spent.
Chakrabarti tweeted about the unusual arrangement in response to media reports Monday. ‘We were doing something totally new, which meant a new setup. So, we were transparent about it from the start,’ he said.
Conservative watchdog group National Legal and Policy Center, which previously had researchers investigating longtime New York Rep. Charles Rangel – a senior lawmaker like the one Ocasio-Cortez knocked off in a primary in her Queens district – named both Ocasio-Cortez and her top aide in the complaint.
+4
A watchdog group claims in a new Federal Elections Commission complaint that the top aide to AOC funneled $1 million in contributions from a PAC he controlled to his own companies
Chakrabarti’s campaigns raised $3.3 million and diverted more than $1 million to his companies, the Washington Examiner reported.
He helped found both Brand New Congress PAC and Justice Democrats, with the goal of bringing new and progressive members like Ocasio-Cortez, a self-described Democratic socialist, to Congress.
After starting Brand New Congress, he formed a Delaware-based LLC, Brand New Campaign LLC. Shifting the funds avoided detailed disclosure requirements of itemized expenses.
‘None of that makes any sense,’ former FEC lawyer Adav Noti of the Campaign Legal Center told the publication. ‘I can’t even begin to disentangle that. They’re either confused or they’re trying to conceal something.’
Chakrabarti’s campaigns raised $3.3 million and diverted more than $1 million to his companies, the Washington Examiner reported
Brand New Congress congratulated AOC after she was elected to in November 2018
Ocasio-Cortez responded to the Washington Times Monday saying: ‘He’s not on my payroll. They were not working for me and they are two separate entities here.’ She added: ‘This is the difference between an LLC and a PAC.’
Ocasio-Cortez’s campaign also paid the LLC for ‘strategic consulting.’
Justice Democrats responded to questions about the arrangement in a May 2018 post titled: ‘When I look at the FEC report for Justice Democrats in 2017, why are there so many expenditures to ‘Brand New Congress’?
The statement says organizers, including Chakrabarti, concluded ‘this PAC would be necessary to do the work of policy development and candidate recruiting. So we created Brand New Congress as a PAC. But actually running the campaigns — meaning doing direct work for campaigns — is not something a PAC can do for a candidate for free.’
For that reason, they set up an LLC that served as the vehicle to pay staff and bill campaigns for services. The goal was ‘to essentially run the full campaigns’ and act as a vendor.
Chakrabarti, 33, is a Harvard-educated tech millionaire.
The complaint argues that the arrangement was illegal and skirted a $5,000 PAC contribution requirement.
Alexandria Ocasio-Cortez’s chief of staff is accused of ‘skirting campaign finance laws’ by running PAC that provided $41,108 in services to her election
Report on Saturday in the New York Post questioned AOC’s chief of staff
Saikat Chakrabarti, 33, ran PAC Justice Democrats prior to joining her staff
Campaign paid PAC $41,108.59 for services and consulting in 2017 and 2018
But PACs are different from vendors and can only give $5,000 per campaign
PUBLISHED: 19:18 EST, 3 March 2019 | UPDATED: 20:20 EST, 3 March 2019
Watchdog groups have questioned whether congresswoman Alexandria Ocasio-Cortez’s chief of staff skirted campaign finance laws.
Saikat Chakrabarti, 33, founded and ran the Tennessee-based PAC Justice Democrats, which spearheaded Ocasio-Cortez’s run, prior to joining the freshman New York Democrat’s Congressional staff.
According to Federal Election Commission filings, Ocasio-Cortez’s campaign paid Justice Democrats a total of $41,108.59 for ‘campaign services’ and ‘strategic consulting’ in 2017 and 2018.
Now a report in the New York Post questions whether a PAC can also be a vendor, and points out that PACs can only give $5,000 in services to a campaign.
Alexandria Ocasio-Cortez’s chief of staff Saikat Chakrabarti (with her above) founded and ran the Tennessee-based PAC Justice Democrats, which her campaign paid $41,108.59
Ocasio-Cortez spokesman Corbin Trent told Post that both the campaign and the PAC followed FEC rules and that they sought advice from an elections lawyer.
‘It was payment for services,’ Trent said of the campaign’s payments to Justice Democrats.
Some watchdogs are questioning the legality of the arrangement, however.
‘They believe their cause is so great that they don’t have to play by the rules,’ Tom Anderson, who heads up the Government Integrity Project at the National Legal and Policy Center in Virginia, a conservative watchdog group, told the Post.
‘They believe that they are above campaign finance law,’ he added.
Another PAC that Chakrabarti founded to support leftist candidates, Brand New Congress, has already come under scrutiny for paying Ocasio-Cortez’s boyfriend Riley Roberts in an alleged cash-funneling scheme.
In the fall of 2017, Ocasio-Cortez’s campaign paid $6,191.32 to Brand New Congress, which turned around and hired Roberts as a marketing consultant, making two payments to him totaling $6,000 in August and September of 2017.
Lawyers for the Coolidge Reagan Foundation asked the FEC to review the matter on Wednesday.
Cortez’s team paid Brand New Congress LLC $6,191.32 in 2017 around the same time the group paid a total of $6,000 to her boyfriend, Riley Roberts (pictured), for marketing consulting
Chakrabarti founded a Silicon Valley app-building company called Some Character LLC before taking an active role in left-wing politics.
He previously directed social-media for Democratic Senator Bernie Sanders’ 2016 presidential campaign.
Last June, Chakrabarti purchased a $1.6 million home in Montgomery County, Maryland, according to real estate records.
Ocasio-Cortez has imposed a salary cap of $80,000 on her staff however, meaning that Chakrabarti will be paid far less than that the $145,000 average that congressional chiefs of staff make.
The congresswoman says that the salary cap ensures that her junior staffers can make a ‘living wage’ of at least $52,000.
However, questions have been raised about whether the salary cap is a means to skirt reporting requirements, which mandate that Capitol Hill staff making more than $126,00 report their assets and other income.
New York Democratic Rep. Alexandria Ocasio-Cortez denied violating campaign finance laws Tuesday in response to a Federal Election Commission (FEC) complaint alleging she and her chief of staff set up a million-dollar private slush fund.
“There is no violation,” Ocasio-Cortez told Fox News.
The National Legal and Policy Center (NLPC), a conservative government watchdog, accused Ocasio-Cortez and Saikat Chakrabarti, her chief of staff, of illegally funneling money between political action committees (PACs) and private companies that were both controlled by Chakrabarti.
The NLPC claims that the transfers from the PACs to the LLCs were part of an “extensive” plan to avoid reporting campaign expenditures to the FEC.
Fox also asked Ocasio-Cortez if she is connected to “dark money,” to which she replied, “No, no.”
U.S. Rep. Alexandria Ocasio-Cortez (D-NY) speaks during a news conference at the East Front of the U.S. Capitol February 7, 2019 in Washington, DC … (Photo by Alex Wong/Getty Images)
Ocasio-Cortez and Chakrabarti obtained majority control over the Justice Democrats PAC in December 2017, despite the fact that the PAC was credited with being the central force behind Ocasio-Cortez’s primary victory against incumbent Rep. Joe Crowley.
Ocasio-Cortez never disclosed her control over the PAC while it was supporting her primary campaign, an arrangement that could open the Democrat up to massive campaign finance violations. The pair could face prison time if it is found that they intentionally withheld the ties between the campaign and the PAC from the FEC.
“If the facts as alleged are true, and a candidate had control over a PAC that was working to get that candidate elected, then that candidate is potentially in very big trouble and may have engaged in multiple violations of federal campaign finance law, including receiving excessive contributions,” former Republican FEC commissioner Hans von Spakovsky told The Daily Caller News Foundation.
Story 1: President Trump Will Meet With North Korea Dictator Kim Jong Un in May — Kim Agrees To Denuclearize and Stop Testing Meeting United States Conditions — Show Us With Concrete Actions — Videos —
Trump agrees to meet Kim Jong Un by May, South Korea says
China SECRETLY ‘wary’ Donald Trump could ‘cut them out’ of North Korea deal in Kim talks
Trump accepting North Korea invitation is step in right direction: Gen. Keane
Analyzing South Korea’s “major announcement” about North Korea
How Can President Donald Trump Prepare For A Meeting With Kim Jong Un? | MSNBC
Shields and Parker on Trump’s possible North Korea meeting, Stormy Daniels’ lawsuit
Trump-Kim meeting: is this really a moment?
BREAKING: President Trump Accepts Kim Jong Un Invitation to Meet on May
Why does North Korea want to meet with Trump?
Secretary Rex Tillerson Explains How North Korean ‘Talks’ Differ From ‘Negotiations’ | NBC News
Why North Korea wants to meet with President Trump
North Korea’s broken promises with the US: A timeline
Trump surprised his staff with Kim Jong Un meeting
White House: No Meeting With North Korea Until We See ‘Concrete Actions’ | NBC News
Sarah Sanders GRILLED on Details of President Trump – Kim Jong Un Meeting
North Korea hasn’t figured Trump out: Gordon Chang
World leaders praising Trump for UN speech
Talking to North Korea is a waste of time: John Bolton
Amb. Bolton: We’re down to two options with North Korea
No more chit-chat with North Korea: Amb. Bolton
UN unaccustomed to aggression in Trump’s speech: Stuart Holliday
Why Trump’s UN speech was so impactful
Trump U.N. speech was vintage Trump: Nigel Farage
US hasn’t had a serious, qualified president in 25 years: Lt. Col. Ralph Peters
‘Grossly irresponsible’ for Trump not to warn North Korea: Oliver North
Washington in shock after Trump ACCEPTS stunning invitation to meet North Korean despot by May after rogue nation agrees to suspend nuclear and missile tests
Trump accept Kim Jong-un’s invitation to meet in May says a South Korea official
White House confirmed that talks would take place but did not specify time
Neither South Korea’s Chung nor the White House said where a meeting would take place
Trump tweeted after announcement that ‘great progress being made’
Kim has promised to freeze nuclear and ballistic missile tests until after talk
U.S. Senator Lindsey Graham warned Kim on Thursday that ‘it will be the end’ of him if he tried to take advantage of Trump
Announcement welcomed by leaders in Russia, China, UK and Australia
South Korea‘s national security adviser Chung Eui-yong first announced the face-to-face and claimed it was due to take place by May.
However, a statement from the White House did not confirm the two-month timeframe and said the place and time of the meeting was still being worked out.
Governments around the world welcomed the announcement, with praise coming from the UK, Russia and Australia.
South Korea’s national security adviser Chung Eui-yong (C-L) meeting US President Donald J. Trump (C) at the White House in Washington, DC, USA, 08 March 2018
South Korea’s national security adviser Chung Eui-yong (L) meeting US President Donald J. Trump (R) at the White House in Washington, DC, USA
‘President Trump greatly appreciates the nice words of the South Korean delegation and President Moon. He will accept the invitation to meet with Kim Jong Un at a place and time to be determined,’ White House Press Secretary Sarah Sanders said in a statement a half hour after South Korea’s announcement.
‘We look forward to the denuclearization of North Korea. In the meantime, all sanctions and maximum pressure must remain.’
Chung, who made the announcement on behalf of South Korea, led the delegation visiting North Korea earlier this week. The invitation to meet Trump was made to him directly by Kim.
The foreign official said that Kim understands and accepts the fact that joint U.S.-South Korean military exercises will continue and that he also made promises to halt nuclear and ballistic tests until the meeting with Trump takes place.
President Donald Trump has accepted North Korean dictator Kim Jong-un’s dramatic offer to meet, and he’ll do it by May, a South Korean official said Thursday evening
Trump popped into the White House press briefing room on Thursday evening and told a small contingent of reporters who just happened to be present that an announcement was coming this evening
A U.S. official later said the meeting would take place in ‘a matter of a couple of months’ but did not commit the president to a face-to-face with Kim this spring.
‘He conveyed that he wants to meet with President Trump as quickly as possible,’ the senior official stated.
The official said the stiff punishing actions on North Korea would also stay in place.
‘At this point we’re not even talking about negotiations,’ the U.S. official said of a plan to hold North Korea to its word that it would freeze its illicit nuclear and ballistic missile development programs.
President Trump reiterated the point in a tweet that followed.
‘Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!’ the U.S. president said.
South Korea’s national security adviser Chung Eui-yong told U.S. press that the goal of the face-to-face talk is to achieve permanent denuclearization on the Korean Peninsula
The planned meeting drew immediate praise from other nations.
A spokesperson for the British government said, ‘The UK welcomes the South Korean announcement that Kim Jong Un has made a renewed commitment to denuclearise and will refrain from further nuclear missile tests while dialogue continues.
‘We welcome the announcement of direct talks with President Trump by May and (South Korean) President Moon Jae-in in April.
‘We have always been clear that we want Kim Jong Un to change path and put the welfare of his people ahead of the illegal pursuit of nuclear weapons.
‘We will continue to work closely with the US, South Korea and the international community to ensure that pressure on North Korea continues and sanctions are strictly enforced until Kim Jong Un matches his words with concrete actions. We will continue to monitor developments closely.’
Russian Foreign Minister Sergey Lavrov also welcomed the news, saying that Russia considers the move ‘a step in the right direction.’
He went on to express hope that an agreement would be implemented because it is ‘necessary for normalizing the situation around the Korean peninsula.’
Australia’s former prime minister expressed surprise at how ‘surprisingly good’ Trump has been at foreign policy compared to his predecessors.
Paul John Keating said the United States was directionless under the previous three administrations and Barack Obama blew an opportunity to reshape the world.
On Friday Keating said he had not expected Trump to have ‘such a pragmatic’ foreign policy on China and Russia, and he urged the U.S. president to continue down the path he was on.
Meanwhile, the foreign ministry in China – North Korea’s key ally – said it hopes all parties to the will ‘show their political courage’ in restarting negotiations, and pledged its support in working toward that goal.
Spokesman Geng Shuang on Friday said China welcomes and supports the ‘positive inter-Korean and U.S.-North Korea interactions.’
Geng told reporters at a regularly scheduled press briefing that China hope that all parties ‘will continue to strive for the political resolution and lasting peace and stability on the peninsula.’
Moving on: President Trump, pictured on Thursday, later tweeted about his decision
Stiff punishing actions on North Korea will continue, despite the overture, the U.S. stressed
News that Trump had agreed to meet the North Korean leader Kim Jong Un sent Asian stock markets surging and the yen tumbling.
It provided a springboard for Asian markets, with Seoul jumping 1.1 percent and Tokyo ending 0.5 percent higher.
Hong Kong added more than one percent, Sydney and Singapore each rose 0.3 percent, and Shanghai jumped 0.6 percent. Taipei, Manila, Wellington and Mumbai were also higher.
Hopes that the two men could reach some sort of agreement also led to a plunge in the yen, which is considered a go-to safe currency in times of volatility and uncertainty. The dollar jumped to its highest level in a week.
‘It’s a big deal – there’s no question this is a positive move,’ Ian Bremmer, president of Eurasia Group, a political-risk research and consulting firm in New York, told Bloomberg TV.
‘But also there is the possibility that it could go badly, that Trump could be embarrassed that they make an agreement that Kim Jong-un could backslide on.’
Bruce Klingner, former head of the CIA division for the Koreas, also warned Trump to beware of Kim’s siren song.
‘Washington has fretted that Seoul’s acquiescence to North Korea’s Olympic charm offensive conveyed legitimacy to the regime and risked undermining international resolve to maintain pressure. The U.S. counseled its ally to exercise caution and move forward cautiously and only after lengthy preparations,’ said Klingner, a research fellow now at the Trump-aligned Heritage Foundation.
‘The Trump administration should take its own advice before it is seduced by the same sirens’ song,’ he said in a statement.
Market effect: A South Korean dealer works in front of monitors at the KEB Hana Bank in Seoul, South Korea
Going up: The benchmark South Korea Composite Stock Price Index (KOSPI) rose 26.37 points to 2,459.45, after the announcement that the leaders of the US and North Korea will meet
The announcement on the White House lawn came hours after Secretary of State Rex Tillerson said the U.S. was ‘a long way from negotiations’ with the North.
Speaking to reporters during a visit to the African nation of Djibouti, Tillerson said the turnaround was down to the president.
‘That is a decision the president took himself. I spoke to him very early this morning about that decision and we had a very good conversation,’ Tillerson said Friday. ‘President Trump has said for some time that he was open to talks and he would willingly meet with Kim when conditions were right.
‘And I think in the president’s judgment that time has arrived now,’ the top U.S. diplomat said.
Tillerson said the United States was surprised at how ‘forward-leaning’ Kim was in his conversations with a visiting South Korean delegation. He said it was the strongest indication to date of Kim’s ‘not just willingness but really his desire for talks.’
Peace move: Kim Jong Un held face to face talks with South Korea’s delegation this week – and has passed a message to Trump offering to meet
Chung had met Kim earlier in the week in Pyongyang, the dictator’s capital. After relaying parts of his conversation to reporters in Seoul and appraising South Korean President Moon Jae-in of the situation, Chung flew to Washington.
At the White House on Thursday, Chung and other South Korean officials briefed the president and his national security adviser, H.R. McMaster, as well as Trump’s chief of staff, John Kelly, his secretary of defense, James Mattis, the director of national intelligence, Dan Coats, and Vice President Mike Pence.
WHERE WILL THE SUMMIT BE?
All that has been confirmed so far is that the meeting will take place by May.
If it happens in Pyongyang, Kim is sure to put on a spectacular show for his visitor, but for America it would run the risk of appearing that Trump is coming to pay his respects.
The Demilitarized Zone that divides the two Koreas – where Kim and South Korean President Moon Jae-in are to meet in late April – is probably the favorite at this stage, offering ease of access for both sides, a controlled environment, and facilities already in place.
It would also appeal to the two men’s sense of drama.
A more neutral location with less weight of symbolism such as Beijing or Geneva – Kim was educated in Switzerland – would mean the key players would have to plan events with another host nation.
Furthermore, it would involve a journey on both sides, and Kim has not left the North since inheriting power from his father in 2011.
Seoul would most likely be unthinkable to Pyongyang. On the other hand, no one would have predicted three months ago that Kim’s sister would visit the South Korean capital within weeks.
United Nations headquarters in New York – Trump’s home town – would mean Kim stepping on American soil, but it has a long history of hosting a rogue gallery of world leaders.
Events have moved so far, so quickly and in such unforeseen ways that no option can immediately be ruled out.
‘I explained to President Trump that his leadership and his maximum pressure policy, together with international solidarity, brought us to this juncture. I expressed President Moon Jae-in’s personal gratitude for President Trump’s leadership,’ Chung said at an outdoor briefing position that’s typically used by lawmakers and organization heads who want to speak to the press after White House meetings.
Chung says he relayed Kim’s commitment to denuclearization.
‘Kim pledged that North Korea will refrain from any further nuclear or missile tests. He understands that the routine joint military exercises between the Republic of Korea and the United States must continue. And he expressed his eagerness to meet President Trump as soon as possible,’ the South Korean official said.
‘President Trump appreciated the briefing and said he would meet Kim Jong-un by May to achieve permanent denuclearization,’ Chung said.
Trump had pre-empted Chung by saying that South Korea would making a major announcement this evening at 7pm EDT on North Korea.
The president popped into the White House press briefing room on Thursday evening at close of business and told a small contingent of reporters who just happened to be present that an announcement was coming.
The U.S. president gave no indication of what would be declared but suggested with the surprise appearance that the news would be positive.
According to CNN, an excited president turned to Jon Karl of ABC News saying, ‘Hopefully, you will give me credit.’
White House press officers scrambled to make good on Trump’s pledge, waiting until just 30 minutes before the time of the announcement to say where it would take place and that the update from would come from Chung.
South Korea’s Moon later said the planned summit will be a ‘historical milestone’ that will put the denuclearization of the Korean Peninsula ‘really on track.’
Moon in a statement read out by his spokesman on Friday also complimented Trump for accepting Kim’s invitation for a summit, saying the American president’s leadership will be praised ‘not only by the residents of South and North Korea but every peace-loving person around the world.’
Moon is also preparing for a summit with Kim at a border village between the Koreas in April.
Talks are a 180 from Trump’s complaint last fall that Tillerson, his secretary of state, was ‘wasting his time’ with diplomacy.
Tillerson had suggested that officials from the U.S. and North Korea sit down for talks without preconditions only to have the White House assert that a conversation would only take place if Kim agreed to abandon his nuclear weapons program.
Tensions began to thaw as the Winter Olympics approached. The games, held just across the border from Pyongyang in South Korea, provided an opportunity for the two Koreas to renew ties.
Earlier this week, Chung spent two days in the neighboring country that ended with a proffer to the U.S. to halt nuclear and missile testings and take up talks.
Trump said Tuesday that a ‘very good dialogue’ had opened up with North Korea as he cautiously approached Pyongyang’s proposition.
He told reporters in the Oval Office that the conversations had yielded progress, striking an optimistic tone.
‘We’re gonna see. We’re gonna see,’ he told a journalist asking about North Korea’s commitment to ending its nuclear weapons program if it no longer felt threatened. ‘They seem to be acting positively, but we’re gonna see.’
President Donald Trump cautiously approached North Korea’s offer to freeze its nuclear program while it holds a ‘candid dialogue’ with the United States on Tuesday
First, Trump sent out a tweet on Tuesday morning that said, ‘We will see what happens!’
The U.S. president said he wants to take the ‘proper’ pathway, which he suggested was diplomatic talks, ‘But we are prepared to go either way.’
‘And as I said, hopefully we’ll go in the very, very peaceful, beautiful path. We’re prepared to go whichever path is necessary,’ he added. ‘I think we’re having very good dialogue, and you’re gonna certainly find out very soon what’s happening, but we have, we have made progress, there’s no question about it.’
That morning, Trump warned Kim, ‘The U.S. is ready to go hard in either direction!’
The U.S. president said then that ‘possible progress’ toward talks had been made, but it could also be a ‘false hope.’
On Saturday evening, Trump said that the North Koreans had reached out and his administration would be meeting with Kim’s government.
‘They, by the way, called up a couple of days ago and said, ‘We would like to talk.’ And I said, ‘So would we, but you have to de-nuke, you have to de-nuke.’ So, let’s see what happens,’ the president stated. ‘But we will be meeting and we’ll see if anything positive happens.’
A National Security Council spokesman did not respond to DailyMail.com’s request for clarification, and a senior official would not tell reporters during a call on Tuesday afternoon if talks were already under way.
Then he said that talks were ‘possible’ — but they could also be a ‘false hope’ — and the ‘U.S. is ready to go hard in either direction’
Swedish Prime Minister Stefan Löfven offered Tuesday during a joint press conference with Trump at the White House to mediate talks with the North Koreans, if that is what Trump wants.
His country maintains an embassy in Pyongyang and serves at the United States’ protectorate there.
Löfven said it’s not up to Sweden to solve the dispute, however, he believes that the North Koreans trust his nation to act as arbiter.
‘If the president decides, the key actors decide, if they want us to help out,’ he said, ‘we’ll be there.’
Other potential meeting places were the Demilitarized Zone, or DMZ, between North and South Korea, in addition to Seoul, Beijing and Tokyo.
A senior U.S. official said Thursday evening that Trump had spoke to Japanese Prime Minister Shinzo Abe. The official did not say if a call to China’s Xi Jinping was also underway.
Complicating a conversation between Trump and Xi was the U.S. president’s announcement on Thursday afternoon that he was slapping a 25 percent tariff on imported steel and a 10 percent penalty on imported aluminum in an aggressive bid to prevent Chinese dumping and boost American metal workers.
Big step: Kim Jong Un,pictured meeting South Korean National Security Director Chung Eui-yong, in Pyongyang, has said he is ready to discuss de-nuclearization with the U.S.
A week ago, Trump signaled his openness to a talk with Kim — if it took place ‘under the right conditions.’
‘Otherwise, we’re not talking,’ Trump told United States governors.
He commented that Kim ‘wants to talk, as of last night’ and said ‘we want to talk also.’
Trump went on to make a familiar complaint about his predecessors, blasting former President Bill Clinton and others for failing to keep North Korea in check.
‘The Clinton administration spent billions and billions of dollars. They gave them billions. They built things for them. They went out of their way, and the day after the agreement was signed, they continued with nuclear research. It was horrible.’
Continuing, Trump said, ‘The Bush administration did nothing — both. The Obama administration wanted to do something. He told me it’s the single biggest problem that this country has. But they didn’t do anything.
‘And it would have been much easier, in those days, than it is now. I think most people understand that. But we’ve been very tough with them.’
Trump’s administration has led an international charge to cripple North Korea’s economy and bring Kim to his knees. The advance will not cease, the U.S. has said, until the rogue dictator abandons his nuclear ambitions.
At his White House news conference on Tuesday, Trump said he believes that the North Koreans are sincere in their offer to halt nuclear and missile tests if the United States sits down for talks.
‘But I think they’re sincere also because the sanctions,’ he assessed. ‘The sanctions have been very, very strong and very biting. And we don’t want that to happen. So I really believe they are sincere. I hope they’re sincere. We’re going to soon find out.’
The Pyeongchang Games provided a long-awaited opening for the kind of detente that could lead to substantive talks between North Korea and South Korea, along with the United States and its allies.
The two Koreas marched under one flag at the opening ceremony of the games, and Kim sent his sister, Kim Yo Jong, to the South to head the North’s delegation.
A South Korean envoy lead by Chung returned Tuesday to Seoul from a meeting with Kim in Pyongyang where the North Koreans are said to have offered to halt nuclear tests for the time being if the United States agrees to talks.
Televisions being sold at an Onoden Co. electronics store display a broadcast of a news report on North Korea’s Nov. 29 missile launch, showing footage captioned as the launch of the Hwasong-12 missile in September, in Tokyo, Japan
North Korea also expressed its willingness during the two-day summit to put a total moratorium on its nuclear program if the South backs off from military behavior it perceives to be a threat.
Chung said said that Kim promised not to use nuclear or conventional weapons against South Korea in the conversation where the two countries also agreed to open a hotline between their leaders ‘to ease military tension and have close coordination’ and meet for another round of talks in April.
The next summit is expected to take place in Panmunjom. It will be only the third inter-Korean set of talks ever held and the first in more than a decade.
The last time the rival countries held high-level talks was in 2007, when the North was under Kim’s father’s command. A summit in 2000 also took place while Kim Jong Il controlled the North. The elder Kim passed away in 2011, giving rise to Kim Jong-un’s reign.
Chung said Tuesday that the younger Kim, 34, said he wants to ‘write a new history of national reunification’ during a four-hour dinner this week in Pyongyang.
Angela Merkel, the German chancellor, hailed the announced talks as a ‘glimmer of hope.’
‘It would of course be wonderful if we could see an easing of tensions because… the nuclearization in North Korea has been a source of great concern for all of us,’ she said.
Former NBA star Dennis Rodman, who has traveled several times to North Korea and is one of the few Americans to have met its leader, also praised Trump for his decision to hold talks.
Rodman told The Associated Press he looks forward to returning to the pariah nation for ‘basketball diplomacy’ in the coming months.
‘Well done, President Trump. You’re on the way to a historical meeting no U.S. president has ever done,’ Rodman said.
U.S. Senator Lindsey Graham said in a statement on Thursday that he beckons peace. He also told Kim that ‘it will be the end’ of him if he tried to take advantage of Trump.
Other senior US politicians were also skeptical, with Republican Cory Gardner of Colorado saying the ‘price of admission’ for Trump and Kim’s meeting must be ‘complete, verifiable, and irreversible de-nuclerization of the Korean peninsula.’
Democrat Ed Markey of Massachusetts said Trump should treat it ‘as the beginning of a long diplomatic process,’ avoiding ‘unscripted’ remarks that could derail it.
Meanwhile, Republican Rep. Ed Royce of California, the House Foreign Affairs Committee chairman, credited Trump and said that North Korea’s desire to talk shows that sanctions are ‘starting to work.’
Special guests: Kim Jong Un sits next to his wife Ri Sol-Ju, with his sister Kim Yo-Jong sat to the right of one of the South Korean diplomats during a meal hosted by North Korea
North Korean leader Kim Jong Un meets members of the special delegation of South Korea’s President in this photo released by North Korea’s Korean Central News Agency
As the Olympics unfolded in South Korea, it was the United States that had loudly warned the world that Kim was putting on a charm offensive.
Pence, who led the U.S. delegation to the opening ceremony, urged the international community, and South Korea, not let up on the North until Kim fully capitulates when it comes to his building of nuclear weapons.
‘The policy of the U.S. is the denuclearization of North Korea. The maximum pressure campaign is going to continue and intensify. All options are on the table,’ a senior official said of Pence’s message to Moon as he departed the peninsula.
The vice president announced during the trip, and the United States followed up with, a rigorous set of sanctions that the Trump administration described as the largest and most aggressive to date.
Treasury blacklisted one person, 27 companies and 28 ships with the action it says was ‘aimed at shutting down North Korea’s illicit maritime smuggling activities to obtain oil and sell coal.’ The sanctions hit entities in Taiwan, Hong Kong, China and Singapore and others.
Steve Mnuchin, the U.S. Treasury Secretary, said that nearly all of North Korea’s shipping sector had now been targeted. The total number of sanctions steps since 2005 has now hit 45 – with almost half of the actions coming since Trump took office.
At a press conference later in the day, Trump said he’d make preparations for ‘phase two’ if the punishing actions are not successful, the outcome of which could be ‘very, very unfortunate for the world.’
‘But hopefully the sanctions will work,’ he said during remarks at a joint White House press conference with the Australian prime minister.
The North Korean dictator shakes hands with South Korea’s national security director Chung Eui-yong as his sister looks on
No insight: Independent journalists were not given access to cover the event depicted in this image distributed by the North Korean government
Envoys for South Korea led by President Moon’s national security director, Chung Eui-yong, are on a rare two-day visit to Pyongyang that’s expected to focus on how to ease a standoff over North Korea’s nuclear ambitions and restart talks between Pyongyang and Washington
North Korea leader Kim Jong Un meets with South Korean delegation
A senior administration official told reporters then, ‘The president is clearly frustrated and rightly so over the efforts that have failed in the past and also over the uptick in testing and the advances we’ve seen in the North Korean program.’
In his Tuesday morning tweets on North Korea, Trump said, ‘Possible progress being made in talks with North Korea. For the first time in many years, a serious effort is being made by all parties concerned.
‘The World is watching and waiting!’ he added. ‘May be false hope, but the U.S. is ready to go hard in either direction!’
His comment suggested that military action against North Korea is still in his back pocket, despite the decreased likelihood of a confrontation.
President Trump said Saturday evening during a roast at a dinner in Washington that’s held off camera that he ‘won’t rule out direct talks’ with Kim.
‘As far as the risk of dealing with a madman is concerned, that’s his problem, not mine,’ he joked.
Trump went on to say that Kim ‘must be a fine man’ and that his hardline against North Korea saved the Winter Olympics.
‘Without President Trump and his strong attitude they would have never called up and said, ‘Hey, we’d love to be in the Olympics together,’ ‘ he recalled South Korea’s Moon as saying. ‘It was heading for disaster and now we’re talking.’
Diving off script in the 35-minute speech that was supposed to stay light and last approximately 10 minutes, Trump said, ‘Maybe positive things are happening. I hope that’s true, and I say that in all seriousness.
‘But we will be meeting, and we’ll see if anything positive happens. It’s been a long time,’ he said. ‘It’s a problem that should have been fixed a long time ago.’
The insults Donald Trump and Kim Jong-un have hurled at each other:
President Donald Trump accepting an offer to meet with North Korean leader Kim Jong-un is a stunning turn of events after a year of heated verbal warfare that included crude insults and mutual threats of nuclear attacks.
While the move to hold a summit appears to be an effort to ease decades of animosity between the US and North Korea, it comes after months of the two leaders trading insults and Trump threatening to ‘totally destroy’ the country.
From Trump calling Kim a ‘rocket man’ and ‘short and fat’ to the US President being labeled ‘mentally deranged’ there has been no shortage of nasty insults between the leaders.
So ahead of the summit – for which a time and place is yet to be determined – here is a look at some of the more notable war of words between Trump and Kim so far.
Short and fat:
Back in November last year, Trump hurled an insult at Kim during a trip to Vietnam calling him ‘short and fat’.
‘Why would Kim Jong-un insult me by calling me ‘old,’ when I would NEVER call him ‘short and fat?’ Oh well, I try so hard to be his friend – and maybe someday that will happen!’ he tweeted.
He was retaliating after North Korean media had labeled Trump as an ‘old lunatic’.
Rocket Man:
During his address to the UN General Assembly back in September, Trump said the US would ‘totally destroy North Korea’ if forced to defend itself or its allies.
He also referred to Kim as ‘Rocket Man’ during his speech.
‘The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea,’ Trump said.
‘Rocket man is on a suicide mission for himself and for his regime.’
+25
Mentally deranged:
Kim hit back to the Rocket Man comments accusing Trump of ‘mentally deranged behavior.’
He said he would ‘surely and definitely tame the mentally deranged US dotard with fire’.
Trump responded on Twitter the following morning: ‘Kim Jong Un of North Korea, who is obviously a madman who doesn’t mind starving or killing his people, will be tested like never before!’
Big button:
Kim said that he has a nuclear button on his desk in his New Year’s address this year.
In the same speech, he also called for improved relations with South Korea and suggested sending a delegation to the Winter Olympics in Pyeongchang.
Trump quickly responded saying that he has a bigger and more powerful nuclear button.
‘North Korean Leader Kim Jong Un just stated that the ‘Nuclear Button is on his desk at all times.’ Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!’ he tweeted.
Fire and fury:
Ever since Trump was elected, the two leaders have traded barbs about threats of potential nuclear attacks.
After North Korea announced they had tested a series of missiles, Trump said the country had best not make more threats or ‘they will be met with fire and fury like the world has never seen.’
North Korea hours later announces a plan to launch a salvo of missiles toward the US territory of Guam, a major military hub in the Pacific.
Other threats of nuclear attacks:
Kim said in his New Year’s address in 2017 that preparations for launching an intercontinental ballistic missile had ‘reached the final stage.’
A day later Trump, who was then president-elect, tweeted: ‘North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the US It won’t happen!’
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Trump signs aluminum and steel tariff order that will take effect this month – but EVERY country on earth will be invited to negotiate exemptions from ‘flexible’ policy
New tariffs of 25 per cent on imported steel and 10 per cent on aluminum will go into effect in 15 days, but Canada and Mexico will be spared from the start
Every other nation that has a ‘security relationship’ with the U.S. will be able to petition for individual exemptions
Senior official said earlier in the day that talk of retail price hikes because of raw material costs is just ‘fake news’
Confusion reigned overnight in Washington with competing news outlets reporting that Thursday tariff signing was on, then off – or perhaps a maybe
Trump tweeted cryptically about a ‘meeting’ on Thursday, not a signing event, but the White House held the ceremony on schedule
Republicans in Congress had warned the president about economic consequences of a trade war, leaving him unsure about following through
PUBLISHED: 15:27 EST, 8 March 2018 | UPDATED: 17:43 EST, 8 March 2018
Donald Trump signed an order on Thursday imposing steep tariffs on steel and aluminum imports, after days of guessing games and internal White House battles over whether daring China to enter a trade war is sound policy.
The president appeared in the Oval Office, flanked by senior officials on one side and a group of steelworkers on the other.
‘You are truly the backbone of America, you know that? You are very special people,’ he told the blue collar contingent.
‘We want a lot of steel coming into our country, but we want it to be fair and we want our workers to be protected.’
The president said his promises to factory workers were a big reason for his 2016 victory, complaining that American steel and aluminum workers have been betrayed – but ‘that betrayal is now over.’
Far from being the ironclad, no-compromises national security measures Trump has telegraphed in the past week, the Associated Press reported that every nation in the world will be able to petition the United States for exemptions.
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Donald Trump signed a proclamation on Thursday imposing new tariffs of 25 per cent on imported steel and 10 per cent on aluminum, a move that will take effect in 15 days
The president greeted foundry and mill workers in the Oval Office, promising that his brand of protectionism will result in better jobs and higher production levels in their communities
Trump invited the workers to take photos of the Oval Office, forgetting to actually sign the proclamation until Treasury Secretary Steve Mnuchin (3rd from right) reminded him to
A senior administration official said the national security underpinnings of the new policy were ‘unassailable,’ and clarified that the offer of loopholes would be somewhat limited
Trump will ‘allow any country with which we have a security relationship to discuss with the United States and the president alternate ways’ of protecting America’s interests, the official said, while cautioning that petitioning countries would have to prove that their steel and aluminum exports aren’t harming America’s national security capabilities.
And ‘it doesn’t just refer to national defense. It’s national security, broadly defined,’ the official added.
That measuring stick could encompass anything from protecting domestic steel mills and foundries to guaranteeing the availability of affordable materials for the automotive and aerospace industries.
Rapid responses from Trump critics in Congress were forceful and unyielding.
‘These so-called “flexible tariffs” are a marriage of two lethal poisons to economic growth – protectionism and uncertainty. Trade wars are not won, they are only lost,’ said Arizona Republican Sen. Jeff Flake, a persistent thorn in Trump’s side who will retire in less than a year.
‘Congress cannot be complicit as the administration courts disaster. I will immediately draft and introduce legislation to nullify these tariffs,’ Flake said in a statement.
Utah Republican Sen. Orrin Hatch, a close Trump ally, was equally sour on the new policy.
The new tariffs will go into effect on March 23 – except for Canadians and Mexicans, who will get a carve-out exemption
Moderate Republican Senator Jeff Flake (left) and Conservative Republican Senator Orrin Hatch (right) both blasted the new tariffs – and said they would employ varying tactics to undo them
‘This is a tax hike on American manufacturers, workers and consumers. Slapping aluminum and steel imports with tariffs of this magnitude is misguided,’ Hatch said. ‘It undermines the benefits that the new tax law provides and runs counter to our goal of advancing pro-growth trade policies that will keep America competitive.’
Hatch said he would ‘continue to work with the administration to revisit this decision and hopefully mitigate the damage it will cause to our nation’s economic growth.’
In a conference call with reporters, the senior Trump administration official downplayed the production cost increases that will likely come along with hikes in the net price of raw materials, saying it would add just a few cents to the cost of food cans, and $25,000 to the price of steel to build a Boeing jet that costs hundreds of millions of dollars.
The official waved off mounting evidence that steel and aluminum tariffs will raise retail prices, declaring: ‘This is simply fake news.’
Trump invited his guests to take photos in the Oval Office, forgetting to sign the proclamation itself on Thursday, and heading toward a small table only when Treasury Secretary Steve Mnuchin reminded him to.
‘Yes, I’m going to do that,’ Trump told him, changing course.
President Donald Trump used a cabinet meeting Thursday to announce that Mexico and Canada will be exempted from new steel and aluminum tariffs,and Australia may also get a carve-out – but it later emerged that nearly every nation on earth would be allowed to petition for special treatment
Trump had already said earlier in the day that Mexico and Canada would likely be spared – provided a renegotiation of the North American Free Trade Agreement progresses to his liking.
‘We’re going to cancel NAFTA’ if negotiations fail, he said Thursday.
During a Cabinet meeting, Trump raised the possibility that Australia, too, could be exempt from the new tariffs covered under his proclamation.
‘We’re going to be very flexible,’ the president said, while pledging to ‘protect the American worker.’
Trump insisted, however, that countries forced to pay the import duties would be charged a 25 per cent premium on steel and 10 per cent on aluminum.
His tariffs will go into effect on March 23.
A senior administration official called the plan both ‘a wonderfully flexible document’ and a vehicle to ‘ensure an ironclad way that we preserve our aluminum and steel industry.’
On Thursday morning it wasn’t clear whether the president would have anything to sign by day’s end.
The White House had punted Wednesday on the timetable, with Press Secretary Sarah Sanders telling reporters that he was expected to ‘sign something by the end of the week.’
Trump tweeted a non-committal message early on Thursday, writing that he was ‘[l]ooking forward to [a] 3:30 P.M. meeting today at the White House.’
Trump downgraded the signing to a ‘meeting’ in a cryptic tweet on Thursday morning but the White House later confirmed that he would indeed sign the tariff order
‘We have to protect & build our Steel and Aluminum Industries while at the same time showing great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military.’
He also told reporters late in the morning: ‘I call it an economic meeting.’
‘We’re going to be very fair. We’re going to be very flexible, but we’re going to protect the American worker,’ he pledged.
Presidential counselor Kellyanne Conway said Thursday on the Fox News Channel that ‘the president has called a meeting today at 3:30. He has invited in steel an aluminum workers.’
But she didn’t say if he would sign anything.
Confusion reigned in Washington overnight, with contradictory reports sparking a ‘will he or won’t he’ guessing game as Trump’s leanings seemed to change by the hour.
CNN reported at dinnertime that the Thursday signing was definitely on.
An MSNBC anchor tweeted late into the evening that the it was ‘not going to happen’ because the president was ‘undecided after a day of heavy pushback from Republicans.’
The Wall Street Journal reported nearly two hours later that Trump was still expected to sign his tariff order, but only sometime ‘this week.’
White House press secretary Sarah Huckabee Sanders hinted at ‘carve-outs’ for Mexico and Canada on Wednesday and said exemptions will be considered on a ‘country by country’ basis
On Thursday morning an NBC reporter tweeted that details were ‘still being finalized’ and ‘if a proclamation is signed it will be largely “symbolic”.’
Sanders said Wednesday that there might be ‘carve-outs’ – exemptions – ‘for Mexico and Canada based on national security, and possibly other countries as well.’
The prospect of across-the-board tariffs that would affect both America’s allies and nations with massive U.S. trade surpluses made some in the White House uneasy, especially chief economic adviser Gary Cohn, who announced his resignation this week.
Other top officials, including Defense Secretary Jim Mattis and Secretary of State Rex Tillerson, also made last-minute appeals for flexibility, saying that overly broad tariffs would damage key security ties with U.S. allies.
One possible plan would give Canada and Mexico 30-day exemptions, officials said Wednesday, a status whose continuation would depend on progress in renegotiating the North American Free Trade Agreement.
On Wednesday, Sanders told reporters that exemptions to the 25 per cent steel tariffs and 10 per cent aluminum tariffs would be made on a ‘case by case’ and ‘country by country’ basis.
Business leaders in the steel and aluminum sectors were reportedly flying to Washington Wednesday night in anticipation of a tariff signing designed to protect them against foreign competition.
But despite industry support, the president of the U.S. Chamber of Commerce raised the specter of a global trade war.
That scenario, Tom Donohue said, would endanger the economic momentum from the GOP tax cuts and Trump’s rollback of regulations.
‘We urge the administration to take this risk seriously,’ Donohue said.
Navarro is well-known as a staunch critic of Germany and China, and is a strong proponent of reducing U.S. trade deficits. He has accused Germany and China of currency manipulation. He has called for increasing the size of the American manufacturing sector, setting high tariffs, and repatriating global supply chains. He is also a strong opponent of the North American Free Trade Agreement and Trans-Pacific Partnership.
His views on trade are widely considered fringe and misguided by other economists. In explaining his role in the Trump administration, Navarro said that he is there “provide the underlying analytics that confirm [Trump’s] intuition [on trade]. And his intuition is always right in these matters.”[9]
Early life and education
Navarro was born on July 15, 1949. Navarro’s father, Alfred “Al” Navarro, a saxophonist and clarinetist, led a house band, which played summers in New Hampshire and winters in Florida.[10][11] His parents divorced when he was 9 or 10.[10] Subsequently, he lived with his mother, Evelyn Littlejohn, a Saks Fifth Avenue secretary, in Palm Beach, Florida.[10][12] He lived in Bethesda, Maryland, during his teenage years.[10]
In the 1970s, Navarro served as a policy analyst for the Urban Services Group, the Massachusetts Energy Office, and the United States Department of Energy.[13]
Navarro’s policy prescriptions include that “U.S. should be tough on trade, crack down on intellectual property theft, tax Chinese exports, combat Chinese mercantilism, [and] bring jobs home.”[18]
Academics
A professor of economics and public policy at University of California, Irvine for over 20 years, Navarro has worked on energy issues and the relationship between the United States and Asia.[19] He has received multiple teaching awards for MBA courses he has taught.[20] Before joining the UC Irvine faculty, Navarro worked as a research associate in Harvard University’s Energy and Environmental Policy Center from 1981 to 1985.
As a doctoral student in 1984 Nararro wrote a book titled, The Policy Game: How Special Interests and Ideologues are Stealing America, which discussed that special interest groups had led the United States to “a point in its history where it cannot grow and prosper.” In the book he also called for greater worker’s compensation by those that had lost jobs to trade and foreign competition. His doctoral thesis on why corporations donate to charity is one of his highest cited works. He has also done research in the topic of wind energy with Frank Harris, a former student of his.[21]
He then lectured at the University of California, San Diego, where he also served as an assistant professor, teaching courses in business and government.[13] Prior to teaching, Navarro worked in Washington, D.C. as an energy and environmental policy analyst.[22]Navarro has published peer-reviewed economics research on energy policy, charity, deregulation and the economics of trash collection.[18][23][24] According to the Economist, Navarro “is a prolific writer, but has no publications in top-tier academic journals.”[25]
Academic and research authorship
Navarro is a prolific author with nearly a dozen books written on various topics in economics and specializing in issues of balance of trade. The Coming China Wars: Where They Will Be Fought, How They Can Be Won is a book by published by FT Press in (2006). Navarro examines China as an emerging world power confronting challenges at home and abroad as it struggles to exert itself in the global market. He also investigates how China’s role in international commerce is creating conflicts with nations around the world over energy, natural resources, the environment, intellectual property, and other issues. A review in Publishers Weekly describes the book as “comprehensive” and “contemporary” and concludes that it “will teach readers to understand the dragon, just not how to vanquish it”.[26]
Death by China: Confronting the Dragon – A Global Call to Action (2011) is a non-fiction book by Navarro and Greg Autry[27] that chronicles “from currency manipulation and abusive trade policies, to deadly consumer products,” the alleged threats to America’s economic dominance in the 21st century posed by China’s Communist Party. Navarro argues that China violates fair trade by “illegal export subsidies and currency manipulation, effectively flooding the U.S. markets” and unfairly making it “virtually impossible” for American companies to compete.[28] It is a critique of “global capitalism” including foreign labor practices and environmental protection.[29] Currency manipulation and subsidies are stated as reasons that “American companies cannot compete because they’re not competing with Chinese companies, they’re competing with the Chinese government.”[30] Ronnie Scheib, from Variety, says “One need not fully subscribe to Peter Navarro’s demonization to appreciate his lucid wake-up call to the imminent dangers of the huge U.S.–China trade imbalance and its disastrous impact on the American economy.”[28]
In 2016, Navarro served as a policy adviser to Trump’s 2016 presidential campaign.[1] Navarro and the international private equity investor Wilbur Ross authored an economic plan for the Donald Trump presidential campaign in September 2016.[38] Navarro was invited to be an adviser after Jared Kushner saw on Amazon that he co-wrote Death by China, while he was researching China for Trump.[39] When told that the Tax Policy Center assessment of Trump’s economic plan would reduce federal revenues by $6 trillion and reduce economic growth in the long term, Navarro said that the analysis demonstrated “a high degree of analytical and political malfeasance”.[40] When the Peterson Institute for International Affairs estimated that Trump’s economic plan would cost millions of Americans their jobs, Navarro said that writers at the Peterson Institute “weave a false narrative and they come up with some phony numbers.”[41] According to MIT economist Simon Johnson, the economic plan essay authored by Navarro and Wilbur Ross for Donald Trump during the campaign had projections “based on assumptions so unrealistic that they seem to have come from a different planet. If the United States really did adopt Trump’s plan, the result would be an immediate and unmitigated disaster.”[42] When 370 economists, including nineteen Nobel laureates, signed a letter warning against Donald Trump’s stated economic policies in November 2016, Navarro said that the letter was “an embarrassment to the corporate offshoring wing of the economist profession who continues to insist bad trade deals are good for America.”[43][44]
In October 2016, with Wilbur Ross and Andy Puzder, Navarro coauthored the essay titled “Economic Analysis of Donald Trump’s Contract with the American Voter”.[45] On December 21, 2016, Navarro was selected by President-elect Trump to head a newly created position, as director of the White House National Trade Council.[46] He outlines President Trump’s trade policy as aiming to create jobs, revive the manufacturing sector, and improve the country’s trade balance. He warned that trade deficits could jeopardize U.S. national security by allowing unfriendly nations to encroach on American supply chains. One of his main missions is to focus on behaviors by other countries that he considers abusive, cheating, illegal, and unfair against the U.S.[47][48][49]
By July 2017, Politico reported that Navarro’s influence within the White House was weak.[50]Axios reported the same in November 2017.[51] By July 2017, Navarro only had two staffers, and the National Trade Council had essentially become part of the Office of Trade and Manufacturing policy.[50] By September 2017, the Office of Trade and Manufacturing policy had been folded into the National Economic Council, which meant that Navarro would have to report to NEC Director Gary Cohn.[52] However, in February 2018, several media outlets reported that Navarro’s influence in the administration was rising again and that he would likely be promoted shortly.[53][54]Josh Rogin, writing for The Washington Post, reported that Navarro had used his time of lowered influence to lead several low-profile policy items, such as working to increase military funding, drafting Executive Order 13806, and leading the effort to solve a dispute between the United States and Qatar over the Open Skies Agreement between the two countries.[55]
Navarro has been a staunch critic of trade with China and strong proponent of reducing U.S. trade deficits. He has attacked Germany, Japan and China for currency manipulation. He has called for increasing the size of the American manufacturing sector, setting high tariffs, and repatriating global supply chains. He was a fierce opponent of the Trans-Pacific Partnership.
According to Bloomberg News, Navarro had “roots as a mainstream economist” as he voiced support for free trade in his 1984 book The Policy Game. He changed his positions as he saw “the globalist erosion of the American economy” develop.[56]
According to Politico, Navarro’s economic theories are “considered fringe” by his fellow economists.[57] Al-Jazeera notes that “few other economists have endorsed Navarro’s ideas.”[58] A New Yorker reporter described Navarro’s views on trade and China as so radical “that, even with his assistance, I was unable to find another economist who fully agrees with them.”[59] The Economist described Navarro as having “oddball views”.[60] The George Mason University economist Tyler Cowen has described him as “one of the most versatile and productive American economists of the last few decades”, but Cowen noted that he disagreed with his views on trade, which he claimed go “against a strong professional consensus.”[57] University of Michigan economist Justin Wolfers described Navarro’s views as “far outside the mainstream,” noting that “he endorses few of the key tenets of” the economics profession.[61] According to Lee Branstetter, economics professor at Carnegie Mellon and trade expert with the Peterson Institute for International Economics, Navarro “was never a part of the group of economists who ever studied the global free-trade system … He doesn’t publish in journals. What he’s writing and saying right now has nothing to do with what he got his Harvard Ph.D. in … he doesn’t do research that would meet the scientific standards of that community.”[62] Marcus Noland, an economist at the Peterson Institute for International Economics, described a tax and trade paper written by Navarro and Wilbur Ross for Trump as “a complete misunderstanding of international trade, on their part.”[40]
Border adjustment tax
Navarro supports a tax policy called “border adjustment”, which essentially taxes all imports.[62] In response to criticism that the border adjustment tax could hurt U.S. companies and put jobs at risk, Navarro called it “fake news.”[62]
Critic of China trade policy
According to Politico, “Navarro is perhaps the most extreme advocate in Washington, and maybe in all of economics, for an aggressive stance toward China.”[57] Navarro put his attention to China in the mid-2000s.[16] His first publication on the subject is the 2006 book The Coming China Wars: Where They Will Be Fought, How They Can Be Won.[63] Navarro has said that he started to examine China when he noticed that his former students were losing jobs, concluding that China was at fault.[16]
In Politico‘s description of the book, “Navarro uses military language to refer to China’s trade policies, referring to its ‘conquest’ of the world’s export markets, which has ‘vaporized literally millions of manufacturing jobs and driven down wages.’ … China’s aspirations are so insatiable, he claims, that eventually there will be a clash over “our most basic of all needs—bread, water, and air.'”[63] Navarro has described the entry of China to the World Trade Organization as one of the United States’ biggest mistakes.[16] To respond to the Chinese threat, Navarro has advocated for 43% tariffs, the repudiation of trade pacts, major increases in military expenditures and strengthened military ties with Taiwan.[63][16]The New York Times notes that “a wide range of economists have warned that curtailing trade with China would damage the American economy, forcing consumers to pay higher prices for goods and services.”[64] Navarro has reportedly also encouraged President Trump to enact a 25-percent tariff on Chinese steel imports, something that “trade experts worry… would upend global trade practices and cause countries to retaliate, potentially leading to a trade war”.[65]
Navarro has said that a large part of China’s competitive advantage over the United States stems from unfair trade practices.[25] Navarro has criticized China for pollution, poor labor standards, government subsidies, producing “contaminated, defective and cancerous” exports, currency manipulation, and theft of US intellectual property.[25][58][66] In his poorly received 2012 documentary, Navarro said that China caused the loss of 57,000 US factories and 25 million jobs.[58] While Navarro maintains that China manipulates its currency, neither the U.S. Treasury nor most economists believe that it is the case.[62][16]
Of the more than dozen China specialists contacted by Foreign Policy, most either did not know of him or only interacted with him briefly.[16] Kenneth Pomeranz, University of Chicago professor of Chinese History, said that his “recollection is that [Navarro] generally avoided people who actually knew something about the country.”[16] Columnist Gordon G. Chang was the only China watcher contacted by Foreign Policy who defended Navarro, but even then noted that he disagreed with Navarro’s claims of currency manipulation, opposition to the TPP and calls for high tariffs.[16] Navarro does not appear to speak Chinese nor has he spent any time in the country.[16] James McGregor, a former chairman of the American Chamber of Commerce in China, said that Navarro’s books and documentary on China “have close to zero credibility with people who know the country,” and are filled with “hyperbole, inaccuracies” and a “cartoonish caricature of China that he puts out.”[16]
Germany
Navarro drew controversy when he accused Germany of using a “grossly undervalued” euro to “exploit” the US and its EU partners.[67]Politico noted that Germany does not set the value of the euro.[63] Economists and commentators are divided on the accuracy of Navarro’s remarks.[68][69]Paul Krugman said that Navarro was right and wrong at the same time: “Yes, Germany in effect has an undervalued currency relative to what it would have without the euro… But does this mean that the euro as a whole is undervalued against the dollar? Probably not.”[70] Boston University economist Laurence Kotlikoff described Navarro’s accusation of Germany as a currency manipulator as “#stupideconomics”.[71]
Manufacturing
Navarro argues that the decline in US manufacturing jobs is chiefly due to “unfair trade practices and bad trade deals. And if you don’t believe that, just go to the booming factories in Germany, in Japan, in Korea, in China, in Malaysia, in Vietnam, in Indonesia, in Italy—every place that we’re running deficits with.”[72] However, many economists attribute the decline in manufacturing jobs chiefly to automation and other innovations that allow manufacturing firms to produce more goods with fewer workers, rather than trade.[72][73]
Navarro has been a proponent of strengthening the manufacturing sector’s role in the national economy: “We envision a more Germany-style economy, where 20 percent of our workforce is in manufacturing. … And we’re not talking about banging tin in the back room.”[62]The New York Times notes that “experts on manufacturing … doubt that the government can significantly increase factory employment, noting that mechanization is the major reason fewer people are working in factories.”[64]
Opposition to NAFTA
Navarro has called for the United States to leave NAFTA.[65]Politico reported that Navarro tried to convince President Trump to leave NAFTA.[65]
Repatriation of global supply chains
Navarro has called for repatriating global supply chains.[63][66] According to Politico’s Jacob Heilbrunn, such a move “would be enormously costly and take years to execute”.[63]
Trade as a national security risk
Navarro has framed trade as a national security risk.[63][74][75] According to Politico, “he’s a hard-line mercantilist who insists that military confrontation with some trading partners is almost inevitable.”[63]
Navarro has characterized foreign purchases of U.S. companies as a threat to national security, but according to NPR, this is “a fringe view that puts him at odds with the vast majority of economists.”[76] Dartmouth economist Douglas Irwin noted that the US government already reviews foreign purchases of companies with military or strategic value, and has on occasion rejected such deals.[76] Irwin said that Navarro had not substantiated his claim with any evidence.[76]
Navarro has also said that the United States has “already begun to lose control of [its] food supply chain”, which according to NPR, “sounded pretty off-the-wall to a number of economists” who noted that the US is a massive exporter of food.[76] Dermot Hayes, an agribusiness economist at Iowa State University, described Navarro’s statement as “uninformed”.[76]
Navarro is a proponent of the notion that trade deficits are bad in and of themselves, a view which is widely rejected by trade experts and economists across the political spectrum.[77][78][79][80][81][82][83][84][85][86][10][excessive citations] In a white paper co-authored with Wilbur Ross, Navarro stated, “when a country runs a trade deficit by importing more than it exports, this subtracts from growth.”[82][87] In a Wall Street Journal op-ed defending his views, Navarro stated, “If we are able to reduce our trade deficits through tough, smart negotiations, we should be able to increase our growth.”[88] Harvard University economics professor Gregory Mankiw has said that Navarro’s views on the trade deficit are based on the kind of mistakes that “even a freshman at the end of ec 10 knows.”[89][90] Tufts University professor Daniel W. Drezner said about Navarro’s op-ed, “as someone who’s written on this topic I could not for the life of me understand his reasoning”.[74] According to Tyler Cowen, “close to no one” in the economics profession agrees with Navarro’s idea that a trade deficit is bad in and of itself.[81] Nobel laureate Angus Deaton described Navarro’s attitude on trade deficits as “an old-fashioned mercantilist position.”[86]
The Economist magazine has described Navarro’s views on the trade deficit as “dodgy economics” and “fantasy”,[25] while the Financial Times has described them as “poor economics”.[91] Economists Noah Smith,[92]Scott Sumner,[93][94]Olivier Blanchard,[66] and Phil Levy[95] have also criticized Navarro’s views on the trade deficit.
Opposition to Trans-Pacific Partnership
Navarro opposes the Trans-Pacific Partnership.[96] In an April 2015 op-ed, Navarro said, “To woo us, their spinmeisters boast the TPP will spur American exports to stimulate sorely needed economic growth. In truth, the American economy will suffer severely. This is because the TPP will hammer two main drivers of economic growth—domestic investment and ‘net exports.'”[96] Navarro said in March 2017 that TPP “would have been a “death knell” to America’s auto and vehicle parts industry that we “urgently need to bring back to full life.”[66]Politico‘s Jacob Heilbrunn and theEconomist argue that there may be a disconnect between Navarro’s policy on China and his opposition to the TPP, as scuttling the TPP will strengthen China’s hand.[63][25]
Story 1: American Sport Fans Vs. National Football League and Players — Not Respecting The American People, National Anthem, American Flag and United States By Kneeling During National Anthem Should Not Be Tolerated by Team Owners or League –NFL Not Enforcing Their Own Rule About National Anthem — Public Relations Disaster Destroying Brand and Team Franchises — Political Correctness Collectivist Conformity Is Not Unity — Videos
“…The National Anthem must be played prior to every NFL game, and all players must be on the sideline for the National Anthem.
During the National Anthem, players on the field and bench area should stand at attention, face the flag, hold helmets in their left hand, and refrain from talking. The home team should ensure that the American flag is in good condition. It should be pointed out to players and coaches that we continue to be judged by the public in this area of respect for the flag and our country. Failure to be on the field by the start of the National Anthem may result in discipline, such as fines, suspensions, and/or the forfeiture of draft choice(s) for violations of the above, including first offenses. …”
~National Football League game operations manual, pages A62-63
Fans Boo When
Cowboys kneels owner Jerry Jones kneels with team before national anthem
Jerry Jones & ENTIRE Dallas Cowboys Team Kneel before Anthem, Hannity Reacts
Morning after analysis: Cowboys found a middle ground
Sean Hannity 9/25/17 – Hannity Fox News Today September 25, 2017 TRUMP-NFL PROTEST, STEVE BANNON
BREAKING NEWS America Football fans are Going To Boycott all NFL Sponsors like Anheuser Busch ,Gato
“Spoilt brats” Tucker Carlson Reacts to NFL Players kneeling during anthem
Special Report with Bret Baier 9/25/17 – Special Report Fox News September 25, 2017 NFL VS TRUMP
“DON’T Pull That Cr@p on Me!” Tucker Gets MAD at NFL Player for Disrespecting the Anthem and Flag
Patriots Fans Boo Anthem Protesting NFL Players
Jim Brown Cuts Colin kaepernick Throat
Ditka on Kaepernick
George Foreman Delivers Devastating Blow to Colin Kaepernick, Calls Out his ‘Privilege’
After 12 Cleveland Browns Kneel, All Stand After Who Showed Up Before The Next Game
After Browns Players Refused to Stand for Anthem, Cleveland Cops Respond With Their Own ‘Protest’
Former Army Ranger Alejandro Villanueva Is Only Steelers Player To Stand For National Anthem
Former Army Ranger Is Only Steelers Player To Stand For National Anthem, Alejandro Villanueva
BREAKING: NFL Executives Just Woke To Devastating News About The Rest Of Their Season Today
Trump responds after a day of NFL protests
Trump: I wish NFL owners respected US flag
“NFL Ratings will go down” Ben Shapiro Reacts to NFL Players taking the knee during national anthem
New Election Themes: Two Americas (NFL Prima Donnas v. America) & Alejandro Villanueva, Patriot/Hero
NFL Dolts, Cretins, Boeotians and Meatheads Misread the Kneel Protest Lunacy
NFL Pansies: The REAL #TakeTheKnee Problem | Louder With Crowder
LIMBAUGH: Trump Is Redefining What A Politician Is
‘GENUINE SADNESS’: Rush Limbaugh Didn’t Watch ‘Sunday Night Football’ For First Time In 45 Years
Limbaugh Warns Sports Media People Who Support Actions Against The Flag: ‘NO WAY Trump Loses This’
LIMBAUGH: The Lefts Success In Destroying The NFL Is Working To A Tee
Rush Limbaugh: NFL players want to do something that will drive away more fans (09-21-2017)
RUSH: IT’S OVER! NFL Is Never Gonna Be What It Was
Bob Costas on NFL protests and patriotism (full CNN interview)
Badass Cowboys Owner Just Went On LIVE TV And Pissed Off Every Racist Player With BIG Announcement
Eagles QB Just Shut Up Every Whiny Protester In The NFL With Shocking Announcement He Made
Chiefs Fan EXPLODES With Rage After Seeing What Disrespectful NFL Player Suddenly Did On Field
The Truth About The Colin Kaepernick National Anthem Controversy
Colin Kaepernick explains why he won’t stand during National Anthem
Kaepernick comes SO close to new NFL deal, then BLM activist girlfriend dashes dreams
NFL Legend John Elway Just ENDED ALL Racist Player Protests After League Commissioner Refused
ROGER GOODELL IGNORING LEAGUE’S OWN RULES IN LETTING PLAYERS PROTEST ANTHEM
At the risk of fines and suspensions, the NFL requires players on the field during the anthem, standing
NFL Commissioner Roger Goodell is such a stickler for adhering to the intricacies of the NFL’s league rule book that he infamously waged a years-long, multi million-dollar battle with the New England Patriots trying to prove that balls used in the 2014 AFC championship between the Pats and the Indianapolis Colts were under-inflated.
After a federal vacated Goodell’s four-game suspension of Tom Brady, Goodell appealed to the 2nd U.S. Circuit Court of Appeals; by 2016, the Pats appeared to lose their will to keep fighting the case and eventually accepted the penalty (Brady’s four game suspension, $1 million fine, and the loss of two draft picks).
Yet the NFL commissioner, notorious for his unusually massive compensation package — rumored to be north of $40 million/year, making his total compensation of $156 million higher than Tom Brady’s — is taking a decidedly less fastidious approach to the rules governing the national anthem at NFL games.
The NFL rule book specifically requires both teams appear on the field for the playing of the anthem, standing, remaining quiet, and holding their helmets in their left hands. Failure to do so can result in fines, suspensions, and the loss of draft picks.
The National Anthem must be played prior to every NFL game, and all players must be on the sideline for the National Anthem.
During the National Anthem, players on the field and bench area should stand at attention, face the flag, hold helmets in their left hand, and refrain from talking. The home team should ensure that the American flag is in good condition. It should be pointed out to players and coaches that we continue to be judged by the public in this area of respect for the flag and our country. Failure to be on the field by the start of the National Anthem may result in discipline, such as fines, suspensions, and/or the forfeiture of draft choice(s) for violations of the above, including first offenses.
On Sunday, almost a hundred players took a knee during the national anthem. The Pittsburgh Steelers, Chicago Beats, Seattle Seahawks, and Tennessee Titans all opted against even coming out on the field for the anthem.
But rather than warn these players and team they’re violating league rules, Goodell is focusing his anger at President Trump, who said in a speech Friday that the NFL team owners should require their players to stand during the anthem.
“The way we reacted today, and this weekend, made me proud,” Goodell said. “I’m proud of our league.”
On Saturday, Goodell responded directly to Trump, accusing the president of disrespecting the league, which asipires to “create a sense of unity in our country and our culture”:
The NFL and our players are at our best when we help create a sense of unity in our country and our culture. There is no better example than the amazing response from our clubs and players to the terrible natural disasters we’ve experienced over the last month. Divisive comments like these demonstrate an unfortunate lack of respect for the NFL, our great game and all of our players, and a failure to understand the overwhelming force for good our clubs and players represent in our communities.
We’ve reached out to the NFL, asking if any of the players or teams that skipped the national anthem will face discipline; we’ll update this report with their comments.
Goodell hasn’t always been so supportive of his players engaging in free speech on the field.
Last year the NFL barred the Dallas Cowboys from wearing a decal on their helmet honoring the five police officers killed in a domestic terror attack.
The NFL also banned the Tennessee Titan’s linebacker, Avery Williamson, from honoring 9/11 victims by wearing cleats that read “9-11/01” and “Never Forget” on the 15th anniversary of the terror attack.
The NFL fined Robert Griffin III $10,000 for wearing a t-shirt during a press conference that said “Operation Patience.” (The shirt was created by Reebok and players are required to only wear clothing sold by Nike.)
RGIII also ran into trouble with the league for wearing a shirt that said “Know Jesus, Know Peace.”
The NFL has banned players from wearing Beats headphones on the field (doing so violated the league’s deal with Bose).
The Steelers’ William Gay was fined for wearing purple cleats, which he did to raise awareness for domestic violence (an issue Goodell claims the league takes seriously).
Goodell’s opposition to speech he dislikes is so determined that he even has a Patriots fan who flipped him off fired from his job.
UPDATE:Snopes.comclaims that this rule does not, in fact, exist. The article cites the rule quoted above and reports “No such wording appears in the 2017 version of the Official Playing Rules of the National Football League.”
Yet the NFL’s Game Operations Manual — the 200-plus book the league refers to as its “bible” — is different than its rulebook. It is not available to the public. The rule cited above comes from the league itself, via the Washington Post.
The Post reported Sunday that the NFL confirmed the rule’s existence but emphasized their ability to enforce it selectively:
Under the league rule, the failure to be on the field for the anthem may result in discipline such as a fine, suspension or loss of a draft pick. But a league official said the key phrase is “may” result, adding he won’t speculate on whether the Steelers would be disciplined.
The specific rule pertaining to the national anthem is found on pages A62-63 of the league’s game operations manual, according to a league source.
UPDATE TWO: After Grabien contacted Snopes.com, bringing the above facts to their attention, the author amended his article, confirming the existence of the above-state rule, and changed their description of this story from “false” to “mixture.”
Everybody loses in the Trump-NFL brawl over the national anthem.
Baltimore Ravens players kneel during the playing of the U.S. national anthem before an NFL football game against the Jacksonville Jaguars at Wembley Stadium in London, Sunday Sept. 24, 2017.PHOTO: MATT DUNHAM/ASSOCIATED PRESS
By The Editorial Board
Healthy democracies have ample room for politics but leave a larger space for civil society and culture that unites more than divides. With the politicization of the National Football League and the national anthem, the Divided States of America are exhibiting a very unhealthy level of polarization and mistrust.
The progressive forces of identity politics started this poisoning of America’s favorite spectator sport last year by making a hero of Colin Kaepernick for refusing to stand for “The Star-Spangled Banner” before games. They raised the stakes this year by turning him into a progressive martyr because no team had picked him up to play quarterback after he opted out of his contract with the San Francisco 49ers.
The NFL is a meritocracy, and maybe coaches and general managers thought he wasn’t good enough for the divisions he might cause in a locker room or among fans. But the left said it was all about race and class.
All of this is cultural catnip for Donald Trump, who pounced on Friday night at a rally and on the weekend on Twitter with his familiar combination of gut political instinct, rhetorical excess, and ignorance. “Wouldn’t you love to see one of these NFL owners, when somebody disrespects our flag, to say, ‘Get that son of a bitch off the field right now, out, he’s fired. He’s fired,’” Mr. Trump said Friday.
No doubt most Americans agree with Mr. Trump that they don’t want their flag disrespected, especially by millionaire athletes. But Mr. Trump never stops at reasonable, and so he called for kneeling players to be fired or suspended, and if the league didn’t comply for fans to “boycott” the NFL.
He also plunged into the debate over head injuries without a speck of knowledge about the latest brain science, claiming that the NFL was “ruining the game” by trying to stop dangerous physical hits. This is the kind of rant you’d hear in a lousy sports bar.
Mr. Trump has managed to unite the players and owners against him, though several owners supported him for President and donated to his inaugural. The owners were almost obliged to defend their sport, even if their complaints that Mr. Trump was “divisive” ignored the divisive acts by Mr. Kaepernick and his media allies that injected politics into football in the first place.
Americans don’t begrudge athletes their free-speech rights—see the popularity of Charles Barkley —but disrespecting the national anthem puts partisanship above a symbol of nationhood that thousands have died for. Players who chose to kneel shouldn’t be surprised that fans around the country booed them on Sunday. This is the patriotic sentiment that they are helping Mr. Trump exploit for what he no doubt thinks is his own political advantage.
American democracy was healthier when politics at the ballpark was limited to fans booing politicians who threw out the first ball—almost as a bipartisan obligation. This showed a healthy skepticism toward the political class. But now the players want to be politicians and use their fame to lecture other Americans, the parsons of the press corps want to make them moral spokesmen, and the President wants to run against the players.
The losers are the millions of Americans who would rather cheer for their teams on Sunday as a respite from work and the other divisions of American life.
Stop me if you’ve heard this before: the crowd at StubHub Center for a San DiegoLos Angeles Chargers game was awful. A huge portion of the crowd were Kansas City Chiefs fans, and for the fourth time in four games at the stadium (including two preseason contests) there were plenty of empty seats. And just a friendly reminder, StubHub only seats 27,000.
How bad was it? Well, the Chargers knew the crowd was so pro-Chiefs that they didn’t even do player introductions over the public address system due to fears their own players would get booed. In their home stadium. In a new city the league told us was so desperate to have the NFL that it could support two teams. A city Dean Spanossaid contained 25 percent of the team’s fans.
VIDEO
The NFL should be helping the Chargers stay in San Diego and NOT Los Angeles | THE HERD
So, the “Fight for LA” is going swimmingly it appears.
Check out some of the tweets and crowd shots from the day:
To add yet another embarrassment to this mess, this banner was flying over the stadium before the game:
As I and may others have said repeatedly, the Chargers move to Los Angeles was moronic, mishandled and has been a disaster. Ultimately it will be a failure and the league knows it.
UPDATE: The Chargers claim the game was a sellout:
To explain that “sellout,” remember the NFL only counts “tickets distributed” not the amount of people who go through the turnstiles. At this point it’s clear ticket brokers bought up a ton of the team’s season ticket packages hoping there would be demand for re-sale tickets. The demand isn’t there, which is why those tickets have been purchased but don’t have people in them. The brokers haven’t been able to unload those tickets on anyone.
JACKSONVILLE, FL – SEPTEMBER 25: Hayes Pullard #52 of the Jacksonville aJaguars nd Dante Fowler #56 raise their fists in protest during the singing of the national anthem before the game against the Baltimore Ravens (Photo by Maddie Meyer/Getty Images)
A headline for a story in the Sporting News this morning: “Shock poll: A third of NFL TV viewers boycotting games because of Colin Kaepernick-led protests.”
Shock? Why?
The Sporting News article says “Nearly one-third (32 percent) of adults say they’re less likely to watch NFL game telecasts because of the Kaepernick-led player protests against racial injustice, according to Rasmussen’s telephone/online survey of 1,000 American adults conducted Oct. 2-3. Only 13 percent said they were more likely to watch an NFL game because of continuing protests by Kaepernick and supporters such as Antonio Cromartie of the Colts (who was cut only two days after raising a fist during the playing of “The Star-Spangled Banner” in London on Sunday).”
This was very predictable.
Three weeks ago I wrote that “the national anthem protests that began with San Francisco 49ers QB Colin Kaepernick and has since been copied by other players have angered many fans. And that anger may be one reason why the television ratings for the first week of NFL games were bad.” As my colleague, Brandon Katz wrote: “Both CBS’ Sunday afternoon game and NBC’s Sunday Night Football saw their lowest ratings in seven years. Throw in last night’s lackluster debut and the 2016 NFL season is off to its slowest start in recent memory in terms of TV ratings.”
Two weeks ago I wrote “it is starting to look like disrespecting the country during the national anthem is accomplishing what the concussions, domestic violence and deflategate could not do–drive down television ratings for the National Football League. Through two weeks of football the NFL’s television ratings are down across the board. The drop in ratings and viewership is unprecedented in recent years and has occurred during the protest of the national anthem, started by San Francisco 49ers backup QB Colin Kaepernick. Just last year some opined that the league’s ratings had no ceiling. That appears to be false.”
And last week I explained that “there can be no more excuses for the bad ratings, like the one offered by Billie Gold, vice president and director of programming research at Amplifi, the global buying arm of media company the DentsuAegis Network, who said it’s (the bad NFL tv ratings) the lack of big games and prominent names that have sacked the league the past two weeks. Nonsense. Something more visceral is causing ratings to fall. My opinion: Fans are ticked about the players protesting the national anthem.”
This morning it was confirmed by the fact that through four weeks, good games and bad, games with marquee quarterbacks and big markets, ratings are way down this year.
This poll is predictable, not shocking. Who will ultimately pay if the ratings continue to sink? The players and owners.
The National Football League will rake in roughly $4.6 billion in television fees from CBSCBS +1.85%, Walt Disney-owned ESPN, Comcast-owned NBC, Foxand DirecTV that it will equally share with its 32 teams this year. The NFL commands such a rich bounty because advertisers pay up for football’s huge ratings.
The television money is a big reason why the average NFL team is worth $2.34 billion and the average NFL player earns $2.1 million.
The networks that televise the games barely mention the protests anymore. But the fans have not forgotten.
Colin Kaepernick’s anthem-kneeling protest movement may have just lost all momentum, now that his traditional supporters have started fact-checking him.
The reliably liberal NBC site Pro Football Talk used Kaepernick’s contentious conference call with Miami media to check claims the 49ers quarterback made that Cuba has “the highest literacy rate” and that, unlike the United States, Cuba “invests more in their education system than they do in their prison system.”
Shockingly, Pro Football Talk took Kaepernick to task:
Kaepernick’s comments about Castro’s Cuba are false.
Although Cuba does have a high literacy rate, it does not have “the highest literacy rate.” A country’s literacy rate can be measured in different ways, but multiple sources find other countries with higher rates than Cuba. World Atlas cites six countries with 100 percent literacy rates, and Cuba is not one of them. The United Nations Educational, Scientific and Cultural Organization says 12 countries have a higher literacy rate than Cuba.
His claim that the United States spends more money on its prison system than on its education system is also incorrect. A study by the Brookings Institute found that total spending on prisons and jails in the United States is $80 billion a year. According to the National Center for Education Statistics, total expenditures for public elementary and secondary schools in the United States amounts to $620 billion a year. Add in the $517 billion spent on postsecondary education, and the U.S. actually spends about 14 times as much on its education system as its prison system.
Pointing out the manifold fallacies in Kaepernick’s words, and occasionally in what he wears, is old hat for conservative media. Though, it marks quite the change for sites like Pro Football Talk who once slammed Donald Trump for his criticism of Kaepernick, lauding the quarterback for “trying to make things better” in America. They also called it “silly” for people to focus on Kaepernick’s socks, which depicted cops as pigs, even though he wore those socks less than two months after five Dallas police officers died by sniper fire.
So, to recap: Kaepernick lost his hero Fidel Castro, lost to the Dolphins, and lost Pro Football Talk. Kind of a rough week.
Colin Kaepernick’s leftism crystallized as he attended courses at the University of California, Berkeley, after joining the NFL as a San Francisco 49ers quarterback in 2011.
The New York Post’s Shaun King spoke of Kaepernick’s political “metamorphosis” with The Intercept’s Jeremy Scahill in an interview published last Sunday:
Colin [told me] he’s always, you know, he’s always been bothered by police brutality, but he never understood it as the systemic problem that it was. And he’s a young guy — he’s 21 when he came into the league — and he literally started auditing a few classes at Berkeley, and from those classes began understanding what systemic racism was, began understanding the systems behind mass incarceration or white supremacy or police brutality. And he was doing this with very few people, including myself, not knowing. I had no idea he was auditing classes. He was kind of undergoing a personal metamorphosis, and he was doing it while he was recovering from the surgeries that he had had.
And it just caused him to be more acutely aware and sensitive to it. And during last summer, he saw the deaths of Philando Castile in Minnesota and Alton Sterling in Baton Rouge and they just affected him personally. And really without talking to anybody, he decided at a pre-season game that he wasn’t going to stand up for the national anthem. And so Colin and I had been talking for couple of months at that point, and I think it really was a spur of the moment, gut decision, where he heard the anthem and just decided like, “I’m not going to stand up for that. I don’t feel like it. I don’t believe it.” And he did that for two weeks before anybody even noticed. These were just preseason games. And when they noticed, a local reporter asked him about it at the end of the game, and that he hadn’t prepared any bullets and he just said: Listen, I’m disturbed by the crisis of police brutality in America. I don’t believe that America keeps its promises to black people in particular. And, you know he was doing this to be in solidarity with victims of police brutality.
Kaepernick has “a fierce love for this country,” alleges King, adding that “a lot of what Colin does is because he wants to see this country get better.”
Throughout the interview, both King and Scahill frame African Americans as a neo-proletariat in modern America via their shared neo-Marxist sociological lens.
Kaepernick’s class selection included one on “the history of black representation in popular culture,” taught by Ameer Hasan Loggins.
Loggins wrote of his friendship with Kaepernick in an August-published post, praising Kaepernick’s anti-Americanism as a moral endeavor:
Time has proven Colin to be on the right side of history. The sentiment around him has become more nuanced amongst those that support him and his stance. But his detractors are still using dispelled, preseason talking points: that he’s disrespecting a song that has been proven to celebrate the institution of slavery; a false narrative about dishonoring the troops, while troops across the country have publicly come out in support of him and his protest; that pig socks make whatever else he does irrelevant. …
Colin will forever be known as a champion of the people.
Kaepernick began his professional football career as a backup quarterback to Alex Smith, and he became the 49ers’ starter in the middle of the 2012 season after Smith suffered a concussion. He then remained the team’s starting quarterback for the rest of the season, leading the team to their first Super Bowl appearance since 1994. During the 2013 season, his first full season as a starter, Kaepernick helped the 49ers reach the NFC Championship Game. Over the next three seasons, however, Kaepernick and the 49ers failed to qualify for the playoffs. Kaepernick’s performance was pointed out as a major reason, which led to him being benched multiple times over that span.
During the 2016 season, Kaepernick gained nationwide attention when he began protesting by “taking a knee” (and not standing) while the United States national anthem was being played before the start of games. His actions were motivated by what he viewed as the oppression of people of color in the country.[2][3] Kaepernick’s controversial behavior prompted a wide variety of responses, which included additional athletes in the NFL and other American sports leagues protesting the anthem in various ways. Following the season’s end, he opted to drop out of his contract with the 49ers to become a free agent. His free agency status has also been the subject of discussion and controversy, with some believing that his protests, and not performance, were the reason he was not signed with a team for the 2017 season.
Early life
Kaepernick was born in 1987 in Milwaukee, Wisconsin, to Heidi Russo, a 19-year-old white woman of Irish and Bohemian[dubious– discuss] descent who was single at the time.[4] His birth father, an African American man, left Russo before Colin was born.[5][6] Russo placed Colin for adoption with Rick and Teresa Kaepernick, a white couple who had two children—son Kyle and daughter Devon—and were looking for a boy after losing two other sons to heart defects.[5][7] Kaepernick became the youngest of their three children. He lived in Fond du Lac, Wisconsin, until age four, and attended grade school in Turlock, California.[8][9]
When Kaepernick was eight years old, he began playing youth football as a defensive end and punter. He then became his youth team’s starting quarterback at age nine, and he completed his first competitive pass for a long touchdown.[8] A 4.0 GPA student[10] at John H. Pitman High School in Turlock, California, Kaepernick played football, basketball and baseball and was nominated for All-State selection in all three sports his senior year. He was the Most Valuable Player (MVP) of the Central California Conference in football, leading his school to its first-ever playoff victory. In basketball, he was a first-team all CCC selection at forward and led his 16th-ranked team to a near upset of #1 ranked Oak Ridge High School in the opening round of playoffs. In that game, Kaepernick scored 34 points but Ryan Anderson scored 50 to beat the Pitman.[11]
College career
Recruitment
Kaepernick achieved most of his accolades in high school as a baseball pitcher and received several scholarship offers in that sport,[8] yet he desperately wanted to play college football. He was almost 6′ 5″ as a senior, but weighed only 170 pounds (77 kg) and his coaches generally kept him from running the ball to limit his risk of injury.[9] He also had poor throwing mechanics, despite his strong arm.[8] During his junior year, Larry Nigro, Pitman’s head coach at the time, made a highlight tape that Kaepernick’s brother, Kyle, copied to DVD, then sent to about 100 Football Bowl Subdivision (FBS, then known as Division I-A) programs. Kaepernick received some interest but no scholarship offers.[8] Even as a senior, he received little attention from FBS schools. Although the University of Nevada, Renocoaching staff frequently watched video of his high school team, no one from the Nevada Wolf Pack football staff came to Turlock to see him play during his senior football season.[9] Nevada head coach Chris Ault decided to offer him a scholarship after one of his assistants, Barry Sacks, saw Kaepernick dominate a high school basketball game on an evening he was suffering from a fever of 102 °F (39 °C). Nevada was the only school to offer him a football scholarship, but was concerned that he would opt for baseball until he signed in February 2006.[9]
Baseball
Kaepernick was a two-time California all-state baseball player and was listed as a draftable prospect on Major League Baseball‘s website in the class of 2006. He earned Northern California athlete of the week honors as a pitcher. As a senior in high school, he threw a 92 mph (148 km/h) fastball, as reported during Kaepernick’s first college football start in 2007 against Boise State.[12] He was also a member of the Brewers Grey squad in the 2005 Area Code games. In his senior year of high school Kaepernick had an ERA of 1.265 with 13 starts and 10 complete games. He finished the year with an 11–2 record with 97 strikeouts and 39 walks.[citation needed]
In the 2009 Major League Baseball Draft, Kaepernick was drafted in the 43rd round by the Chicago Cubs.[13] He decided that he wanted to continue to play football at the University of Nevada and chose not to sign with the Cubs.[14]
Football
2007 (freshman season)
Kaepernick started his college career at Nevada playing in 11 of the team’s 13 games. He finished the season with 19 passing touchdowns, three interceptions, and 2,175 passing yards with a 53.8% completion percentage. Kaepernick also added 593 rushing yards and six rushing touchdowns as the Nevada Wolf Pack finished 6-7.[15]
2008 (sophomore season)
As a sophomore, Kaepernick became just the fifth player in NCAA history to pass for 2,000 yards and rush for 1,000 or more yards in a single season. Some of his notable statistical achievements were:
Only NCAA quarterback in 2008 to pass for 2,500 or more yards and rush for 1,000 or more yards.
Ranked second among all NCAA QB’s in rushing yardage with 1,130.
Ranked seventh among all NCAA players with 7.02 yards per carry.
Was tied ninth among all NCAA players with 17 rushing TD’s.
Kaepernick, with 1,130 rushing yards, and running back Vai Taua, with 1,521 rushing yards, made 2008 the first year in school history that Nevada had two 1,000-yard rushers in the same season.[16]
Despite playing the entire second half with an ankle injury, he set a new Humanitarian Bowl record with 370 yards passing and was awarded the MVP in a losing effort. He was named the WAC Offensive Player of the Year at the end of the season. He was the first sophomore to win this award since Marshall Faulk of San Diego State did in 1992. He was also named first team All-WAC quarterback.[citation needed]
2009 (junior season)
Kaepernick was named the pre-season WAC Offensive Player of the Year at the WAC Media’s event in July. On August 3 it was announced he was named to the Davey O’Brien Award pre-season watch list. On August 14 it was announced that he was named to the pre-season Maxwell Award watch list and on August 17 to the Manning Award watch list. Kaepernick led the Wolf Pack to an 8–5 record and a second-place finish in the WAC behind undefeated Boise State. He was named second team All-WAC quarterback. He was the first player in Nevada history to earn the team’s MVP award twice, doing so in 2008 as well.[citation needed]
He finished the 2009 season with 2,052 passing yards and 1,183 rushing yards. He became the first player in NCAA history to record back-to-back 2,000/1,000 yard seasons. His 1,183 rush yards along with Luke Lippincott’s 1,034 and Vai Taua’s 1,345 makes him a part of the first trio of teammates in NCAA history to rush for 1,000 yards each in the same season.[citation needed]
Entering the 2010 NCAA season, Kaepernick ranked first among active college football players in rushing touchdowns. He was second in yards-per-carry (behind Wolf Pack teammate Vai Taua), total offense-per-game, and touchdowns scored. He ranked third in yards-per-play and fourth in pass touchdowns and total number of offensive plays. He was a counselor at the prestigious Manning Passing Academy event in Thibodaux, Louisiana, during the 2010 camp. His performance drew praise from various NFL and ESPN personnel including former New York Giants quarterback Jesse Palmer who said of Kaepernick, “by far, the strongest arm in the camp”.[17]
On November 26, Kaepernick led his team to a 34–31 overtime victory against the previously undefeated Boise State Broncos, snapping a 24-game win streak that had dated back to the 2008 Poinsettia Bowl. This game was played on Nevada’s senior night, the final home game for Kaepernick. Nevada Head Coach Chris Ault would later call this game the “most important win in program history”. During this game, Kaepernick surpassed 1,000 rushing yards for this season, becoming the first player in NCAA history to have over 2,000 yards passing and 1,000 yards rushing for three consecutive seasons. Along with Taua’s 131 yards rushing in the game, the duo became the NCAA’s all-time leaders in rushing yards by teammates (8,285) passing the legendary SMU “Pony Express” duo of Eric Dickerson and Craig James (8,193).[19]
On December 4 against Louisiana Tech University, Kaepernick joined Florida’s Tim Tebow as the second quarterback in FBS history to throw for 20 touchdowns and run for 20 in the same season. Later that same evening, Auburn’s Cam Newton joined Tebow and Kaepernick as the third. Kaepernick’s three rushing touchdowns in that game also placed him in a tie with former Nebraska quarterback and Heisman Trophy winner Eric Crouch for most rushing touchdowns in FBS history by a quarterback with 59 in his career.[20] Nevada claimed a share of the WAC title after defeating Louisiana Tech. Kaeperick was named WAC Co-Offensive Player of the Year with Kellen Moore, who won the award in 2009.[21]
Kaepernick is the only quarterback in the history of Division I FBS college football to have passed for over 10,000 yards and rushed for over 4,000 yards in a collegiate career. He is also the only Division 1 FBS quarterback to have passed for over 2,000 yards and rushed for over 1,000 yards in a single season three times in a career (consecutively).[citation needed]
Kaepernick graduated from Nevada in December 2010 with a bachelor’s degree in business management and is a member of Kappa Alpha Psi fraternity.[citation needed]
On April 29, 2011, the San Francisco 49ers traded up with the Denver Broncos from the thirteenth pick in the second round (#45 overall) to select Kaepernick as the fourth pick in the second round (#36 overall) at the 2011 NFL Draft. The Broncos received picks 45, 108, and 141 overall in exchange for the 36th overall pick.
San Francisco 49ers
2011 season
For the 2011 preseason, Kaepernick completed 24-of-50 passes for 257 yards and five interceptions.[23] Kaepernick spent the 2011 season as backup to Alex Smith and played his first game in Week 4 (October 2) on the road against the Philadelphia Eagles.[23] On third down and 17 during the first quarter, he came in for Smith as quarterback with the offense in shotgun formation and handed off to Frank Gore, who ran for five yards.[24] In the Week 5 (October 9) home game, a 48–3 win over the Tampa Bay Buccaneers, Kaepernick completed three passes for 35 yards. However, he failed to complete two passes in the 49ers’ Week 13 (December 4) game, a 26–0 win over the St. Louis Rams.[23] The 49ers finished the 2011 regular season 13–3 but lost the NFC championship to the eventual Super Bowl championNew York Giants.
In 2012 against the New York Jets, Kaepernick scored his first career touchdown on a seven-yard run.[25] Throughout the early season, Kaepernick was used as a wildcat quarterback.[26] In Week 10 against the St. Louis Rams, Kaepernick replaced starter Alex Smith, who had suffered a concussion in the first half. However, the game would end in a rare 24–24 tie, the first tie in the NFL in four years.[27]
With Smith still recovering, Kaepernick got his first NFL start the next game on November 19, during a Monday Night Football game against the Chicago Bears at Candlestick Park.[28] Kaepernick completed 16-of-23 for 246 yards with two touchdowns in a 32–7 win against a highly ranked Bears defense. 49ers head coachJim Harbaugh spoke highly of Kaepernick’s performance after the game, leaving open the possibility of Kaepernick continuing to start. “Usually tend to go with the guy who’s got the hot hand, and we’ve got two quarterbacks that have got a hot hand”, Harbaugh said.[29] A quarterback controversy began. Smith was ranked third in the NFL in passer rating (104.1), led the league in completion percentage (70%), and had been 19–5–1 as a starter under Harbaugh, while Kaepernick was considered more dynamic with his scrambling ability and arm strength.[30][31]
Smith was cleared to play the day before the following game, but Harbaugh chose not to rush him back and again started Kaepernick. In a rematch of the 2012 playoffs against the New Orleans Saints, the 49ers won 31–21 with Kaepernick throwing for a touchdown and running for another.[32][33] The following week, Harbaugh announced that Kaepernick would start for the 8–2–1 49ers against St. Louis. Harbaugh stated that Kaepernick’s assignment was week-to-week, not necessarily permanent,[34] but he remained the starter for the rest of the season.
In his first career postseason start, the 49ers won 45–31 against the Green Bay Packers, and he set an NFL single-game record for most rushing yards by a quarterback with 181, breaking Michael Vick‘s record of 173 in a 2002 regular season game.[35] He also broke the 49ers postseason rushing record, regardless of position.[36] Kaepernick carried the ball 16 times for 181 yards and scrambled five times for 75 yards, including touchdowns of 20 and 56 yards, and collected another 99 yards rushing on zone-read option plays. He also passed for 263 yards and two touchdowns. In total, Kaepernick had 444 yards of total offense with four touchdowns. Kaepernick became the third player after Jay Cutler in 2011 and Otto Graham in both 1954 and 1955 to run for two touchdowns and pass for two others in a playoff game.[35] In the NFC Championship game, the 49ers defeated the Atlanta Falcons 28–24 with Kaepernick completing 16-of-21 passes for 233 yards and one touchdown. The team advanced to Super Bowl XLVII in New Orleans against the Baltimore Ravens. Kaepernick threw for a touchdown and ran for another, but the 49ers fell behind early and could not come back, losing by a score of 31–34.[37]
2013 season
Kaepernick in 2013.
In the season opener of the 2013 season against the Green Bay Packers, Kaepernick threw for a career-high 412 yards and three touchdowns, the first 400-yard game by a 49ers quarterback since Tim Rattay on October 10, 2004. Of the total 412 yards, 208 yards were to newly acquired teammate Anquan Boldin, making his debut as a 49er. In addition, Kaepernick’s performance also marked the first 400-yard passing with three touchdowns performance by a 49ers quarterback since Jeff Garcia in the 1999 season.
In the NFC Championship Game against eventual Super Bowl championSeattle Seahawks, Kaepernick rushed for 130 yards, including a 58-yard run, and passed for 153 yards. The 49ers led until the fourth quarter. Two turnovers by Kaepernick led to the Seahawks having a 23–17 lead with a few minutes left. Kaepernick drove the 49ers to the red zone but with 22 seconds left, Kaepernick’s pass intended for Michael Crabtree was tipped by Seattle’s Richard Sherman and intercepted by Malcolm Smith, ending the 49ers’ season and attempt to return to the Super Bowl. Kaepernick ended the season with 3,197 yards passing, 21 touchdowns, and only eight interceptions. He also finished with 524 yards rushing yards and four rushing touchdowns.
2014 season
On June 4, Kaepernick signed a six-year contract extension with the 49ers, worth up to $126 million, including $54 million in potential guarantees, and $13 million fully guaranteed.[38]
On September 17, Kaepernick was fined by the NFL for using inappropriate language on the field.[39] On October 9, he was fined $10,000 by the NFL for appearing at a post-game press conference wearing headphones from Beats by Dre, while the league’s headphone sponsor was Bose.[40] In a game against the San Diego Chargers, he recorded a 90-yard run for a touchdown. The 49ers finished the season 8–8 and failed to make the playoffs for the first time since 2010. Kaepernick threw for 3,369 yards with 18 touchdowns and 10 interceptions. He rushed for 639 yards and one touchdown. Following the season, head coach Jim Harbaugh left to coach the University of Michigan.
2015 season
In 2015, Kaepernick struggled under new head coach Jim Tomsula. A day after a 27–6 collapse at St. Louis in Week 8, Kaepernick lost his starting job to backup Blaine Gabbert for Week 9 against Atlanta.[41] With Gabbert starting as their new quarterback, the 49ers narrowly won 17–16. On November 21, the 49ers announced that Kaepernick would miss the rest of the season because of an injured left shoulder that required surgery.[42] He finished the season with 1,615 yards passing, six passing touchdowns, five interceptions and 256 rushing yards with one rushing touchdown.
Head coach Tomsula was fired following the season and the 49ers hired Chip Kelly as his replacement.[43] In February 2016, Kaepernick expressed an interest in being traded.[44]
2016 season
Kaepernick entered the 2016 season competing for starting quarterback position with Gabbert.[45] On September 3, 2016, Kelly named Gabbert as the starter for the beginning of the 2016 season.[46] Prior to the 49ers Week 6 game against the Buffalo Bills, Kelly announced Kaepernick would start, marking his first start of the season. On October 13, it was announced that he and the 49ers restructured his contract, turning it into a two-year deal with a player option for the next season.[47] He completed 13-of-29 passes, with 187 passing yards, one passing touchdown and 66 rushing yards in the 49ers 45-16 loss to the Buffalo Bills.[48] On November 27, he recorded 296 passing yards, three passing touchdowns and 113 yards rushing in the 49ers’ 24-31 loss to the Miami Dolphins. He joined Michael Vick, Cam Newton, Randall Cunningham, and Marcus Mariota as the only quarterbacks in NFL history to record at least three passing touchdowns and 100 yards rushing in a game. In a Week 13 loss to the Chicago Bears, Kaepernick threw a career-low four yards before getting benched for Gabbert. He returned to the starting lineup the following week and threw for 183 yards and two touchdowns in the 49ers’ 13-41 loss to the Atlanta Falcons. On December 24, Kaepernick recorded 281 total yards, two passing touchdowns, one interception, one rushing touchdown, and a two-point conversion on the game-winning drive as the 49ers beat the Los Angeles Rams 22-21 to get their first victory on the season with Kaepernick as the starter.[49] For the 2016 NFL season, Kaepernick played twelve games and ended the season with 2,241 passing yards, sixteen passing touchdowns, four interceptions and added 468 rushing yards and two rushing touchdowns.[50]
On March 3, 2017, Kaepernick officially opted out of his contract with the 49ers, an option as part of his restructured contract, therefore making him a free agent at the start of the 2017 league year.[51]
Before a preseason game in 2016, Kaepernick sat down, as opposed to the tradition of standing, during the playing of “The Star-Spangled Banner“. During a post-game interview, he explained his position stating, “I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color. To me, this is bigger than football and it would be selfish on my part to look the other way. There are bodies in the street and people getting paid leave and getting away with murder”, referencing a series of events that led to the Black Lives Matter movement and adding that he would continue to protest until he feels like “[the American flag] represents what it’s supposed to represent”.[52][53][54] In the 49ers’ final 2016 preseason game on September 1, 2016, Kaepernick opted to kneel during the U.S. national anthem rather than sit as he did in their previous games. He explained his decision to switch was an attempt to show more respect to former and current U.S. military members while still protesting during the anthem after having a conversation with former NFL player and U.S. military veteran Nate Boyer.[55] After the September 2016 police shootings of Terence Crutcher and Keith Lamont Scott,[56] Kaepernick commented publicly on the shootings saying, “this is a perfect example of what this is about.”[57]
Kaepernick soon became highly polarizing as numerous people took public stances either supporting or maligning Kaepernick’s actions; in many cases this polarization correlates with racial divisions.[58] Various members of the NFL and other athletes across the United States, such as Megan Rapinoe, also began kneeling and/or raising their fist like the 1968 Olympics Black Power salute during the playing of the U.S. national anthem. Some U.S. military veterans voiced support using the social media hashtag “veterans for Kaepernick”.[59] In the following weeks, Kaepernick’s jersey became the top-selling jersey on the NFL’s official shop website.[60] An NFL fan poll was taken during the beginning of the 2016 NFL season and Kaepernick was voted the most disliked player in the NFL; this poll was polarized, with 37% of caucasians disliking him “a lot”, and 42% of African-Americans liking him “a lot.”[58] A few people posted videos of them burning Kaepernick jerseys. Former NFL MVP Boomer Esiason called Kaepernick’s actions “an embarrassment” while an anonymous NFL executive called Kaepernick “a traitor”.[61] The 2016 NFL season also saw a significant drop in their television ratings. Polls suggest that fans boycotting the NFL because of Kaepernick-inspired protests were a contributor to the decline in viewers.[62]He also claims to have received death threats.[57]
In September 2016, sociology professor Michael Eric Dyson wrote of the double bind faced by black people: “Black folk have, throughout history, displayed their patriotism by criticizing the nation for its shortcomings, and they have been, in turn, roundly criticized.”[63]Dyson suggested that the wisdom of the abolitionist Frederick Douglass maintains relevance to racism in the context of Kaepernick and protest.[63] Dyson concluded, “When a black athlete bravely speaks up, we punish him.”
Following his departure from the 49ers, Kaepernick went unsigned through the offseason and 2017 training camps.[67] Some commentators argued that he was not signed because his performance had declined,[68][69] while others disputed those interpretations and argued that he was being blackballed because of his on-field political actions.[70][71][67] By August 2017, the statistics website FiveThirtyEight concluded that “it’s obvious Kaepernick is being frozen out for his political opinions”, calling it “extraordinary … that a player like him can’t find a team”, after finding that “no above-average quarterback [measured by the total quarterback rating] has been unemployed nearly as long as Kaepernick this offseason”.[72]PresidentDonald Trump took credit for Kaepernick’s situation, claiming he would use Twitter to create a public relations crisis for any team that signed him.[73][74]
In late July and early August, the Baltimore Ravens were working to extend an offer to Kaepernick. According to Ray Lewis, the offer was terminated after a tweet by Kaepernick’s girlfriend compared the Ravens team owner Steve Bisciotti to a slave owner. According to other reports, Bisciotti had been objecting to signing Kaepernick even before the incident.[75][76]
Kaepernick was baptizedMethodist, confirmedLutheran, and attended a Baptist church during his college years.[78] Kaepernick spoke about his faith saying, “My faith is the basis from where my game comes from. I’ve been very blessed to have the talent to play the game that I do and be successful at it. I think God guides me through every day and helps me take the right steps and has helped me to get to where I’m at. When I step on the field, I always say a prayer, say I am thankful to be able to wake up that morning and go out there and try to glorify the Lord with what I do on the field. I think if you go out and try to do that, no matter what you do on the field, you can be happy about what you did.”[79]
Kaepernick has multiple tattoos. His right arm features a scroll with the Bible verse Psalm 18:39 written on it. Tattooed under the scroll are praying hands with the phrase “To God The Glory” written on them. To the left of both the scroll and praying hands is the word “Faith” written vertically. His left arm features a Christian cross with the words “Heaven Sent” on it referring to Jesus. Written above and below the cross is the phrase “God Will Guide Me”. Written to the left and right of the cross is the Bible verse Psalm 27:3. His chest features the phrase “Against All Odds” and artwork around it that represents “inner strength, spiritual growth, and humility”. His back features a mural of angels against demons.[80][81][82]
When he was ten years old, Kaepernick acquired a pet African spurred tortoise named Sammy. The tortoise since has grown to weigh 115 pounds.[83] When he was in fourth grade, Kaepernick wrote himself a letter, predicting that he would be 6 feet 4 inches, 190 pounds, and would “then go to the pros and play on the Niners or Packers even if they aren’t good in seven years”,[84] predictions which became accurate except for his weight.
Near the end of the 2012 NFL season, Kaepernick’s signature touchdown celebration earned him a photo fad by his namesake, called “Kaepernicking”. The signature touchdown pose involves flexing and kissing the bicep of his right arm. Kaepernick says he kisses his “Faith”, “To God The Glory”, and Psalm 18:39 tattoos and the reason he does the celebration is because “…it’s my way of saying I don’t really care what people think about my tattoos” and “God has brought me this far. He has laid out a phenomenal path for me. And I can’t do anything but thank Him.”[80]
Kaepernick reportedly started dating radio personality and television hostNessa in July 2015,[85] and officially went public about their relationship in February 2016.[86] Kaepernick began following a vegan diet in late 2015.[87]
In November 2016, Miami Herald reporter Armando Selguero asked Kaepernick about a shirt Kaepernick had worn in August showing Fidel Castro meeting with Malcolm X with the phrase, “Like minds think alike.”[88] Kaepernick said the shirt was a comment “about Malcolm X and what he’s done for people, but when pressed about the Castro aspect, added, “One thing that Fidel Castro did do is they have the highest literacy rate because they invest more in their education system than they do in their prison system, which we do not do here, even though we’re fully capable of doing that.”[89]
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Donald Trump Leads in Expectations, Shows Strength on Attributes (POLL)
By JULIE PHELAN
Donald Trump leads the Republican presidential field in the latest ABC News/Washington Post poll, not only in vote preferences but in expectations as well -– a remarkable feat for the non-politician who’s surprised the GOP establishment with his staying power as well as his support.Trump has leveled off with backing from 32 percent of Republicans and Republican-leaning independents who are registered to vote, easily enough to retain his frontrunner status. Fellow outsider Ben Carson follows with 22 percent, also flat this month after sharp summertime gains.Notably, even more leaned Republicans — 42 percent — say they expect Trump to win the GOP nomination for president. And given a list of six potential nominees, 43 percent pick Trump as having the best chance to win the general election just more than a year from now.See PDF with full results here.
Trump also fares well on many key attributes. Nearly half of leaned Republicans — 47 percent — view him as the strongest leader; 39 percent think he’d be best able to handle immigration; 32 percent feel he is closest to them on the issues; and 29 percent say he “best understands the problems of people like you.” In each case he leads the other top-five contenders for the nomination, Carson, Marco Rubio, Jeb Bush, Ted Cruz and Carly Fiorina.
Trump has weaknesses nonetheless. More view Carson as the most honest and trustworthy (33 percent vs. 21 percent for Trump), and Trump trails Bush in having the best experience (31 vs. 23 percent). While 19 percent say Trump has the best personality and temperament to serve effectively as president, that compares with a similar 24 percent for Carson.
Trump and Bush are particularly weak in another measure in this poll, produced for ABC byLanger Research Associates. Roughly equal numbers of leaned Republicans say the more they hear about Trump the less they like him, compared with liking him more, 45 vs. 47 percent. Albeit not a statistically significant result, Bush goes numerically underwater in this gauge, 47-41 percent.
Compare that to Carson: Sixty-four percent say as they hear more about him they like him more, vs. just 18 percent who like him less, a vast 46-point net positive. Scores for Rubio, Fiorina and Cruz also are net positive on this measure by 23, 17 and 8 points, respectively.
Horserace
For all the campaigning under way, the overall race for the GOP nomination looks to be on pause, with essentially no change in candidate support since last month. That reflects a loss of momentum for Trump and Carson alike. Still, among their opponents only Rubio cracks the double digits, and just barely, with 10 percent.
In addition to his appeal to anti-immigration Republicans, Trump’s candidacy is very much bolstered by desire in the party for a political outsider. Republicans and Republican-leaning independents by 57-39 percent say they’re looking for someone from outside the political establishment rather than someone with political experience – drastically different from the 21-76 percent division on this issue among leaned Democrats. And Trump wins 41 percent support from registered leaned Republicans looking for an outsider, vs. 18 percent from those who prefer political experience.
Trump also continues to garner greater support among less educated potential voters -– 46 percent among those who haven’t gone beyond high school, vs. 23 percent among those who’ve attended college. And he’s still more popular among men than women, with 37 vs. 27 percent. Indeed white men without a college degree (leaned Republicans overwhelmingly are white) are among his strongest groups in voter preference and on issues and attributes alike.
Trump also does particularly well among leaned Republicans who oppose the Trans-Pacific Partnership, a trade agreement he, too, opposes. He’s backed by 45 percent of its critics vs. 21 percent of its supporters.
Further, Trump is maintaining his support among groups where it might not be expected -– for example, he’s backed by a third of evangelical white Protestants, “very” conservative leaned Republicans and Southerners alike. He has 36 percent support in non-urban areas, vs. 24 percent in cities.
Groups
These results also are reflected in perceptions of candidate attributes. Men, those with less education, those who prefer a political outsider and opponents of the Trans-Pacific Partnership generally are more apt to rate Trump positively.
In one potential trouble spot for Trump, very conservative Republicans –- a key GOP group –- are less likely than “somewhat” conservatives to view him as the strongest leader of the lot, although he leads on this attribute in both groups, picked as strongest leader by 40 percent of strong conservatives and 52 percent of somewhat conservatives.
Additionally, just 14 percent of very conservatives think Trump’s the most honest and trustworthy; 40 percent say it’s Carson. And while very conservative leaned Republicans say by 53-35 percent that the more they hear about Trump the more they like him, that swells to 78-10 percent for Carson.
Methodology
This ABC News/Washington Post poll was conducted by landline and cellular telephone Oct. 15-18, 2015, in English and Spanish, among a random national sample of 1,001 adults, including 423 leaned Republicans. Results have a margin of sampling error of 3.5 points for the full sample and 5.5 points for leaned Republicans, including the survey’s design effect. Partisan divisions are 30-24-39 percent, Democrats-Republicans-independents.
The survey was produced for ABC News by Langer Research Associates of New York, N.Y., with sampling, data collection and tabulation by Abt-SRBI of New York, N.Y. See details on the survey’s methodology here.
Get real-time updates as this story unfolds. To start, just “star” this story in ABC News’ phone app. Download ABC News for iPhone here or ABC News for Android here.
Paul Ryan’s bid for House speaker splinters conservative Freedom Caucus
Lisa Mascaro
e conditions that Rep. Paul Ryan has set to become the next House speaker are driving a wedge in the fiery House Freedom Caucus, potentially weakening the unity of the conservative group that pushed out the current speaker.
Conservatives appear torn over the offer posed Tuesday by Ryan, the popular Wisconsin Republican, who has given his GOP colleagues until Friday to decide whether they are willing to end their infighting and unite around him.
The Freedom Caucus has so far maintained powerful cohesion as a 40-plus bloc of votes — a force that nudged Speaker John A. Boehner’s early retirement and then blocked the rise of Majority Leader Kevin McCarthy (R-Bakersfield). But that unity is showing signs of fraying.
Some members of the caucus said Ryan’s bid for speaker offered a compelling solution to the GOP’s leadership struggle. Others, though, appeared unwilling to yield to Ryan’s various conditions — a position amplified by conservative groups outside the Capitol.
Signs of division inside the caucus were already apparent.
Two lawmakers recently exited the group; one, California Rep. Tom McClintock, among the most conservative Republicans in the House, detailed the caucus’ “many missteps that have made it counterproductive to its stated goals.”
Deepening the wedge in the influential conservative caucus may become central to finding a new GOP speaker who can lead the divided majority and end the cycle of dysfunction that is damaging the party’s standing with voters ahead the 2016 presidential election.
On the other hand, if the Freedom Caucus unites against Ryan or withholds enough votes it would almost certainly prolong the chaotic leadership struggle.
“Listen, I think Paul is going to get the support he’s looking for,” Boehner said Wednesday after a closed-door party meeting. “But this decision is up to the members.”
Ryan, the party’s former vice presidential nominee, has said he is willing to take on the job to replace Boehner if the House majority’s three main factions pledge support.
His chief obstacle remains the Freedom Caucus, which had thrown its support to one of its own, a little known newcomer, Rep. Daniel Webster (R-Fla.).
With party elections set for Oct. 28, Ryan — like Boehner and McCarthy – would be expected to easily win a majority from within the House GOP. But the challenge will come the next day, when a full House floor vote poses a less certain outcome if all Republicans do not unite against Democrats.
Even if Ryan does not win the official support of the Freedom Caucus, he may be able to peel away enough votes to assure success, and some caucus members are already voicing support for him.
“We’re not a monolithic group by any stretch,” said Rep. Mick Mulvaney (R-S.C.), a leader of the Freedom Caucus, who warned that it may be difficult for the group to change its endorsement. “So the fact we have a difference of opinion amongst the various members is not at all unusual.”
Rep. Cynthia Lummis (R-Wyo.), a Freedom Caucus member who backed Rep. Jason Chaffetz (R-Utah) for speaker rather Webster, was leaning toward Ryan. Chaffetz dropped out of the running Tuesday and threw his support to Ryan.
“I’m not sure that Paul Ryan could walk on water today,” Lummis said after hearing his pitch, “but give him 10 days.”
Outside conservative groups, though, have already turned against Ryan and revved up their attacks.
And Republican voters appear to be in a fighting mood. Polling released Wednesday showed they want a new speaker who is not quick to compromise. Among GOP voters, 62% prefer a speaker who sticks to conservative principles, even if that leads to a government shutdown, according to the Associated Press-GfK poll.
Although Ryan is willing to consider some of the rules changes conservatives want to weaken the speaker’s grip on power, he has several demands of his own that the Freedom Caucus is hesitant to support.
Top among them is making it harder for conservatives to deploy one of their most powerful tools: calling a procedural vote to oust the speaker, which led to Boehner’s early retirement and warned McCarthy off the job.
Ryan told fellow Republicans he was willing to take “arrows in the chest, but not in the back,” according to those familiar with his remarks to the private meeting Tuesday evening.
That will be a tough sell for conservatives who see the motion to “vacate the chair” as the strongest leverage they have over the leadership.
Some changes, such as raising the threshold for bringing such a motion to the floor or approving it, could be acceptable.
Conservative radio talk show host Laura Ingraham raised particular objection over Ryan’s condition that he wouldn’t travel as much for the party as Boehner had so that he could spend more time at home with his family.
“George Washington left the luxury and beauty of Mount Vernon for Valley Forge,” she tweeted, referring to the Washington’s role in the Revolutionary War. “He even worked wkends & morning workouts for his people.”
The Freedom Caucus held a private meeting with Ryan later Wednesday. The group, which includes newer members of Congress as well as more veteran conservatives, is guided by internal rules that require 80% support to endorse a candidate, which Webster was able to win.
But the endorsement of Webster was binding only through the internal party election, meaning lawmakers in the group would be free to vote as they wish on the floor.
Ryan had indicated to his colleagues that he wanted the support from all three caucuses — the Freedom Caucus, the conservative Republican Study Committee and a small moderate GOP wing.
It’s unlikely that Ryan will settle for a promise that the Freedom Caucus will support him during the floor vote if it keeps its previous endorsement for his rival. A Ryan aide said he wants the full caucus’ formal endorsement now.
Paul Ryan is still talking to conservatives about supporting his speaker bid
Erin Kelly and Deirdre Shegreen
Rep. Paul Ryan has apparently not yet been able to secure the support of House conservatives for his bid for speaker, despite the confident assertion by the man he hopes to succeed that Ryan will be able to unite the fractious Republican conference.
“I think Paul is going to get the support that he is looking for,” speaker John Boehner told reporters Wednesday after a meeting of House Republicans. Boehner announced that Republicans will choose a new speaker next week, voting in conference next Wednesday to pick their nominee and on the House floor next Thursday.
But after an hour-long meeting with the rebellious Freedom Caucus Wednesday, Ryan shrugged off questions about whether he had won the group’s endorsement. “We had a nice meeting, a good chat,” Ryan said. Asked if he got a commitment, he said, “we just had an exchange of ideas” and a conversation about “how to make Congress work better.”
Members of the Freedom Caucus said they planned to meet again Wednesday night to talk about Ryan’s bid.
“We’re not done yet,” said Rep. Tim Huelskamp, R-Kan. “Everything’s still being discussed.”
Ryan announced Tuesday night that he will run for the top leadership job if he gets the support of all GOP factions. The Wisconsin Republican gave his colleagues until Friday to decide whether they can support him. Ryan, chairman of the Ways and Means Committee and the 2012 Republican nominee for vice president, had repeatedly said he did not want the job but was pressed to run by Republicans who see him as the best candidate to unite the GOP conference.
“We as a conference should unify now,” Ryan told reporters Tuesday night after meeting with his Republican colleagues. “What I told members is if you can agree to these requests and if I can truly be a unifying figure, then I will gladly serve, and if I am not unifying, that is fine as well — I will be happy to stay where I am.”
Rep. Paul Ryan will run for House speaker if GOP factions endorse him
The Freedom Caucus, a group of about 40 conservative members, has been the most nettlesome. The group helped force Boehner into retirement by threatening to call a no-confidence vote on his speakership. Boehner plans to leave Congress at the end of next week, assuming that House members have elected a new speaker.
The influential group also convinced Majority Leader Kevin McCarthy, R-Calif., to withdraw his bid to become speaker when it became clear he could not win their support. The Freedom Caucus has already endorsed Rep. Daniel Webster, R-Fla., to be the next speaker.
The Caucus is seeking changes to House rules that will allow them to offer more amendments, get more conservative bills on the floor and restore the independence of committee chairmen. Those changes would diminish the speaker’s power. “The next speaker must follow House rules and commit to an open process for debating and amending legislation,” the Freedom Caucus said in a recent Twitter post. “Let the House work its will.”
Before the meeting, Rep. Mick Mulvaney, R-S.C., a member of the group, sounded skeptical that Ryan could win the group’s support. For the Freedom Caucus to endorse, 80 percent of the group’s 40 members have to agree, Mulvaney said, adding that is a “very difficult” bar to meet.
Mulvaney said one of his questions for Ryan will be whether he really wants to serve as speaker. “If you listen to Paul, what you hear is ‘I don’t want the job’,” Mulvaney said.
Ryan said Tuesday he is willing to consider rule changes to give all members a greater voice in the House. But he also said he wants to ensure that “we do not experience constant leadership challenges and crises.”
Boehner said Wednesday that Republicans already know Ryan well. “He works hard; he’s very bright.”
Story 1: Dallas Cowboys Win 24 -20 Over Detroit, Dallas Citizens Pockets Picked By City five-cent environmental fee for each single-use bag — plastic and paper bags! — It Is A Tax Stupid — Vote Out of Office All Representatives Who Passed This Tax — Videos
An Inconvenient tax: picking people’s pockets
By Raymond Thomas Pronk
Warning, when you check out, be on the lookout for pickpockets.
The latest green movement cause du jour is the banning or taxing of disposable plastic and paper bags. These laws or city ordinances are designed to nudge or coerce customers to bring their own reusable tote bag when they shop for groceries and other merchandise.
A number of United States cities including Washington, D.C., Los Angeles, San Francisco, Portland, Seattle, Boulder, Austin and now unfortunately Dallas have either banned or taxed disposable plastic and/or paper bags or so-called “single-use carryout bags.” According to the Earth Policy Institute, over 20 million people are currently covered by 132 city and county plastic bag bans or fee ordinances in the U.S.
For decades most American and European businesses have provided their customers bags, at no additional charge, to carryout and transport their purchase. In the 1980s businesses began to give their customers a choice of paper or plastic.
On March 26, 2014, the Dallas City Council passed an 8 to 6 City Ordinance No. 29307. It requires business establishments that provide their customers “single-use carryout bags” to register with the city annually each location providing these bags and charge their customers an “environment fee” of 5 cents per bag to promote a “culture of clean” and “to protect the natural environment, the economy and the health of its residences.”
Give me a break. It is a new tax to raise millions in new tax revenue for the City of Dallas. Who are the elected Dallas-8 council member watermelons (green on the outside, red on the inside) that ordained this tax on the people and businesses of Dallas? The names of the Dallas-8 are Tennell Atkins, Carolyn R. Davis, Scott Griggs, Adam Medrano, Dwaine R. Caraway, Sandy Greyson, Philip T. Kingston, and Mayor Mike Rawlings.
The Dallas-8 are led by council member Caraway, who wanted to completely ban plastic and paper single-use carryout bags. Instead they decided to shake down Dallas businesses and their customers with a new highly regressive tax. Caraway refuses to call it a tax and claims the new ordinance which went in effect on January 1 is “a ban with a fee, such as other cities are doing across the United States.”
The eight-page ordinance includes the definition and standards that reusable carryout bags must satisfy: “A reusable carryout bag must meet the minimum reuse testing standard of 100 reuses carrying 16 pound.” Reusable bags may be made of cloth, washable fabric, durable materials, recyclable plastic with a minimum thickness of 4.0 mil or recyclable paper that contains a minimum of 40 percent recycled content.
All of the above reusable bags must have handles with the exception of small bags with a height of less than 14 inches and a width of less than 8 inches.
Business establishments can either provide or sell reusable carryout bags to its customer or to any person.
The city ordinance exempts some bags from the single-use carryout definition including:
Plastic bags used for produce, meats, nuts, grains and other bulk items inside grocery or other retail stores,
Single-use plastic bags used by restaurants to take away prepared food only where necessary to prevent moisture damage from soups, sauces, gravies or dressings,
Recyclable paper bags used by restaurants to take away prepared food,
Recyclable paper bags from pharmacies or veterinarians for prescription drugs,
Laundry, dry cleaning or garment bags,
Biodegradable door-hanger and newspaper bags, and
Bags for trash, yard debris and pet waste.
The Dallas 5 cent paper and plastic bag tax or environment fee applies only to single-use carryout bags defined as bags not meeting the requirements of a reusable bag.
Businesses that violate the ordinance can be fined up to a maximum of $500 per day.
Lee Califf, executive director of the American Progressive Bag Alliance, a bag manufacturing group, said “This legislation applies to a product that is less than 0.5 percent of municipal waste in the United States and typically less than 1 percent of litter in studies conducted across the country;” “Placing a fee on a product with such a minuscule contribution to the waste and litter streams will not help the environment: but it will cost Dallas consumers millions more per year on their grocery bills, while hurting small business and threatening the livelihoods of the 4,500 Texans who work in the plastic bag and recycling industry.”
Stop the shakedown of Dallas businesses and their customers. Repeal the inconvenient tax on paper and plastic disposable bags by voting out of office the Dallas-8 city council members who voted for this tax, Dwaine Caraway. Support your Texas state representatives in passing a new law that would prohibit cities such as Dallas and Austin from banning or taxing paper and plastic carryout bags.
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On January 1, 2015, the Carryout Bag Ordinance will start in Dallas.
Are you ready?
RETAILERS
CUSTOMERS
Retailers offering single-use bags to customers must:
Register ELECTRONICALLYHERE; works best on Chrome or Firefox (if you need to register using a paper form via USPS, clickhere)
Assess a five-cent environmental fee for each single-use bag; the environmental fee is not subject to sales tax
Print total number of bags and fee on each receipt
Keep records available for inspectors
Post signs in controlled parking lots reminding customers to bring their bags
Post signs in the store, within six feet of each register, per the ordinance SAMPLE HERE
The full link to the Code Compliance carryout bag website, with forms and additional information, is here
Retailers offering only reusable bags, as defined by the ordinance, have different requirements.
All retailers should look at their operations and determine if their bags are single-use, reusable, or exempted from the single-use definition. Consult the full ordinance for all details pertaining to the ordinance and what is expected for each type of bag including thickness, language on the bag, durability, signage, and other considerations.
Customers, you are encouraged to bring your bagand keep your change.Single-use carryout bags have a five-cent per bag environmental fee. A single-use bag can be paper or plastic.Reusable bags do not have the environmental fee, though stores may charge you to offset costs. Reusable bags stores offer can be made from cloth or other washable woven materials, recyclable paper, or recyclable plastic so long as they meet certain requirements. However, any bag you bring with you to use is considered reusable since you are reusing it.There are some bags that are exempted from the single-use bag definition:
Laundry, dry cleaning or garment bags;
Biodegradable door-hanger and newspaper bags;
Bags for trash, yard debris or pet waste;
Plastic bags used for produce, meats, nuts, grains and other bulk items inside grocery or other retail stores;
Recyclable paper bags from pharmacies or veterinarians for prescription drugs; and,
Recyclable paper bags used by restaurants to take away prepared food.
Single-use plastic bags used by restaurants to take away prepared food only where necessary to prevent moisture damage from soups, sauces, gravies or dressings.
Remember to recycle the bags you can recycle appropriately.
Many wonder why the City passed this ordinance. The Dallas City Council passed the ordinance to help improve the environment and keep our city clean. The City is currently spending nearly $4 million dollars to remove litter from our community to keep it beautiful and thriving.
The Carryout Bag ordinance is intended to encourage shoppers to use reusable bags to carry goods from stores, restaurants, and other locations to reduce the number of bags that can end up loose in the environment as litter.
To help you understand, we have created this list of frequently asked question.
The carryout bag ordinance outlines the City’s “desire to protect the natural environment, the economy and the health of its residents,” and the “negative impact on the environment caused by improper disposal of single-use carryout bags.” The Dallas City Council approved the ordinance on March 26, 2014.
The ordinance takes effect on January 1, 2015.
Retailers and customers should be ready and know all the details. This website and the City’s Code Compliance Services website have details to help retailers prepare. The links to the Code website on DallasCityHall.com are below.
Some are still unclear how the ordinance may impact them.
Businesses will have to register each location with the City in order to offer single-use bags. No registration is necessary if a business is only offering reusable bags or bags that are exempted from the single-use bag definition in the ordinance. Businesses must be registered before distributing single-use carryout bags starting January 1, 2015. Businesses are required to collect a five-cent environmental fee for every single-use bag used by a customer.
Customers will be charged a five-cent environmental fee for each single-use bag, paper or plastic, they receive from retailers. Again, reusable bags and bags exempted from the definition of single-use bags do not carry the environmental fee. You can avoid the environmental fee by bringing your own bags with you. The five cent fee assessed for the single-use bag is not subject to sales tax.
Will I still be able to get plastic carryout bags?
Yes, provided your retailer chooses to offer them and collect the environmental fee.
Can I bring my own reusable bags to carry out items I purchased?
Yes. Customers are encouraged to bring their own reusable bags to carry out their items instead of paying the five-cent environmental fee per single-use plastic or paper bag.
If I reuse a single-use carryout bag, will I have to pay the fee again?
Whatever bag you bring — tote bag, golf bag, diaper bag, satchel, purse, or produce bag — if you bring it with you to reuse, you do not have to pay the environmental fee.
Where does the money go?
A portion of the fees will be used to pay for enforcement of the ordinance and for public education efforts. Stores keep 10 percent of the five-cent fee to help offset administrative costs.
Does this ordinance apply to all businesses?
All retailers that offer single-use carryout bags in Dallas are subject to this ordinance.
What about non-profits or charities?
If the non-profit or charity offers food, groceries, clothing, or other household items free of charge to clients, they may still use single-use carryout bags for the specific function of distributing those items. However, the ordinance will apply to any bags used at the point of sale for any goods sold through the non-profit or charity.
Additionally, any non-profit or charity that collects goods for donation from the public or which leaves informational material for the public must be sure any door-hanger bags left for collecting those goods or providing that informational material are biodegradable.
Does the ordinance include all bags?
The ordinance applies to single-use paper or plastic carryout bags used by businesses as defined in the ordinance language.
What if businesses don’t follow the ordinance?
Businesses that violate the ordinance could face fines of up to $500 per day.
How will the ordinance be enforced?
City Code Compliance inspectors will respond to complaints and provide proactive enforcement.
How can the City know if businesses aren’t complying with the law? Will they be doing more inspections?
There will be proactive enforcement and periodic audits. Additionally, the City will respond to complaints from residents.
Will the ban on single-use bags at city facilities apply to retailers at American Airlines Center, city museums, the Omni Dallas Hotel, and Fair Park?
Yes. The City Attorney’s Office will work with Code Enforcement to determine which facilities are affected and how.
Whom should I contact if I have additional questions?
Call 3-1-1, the Office of Environmental Quality, Code Compliance or email us atgreendallas@dallascityhall.com.
NEW⇒ Where can I find the forms? Forms and more information are available on the Code Compliance website dedicated to the Carryout Bag Ordinance here.
But beginning January 1 retailers will have to charge customers who want them “an environmental fee” of five cents per bag, and they will get to keep 10 percent of that money. The ordinance also says retailers who want to keep handing out plastic and paper bags will have to register with the city and keep track of bags sold.
The city says the money raised from the bag fees will help go toward funding enforcement and education efforts that assistant city manager Jill Jordan told the council could cost around $250,000 and necessitate the hiring of up to 12 additional staff members.
Wednesday’s vote came a year after council member Dwaine Caraway asked the city attorney to draft an ordinance that completely banned the bag. The council member says the ordinance passed today was a compromise born out of “a fair process” that included environmentalists, bag manufactures and retailers. Several of his colleagues wanted to send the proposed ordinances back to committee for further debate. But Caraway wanted a vote now.
“You get to a point where it’s time to make decisions, decisions that will have a great impact on the city of Dallas and our environmental status … and the beautification of our city,” he said. The process has “been pretty tough. it’s been back and forth. We listened and listened fairly.”
But six of his colleagues disagreed: Sheffie Kadane said the fee-based ban will result in a lawsuit from retailers and manufacturers. Rick Callahan called it a “government intrusion.” Jennifer Staubach Gates said it wouldn’t do any good, because in five years the reusable bags supported by the environmentalists will end up in landfills too. And Jerry Allen said the three options being considered by council, including a full-out ban, represented “a lack of clear conviction,” which he found disappointing.
And then there was Lee Kleinman, who on Friday indicated he supported the fee-based ordinance. Five days later he’d changed his mind and said he no longer cared what happened in his colleagues’ districts.
“I would personally probably stay more focused on my own district, which does not have the same trash problems as others,” he said, to the amazement of some of his southern sector colleagues. “Why should I care if someone is shopping like at Southwest Center Mall and they want a plastic bag? If people in that community are satisfied with the conditions around that mall, why should I utilize my position in North Dallas to improve those conditions? I should just focus my energies on North Dallas redevelopment projects and not help another improve quality of life in other areas of the city.”
That entire speech is above, thanks to my colleague Scott Goldstein.
Vonciel Jones Hill, who has said in the past she opposes any ban or bag tax, was no present for today’s vote. Monica Alonzo also voted against it, but said nothing.
In a statement released following the vote, the American Progressive Bag Alliance said it’s “a move that will fail to accomplish any environmental goals while jeopardizing 4,500 Texas jobs and hurting consumers.”
Its executive director, Lee Califf, said in a statement that “the vote to approve a 5-cent plastic and paper grocery bag fee in Dallas is another example of environmental myths and junk science driving poor policy in the plastic bag debate.”
But it’s not clear if the state will allow Dallas’ new bag “ban” — or bag tax, more appropriately.
Attorney General Greg Abbott is going to weigh in on the legality of bag bans, following a request by state Rep. Dan Flynn of Canton on behalf of the Texas Retailers Association. Jerry Allen asked Dallas City Attorney Warren Ernst if the state allows bag bans.
“We are ready to defend that position,” Ernst said. “If it’s the will of the council to pass the ordinance, we’ll defend that as a legal action by the city.”
Allen was not convinced, insisting “there’s a tremendous amount of uncertainty.” Ernst appeared to agree.
Those council members opposed to the ordinance said Dallas needs to do a better job of enforcing its litter laws. Jordan told the council that the city spends $4 million annually on trash pick-up, “and we still have litter.”
In the end, said council member Scott Griggs, “this is just one step. We tackle the bags then we can move on to Styrofoam and other issues that cause trash. This is a large elephant we’ll have to take on as a city and a council.”
Kroger’s Gary Huddleston, also of the Texas Retailers Association, shared a hug with Dwaine Caraway following today’s council vote.
Following the vote, Gary Huddleston, head of the Texas Retailers Association, said he wasn’t sure whether his organization would sue the city. He noted that they are awaiting the attorney general’s ruling on the legality of a fee.
“It will affect the retailers in the city of Dallas and it will affect our customers,” Huddleston said. “They’ll have to pay for their paper and plastic bags or they bring in their reusable bags.”
“We personally believe the solution to litter in the city of Dallas is a strong recycling program and also punishing the people that litter and not punishing the retailer,” Huddleston said.
The fee means that businesses will have to institute additional programming and training in order to enforce ordinance and track the fees. Customers will “have to pay a nickel a bag, whereas maybe they use that nickel to buy more product in my store.”
But Huddleston’s concerns didn’t stop him from hugging Caraway outside chambers. The two men smiled and embraced in front of television cameras.
The council member said he was pleased with the result of more than a year of work. He refused to call the fee a “tax.”
“It’s a ban with a fee, such as other cities are doing across the United States,” Caraway said.
He said it’s important for residents to know the ban does not cover a variety of bags, such as those in the produce section of grocery stores or at restaurants
“Folks need to understand that these are single-use carryout bags,” Caraway said. “These are simply those thin, flimsy bags that take flight and that are undesirable and bad for the environment.”
Staff writer Scott Goldstein contributed to this report.
Dallas Will Charge Fees for Plastic Bag Use
By Josh Ault and Ken Kalthoff
The City of Dallas has implemented new rules for plastic grocery bags, imposing a 5 cent fee on single-use plastic or paper grocery bags. The rules go into effect in January. (Published Wednesday, Mar 26, 2014)
Thursday, Mar 27, 2014 • Updated at 5:56 AM CST
The Dallas City Council has passed a proposal ordering retailers to charge a fee for one-time use plastic bags while partially banning them from city-owned facilities.
In a 8-6 vote, the council passed the ordinance requiring retailers to charge customers a $0.05 fee if they request single-use plastic or paper bags.
Dallas Plastic Bag Ban Vote Wednesday[DFW] Dallas Plastic Bag Ban Vote Wednesday
The Dallas City Council is expected to vote on plastic bag ban issue on Wednesday. (Published Monday, Mar 24, 2014)
Dallas City Councilman Dwaine Caraway accepted the compromise of a bag fee after spending a year fighting for a ban on single-use bags.
“This is an opportunity for us to clean our city, to clean our environment and to move forward, and to be like the other cities across the country and around the world,” Caraway said.
Zac Trahan with Texas Campaign for The Environment said Austin and eight smaller Texas cities have taken stronger action by banning single-use bags, but he still supported the Dallas regulations.
“It’s still a step in the right direction because it will still result in a huge reduction in the number of bags that will be distributed,” he said.
The ordinance also requires those retailers to register with the city and track the number of single-use bags sold.
The retailer would keep 10 percent of the environmental fee with the remainder going to the city to fund enforcement and education efforts.
Lee Califf, the executive director of the bag manufacturers’ group American Progressive Bag Alliance, released the following statement after the ordinance was passed.
“The vote to approve a 5-cent plastic and paper grocery bag fee in Dallas is another example of environmental myths and junk science driving poor policy in the plastic bag debate. This legislation applies to a product that is less than 0.5% of municipal waste in the United States and typically less than 1% of litter in studies conducted across the country. The City Council rushed through a flawed bill to appease its misguided sponsor, despite the fact that 70% of Dallas residents opposed this legislation in a recent poll.
“Placing a fee on a product with such a minuscule contribution to the waste and litter streams will not help the environment; but it will cost Dallas consumers millions more per year on their grocery bills, while hurting small businesses and threatening the livelihoods of the 4,500 Texans who work in the plastic bag manufacturing and recycling industry. Councilman Caraway may view this vote as a victory for his political career, but there are no winners with today’s outcome.”
Several Council Members opposed any new restrictions.
Rick Callahan said grocery bags are only a small part of the Dallas litter problem and better recycling education is needed.
“Banning something or adding a fee, putting more regulation on business is not the answer,” Callahan said.
The ordinance does ban single-use plastic or paper bags at city-owned facilities and events.
It still allows distributing multi-use, or stronger, paper or plastic bags for free so stores can get around charging the fee by offering better bags.
The ordinance goes into effect Jan. 1, 2015.
After more than a year of considering a ban on disposable shopping bags, the Dallas City Council voted instead last week to impose a 5-cent “environmental fee” on each bag.
In previous columns, Steve Blow had opposed a ban, while Jacquielynn Floyd had supported it. Today, they debate the council’s new approach.
Steve: Leave it to the Dallas City Council to take a bad idea and find a way to make it worse. I thought a ban on shopping bags was a bad idea, but slapping a new tax on Dallas shoppers is even more pointless.
This isn’t just a new tax, it’s a new mini-bureaucracy at City Hall. There’s talk of hiring 12 new people to run the program. And I’m sure someone is already writing a job description for a Deputy Junior Assistant City Manager for Retail Packaging Assessment and Oversight.
Good grief. I had little faith that a ban would accomplish much. I’m even more dubious about a bag tax — except as a tool of government growth.
Jacquielynn: Dude, it’s a nickel. Nobody’s getting taxed into bankruptcy here.
I hope, in fact, that this modest 5 cents is enough to assign at least minimal value to these awful bags. The reason they end up on fences, in fields and as tree garbage is that they’re so free and plentiful.
Almost everybody collects them every day — yet they have virtually no value. It’s human nature to take something for free, then toss it or lose track if you don’t need it.
Like it or not, this is the direction cities are headed. Los Angeles has had a ban in effect for more than a year. New York and Chicago are talking about either banning or limiting plastic bags.
I don’t think this is a case of forcing people to bow to the authoritarian rule of government overlords — we’re asking for a very minor change in their habits. It makes environmental sense, like other conservation and recycling measures that have become routine.
Steve: They don’t end up as litter because they’re free and plentiful. They end up as litter because a few dopes among us litter. A nickel is not going to transform those dopes into responsible citizens. Anyone careless with trash is not going to suddenly become careful with 5-cent trash.
On a fundamental level, this issue chaps my inner libertarian. I don’t think “government regulation” is automatically a dirty word. But I firmly believe the need must be obvious and compelling before we add more regulation.
Jack, you may be fixated on plastic bags as you drive around, but I promise they make up a small percentage of the litter that’s out there. I see more cups than anything. Will we be required to carry around reusable cups next? Or pay a cups tax?
Jacquielynn: Steve, I agree that clueless dolts dump all kinds of garbage, from burger wrappers to moldy old sofas.
Plastic bags are a particular problem, though, for the very qualities that make them such a successful consumer product: They’re cheap, durable, lightweight and water-resistant. They’re mobile, easily blown into trees, creeks, fences and even for miles out into rural areas. A farmer who lives outside Dallas told me this week he hates plastic bags because when they land on his property, baby calves can choke on them.
Most of us don’t have calf problems, but the bags’ weightlessness makes them vulnerable to any breeze. Even if they’re responsibly discarded, they’ll blow out of open trash cans, trucks, you name it.
They’re not just a blight — they’re a highly contagious blight.
Steve: Oh, c’mon. How am I supposed to rebut choking baby calves?
I will point out that Washington, D.C., has a real paradox on its hands. It implemented a 5-cent fee on disposable bags in 2010. And in a survey last year, residents reported using 60 percent fewer bags.
But get this: Tax revenue from the bags has been going up, not down as was expected. The city had originally projected to collect $1.05 million in fiscal 2013. Instead, bag fees topped $2 million.
The dollars don’t lie. More bags are being used after four years. Sure, some people will switch to reusable bags. But this sure isn’t going to make plastic bags disappear. Is a regressive new tax really worth it?
Jacquielynn: I’d be happy to sidestep the entire “tax” issue by banning bags outright. If you want groceries, make sure you have a way to get them home.
But if cities aren’t ready to take that step, and they actually see a windfall out of bag taxes, maybe that should be dedicated to cleanup efforts.
Ideally, though, stores wouldn’t have the things at all. They can make boxes available (a la Costco). They can sell heavier plastic multiple-use bags for 25 or 50 cents. Shoppers buying just one or two items could learn to use the flexible appendages at the ends of their arms to carry stuff away.
The mail I’ve received from angry readers makes it plain that a lot of people loathe this plan, whether you call it a ban or a tax.
But I just don’t think we’re asking for a dramatic change in the way we live our lives. If we don’t stop assuming that everything we send to the landfill magically disappears, the landfill is going to start coming to us. Do you really want to live in a city that has garbage in the trees?
Steve: No, it’s not a drastic change. Just a needless one. And I’m looking out my office window at six or seven trees with nary a bag in sight. Except for a few spots, the litter problem has been overblown.
I just wish we had tried a major public-awareness campaign before imposing more taxes and more regulation. 1. Recycle bags where you get them. 2. Try reusable bags. 3. Don’t litter, you dope.
Jacquielynn: On those points, we’re in wholehearted agreement.
Don’t bag it. Butt out. That’s the message Wednesday to Attorney General Greg Abbott from supporters of efforts to ban the use of plastic bags in Texas. The Attorney General has been asked to determine whether or not city ordinances like the one in Austin go too far and violate state law. While Abbott was told to back off, the state lawmaker who asked the Attorney General to get involved explained why he made the request.
It’s no longer legal in Austin for a retailer to provide customers with plastic bags. Wednesday, those who want to keep the bag ban on the books gathered at the state capitol to send a message.
“We call on the Attorney General today to keep his nose out of local government’s business of protecting the health of their residents and local communities, and leave well enough alone,” said Robin Schneider who is the Executive Director of Texas Campaign for the Environment.
The group is filing a legal brief to convince the Attorney General that cities in Texas have the Home-Rule authority to out-law plastic bags. Austin is among nearly a dozen towns that have passed bag ban ordinances. Wednesday is the deadline to weigh in before the Attorney General issues an opinion. The question is whether or not a municipal ban violates the state health and safety code.
The state lawmaker who requested the legal opinion, state Rep. Dan Flynn (R) Vann said his concern is not necessarily about the use of plastic bags but about the perceived abuse of power.
“The last this particular law was looked at was about 20 years ago,” said Rep. Flynn.
The Republican from Van heads up a House Committee created to make government more transparent. According to Flynn, he made the request for a legal opinion after getting several calls asking for clarification.
“It’s not about Austin, it’s all about state authority and the power grab by some cities over state law, that’s just about the easiest way to say it.”
When a ban on plastic bags was approved in Austin, the lack of a similar, free, option spurred much of the opposition. Shoppers are required to buy their own reusable cloth of thick plastic bags. Some stores in Austin do provide paper bags but typically charge for them,” said Flynn.
“They’re not charging in Fort Stockton,” said Darren Hodges, Mayor Pro Tem of that west Texas town.
The Fort Stockton city council worked with local retailers before being one of the first to pass a ban. According to Hodges, free biodegradable bags are offered to Fort Stockton shoppers. That kind of option, he agreed, could help reduce back lash in communities considering similar action.
“It’s best to get with your big bag people and work with them on something that they can live with, at least get everyone involved in the process and see if you can move forward,” said Hodges.
An A.G. ruling against bag bans will not strike down any ordinance. It could provide a legal foot-hold for any group that takes a city to court.
The Dallas city council, earlier Wednesday, considered its own bag ban. Instead of out-lawing them, in a close vote, the Dallas council passed an environmental fee ordinance, which is essentially a new tax.
Starting next year shoppers in Dallas will be charged 5-cents for every plastic and paper bag that they use.
In reaction to the Dallas council vote, the American Progressive Bag Alliance issued the following statement:
“The vote to approve a 5-cent plastic and paper grocery bag fee in Dallas is another example of environmental myths and junk science driving poor policy in the plastic bag debate. This legislation applies to a product that is less than 0.5% of municipal waste in the United States and typically less than 1% of litter in studies conducted across the country. The City Council rushed through a flawed bill to appease its misguided sponsor, despite the fact that 70% of Dallas residents opposed this legislation in a recent poll.”
Los Angeles rang in the 2014 New Year with a ban on the distribution of plastic bags at the checkout counter of big retailers, making it the largest of the 132 cities and counties around the United States with anti-plastic bag legislation. And a movement that gained momentum in California is going national. More than 20 million Americans live in communities with plastic bag bans or fees. Currently 100 billion plastic bags pass through the hands of U.S. consumers every year—almost one bag per person each day. Laid end-to-end, they could circle the equator 1,330 times. But this number will soon fall as more communities, including large cities like New York and Chicago, look for ways to reduce the plastic litter that blights landscapes and clogs up sewers and streams.
While now ubiquitous, the plastic bag has a relatively short history. Invented in Sweden in 1962, the single-use plastic shopping bag was first popularized by Mobil Oil in the 1970s in an attempt to increase its market for polyethylene, a fossil-fuel-derived compound. Many American customers disliked the plastic bag when it was introduced in 1976, disgusted by the checkout clerks having to lick their fingers when pulling the bags from the rack and infuriated when a bag full of groceries would break or spill over. But retailers continued to push for plastic because it was cheaper and took up less space than paper, and now a generation of people can hardly conceive of shopping without being offered a plastic bag at the checkout counter.
The popularity of plastic grocery bags stems from their light weight and their perceived low cost, but it is these very qualities that make them unpleasant, difficult, and expensive to manage. Over one third of all plastic production is for packaging, designed for short-term use. Plastic bags are made from natural gas or petroleum that formed over millions of years, yet they are often used for mere minutes before being discarded to make their way to a dump or incinerator—if they don’t blow away and end up as litter first. The amount of energy required to make 12 plastic bags could drive a car for a mile.
In landfills and waterways, plastic is persistent, lasting for hundreds of years, breaking into smaller pieces and leaching out chemical components as it ages, but never fully disappearing. Animals that confuse plastic bags with food can end up entangled, injured, or dead. Recent studies have shown that plastic from discarded bags actually soaks up additional pollutants like pesticides and industrial waste that are in the ocean and delivers them in large doses to sea life. The harmful substances then can move up the food chain to the food people eat. Plastics and the various additives that they contain have been tied to a number of human health concerns, including disruption of the endocrine and reproductive systems, infertility, and a possible link to some cancers.
California—with its long coastline and abundant beaches where plastic trash is all too common—has been the epicenter of the U.S. movement against plastic bags. San Francisco was the first American city to regulate their use, starting with a ban on non-compostable plastic bags from large supermarkets and chain pharmacies in 2007. As part of its overall strategy to reach “zero waste” by 2020 (the city now diverts 80 percent of its trash to recyclers or composters instead of landfills), it extended the plastic bag ban to other stores and restaurants in 2012 and 2013. Recipients of recycled paper or compostable bags are charged at least 10ȼ, but—as is common in cities with plastic bag bans—bags for produce or other bulk items are still allowed at no cost. San Francisco also is one of a number of Californian cities banning the use of polystyrene (commonly referred to as Styrofoam) food containers, and it has gone a step further against disposable plastic packaging by banning sales of water in plastic bottles in city property.
All told, plastic bag bans cover one-third of California’s population. Plastic bag purchases by retailers have reportedly fallen from 107 million pounds in 2008 to 62 million pounds in 2012, and bag producers and plastics manufacturers have taken note. Most of the ordinances have faced lawsuits from plastics industry groups like the American Chemistry Council (ACC). Even though the laws have largely held up in the courts, the threat of legal action has deterred additional communities from taking action and delayed the process for others.
Ironically, were it not for the intervention of the plastics industry in the first place, California would likely have far fewer outright plastic bag bans. Instead, more communities might have opted for charging a fee per bag, but this option was prohibited as part of industry-supported state-wide legislation in 2006 requiring Californian grocery stores to institute plastic bag recycling programs. Since a first attempt in 2010, California has come close to introducing a statewide ban on plastic bags, but well-funded industry lobbyists have gotten in the way. A new bill will likely go up for a vote in 2014 with the support of the California Grocers Association as well as state senators who had opposed an earlier iteration.
Seattle’s story is similar. In 2008 the city council passed legislation requiring groceries, convenience stores, and pharmacies to charge 20ȼ for each one-time-use bag handed out at the cash register. A $1.4 million campaign headed by the ACC stopped the measure via a ballot initiative before it went into effect, and voters rejected the ordinance in August 2009. But the city did not give up. In 2012 it banned plastic bags and added a 5ȼ fee for paper bags. Attempts to gather signatures to repeal this have been unsuccessful. Eleven other Washington jurisdictions have also banned plastic bags, including the state capital, Olympia. (See database of U.S. plastic bag initiatives and a timeline history.)
A number of state governments have entertained proposals for anti-plastic bag legislation, but not one has successfully applied a statewide charge or banned the bags. Hawaii has a virtual state prohibition, as its four populated counties have gotten rid of plastic bags at grocery checkouts, with the last one beginning enforcement in July 2015. Florida, another state renowned for its beaches, legally preempts cities from enacting anti-bag legislation. The latest attempt to remove this barrier was scrapped in April 2014, although state lawmakers say they will revisit the proposal later in the year.
Opposition to plastic bags has emerged in Texas, despite the state accounting for 44 percent of the U.S. plastics market and serving as the home to several important bag manufacturers, including Superbag, one of America’s largest. Eight cities and towns in the state have active plastic bag bans, and others, like San Antonio, have considered jumping on the bandwagon. Austin banned plastic bags in 2013, hoping to reduce the more than $2,300 it was spending each day to deal with plastic bag trash and litter. The smaller cities of Fort Stockton and Kermit banned plastic bags in 2011 and 2013, respectively, after ranchers complained that cattle had died from ingesting them. Plastic bags have also been known to contaminate cotton fields, getting caught up in balers and harming the quality of the final product. Plastic pollution in the Trinity River Basin, which provides water to over half of all Texans, was a compelling reason for Dallas to pass a 5ȼ fee on plastic bags that will go into effect in 2015.
Washington, D.C., was the first U.S. city to require food and alcohol retailers to charge customers 5ȼ for each plastic or paper bag. Part of the revenue from this goes to the stores to help them with the costs of implementation, and part is designated for cleanup of the Anacostia River. Most D.C. shoppers now routinely bring their own reusable bags on outings; one survey found that 80 percent of consumers were using fewer bags and that over 90 percent of businesses viewed the law positively or neutrally.
Montgomery County in Maryland followed Washington’s example and passed a 5ȼ charge for bags in 2011. A recent study that compared shoppers in this county with those in neighboring Prince George’s County, where anti-bag legislation has not gone through, found that reusable bags were seven times more popular in Montgomery County stores. When bags became a product rather than a freebie, shoppers thought about whether the product was worth the extra nickel and quickly got into the habit of bringing their own bags.
One strategy of the plastics industry—concerned about declining demand for its products—is an attempt to change public perception of plastic bags by promoting recycling. Recycling, however, is also not a good long-term solution. The vast majority of plastic bags—97 percent or more in some locales—never make it that far. Even when users have good intentions, bags blow out of outdoor collection bins at grocery stores or off of recycling trucks. The bags that reach recycling facilities are the bane of the programs: when mixed in with other recyclables they jam and damage sorting machines, which are very costly to repair. In San Jose, California, where fewer than 4 percent of plastic bags are recycled, repairs to bag-jammed equipment cost the city about $1 million a year before the plastic bag ban went into effect in 2012.
Proposed plastic bag restrictions have been shelved in a number of jurisdictions, including New York City, Philadelphia, and Chicago, in favor of bag recycling programs. New York City may, however, move ahead with a bill proposed in March 2014 to place a city-wide 10ȼ fee on single-use bags. Chicago is weighing a plastic bag ban.
In their less than 60 years of existence, plastic bags have had far-reaching effects. Enforcing legislation to limit their use challenges the throwaway consumerism that has become pervasive in a world of artificially cheap energy. As U.S. natural gas production has surged and prices have fallen, the plastics industry is looking to ramp up domestic production. Yet using this fossil fuel endowment to make something so short-lived, which can blow away at the slightest breeze and pollutes indefinitely, is illogical—particularly when there is a ready alternative: the reusable bag.
A Short History of the Plastic Bag: Selected Dates of Note in the United States and Internationally
1933
Polyethylene is discovered by scientists at Imperial Chemical Industries, a British company.
1950
Total global plastics production stands at less than 2 million metric tons.
1965
Sten Thulin’s 1962 invention of the T-shirt bag, another name for the common single-use plastic shopping bag, is patented by Swedish company Celloplast.
1976
Mobil Oil introduces the plastic bag to the United States. To recognize the U.S. Bicentennial, the bag’s designs are in red, white, and blue.
1982
Safeway and Kroger, two of the biggest U.S. grocery chains, start to switch from paper to plastic bags.
1986
Plastic bags already account for over 80 percent of the market in much of Europe, with paper holding on to the remainder. In the United States, the percentages are reversed.
June 1986
The half-million-member-strong General Federation of Women’s Clubs starts a U.S.-wide letter writing campaign to grocers raising concerns about the negative environmental effects of plastic bags.
Late 1980s
Plastic bag usage estimated to catch up to paper in U.S. groceries.
1989
Maine passes a law requiring retailers to only hand out plastic bags if specifically requested; this is replaced in 1991 by a statewide recycling initiative.
1990
The small Massachusetts island of Nantucket bans retail plastic bags.
1994
Denmark begins taxing retailers for plastic bags.
1996
Four of every five grocery bags used in the United States are made of plastic.
1997
Captain Charles Moore discovers the “Great Pacific Garbage Patch” in the remote North Pacific, where plastic is estimated to outweigh zooplankton six to one, drawing global attention to the accumulation of plastics in the ocean.
2000
Mumbai, India, bans plastic bags, with limited enforcement.
2002
Global plastics production tops 200 million metric tons.
March 2002
Ireland becomes the first country to tax consumers’ use of plastic bags directly.
March 2002
Bangladesh becomes the first country to ban plastic bags. Bags had been blamed for exacerbating flooding.
2006
Italy begins efforts to pass a national ban on plastic bags; due to industry complaints and legal issues, these efforts are ongoing.
April 2007
San Francisco becomes the first U.S. city to ban plastic grocery bags, later expanding to all retailers and restaurants.
2007-2008
The ACC spends $5.7 million on lobbying in California, much of it to oppose regulations on plastic bags.
June 2008
China’s plastic bag ban takes effect before Beijing hosts the Olympic Games.
September 2008
Rwanda passes a national ban on plastic bags.
2009
Plastics overtake paper and paperboard to become the number one discarded material in the U.S. waste stream.
July 2009
Hong Kong’s levy on plastic bags takes effect in chains, large groceries, and other more sizable stores; it is later expanded to all retailers.
August 2009
Seattle’s attempt to impose a 20ȼ fee on both paper and plastic bags is defeated before it can take effect by a referendum financed largely by the American Chemistry Council (ACC).
December 2009
Madison, Wisconsin, mandates that households recycle plastic bags rather than disposing of them with their trash.
January 2010
Washington, D.C., begins requiring all stores that sell food or alcohol to charge 5ȼ for plastic and paper checkout bags.
2010
Major bag producer Hilex Poly spends over $1 million in opposition to a proposed statewide plastic bag ban in California.
2010
Plastic bags appear in the Guinness World Records as the world’s “most ubiquitous consumer item.”
October 2011
In Oregon, Portland’s ban on plastic bags at major groceries and certain big-box stores begins.
May 2012
Honolulu County approves a plastic bag ban (to go into effect in July 2015), completing a de facto state-wide ban in Hawaii.
July 2012
Seattle’s plastic bag ban takes effect nearly three years after the first tax attempt failed.
March 2013
A bag ban takes effect in Austin, TX.
September-October 2013
During the Ocean Conservancy’s 2013 Coastal Cleanup event, more than 1 million plastic bags were picked up from coasts and waterways around the world.
January 2014
Los Angeles becomes the largest U.S. city to ban plastic bags.
April 2014
Members of the European Parliament back new rules requiring member countries to cut plastic bag use 50 percent by 2017 and 80 percent by 2019.
April 2014
Over 20 million people are covered under 132 city and county plastic bag bans or fee ordinances in the United States.
Selected Plastic Bag Regulations in the United States
Boulder, CO
Boulder grocery stores charge 10ȼ for plastic and paper bags. The city’s reasons for applying the fee to both were that plastic bags are difficult to recycle and paper bag production is also energy- and water-intensive. Stores keep 4ȼ and the rest of the money goes to the city to cover administrative costs, to provide residents with free reusable bags, and to otherwise minimize the impacts of bag waste. Just six months after the fee began in 2013, the city announced that bag use had dropped by 68 percent.
Chicago, IL
The Chicago City Council has visited the idea of limiting plastic bags giveaways several times over the last six years. In 2008 a proposed bag ban was rejected in favor of a bag recycling program. A bill banning plastic bags at most retailers is under consideration.
Dallas, TX
Plastic bags and bottles make up about 40 percent of all the trash in the Trinity River that provides water to over half of all Texans, including those living in Dallas-Fort Worth and Houston, according to estimates by Peter Payton, Executive Director of Groundwork Dallas, a group that does monthly cleanups in the watershed. In March 2014, a 5ȼ fee on plastic and paper bags at all grocery and retail stores, along with a ban on plastic bags at all city events, facilities, and properties, was approved by the City Council. It will go into effect in January 2015. Nine tenths of the revenue generated from bag sales will go to the city.
Hawaii
In April 2012, Honolulu County joined the counties of Maui, Kauai, and Hawaii in banning non-biodegradable plastic bags. This amounts to a de facto statewide bag ban—a first for the United States. The ordinances state that plastic bag use must be regulated “to preserve health, safety, welfare, and scenic and natural beauty.” Retailers have until mid-2015 to comply.
Los Angeles County (Unincorporated), CA
In July 2011, a ban on plastic bags in large stores took effect in the unincorporated area of Los Angeles County, home to 1.1 million people. In January 2012, that ban expanded to include small stores, like pharmacies and convenience marts. Nearly 800 retail stores are affected. This was the first in California to add a 10ȼ charge for paper bags; since its enactment, all other California municipalities have included a paper bag charge. In December 2013, the Department of Public Works announced that the ordinance had resulted in a sustained 90 percent reduction in single-use bag use at large stores.
Los Angeles, CA
In June 2013, the City Council of Los Angeles voted to ban stores from providing plastic carryout bags to customers, as well as to require stores to charge 10ȼ for paper bags. Large retailers are affected in January 2014; smaller retailers are affected in July 2014. The city was spending $2 million a year cleaning up plastic bags.
Manhattan Beach, CA
After passing a plastic bag ban in 2008, the city became the first to be sued by the Save the Plastic Bag Coalition—a group of plastic bag manufacturers and distributors—for not preparing an environmental impact report as required under the California Environmental Quality Act. The Coalition claimed a shift from plastic to recycled paper bags would harm the environment. Two lower courts sided with the Coalition and ruled that a report was required, but in 2011, on appeal, the California Supreme Court said that any increased use of paper bags in a small city like Manhattan Beach would have negligible environmental impact and therefore a report was unnecessary. This precedent allowed many California cities to proceed with banning plastic bags without such a report.
Nantucket Island, MA
Nantucket, a small seasonal tourist town, banned non-biodegradable plastic bags in 1990. Facing a growing waste disposal problem, the town envisioned building a facility where as much material as possible could be diverted from the landfill to be recycled or composted; such a facility would only be able to accept biodegradable bags.
New York City, NY
Former Mayor Michael Bloomberg proposed a 5ȼ tax on plastic bags in 2009, but the idea was later dropped in a budget agreement with the City Council. In March 2014, the City Council began to consider a proposal mandating a 10ȼ charge per plastic and paper bag at most stores.
San Francisco, CA
San Francisco was the first U.S. city to regulate plastic bags. The original ordinance, which was adopted in April 2007, banned non-compostable plastic bags at all large supermarkets and chain pharmacies. In October 2012 the law was applied to all stores, and in October 2013 the law expanded to restaurants. The Save the Plastic Bag Coalition sued the city, contesting the extensions to the ban, but those were upheld by the First District Court of Appeal in December 2013. In April 2014, the Supreme Court of California denied the Coalition’s first appeal, allowing the city to keep its bag ban.
Santa Monica, CA
Santa Monica has banned plastic bags from all retailers since September 2011. Grocery, liquor, and drug stores may offer paper bags for 10ȼ each, while department stores and restaurants may provide paper bags for no fee. Because the Save the Plastic Bag Coalition had sued other cities for not conducting an environmental impact review prior to the announcements of their bag bans, Santa Monica conducted a review and thus avoided a lawsuit. Plastic bags for carryout food items from restaurants and reusable bags made from polyethylene are allowed.
Seattle, WA
In July 2008 the Seattle government approved a 20ȼ charge on all paper and plastic checkout bags, but opponents collected enough signatures to put the ordinance up for a vote on the August 2009 primary ballot. The Coalition to Stop the Seattle Bag Tax—consisting of the American Chemistry Council’s Progressive Bag Affiliates, 7-Eleven, and the Washington Food Industry—spent $1.4 million on the referendum campaign (15 times more than fee supporters), and voters chose to reject the ordinance. It took until July 2012 for the city to enact its current ban on plastic bags and place a 5ȼ fee on paper bags. Seattle residents are largely in favor of the ban, and attempts to gather signatures to repeal it have not been successful.
Washington, DC
In January 2010, Washington, D.C., began requiring a 5ȼ charge for plastic and paper carryout bags at all retailers that sell food or alcohol. Businesses keep a portion of the fee, and the remainder goes to The Anacostia River Clean Up and Protection Fund. A survey conducted in early 2013 found that four out of five District households are using fewer bags since the tax came into effect. Almost 60 percent of residents reported carrying reusable bags with them “always” or “most of the time” when they shop. Two thirds of District residents reported seeing less plastic bag litter since the tax came into effect. One half of businesses reported saving money because of the fee.
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Cochran Campaign Illegally Robocalls Black Democrats Against “Racist” Tea Party
Stop the Tea Party RoboCall
Mississippi primary: Thad Cochran celebrates victory against Tea Party rival – video
How Another Tea Party Candidate Lost — Thad Cochran’s Win
Cochran Wins Mississippi Senate Race
Cochran vs. McDaniel: Racist Tactic Emerges in Mississippi GOP Primary Fight
Robocall Recruiting Dem Votes For GOP Sen. Cochran Bashes Tea Party, Claims Racism
The GOP Senate primary in Mississippi continues to intensify with the surfacing of a robocall aimed at potential voters that strongly criticizes the tea party and urges the listeners to vote against state Sen. Chris McDaniel in Tuesday’s runoff vote.
In the automated message appearing to target black Democrat voters in Mississippi, the female voice on the line claims that tea party challenger Chris McDaniel would lead to more obstruction in Washington and create more “disrespectful treatment” to the nation’s first African-American president.
“The time has come to take a stand and say NO to the tea party,” the message says. “NO to their obstruction. NO to their disrespectful treatment of the first African-American president.”
The robocall, which was first obtained by freelance journalist Charles C. Johnson from a local resident, goes on to urge listeners to go to the next polls Tuesday and vote against McDaniel. The only option in voting against McDaniel is to vote for incumbent Sen. Thad Cochran as they will be the only two names on the ballot.
“If we do nothing, tea party candidate Chris McDaniel wins and causes even more problems for President Obama,” the message continues. “With your help we can stop this. Please commit to voting against tea party candidate Chris McDaniel next Tuesday and say NO to the tea party!”
Some experts have argued that it is technically illegal for voters affiliated with an opposing party to vote in another party’s primary in Mississippi.
The Cochran campaign is denying that they have any connection with the robocall and declared it to be a “stunt” coming from allies of McDaniel.
“It’s an obvious, transparent stunt by McDaniel and his allies,” Jordan Russell, a spokesman for Cochran, told The Daily Caller Sunday.
The McDaniel campaign is claiming otherwise.
“It is clear that Mississippi Republicans have rejected Thad Cochran’s liberal voting record and it’s sad to see Thad Cochran resort to courting Democrats simply to hold onto power,” McDaniel spokesman Noel Fritsch told TheDC.
This isn’t the first allegation that there are efforts to get out Democratic votes for Cochran in Tuesday’s vote.
This is only the latest incident in controversy surrounding efforts to get out Democratic votes for Cochran in the runoff that includes a black preacher — who is a strong supporter of the Democratic nominee for the Senate seat — actively trying to get members of his community to vote for the sitting senator. http://www.youtube.com/watch?v=DUx7YVPKbBY
Cochran Holds Off Tea Party Challenger in Mississippi
Thad Cochran celebrated his victory with supporters after the primary.CreditEdmund D. Fountain for The New York Times
A surge of voters showed up on Tuesday in African-American precincts and in Mr. Cochran’s other strongholds to surprise Mr. McDaniel, 41, who just Monday night declared his campaign had gone from impossible to improbable to unstoppable. Early Wednesday, with all but one precinct reporting, Mr. Cochran’s lead over Mr. McDaniel was a little more than 6,000 votes. Recounts are not required under Mississippi law, although Mr. McDaniel could seek to challenge the results through the courts.
Mr. Cochran’s victory was powered in part by African-Americans in areas of north Jackson whose turnout shattered that seen in those precincts in the primary. Turnout jumped fivefold at New Hope Baptist Church, and sevenfold at Green Elementary School, where only 14 voters came out on June 3 but about 100 showed up on Tuesday.
Their high numbers came despite pledges by conservative political action committees to monitor turnout in Democratic areas targeted by Mr. Cochran’s campaign. Both the N.A.A.C.P. — which sent its own poll watchers — and the United States Justice Department expressed concerns about the possible intimidation of black Democrats, but no irregularities were reported to Mississippi election officials. The state has no party registration, and anyone could vote in the Republican runoff who had not voted in the Democratic primary, which was won by former Representative Travis Childers, 56.
It was an extraordinary end to a wild campaign, with a Republican standing up for the rights of black Democrats, and with Tea Party groups from the North, especially the Senate Conservatives Fund, crying foul.
Also sure to inflame the right: a center-right super PAC, Defending Main Street, which contributed over $150,000 to Mr. Cochran during the runoff, received $250,000 from Michael Bloomberg in the same period, according to a source close to the former New York City mayor.
REPUBLICAN PRIMARY
Mississippi – U.S. Senate
CANDIDATE
VOTES
PCT.
Thad CochranIncumbent
191,508
50.9%
Chris McDaniel
184,815
49.1
100% reporting
Mr. Bloomberg also contributed $250,000 to Mr Cochran’s super PAC, Mississippi Conservatives, before the primary.
For months, the contest between Mr. Cochran and Mr. McDaniel was viewed as this year’smain event in the six-year clash between conservative activists and Republican incumbents. Money and celebrities poured into Mississippi from all over the country, with the establishment determined to make the state a Tea Party Waterloo. For their part, conservative groups were hoping for one major victory for the season.
But after the surprise primary defeat this month of Representative Eric Cantor of Virginia, the House majority leader, the Mississippi contest took on greater significance. Outside conservative groups hoped to emerge with a second victory that would propel challenges in Tennessee, where Senator Lamar Alexander was widely expected to win, and perhaps in Kansas, where Senator Pat Roberts appeared to have recovered from an early stumble overwhether he lived in Kansas or the Washington area.
Instead, establishment Republicans and a surprisingly high number of Democrats helped deliver a come-from-behind victory for a senator known for his soft-spoken patrician air and his ability to bring home millions in dollars of federal spending.
Mr. Cochran shifted his campaign message from polishing his conservative credentials to extolling his record of keeping Mississippi flush with federal cash. He also attacked Mr. McDaniel for his vows of austerity, especially in education.
Senator Thad Cochran addressed supporters after winning Tuesday’s primary election.CreditEdmund D. Fountain for The New York Times
Those attacks seemed to work with voters — at least enough to spook Democrats, and even some Republicans, who are accustomed to the protection and seniority of a long line of Congress members going back almost 100 years, including Senators John C. Stennis, James Eastland and Trent Lott and Representatives Sonny Montgomery and Jamie L. Whitten.
Jeanie Munn, who lives in Hattiesburg, said Mr. McDaniel “represents a threat to the state.” She cited a vote he cast in the State Senate against a new nursing school building at the University of Southern Mississippi.
Roger Smith, a black Democrat who said he was being paid to organize for Mr. Cochran, said, “I don’t know too much about McDaniel other than what McDaniel’s saying: that he’s Tea Party, he’s against Obama, he don’t like black people.”
“You’re going to get one of the white guys in there,” he said. “You got to make a choice.”
In downtown Hattiesburg, Democratic voters trickled out of the Court Street United Methodist Church, saying they had voted for a Republican for the first time in their lives — Mr. Cochran. Heath Kleinke, 38, held his 4-month-old baby and said he wanted her to get a good education in Mississippi, something he believed would be made more difficult if Mr. McDaniel were to make good on his proposal to cut federal funding.
A Senator Turns Back a Challenge in Mississippi
Senator Thad Cochran of Mississippi celebrated his victory over a Tea Party-backed challenger, Chris McDaniel, at a party in Jackson on Tuesday.
Edmund D. Fountain for The New York Times
“The fact that he openly criticizes Thad Cochran for talking to Democrats riled me up from the beginning,” added Mr. Kleinke, a graphic designer.
White Democrats also turned out for the senator. Dorothy McGehee, 88, a lifelong Democrat who registered blacks to vote in the civil rights era, found herself putting out Cochran yard signs in Meadville, Miss., and begging her friends to vote.
Kino Sintee, 17, and three black friends waved “Thad” signs on a street corner in a black Hattiesburg neighborhood. They said the preacher from Mount Olive Baptist Church asked them to help out.
“They’re talking about taking everything away from us,” he said. “People still need stuff.”
For months, the contest between Mr. Cochran and Mr. McDaniel was viewed as this year’s main event in the six-year clash between conservative activists and Republican incumbents.CreditWilliam Widmer for The New York Times
Michael Davis, 44, said it was his “duty” to stop Mr. McDaniel. “If anyone wants to tell me I’m stealing the election or something ludicrous like that, it doesn’t work that way,” he said.
In Tupelo, Miss., John Armistead, 73, a die-hard Democrat, and his wife, Sandra, 69, a Republican, put aside their differences on Tuesday, and both voted for Mr. Cochran.
“Even though he votes with the Republicans on virtually everything, I’ve never seen Cochran as being so partisan,” Mr. Armistead said. “As a Democrat, that’s important to me. McDaniel is very partisan and will align himself with the right-wing, partisan-type people.”
Those crossover votes from Democrats left many of Mr. McDaniel’s supporters seething.
“Our whole system is corrupt,” said a glum Alicia Holloman of George County as the last results trickled into the McDaniel party at the Hattiesburg Convention Center. “We deserve to be called the most corrupt state in the nation.”
Her husband, Michael, was more circumspect.
“You should be able to vote the way you want to vote. It’s fair,” he said. “But when you’re on the losing side, it stinks.”
Obama Redskins Team Name Change Redskins Should Change Name Offensive to Native Americans
U.S. Patent office cancels Redskins trademark registration
Redskins Fight Started with UI Law Grad
Bill Maher & Dennis Miller on Free Speech vs Political Correctness (2002)
Rush Limbaugh – Redskins Trademark Loss Shows Obama Officials Are Authoritarians – 6-18-14
Redskins’ ‘Disparaging’ Brand Loses Trademark
Rush Limbaugh defends Washington Redskins’ name
Glenn Beck Attacks Bob Costas for Redskins Commentary: ” Sanctimonious Piece of Crap “
77 years of Redskins branding
Redskins lawyer Lanny Davis defends team name on CNN’s The Situation Room
FOX & frends: Brian Kilmeade asks Native Americans offended by ‘Redskins’: ‘Why now?
Charles Krauthammer: Washington Redskins is offensive even if Native Americans aren’t offended
End of the Redskins Patent office cancels ‘disparaging’ copyright
Washington Redskins’ Trademarks Cancelled
Washington Redskins: U.S. Patent Office cancels team trademarks, calls name “disparaging of Native Americans
What is classical liberalism?
The Decline and Triumph of Classical Liberalism, Part 1
The Decline and Triumph of Classical Liberalism, Part 2
Libertarian Ethics: Part 1 Private Property
The Libertarian Case Against Intellectual Property
Libertarian perspectives on intellectual property
An Economist’s Look at Intellectual Property Law
Basic Facts About Trademarks: What Every Small Business Should Know Now, Not Later
How do you trademark a name in the US?
Should I Register My Trademarks?
Washington Redskins Trademark Dispute – Gerben Law Firm
PROTECTING YOUR INTELLECTUAL PROPERTY- Trademarks
Understanding Trademarks and Patents
Understanding The 4 Types Of Intellectual Property
United States Patent and Trademark Office
Intellectual Property and Libertarianism | Stephan Kinsella
War and the Fed | Lew Rockwell
Federal agency cancels Redskins trademark registration, says name is disparaging
BY THERESA VARGAS
The U.S. Patent and Trademark Office canceled the Washington Redskins’ trademark registration on Wednesday, a move that won’t force the NFL team to change its name but fuels the intense fight by opponents to eliminate what they view as a racial slur against Native Americans.
The 99-page decision by the Trademark Trial and Appeal Board said the team’s name and logo are disparaging. It dilutes the Redskins’ legal protection against infringement and hinders the team’s ability to block counterfeit merchandise from entering the country.
But its effect is largely symbolic. The ruling cannot stop the team from selling T-shirts, beer glasses and license-plate holders with the moniker or keep the team from trying to defend itself against others who try to profit from the logo. And the trademark registrations will remain effective during any appeal process.
The ruling’s main impact is as a cudgel by an increasingly vocal group of Native Americans, lawmakers, former players and others who are trying to persuade team officials to change the name. The backlash against the name has never been more intense.
And opponents immediately seized upon the decision to increase pressure on the team.
Sen. Maria Cantwell (D-Wash.), who persuaded 49 other members of Congress to send a letter last month to the National Football League on the issue, interrupted a debate on the Senate floor to herald the decision.
“So many people have helped in this effort, and I want to applaud them,” Cantwell said. She later said she believes the decision will ultimately force the hands of team owner Daniel Snyder and NFL Commissioner Roger Goodell in ways other efforts have not. “You want to ignore millions of Native Americans?” she said. “Well, it’s pretty hard to say the federal government doesn’t know what they’re talking about when they say it’s disparaging.”
Jesse Witten, an attorney for the Native Americans who filed the case, called the victory “a long time coming.” The board had previously ruled in favor of a different group of Native Americans, led by Suzan Harjo, that filed a similar case in 1992. But that case was later dismissed in the federal courts. The court did not rule on the merits of the case but ultimately said the plaintiffs did not have standing to file it.
Federal trademark law does not permit registration of trademarks that “may disparage” individuals or groups or “bring them into contempt or disrepute.” The ruling pertains to six trademarks associated with the team, each containing the word “Redskin.”
Robert Raskopf, a lawyer who has been representing the team since the 1992 case was filed, said he was “disheartened” and “surprised” by the ruling. He noted that Wednesday’s decision came from a divided panel of judges, with one of the three dissenting, and that the earlier case was won on appeal. “We’ve been down this road already,” he said. “We have the same evidence here that we had last time, the same arguments, the same exact case.”
He said that the team plans to appeal the decision. “We are certainly confident that moving forward we are going to prevail yet again,” he said.
United States Patent and Trademark Office (PTO or USPTO)
The United States Patent and Trademark Office (PTO or USPTO) is an agency in the U.S. Department of Commerce that issues patents to inventors and businesses for their inventions, and trademark registration for product and intellectual property identification. The USPTO is “unique among federal agencies because it operates solely on fees collected by its users, and not on taxpayer dollars”.[1] Its “operating structure is like a business in that it receives requests for services—applications for patents and trademark registrations—and charges fees projected to cover the cost of performing the services [it] provide[s]”.[2][3]
The USPTO is based in Alexandria, Virginia, after a 2006 move from the Crystal City area of neighboring Arlington,Virginia. The offices under Patents and the Chief Information Officer that remained just outside the southern end of Crystal City completed moving to Randolph Square, a brand-new building in Shirlington Village, on April 27, 2009.
The head of the USPTO is Michelle Lee. She took up her new role on January 13, 2014, and formerly served as the Director of the USPTO’s Silicon Valley satellite office.[4]
The USPTO mission is to “maintain[] a permanent, interdisciplinary historical record of all U.S. patent applications in order to fulfill objectives outlined in the United States constitution“.[5] The legal basis for the United States patent system is Article 1, Section 8, wherein the powers of Congress are defined.[6]
It states, in part:
“The Congress shall have Power…To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”.
The PTO’s mission is to promote “industrial and technological progress in the United States and strengthen the national economy” by:
Administering the laws relating to patents and trademarks;
Advising the Secretary of Commerce, the President of the United States, and the administration on patent, trademark, and copyright protection; and
Providing advice on the trade-related aspects of intellectual property.
The USPTO is headquartered at the Alexandria Campus, consisting of 11 buildings in a city-like development surrounded by ground floor retail and high rise residential buildings between the METRO stations of King Street station and Eisenhower Avenue station where the actual Alexandria Campus is located between Duke Street (on the North) to Eisenhower Avenue (on the South), and between John Carlyle Street (on the East) to Elizabeth Lane (on the West) in Alexandria, Virginia.[7][8][9] An additional building in Arlington, Virginia, was opened in 2009.
The USPTO was expected by 2014 to open its first ever satellite offices in Detroit, Dallas, Denver, and Silicon Valleyto reduce backlog and reflect regional industrial strengths.[10] The first satellite office opened in Detroit on July 13, 2012.[11][12][13][14][15] The 2013 sequestration has put the satellite office for Silicon Valley, which is home to the nation’s top patent-producing cities, on hold indefinitely.[16]
As of September 30, 2009, the end of the U.S. government’s fiscal year, the PTO had 9,716 employees, nearly all of whom are based at its five-building headquarters complex in Alexandria. Of those, 6,242 were patent examiners(almost all of whom were assigned to examine utility patents; only 99 were assigned to examine design patents) and 388 were trademark examining attorneys; the rest are support staff.[17] While the agency has noticeably grown in recent years, the rate of growth was far slower in fiscal 2009 than in the recent past; this is borne out by data from fiscal 2005 to the present:[17]
At end of FY
Employees
Patent examiners
Trademark examining attorneys
2009
9,716
6,242
388
2008
9,518
6,055
398
2007
8,913
5,477
404
2006
8,189
4,883
413
2005
7,363
4,258
357
Patent examiners make up the bulk of the employees at USPTO. They are generally newly graduated scientists and engineers, recruited from various universities around the nation.[citation needed] They hold degrees in various scientific disciplines, but who do not necessarily hold law degrees. Unlike patent examiners, trademark examiners must be licensed attorneys.[citation needed] All examiners work under a strict, “count”-based production system.[18] For every application, “counts” are earned by composing, filing, and mailing a first office action on the merits, and upon disposal of an application.
The Commissioner for Patents oversees three main bodies, headed by former Deputy Commissioner for Patent Operations, currently[19] Peggy Focarino, the Deputy Commissioner for Patent Examination Policy, currently[when?] Andrew Hirshfeld as Acting Deputy, and finally the Commissioner for Patent Resources and Planning, which is currently[when?] vacant.[20] The Patent Operations of the office is divided into nine different technology centers that deal with various arts.[21]
In recent years, the USPTO has seen increasing delays between when a patent application is filed and when it issues. To address its workload challenges, the USPTO has undertaken an aggressive program of hiring and recruitment. The USPTO hired 1,193 new patent examiners in Fiscal Year 2006 (year ending September 30, 2006),[24] 1,215 new examiners in fiscal 2007,[25] and 1,211 in fiscal year 2008.[26] The USPTO expected to continue hiring patent examiners at a rate of approximately 1,200 per year through 2012; however, due to a slowdown in new application filings since the onset of the late-2000s economic crisis,[27] and projections of substantial declines in maintenance fees in coming years,[28] the agency imposed a hiring freeze in early March 2009.[29]
In 2006, USPTO instituted a new training program for patent examiners called the “Patent Training Academy”. It is an eight-month program designed to teach new patent examiners the fundamentals of patent law, practice and examination procedure in a college-style environment.[30] Because of the impending USPTO budget crisis previously alluded to, it had been rumored that the Academy would be closed by the end of 2009.[28] Focarino, then Acting Commissioner for Patents, denied in a May 2009 interview that the Academy was being shut down, but stated that it would be cut back because the hiring goal for new examiners in fiscal 2009 was reduced to 600.[31] Ultimately, 588 new patent examiners were hired in fiscal year 2009.[32]
Fee diversion
For many years, Congress has “diverted” about 10% of the fees that the USPTO collected into the general treasury of the United States. In effect, this took money collected from the patent system to use for the general budget. This fee diversion has been generally opposed by patent practitioners (e.g., patent attorneys andpatent agents), inventors, the USPTO,[33] as well as former federal judge Paul R. Michel.[34] These stakeholders would rather use the funds to improve the patent office and patent system, such as by implementing the USPTO’s 21st Century Strategic Plan.[35] The last six annual budgets of the George W. Bush administration did not propose to divert any USPTO fees, and the first budget of the Barack Obama administration continues this practice; however, stakeholders continue to press for a permanent end to fee diversion.[36]
On July 31, 1790, the first U.S. patent was issued to Samuel Hopkins for an improvement “in the making of Pot ash andPearl ash by a new Apparatus and Process”. This patent was signed by then President George Washington.
The X-Patents (the first 10,280 issued between 1790 and 1836) were destroyed by a fire; fewer than 3,000 of those have been recovered and re-issued with numbers that include an “X”. The X generally appears at the end of the numbers hand-written on full-page patent images; however, in patent collections and for search purposes, the X is considered to be the patent type – analogous to the “D” of design patents – and appears at the beginning of the number. The X distinguishes the patents from those issued after the fire, which began again with patent number 1.
Each year, the PTO issues over 150,000 patents to companies and individuals worldwide. As of December 2011, the PTO has granted 8,743,423 patents and has received 16,020,302 applications.[37]
Trademarks
The USPTO examines applications for trademark registration. If approved, the trademarks are registered on either the Principal Register or the Supplemental Register, depending upon whether the mark meets the appropriate distinctiveness criteria. However, this function is declining in popularity as trademark applicants move to cheaper, more straightforward state-by-state registrations.[citation needed][38][39]
Representation
The PTO only allows certain qualified persons to practice before the PTO. Practice includes filing of patent applications on behalf of inventors, prosecuting patent applications on behalf of inventors, and participating in administrative appeals and other proceedings before the PTO examiners and boards. The PTO sets its own standards for who may practice and requires that any person who practices become registered. A patent agent is a person who has passed the USPTO registration examination (the “patent bar”) but has not passed any state bar exam to become a licensed attorney; a patent attorney is a person who has passed both a state bar and the patent bar and is in good standing as an attorney.[40] A patent agent can only act in a representative capacity in patent matters presented to the USPTO, and may not represent a patent holder or applicant in a court of law. To be eligible for taking the patent bar exam, a candidate must possess a degree in “engineering or physical science or the equivalent of such a degree”.[40]
The United States allows any citizen from any country to sit for the patent bar (if he/she has the requisite technical background).[41] Only Canada has a reciprocity agreement with the United States that confers upon a patent agent similar rights.[42]
An unrepresented inventor may file a patent application and prosecute it on his or her own behalf (pro se). If it appears to a patent examiner that an inventor filing apro se application is not familiar with the proper procedures of the Patent Office, the examiner may suggest that the filing party obtain representation by a registered patent attorney or patent agent.[43] The patent examiner cannot recommend a specific attorney or agent, but the Patent Office does post a list of those who are registered.[44]
While the inventor of a relatively simple-to-describe invention may well be able to produce an adequate specification and detailed drawings, there remains language complexity in what is claimed, either in the particular claim language of a utility application, or in the manner in which drawings are presented in a design application. There is also skill required when searching for prior art that is used to support the application and to prevent applying for a patent for something that may be unpatentable. A patent examiner will make special efforts to help pro se inventors understand the process but the failure to adequately understand or respond to an Office action from the USPTO can endanger the inventor’s rights, and may lead to abandonment of the application.
Electronic filing system
The USPTO accepts patent applications filed in electronic form. Inventors or their patent agents/attorneys can file applications as Adobe PDF documents. Filing fees can be paid by credit card or by a USPTO “deposit account”.
Patent search tools
The USPTO web site provides free electronic copies of issued patents and patent applications as multiple-page TIFF (graphic) documents. The site also provides Boolean search and analysis tools.[45]
The USPTO’s free distribution service only distributes the patent documents as a set of TIFF files.[46] Numerous free and commercial services provide patent documents in other formats, such as Adobe PDF and CPC.
Criticisms
This article’s Criticism or Controversy section may compromise the article’s neutral point of view of the subject. Please integrate the section’s contents into the article as a whole, or rewrite the material.(October 2013)
The USPTO has been criticized for granting patents for impossible or absurd, already known, or arguably obvious inventions.[47]
U.S. Patent 6,025,810, “Hyper-light-speed antenna”, an antenna that sends signals faster than the speed of light.[47] According to the description in the patent, “The present invention takes a transmission of energy, and instead of sending it through normal time and space, it pokes a small hole into another dimension, thus, sending the energy through a place which allows transmission of energy to exceed the speed of light.”[52]
U.S. Patent 6,368,227, “Method of swinging on a swing”, issued April 9, 2002,[53][54] was granted to a seven-year-old boy, whose father, a patent attorney, wanted to demonstrate how the patent system worked to his son who was five years old at the time of the application. The PTO initially rejected it due to prior art, but eventually issued the patent.[53] However, all claims of the patent were subsequently canceled by the PTO upon reexamination.[55]
U.S. Patent 6,960,975, “Space vehicle propelled by the pressure of inflationary vacuum state”, describes an anti-gravity device. In November 2005, the USPTO was criticized by physicists for granting it. The journal Nature first highlighted this patent issued for a device that presumably amounts to a perpetual motionmachine, defying the laws of physics.[56][57][58][59] The device comprises a particular electrically superconducting shield and electromagnetic generating device. The examiner allowed the claims because the design of the shield and device was novel and not obvious.[60] In situations such as this where a substantial question of patentability is raised after a patent issues, the Commissioner of the Patent Office can order a reexamination of the patent.
Controversial trademarks
U.S. Trademark 77,139,082, “Cloud Computing” for Dell, covering “custom manufacture of computer hardware for use in data centers and mega-scale computing environments for others”, was allowed by a trademark attorney on July 8, 2008. Cloud computing is a generic term that could define technology infrastructure for years to come, which had been in general use at the time of the application.[61] The application was rejected on August 12, 2008, as descriptive and generic.[62]
The USPTO has been criticized for taking an inordinate amount of time in examining patent applications. This is particularly true in the fast-growing area[dated info] ofbusiness method patents. As of 2005, patent examiners in the business method area were still examining patent applications filed in 2001.[citation needed]
The delay was attributed by spokesmen for the Patent Office to a combination of a sudden increase in business method patent filings after the 1998 State Street Bank decision, the unfamiliarity of patent examiners with the business and financial arts (e.g., banking, insurance, stock trading etc.), and the issuance of a number of controversial patents (e.g., U.S. Patent 5,960,411 “Amazon one click patent“) in the business method area.
Effective August 2006, the USPTO introduced an accelerated patent examination procedure in an effort to allow inventors a speedy evaluation of an application with a final disposition within twelve months. The procedure requires additional information to be submitted with the application and also includes an interview with the examiner.[64] The first accelerated patent was granted on March 15, 2007, with a six-month issuance time.[65]
As of the end of 2008, there were 1,208,076 patent applications pending at the Patent Office. At the end of 1997, the number of applications pending was 275,295. Therefore, over those eleven years there was a 439% increase in the number of pending applications.[66]
December 2012 data showed that there was 597,579 unexamined patent application backlog.[67] During the four years since 2009, more than 50% reduction was achieved. First action pendency was reported as 19.2 months.
As libertarians attempt to persuade others of their position, they encounter an interesting paradox. On the one hand, the libertarian message is simple. It involves moral premises and intuitions that in principle are shared by virtually everyone, including children. Do not hurt anyone. Do not steal from anyone. Mind your own business.
A child will say, “I had it first.” There is an intuitive sense according to which the first user of a previously unowned good holds moral priority over latecomers. This, too, is a central aspect of libertarian theory.
Following Locke, Murray Rothbard, and other libertarian philosophers sought to establish a morally and philosophically defensible account of how property comes to be owned. Locke held the goods of the earth to have been owned in common at the beginning, while Rothbard more plausibly held all goods to have been initially unowned, but this difference does not affect their analysis. Locke is looking to justify how someone may remove a good from common ownership for his individual use, and Rothbard is interested in how someone may take an unowned good and claim it for his individual use.
Locke’s answer will be familiar. He noted, first of all, that “every man has a property in his own person.” By extension, everyone justly holds as his own property those goods with which he has mixed his labor. Cultivating land, picking an apple – whatever the case may be, we say that the first person to homestead property that had previously sat in the state of nature without an individual owner could call himself its owner.
Once a good that was previously in the state of nature has been homesteaded, its owner need not continue to work on or transform it in order to maintain his ownership title. Once the initial homesteading process has taken place, future owners can acquire the property not by mixing their labor with it – which at this point would be trespassing – but by purchasing it or receiving it as a gift from the legitimate owner.
As I’ve said, we sense intuitively the justice at the heart of this rule. If the individual does not own himself, then what other human being does? If the individual who transforms some good that previously lacked specific ownership title does not have a right to that good, then what other person should?
In addition to being just, this rule also minimizes conflict. It is a rule everyone can understand, based on a principle that applies to all people equally. It does not say that only members of a particular race or level of intelligence may own property. And it is a rule that definitively stakes out ownership claims in ways that anyone can grasp, and which will keep disputes to a minimum.
Alternatives to this first user, first homesteader principle are few and unhelpful. If not the first user, then who? The fourth user? The twelfth user? But if only the fourth or twelfth user is the rightful owner, then only the fourth or twelfth user has the right to do anything with the good. That is what ownership is: the ability to dispose of a good however one wishes, provided that in doing so the owner does not harm anyone else. Assigning property title through a method like verbal declaration, say, would do nothing to minimize conflict; people would shout vainly at each other, each claiming ownership of the good in question, and peaceful resolution of the resulting conflict seems impossible.
These principles are easy to grasp, and as I’ve said, they involve moral insights which practically everyone claims to share.
And here is the libertarian paradox. Libertarians begin with these basic, commonly shared principles, and seek only to apply them consistently and equally to all people. But even though people claim to support these principles, and even though most people claim to believe in equality – which is what the libertarian is upholding by applying moral principles to everyone without exception – the libertarian message suddenly becomes extreme, unreasonable, and unacceptable.
Why is it so difficult to persuade people of what they implicitly believe already?
The reason is not difficult to find. Most people inherit an intellectual schizophrenia from the state that educates them, the media that amuses them, and the intellectuals who propagandize them.
This is what Murray Rothbard was driving at when he described the relationship between the state and the intellectuals. “The ruling elite,” he wrote,
whether it be the monarchs of yore or the Communist parties of today, are in desperate need of intellectual elites to weave apologias for state power. The state rules by divine edict; the state insures the common good or the general welfare; the state protects us from the bad guys over the mountain; the state guarantees full employment; the state activates the multiplier effect; the state insures social justice, and on and on. The apologias differ over the centuries; the effect is always the same.
Why, in turn, do the intellectuals provide the state this service? Why are they so eager to defend, legitimate, and make excuses for the corridors of power?
Rothbard had an answer:
We can see what the state rulers get out of their alliance with the intellectuals; but what do the intellectuals get out of it? Intellectuals are the sort of people who believe that, in the free market, they are getting paid far less than their wisdom requires. Now the state is willing to pay them salaries, both for apologizing for state power, and in the modern state, for staffing the myriad jobs in the welfare, regulatory state apparatus.
In addition to this, the intellectual class we are dealing with wants to impose its vision, its pattern, on society. Frederic Bastiat spends much of his classic little book The Law on this very impulse: the conception of the intellectual and the politician as the sculptors, and the human race as so much clay.
What we are taught, therefore, from all official channels, is something like the following. For the sake of mankind’s well-being and improvement, some individuals need to exercise power over others. On our own, we would have little if any philanthropic instinct. We would commit the vilest of crimes. Commerce would grind to a halt, innovation would cease, and the arts and sciences would be neglected. The human race would descend to a condition too degraded and appalling to contemplate.
Therefore, a single institution needs a monopoly on the initiation of physical force and on the ability to expropriate individuals. That institution will ensure that society is molded according to the proper pattern, that “social justice” is achieved, and that mankind’s deepest aspirations have some chance of fulfillment.
So entrenched in our minds are these ideas that it would hardly occur to most people even to think of them as propaganda. This is simply the truth about the world, people assume. It is the way things are. They cannot be otherwise.
But what if they can? What if there really is another way to live? What if the sphere of freedom need not be so confined after all, but may expand without limit? What if the general presumption against monopoly applies to government just as much as it does to anything else? What if the free market, the most extraordinary creator of wealth and innovation ever known, and the most reliable and efficient allocation mechanism of scarce resources, is also better at producing the goods for which we have been told we must rely on government? And what if the state, the greatest mass-murderer in history, the great drag on economic progress, and the institution that pits us against each other in a zero-sum game of mutual plunder, is retarding rather than advancing human welfare?
Just how liberating this political philosophy is becomes clear when we realize some of its implications.
It means that taxation is a moral outrage, since it involves the violent expropriation of peaceful individuals.
It means that military conscription is a fancy term for official kidnapping.
It means that the state’s wars are cases of mass murder, and that the suspension of normal moral rules that the state’s officials insist on during wartime is a transparent attempt to divert the normal kinds of moral inquiries that might occur to someone unschooled in government propaganda.
And it means the state is not the glorious guarantor of the public good, but is instead, a parasite on the individuals it rules. The left-anarchists were grotesquely wrong to condemn the state as the protector of private property. The state could not survive absent its aggression against private property. It produces nothing of its own, and can survive only because of the productive work of those it expropriates.
The state is the very opposite of the free market in its ethics and in its behavior, and yet so few supporters of the market bother to examine their premises. They continue to believe the following:
(1) The best social system is one in which private property is respected, people are free to exchange with each other, and coercion is not used.
(2) That is, until the production of certain goods is in question. Then we need monopoly, coercion, expropriation, bureaucratic decisionmaking – in other words, the most egregious contradiction of the principles we claim to uphold.
To be sure, it may not be so easy at first to imagine the free-market provision of certain goods. And anyway, don’t we need someone “in charge”?
But by the same token, it should be just as difficult to imagine the success of the free market itself: without someone in charge of production decisions, how can we expect private actors to produce what people want, especially when faced with a virtually infinite number of possible combinations of resources, each of which is demanded in varying degrees of intensity by an unimaginable number of possible production processes? Yet that is exactly what happens on the market, without fanfare, every day.
I’ve been surprised not only by the spread of anarcho-capitalism – quite a surprising development, since it runs counter to everything people are taught to take for granted – but also by the attacks on it. You’d think, since we’re still a tiny minority, no important periodical would bother going after us. And yet they have. The reason? Because they realize, as you and I do, what these ideas mean.
Libertarians have put forth the most radical critique of the state ever posed. The Marxists claimed to favor the withering away of the state, it is true, but this can hardly be taken seriously. The coercive power of the state plays a central role in the Marxist transition from capitalism to socialism. As Rothbard put it, “It is absurd to try to reach statelessness via the absolute maximization of state power in a totalitarian dictatorship of the proletariat (or more realistically a select vanguard of the said proletariat). The result can only be maximum statism and hence maximum slavery….”
And without private property, how would production decisions be made? By a state, of course. The Marxists just wouldn’t call it a state. Again Rothbard:
With private property mysteriously abolished, then, the elimination of the state under communism…would necessarily be a mere camouflage for a new state that would emerge to control and make decisions for communally owned resources. Except that the state would not be called such, but rather renamed something like a “people’s statistical bureau”…. It will be small consolation to future victims, incarcerated or shot for committing “capitalist acts between consenting adults” (to cite a phrase made popular by Robert Nozick), that their oppressors will no longer be the state but only a people’s statistical bureau. The state under any other name will smell as acrid.
“Limited-government” conservatives, in turn – who in practice favor an enormous government footprint, but for the sake of argument we’ll give them the benefit of the doubt – want to reform the system. If we try this or that, they say, we can transform a monopoly on violence and expropriation into the fountainhead of order and civilization.
We libertarians are a million miles removed from either of these views. We do not view government officials as “public servants.” How sad to hear naïve conservatives speak of returning to a time when government is responsive to the people, whose elected officials in turn pursue the public good. The situation we face now, contrary to what these conservatives try to believe, is not an unfortunate aberration. It is the dismal norm.
There are two, and only two, versions of the story of liberty and power. One looks to power, as manifested in the state, as the source of progress, prosperity, and order. The other credits liberty with these good things, along with commerce, invention, prosperity, the arts and sciences, the conquering of disease and destitution, and much else. For us liberty truly is the mother, not the daughter, of order.
Some will protest that a third option is available: a judicious combination of the state and liberty, it may be said, is necessary to human flourishing. But this is merely an apologia for the state, since it takes for granted precisely what we libertarians dispute: that the state is the indispensable source of order, within which liberty flourishes. To the contrary, liberty flourishes despite the state, and the fruits of liberty that we observe around us would be all the more abundant were it not for the state’s dead hand.
We can find precursors of anarcho-capitalism here and there in Western intellectual history – Gustave de Molinari, for example, and in the United States Lysander Spooner, Benjamin Tucker, and a handful of others. But no one developed it fully, followed it consistently, or assembled it in a coherent system before Rothbard. It was Rothbard who made a sweeping and systematic case for private-property anarchism, based on economics, philosophy, and history.
Very few people have either the courage or the originality to break radically with existing systems of thought, much less to develop their own. Courage and originality were Rothbard’s trademarks. Had Murray been content to repeat the state’s propaganda, a man of his genius could have taught wherever he wanted, and enjoyed the prestige and privilege of the top tier of academia. He refused to do it. Instead, he labored, often thanklessly, to bequeath to us an elegant – and massive – system of scholarship from which we can learn and to which we can add as we press forward toward Murray’s lifelong goal of a truly free society.
We can be thankful that we live in an age in which the work of Rothbard – despised, resisted, and suppressed by the purveyors of official opinion – is readily available.
And here is another side to the libertarian paradox: although our philosophy derives from a single proposition, the nonaggression principle, the development of and elaborations on that principle provide an inexhaustible source of intellectual pleasure, as we explore how the interlocking features of human society can work together harmoniously in the absence of coercion.
The intellectual class has its task and we have ours. Theirs is to confuse and obscure; ours is to clarify and explain. Theirs is to darken the mind; ours is to enlighten it. Theirs is to subject man to the domination of those who violate the moral principles all civilized people claim to cherish. Ours is to emancipate him from that subjection.
I will leave you with the final libertarian paradox, which is this: while on the one hand we are teachers of the philosophy of freedom, as long as we love and cherish these great ideas, we shall always be students as well. Continue to explore and discover, to read and to write, to discuss and to persuade. Violence is the tool of the state. Knowledge and the mind are the tools of free people.
In the early 20th century, liberals split on several issues, and particularly in America a distinction grew up between classical liberals and social liberals.
Meaning of the term
In the late 19th century, classical liberalism developed into neo-classical liberalism, which argued for government to be as small as possible in order to allow the exercise of individual freedom. In its most extreme form, it advocated Social Darwinism. Libertarianism is a modern form of neo-classical liberalism.[6]
The term classical liberalism was applied in retrospect to distinguish earlier 19th-century liberalism from the newer social liberalism.[7] The phrase classical liberalism is also sometimes used to refer to all forms of liberalismbefore the 20th century, and some conservatives and libertarians use the term classical liberalism to describe their belief in the primacy of individual freedom and minimal government. It is not always clear which meaning is intended.[8][9][10]
Evolution of core beliefs
Core beliefs of classical liberals included new ideas—which departed from both the older conservative idea of society as a family and from later sociological concept of society as complex set of social networks—that individuals were “egoistic, coldly calculating, essentially inert and atomistic”[11] and that society was no more than the sum of its individual members.[12]
These beliefs were complemented by a belief that “labour”, i.e. individuals without capital, can only be motivated by fear of hunger and by a reward, while “men of higher rank” can be motivated by ambition, as well.[citation needed] This led politicians at the time to pass the Poor Law Amendment Act 1834, which limited the provision of social assistance, because classical liberals believed in “an unfettered market” as the mechanism that will most efficiently lead to a nation’s wealth. Adopting Thomas Malthus‘s population theory, they saw poor urban conditions as inevitable, as they believed population growth would outstrip food production; and they considered that to be desirable, as starvation would help limit population growth. They opposed any income or wealth redistribution, which they believed would be dissipated by the lowest orders.[13]
Classical liberals agreed with Thomas Hobbes that government had been created by individuals to protect themselves from one another. They thought that individuals should be free to pursue their self-interest without control or restraint by society. Individuals should be free to obtain work from the highest-paying employers, while the profit motive would ensure that products that people desired were produced at prices they would pay. In a free market, both labour and capital would receive the greatest possible reward, while production would be organised efficiently to meet consumer demand.[14]
Drawing on selected ideas of Adam Smith, classical liberals believed that all individuals are able to equally freely pursue their own economic self-interest, without government direction, serving the common good.[15] They were critical of welfare state[16] as interfering in a free market. They criticized labour’s group rights being pursued at the expense of individual rights,[17] while they accepted big corporations’ rights being pursued at the expense of inequality of bargaining power noted by Adam Smith:[18]
A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.
It was not until emergence of social liberalism that child labour was forbidden, minimum standards of worker safety were introduced, a minimum wage and old age pensions were established, and financial institutions regulations with the goal of fighting cyclic depressions, monopolies, and cartels, were introduced. They were met by classical liberalism as an unjust interference of the state.[19] So called slim state was argued for, instead, serving only the following functions:
protection against foreign invaders, extended to include protection of overseas markets through armed intervention,
protection of citizens from wrongs committed against them by other citizens, which meant protection of private property and enforcement of contracts and the suppression of trade unions and the Chartist movement,
building and maintaining public institutions, and
“public works” that included a stable currency, standard weights and measures, and support of roads, canals, harbors, railways, and postal and other communications services.[20]
They believed that rights are of a negative nature which require other individuals (and governments) to refrain from interfering with free market, whereas social liberalism believes labour has a right to be provided with certain benefits or services via taxes paid by corporations.[21]
Core beliefs of classical liberals did not necessarily include democracy where law is made by majority vote by citizens, because “there is nothing in the bare idea of majority rule to show that majorities will always respect the rights of property or maintain rule of law.”[22]For example, James Madison argued for a constitutional republic with protections for individual liberty over a pure democracy, reasoning that, in a pure democracy, a “common passion or interest will, in almost every case, be felt by a majority of the whole…and there is nothing to check the inducements to sacrifice the weaker party….”[23]
Hayek’s typology of beliefs
Friedrich Hayek identified two different traditions within classical liberalism: the “British tradition” and the “French tradition”. Hayek saw the British philosophers Bernard Mandeville, David Hume, Adam Smith, Adam Ferguson, Josiah Tucker, Edmund Burke and William Paley as representative of a tradition that articulated beliefs in empiricism, the common law, and in traditions and institutions which had spontaneously evolved but were imperfectly understood. The French tradition included Rousseau, Condorcet, the Encyclopedistsand the Physiocrats. This tradition believed in rationalism and sometimes showed hostility to tradition and religion. Hayek conceded that the national labels did not exactly correspond to those belonging to each tradition: Hayek saw the Frenchmen Montesquieu,Constant and Tocqueville as belonging to the “British tradition” and the British Thomas Hobbes, Priestley, Richard Price and Thomas Paine as belonging to the “French tradition”.[24] Hayek also rejected the label laissez faire as originating from the French tradition and alien to the beliefs of Hume, Smith and Burke.
History
Classical liberalism in Britain developed from Whiggery and radicalism, and represented a new political ideology. Whiggery had become a dominant ideology following the Glorious Revolution of 1688, and was associated with the defence of Parliament, upholding the rule of law and defending landed property. The origins of rights were seen as being in an ancient constitution, which had existed from time immemorial. These rights, which some Whigs considered to include freedom of the press and freedom of speech, were justified by custom rather than by natural rights. They believed that the power of the executive had to be constrained. While they supported limited suffrage, they saw voting as a privilege, rather than as a right. However there was no consistency in Whig ideology, and diverse writers including John Locke, David Hume, Adam Smith and Edmund Burke were all influential among Whigs, although none of them was universally accepted.[25]
British radicals, from the 1790s to the 1820s, concentrated on parliamentary and electoral reform, emphasizing natural rights and popular sovereignty. Richard Price and Joseph Priestley adapted the language of Locke to the ideology of radicalism.[25] The radicals saw parliamentary reform as a first step toward dealing with their many grievances, including the treatment of Protestant Dissenters, the slave trade, high prices and high taxes.[26]
There was greater unity to classical liberalism ideology than there had been with Whiggery. Classical liberals were committed to individualism, liberty and equal rights. They believed that required a free economy with minimal government interference. Writers such asJohn Bright and Richard Cobden opposed both aristocratic privilege and property, which they saw as an impediment to the development of a class of yeoman farmers. Some elements of Whiggery opposed this new thinking, and were uncomfortable with the commercial nature of classical liberalism. These elements became associated with conservatism.[27]
Classical liberalism was the dominant political theory in Britain from the early 19th century until the First World War. Its notable victories were the Catholic Emancipation Act of 1829, the Reform Act of 1832, and the repeal of the Corn Laws in 1846. The Anti-Corn Law League brought together a coalition of liberal and radical groups in support of free trade under the leadership of Richard Cobden and John Bright, who opposed militarism and public expenditure. Their policies of low public expenditure and low taxation were adopted by William Ewart Gladstone when he became chancellor of the exchequer and later prime minister. Classical liberalism was often associated with religious dissent and nonconformism.[28]
Although classical liberals aspired to a minimum of state activity, they accepted the principle of government intervention in the economy from the early 19th century with passage of the Factory Acts. From around 1840 to 1860, laissez-faire advocates of the Manchester School and writers in The Economist were confident that their early victories would lead to a period of expanding economic and personal liberty and world peace but would face reversals as government intervention and activity continued to expand from the 1850s. Jeremy Bentham and James Mill, although advocates of laissez faire, non-intervention in foreign affairs, and individual liberty, believed that social institutions could be rationally redesigned through the principles of Utilitarianism. The Conservative prime minister, Benjamin Disraeli, rejected classical liberalism altogether and advocated Tory Democracy. By the 1870s, Herbert Spencer and other classical liberals concluded that historical development was turning against them.[29] By the First World War, the Liberal Party had largely abandoned classical liberal principles.[30]
The changing economic and social conditions of the 19th century led to a division between neo-classical and social liberals who, while agreeing on the importance of individual liberty, differed on the role of the state. Neo-classical liberals, who called themselves “true liberals”, saw Locke’s Second Treatise as the best guide, and emphasised “limited government”, while social liberals supported government regulation and the welfare state.Herbert Spencer in Britain and William Graham Sumner were the leading neo-classical liberal theorists of the 19th century.[31] Neo-classical liberalism has continued into the contemporary era, with writers such as Robert Nozick.[32]
In the United States, liberalism took a strong root because it had little opposition to its ideals, whereas in Europe liberalism was opposed by many reactionary interests. In a nation of farmers, especially farmers whose workers were slaves, little attention was paid to the economic aspects of liberalism. Thomas Jefferson adopted many of the ideals of liberalism but, in the Declaration of Independence, changed Locke’s “life, liberty, and property” to the more socially liberal “life, liberty, and the pursuit of happiness”.[33] As America grew, industry became a larger and larger part of American life; and, during the term of America’s first populist president, Andrew Jackson, economic questions came to the forefront. The economic ideas of the Jacksonian era were almost universally the ideas of classical liberalism. Freedom was maximised when the government took a “hands off” attitude toward industrial development and supported the value of the currency by freely exchanging paper money for gold. The ideas of classical liberalism remained essentially unchallenged until a series of depressions, thought to be impossible according to the tenets of classical economics, led to economic hardship from which the voters demanded relief. In the words of William Jennings Bryan, “You shall not crucify the American farmer on a cross of gold.” Classical liberalism remained the orthodox belief among American businessmen until the Great Depression.[34] The Great Depression saw a sea change in liberalism, leading to the development of modern liberalism. In the words of Arthur Schlesinger Jr.:
When the growing complexity of industrial conditions required increasing government intervention in order to assure more equal opportunities, the liberal tradition, faithful to the goal rather than to the dogma, altered its view of the state,” and “there emerged the conception of a social welfare state, in which the national government had the express obligation to maintain high levels of employment in the economy, to supervise standards of life and labour, to regulate the methods of business competition, and to establish comprehensive patterns of social security.[35]
Central to classical liberal ideology was their interpretation of John Locke’s Second Treatise of Government and “A Letter Concerning Toleration“, which had been written as a defence of the Glorious Revolution of 1688. Although these writings were considered too radical at the time for Britain’s new rulers, they later came to be cited by Whigs, radicals and supporters of the American Revolution.[36] However, much of later liberal thought was absent in Locke’s writings or scarcely mentioned, and his writings have been subject to various interpretations. There is little mention, for example, of constitutionalism, the separation of powers, and limited government.[37]
James L. Richardson identified five central themes in Locke’s writing: individualism, consent, the concepts of the rule of law and government as trustee, the significance of property, and religious toleration. Although Locke did not develop a theory of natural rights, he envisioned individuals in the state of nature as being free and equal. The individual, rather than the community or institutions, was the point of reference. Locke believed that individuals had given consent to government and therefore authority derived from the people rather than from above. This belief would influence later revolutionary movements.[38]
As a trustee, Government was expected to serve the interests of the people, not the rulers, and rulers were expected to follow the laws enacted by legislatures. Locke also held that the main purpose of men uniting into commonwealths and governments was for the preservation of their property. Despite the ambiguity of Locke’s definition of property, which limited property to “as much land as a man tills, plants, improves, cultivates, and can use the product of”, this principle held great appeal to individuals possessed of great wealth.[39]
Locke held that the individual had the right to follow his own religious beliefs and that the state should not impose a religion against Dissenters. But there were limitations. No tolerance should be shown for atheists, who were seen as amoral, or to Catholics, who were seen as owing allegiance to the Pope over their own national government.[40]
Adam Smith’s The Wealth of Nations, published in 1776, was to provide most of the ideas of economics, at least until the publication of J. S. Mill‘s Principles in 1848.[41] Smith addressed the motivation for economic activity, the causes of prices and the distribution of wealth, and the policies the state should follow in order to maximise wealth.[42]
Smith wrote that as long as supply, demand, prices, and competition were left free of government regulation, the pursuit of material self-interest, rather than altruism, would maximize the wealth of a society[43] through profit-driven production of goods and services. An “invisible hand” directed individuals and firms to work toward the nation’s good as an unintended consequence of efforts to maximize their own gain. This provided a moral justification for the accumulation of wealth, which had previously been viewed by some as sinful.[42]
He assumed that workers could be paid as low as was necessary for their survival, which was later transformed by Ricardo and Malthus into the “Iron Law of Wages“.[44] His main emphasis was on the benefit of free internal and international trade, which he thought could increase wealth through specialization in production.[45] He also opposed restrictive trade preferences, state grants of monopolies, and employers’ organisations and trade unions.[46]Government should be limited to defence, public works and the administration of justice, financed by taxes based on income.[47]
Smith’s economics was carried into practice in the nineteenth century with the lowering of tariffs in the 1820s, the repeal of the Poor Relief Act, that had restricted the mobility of labour, in 1834, and the end of the rule of the East India Company over India in 1858.[48]
In addition to Adam Smith’s legacy, Say’s law, Malthus theories of population and Ricardo’s iron law of wages became central doctrines of classical economics. The pessimistic nature of these theories led to Carlyle calling economics the dismal science and it provided a basis of criticism of capitalism by its opponents.[49]
Jean-Baptiste Say was a French economist who introduced Adam Smith’s economic theories into France and whose commentaries on Smith were read in both France and Britain.[48] Say challenged Smith’s labour theory of value, believing that prices were determined by utility and also emphasised the critical role of the entrepreneur in the economy. However neither of those observations became accepted by British economists at the time. His most important contribution to economic thinking was Say’s law, which was interpreted by classical economists that there could be no overproduction in a market, and that there would always be a balance between supply and demand.[50] This general belief influenced government policies until the 1930s. Following this law, since the economic cycle was seen as self-correcting, government did not intervene during periods of economic hardship because it was seen as futile.[51]
Thomas Malthus wrote two books, An essay on the principle of population, published in 1798, and Principles of political economy, published in 1820. The second book which was a rebuttal of Say’s law had little influence on contemporary economists.[52] His first book however became a major influence on classical liberalism. In that book, Malthus claimed that population growth would outstrip food production, because population grew geometrically, while food production grew arithmetically. As people were provided with food, they would reproduce until their growth outstripped the food supply. Nature would then provide a check to growth in the forms of vice and misery. No gains in income could prevent this, and any welfare for the poor would be self-defeating. The poor were in fact responsible for their own problems which could have been avoided through self-restraint.[53]
David Ricardo, who was an admirer of Adam Smith, covered many of the same topics but while Smith drew conclusions from broadly empirical observations, Ricardo used induction, drawing conclusions by reasoning from basic assumptions.[54] While Ricardo accepted Smith’s labour theory of value, he acknowledged that utility could influence the price of some rare items. Rents on agricultural land were seen as the production that was surplus to the subsistence required by the tenants. Wages were seen as the amount required for workers’ subsistence and to maintain current population levels.[55] According to his Iron Law of Wages, wages could never rise beyond subsistence levels. Ricardo explained profits as a return on capital, which itself was the product of labour. But a conclusion many drew from his theory was that profit was a surplus appropriated by capitalists to which they were not entitled.[56]
Utilitarianism provided the political justification for implementation of economic liberalism by British governments, which was to dominate economic policy from the 1830s. Although utilitarianism prompted legislative and administrative reform and John Stuart Mill‘s later writings on the subject foreshadowed the welfare state, it was mainly used as a justification for laissez faire.[57]
The central concept of utilitarianism, which was developed by Jeremy Bentham, was that public policy should seek to provide “the greatest happiness of the greatest number”. While this could be interpreted as a justification for state action to reduce poverty, it was used by classical liberals to justify inaction with the argument that the net benefit to all individuals would be higher.[49]
Political economy
Classical liberals saw utility as the foundation for public policies. This broke both with conservative “tradition” and Lockean “natural rights”, which were seen as irrational. Utility, which emphasises the happiness of individuals, became the central ethical value of all liberalism.[58] Although utilitarianism inspired wide-ranging reforms, it became primarily a justification for laissez-faire economics. However, classical liberals rejected Adam Smith‘s belief that the “invisible hand” would lead to general benefits and embraced Thomas Robert Malthus‘ view that population expansion would prevent any general benefit and David Ricardo‘s view of the inevitability of class conflict. Laissez faire was seen as the only possible economic approach, and any government intervention was seen as useless and harmful. The Poor Law Amendment Act 1834 was defended on “scientific or economic principles” while the authors of the Elizabethan Poor Law of 1601 were seen as not having had the benefit of reading Malthus.[59]
Commitment to laissez faire, however, was not uniform. Some economists advocated state support of public works and education. Classical liberals were also divided on free trade. Ricardo, for example, expressed doubt that the removal of grain tariffs advocated byRichard Cobden and the Anti-Corn Law League would have any general benefits. Most classical liberals also supported legislation to regulate the number of hours that children were allowed to work and usually did not oppose factory reform legislation.[59]
Despite the pragmatism of classical economists, their views were expressed in dogmatic terms by such popular writers as Jane Marcet and Harriet Martineau.[59] The strongest defender of laissez faire was The Economist founded by James Wilson in 1843. The Economist criticised Ricardo for his lack of support for free trade and expressed hostility to welfare, believing that the lower orders were responsible for their economic circumstances. The Economist took the position that regulation of factory hours was harmful to workers and also strongly opposed state support for education, health, the provision of water, and granting of patents and copyrights.[60]
The Economist also campaigned against the Corn Laws that protected landlords in the United Kingdom of Great Britain and Ireland against competition from less expensive foreign imports of cereal products. A rigid belief in laissez faire guided the government response in 1846–1849 to the Great Famine in Ireland, during which an estimated 1.5 million people died. The minister responsible for economic and financial affairs, Charles Wood, expected that private enterprise and free trade, rather than government intervention, would alleviate the famine.[60] The Corn Laws were finally repealed in 1846 by removal tariffs on grain which kept the price of bread artificially high.[61] However, repeal of the Corn Laws came too late to stop Irish famine, partly because it was done in stages over three years.[62][63]
Free trade and world peace
Several liberals, including Adam Smith and Richard Cobden, argued that the free exchange of goods between nations could lead to world peace, a view recognised by such modern American political scientists as Robert Alan Dahl, Michael W. Doyle, Bruce Martin Rassett and John Robert Oneal.[64] Dr. Erik Gartzke[65] of Columbia University states, “Scholars like Montesquieu, Adam Smith, Richard Cobden, Norman Angell, and Richard Rosecrance have long speculated that free markets have the potential to free states from the looming prospect of recurrent warfare.”[66] American political scientists John R. Oneal and Bruce M. Russett, well known for their work on the democratic peace theory, state:[67]
The classical liberals advocated policies to increase liberty and prosperity. They sought to empower the commercial class politically and to abolish royal charters, monopolies, and the protectionist policies of mercantilism so as to encourage entrepreneurship and increase productive efficiency. They also expected democracy and laissez-faire economics to diminish the frequency of war.
Adam Smith argued in the Wealth of Nations that, as societies progressed from hunter gatherers to industrial societies, the spoils of war would rise but that the costs of war would rise further, making war difficult and costly for industrialised nations.[68]
… the honours, the fame, the emoluments of war, belong not to [the middle and industrial classes]; the battle-plain is the harvest field of the aristocracy, watered with the blood of the people…Whilst our trade rested upon our foreign dependencies, as was the case in the middle of the last century…force and violence, were necessary to command our customers for our manufacturers…But war, although the greatest of consumers, not only produces nothing in return, but, by abstracting labour from productive employment and interrupting the course of trade, it impedes, in a variety of indirect ways, the creation of wealth; and, should hostilities be continued for a series of years, each successive war-loan will be felt in our commercial and manufacturing districts with an augmented pressure
By virtue of their mutual interest does nature unite people against violence and war…the spirit of trade cannot coexist with war, and sooner or later this spirit dominates every people. For among all those powers…that belong to a nation, financial power may be the most reliable in forcing nations to pursue the noble cause of peace…and wherever in the world war threatens to break out, they will try to head it off through mediation, just as if they were permanently leagued for this purpose.[71]
Cobden believed that military expenditures worsened the welfare of the state and benefited a small but concentrated elite minority, summing up British imperialism, which he believed was the result of the economic restrictions of mercantilist policies. To Cobden, and many classical liberals, those who advocated peace must also advocate free markets.
Relationship to modern liberalism
Many modern scholars of liberalism argue that no particularly meaningful distinction between classical and modern liberalism exists. Alan Wolfe summarises this viewpoint, which:[72]
reject(s) any such distinction and argue(s) instead for the existence of a continuous liberal understanding that includes both Adam Smith and John Maynard Keynes… The idea that liberalism comes in two forms assumes that the most fundamental question facing mankind is how much government intervenes into the economy… When instead we discuss human purpose and the meaning of life, Adam Smith and John Maynard Keynes are on the same side. Both of them possessed an expansive sense of what we are put on this earth to accomplish. Both were on the side of enlightenment. Both were optimists who believed in progress but were dubious about grand schemes that claimed to know all the answers. For Smith, mercantilism was the enemy of human liberty. For Keynes, monopolies were. It makes perfect sense for an eighteenth-century thinker to conclude that humanity would flourish under the market. For a twentieth century thinker committed to the same ideal, government was an essential tool to the same end… [M]odern liberalism is instead the logical and sociological outcome of classical liberalism.
According to William J. Novak, however, liberalism in the United States shifted, “between 1877 and 1937…from laissez-faire constitutionalism to New Dealstatism, from classical liberalism to democratic social-welfarism”.[73]
L. T. Hobhouse, in Liberalism (London: Williams and Norgate, 1911), attributed this purported shift, which included qualified acceptance of government intervention in the economy and the collective right to equality in dealings, to an increased desire for what Hobhouse called “just consent”.[74] Hayek wrote that Hobhouse’s book would have been more accurately titled Socialism, and Hobhouse himself called his beliefs “liberal socialism”.[75]
Jump up^Dickerson, M. O. An Introduction to Government and Politics: A Conceptual Approach. Cengage Learning, 2009. p. 132
Jump up^Alan Ryan, “Liberalism”, in A Companion to Contemporary Political Philosophy, ed. Robert E. Goodin and Philip Pettit (Oxford: Blackwell Publishing, 1995), 293.
Jump up^Evans, M. ed. (2001): Edinburgh Companion to Contemporary Liberalism: Evidence and Experience, London: Routledge, 55 (ISBN 1-57958-339-3)
Jump up^Smith, A. (1776): Wealth of Nations, Book I, ch. 8
Jump up^Ryan, A. (1995): “Liberalism”, In: Goodin, R. E. and Pettit, P., eds.: A Companion to Contemporary Political Philosophy, Oxford: Blackwell Publishing, 293.
Jump up^James Madison, Federalist No. 10 (November 22, 1787), in Alexander Hamilton, John Jay, and James Madison, The Federalist: A Commentary on the Constitution of the United States, ed. Henry Cabot Lodge (New York, 1888), 56.
Jump up^F. A. Hayek, The Constitution of Liberty (London: Routledge, 1976), 55–56.
Jump up^Erik Gartzke, “Economic Freedom and Peace,” in Economic Freedom of the World: 2005 Annual Report (Vancouver: Fraser Institute, 2005).
Jump up^Oneal, J. R.; Russet, B. M. (1997). “The Classical Liberals Were Right: Democracy, Interdependence, and Conflict, 1950-1985”.International Studies Quarterly41 (2): 267–294. doi:10.1111/1468-2478.00042.edit
Jump up^Michael Doyle, Ways of War and Peace: Realism, Liberalism, and Socialism (New York: Norton, 1997), 237 (ISBN 0-393-96947-9).
Jump up^William J. Novak, [“The Not-So-Strange Birth of the Modern American State: A Comment on James A. Henretta’s ‘Charles Evans Hughes and the Strange Death of Liberal America'”], Law and History Review 24, no. 1 (2006).
Jump up^L. T. Hobhouse, Liberalism, in Hobhouse: Liberalism and Other Writings, James Meadowcroft, editor, Cambridge University Press, 1994, ISBN 978-0-521-43726-4
Jump up^F. A. Hayek, The Fatal Conceit: The Errors of Socialism (University of Chicago Press, 1991), 110.
References
Gray, John. Liberalism. Minneapolis: University of Minnesota Press, 1995 ISBN 0-8166-2800-9
Henry, Katherine. Liberalism and the Culture of Security: The Nineteenth-Century Rhetoric of Reform University of Alabama Press, 2011. Draws on literary and other writings to study the debates over liberty and tyranny.
Hunt, E. K. Property and Prophets: the Evolution of Economic Institutions and Ideologies. New York: M. E. Sharpe, Inc., 2003 ISBN 0-7656-0608-9
Ishiyama, John T. and Breuning, Marijke. 21st Century Political Science: A Reference Handbook, Volume 1. London, UK: SAGE, 2010 ISBN 1-4129-6901-8
Mayne, Alan James. From politics past to politics future: an integrated analysis of current and emergent paradigms. Westport, CT: Greenwood Publishing Group, 1999 ISBN 0-275-96151-6
Mills, John. A critical history of economics. Basingstoke, Hampshire UK: Palgrave Macmillan, 2002 ISBN 0-333-97130-2
Richardson, James L. Contending Liberalisms in World Politics: Ideology and Power. Boulder, CO: Lynne Rienner Publishers, 2001 ISBN 1-55587-939-X
Turner, Michael J. British Politics in an Age of Reform. Manchester UK: Manchester University Press, 1999 ISBN 0-7190-5186-X, 9780719051869
Story 1: Part 2 Update and Revisions — FairTax Less — 20% Consumption Tax Replacing All Federal Income, Payroll and Estate and Gift Taxes With A $500 Per Month Prebate For Every Adult American and $100 Per Child Per Month! — Videos
Freedom from the IRS! – FairTax Explained – Educate Yourself!
FairTax explained – a 2 minute introduction
What is the FairTax legislation?
How is the FairTax collected?
How does the FairTax affect the economy?
How does the FairTax rate compare to today’s?
Can I pretend to be a business to avoid the sales tax?
Do corporations get a windfall break from the FairTax?
What is the impact of the FairTax on business?
If people bring home their whole paychecks how can prices fall?
Does the FairTax protect privacy and other civil liberties?
What assumptions does the FairTax make about government spending?
Why is the FairTax better than a flat income tax?
Is consumption a reliable source of revenue?
Is the FairTax rate really 23%?
How do we keep exemptions and exclusions from undermining the FairTax?
How does the FairTax impact retailers?
How will used goods be taxed?
How will the FairTax affect state sales tax systems?
What will happen to government programs like Social Security and Medicare?
How will Social Security payments be calculated under the FairTax?
How does the FairTax impact the middle class?
How will the FairTax impact seniors?
How does the FairTax impact savings?
Will the FairTax drive the economy down if people stop buying?
How does the FairTax affect tax preparers and CPAs?
How will the FairTax affect state sales tax systems?
If people bring home their whole paychecks how can prices fall?
Isn’t it a stretch to say the IRS will go away?
Will the FairTax lead to a massive underground economy?
How does the “prebate” work?
Is it fair for rich people to get the same prebate as poor people?
Wouldn’t it be more fair to exempt food and medicine from the FairTax?
Will the prebate create a massive new entitlement system?
Is the FairTax truly progressive?
How does the FairTax affect compliance costs?
How will the FairTax help people who don’t hire an accountant?
How can you tax life saving medical treatment?
How does the FairTax impact charitable giving?
Will government pay taxes under the FairTax?
What will the transition be like from the income tax to the FairTax?
Will the FairTax hurt home ownership with no mortgage interest deduction?
Is education taxed under the FairTax?
Are any significant economies funded by a sales tax?
What will happen to cities who depend on tax free bonds?
Can’t Americans just cross the border to avoid the FairTax
How does the FairTax affect illegal immigration?
How is the FairTax different from a Value Added Tax (VAT)?
Dave Ramsey Supports the Fair Tax
Neal Boortz Explain the FAIRTAX
Rob Woodall Floor Speech: The FairTax will bring jobs back to America.
Woodall: Taxing consumption instead of taxing income will grow the American economy.
Flat Tax vs. National Sales Tax
Grover Norquist: Flat Tax vs Fair Tax
Fair Tax Presentation
FairTax Show – Part 1
FairTax Show – Part 2
FairTax Show – Part 3
FairTax: Fire Up Our Economic Engine (Official HD)
My FAIRTAX Story_Paul Wizikowski
Woodall FairTax Special Order
Congressman John Linder, Father of the FairTax
John Linder devoted some 35 years of his life to public service, starting in the Georgia House of Representatives in 1975, and in Congress 1993 – 2011. Linder is nationally known as the father of the FairTax Act which he sponsored in Washington. Linder and radio commentator Neal Boortz wrote two books about why the FairTax is fairer than current taxation schemes. Linder spoke to the Public Policy Foundation on May 21, 1993, just a few months after he was sworn into Congress for the first of his nine terms.
The FairTax is a proposal to reform the federal tax code of the United States. It would replace all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes(including Social Security and Medicare taxes), gift taxes, and estate taxes with a single broad national consumption tax on retail sales. The Fair Tax Act (H.R. 25/S. 122) would apply a tax, once, at the point of purchase on all new goods and services for personal consumption. The proposal also calls for a monthly payment to all familyhouseholds of lawful U.S. residents as an advance rebate, or “prebate”, of tax on purchases up to the poverty level.[1][2] First introduced into the United States Congress in 1999, a number of congressional committees have heard testimony on the bill; however, it has not moved from committee and has yet to have any effect on the tax system. In recent years, a tax reform movement has formed behind the FairTax proposal.[3] Increased attention was created after talk radio personality Neal Boortz and Georgia Congressman John Linderpublished The FairTax Book in 2005 and additional visibility was gained in the 2008 presidential campaign.As defined in the legislation, the tax rate is 23% for the first year. This percentage is based on the total amount paid including the tax ($23 out of every $100 spent in total). This would be equivalent to a 30% traditional U.S. sales tax ($23 on top of every $77 spent—$100 total).[4] The rate would then be automatically adjusted annually based on federal receipts in the previous fiscal year.[5] With the rebate taken into consideration, the FairTax would be progressive on consumption,[2] but would also be regressive on income at higher income levels (as consumption falls as a percentage of income).[6][7] Opponents argue this would accordingly decrease the tax burden on high-income earners and increase it on the middle class.[4][8] Supporters contend that the plan would effectively tax wealth, increase purchasing power,[9][10] and decrease tax burdens by broadening the tax base.The plan’s supporters believe that a consumption tax would have a positive effect on savings and investment, that it would ease tax compliance, and that the tax would result in increased economic growth, incentives forinternational business to locate in the U.S., and increased U.S. competitiveness in international trade.[11][12][13] The plan is intended to increase cost transparency for funding the federal government, and supporters believe it would have positive effects on civil liberties, the environment, and advantages with taxing illegal activity and undocumented immigrants.[11][14] Opponents contend that a consumption tax of this size would be extremely difficult to collect, and would lead to pervasive tax evasion.[4][6] They also argue that the proposed sales tax rate would raise less revenue than the current tax system, leading to an increased budget deficit.[4][15]There are also concerns regarding the proposed repeal of the Sixteenth Amendment, removal of tax deduction incentives, transition effects on after-tax savings, incentives on credit use, and the loss of tax advantages tostate and local bonds.
Linder first introduced the Fair Tax Act (H.R. 2525) on July 14, 1999 to the 106th United States Congress and a substantially similar bill has been reintroduced in each subsequent session of Congress. The bill attracted a total of 56 House and Senate cosponsors in the 108th Congress,[17][18] 61 in the 109th,[19][20] 76 in the 110th,[21][22] 70 in the 111th,[23][24] 78 in the 112th,[25][26] and 81 in the 113th (H.R. 25/S. 122). Former Speaker of the HouseDennis Hastert (Republican) had cosponsored the bill in the 109th–110th Congress, but it has not received support from the Democratic leadership, which still controls the Senate.[20][21][27] Democratic Representative Collin Peterson of Minnesota and Democratic Senator Zell Miller of Georgia cosponsored and introduced the bill in the 108th Congress, but Peterson is no longer cosponsoring the bill and Miller has left the Senate.[17][18] In the 109th–111th Congress, Representative Dan Boren has been the only Democrat to cosponsor the bill.[19][21] A number of congressional committees have heard testimony on the FairTax, but it has not moved from committee since its introduction in 1999. The legislation was also discussed with President George W. Bush and his Secretary of the TreasuryHenry M. Paulson.[28]
To become law, the bill will need to be included in a final version of tax legislation from the U.S. House Committee on Ways and Means, pass both the House and the Senate, and finally be signed by the President. In 2005, President Bush established an advisory panel on tax reform that examined several national sales tax variants including aspects of the FairTax and noted several concerns. These included uncertainties as to the revenue that would be generated, and difficulties of enforcement and administration, which made this type of tax undesirable to recommend in their final report.[8] The panel did not examine the Fairtax as proposed in the legislation. The FairTax received visibility in the 2008 presidential election on the issue of taxes and the IRS, with several candidates supporting the bill.[29][30] A poll in 2009 by Rasmussen Reports found that 43% of Americans would support a national sales tax replacement, with 38% opposed to the idea; the sales tax was viewed as fairer by 52% of Republicans, 44% of Democrats, and 49% of unaffiliateds.[31] President Barack Obama does not support the bill,[32] arguing for more progressive changes to the income and payroll tax systems.
Tax rate
The sales tax rate, as defined in the legislation for the first year, is 23% of the total payment including the tax ($23 of every $100 spent in total—calculated similar to income taxes). This would be equivalent to a 30% traditional U.S. sales tax ($23 on top of every $77 spent—$100 total, or $30 on top of every $100 spent—$130 total).[4] After the first year of implementation, this rate is automatically adjusted annually using a predefined formula reflecting actual federal receipts in the previous fiscal year.
The effective tax rate for any household would be variable due to the fixed monthly tax rebate that are used to rebate taxes paid on purchases up to the poverty level.[2] The tax would be levied on all U.S. retail sales for personal consumption on new goods andservices. Critics argue that the sales tax rate defined in the legislation would not be revenue neutral (that is, it would collect less for the government than the current tax system), and thus would increase the budget deficit, unless government spending were equally reduced.[4]
Sales tax rate
During the first year of implementation, the FairTax legislation would apply a 23% federal retail sales tax on the total transaction value of a purchase; in other words, consumers pay to the government 23 cents of every dollar spent in total (sometimes called tax-inclusive, and presented this way to provide a direct comparison with individual income and employment taxes which reduce a person’s available money before they can make purchases). The equivalent assessed tax rate is 30% if the FairTax is applied to the pre-tax price of a good like traditional U.S. state sales taxes (sometimes called tax-exclusive; this rate is not directly comparable with existing income and employment taxes).[4] After the first year of implementation, this tax rate would be automatically adjusted annually using a formula specified in the legislation that reflects actual federal receipts in the previous fiscal year.[5]
A household’s effective tax rate on consumption would vary with the annual expenditures on taxable items and the fixed monthly tax rebate. The rebate would have the greatest effect at low spending levels, where they could lower a household’s effective rate to zero or below.[33] The lowest effective tax rate under the FairTax could be negative due to the rebate for households with annual spending amounts below poverty level spending for a specified household size. At higher spending levels, the rebate has less impact, and a household’s effective tax rate would approach 23% of total spending. A person spending at the poverty level would have an effective tax rate of 0%, whereas someone spending at four times the poverty level would have an effective tax rate of 17.2%.[33] Buying or otherwise receiving items and services not subject to federal taxation (such as a used home or car) can contribute towards a lower effective tax rate. The total amount of spending and the proportion of spending allocated to taxable items would determine a household’s effective tax rate on consumption.[33] If a rate is calculated on income, instead of the tax base, the percentage could exceed the statutory tax rate in a given year.
The annual consumption allowance is based on the 2012 DHHS Poverty Guidelines as published in theFederal Register, January 26, 2012. There is no marriage penalty as the couple amount is twice the amount that a single adult receives. For each additional child above 7, add $3,960 to the annual consumption allowance, $911 to the annual rebate, and $76 to the monthly rebate amount. The annual consumption allowance is the amount of spending that is “untaxed” under the FairTax. Note: Alaska and Hawaii have different poverty levels and would have different FairTax rebate amounts.
Under the FairTax, familyhouseholds of lawful U.S. residents would be eligible to receive a “Family Consumption Allowance” (FCA) based on family size (regardless of income) that is equal to the estimated total FairTax paid on poverty level spending according to the poverty guidelines published by the U.S. Department of Health and Human Services.[1] The FCA is a tax rebate (known as a “prebate” as it would be an advance) paid in twelve monthly installments, adjusted for inflation. The rebate is meant to eliminate the taxation of household necessities and make the plan progressive.[4] Households would register once a year with their sales tax administering authority, providing the names and social security numbers of each household member.[1] The Social Security Administration would disburse the monthly rebate payments in the form of a paper check via U.S. Mail, an electronic funds transfer to a bank account, or a “smartcard” that can be used like a debit card.[1]
Opponents of the plan criticize this tax rebate due to its costs. Economists at the Beacon Hill Institute estimated the overall rebate cost to be $489 billion (assuming 100% participation).[35] In addition, economist Bruce Bartlett has argued that the rebate would create a large opportunity for fraud,[36] treats children disparately, and would constitute a welfarepayment regardless of need.[37]
The President’s Advisory Panel for Federal Tax Reform cited the rebate as one of their chief concerns when analyzing their national sales tax, stating that it would be the largestentitlement program in American history, and contending that it would “make most American families dependent on monthly checks from the federal government”.[8][38] Estimated by the advisory panel at approximately $600 billion, “the Prebate program would cost more than all budgeted spending in 2006 on the Departments of Agriculture, Commerce, Defense, Education, Energy, Homeland Security, Housing and Urban Development, and Interior combined.”[8] Proponents point out that income tax deductions, tax preferences, loopholes, credits, etc. under the current system was estimated at $945 billion by the Joint Committee on Taxation.[35] They argue this is $456 billion more than the FairTax “entitlement” (tax refund) would spend to cover each person’s tax expenses up to the poverty level. In addition, it was estimated for 2005 that the Internal Revenue Service was already sending out $270 billion in refund checks.[35]
Presentation of tax rate
Mathematically, a 23% tax out of $100 yields the same as a 30% tax on $77.
Sales and income taxes behave differently due to differing definitions of tax base, which can make comparisons between the two confusing. Under the existing individual income plus employment (Social Security; Medicare; Medicaid) tax formula, taxes to be paid are included in the base on which the tax rate is imposed (known as tax-inclusive). If an individual’s gross income is $100 and the sum of their income plus employment tax rate is 23%, taxes owed equals $23. Traditional state sales taxes are imposed on a tax base equal to the pre-tax portion of a good’s price (known as tax-exclusive). A good priced at $77 with a 30% sales tax rate yields $23 in taxes owed. To adjust an inclusive rate to an exclusive rate, divide the given rate by one minus that rate (i.e. ).
The FairTax statutory rate, unlike most U.S. state-level sales taxes, is presented on a tax base that includes the amount of FairTax paid. For example, a final after-tax price of $100 includes $23 of taxes. Although no such requirement is included in the text of the legislation, Congressman John Linder has stated that the FairTax would be implemented as an inclusive tax, which would include the tax in the retail price, not added on at checkout—an item on the shelf for five dollars would be five dollars total.[28][39] The legislation requires the receipt to display the tax as 23% of the total.[40] Linder states the FairTax is presented as a 23% tax rate for easy comparison to income and employment tax rates (the taxes it would be replacing). The plan’s opponents call the semantics deceptive. FactCheck called the presentation misleading, saying that it hides the real truth of the tax rate.[41]Bruce Bartlett stated that polls show tax reform support is extremely sensitive to the proposed rate,[37] and called the presentation confusing and deceptive based on the conventional method of calculating sales taxes.[42] Proponents believe it is both inaccurate and misleading to say that an income tax is 23% and the FairTax is 30% as it implies that the sales tax burden is higher.
A key question surrounding the FairTax is whether the tax has the ability to be revenue-neutral; that is, whether the tax would result in an increase or reduction in overall federal tax revenues. Economists, advisory groups, and political advocacy groups disagree about the tax rate required for the FairTax to be truly revenue-neutral. Various analysts use different assumptions, time-frames, and methods resulting in dramatically different tax rates making direct comparison among the studies difficult. The choice between static ordynamic scoring further complicates any estimate of revenue-neutral rates.[43]
A 2006 study published in Tax Notes by the Beacon Hill Institute at Suffolk University and Dr. Laurence Kotlikoff estimated the FairTax would be revenue-neutral for the tax year 2007 at a rate of 23.82% (31.27% tax-exclusive).[44] The study states that purchasing power is transferred to state and local taxpayers from state and local governments. To recapture the lost revenue, state and local governments would have to raise tax rates or otherwise change tax laws in order to continue collecting the same real revenues from their taxpayers.[38][44] The Argus Group and Arduin, Laffer & Moore Econometrics each published an analysis that defended the 23% rate.[45][46][47] While proponents of the FairTax concede that the above studies did not explicitly account for tax evasion, they also claim that the studies did not altogether ignore tax evasion under the FairTax. These studies presumably incorporated some degree of tax evasion in their calculations by using National Income and Product Account based figures, which is argued to understate total household consumption.[44] The studies also did not account for capital gains that may be realized by the U.S. government if consumer prices were allowed to rise, which would reduce the real value of nominal U.S. government debt.[44] Nor did these studies account for any increased economic growth that many economists researching the plan believe would occur.[44][47][48][49]
In contrast to the above studies, William G. Gale of the Brookings Institution published a study in Tax Notes that estimated a rate of 28.2% (39.3% tax-exclusive) for 2007 assuming full taxpayer compliance and an average rate of 31% (44% tax-exclusive) from 2006–2015 (assumes that the Bush tax cuts expire on schedule and accounts for the replacement of an additional $3 trillion collected through the Alternative Minimum Tax).[4][15][50] The study also concluded that if the tax base were eroded by 10% due to tax evasion, tax avoidance, and/or legislative adjustments, the average rate would be 34% (53% tax-exclusive) for the 10 year period. A dynamic analysis in 2008 by the Baker Institute For Public Policy concluded that a 28% (38.9% tax-exclusive) rate would be revenue neutral for 2006.[51] The President’s Advisory Panel for Federal Tax Reform performed a 2006 analysis to replace the individual and corporate income tax with a retail sales tax and estimated the rate to be 25% (34% tax-exclusive) assuming 15% tax evasion, and 33% (49% tax-exclusive) with 30% tax evasion.[8] The rate would need to be substantially higher to replace the additional taxes replaced by the FairTax (payroll, estate, and gift taxes). Several economists criticized the President’s Advisory Panel’s study as having allegedly altered the terms of the FairTax, using unsound methodology, and/or failing to fully explain their calculations.[35][44][52]
Taxable items and exemptions
The tax would be levied once at the final retail sale for personal consumption on new goods and services. Purchases of used items, exports and business-to-business intermediate transactions would not be taxed. Also excluded are investments, such as purchases ofstock, corporate mergers and acquisitions and capital investments. Savings and education tuition expenses would be exempt as they would be considered an investment (rather than final consumption).[53]
A good would be considered “used” and not taxable if a consumer already owns it before the FairTax takes effect or if the FairTax has been paid previously on the good, which may be different from the item being sold previously. Personal services such as health care, legal services, financial services, and auto repairs would be subject to the FairTax, as would renting apartments and other real property.[4] Food, clothing, prescription drugs and medical services would be taxed. (State sales taxes generally exempt these types of basic-need items in an effort to reduce the tax burden on low-income families. The FairTax would use a monthly rebate system instead of the common state exclusions.) Internet purchases would be taxed, as would retail international purchases (such as a boat or car) that are imported to the United States (collected by the U.S. Customs and Border Protection).[53]
Boston University study of the FairTax. Lower rates claimed on workers from a larger tax base, replacing regressive taxes, and wealth taxation.
President’s Advisory Panel’s analysis of a hybrid National Sales Tax. Higher rates claimed on the middle-class for an income tax replacement (excludes payroll, estate, and gift taxes replaced under the FairTax).
The FairTax’s effect on the distribution of taxation or tax incidence (the effect on the distribution of economic welfare) is a point of dispute. The plan’s supporters argue that the tax would broaden the tax base, that it would be progressive, and that it would decrease tax burdens and start taxing wealth (reducing the economic gap).[9][54] Opponents argue that a national sales tax would be inherently regressiveand would decrease tax burdens paid by high-income individuals.[4][55] A person earning $2 million a year could live well spending $1 million, and as a result pay a mere 11% of that year’s income in taxes.[4]Households at the lower end of the income scale spend almost all their income, while households at the higher end are more likely to devote a portion of income to saving. Therefore, according to economistWilliam G. Gale, the percentage of income taxed is regressive at higher income levels (as consumption falls as a percentage of income).[6]
Income earned and saved would not be taxed until spent under the proposal. Households at the extreme high end of consumption often finance their purchases out of savings, not income.[6][37] EconomistLaurence Kotlikoff states that the FairTax could make the tax system much more progressive and generationally equitable,[2] and argues that taxing consumption is effectively the same as taxing wages plus taxing wealth.[2] A household of three persons (this example will use two adults of any gender plus one child; the rebate does not consider marital status) spending $30,000 a year on taxable items would devote about 3.4% of total spending ( [$6,900 tax minus $5,888 rebate]/$30,000 spending ) to the FairTax after the rebate. The same household spending $125,000 on taxable items would spend around 18.3% ( [$28,750 tax minus $5,888 rebate]/$125,000 spending ) on the FairTax. At higher spending levels, the rebate has less impact and the rate approaches 23% of total spending. Thus, according to economist Laurence Kotlikoff, the effective tax rate is progressive on consumption.[2]
Studies by Kotlikoff and Daivd Rapson state that the FairTax would significantly reduce marginal taxes on work and saving, lowering overall average remaining lifetime tax burdens on current and future workers.[9][56] A study by Kotlikoff and Sabine Jokisch concluded that the long term effects of the FairTax would reward low-income households with 26.3% more purchasing power, middle-income households with 12.4% more purchasing power, and high-income households with 5% more purchasing power.[10] The Beacon Hill Institute reported that the FairTax would make the federal tax system more progressive and would benefit the average individual in almost all expenditures deciles.[7] In another study, they state the FairTax would offer the broadest tax base (an increase of over $2 trillion), which allows the FairTax to have a lower tax rate than current tax law.[57]
Gale analyzed a national sales tax (though different from the FairTax in several aspects[7][45]) and reported that the overall tax burden on middle-income Americans would increase while the tax burden on the top 1% would drop.[6] A study by the Beacon Hill Institute reported that the FairTax may have a negative effect on the well-being of mid-income earners for several years after implementation.[49]According to the President’s Advisory Panel for Federal Tax Reform report, which compared the individual and corporate income tax (excluding other taxes the FairTax replaces) to a sales tax with rebate,[8][35] the percentage of federal taxes paid by those earning from $15,000–$50,000 would rise from 3.6% to 6.7%, while the burden on those earning more than $200,000 would fall from 53.5% to 45.9%.[8] The report states that the top 5% of earners would see their burden decrease from 58.6% to 37.4%.[8][58] FairTax supporters argue that replacing the regressive payroll tax (a 15.3% total tax not included in the Tax Panel study;[8] payroll taxes include a 12.4% Social Security tax on wages up to $97,500 and a 2.9% Medicare tax, a 15.3% total tax that is often split between employee and employer) greatly changes the tax distribution, and that the FairTax would relieve the tax burden on middle-class workers.[2][52]
The predicted effects of the FairTax are a source of disagreement among economists and other analysts.[41][42][55] According to Money magazine, while many economists and tax experts support the idea of a consumption tax, many of them view the FairTax proposal as having serious problems with evasion and revenue neutrality.[4] Some economists argue that a consumption tax (the FairTax is one such tax) would have a positive effect on economic growth, incentives for international business to locate in the U.S., and increased U.S. international competitiveness (border tax adjustment in global trade).[11][12][13] The FairTax would be tax-free on mortgage interest (up to a basic interest rate) and donations, but some law makers have concerns about losing tax incentives on home ownership and charitable contributions.[59] There is also concern about the effect on the income tax industry and the difficulty of repealing the Sixteenth Amendment (to prevent Congress from re-introducing an income tax).[60]
Americans For Fair Taxation states the FairTax would boost the United States economy and offers a letter signed by eighty economists, including Nobel LaureateVernon L. Smith, that have endorsed the plan.[12] The Beacon Hill Institute estimated that within five years real GDP would increase 10.7% over the current system, domestic investment by 86.3%, capital stock by 9.3%, employment by 9.9%, real wages by 10.2%, and consumption by 1.8%.[49]Arduin, Laffer & Moore Econometrics projected the economy as measured by GDP would be 2.4% higher in the first year and 11.3% higher by the 10th year than it would otherwise be.[47] Economists Laurence Kotlikoff and Sabine Jokisch reported the incentive to work and save would increase; by 2030, the economy’s capital stock would increase by 43.7% over the current system, output by 9.4%, and real wages by 11.5%.[10] Economist John Golob estimates a consumption tax, like the FairTax, would bring long-term interest rates down by 25–35%.[61] An analysis in 2008 by the Baker Institute For Public Policy indicated that the plan would generate significant overall macroeconomic improvement in both the short and long-term, but warned of transitional issues.[51]
FairTax proponents argue that the proposal would provide tax burden visibility and reduce compliance and efficiency costs by 90%, returning a large share of money to the productive economy.[2] The Beacon Hill Institute concluded that the FairTax would save $346.51 billion in administrative costs and would be a much more efficient taxation system.[62]Bill Archer, former head of the House Ways and Means Committee, asked Princeton University Econometrics to survey 500 European and Asian companies regarding the effect on their business decisions if the United States enacted the FairTax. 400 of those companies stated they would build their next plant in the United States, and 100 companies said they would move their corporate headquarters to the United States.[63] Supporters argue that the U.S. has the highest combined statutory corporate income tax rate among OECD countries along with being the only country with no border adjustment element in its tax system.[64][65] Proponents state that because the FairTax eliminates corporate income taxes and is automatically border adjustable, the competitive tax advantage of foreign producers would be eliminated, immediately boosting U.S. competitiveness overseas and at home.[66]
Opponents point to a study commissioned by the National Retail Federation in 2000 that found a national sales tax bill filed by Billy Tauzin, the Individual Tax Freedom Act (H.R. 2717), would bring a three-year decline in the economy, a four-year decline in employment and an eight-year decline in consumer spending.[67]Wall Street Journal columnist James Taranto states the FairTax is unsuited to take advantage of supply-side effects and would create a powerful disincentive to spend money.[55] John Linder states an estimated $11 trillion is held in foreign accounts (largely for tax purposes), which he states would be repatriated back to U.S. banks if the FairTax were enacted, becoming available to U.S. capital markets, bringing down interest rates, and otherwise promoting economic growth in the United States.[11] Attorney Allen Buckley states that a tremendous amount of wealth was already repatriated under law changes in 2004 and 2005.[68] Buckley also argues that if the tax rate was significantly higher, the FairTax would discourage the consumption of new goods and hurt economic growth.[68]
During the transition, many or most of the employees of the IRS (105,978 in 2005)[69] would face loss of employment.[44] The Beacon Hill Institute estimate is that the federal government would be able to cut $8 billion from the IRS budget of $11.01 billion (in 2007), reducing the size of federal tax administration by 73%.[44] In addition, income tax preparers (many seasonal), tax lawyers, tax compliance staff in medium-to-large businesses, and software companies which sell tax preparation software could face significant drops, changes, or loss of employment. The bill would maintain the IRS for three years after implementation before completely decommissioning the agency, providing employees time to find other employment.[16]
In the period before the FairTax is implemented, there could be a strong incentive for individuals to buy goods without the sales tax using credit. After the FairTax is in effect, the credit could be paid off using untaxed payroll. If credit incentives do not change, opponents of the FairTax worry it could exacerbate an existing consumer debt problem.[70] Proponents of the FairTax state that this effect could also allow individuals to pay off their existing (pre-FairTax) debt more quickly,[11] and studies suggest lower interest rates after FairTax passage.[61]
Individuals under the current system who accumulated savings from ordinary income (by choosing not to spend their money when the income was earned) paid taxes on that income before it was placed in savings (such as a Roth IRA or CD). When individuals spend above the poverty level with money saved under the current system, that spending would be subject to the FairTax. People living through the transition may find both their earnings and their spending taxed.[71] Critics have stated that the FairTax would result in unfair double taxation for savers and suggest it does not address the transition effect on some taxpayers who have accumulated significant savings from after-tax dollars, especially retirees who have finished their careers and switched to spending down their life savings.[38][71] Supporters of the plan argue that the current system is no different, since compliance costs and “hidden taxes” embedded in the prices of goods and services cause savings to be “taxed” a second time already when spent.[71] The rebate would supplement accrued savings, covering taxes up to the poverty level. The income taxes on capital gains, estates, social security and pension benefits would be eliminated under FairTax. In addition, the FairTax legislation adjusts Social Security benefits for changes in the price level, so a percentage increase in prices would result in an equal percentage increase to Social Security income.[16] Supporters suggest these changes would offset paying the FairTax under transition conditions.[11]
The FairTax would be tax free on mortgage interest up to the federal borrowing rate for like-term instruments as determined by the Treasury,[72] but since savings, education, and other investments would be tax free under the plan, the FairTax could decrease the incentive to spend more on homes. An analysis in 2008 by the Baker Institute For Public Policy concluded that the FairTax would have significant transitional issues for the housing sector since the investment would no longer be tax-favored.[51] In a 2007 study, the Beacon Hill Institute concluded that total charitable giving would increase under the FairTax, although increases in giving would not be distributed proportionately amongst the various types of charitable organizations.[73] The FairTax may also affect state and local government debt as the federal income tax system provides tax advantages to municipal bonds.[74] Proponents believe environmental benefits would result from the FairTax through environmental economics and the re-use and re-sale of used goods.[75] Former Senator Mike Gravel states the significant reduction of paperwork for IRS compliance and tax forms is estimated to save about 300,000 trees each year.[75] Advocates argue the FairTax would provide an incentive for illegal immigrants to legalize as they would otherwise not receive the rebate.[1][11] Proponents also believe that the FairTax would have positive effects on civil liberties that are sometimes charged against the income tax system, such as social inequality, economic inequality, financial privacy, self-incrimination,unreasonable search and seizure, burden of proof, and due process.[14][76]
If the FairTax bill were passed, permanent elimination of income taxation would not be guaranteed; the FairTax bill would repeal much of the existing tax code, but the Sixteenth Amendment would remain in place. Preventing new legislation from reintroducing income taxation would require a repeal of the Sixteenth Amendment to the United States Constitution with a separate provision expressly prohibiting a federal income tax.[60] This is referred to as an “aggressive repeal”. Separate income taxes enforced by individual states would be unaffected by the federal repeal. Passing the FairTax would require only a simple majority in each house of the United States Congress along with the signature of the President, whereas enactment of a constitutional amendment must be approved by two thirds of each house of the Congress, and three-quarters of the individual U.S. states. It is therefore possible that passage of the FairTax bill would simply add another taxation system. If a new income tax bill were passed after the FairTax passage, a hybrid system could develop; albeit, there is nothing preventing a bill for a hybrid system today. To address this issue and preclude that possibility, in the 111th Congress John Linder introduced a contingent sunset provision in H.R. 25. It would require the repeal of the Sixteenth Amendment within 8 years after the implementation of the FairTax or, failing that, the FairTax would expire.[77] Critics have also argued that a tax on state government consumption could be unconstitutional.[68]
Since the FairTax would not tax used goods, the value would be determined by the supply and demand in relation to new goods.[78] The price differential/margins between used and new goods would stay consistent, as the cost and value of used goods are in direct relationship to the cost and value of the new goods. Because the U.S. tax system has a hidden effect on prices, it is expected that moving to the FairTax would decrease production costs from the removal of business taxes and compliance costs, which is predicted to offset a portion of the FairTax effect on prices.[11]
Value of used goods
Since the FairTax would not tax used goods, some critics have argued that this would create a differential between the price of new and used goods, which may take years to equalize.[37] Such a differential would certainly influence the sale of new goods like vehicles and homes. Similarly, some supporters have claimed that this would create an incentive to buy used goods, creating environmental benefits of re-use and re-sale.[75] Conversely, it is argued that like the income tax system that contains embedded tax cost (seeTheories of retail pricing),[79] used goods would contain the embedded FairTax cost.[71] While the FairTax would not be applied to the retail sales of used goods, the inherent value of a used good includes the taxes paid when the good was sold at retail. The value is determined by the supply and demand in relation to new goods.[78] The price differential / margins between used and new goods should stay consistent, as the cost and value of used goods are in direct relationship to the cost and value of the new goods.
Based on a study conducted by Dale Jorgenson, proponents state that production cost of domestic goods and services could decrease by approximately 22% on average after embedded tax costs are removed, leaving the sale nearly the same after taxes. The study concludes that producer prices would drop between 15% and 26% (depending on the type of good/service).[80] Jorgenson’s research included all income and payroll taxes in the embedded tax estimation, which assumes employee take-home pay (net income) remains unchanged from pre-FairTax levels.[4][81] Price and wage changes after the FairTax would largely depend on the response of the Federal Reserve monetary authorities.[28][37][82] Non-accommodation of the money supply would suggest retail prices and take home pay stay the same—embedded taxes are replaced by the FairTax. Full accommodation would suggest prices and incomes rise by the exclusive rate (i.e. 30%)—embedded taxes become windfall gains. Partial accommodation would suggest a varying degree in-between.[28][82]
If businesses provided employees with gross pay (including income tax withholding and the employee share of payroll taxes),[44]Arduin, Laffer & Moore Econometrics estimated production costs could decrease by a minimum of 11.55% (partial accommodation).[47] This reduction would be from the removal of the remaining embedded costs, including corporate taxes, compliance costs, and the employer share of payroll taxes. This decrease would offset a portion of the FairTax amount reflected in retail prices, which proponents suggest as the most likely scenario.[28] Bruce Bartlett states that it is unlikely that nominal wages would be reduced, which he believes would result in a recession, but that the Federal Reserve would likely increase the money supply to accommodate price increases.[37] David Tuerck states “The monetary authorities would have to consider how the degree of accommodation, varying from none to full, would affect the overall economy and how it would affect the well-being of various groups such as retirees.”[82]
Social Security benefits would be adjusted for any price changes due to FairTax implementation.[16] The Beacon Hill Institute states that it would not matter, apart from transition issues, whether prices fall or rise—the relative tax burden and tax rate remains the same.[44] Decreases in production cost would not fully apply to imported products; so according to proponents, it would provide tax advantages for domestic production and increase U.S. competitiveness in global trade (see Border adjustability). To ease the transition, U.S. retailers will receive a tax credit equal to the FairTax on their inventory to allow for quick cost reduction. Retailers would also receive an administrative fee equal to the greater of $200 or 0.25% of the remitted tax as compensation for compliance costs,[83] which amounts to around $5 billion.
Effects on tax code compliance
One avenue for non-compliance is the black market. FairTax supporters state that the black market is largely untaxed under the current tax system. Economists estimate the underground economy in the United States to be between one and three trillion dollars annually.[84][85] By imposing a sales tax, supporters argue that black market activity would be taxed when proceeds from such activity are spent on legal consumption.[86] For example, the sale of illegal narcotics would remain untaxed (instead of being guilty of income tax evasion, drug dealers would be guilty of failing to submit sales tax), but they would face taxation when they used drug proceeds to buy consumer goods such as food, clothing, and cars. By taxing this previously untaxed money, FairTax supporters argue that non-filers would be paying part of their share of what would otherwise be uncollected income and payroll taxes.[11][87]
Other economists and analysts have argued that the underground economy would continue to bear the same tax burden as before.[13][86][87][88] They state that replacing the current tax system with a consumption tax would not change the tax revenue generated from the underground economy—while illicit income is not taxed directly, spending of income from illicit activity results in business income and wages that are taxed.[13][86][87]
Proponents state the FairTax would reduce the number of tax filers by about 86% (from 100 million to 14 million) and reduce the filing complexity to a simplified state sales tax form.[52] The Government Accountability Office(GAO), among others, have specifically identified the negative relationship between compliance costs and the number of focal points for collection.[89] Under the FairTax, the federal government would be able to concentrate tax enforcement efforts on a single tax. Retailers would receive an administrative fee equal to the greater of $200 or 0.25% of the remitted tax as compensation for compliance costs.[83] In addition, supporters state that the overwhelming majority of purchases occur in major retail outlets, which are very unlikely to evade the FairTax and risk losing their business licenses.[44] Economic Census figures for 2002 show that 48.5% of merchandise sales are made by just 688 businesses (“Big-Box” retailers). 85.7% of all retail sales are made by 92,334 businesses, which is 3.6% of American companies. In the service sector, approximately 80% of sales are made by 1.2% of U.S. businesses.[28]
The FairTax is a national tax, but can be administered by the states rather than a federal agency,[90] which may have a bearing on compliance as the states’ own agencies could monitor and audit businesses within that state. The 0.25% retained by the states amounts to $5 billion the states would have available for enforcement and administration. For example, California should receive over $500 million for enforcement and administration, which is more than the $327 million budget for the state’s sales and excise taxes.[91] Because the federal money paid to the states would be a percentage of the total revenue collected, John Linder claims the states would have an incentive to maximize collections.[11] Proponents believe that states that choose to conform to the federal tax base would have advantages in enforcement, information sharing, and clear interstate revenue allocation rules.[89][90] A study by the Beacon Hill Institute concluded that, on average, states could more than halve their sales tax rates and that state economies would benefit greatly from adopting a state-level FairTax.[89]
FairTax opponents state that compliance decreases when taxes are not automatically withheld from citizens, and that massive tax evasion could result by collecting at just one point in the economic system.[37] Compliance rates can also fall when taxed entities, rather than a third party, self-report their tax liability. For example, ordinary personal income taxes can be automatically withheld and are reported to the government by a third party. Taxes without withholding and with self-reporting, such as the FairTax, can see higher evasion rates. Economist Jane Gravelle of the Congressional Research Service found studies showing that evasion rates of sales taxes are often above 10%, even when the sales tax rate is in the single digits.[87] Tax publications by the Organisation for Economic Co-operation and Development (OECD), IMF, and Brookings Institution have suggested that the upper limit for a sales tax is about 10% before incentives for evasion become too great to control.[37] According to the GAO, 80% of state tax officials opposed a national sales tax as an intrusion on their tax base.[37]Opponents also raise concerns of legal tax avoidance by spending and consuming outside of the U.S. (imported goods would be subject to collection by the U.S. Customs and Border Protection).[92]
Economists from the University of Tennessee concluded that while there would be many desirable macroeconomic effects, adoption of a national retail sales tax would also have serious effects on state and local government finances.[93] Economist Bruce Bartlett stated that if the states did not conform to the FairTax, they would have massive confusion and complication as to what is taxed by the state and what is taxed by the federal government.[37] In addition, sales taxes have long exempted all but a few services because of the enormous difficulty in taxing intangibles—Bartlett suggests that the state may not have sufficient incentive to enforce the tax.[42]University of Michigan economist Joel Slemrod argues that states would face significant issues in enforcing the tax. “Even at an average rate of around five percent, state sales taxes are difficult to administer.”[94] University of Virginia School of Law professor George Yin states that the FairTax could have evasion issues with export and import transactions.[38] The President’s Advisory Panel for Federal Tax Reform reported that if the federal government were to cease taxing income, states might choose to shift their revenue-raising to income.[8] Absent the Internal Revenue Service, it would be more difficult for the states to maintain viable income tax systems.[8][93]
Underground economy
Opponents of the FairTax argue that imposing a national retail sales tax would drive transactions underground and create a vast underground economy.[4] Under a retail sales tax system, the purchase of intermediate goods and services that are factors of productionare not taxed, since those goods would produce a final retail good that would be taxed. Individuals and businesses may be able to manipulate the tax system by claiming that purchases are for intermediate goods, when in fact they are final purchases that should be taxed. Proponents point out that a business is required to have a registered seller’s certificate on file, and must keep complete records of all transactions for six years. Businesses must also record all taxable goods bought for seven years. They are required to report these sales every month (see Personal vs. business purchases).[40] The government could also stipulate that all retail sellers provide buyers with a written receipt, regardless of transaction type (cash, credit, etc.), which would create a paper trail for evasion with risk of having the buyer turn them in (the FairTax authorizes a reward for reporting tax cheats).[52]
While many economists and tax experts support a consumption tax, problems could arise with using a retail sales tax rather than a value added tax (VAT).[4][37] A VAT imposes a tax at every intermediate step of production, so the goods reach the final consumer with much of the tax already in the price. The retail seller has little incentive to conceal retail sales, since he has already paid much of the good’s tax. Retailers are unlikely to subsidize the consumer’s tax evasion by concealing sales. In contrast, a retailer has paid no tax on goods under a sales tax system. This provides an incentive for retailers to conceal sales and engage in “tax arbitrage” by sharing some of the illicit tax savings with the final consumer. Laurence Kotlikoff has stated that the government could compel firms to report, via 1099-type forms, their sales to other firms, which would provide the same records that arise under a VAT.[52] In the United States, a general sales tax is imposed in 45 states plus the District of Columbia (accounting for over 97% of both population and economic output), which proponents argue provides a large infrastructure for taxing sales that many countries do not have.
Personal versus business purchases
Businesses would be required to submit monthly or quarterly reports (depending on sales volume) of taxable sales and sales tax collected on their monthly sales tax return. During audits, the business would have to produce invoices for the “business purchases” that they did not pay sales tax on, and would have to be able to show that they were genuine business expenses.[40] Advocates state the significant 86% reduction in collection points would greatly increase the likelihood of business audits, making tax evasion behavior much more risky.[52] Additionally, the FairTax legislation has several fines and penalties for non-compliance, and authorizes a mechanism for reporting tax cheats to obtain a reward.[40] To prevent businesses from purchasing everything for their employees, in a family business for example, goods and services bought by the business for the employees that are not strictly for business use would be taxable.[40] Health insurance or medical expenses would be an example where the business would have to pay the FairTax on these purchases. Taxable property and services purchased by a qualified non-profit or religious organization “for business purposes” would not be taxable.[95]
The creation of the FairTax began with a group of businessmen from Houston, Texas, who initially financed what has become the political advocacy group Americans For Fair Taxation (AFFT), which has grown into a large tax reform movement.[3][28] This organization, founded in 1994, claims to have spent over $20 million in research, marketing, lobbying, and organizing efforts over a ten-year period and is seeking to raise over $100 million more to promote the plan.[96] AFFT includes a staff in Houston and a large group of volunteers who are working to get the FairTax enacted. Bruce Bartlett has charged that the FairTax was devised by the Church of Scientology in the early 1990s.[42] Representative John Linder told the Atlanta Journal-Constitution that Bartlett confused the FairTax movement with the Scientology-affiliated Citizens for an Alternative Tax System,[97] which also seeks to abolish the federal income tax and replace it with a national retail sales tax. Leo Linbeck, AFFT Chairman and CEO, stated “As a founder of Americans For Fair Taxation, I can state categorically, however, that Scientology played no role in the founding, research or crafting of the legislation giving expression to the FairTax.”[96]
Much support has been achieved by talk radio personality Neal Boortz.[98] Boortz’s book (co-authored by Georgia Congressman John Linder) entitled The FairTax Book, explains the proposal and spent time atop the New York Times Best Seller list. Boortz stated that he donates his share of the proceeds to charity to promote the book.[98] In addition, Boortz and Linder have organized several FairTax rallies to publicize support for the plan. Other media personalities have also assisted in growing grassroots support including former radio and TV talk show host Larry Elder, radio host and former candidate for the 2012 GOP Presidential Nomination Herman Cain, Fox News and radio host Sean Hannity, and Fox Business Host John Stossel.[99] The FairTax received additional visibility as one of the issues in the 2008 presidential election. At a debate on June 30, 2007, several Republican candidateswere asked about their position on the FairTax and many responded that they would sign the bill into law if elected.[29] The most vocal promoters of the FairTax during the 2008 primary elections were Republican candidate Mike Huckabee and Democratic candidate Mike Gravel. Since 2008, the tax has been popular at Tea Party protests.[100] The Internet, blogosphere, and electronic mailing lists have contributed to promoting, organizing, and gaining support for the FairTax. In the 2012 Republican presidential primary, and his ensuing Libertarian Party presidential run, former Governor of New Mexico and businessman Gary Johnson actively campaigned for the FairTax.[101] Former CEO of Godfather’s PizzaHerman Cain has been promoting the FairTax as a final step in a multiple-phase tax reform.[102] Outside of the United States, the Christian Heritage Party of Canada adopted a FairTax proposal as part of their 2011 election platform[103] but won no seats in that election.
Mack, Connie, III; Breaux, John (2005-11-01). “National Retail Sales Tax (Chapter 9)” (PDF). President’s Advisory Panel for Federal Tax Reform. Retrieved 2010-02-16.
McTague, Jim (April 2005). “The Underground Economy”. The Wall Street Journal Classroom Edition. Barron’s. Archived from the original on 2006-07-18. Retrieved 2006-07-25.
“S.13 112th Cosponsors”. 112th U.S. Congress. The Library of Congress. 2011-01-25. Retrieved 2014-02-07.
“S.25 109th Cosponsors”. 109th U.S. Congress. The Library of Congress. 2005-01-24. Retrieved 2006-08-22.
“S.296 111th Cosponsors”. 111th U.S. Congress. The Library of Congress. 2009-01-22. Retrieved 2009-01-25.
“S.1025 110th Cosponsors”. 110th U.S. Congress. The Library of Congress. 2007-03-29. Retrieved 2007-04-04.
“S.1493 108th Cosponsors”. 108th U.S. Congress. The Library of Congress. 2003-07-30. Retrieved 2006-08-22.
Schlosser, Eric (2004-04-01). Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market (Reprint ed.). Mariner Books. ISBN978-0-618-44670-4.
Tuerck, David G.; Haughton, Jonathan; Bachman, Paul; Sanchez-Penalver, Alfonso; Dinwoodie, Sara (February 2007). “The FairTax and Charitable Giving” (PDF). Beacon Hill Institute. Retrieved 2007-09-18.
“Types of Bonds”. SmartMoney.com. Yahoo Finance. Archived from the original on 2006-04-09. Retrieved 2006-07-24.
Vance, Laurence (2005-05-18). “The Fair Tax Fraud”. Ludwig von Mises Institute. Retrieved 2008-08-14.
McCaffery, Edward, J. (2006). Fair Not Flat: How to Make the Tax System Better and Simpler (Paperback ed.). University of Chicago Press. ISBN0-226-55561-5.
Story 1: Resolution to Renounce the National Security Agency’s Surveillance Program — Videos
The Republican National Committee Blasts The NSA’s “Dragnet” Surveillance
Glenn Beck 1 Hour Video NSA Prism
January 23 2014 Breaking News CNN Live President Barack Obama NSA Speech Rand Paul Slams Obama
National Security Agency Whistleblower William Binney on Growing State Surveillance
In his first television interview since he resigned from the National Security Agency over the its domestic surveillance program, William Binney discusses the NSA’s massive power to spy on Americans and why the FBI raided his home after he became a whistleblower. Binney was a key source for investigative journalist James Bamford’s recent exposé in Wired Magazine about how the NSA is quietly building the largest spy center in the country in Bluffdale, Utah. The Utah spy center will contain near-bottomless databases to store all forms of communication collected by the agency including private emails, cell phone calls and Google searches and other personal data.
Binney served in the NSA for over 30 years, including a time as technical director of the NSA’s World Geopolitical and Military Analysis Reporting Group. Since retiring from the NSA in 2001 he has warned that the NSA’s data-mining program has become so vast that it could “create an Orwellian state.” Today marks the first time Binney has spoken on national television about NSA surveillance.
NSA Whistleblower Thomas Drake speaks at National Press Club – March 15, 2013
Thomas Drake, a former Senior Executive at NSA who was charged under the espionage act after he blew the whistle on waste and fraud and illegal activity at the intelligence agency, spoke at a March 15, 2013 National Press Club luncheon. Drake’s event was part of the club’s celebration of Sunshine Week, a national initiative to underscore the importance of open government and freedom of information.
NSA whistleblower Edward Snowden: ‘I don’t want to live in a society that does these sort of things’
The Truth About Edward Snowden
The NSA PRISM Surveillance Program in One Minute
Gallup Poll_ Americans Do NOT Approve Of The NSA Spying On Every Person In Our Country
Judge Rules NSA Surveillance Almost Orwellian — Obama Prepares to Leave Spying Program In
[HOT NEWS] NSA Spying: Obama Lies to Leno and the American People
Exclusive: Republican Party Calls For End To NSA Domestic Phone Records Program
In the latest indication of a growing libertarian wing of the GOP, the Republican National Committee passed a resolution Friday calling for an investigation into the “gross infringement” of Americans’ rights by National Security Agency programs that were revealed by Edward Snowden.
The resolution also calls on on Republican members of Congress to enact amendments to the Section 215 law that currently allows the spy agency to collect records of almost every domestic telephone call. The amendment should make clear that “blanket surveillance of the Internet activity, phone records and correspondence — electronic, physical, and otherwise — of any person residing in the U.S. is prohibited by law and that violations can be reviewed in adversarial proceedings before a public court,” the resolution reads.
The measure, the “Resolution to Renounce the National Security Agency’s Surveillance Program,” passed by an “overwhelming majority” by voice vote, along with resolutions calling for the repeal of the Foreign Account Tax Compliance Act and reaffirming the party’s pro-life stance, according to Reince Priebus, the RNC chairman.
Among other points, the resolution declares “the mass collection and retention of personal data is in itself contrary to the right of privacy protected by the Fourth Amendment of the United States Constitution,” a claim embraced by civil libertarians of both parties.
The revelation of the NSA programs has caused deepened a rift within the Republican Party between national security hawks and libertarians, but at the meeting, no RNC member rose to speak against the resolution.
The full text of the resolution as given to TIME follows below:
Resolution to Renounce the National Security Agency’s Surveillance Program
WHEREAS, the secret surveillance program called PRISM targets, among other things, the surveillance of U.S. citizens on a vast scale and monitors searching habits of virtually every American on the internet;
WHEREAS, this dragnet program is, as far as we know, the largest surveillance effort ever launched by a democratic government against its own citizens, consisting of the mass acquisition of Americans’ call details encompassing all wireless and landline subscribers of the country’s three largest phone companies;
WHEREAS, every time an American citizen makes a phone call, the NSA gets a record of the location, the number called, the time of the call and the length of the conversation, all of which are an invasion into the personal lives of American citizens that violates the right of free speech and association afforded by the First Amendment of the United States Constitution;
WHEREAS, the mass collection and retention of personal data is in itself contrary to the right of privacy protected by the Fourth Amendment of the United States Constitution, which guarantees the right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures, that warrants shall issue only upon probable cause, and generally prevents the American government from issuing modern-day writs of assistance;
WHEREAS, unwarranted government surveillance is an intrusion on basic human rights that threatens the very foundations of a democratic society and this program represents a gross infringement of the freedom of association and the right to privacy and goes far beyond even the permissive limits set by the Patriot Act; and
WHEREAS, Republican House Representative Jim Sensenbrenner, an author of the Patriot Act and Chairman of the House Judiciary Committee at the time of Section 215′s passage, called the Section 215 surveillance program “an abuse of that law,” writing that, “based on the scope of the released order, both the administration and the FISA (Foreign Intelligence Surveillance Act) court are relying on an unbounded interpretation of the act that Congress never intended,” therefore be it
RESOLVED, the Republican National Committee encourages Republican lawmakers to enact legislation to amend Section 215 of the USA Patriot Act, the state secrets privilege, and the FISA Amendments Act to make it clear that blanket surveillance of the Internet activity, phone records and correspondence — electronic, physical, and otherwise — of any person residing in the U.S. is prohibited by law and that violations can be reviewed in adversarial proceedings before a public court;
RESOLVED, the Republican National Committee encourages Republican lawmakers to call for a special committee to investigate, report, and reveal to the public the extent of this domestic spying and the committee should create specific recommendations for legal and regulatory reform ot end unconstitutional surveillance as well as hold accountable those public officials who are found to be responsible for this unconstitutional surveillance; and
RESOLVED, the Republican National Committee encourages Republican lawmakers to immediately take action to halt current unconstitutional surveillance programs and provide a full public accounting of the NSA’s data collection programs.
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The Pronk Pops Show 1322, September 18, 2019, Story 1: Federal Reserve Open Market Committee (FOMC) Lowers The Federal Funds Target Rate by .25% with New Range of 1.75% to 2.00% Reflecting Slowing Moderate Rate of Growth of Real Gross Domestic Product (GDP) of 2.5% Below The Historical Average of Between 3.0% to 3.5% GDP Growth Rate — Trump Panics Wants Return To Irresponsible Near Zero Interest Rate Policy and Financial Repression of The Great Recession — Trump Just Another Big Government Bubble Blower Inflating Stock Market Prices — Videos — Story 2: Federal Reserve Injects Billions Into The Economy in Overnight Repo Operations — Videos — Story 3: The Ranting Former Trump National Security Adviser John Bolton — Neoconservative Interventionist War Monger — Videos — Story 4: President Trump Visits the Double Wall with Road In Between — The U.S. Border Agents Wanted — A Game Changer — Need To Build 1500 Miles of New Wall To Stop The 30-60 Million Illegal Alien Invasion of United States Over Last 33 Years — Videos
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Story 1: Federal Reserve Open Market Committee (FOMC) Lowers The Federal Funds Target Rate by .25% with New Range of 1.75% to 2.00% Reflecting Slowing Moderate Rate of Growth of Real Gross Domestic Product (GDP) of 2.5% Below The Historical Average of Between 3.0% to 3.5% GDP Growth Rate — Trump Panics Wants Return To Irresponsible Near Zero Interest Rate Policy and Financial Repression of The Great Recession — Trump Just Another Big Government Bubble Blower Inflating Stock Market Prices — Videos —
Fed Chairman Powell faces dilemma as Trump continues his public criticism
Powell Says Fed Rate Cut Is Insurance Against Ongoing Risks
WATCH LIVE: Fed Chairman Jerome Powell speaks after interest rate cut decision – 09/18/2019
It wouldn’t be surprising if the Fed cuts rates, policy expert says
Fiat money may not survive this recession
Peter Schiff on recession warning: It’s going to be worse than 2008
What Happens When the Fed Lowers Interest Rates
Can Low Interest Rates Hold Off Recession? (w/ Richard Wolff)
Gold & Silver Prices Fall on FED Rate Cut Announcement
Trump on Fed: ‘Only problem we have is Jay Powell and the Fed’
The discount rate | Money, banking and central banks | Finance & Capital Markets | Khan Academy
A crack just emerged in the financial markets: The NY Fed spends $53 billion to rescue the overnight lending market
Updated 11:54 AM ET, Wed September 18, 2019
Borrowing rates skyrocketed on Tuesday in a corner of the markets the public rarely notices but that is critical to the functioning of the global financial system.
Rates spike
$1 trillion deficits and paying Uncle Sam
The return of QE?
Current Federal Reserve Interest Rates and Why They Change
Why the Fed Lowered Its Benchmark Rate in September 2019
The interest rate targeted by the Federal Reserve, the federal funds rate, is currently 1.75% to 2%. That’s after the Fed cut it a quarter of a percentage point on Sept. 18, 2019.1 The federal funds rate is the benchmark interest rate banks charge each other for overnight loans. It generally reflects the health of the economy and has a big impact on other interest rates. The Sept. 18 cut was the second rate drop in 2019, after years of steady increases following the Great Recession.2
The Federal Reserve is the central bank of the United States and it is mandated by Congress to promote economic stability, mainly by raising or lowering the cost of borrowing.3 The Fed said it lowered interest rates because, although the U.S. economy is strong and unemployment is low, business investments and exports have “weakened” since the last meeting of the Federal Open Market Committee.4 The FOMC is the Fed’s rate-setting body, and it votes on interest rate changes every six weeks or so.
The FOMC looks at where it thinks the economy is headed and sets interest rates to help the economy reach or maintain full employment, moderate long-term interest rates, and an inflation rate of 2%.5
The fed funds rate is critical in determining the U.S. economic outlook. It is used to set short-term interest rates, including banks’ prime rate (the rate banks charge customers for loans), most adjustable-rate mortgages, and credit card rates.
Why the Fed Raises or Lowers Interest Rates
The Fed uses interest rates as a lever to grow the economy or put the brakes on it. If the economy is slowing, the Fed can lower interest rates to make it cheaper for businesses to borrow money, invest, and create jobs. Lower interest rates also tend to make consumers more eager to borrow and spend, which helps spur the economy.
On the other hand, if the economy is growing too fast and inflation is heating up, the Fed may raise interest rates to curtail spending and borrowing.
In December 2008, the Fed cut the fed funds rate to 0.25%. That’s effectively nothing. It did so amid the worst financial crisis since the Great Depression, in an effort to light a spark under the economy. The rate stayed unchanged until 2015, and rose steadily through 2018 as the economy picked up steam.6 The 2019 cuts are a sign that growth is beginning to slow.
How the Fed Funds Rate Works
The FOMC targets a specific level for the fed funds rate, which determines the interest rates banks actually charge one another for overnight loans. Banks use these loans to help them meet cash reserve requirements: Banks that are short borrow from banks that have excess.
A reserve requirement is the amount of cash a bank must keep overnight. It’s set by the Fed and is a percentage of the bank’s deposits. The current top reserve requirement is 10% for banks with more than $124.2 million on deposit.
Prior to the financial crisis, the Fed controlled the fed funds rate by buying and selling U.S. government securities on the open market. When the Fed buys a security, that increases the reserves of the bank associated with the sale, which makes the bank more likely to lend. To attract borrowers, the bank lowers interest rates, including the rate it charges other banks.
When the Fed sells a security, the opposite happens. Bank reserves fall, making the bank more likely to borrow, causing the fed funds rate to rise.7 These shifts in the fed funds rate ripple through the rest of the credit markets, influencing other short-term interest rates such as savings, bank loans, credit card interest rates, and adjustable-rate mortgages.
Actions the Fed took during the financial crisis and throughout the recession that followed had the effect of ballooning banks’ reserve balances, and as a result, banks didn’t need to borrow from one another to meet reserve requirements.8 The Federal Reserve could no longer rely on reserve balance manipulation to control interest rates. Because of that, the Fed has developed other tools to affect the rate.
How the Fed Now Sets the Fed Funds Rate
Today, the Fed sets a target range for the fed funds rate. It started back in October 2008, when the Fed began paying interest on reserves (IOR), but to a limited number of institutions. This was intended as the floor on the fed funds rate.9 After all, banks won’t lend to each other at a lower rate than what they’re getting from the Fed.
But eventually, the Fed realized the IOR wasn’t sufficient. It needed a sub-floor, so in 2013 it added another tool to help it control the target rate: the overnight reverse repurchase agreement facility (ON RRP, or “reverse repo”).10 This program is available to a broader range of financial institutions than IOR.11
With the ON RPP, the Fed agrees to sell a security and buy it back at a higher price, which is effectively the interest rate. This rate is set high enough to attract buyers, but below IOR. When banks need to borrow from one another, they do so within the range bounded by IOR and ON RPP. And when the Fed acts to raise or lower interest rates, it adjusts both IOR and ON RPP.
How Other Interest Rates Are Determined
The fed funds rate is one of the most significant leading economic indicators in the world. Its importance is psychological as well as financial, as many of the interest rates businesses and consumers pay are based on it, if only indirectly. For example, the prime lending rate is determined by individual banks themselves, who base their rates on the fed funds rate.12
Variable interest rates for credit cards and other consumer loans, for example, rely on the prime rate, which means they’re also affected by the fed funds rate.
However, not all loans rely on the prime lending rate. In fact, the interest rates for 30-year mortgages correlate with the yield on the 10-year Treasury note. That’s because investors who are interested in safe long-term returns on their investments see lots in common between the two—but not because one rate is determined by the other.13 Ultimately, supply and demand determine the rates for both.
Another important benchmark interest rate that is not set by the Fed is the London Interbank Offered Rate (LIBOR). It is the average interest rate major global banks charge each other to borrow. LIBOR is calculated daily, and is the basis for a host of commercial and consumer interest rates, from corporate bonds to adjustable-rate mortgages.14
Fed Cuts Rates By Quarter Point But Faces Growing Split
Central bankers divided over Wednesday’s decision and the outlook for further reductions.
By
WASHINGTON—The Federal Reserve voted to cut interest rates by a quarter-percentage point for the second time in as many months to cushion the economy against a global slowdown amplified by the U.S.-China trade conflict.
While the central bankers left the door open to additional cuts, they were split over Wednesday’s decision and the outlook for further reductions.
Seven of 10 officials voted in favor lowering the short-term benchmark to a range between 1.75% and 2%. As in July, two reserve bank presidents dissented from the decision in favor of holding rates steady. This time, Fed Chairman Jerome Powell faced a third dissent from a bank president who preferred a larger, half-point cut.
“We took this step to keep the economy strong,” said Mr. Powell in a news conference after the decision.
He also indicated rates could be cut further if the economy weakened further, even though he said officials still have a positive outlook for the U.S. economy.
[For up-to-the-minute of the Fed’s monetary policy meeting, please see Federal Reserve Interest-Rate Decision—Live Analysis]
U.S. stocks wobbled, then pared declines after the Fed’s decision. Treasury yields, which move inversely to prices, ticked higher though held their recent range.
The policy statement released after the meeting was little changed from July, when officials held the door open to future rate cuts. As the rate-setting committee “contemplates the future path” of its policy rate, “it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,” the statement said, repeating language from July.
The statement noted household spending had been rising at a strong pace while business investment and exports had weakened.
Projections released after Wednesday’s two-day meeting showed the extent of the split over the policy outlook, complicating the challenge facing Mr. Powell.
Seven of 17 officials penciled in one more rate cut this year. The other 10 were split evenly between those who thought the new level of rates, after Wednesday’s cut, would be appropriate and those who thought rates shouldn’t have to go any lower.
Lowered Expectations
The Fed’s forecasts of the federal-funds rate for the end of 2019 have changed over time. Circles below are sized according to the number of officials who set their projections to the corresponding rate for each release.
Projected midpoint for rate at end of 2019
Target range following
this quarter’s release
10 officials
5
Seven of 17 officials projected one more quarter-point cut this year
4.0%
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Sept. ’17
Dec.
March ’18
June
Sept.
Dec.
March ’19
June
Sept.
PROJECTION RELEASE DATE
Source: Federal Reserve
Those divides are even sharper in projections for next year. Roughly half of officials projected rates by December 2020 would sit one-quarter point below the new level, while another half thought it would be appropriate to reverse at least one of the two recent cuts.
Officials cited three reasons—weakening global growth, rising trade-policy uncertainty and muted inflation—for cutting rates at their July 30-31 meeting. The U.S.-China trade conflict worsened immediately after the July meeting, and the global industrial downturn shows no sign of bottoming out.
The Fed faces an unusual challenge setting policy given the volatile outlook for the global trading environment, that has chilled business investment. “There is a piece of this that we really can’t address,” said Mr. Powell. “It’s an unusual situation… It’s a challenging time, I admit it.”
Officials expected the U.S. economy to slow this year, but increased uncertainty means officials aren’t sure if the economy is going to cool a little bit or a lot.
U.S. economic data paint a mixed picture. Consumer spending has been solid, but manufacturing has weakened. Recent revisions to employment and profit growth show that the economy over the past year wasn’t as strong as previously thought.
Some Fed officials have warned that waiting for signs of consumer spending and hiring to slow more sharply could require the Fed to deliver more aggressive stimulus at a time when its policy rate is already historically low.
Hiring has slowed this year. The private sector added 129,000 jobs on average over the three months ended August, down from 236,000 for the three-month period ended December.
One challenge for the Fed in reading these numbers is that for years, officials have expected hiring to slow as the economic expansion matures. At the same time, wage growth hasn’t accelerated substantially this year, as would occur when the demand for workers outstrips supply.
Meantime, the Fed has come under growing pressure from President Trump to aggressively cut interest rates—to boost stock markets and weaken the U.S. dollar—after the White House’s trade talks with China hit an impasse this spring. Mr. Trump had called for the Fed to cut rates by a half-point in April, but he has since said the Fed should lower rates more aggressively.
Soon after the Fed announced its rate cut, Mr. Trump lashed out at Mr. Powell on Twitter. “Jay Powell and the Federal Reserve Fail Again,” he wrote, one of 30 such statements about Fed policy since the July meeting. “No ‘guts,’ no sense, no vision! A terrible communicator!”
Mr. Powell has said the Fed doesn’t make policy decisions based on demands from political leaders and instead focuses on its congressional mandate to boost employment while keeping inflation stable. The unemployment rate, at 3.7%, is near a half-century low, while inflation, excluding volatile food and energy categories, has been running around 1.6%, according to the Fed’s preferred gauge, below its 2% target.
Separately, the Fed announced steps designed to boost liquidity in short-term funding markets after the central bank was twice forced this week to inject cash into money markets to pull down interest rates.
The Fed’s benchmark rate rose to 2.3% on Tuesday, trading outside of its range of 2% to 2.25%, after technical factors and monetary and regulatory changes created shortages of funds for banks.
Earlier Wednesday, the New York Fed injected $75 billion in cash into money markets, following a $53 billion infusion on Tuesday.
At the two-day meeting, the Fed’s rate-setting committee lowered a separate interest rate paid to banks on deposits, known as reserves, held at the Fed, which could reduce banks’ demand for that cash and increase their lending in other money markets. The committee cut that rate and another borrowing rate by 0.3 percentage point, larger than the 0.25 percentage-point reduction in the fed-funds target.
RELATED READING
https://www.wsj.com/articles/fed-cuts-rates-by-quarter-point-but-faces-growing-split-11568830081
Trump Says Fed Should Cut Rates to ‘Zero, or Less,’ Attacks Jerome Powell Again
Some economists warn president’s push might send up long-term Treasury yields, making it harder to achieve goal of locking in low rates
By
WASHINGTON—President Trump renewed his call for lower interest rates and his criticism of the Federal Reserve on Wednesday, by pressing for the central bank to cut short-term rates to “ZERO, or less,” negative rates that the U.S. avoided even after the 2008 financial crisis.
For weeks, Mr. Trump has pushed for lower rates to help cushion the economy against fears of a broader global slowdown. On Wednesday, he introduced a different argument for rate cuts by saying it would allow the U.S. to lock in lower interest rates for a longer period of time.
“We should then start to refinance our debt,” he wrote on Twitter, arguing it would reduce interest costs “while at the same time substantially lengthening the term.”
But some economists, including one of Mr. Trump’s former advisers, warned that his push for lower short-term interest rates might make it harder to achieve the stated goal of locking in lower rates, because it could send up long-term Treasury yields.
The tweets marked the latest escalation of Mr. Trump’s pressure on the Fed and attacks on Chairman Jerome Powell, whom the president picked for the post in 2017. Mr. Trump said the U.S. should always be paying the lowest rate and complained that the “naivete” of Mr. Powell and the Fed means that this was a “once in a lifetime opportunity that we are missing because of ‘Boneheads.’ ”
A Fed spokeswoman declined to comment on the tweets. Mr. Powell has previously defended the Fed’s tradition of independence from political pressure.
After cutting their benchmark interest rate in July by a quarter percentage point, Fed officials are gearing up to cut rates again, likely by another quarter point, at their Sept. 17-18 policy meeting.
Mr. Powell framed the July decision to lower the Fed’s benchmark short-term rate to a range between 2% and 2.25% as a “mid-cycle adjustment.” The global growth and trade outlook has deteriorated since then amid an escalation in Mr. Trump’s trade war with China.
SHARE YOUR THOUGHTS
How do you think another rate reduction might affect the U.S. economy? Join the conversation below.
Economists warn that pushing short-term interest rates to near zero could signal that Fed officials expect a much deeper economic downturn.
“That could have the unintended consequence of triggering a major drop in confidence in the economy that could precipitate a recession, which would have the opposite effect,” said Diane Swonk, chief economist at Grant Thornton.
Lowering rates all the way to zero now, when the economy is still on solid footing, could also leave the Fed without any ammunition if an actual recession hits, Ms. Swonk said.
Some economists were also skeptical that pushing interest rates to zero would actually lead to lower interest costs on government debt.
Mr. Trump has previously floated the idea of refinancing the U.S.’s nearly $17 trillion in publicly held debt, which has jumped in the wake of Republican tax cuts and bipartisan budget deals that boosted federal deficits.
“I would like to see the rates be low and pay amortization, pay off debt,” Mr. Trump said in an October 2018 interview with The Wall Street Journal, complaining that the Fed had made this difficult by raising rates several times in recent years.
RELATED
Debt-servicing costs are one of the fastest growing drivers of federal spending: Interest payments have increased nearly 10% so far this fiscal year, totaling $497.2 billion through July, roughly $1.6 billion a day, according to the Treasury Department.
It isn’t exactly clear what Mr. Trump envisions. Sovereign debt is different from mortgage debt, and can’t be renegotiated to reduce monthly payments or pay debt off early. But the Treasury can replace maturing government securities with new, long-term debt at lower interest rates, which could bring down costs.
“The Treasury should start issuing debt in much longer terms,” said Stephen Moore, an economic adviser to Mr. Trump’s 2016 campaign who at one point was under consideration for a slot on the Fed board, in a Wall Street Journal op-ed last month. “This would lock in today’s low interest rates on the national debt for 10, 20, 30 years or perhaps even longer.”
Ernie Tedeschi, an economist at Evercore ISI, said such an idea makes sense, but it is something that the Treasury is already doing. The average length to maturity of publicly held federal debt has risen to 66 months, from 46 months at the height of the 2008 financial crisis.
The Treasury has also asked an advisory group to reconsider the potential benefits of issuing ultra-long bonds, as other countries have done.
Lowering the Fed’s benchmark federal-funds rate to zero wouldn’t automatically translate to lower interest rates on government debt, which is determined by bond markets, Mr. Tedeschi said. While short-term interest costs would likely fall, “it could be that the 10-year [Treasury note] goes up because markets are more confident in the Fed management of the economy,” he said, a shift that would lead to higher interest costs.
Paul Winfree, the director of the Heritage Foundation’s Roe Institute for Economic Policy Studies and a former budget adviser to Mr. Trump, said the president’s argument is “economically inaccurate.”
“Treasury has to offer interest rates that will attract buyers,” he said. “If all of a sudden we decide to roll over all of our debt, well, that will surely influence the interest rate on the debt. Like if all of a sudden every household in America decided to refinance.”
Mr. Trump said last month that the Fed should cut its benchmark interest rate by at least a full percentage point and resume its crisis-era program of buying bonds to lower long-term borrowing costs. Such moves would typically be considered only when the economy faces a substantial downturn.
Wednesday’s comments are the first time Mr. Trump has called for rates below zero. In response to a reporter’s question several weeks ago, Mr. Trump said he didn’t want negative rates.
Yields in some countries, including Germany, France and the Netherlands, have fallen below zero already. On Tuesday, JPMorgan Chase & Co. Chief Executive James Dimon said the bank has begun discussing what fees and charges it could introduce if interest rates go to zero or lower. Even during the last recession, the Fed didn’t employ negative rates.
Mr. Trump and White House officials have said they don’t believe the U.S. is headed toward a slowdown, but also have floated other ideas, such as tax cuts, to boost the economy.
A rate cut of the magnitude Mr. Trump is calling for hasn’t happened since the global financial crisis in late 2008.
In comments last week, Mr. Powell said the U.S. economy faced a favorable outlook despite significant risks from weaker global growth and trade uncertainty.
https://www.wsj.com/articles/trump-says-fed-should-reduce-rates-to-zero-or-less-11568201306
Story 2: Federal Reserve Injects Billion Into The Economy in Overnight Repo Operation — Videos
Fed accepts $75 billion of $80 billion in bids in repo operation
NY Fed concludes first repo in 11 years amid liquidity concerns
The Fed has cut rates, so what’s next for the markets?
Top strategist: ‘Biggest bubble ever’ just burst. Here’s what happens next
BITCOIN. And Here We Go! FED Prints $128 Billion To “Calm The Financial Markets”
A crack just emerged in the financial markets: The NY Fed spends $53 billion to rescue the overnight lending market
Updated 11:54 AM ET, Wed September 18, 2019
Borrowing rates skyrocketed on Tuesday in a corner of the markets the public rarely notices but that is critical to the functioning of the global financial system.
Rates spike
$1 trillion deficits and paying Uncle Sam
The return of QE?
Story 3: The Ranting Former Trump National Security Adviser John Bolton — Neoconservative Interventionist War Monger — Videos
EXCLUSIVE
Bolton unloads on Trump’s foreign policy behind closed doors
The recently fired national security adviser made little secret of his disagreements with the president.
John Bolton, President Donald Trump’s fired national security adviser, harshly criticized Trump’s foreign policy on Wednesday at a private lunch, saying inviting the Taliban to Camp David sent a “terrible signal” and that it was “disrespectful” to the victims of 9/11 because the Taliban had harbored al Qaeda.
Bolton also said that any negotiations with North Korea and Iran were “doomed to failure,” according to two attendees.
All the North Koreans and Iranians want to do is negotiate for relief from sanctions to support their economies, said Bolton, who was speaking before guests invited by the Gatestone Institute, a conservative think tank.
“He ripped Trump, without using his name, several times,” said one attendee. Bolton didn’t immediately respond to a request for comment.
Bolton also said more than once that Trump’s failure to respond to the Iranian attack on an American drone earlier this summer set the stage for the Islamic Republic’s aggression in recent months.
At one point, Bolton, a previous chairman of Gatestone, suggested that had the U.S. retaliated for the drone shootdown, Iran might not have damaged the Saudi oil fields.
Bolton called the alleged attack on Saudi Arabia, which U.S. and Saudi officials have blamed on Iran, “an act of war” by anyone’s definition.
The former national security adviser’s comments come on the same day Trump named his successor, hostage negotiator Robert C. O’Brien.
Speaking on an airport tarmac in Los Angeles, Trump introduced his new top foreign policy aide as “highly respected” and hailed their “good chemistry.” The remarks indicated that in O’Brien, Trump sees a more compatible adviser than Bolton, whose disagreements with the president and clashes with other senior officials often spilled into public view.
After the attack in June, Trump was poised to launch a military response against the Iranians — strongly urged by Bolton — but pulled back after Fox News host Tucker Carlson and others warned him that it was a bad idea.
During Wednesday’s luncheon, Bolton said the planned response had gone through the full process and everybody in the White House had agreed on the retaliatory strike.
But “a high authority, at the very last minute,” without telling anyone, decided not to do it, Bolton complained.
Bolton spoke to around 60 Gatestone donors at the exclusive restaurant Le Bernardin in Manhattan. Attendees included noted lawyer Alan Dershowitz and his wife Carolyn, former attorney general Michael Mukasey, Newsmax CEO Chris Ruddy, First Amendment lawyer Floyd Abrams, former Fox News host John Stossel, former New York Lt. Gov. Betsy McCaughey and New York billionaire John Catsimadis.
Billionaire Rebekah Mercer introduced Bolton as “the best national security adviser our country could have hoped for,” garnering her very loud applause. Bolton had been scheduled to speak to the group before Trump fired him.
In his talk and the Q&A session that followed, Bolton took attendees through a number of global issues.
On Afghanistan, another frequent subject of disagreement with the president, Bolton said that the U.S. should not have pursued a peace deal with the Taliban.
Instead, he said, the U.S. should keep 8,600 troops in Afghanistan with intelligence support and other support elements. He called the proposed deal that was on the table similar to the agreement the Taliban offered the U.S. after 9/11, but said “it doesn’t make any sense.”
More than once, Bolton said, Israel would “sooner or later” see a new government, even though he personally liked Israeli Prime Minister Benjamin Netanyahu.
On Venezuela, a focus of his short White House tenure, Bolton claimed there were 20,000 to 25,000 Cuban troops in the South American country. The day they left, he predicted, the Nicholas Maduro regime would fall by midnight.
He also said that if British Labour leader Jeremy Corbyn were to become prime minister, it would be “fatal to the special relationship” between the U.S. and Britain.
During the Q&A session, Dershowitz told the crowd that it was “a national disaster” that Bolton had been booted from the White House, to what the attendee described as “thunderous applause.”
https://www.politico.com/story/2019/09/18/bolton-trump-foreign-policy-1501932
Story 4: President Trump Visits the Double Wall with Road In Between The U.S. Border Agents Wanted — A Game Changer — Need To Build 1500 Miles of New Wall To Stop The 30-60 Million Illegal Alien Invasion of United States Over Last 33 Years — Videos
Live: Trump tours border wall site in San Diego, California
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Listen To Pronk Pops Podcast or Download Shows 617-628
Listen To Pronk Pops Podcast or Download Shows 608-616
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Listen To Pronk Pops Podcast or Download Shows 565-574
Listen To Pronk Pops Podcast or Download Shows 556-564
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Listen To Pronk Pops Podcast or Download Shows 532-537
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Listen To Pronk Pops Podcast or Download Shows 338-345
Listen To Pronk Pops Podcast or Download Shows 328-337
Listen To Pronk Pops Podcast or Download Shows 319-327
Listen To Pronk Pops Podcast or Download Shows 307-318
Listen To Pronk Pops Podcast or Download Shows 296-306
Listen To Pronk Pops Podcast or Download Shows 287-295
Listen To Pronk Pops Podcast or Download Shows 277-286
Listen To Pronk Pops Podcast or Download Shows 264-276
Listen To Pronk Pops Podcast or Download Shows 250-263
Listen To Pronk Pops Podcast or Download Shows 236-249
Listen To Pronk Pops Podcast or Download Shows 222-235
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Listen To Pronk Pops Podcast or Download Shows 194-201
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Listen To Pronk Pops Podcast or Download Show 112
Listen To Pronk Pops Podcast or Download Shows 108-111
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Listen To Pronk Pops Podcast or Download Shows 98-100
Listen To Pronk Pops Podcast or Download Shows 94-97
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Listen To Pronk Pops Podcast or Download Shows 88-90
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Listen To Pronk Pops Podcast or Download Shows 79-83
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Listen To Pronk Pops Podcast or Download Shows 58-61
Listen To Pronk Pops Podcast or Download Shows 55-57
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