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The Pronk Pops Show 879, April 24, 2017, Story 1: The Elites vs. The People Not Nationalism vs. Internationalism — Decline and Fall Of The Socialist Welfare State — Videos — Story 2: President Trump’s Transparent Executive Orders — Videos

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The Pronk Pops Show Podcasts

Pronk Pops Show 879: April 24, 2017

Pronk Pops Show 878: April 21, 2017

Pronk Pops Show 877: April 20, 2017

Pronk Pops Show 876: April 19, 2017

Pronk Pops Show 875: April 18, 2017

Pronk Pops Show 874: April 17, 2017

Pronk Pops Show 873: April 13, 2017

Pronk Pops Show 872: April 12, 2017

Pronk Pops Show 871: April 11, 2017

Pronk Pops Show 870: April 10, 2017

Pronk Pops Show 869: April 7, 2017

Pronk Pops Show 868: April 6, 2017

Pronk Pops Show 867: April 5, 2017

Pronk Pops Show 866: April 3, 2017

Pronk Pops Show 865: March 31, 2017

Pronk Pops Show 864: March 30, 2017

Pronk Pops Show 863: March 29, 2017

Pronk Pops Show 862: March 28, 2017

Pronk Pops Show 861: March 27, 2017

Pronk Pops Show 860: March 24, 2017

Pronk Pops Show 859: March 23, 2017

Pronk Pops Show 858: March 22, 2017

Pronk Pops Show 857: March 21, 2017

Pronk Pops Show 856: March 20, 2017

Pronk Pops Show 855: March 10, 2017

Pronk Pops Show 854: March 9, 2017

Pronk Pops Show 853: March 8, 2017

Pronk Pops Show 852: March 6, 2017

Pronk Pops Show 851: March 3, 2017

Pronk Pops Show 850: March 2, 2017

Pronk Pops Show 849: March 1, 2017

Pronk Pops Show 848: February 28, 2017

Pronk Pops Show 847: February 27, 2017

Pronk Pops Show 846: February 24, 2017

Pronk Pops Show 845: February 23, 2017

Pronk Pops Show 844: February 22, 2017

Pronk Pops Show 843: February 21, 2017

Pronk Pops Show 842: February 20, 2017

Pronk Pops Show 841: February 17, 2017

Pronk Pops Show 840: February 16, 2017

Pronk Pops Show 839: February 15, 2017

Pronk Pops Show 838: February 14, 2017

Pronk Pops Show 837: February 13, 2017

Pronk Pops Show 836: February 10, 2017

Pronk Pops Show 835: February 9, 2017

Pronk Pops Show 834: February 8, 2017

Pronk Pops Show 833: February 7, 2017

Pronk Pops Show 832: February 6, 2017

Pronk Pops Show 831: February 3, 2017

Pronk Pops Show 830: February 2, 2017

Pronk Pops Show 829: February 1, 2017

Pronk Pops Show 828: January 31, 2017

Pronk Pops Show 827: January 30, 2017

Pronk Pops Show 826: January 27, 2017

Pronk Pops Show 825: January 26, 2017

Pronk Pops Show 824: January 25, 2017

Pronk Pops Show 823: January 24, 2017

Pronk Pops Show 822: January 23, 2017

Pronk Pops Show 821: January 20, 2017

Pronk Pops Show 820: January 19, 2017

Pronk Pops Show 819: January 18, 2017

Pronk Pops Show 818: January 17, 2017

Pronk Pops Show 817: January 13, 2017

Pronk Pops Show 816: January 12, 2017

Pronk Pops Show 815: January 11, 2017

Pronk Pops Show 814: January 10, 2017

Pronk Pops Show 813: January 9, 2017

 

Image result for cartoons branco french elections round 1 April 23, 2017

 Image result for the political elitesImage result for cartoons trump executive orders

 

 

 

 

Story 1: The Elites vs. The People  Not Nationalism vs. Internationalism — Videos —

Image result for the ruling class angelo codevilla

Image result for the ruling class angelo codevilla

French election explained: Emmanuel Macron and Marine Le Pen go head to head

Nigel Farage on French election: Don’t write off Le Pen

[Video] Rush Limbaugh: French Election Mirrors U.S. 2016 Vote

As anti-establishment candidates advance, France’s political establishment unites against Le Pen

French election: What would Emmanuel Macron’s presidency mean for Britain? – BBC Newsnight

Published on Apr 24, 2017

Centrist Emmanuel Macron will face far-right leader Marine Le Pen in the second round of the French presidential election.To learn more about the presidential candidate, Evan Davis has met up with Benjamin Griveaux, Mr Macron’s campaign spokesman.

PODCAST: The French Election Results and Their Impact

Why the French Election Is Critical and What We Learn from Emmanuel Macron’s Movement Versus Party

Angelo Codevilla – Does America Have a Ruling Class?

The Revolution of America’s Regime

456. The Iron Fist of the Ruling Class | Angelo Codevilla

1. America’s Ruling Class

2. Has Homeland Security Been a Failure?

3. What’s Wrong with the CIA?

[youtube-https://www.youtube.com/watch?v=NC3eM4ZAYL4]

4. Are We Winning the “War on Terror”?

Who Are America’s Elites? – Ben Shapiro

Clinton’s ‘deplorable’ attack

Clinton ‘Basket of Deplorables’ Remark Draws Fire

Peter O’Toole – The Ruling Class

The Ruling Class (1972)

George Carlin – It’s a Big Club and You Ain’t In It! The American Dream

Image result for chart of parties in france 2017

Image result for chart of parties in france 2017

Official first round result

With 107 of 107 departements counted | At 17:58 CEST
Macron 24.01%
Le Pen 21.3%
Fillon 20.01%
Mélenchon 19.58%
Hamon 6.36%
Dupont-Aignan 4.7%
Lassalle 1.21%
Poutou 1.09%
Asselineau 0.92%
Arthaud 0.64%
Cheminade 0.18%

Marine Le Pen and Emmanuel Macron Advance

For the first time in modern French history, neither candidate is from a major party.

Emmanuel Macron casts his ballot in the first round of French presidential election at a polling station in Le Touquet, France on April 23, 2017.

Emmanuel Macron casts his ballot in the first round of French presidential election at a polling station in Le Touquet, France on April 23, 2017.Eric Feferberg / ReutersYASMEEN SERHANAPR 23, 2017

Macron and Le Pen’s strong showings Sunday, which saw an approximately 77 percent voter turnout (slightly lower than the 79 percent who voted in the first round in 2012), signaled a rebuke of the political establishment that has dominated French politics for decades. Macron launched his centrist party in August 2016 after he quit his role in President François Hollande’s Socialist government, and despite the party’s youth it boasts a quarter of a million members. Meanwhile, Le Pen’s FN secured the most votes it has ever received in its nearly half-century history, surpassing the 18-percent first-round finish it saw in 2012. 
Even Jean-Luc Mélenchon, the far-left candidate who ran under a movement called La France Insoumise, or “Unsubmissive France,” had his strongest performance to date. Though his last-minute surge in the polls wasn’t enough to propel him to the second round, he still managed to claim 19.5 percent of the vote, far surpassing the 11 percent he won during his first presidential bid in 2012.Republican candidate François Fillon also earned 19.5 percent of the vote, tying Mélenchon for third place. The center-right candidate and former prime minister enjoyed a comfortable lead early on in his campaign, but support wavered in January after his candidacy was embroiled by allegations he misused public funds to pay his wife, Penelope, and two of their children for parliamentary work they are alleged not to have performed. Fillon denied any wrongdoing, although the launch of a formal investigation into both him and his wife prompted several of his Republican allies to quit his campaign.Socialist candidate Benoît Hamon, who came in last of the main contenders with 6.2 percent of the vote, also suffered from fissures within his own party. Despite clinching a decisive victory during the January primary, Hamon failed to command the support of Socialist party leaders, many of whom, including former Prime Minister Manuel Valls, endorsed Macron instead. This, paired with the deeply unpopular presidency of Hollande and the competition of similarly far-left Mélenchon, made the ruling party’s poor showing all but certain. The results prompted the losing candidates to urge their supporters to back Macron. Hamon said there was a distinction between a political adversary and an “enemy of the Republic,” referring to Le Pen. Fillon warned that Le Pen would lead France to “ruin.”

 

The advancement of two non-traditional candidates will certainly have an impact on their ability to govern once they make it to the Élysée Palace. In the month following the presidential contest, French voters will return to the polls to elect members of the National Assembly, France’s lower but more powerful house of parliament. This election is particularly important because whoever becomes prime minister almost always comes from the party that controls the chamber and, at present, neither Le Pen’s FN (which claims two of the National Assembly’s 577 seats) or Macron’s En Marche (which claims none) are expected to command a majority. This makes cohabitation, in which the president must share power with the prime minister of a different party, almost certain. Though this power-sharing arrangement is not unprecedented in French political history, as Politico’s Pierre Briançon notes, it has never been a favorable one.

It reduces the head of state to a figurehead, akin to northern European monarchs or ceremonial presidents such as those of Germany or Italy. In those times, the prime minister holds most of the executive powers, save for those governing foreign policy and defense, which the constitution puts specifically in the president’s domain. …It has happened three times in postwar history — first from 1986 to 1988, when Socialist President François Mitterrand had to live with Jacques Chirac as prime minister. From 1993 to 1995, Mitterrand had to deal with another conservative premier, Édouard Balladur. And finally, from 1997 to 2002, President Chirac had to contend with Socialist Prime Minister Lionel Jospin.

Macron and Le Pen now have two weeks ahead of the runoff to court the voters who backed their former competitors, as well as the estimated one-third of French voters who are still undecided. From the recent terrorist attack in Paris to the country’s 10 percent unemployment rate, issues such as security and the economy will likely remain at the forefront of the contest.

https://www.theatlantic.com/news/archive/2017/04/french-election-results-first-round/523965/

Outsiders Emmanuel Macron and Marine Le Pen sweep to victory as France kicks out old guard: Europhile newcomer narrowly wins first vote to take on far-Right’s Madame Frexit for the presidency

  • Far-right leader Marine Le Pen and independent centrist Emmanuel Macron have made it to the second round 
  • 36.7million voted, a turnout of 78.2 per cent; Macron won 23.9 per cent of the vote, Le Pen 21.4 
  • Republican candidate Francois Fillon conceded after initial results showed he achieved 19.5 per cent of vote
  • Far-left leader Jean-Luc Melenchon refused to concede until final results of first-round vote announced
  • France’s Prime Minister, Bernard Cazeneuve, has called on voters to support Macron instead of Le Pen 
  • This is the first time in 60 years none of France’s mainstream parties have entered the second round
  • Riots broke out in Nantes and Paris’ Place de la Bastille – the birthplace of the French Revolution 

French voters turned their backs on the political establishment last night in round one of the presidential election.

Emmanuel Macron – an independent centrist – won first place ahead of National Front leader Marine Le Pen.

The result will have major implications for Britain and its departure from the EU.

Miss Le Pen wants to completely renegotiate France’s relationship with Brussels while Mr Macron wants closer links.

Scroll down for video 

Marine Le Pen

Emmanuel Macron

Marine Le Pen (left) and Emmanuel Macron (right) celebrated the initial results of the polls, which said they both made it to the second round of the election

Le Pen went to greet her supporters after the initial results and said: '‘This is a historic result. The French must take the step for this historic opportunity. This is the first step to drive the French [people] into the Elysee Palace'

Le Pen went to greet her supporters after the initial results and said: ”This is a historic result. The French must take the step for this historic opportunity. This is the first step to drive the French [people] into the Elysee Palace’

Supporters of Le Pen, leader of the French National Front, were seen waving their flags emblazoned with ‘Marine Presidente’ at her election headquarters in Henin-Beaumont, after the inital results were announced

Supporters of French centrist candidate Macron were also seen cheering in delight at the results and waving the French flag

Supporters of French centrist candidate Macron were also seen cheering in delight at the results and waving the French flag

Many people were seen hugging after initial results showed Macron winning 23.9 percent of the vote, beating France's two main parties

Many people were seen hugging after initial results showed Macron winning 23.9 percent of the vote, beating France’s two main parties

According to France’s Interior Ministry, 46 million people voted in the first stage of the elections which knocked the traditional Right and Left parties out of the running for the first time in 60 years.

With 97 per cent of the vote counted, Macron achieved 23.9 per cent, followed by Le Pen on 21.4. A total of 36.7million voted, a turnout of 78.2 per cent.

But it is thought that Le Pen’s chances of winning the second round are limited as supporters for Republican candidate Francois Fillon, who conceded but has gained 19.9 per cent of the votes, will support Macron.

However, far-left leader Jean-Luc Melenchon, who gained 19.6 per cent, refused to concede until the final results of first-round vote were announced. 

Macron took to the stage in Paris earlier, with his wife Brigitte, and urged national unity against Le Pen.

To chants of ‘Macron president!’ and ‘We’re going to win,’ Macron began his speech by paying tribute to his opponents, and praised his supporters for his lightning rise.

He said: ‘We have turned a page in French political history,’ and added he wants to gather ‘the largest possible’ support before May 7.

Macron acknowledged widespread anger at traditional parties and promised ‘new transformations’ in French politics.

At a rally last night, Le Pen told her supporters she is offering ‘the great alternative’ in the presidential race. 

Crowds celebrate as Macron & Le Pen expected go through to next round

She added: 'It is time to liberate the French people from the arrogant [political] elite.' Le Pen was later given a bunch of flowers

She added: ‘It is time to liberate the French people from the arrogant [political] elite.’ Le Pen was later given a bunch of flowers

Le Pen addresses supporters as she goes through to second round
She said: ‘This is a historic result. The French must take the step for this historic opportunity. This is the first step to drive the French [people] into the Elysee Palace.

‘It is time to liberate the French people from the arrogant [political] elite.’

Former favourite Fillon conceded and voiced his support for Macron after initial projections showed he and Melanchon got 19.5 per cent of the vote. 

Shortly afterwards, France’s Prime Minister, Bernard Cazeneuve, also called on voters to support Macron.

The outcome capped an extraordinary few months for a deeply divided France, which saw a campaign full of twists and turns and widespread anger at traditional parties.

It signals a stinging defeat for the Fillon and Socialist Benoit Hamon, meaning neither of France’s mainstream parties will be in the second round for the first time in 60 years.

Macron, a 39-year-old who had never before stood for election and only started his independent centrist movement 12 months ago, will be the overwhelming favourite to win the second round on May 7.

He served as an economy minister under President Francois Hollande, ran without the backing of an established party, forming his own called ‘En Marche!’.

His wife Brigitte is 25 years his senior and taught him at school.

Macron, a 39-year-old who had never before stood for election and only started his independent centrist movement, En Marche!, 12 months ago

Macron, a 39-year-old who had never before stood for election and only started his independent centrist movement, En Marche!, 12 months ago

Macron thanks supporters for campaign that changed French politics

He said he wants to gather 'the largest possible' support before the May 7 runoff. He praised his supporters for a campaign that 'changed the course of our country'

He said he wants to gather ‘the largest possible’ support before the May 7 runoff. He praised his supporters for a campaign that ‘changed the course of our country’

Macron acknowledged widespread anger at traditional parties and promised 'new transformations' in French politics

Macron acknowledged widespread anger at traditional parties and promised ‘new transformations’ in French politics

European Commission President Jean-Claude Juncker congratulated Macron on Sunday and wished the centrist well for the May 7 French presidential runoff against Le Pen.

‘Juncker congratulated Macron on his result in the first round and wished him all the best for the next round,’ Margaritis Schinas said on Twitter.

Underlining broad support for Macron among leaders of the European Union institutions in Brussels, EU foreign policy chief Federica Mogherini from the Italian centre-left added her congratulations to those of Juncker, a centre-right former prime minister of Luxembourg.

‘To see the flags of France and the EU hailing Emmanuel Macron’s result shows hope and the future of our generation,’ tweeted Mogherini, 43, after the 39-year-old Macron’s first-round victory speech to supporters was broadcast on television.

Last night he was congratulated by former Labour MP David Miliband and by former chancellor George Osborne.

Mr Miliband said: ‘Tremendous achievement by Emmanuel Macron. Bulwark against evil forces and tribune for modernization in France and Europe.’

Mr Osborne said: ‘Congratulations to my friend Emmanuel Macron. Proof you can win from the centre. At last the chance for the leadership that France needs.’

Fillon urges supporters to vote for Macron as he concedes

Despite his defeat, supporters for the election candidate far-left leader Jean-Luc Melenchon still cheered for him outside his election headquarters

Despite his defeat, supporters for the election candidate far-left leader Jean-Luc Melenchon still cheered for him outside his election headquarters

Anti-fascist activists clashed with riot police in Paris' Place de la Bastille - the birthplace of the French Revolution

Anti-fascist activists clashed with riot police in Paris’ Place de la Bastille – the birthplace of the French Revolution

Demonstrators in Nantes chanted anti-Le Pen slogans as they showed their opposition to the National Front leader

Demonstrators in Nantes chanted anti-Le Pen slogans as they showed their opposition to the National Front leader

The euro has jumped 2 per cent on Sunday night, to more than 85p ($1.09), after projections showed Macron and Le Pen would go head to head.

Macron has vowed to reinforce France’s commitment to the EU and euro.

Stock markets will next open in Asia before Europe starts trading on Monday morning.

But despite stock markets around the world improving significantly, investors fretted beforehand that another unforseen election outcome could upend the market. In addition, the  presidential race was plagued by controversy.

 Republican candidate Fillon, 63, is accused of embezzling state money by paying his British wife Penelope, 61, as his assistant – despite her allegedly carrying out no work.

Le Pen faces a fraud inquiry, with her chief of staff accused of misusing EU funds while Melenchon, 65, had vowed to pull his country out of Europe and get rid of the euro.

Earlier this evening, Le Pen had security authorities on high alert, with rioting expected across the country in protest due to her election success.

More than 50,000 police and gendarmes were deployed to the 66,000 polling stations for Sunday’s election, which comes after Thursday’s deadly attack on the Champs-Elysees in which a police officer and a gunman were slain.

However, initial election results triggered riots across the country, initially sparked in Paris’ Place du la Bastille, the birthplace of the French Revolution, tonight against the Le Pen’s National Front.

The crowds of young people, some from anarchist and anti-fascist groups, gathered in eastern Paris as results were coming in from Sunday’s first-round vote.

Police fired tear gas to disperse an increasingly rowdy crowd. Riot police surrounded the area.

Protesters have greeted several of Le Pen’s campaign events, angry at her anti-immigration policies and her party, which she has sought to detoxify after a past tainted by racism and anti-Semitism.

There were angry scenes in Nantes in western France, where anti-fascists took to the streets to protest

There were angry scenes in Nantes in western France, where anti-fascists took to the streets to protest

Ballot boxes in Le Port, on the French overseas island of La Reunion were seen locked after the polls closed earlier this evening

Ballot boxes in Le Port, on the French overseas island of La Reunion were seen locked after the polls closed earlier this evening

Two officials were seen tipping out the votes ready to count them ahead of the results, which are expected to be announced within the hour

Two officials were seen tipping out the votes ready to count them ahead of the results, which are expected to be announced within the hour

Le Pen has vowed to offer French voters a referendum to leave the EU and wants to leave the euro, known as Frexit.

Her father, the convicted racist and anti-Semite Jean-Marie Le Pen, won through to the second round of the 2002 presidential election but was then crushed by the conservative Jacques Chirac.

However she faces a similar prospect of defeat when she goes up against Macron in the second round of the next week.

He is widely expected to win the contest against Le Pen.

In France the election took place with the nation on high alert, with the vote taking place just three days after a police officer was gunned down by a Jihadi on the Champs-Elysees in Paris.

In Besancon, eastern France a stolen car was abandoned outside a polling station with the engine running.

A policeman secures the entrance of a polling station as people arrive to vote in the first round of 2017 French presidential election in Henin-Beaumont, France, April 23, 2017

A policeman secures the entrance of a polling station as people arrive to vote in the first round of 2017 French presidential election in Henin-Beaumont, France, April 23, 2017

Policemen stand near a polling station during the first round of 2017 French presidential election in Paris, France

Policemen stand near a polling station during the first round of 2017 French presidential election in Paris, France

Femen activists with masks, including one wearing a mask of Marine Le Pen, top left, are detained as they demonstrate in Henin-Beaumont, northern France, where far-right leader and presidential candidate Le Pen voted during the first round of the French presidential election

Femen activists with masks, including one wearing a mask of Marine Le Pen, top left, are detained as they demonstrate in Henin-Beaumont, northern France, where far-right leader and presidential candidate Le Pen voted during the first round of the French presidential election

Police found a hunting rifle inside the vehicle which had been disguised with stolen number plates.

In Rouen, Normandy, a gunman shot and wounded another man but the incident was classified as ‘non-terror related’.

Two other polling station, in Saint Omer, northern France, were evacuated because of a suspicious vehicle with Dutch number plates.

Ballots were cast in the wake of took place after a series of devastating terror attacks across France, but despite that armed police and soldiers are outlawed from protecting 67,000 French polling stations.

There had been a serious concern that groups including Islamic State would target the election.

However the 50,000 policemen and gendarmes that were only standby along with 7,000 soldiers were not required as the day went on.

The presidential poll is the first to be held during a state of emergency, put in place since the Paris attacks of November 2015.

A Femen activists wearing the mask of Marine le Pen is detained as they demonstrate in Henin Beaumont, northern France

A Femen activists wearing the mask of Marine le Pen is detained as they demonstrate in Henin Beaumont, northern France

TOPLESS demonstrators protests outside French polling station

Voters are choosing between 11 candidates in the most unpredictable contest in decades, and the poll conducted by RTBF suggests just that.

Topless demonstrators from the Femen activist group caused a commotion as they staged a stunt against Le Pen outside a polling station where the far-right presidential candidate was heading to vote.

Around six activists were detained Sunday morning after jumping out of an SUV limo wearing masks of Le Pen and United States President Donald Trump.

Police and security forces quickly forced them into police vans, confiscating their signs.

Le Pen voted at the station shortly after without further disruption.

After nine hours of voting, turnout was 69.4 percent, one of the highest levels in 40 years.

While down slightly on the same point in the 2012 election, an extra hour of voting in smaller towns was expected to take turnout to around 78 to 81 percent.

A Femen activist wearing the mask of U.S President Donald Trump is taken away from the scene near a scrum of photographers 

A Femen activist wearing the mask of U.S President Donald Trump is taken away from the scene near a scrum of photographers

People line up before casting their vote for the first-round presidential election at a polling station in Paris, Sunday, April 23, 2017

People line up before casting their vote for the first-round presidential election at a polling station in Paris, Sunday, April 23, 2017

Outgoing French president Francois Hollande casts his ballot at a polling station in Tulle

Outgoing French president Francois Hollande casts his ballot at a polling station in Tulle (left) as Marine Le Pen emerges from a booth (right)

Outgoing French president Francois Hollande picks up ballot papers before casting his vote at a polling station in Tulle, central France, on April 23, 2017, during the first round of the Presidential election

Outgoing French president Francois Hollande picks up ballot papers before casting his vote at a polling station in Tulle, central France, on April 23, 2017, during the first round of the Presidential election

Former French President and former Head of Les Republicains right wing Party Nicolas Sarkozy (centre) and his wife, the singer Carla Bruni Sarkozy (left) vote in the first round of the 2017 French Presidential Election at the Jean de la Fontaine High School in the 16th arrondissement on April 23, 2017 in Paris, France

Former French President and former Head of Les Republicains right wing Party Nicolas Sarkozy (centre) and his wife, the singer Carla Bruni Sarkozy (left) vote in the first round of the 2017 French Presidential Election at the Jean de la Fontaine High School in the 16th arrondissement on April 23, 2017 in Paris, France

Former French President and former Head of Les Republicains right wing Party Nicolas Sarkozy sweeps the curtain aside as he leaves a voting booth

Former French President and former Head of Les Republicains right wing Party Nicolas Sarkozy sweeps the curtain aside as he leaves a voting booth

Marine Le Pen was today poised for a historic breakthrough in France’s nail-biting presidential race

Marine Le Pen was today poised for a historic breakthrough in France’s nail-biting presidential race

Her campaign has been dominated by anti-Islam and anti-immigration rhetoric and critics said she has used the violence to stoke further hostility.

Defiant voters proclaimed the Paris terrorist attack would not alter their political loyalties in the French presidential elections today, although many feared a surge in support for the National Front.

As citizens flocked to polling stations across the country Parisians told how they would ‘vote with their hearts’ to reject extremist ideas, in the first round of voting to decide the new leader of France.

Mother-of-one Marie-Noelle Liesse told MailOnline she voted for independent centrist Emmanuel Macron to stop Marine Le Pen.

She said: ‘I voted with my heart to stop the extremists, the National Front, from getting into power.

‘The terrorist attack on the Champs Elysee has not affected the way I voted, but I fear it may have influenced some people.

‘I voted for Macron. I believe he is the right candidate to lead France.’

Mrs Liesse, 45, a communications executive, brought her five-year-old son Amant, to the polling station in the central Marais district of Paris.

Marine Le Pen casts her vote in the French presidential elections

French presidential election candidate for the far-right Front National (FN) party, Marine Le Pen casts her ballot in the first round of the French presidential elections in Henin-Beaumont, Northern France, shortly after the commotion

French presidential election candidate for the far-right Front National (FN) party, Marine Le Pen casts her ballot in the first round of the French presidential elections in Henin-Beaumont, Northern France, shortly after the commotion

Centrist candidate Emmanuel Macron waves supporters after casting his vote in the first round of the French presidential election, in le Touquet, northern France, Sunday April 23, 2017

Centrist candidate Emmanuel Macron waves supporters after casting his vote in the first round of the French presidential election, in le Touquet, northern France, Sunday April 23, 2017

People line up before casting their vote for the first-round presidential election at a polling station in Paris, Sunday, April 23, 2017

People line up before casting their vote for the first-round presidential election at a polling station in Paris, Sunday, April 23, 2017

Young professional couple Max Nivoix and Mariam Guedra voted for independent centrist Emmanuel Macron for said they feared the terrorist attack would galvanise support for Marine Le Pen’s National Front.

Mr Nivoix, 28, an industrial products buyer, told MailOnline: ‘I have voted for Macron. I think he is the best candidate to lead France.

‘The terrorist attack last week has not influenced the way I voted. But I fear that people outside of Paris will turn to Le Pen because of it.’

French nationals in the UK casting their votes

Among the 60,000 polling stations to open their doors was the French Consulate in South Kensington, where the bulk of the UK’s French nationals are expected to cast their votes.

According to figures from 2014, there are 400,000 French people living in London, which prompted Boris Johnson to call it France’s sixth biggest city.

At the end of 2013, the Foreign Ministry recorded 1.6million French expats living in the UK, according to The Independent.

Outside of the capital, there are polling stations in Ashford, Brighton, Belfast, Birmingham, Bristol, Leeds, Manchester, Aberdeen, Edinburgh and Glasgow.

 His partner Ms Guedra, 28, an engineer, added: ‘I voted for Emmanuel Macron too. He has the best policies for young people and for the time we live in now.

‘But we are both educated and from the city. I know that old people and people in the countryside are more in favour of Le Pen.’

Flight attendant Baptiste Laurent said he voted for communist-backed firebrand Jean-Luc Melonchon he feared National Front candidate Marine Le Pen could come top in the poll.

Mr Laurent, 39, told MailOnline: ‘I voted for Melonchon because I voted for what I believe in – a more equal society.

‘But I fear that Le Pen could be the biggest winner today.’

Mr Laurent came to the polling station with his 14-month-old daughter Romy.

A primary school teacher also backed communist-backed firebrand Jean-Luc Melonchon but feared a surge of support for Le Pen’s National Front.

Alexandre, 42, told MailOnline: ‘I voted for Melonchon because I support his programme and his socialist policies.

‘But Le Pen will do well in the polls today. She has a strong base of support. And after the terrorist attack she will get more votes. I think she will get through to the second round of voting.’

The second round of voting between the two front runners of today’s poll will take place on Sunday 7 May.

She is locked in a duel with centrist front-runner Emmanuel Macron, 39, a staunch defender of the single market who has told Theresa May he favours a ‘hard Brexit’.

If, as expected, Le Pen and Macron are successful in the first round of voting today, they will face each other in the run-off on May 7.

People line up to vote at a polling station in the first round of 2017 French presidential election in Vaulx-en-Velin, France, April 23, 2017

People line up to vote at a polling station in the first round of 2017 French presidential election in Vaulx-en-Velin, France, April 23, 2017

Brigitte Trogneux casts her ballot next to her husband, French presidential election candidate for the En Marche movement Emmanuel Macron during the first round of the Presidential election at a polling station in Le Touquet

Brigitte Trogneux casts her ballot next to her husband, French presidential election candidate for the En Marche movement Emmanuel Macron during the first round of the Presidential election at a polling station in Le Touquet

But analysts say the battle for the Élysée Palace is by no means a two-horse race.

Le Pen has moved from 22 per cent to 23 per cent in the latest opinion poll while her three rivals have all lost half a percentage point of support.

Macron dropped back to 24.5 per cent, while republican candidate François Fillon and leftist candidate Jean-Luc Mélenchon were back on 19 per cent.

The far-Right leader is confident her chances of winning the election’s first round have been strengthened by last week’s terrorist murder of a police officer on the Champs-Élysées

The far-Right leader is confident her chances of winning the election’s first round have been strengthened by last week’s terrorist murder of a police officer on the Champs-Élysées

Experts said a Le Pen victory in the first round could mean cheaper holidays for Brits heading to Europe.

Kathleen Brooks, of City Index Direct, said: ‘I think if Le Pen wins today by a wide enough margin, then the euro will fall significantly, possibly to the lowest levels we’ve seen this year. And a weak euro will initially be great for us as everything will be much cheaper in Europe.’

Le Pen’s father, the convicted racist Jean-Marie Le Pen, caused shockwaves around the world in 2002 when he came second in the first round. He then went on to lose to Jacques Chirac by a landslide of more than 80 per cent.

But Marine Le Pen is convinced she can go one better by positioning herself as the candidate who is toughest on terror.

She had pledged to ‘immediately reinstate border checks’, to expel foreigners and to ban all immigration, whether illegal or not. Supporters include Donald Trump who said the Paris attack would ‘have a big effect on the presidential election’ because the French people ‘will not take much more of this’.

But Prime Minister Cazeneuve accused Le Pen of ‘shamelessly seeking to exploit fear and emotion for exclusively political ends’. Mr Cazeneuve pointed out that Karim Cheurfi, the 39-year-old responsible for the murder of traffic officer Xavier Jugelé, 37, was a born and bred Frenchman.

Le Pen has called for negotiation with Brussels on a new EU, followed by a referendum; extremist mosques closed and priority to French nationals in social housing; and retirement age fixed at 60.

Macron forged a reputation with his ‘Macron Law’, a controversial reform bill that allowed shops to open more often on Sundays. On security, he has said France is paying for the intelligence jobs cuts made when Fillon was PM between 2007 and 2012.

http://www.dailymail.co.uk/news/article-4437156/Leading-candidates-cast-votes-French-election.html#ixzz4fEBy4Ooi

 

Is Macron the EU’s last best hope?

For the French establishment, Sunday’s presidential election came close to a near-death experience. As the Duke of Wellington said of Waterloo, it was a “damn near-run thing.”

Neither candidate of the two major parties that have ruled France since Charles De Gaulle even made it into the runoff, an astonishing repudiation of France’s national elite.

Marine Le Pen of the National Front ran second with 21.5 percent of the vote. Emmanuel Macron of the new party En Marche! won 23.8 percent.

Macron is a heavy favorite on May 7. The Republicans’ Francois Fillon, who got 20 percent, and the Socialists’ Benoit Hamon, who got less than 7 percent, both have urged their supporters to save France by backing Macron.

Ominously for U.S. ties, 61 percent of French voters chose Le Pen, Fillon or radical Socialist Jean-Luc Melenchon. All favor looser ties to America and repairing relations with Vladimir Putin’s Russia.

Le Pen has a mountain to climb to win, but she is clearly the favorite of the president of Russia, and perhaps of the president of the United States. Last week, Donald Trump volunteered:

“She’s the strongest on borders, and she’s the strongest on what’s been going on in France. … Whoever is the toughest on radical Islamic terrorism, and whoever is the toughest at the borders, will do well in the election.”

As an indicator of historic trends in France, Le Pen seems likely to win twice the 18 percent her father, Jean-Marie Le Pen, won in 2002, when he lost in the runoff to Jacques Chirac.

The campaign between now and May 7, however, could make the Trump-Clinton race look like an altarpiece of democratic decorum.

Not only are the differences between the candidates stark, Le Pen has every incentive to attack to solidify her base and lay down a predicate for the future failure of a Macron government.

And Macron is vulnerable. He won because he is fresh, young, 39, and appealed to French youth as the anti-Le Pen. A personification of Robert Redford in “The Candidate.”

But he has no established party behind him to take over the government, and he is an ex-Rothschild banker in a populist environment where bankers are as welcome as hedge-fund managers at a Bernie Sanders rally.

He is a pro-EU, open-borders transnationalist who welcomes new immigrants and suggests that acts of Islamist terrorism may be the price France must pay for a multi-ethnic and multicultural society.

Macron was for a year economic minister to President Francois Hollande who has presided over a 10 percent unemployment rate and a growth rate that is among the most anemic in the entire European Union.

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He is offering corporate tax cuts and a reduction in the size of a government that consumes 56 percent of GDP, and presents himself as the “president of patriots to face the threat of nationalists.”

His campaign is as much “us vs. them” as Le Pen’s.

And elite enthusiasm for Macron seems less rooted in any anticipation of future greatness than in the desperate hope he can save the French establishment from the dreaded prospect of Marine.

But if Macron is the present, who owns the future?

Across Europe, as in France, center-left and center-right parties that have been on the scene since World War II appear to be emptying out like dying churches. The enthusiasm and energy seem to be in the new parties of left and right, of secessionism and nationalism.

The problem for those who believe the populist movements of Europe have passed their apogee, with losses in Holland, Austria and, soon, France, that the fever has broken, is that the causes of the discontent that spawned these parties are growing stronger.

What are those causes?

A growing desire by peoples everywhere to reclaim their national sovereignty and identity, and remain who they are. And the threats to ethnic and national identity are not receding, but growing.

The tide of refugees from the Middle East and Africa has not abated. Weekly, we read of hundreds drowning in sunken boats that tried to reach Europe. Thousands make it. But the assimilation of Third World peoples in Europe is not proceeding. It seems to have halted.

Second-generation Muslims who have lived all their lives in Europe are turning up among the suicide bombers and terrorists.

Fifteen years ago, al-Qaida seemed confined to Afghanistan. Now it is all over the Middle East, as is ISIS, and calls for Islamists in Europe to murder Europeans inundate social media.

As the numbers of native-born Europeans begin to fall, with their anemic fertility rates, will the aging Europeans become more magnanimous toward destitute newcomers who do not speak the national language or assimilate into the national culture, but consume its benefits?

If a referendum were held across Europe today, asking whether the mass migrations from the former colonies of Africa and the Middle East have on balance made Europe a happier and better place to live in in recent decades, what would that secret ballot reveal?

Does Macron really represent the future of France, or is he perhaps one of the last men of yesterday?
 http://www.wnd.com/2017/04/is-macron-the-eus-last-best-hope/#e9TbxGcObXt9Bpu5.99

 

Story 2:  President Trump’s Transparent Executive Orders — Videos — 

Image result for list of trump executive ordersImage result for list of trump executive ordersImage result for list of trump executive ordersImage result for cartoons trump executive ordersImage result for list of trump executive orders

What Are Executive Orders?

President Trump Signs Financial Services Executive Orders

How Trump’s executive order begins to reform the H-1B visa program

Trump’s executive order to help the American worker

President Trump Signs Executive Orders Regarding Trade

What do all of President Trump’s executive orders mean?

[youtube-https://www.youtube.com/watch?v=ov2-KwmkMNQ]

The impact of President Trump’s executive actions

WATCH: President Trump Signs Executive EPA Orders (FNN)

Executive order (United States)

From Wikipedia, the free encyclopedia
“Executive order” redirects here. For other uses, see Executive order (disambiguation). Not to be confused with Presidential proclamation or Presidential memorandum.

Executive orders are orders issued by United States Presidents and directed towards officers and agencies of the Federal government of the United States. Executive orders have the full force of law, based on the authority derived from statute or the Constitution itself. The ability to make such orders is also based on express or implied Acts of Congress that delegate to the President some degree of discretionary power (delegated legislation).[1]

Like both legislative statutes and regulations promulgated by government agencies, executive orders are subject to judicial review and may be overturned if the orders lack support by statute or the Constitution.[2] Major policy initiatives require approval by the legislative branch, but executive orders have significant influence over the internal affairs of government, deciding how and to what degree legislation will be enforced, dealing with emergencies, waging wars, and in general fine-tuning policy choices in the implementation of broad statutes.

Basis in the United States Constitution

The United States Constitution does have a provision that explicitly permits the use of executive orders. The term executive power in Article II, Section 1, Clause 1 of the Constitution is not entirely clear. The term is mentioned as direction to “take Care that the Laws be faithfully executed” and is part of Article II, Section 3, Clause 5. The consequence of failing to comply possibly being removal from office.[3][4]

The U.S. Supreme Court has held[5] that all executive orders from the President of the United States must be supported by the Constitution, whether from a clause granting specific power, or by Congress delegating such to the executive branch.[6] Specifically, such orders must be rooted in Article II of the US Constitution or enacted by the congress in statutes. Attempts to block such orders have been successful at times when such orders exceeded the authority of the president or could be better handled through legislation.[7]

The Office of the Federal Register is responsible for assigning the executive order a sequential number after receipt of the signed original from the White House and printing the text of the executive order in the daily Federal Register and Title 3 of the Code of Federal Regulations.[8]

Other types of orders issued by “the Executive” are generally classified simply as administrative orders rather than executive orders.[9] These are typically the following:

Presidential directives are considered a form of executive order issued by the President of the United States with the advice and consent of a major agency or department found within the executive branch of government.[10]Some types of Presidential directives are the following:

History and use

With the exception of William Henry Harrison, all presidents beginning with George Washington in 1789 have issued orders that in general terms can be described as executive orders. Initially they took no set form. Consequently, such orders varied as to form and substance.[11]

The first executive order was issued by George Washington on June 8, 1789, addressed to the heads of the federal departments, instructing them “to impress me with a full, precise, and distinct general idea of the affairs of the United States” in their fields.[12]

The most famous executive order was by President Abraham Lincoln when he issued the Emancipation Proclamation on January 1, 1863. Political scientist Brian R. Dirck states:

The Emancipation Proclamation was an executive order, itself a rather unusual thing in those days. Executive orders are simply presidential directives issued to agents of the executive department by its boss.[13]

Until the early 1900s, executive orders went mostly unannounced and undocumented, seen only by the agencies to which they were directed. This changed when the Department of State instituted a numbering scheme in 1907, starting retroactively with United States Executive Order 1 issued on October 20, 1862, by President Abraham Lincoln.[14] The documents that later came to be known as “executive orders” apparently gained their name from this order issued by Lincoln, which was captioned “Executive Order Establishing a Provisional Court in Louisiana”.[9] This court functioned during the military occupation of Louisiana during the American Civil War, and Lincoln also used Executive Order 1 to appoint Charles A. Peabody as judge, and to designate the salaries of the court’s officers.[14]

President Truman’s Executive Order 10340 in Youngstown Sheet & Tube Co. v. Sawyer, 343 US 579 (1952) placed all steel mills in the country under federal control. This was found invalid because it attempted to make law, rather than clarify or act to further a law put forth by the Congress or the Constitution. Presidents since this decision have generally been careful to cite which specific laws they are acting under when issuing new executive orders. Likewise, when presidents believe their authority for issuing an executive order stems from within the powers outlined in the Constitution, the order will simply proclaim “under the authority vested in me by the Constitution” instead.

Wars have been fought upon executive order, including the 1999 Kosovo War during Bill Clinton‘s second term in office. However, all such wars have had authorizing resolutions from Congress. The extent to which the president may exercise military power independently of Congress and the scope of the War Powers Resolution remain unresolved constitutional issues, although all presidents since its passage have complied with the terms of the resolution while maintaining that they are not constitutionally required to do so.

President Truman issued 907 executive orders, with 1,081 orders by Theodore Roosevelt, 1,203 orders by Calvin Coolidge, and 1,803 orders by Woodrow Wilson. Franklin D. Roosevelt has the distinction of making a record 3,522 executive orders.

Franklin Roosevelt

Prior to 1932, uncontested executive orders had determined such issues as national mourning on the death of a president, and the lowering of flags to half-staff. President Franklin Roosevelt issued the first of his 3,522 executive orders on March 6, 1933, declaring a bank holiday, forbidding banks to release gold coin or bullion. Executive Order 6102 forbade the hoarding of gold coin, bullion and gold certificates. A further executive order required all newly mined domestic gold be delivered to the Treasury.[15]

By Executive Order 6581, the president created the Export-Import Bank of the United States. On March 7, 1934, he created the National Industrial Recovery Act (Executive Order 6632). On June 29, the president issued Executive Order 6763 “under the authority vested in me by the Constitution”, thereby creating the National Labor Relations Board.

In 1934, while Charles Evans Hughes was Chief Justice of the United States (in the time period known as the Hughes Court), the Court found that the National Industrial Recovery Act (NIRA) was unconstitutional. The president then issued Executive Order 7073 “by virtue of the authority vested in me under the said Emergency Relief Appropriation Act of 1935“, reestablishing the National Emergency Council to administer the functions of the NIRA in carrying out the provisions of the Emergency Relief Appropriations Act. On June 15, he issued Executive Order 7075, which terminated NIRA and replaced it with the Office of Administration of the National Recovery Administration.[16]

In the years that followed, President Roosevelt replaced the outgoing judges with those more in line with his views, ultimately appointing Hugo Black, Stanley Reed, Felix Frankfurter, William O. Douglas, Frank Murphy, Robert H. Jackson and James F. Byrnes to the Court. Historically, only George Washington had equal or greater influence over Supreme Court appointments, choosing all of its original members. Justices Frankfurter, Douglas, Black, and Jackson dramatically checked presidential power by invalidating the executive order at issue in The Steel Seizure Case (i.e., Executive Order 10340). In that case Roosevelt’s successor, President Truman, had ordered private steel production facilities seized in support of the Korean War effort, but the Court held the executive order was not within the power granted to the President by the Constitution.

Table of Presidents using Executive Orders

President Number
issued [15]
Starting with
E.O. number [15]
George Washington 8 n/a
John Adams 1 n/a
Thomas Jefferson 4 n/a
James Madison 1 n/a
James Monroe 1 n/a
John Quincy Adams 3 n/a
Andrew Jackson 12 n/a
Martin van Buren 10 n/a
William Henry Harrison 0 n/a
John Tyler 17 n/a
James K. Polk 18 n/a
Zachary Taylor 5 n/a
Millard Fillmore 12 n/a
Franklin Pierce 35 n/a
James Buchanan 16 n/a
Abraham Lincoln 48
Andrew Johnson 79
Ulysses S. Grant 217
Rutherford B. Hayes 92
James Garfield 6
Chester Arthur 96
Grover Cleveland (first term) 113
Benjamin Harrison 143
Grover Cleveland (second term) 140
William McKinley 185
Theodore Roosevelt 1,081
William Howard Taft 724
Woodrow Wilson 1,803
Warren G. Harding 522
Calvin Coolidge 1,203
Herbert Hoover 968 5075
Franklin D. Roosevelt (~3.05 terms) 3,522 6071
Harry S. Truman 907 9538
Dwight D. Eisenhower 484 10432
John F. Kennedy 214 10914
Lyndon B. Johnson 325 11128
Richard Nixon 346 11452
Gerald R. Ford 169 11798
Jimmy Carter 320 11967
Ronald Reagan 381 12287
George H. W. Bush 166 12668
Bill Clinton[17] 308 12834
George W. Bush[17] 291 13198
Barack Obama[17] 276 13489
Donald Trump (as of April 21, 2017) [18] 25 13765

https://en.wikipedia.org/wiki/Executive_order_(United_States)

Trump has already signed 66 executive actions — here’s what each one does

donald trumpPresident Donald Trump signs the executive order halting immigrants from some Muslim-majority countries from entering the US.Olivier Douliery-Pool/Getty Images

President Donald Trump’s first months in office have been filled with a flurry of action, and he’s just getting started.

The 45th president has signed 66 executive actions so far, with far-reaching effects on Americans’ lives.

There are technically three types of executive actions, which each have different authority and effects, with executive orders holding the most prestige:

  • Executive orders are assigned numbers and published in the federal register, similar to laws passed by Congress, and typically direct members of the executive branch to follow a new policy or directive. Trump has issued 24 orders.
  • Presidential memoranda do not have to be published or numbered (though they can be), and usually delegate tasks that Congress has already assigned the president to members of the executive branch. Trump has issued 22 memoranda.
  • Finally, while some proclamations — like President Abraham Lincoln’s emancipation proclamation — have carried enormous weight, most are ceremonial observances of federal holidays or awareness months. Trump has issued 20 proclamations.

Scholars have typically used the number of executive orders per term to measure how much presidents have exercised their power. George Washington only signed eight his entire time in office, according to the American Presidency Project, while FDR penned over 3,700.

In his two terms, President Barack Obama issued 277 executive orders, a total number on par with his modern predecessors, but the lowest per year average in 120 years. Trump, so far, has signed 24 executive orders in 89 days.

Here’s a quick guide to the executive actions Trump has made so far, what they do, and how Americans have reacted to them:

Executive Order, April 18: ‘Buy American, Hire American’

Executive Order, April 18: 'Buy American, Hire American'

President Donald Trump speaks at Snap-On Tools in Kenosha, Wisconsin on April 18, 2017.Associated Press/Kiichiro Sato

At a tools manufacturer in Wisconsin, Trump signed an order directing federal agencies to review and propose changes to the popular, but controversial H-1B visa program meant to attract skilled foreign labor.

Critics say it’s used by companies to hire cheap, foreign workers in place of Americans, while proponents — including many in the tech industry — say it provides much-needed skilled workers to sectors where companies have struggled to hire Americans.

Trump’s “Buy American, hire American” order also directs federal agencies to maximize the American products they purchase, particularly calling out “steel, iron, aluminum, and cement.”

Read the full text of the order here »

Presidential proclamation, April 14: National Park Week

Presidential proclamation, April 14: National Park Week

White House press secretary Sean Spicer gave Interior Secretary Ryan Zinke the first quarter check of Trump’s salary to the National Park Service as Tyrone Brandyburg, Harpers Ferry National Historical Park Superindendant, looked on during the daily press briefing at the White House on April 3, 2017.Mark Wilson/Getty Images

Trump designated April 15-23, 2017 as National Park Week, during which all 417 sites (59 official “parks”) across the country are free to enter, a move many past presidents have made as well.

The president also donated his first quarter salary to the National Park Service’s American Battlefield Protection Program. Critics were quick to point out that Trump’s $78,333.32 donation could hardly make up for the nearly $2 billion his federal budget proposes cutting from the Interior Department this year.

 

Presidential memorandum, April 12: Delegating terrorist report request

Presidential memorandum, April 12: Delegating terrorist report request

FBI Director James Comey testifies on Capitol Hill in Washington on Jan. 10, 2017, before the Senate Intelligence Committee hearing on Russian Intelligence Activities.AP Photo/Cliff Owen

The 2017 National Defense Authorization Act directs the president to review “known instances since 2011 in which a person has traveled or attempted to travel to a conflict zone in Iraq or Syria from the United States to join or provide material support or resources to a terrorist organization,” and submit a report to Congress.

Trump delegated this responsibility to FBI Director James Comey.

Read the full text of the memo here »

Presidential memorandum, April 11: Signing letter on including Montenegro in NATO

Presidential memorandum, April 11: Signing letter on including Montenegro in NATO

Montenegro’s PM Djukanovic attends a NATO foreign ministers meeting in Brussels.Thomson Reuters

At the end of March, the US Senate voted to include Montenegro’s in NATO, 97 to 2. While Trump called the alliance “obsolete” as recently as January, he said he no longer feels that way, and didn’t veto the small southern European country’s inclusion.

The president has called on members of NATO to pay their fair share, saying the US carries too much financial responsibility for the military stronghold. The addition of Montenegro is likely to irk Russia, however, as it means one more country looks to West instead of staying under the influence of the Kremlin.

Read the full text of the memo indicating Trump’s approval of the Senate’s vote here »

Presidential memorandum, April 8: Notifying Congress of the US Syria strike

Presidential memorandum, April 8: Notifying Congress of the US Syria strike

In this image from video provided by the U.S. Navy, the guided-missile destroyer USS Porter (DDG 78) launches a tomahawk land attack missile in the Mediterranean Sea, Friday, April 7, 2017.Mass Communication Specialist 3rd Class Ford Williams/U.S. Navy via AP

This memo formally informed Congress of Trump’s order to launch a salvo of 59 cruise missiles on Shayrat airfield and nearby military infrastructure controlled by Syrian President Bashar Assad on Friday, in response to a chemical attack that killed at least 80 people in the northwestern part of the country on Tuesday.

Some lawmakers slammed Trump for not getting congressional or UN approval before ordering the strike, as the president’s legal authority for doing so is unclear.

“I acted in the vital national security and foreign policy interests of the United States, pursuant to my constitutional authority to conduct foreign relations and as Commander in Chief and Chief Executive,” Trump said in the memo. “I am providing this report as part of my efforts to keep the Congress fully informed, consistent with the War Powers Resolution.”

Read the full text of the memo here »

5 presidential proclamations, April 3-7: Honoring and drawing awareness

5 presidential proclamations, April 3-7: Honoring and drawing awareness

John Glenn was the first US man to orbit the Earth as part of Project Mercury.NASA

Trump proclaimed various days and weeks in April were in honor of five different causes:

  1. April 2-8, 2017: National Crime Victims’ Rights Week
  2. Honoring the Memory of John Glenn
  3. April 7, 2017: Education and Sharing Day
  4. April 14, 2017: Pan American Day; April 9-15, 2017: Pan American Week
  5. April 9, 2017: National Former Prisoner of War Recognition Day

Read the full text of each proclamation in the links above.

 

Presidential memorandum, April 3: Principles for reforming the draft

Presidential memorandum, April 3: Principles for reforming the draft

The president’s son-in-law and top adviser Jared Kushner talks with Gen. Joseph F. Dunford Jr. during his visit to Iraq with the US military on April 4.Chairman of the Joint Chiefs of Staff/Flickr

The United States has had a volunteer-based military for over four decades, but nearly all American males still have to register for the draft when they turn 18.

In the 2017 National Defense Authorization Act, Congress called on the president to outline his principles for reforming the draft. So in his order, Trump told Congress that the US military should recruit a diverse pool of citizens, and offer them training opportunities that will benefit the armed forces as well as their future employment, in order to “prepare to mitigate an unpredictable global security and national emergency environment.”

Read the full text of the memo here »

2 Executive Orders, March 31: Lowering the trade deficit and collecting import duties

2 Executive Orders, March 31: Lowering the trade deficit and collecting import duties

Vice President Mike Pence tries to stop President Donald Trump as he leaves before signing executive orders regarding trade in the Oval Office on March 31, 2017.AP Photo/Andrew Harnik

Ahead of Trump’s first meeting with Chinese President Xi Jinping, he signed two orders focused on an issue he decried during the campaign: the US trade deficit.

The first order directs the executive branch to produce a country-by-country, product-by-product report on trade deficits in 90 days, in order to figure out how to reduce the $500 billion trade deficit the US had in 2016.

Business Insider’s Pedro Nicolaci da Costa wrote that the order’s plan for a “90-day ‘investigation’ into why the US had trade deficits with specific countries, [was] a quixotic exercise most economists say shows a deep lack of understanding of the workings of international trade.”

The second order seeks to strengthen the US response to its trade laws preventing counterfeit or illegal imports, citing “$2.3 billion in antidumping and countervailing duties” that the government hasn’t collected.

“On a typical day, CBP screens more than 74,000 truck, rail, and sea cargo containers at 328 U.S. ports of entry — with imported goods worth approximately $6.3 billion,” a Department of Homeland Security press release on the order wrote. “In Fiscal Year 2016, CBP seized more than 31,500 of counterfeit shipments and collected more $40 billion in duties, taxes, and fees, making CBP the U.S. government’s second largest source of revenue.”

Read the full text of the deficit order here »

And the full text of the antidumping order here »

Executive Orders, March 31 and February 9: Changing the DOJ order of succession

Executive Orders, March 31 and February 9: Changing the DOJ order of succession

Attorney General Jeff Sessions speaks after being sworn-in in the Oval Office of the White House on February 9, 2017.REUTERS/Kevin Lamarque

On February 9, Trump signed an order establishing a line of succession to lead the US Department of Justice if the attorney general, deputy attorney general, or associate attorney general die, resign, or are otherwise unable to carry on their duties. In order, the US Attorney for the Eastern District of Virginia, the US Attorney for the Northern District of Illinois, and then the US Attorney for the Western District of Missouri will be next in line.

The action reverses an order Obama signed days before leaving office. After Trump fired acting Attorney General Sally Yates for refusing to enforce his first travel ban, he appointed Dana Boente, US attorney for the Eastern District of Virginia, as acting attorney general in her place. This order elevates his position in the order of succession.

Read the full text of the first order here »

On March 31, Trump signed another order reversing this order. The new order of succession after the AG, deputy AG, and associate AG are as follows: US Attorney for the Eastern District of Virginia, US Attorney for the Eastern District of North Carolina, and then the US Attorney for the Northern District of Texas.

Since Attorney General Jeff Sessions recused himself from the DOJ probe into Trump’s associates contacts with Russian operatives, the order of succession will determine who will oversee that investigation. Trump will have to fill the North Carolina post soon, the Palmer Report points out, possibly allowing the president to influence who leads the Russia investigation.

Read the full text of the second order here »

6 presidential proclamations, March 31: Sexual assault awareness and others

6 presidential proclamations, March 31: Sexual assault awareness and others

Jessica Drake (R) was one of several women who accused Donald Trump of past sexual misconduct during the 2016 election.Reuters/Kevork Djansezian

Trump proclaimed April 2, 2017 World Autism Awareness Day, and that the month of April 2017 was in honor of five different causes:

  1. Cancer Control Month
  2. National Child Abuse Prevention Month
  3. National Sexual Assault Awareness and Prevention Month
  4. National Financial Capability Month
  5. National Donate Life Month

Many criticized Trump’s National Sexual Assault Awareness and Prevention Month, in particular, because multiple woman came forward during the campaign and accused Trump of sexual misconduct in the past. He also bragged on a 2005 tape that surfaced in October 2016that he could “grab” women “by the p—y” because “when you’re a star they let you do it.”

A very Ironic Trump Declares “National Sexual Assault Awareness and Prevention Month” http://www.motherjones.com/politics/2017/03/donald-trump-april-national-sexual-assault-awareness-month  via @MotherJones

Photo published for Trump Declares "National Sexual Assault Awareness and Prevention Month"

Trump Declares “National Sexual Assault Awareness and Prevention Month”

The president has been accused of assaulting more than 15 women.

motherjones.com

Trump’s defense of O’Reilly underscores how farcical his proclamation of National Sexual Assault Awareness and Prevention Month is.

Read the full text of each proclamation in the links above.

Executive Order, March 29: Combating the opioid crisis

Executive Order, March 29: Combating the opioid crisis

President Donald Trump shakes hands with New Jersey Gov. Chris Christie at a panel discussion on an opioid and drug abuse in the Roosevelt Room of the White House March 29, 2017 in Washington, DC.Shawn Thew-Pool/Getty Images

This order established the President’s Commission on Combating Drug Addiction and the Opioid Crisis. The commission, headed by New Jersey Gov. Chris Christie, is supposed to report to the president strategies to address the epidemic, which is now killing 30,000 Americans a year.

But many experts said the president’s action is “underwhelming.”

“These people don’t need another damn commission,” an anonymous former Obama administration official who worked on the issue told Politico. “We know what we need to do. … It’s not rocket science.” Business Insider’s Erin Brodwin outlined some strategies that scientists think will work.

Read the full text of the order here »

Executive Order, March 28: Dismantling Obama’s climate change protections

Executive Order, March 28: Dismantling Obama's climate change protections

President Donald Trump, accompanied by Environmental Protection Agency (EPA) Administrator Scott Pruitt, third from left, and Vice President Mike Pence, right, signs an Energy Independence Executive Order, Tuesday, March 28, 2017, at EPA headquarters in Washington with coal and oil executives.AP Photo/Pablo Martinez Monsivais

On the campaign trail, Trump vowed to bring back coal mining jobs and dismantle Obama’s environmental policy, declaring climate change a “hoax.” While coal jobs are unlikely to come back in droves, this executive order makes good on the second promise, directing federal agencies to rescind any existing regulations that “unduly burden the development of domestic energy resources.”

It also rescinds four of Obama’s executive actions, two of his reports, and tells the Environmental Protection Agency to review his landmark Clean Power Plan that would have capped power plant emissions. Since many of Obama’s actions were complex, however, it may take Trump a while to reverse them.

Democrats, environmentalists, and protesters demonstrating outside the White House after Trump signed the order decried the action, declaring it would lead to runaway climate change, while many Republican congressmen applauded the action for promoting energy independence.

Read the full text of the order here »

Executive Order, March 27: Revoking Obama’s fair pay and safe workplaces orders

Executive Order, March 27: Revoking Obama's fair pay and safe workplaces orders

President Barack Obama meets with then-President-elect Donald Trump in the Oval Office of the White House on November 10, 2016.REUTERS/Kevin Lamarque

In 2014, Obama signed an executive order requiring federal government contracts over $500,000 had to go to companies that hadn’t violated labor laws. He signed two more orders making minor clarifications to that original order later that year and in 2016.

Trump’s new order revoking those three orders, and directed federal agencies to review any procedural changes they made because of the orders. When companies bid for federal contracts, they’ll no longer have to disclose if they’ve violated the Fair Labor Standards Act, the Occupational Safety and Health Act, the Migrant and Seasonal Agricultural Worker
Protection Act, or the National Labor Relations Act.

Read the full text of the order here »

Presidential memorandum, March 27: Establishing the White House Office of American Innovation

Presidential memorandum, March 27: Establishing the White House Office of American Innovation

President Trump departs the White House in Washington with son-in-law and senior adviser Jared Kushner.Thomson Reuters

Trump established the White House Office of American Innovation, choosing his son-in-law and senior adviser Jared Kushner to lead it. The office will aim to overhaul government functions with ideas from industry.

Business titans Gary Cohn (National Economic Council director), Dina Powell (senior counselor to the president for economic initiatives and deputy national security adviser), Chris Liddell (assistant to the president for strategic initiatives), and Reed Cordish (assistant to the president for intragovernmental and technology initiatives) will also be on the team.

Read the full text of the memo here »

Presidential proclamation, March 24: Greek Independence Day

Presidential proclamation, March 24: Greek Independence Day

President Donald Trump speaks to guests during a Greek Independence Day celebration in the East Room of the White House, on March 24, 2017 in Washington, DC.Mark Wilson/Getty Images

Trump declared March 25, 2017, as Greek Independence Day.

“American patriots built our Republic on the ancient Greeks’ groundbreaking idea that the people should decide their political fates,” the president wrote in the proclamation.

Read the full text here »

2 presidential memoranda, March 23: Declaring an emergency in South Sudan

2 presidential memoranda, March 23: Declaring an emergency in South Sudan

The same day he signed these memoranda, Trump honked the horn of an 18-wheeler truck while meeting with truckers and CEOs on the South Lawn of the White House, Thursday, March 23, 2017.AP Photo/Andrew Harnik

Trump signed two memoranda declaring a national emergency in South Sudan, and notifying Congress that he did so, extending the emergency Obama declared in 2014. One million people there are on the brink of dying from a lack of food.

United Nations officials have called the famine in South Sudan, Nigeria, and Somalia the “world’s largest humanitarian crisis in 70 years.”

Office of Management and Budget Director Mick Mulvaney has said that the president’s proposed budget would “spend less money on people overseas and more money on people back home” and “absolutely” cut programs like those that would aid those starving in South Sudan.

Read the full text of the memos here and here »

Presidential memorandum, March 20: Delegating to Tillerson

Presidential memorandum, March 20: Delegating to Tillerson

President Donald Trump smiles at Secretary of State Rex Tillerson after he was sworn in in the Oval Office of the White House in Washington, Wednesday, Feb. 1, 2017.Associated Perss/Carolyn Kaster

Trump delegated presidential powers in the National Defense Authorization Act to Secretary of State Rex Tillerson. The law doles out funding “for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe military personnel strengths.”

Read the full text of the memo here »

Presidential proclamation, March 17: National Poison Prevention Week

Presidential proclamation, March 17: National Poison Prevention Week

President Donald Trump departs the White House with his grandchildren Arabella and Joseph on March 3, 2017.Win McNamee/Getty Images

Trump proclaimed March 19 through March 25, 2017 National Poison Prevention Week in order to encourage Americans to safeguard their homes and protect children from ingesting common household items that may poison them.

Read the full text of the proclamation here »

Presidential memorandum, March 16: A letter to the House of Representatives outlining Trump’s proposed budget

Presidential memorandum, March 16: A letter to the House of Representatives outlining Trump's proposed budget

Winners and losers in Trump’s first budget.Mike Nudelman/Business Insider

Trump sent his first budget to the House of Representatives, requesting an additional $30 billion for the Department of Defense to fight ISIS and $3 billion for the Department of Homeland Security to protect the US border.

To offset the massive defense money, Trump proposes slashing funding for several key federal agencies, dropping budgets for the State Department and the Environmental Protection Agency by almost a third.

Several noteworthy Republican lawmakers signaled they didn’t approve of Trump’s first budget, and Democrats across the board decried the deep spending cuts.

Read the full text of the memorandum here »

Executive Order, March 13: Reorganizing the executive branch

Executive Order, March 13: Reorganizing the executive branch

President Donald Trump’s Cabinet gathers in the Oval Office on March 13, 2017.Donald Trump/Twitter

With the written aim of improving the efficiency of the federal government, Trump signed an order to shake up the executive branch, and “eliminate or reorganize unnecessary or redundant federal agencies” identified in a 180-day review.

It directs Office of Management and Budget Director Mick Mulvaney to review agency head’s proposed plans to reorganize or shrink their departments, and submit a plan to Trump by September 2017 outlining how to streamline the government.

Historians expressed skepticism that Trump would be able to effectively shrink the government, since many past presidents have tried and failed to do so. Critics argued that Trump could use the order to dismantle federal agencies that he or his Cabinet members don’t like.

Read the full text of the order here »

Presidential proclamation, March 6: National Consumer Protection Week

Presidential proclamation, March 6: National Consumer Protection Week

Pool/Getty Images

March 5 through March 11, 2017 was National Consumer Protection Week, Trump proclaimed, which “reminds us of the importance of empowering consumers by helping them to more capably identify and report cyber scams, monitor their online privacy and security, and make well-informed decisions.”

Read the full text of the proclamation here »

Executive Order, March 6: A new travel ban

Executive Order, March 6: A new travel ban

President Donald Trump signs a new temporary travel ban in the Oval Office on March 6, 2017.Sean Spicer/Twitter

Trump’s second go at his controversial travel order bans people from Sudan, Iran, Somalia, Yemen, Syria, and Libya from entering the US for 90 days, and bars all refugees from coming into the country for 120 days, starting March 16.

Existing visa holders will not be subjected to the ban, and religious minorities will no longer get preferential treatment — two details critics took particular issue with in the first ban. The new order removed Iraq from the list of countries, and changed excluding just Syrian refugees to preventing all refugees from entering the US.

Democrats denounced the new order, with Senate Minority Leader Chuck Schumer saying the “watered-down ban is still a ban,” and Democratic National Committee Chair Tom Perez saying “Trump’s obsession with religious discrimination is disgusting, un-American, and outright dangerous.”

Read the full text of the order here »

UPDATE 3/15: US District Judge Derrick Watson put an emergency halt on the revised travelban the day before it would have taken effect, after several states and refugee groups sued in court. Trump vowed to appeal the decision and take the order all the way to the Supreme Court if necessary.

Presidential Memorandum, March 6: Guidance for agencies to implement the new travel ban

Presidential Memorandum, March 6: Guidance for agencies to implement the new travel ban

Secretary of State Rex Tillerson, Attorney General Jeff Sessions, and Homeland Security Secretary John Kelly make statements on Trump’s new travel ban on March 6, 2017.AP Photo/Susan Walsh

This memo instructs the State Department, the Justice Department, and the Department of Homeland Security how to implement Trump’s new travel ban.

It directs the three department heads to enhance the vetting of visa applicants and other immigrants trying to enter the US as they see fit, to release how many visa applicants there were by country, and to submit a report in 180 days detailing the long-term costs of the United States Refugee Admissions Program.

Read the full text of the memorandum here »

3 Presidential proclamations, March 1: National months for women, the American Red Cross, and Irish-Americans

3 Presidential proclamations, March 1: National months for women, the American Red Cross, and Irish-Americans

Donald Trump signs bills to promote women in STEM.Zach Gibson/Getty Images

The president proclaimed March 2017 Women’s History Month, American Red Cross Month, and Irish-American Heritage Month.

Read the full text of the women’s history proclamation here »

And the Red Cross proclamation here »

And the Irish-American proclamation here »

Executive Order, February 28: Promoting Historically Black Colleges and Universities

Executive Order, February 28: Promoting Historically Black Colleges and Universities

Kellyanne Conway, counselor to the president, takes a photo of leaders from Historically Black Colleges and Universities and Trump in the Oval Office.Getty Images

This order established the White House Initiative on Historically Black Colleges and Universities, which will aim to increase private funding of these schools, encourage more students to attend them, and identify ways the executive branch can help these institutions succeed.

Students at some HBCU protested the meeting their leaders attended to witness Trump signing the order, expressing their disapproval of the president in general, and questioning whether the action was “truly a seat at the table” or merely “a photo op.”

Read the full text of the order here »

Executive Order, February 28: Reviewing the ‘Waters of the United States’ rule

Executive Order, February 28: Reviewing the 'Waters of the United States' rule

EPA Administrator Scott Pruitt holds up an EPA cap during his first address to the agency.AP Photo/Susan Walsh

The order directed federal agencies to revise the Clean Water Rule, a major regulation Obama issued in 2015 to clarify what areas are federally protected under the Clean Water Act.

Trump’s EPA Administrator Scott Pruitt called the rule “the greatest blow to private property rights the modern era has seen,” in 2015, and led a multi-state lawsuit against it while he was Oklahoma’s attorney general.

David J. Cooper, an ecologist at Colorado State University, cautioned that repealing the rule wouldn’t settle the confusion about what the federal government can protect under the Clean Water Act, or where.

Read the full text of the order here »

Executive Order, February 24: Enforcing regulatory reform

Executive Order, February 24: Enforcing regulatory reform

President Donald Trump meets with union leaders at the White House.Getty Images

This order creates Regulator Reform Officers within each federal agency who will comb through existing regulations and recommend which ones the administration should repeal. It directs the officers to focus on eliminating regulations that prevent job creation, are outdated, unnecessary, or cost too much.

The act doubles down on Trump’s plan to cut government regulations he says are hampering businesses, but opponents insist are necessary to protect people and the environment. Leaders of 137 nonprofit groups sent a letter to the White House on February 28 telling the president that “Americans did not vote to be exposed to more health, safety, environmental and financial dangers.”

Read the full text of the order here »

Executive Order, February 9: Combating criminal organizations

Executive Order, February 9: Combating criminal organizations

Recaptured drug lord Joaquin “El Chapo” Guzman is escorted by soldiers at the hangar belonging to the office of the Attorney General in Mexico City, Mexico on January 8, 2016.Reuters/Amanda Macias/Business Insider

The order is intended to “thwart” criminal organizations, including “criminal gangs, cartels, racketeering organizations, and other groups engaged in illicit activities.”

The action directs law enforcement to apprehend and prosecute citizens, and deport non-citizens involved in criminal activities including “the illegal smuggling and trafficking of humans, drugs or other substances, wildlife, and weapons,” “corruption, cybercrime, fraud, financial crimes, and intellectual-property theft,” and money laundering

The Secretary of State, Attorney General, Secretary of Homeland Security, and Director of National Intelligence will co-chair a Threat Mitigation Working Group that will identify ways that local, state, federal, and international law enforcement can work together in order to eradicate organized crime.

It also instructs the co-chairs to present the president with a report within 120 days outlining the penetration of criminal organizations into the United States, and recommendations for how to eradicate them.

Read the full text of the order here »

Executive Order, February 9: Reducing crime

Executive Order, February 9: Reducing crime

President Donald Trump speaks during a meeting with county sheriffs in the Roosevelt Room of the White House in Washington, Tuesday, Feb. 7, 2017.AP Photo/Evan Vucci

Following up on his promise to restore “law and order” in America, Trump signed an executive order intended to reduce violent crime in the US, and “comprehensively address illegal immigration, drug trafficking, and violent crime.”

The action directs Attorney General Jeff Sessions to assemble a task force in order to identify new strategies and laws to reduce crime, and to evaluate how well crime data is being collected and leveraged across the country.

Trump has come under fire recently for claiming the national murder rate was at an all-time high, when it has in fact dropped to one of the lowest rates ever, with 2015 merely experiencing a slight uptick from the previous year.

Read the full text of the order here »

Executive Order, February 9: Protecting law enforcement

Executive Order, February 9: Protecting law enforcement

Police break up skirmishes between demonstrators and supporters of then-Republican presidential candidate Donald Trump that broke out after it was announced the rally on March 11, 2016 in Chicago, Illinois would be postponed.Scott Olson/Getty Images

The order seeks to create new laws that will protect law enforcement, and increase the penalties for crimes committed against them.

It also directs the attorney general to review existing federal grant funding programs to law enforcement agencies, and recommend changes to the programs if they don’t adequately protect law enforcement.

The action is likely in response to multiple high-profile police killings over the past year, including a sniper attack that killed five Dallas police officers in July.

Read the full text of the order here »

Executive Order, February 3: Reviewing Wall Street regulations

Executive Order, February 3: Reviewing Wall Street regulations

President Donald Trump signs an executive order rolling back regulations from the 2010 Dodd-Frank law on Wall Street reform on Feb. 3, 2017 in the Oval Office.REUTERS/Kevin Lamarque

Trump signed two actions on Friday that could end up rewriting regulations in the financial industry that Obama and Congress put in place after the 2008 financial crisis.

The executive order sets “Core Principles” of financial regulation declaring that Trump’s administration seeks to empower Americans to make their own financial decisions, prevent taxpayer-funded bailouts, and reduce regulations on Wall Street so US companies can compete globally.

It also directs the Secretary of Treasury to review existing regulations on the financial system, determine whether the Core Principles are being met, and report back to the President in 120 days.

Experts worry that loosening regulations could roll back the Obama administration’s landmark consumer protection reform bill, Dodd-Frank, aimed at reducing risk in the financial system. Sen. Elizabeth Warren, the progressive darling from Massachusetts, led the charge decrying the actions.

Read the full text of the order here »

Presidential Memorandum, February 3: Reviewing the fiduciary duty rule

Presidential Memorandum, February 3: Reviewing the fiduciary duty rule

President Donald Trump signs an executive action in the White House.AP

The memorandum directs the Labor Secretary to review the “fiduciary rule,” another Obama-era law intended to protect Americans’ retirement money from conflicted advice from financial advisers that has long drawn rebuke from Wall Streeters and was scheduled to go into effect in April.

If the secretary finds the rule conflicts with the administration’s Core Principles, adversely affects the retirement industry, or causes increased litigation, then he should recommend revising or repealing the rule.

Democratic lawmakers and 38-million-member retiree nonprofit AARP came out against the action. Read more about Wall Street’s response to the memorandum here »

Read the full text of the memorandum here »

Presidential proclamation, February 2: American Heart Month

Presidential proclamation, February 2: American Heart Month

President Donald Trump and his wife Melania stand for the singing of the National Anthem during his inauguration ceremony at the Capitol on January 20, 2017.REUTERS/Carlos Barria

This ceremonial proclamation invited Americans to wear red on Friday, February 3, 2017 for National Wear Red Day, and followed Congress’ request in 1963 for presidents to annually declare February American Heart Month. The goal is to remember those who have died from heart disease and to improve its prevention, detection, and treatment.

Read the full text of the proclamation here »

Executive Order, January 30: For every new regulation proposed, repeal two existing ones

Executive Order, January 30: For every new regulation proposed, repeal two existing ones

President Donald Trump.Olivier Douliery-Pool/Getty Images

The order states that for every one regulation the executive branch proposes, two must be identified to repeal. It also caps the spending on new regulations for 2017 at $0.

Some environmental groups expressed concern that the order could undo regulations put in place to protect natural resources.

Read the full text here »

Executive Order, January 28: Drain the swamp

Executive Order, January 28: Drain the swamp

Trump’s Cabinet nominees.Skye Gould/Business Insider

The order requires appointees to every executive agency to sign an ethics pledge saying they will never lobby a foreign government and that they won’t do any other lobbying for five years after they leave government.

But it also loosened some ethics restrictions that Obama put in place, decreasing the number of years executive branch employees had to wait since they had last been lobbyists from two years to one.

Read the full text here »

Presidential Memorandum, January 28: Reorganizing the National and Homeland Security Councils

Presidential Memorandum, January 28: Reorganizing the National and Homeland Security Councils

Chief White House strategist Steve Bannon.AP Photo/Gerald Herbert

Trump removed the nation’s top military and intelligence advisers as regular attendees of the National Security Council’s Principals Committee, the interagency forum that deals with policy issues affecting national security.

The executive measure established Trump’s chief strategist, Steve Bannon, as a regular attendee, and disinvited the chairman of the Joint Chiefs of Staff and the Director of National Intelligence to attend only when necessary.

Top Republican lawmakers and national security experts roundly criticized the move, expressing their skepticism that Bannon should be present and alarm that the Joint Chiefs of Staff sometimes wouldn’t be.

Read the full text here »

Presidential Memorandum, January 28: Defeating ISIS

Presidential Memorandum, January 28: Defeating ISIS

Donald Trump at a rally with James Mattis, his pick for defense secretary.AP

Making a point to use the phrase “radical Islamic terrorism” (something Trump criticized Obama for on the campaign trail), Trump directed his administration “to develop a comprehensive plan to defeat ISIS,” drafted within 30 days.

Read the full text here »

Executive Order, January 27: Immigration ban

Executive Order, January 27: Immigration ban

Protesters assemble at John F. Kennedy International Airport in New York, Saturday, Jan. 28, 2017 after earlier in the day two Iraqi refugees were detained while trying to enter the country.Associated Press/Craig Ruttle

In Trump’s most controversial executive action yet, he temporarily barred people from majority-Muslim Iran, Iraq, Libya, Somalia, Sudan, and Yemen from entering the country for 90 days, and Syrians from entering until he decides otherwise.

Federal judges in several states declared the order unconstitutional, releasing hundreds of people who were stuck at US airports in limbo. The White House continues to defend the action, insisting it was “not about religion” but about “protecting our own citizens and border.”

Tens of thousands of people protested the action in cities and airports across the US, company executives came out against the order, and top Republicans split with their president to criticize Trump’s approach.

Read the full text here »

UPDATE: Since the Ninth Circuit Court of Appeals struck down this order on February 9, Trump issued a new order intended to replace this one on March 6.

Presidential Memorandum, January 27: ‘Rebuilding’ the military

Presidential Memorandum, January 27: 'Rebuilding' the military

Marine General James Mattis.US Marine Corps

This action directed Secretary of Defense James Mattis to conduct a readiness review of the US military and Ballistic Missile Defense System, and submit his recommendations to “rebuild” the armed forces.

Read the full text here »

Presidential proclamation, January 26: National School Choice Week

Presidential proclamation, January 26: National School Choice Week

Thousands rally in support of charter schools outside the Capitol in Albany, N.Y., on Tuesday, March 4, 2014.AP Images

Trump proclaimed January 22 through January 28, 2017 as National School Choice Week.

The ceremonial move aimed to encourage people to demand school-voucher programs and charter schools, of which Trump’s Secretary of Education nominee Betsy DeVos is a vocal supporter. Meanwhile, opponents argue that the programs weaken public schools and fund private schools at taxpayers’ expense.

Read the full text here »

Executive Order, January 25: Build the wall

Executive Order, January 25: Build the wall

Supporters of then-Republican presidential candidate Donald Trump chant, “Build that wall,” before a town hall meeting in Rothschild, Wis. on April 2, 2016.Associated Press/Charles Rex Arbogast

Trump outlined his intentions to build a wall along the US border with Mexico, one of his main campaign promises.

The order also directs the immediate detainment and deportation of illegal immigrants, and requires state and federal agencies tally up how much foreign aid they are sending to Mexico within 30 days, and tells the US Customs and Border Protection to hire 5,000 additional border patrol agents.

While Trump has claimed Mexico will pay for the wall, his administration has since softened this pledge, indicating US taxpayers may have to foot the bill, at least at first.

Read the full text here »

Executive Order, January 25: Cutting funding for sanctuary cities

Executive Order, January 25: Cutting funding for sanctuary cities

Lordes Reboyoso, right, yells at a rally outside of City Hall in San Francisco, Wednesday, Jan. 25, 2017.Associated Press/Jeff Chiu

Trump called “sanctuary cities” to comply with federal immigration law or have their federal funding pulled.

The order has prompted a mixture of resistance and support from local lawmakers and police departments in the sanctuary cities, which typically refuse to honor federal requests to detain people on suspicion of violating immigration law even if they were arrested on unrelated charges. The city of San Francisco is already suing Trump, claiming the order is unconstitutional.

Read the full text here »

Executive Order, January 24: Expediting environmental review for infrastructure projects

Executive Order, January 24: Expediting environmental review for infrastructure projects

Then Republican presidential candidate Donald Trump holds a campaign rally.Mark Lyons/Getty Images

The order allows governors or heads of federal agencies to request an infrastructure project be considered “high-priority” so it can be fast-tracked for environmental review.

Trump signed the order as a package infrastructure deal, along with three memoranda on oil pipelines.

Read the full text here »

3 Presidential Memoranda, January 24: Approving pipelines

3 Presidential Memoranda, January 24: Approving pipelines

President Donald Trump looks up while signing an executive action to advance construction of the Keystone XL pipeline at the White House in Washington January 24, 2017.Reuters/Kevin Lamarque

Trump signed three separate memoranda set to expand oil pipelines in the United States, a move immediately decried by Native American tribes, Democrats, and activists.

The first two direct agencies to immediately review and approve construction of the Dakota Access Pipeline and the Keystone XL Pipeline, and the third requires all pipeline materials be built in the US.

While pipeline proponents argue that they transport oil and gas more safely than trains or trucks can, environmentalists say pipelines threaten the contamination of drinking water.

Read the full text of all three memoranda here »

Presidential Memorandum, January 24: Reduce regulations for US manufacturing

Presidential Memorandum, January 24: Reduce regulations for US manufacturing

President-elect Donald Trump talks with workers during a visit to the Carrier factory on Dec. 1, 2016, in Indianapolis, Ind.AP Photo/Evan Vucci

Trump directed his Secretary of Commerce to review how federal regulations affect US manufacturers, with the goal of figuring out how to reduce them as much as possible.

Read the full text here »

Presidential Memorandum, January 23: Reinstating the ‘Mexico City policy’

Presidential Memorandum, January 23: Reinstating the 'Mexico City policy'

Hundreds of thousands of protesters march down Pennsylvania avenue during the Women’s March on Washington January 21, 2017 in Washington, DC to protest newly inaugurated President Donald Trump.Aaron P. Bernstein/Getty Image

The move reinstated a global gag rule that bans American non-governmental organizations working abroad from discussing abortion.

Democratic and Republican presidents have taken turns reinstating it and getting rid of it since Ronald Reagan created the gag order in 1984. The rule, while widely expected, dismayed women’s rights and reproductive health advocates, but encouraged antiabortion activists.

Read the full text here »

Presidential Memorandum, January 23: Hiring Freeze

Presidential Memorandum, January 23: Hiring Freeze

Andy Kiersz/Business Insider

Trump froze all hiring in the executive branch excluding the military, directing no vacancies be filled, in an effort to cut government spending and bloat.

Union leaders called the action “harmful and counterproductive,” saying it would “disrupt government programs and services that benefit everyone.”

Read the full text here »

UPDATE 4/12: The hiring freeze is lifted, but budget director Mick Mulvaney says many jobs will stay unfilled because the Trump administration wants to reduce the federal workforce. The AP reported that the federal government added 2,000 workers in February and January, despite the freeze.

Presidential Memorandum, January 23: Out of the TPP

Presidential Memorandum, January 23: Out of the TPP

A protester holds signs against the TPP during a rally in Lima, Peru.Esteban Felix/AP Photo

This action signaled Trump’s intent to withdraw from the Trans Pacific Partnership, a trade deal that would lower tariffs for 12 countries around the Pacific Rim, including Japan and Mexico but excluding China.

Results were mixed. Sen. Bernie Sanders said he was “glad the Trans-Pacific Partnership is dead and gone,” while Republican Sen. John McCain said withdrawing was a “serious mistake.”

Read the full text here »

Executive Order, January 20: Declaring Trump’s intention to repeal the Affordable Care Act

Executive Order, January 20: Declaring Trump's intention to repeal the Affordable Care Act

Then President-elect Donald Trump meets with Speaker of the House Paul Ryan of Wisconsin on Capitol Hill November 10, 2016.Reuters

One of Trump’s top campaign promises was to repeal and replace the Affordable Care Act, commonly called Obamacare.

His first official act in office was declaring his intention to do so. Congressional Republicans have been working to do just that since their term started January 3, though there was dissent among Republicans over whether or not to complete the repeal process before a replacement plan is finalized and strident Democratic resistance to any repeal of the ACA.

Read the full text here »

UPDATE 3/28: House Speaker Paul Ryan pulled the bill to repeal and replace the ACA, officially called the American Health Care Act, on March 24 after Republicans didn’t have enough votes to pass it. But some members of the GOP are still working on a way to dismantle Obamacare.

Presidential Memorandum, January 20: Reince’s regulatory freeze

Presidential Memorandum, January 20: Reince's regulatory freeze

President-elect Donald Trump and Republican National Committee Chairman Reince Priebus on election night.Mark Wilson/Getty Images

Trump’s Chief of Staff Reince Priebus signed this action, directing agency heads not to send new regulations to the Office of the Federal Register until the administration has leaders in place to approve them.

Obama’s Chief of Staff Rahm Emanuel signed a similar memorandum when he took office in 2009, but as Bloomberg notes, Priebus changed the language from a suggestion to a directive.

The action is partly carried out to make sure the new administration wants to implement any pending regulations the old one was considering. Environmentalists worried if this could mean Trump is about to undo many of Obama’s energy regulations.

http://www.businessinsider.com/trump-executive-orders-memorandum-proclamations-presidential-action-guide-2017-1/#presidential-memorandum-january-20-reinces-regulatory-freeze-50

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The Pronk Pops Show 871, April 11, 2017, Story 1: Trump Rattling Cages (Sending Messages) in Syria and North Korea (Democratic People’s Republic of Korea (DPRK)) — Training Exercise — Trump Neoconed — Videos — Story 2: Attorney General Sessions Enforces Immigration Law — The Trump Era — Videos

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Story 1: Trump Rattling Cages (Sending Messages) in Syria and North Korea (Democratic People’s Republic of Korea (DPRK)) —  Training Exercise — Trump Neoconed — Videos —

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North Korea state media warns of nuclear strike if provoked as U.S. warships approach

* North Korea media warns of nuclear strike on U.S. if provoked

* U.S. warships head for Korean peninsula

* Trump says North Korea “looking for trouble”

* Russia “really worried” about possible U.S. attack on North (Adds Trump Tweet)

By Sue-Lin Wong

PYONGYANG, April 11 (Reuters) – North Korean state media on Tuesday warned of a nuclear attack on the United States at any sign of U.S. aggression as a U.S. Navy strike group steamed towards the western Pacific.

U.S. President Donald Trump, who has urged China to do more to rein in its impoverished neighbour, said in a Tweet North Korea was “looking for trouble” and the United States would “solve the problem” with or without China’s help.

Tension has escalated sharply on the Korean peninsula with talk of military action by the United States gaining traction following its strikes last week against Syria and amid concerns the reclusive North may soon conduct a sixth nuclear test.

For more news videos visit Yahoo View, available now on iOS and Android.

North Korea’s official Rodong Sinmun newspaper said the country was prepared to respond to any aggression by the United States.

“Our revolutionary strong army is keenly watching every move by enemy elements with our nuclear sight focused on the U.S. invasionary bases not only in South Korea and the Pacific operation theatre but also in the U.S. mainland,” it said.

South Korean acting President Hwang Kyo-ahn warned of “greater provocations” by North Korea and ordered the military to intensify monitoring and to ensure close communication with the United States.

“It is possible the North may wage greater provocations such as a nuclear test timed with various anniversaries including the Supreme People’s Assembly,” said Hwang, acting leader since former president Park Geun-hye was removed amid a graft scandal.

Trump said in a Tweet a trade deal between China and the United States would be “far better for them if they solved the North Korea problem”.

“If China decides to help, that would be great,” he said. “If not, we will solve the problem without them!”

Trump and his Chinese counterpart, Xi Jinping, met in Florida last week and Trump pressed Xi to do more to rein in North Korea.

The North convened a Supreme People’s Assembly session on Tuesday, one of its twice-yearly sessions in which major appointments are announced and national policy goals are formally approved. It did not immediately release details.

But South Korean officials took pains to quell talk in social media of an impending security crisis or outbreak of war.

“We’d like to ask precaution so as not to get blinded by exaggerated assessment about the security situation on the Korean peninsula,” Defence Ministry spokesman Moon Sang-kyun said.

Saturday is the 105th anniversary of the birth of Kim Il Sung, the country’s founding father and grandfather of current ruler, Kim Jong Un.

A military parade is expected in the North’s capital, Pyongyang, to mark the day. North Korea often also marks important anniversaries with tests of its nuclear or missile capabilities in breach of U.N. Security Council resolutions.

Men and women in colourful outfits were singing and dancing on the streets of Pyongyang, illuminated by better lighting than that seen in previous years, apparently practising for the parade planned.

Syrian President Bashar al-Assad sent a message of congratulations to mark the event, lambasting “big powers” for their “expansionist” policy.

“The friendly two countries are celebrating this anniversary and, at the same time, conducting a war against big powers’ wild ambition to subject all countries to their expansionist and dominationist policy and deprive them of their rights to self-determination,” the North’s KCNA news agency quoted the message as saying.

The North’s foreign ministry, in a statement carried by KCNA, said the U.S. navy strike group’s approach showed America’s “reckless moves for invading had reached a serious phase”.

“We never beg for peace but we will take the toughest counteraction against the provocateurs in order to defend ourselves by powerful force of arms and keep to the road chosen by ourselves,” an unidentified ministry spokesman said.

North Korea and the rich, democratic South are technically still at war because their 1950-53 conflict ended in a truce, not a peace treaty. The North regularly threatens to destroy the South and its main ally, the United States.

http://finance.yahoo.com/news/north-korea-state-media-warns-100014004.html

Coming to Terms With the American Empire

APRIL 14, 2015 | 07:54 GMT

 

By George Friedman

“Empire” is a dirty word. Considering the behavior of many empires, that is not unreasonable. But empire is also simply a description of a condition, many times unplanned and rarely intended. It is a condition that arises from a massive imbalance of power. Indeed, the empires created on purpose, such as Napoleonic France and Nazi Germany, have rarely lasted. Most empires do not plan to become one. They become one and then realize what they are. Sometimes they do not realize what they are for a long time, and that failure to see reality can have massive consequences.

World War II and the Birth of an Empire

The United States became an empire in 1945. It is true that in the Spanish-American War, the United States intentionally took control of the Philippines and Cuba. It is also true that it began thinking of itself as an empire, but it really was not. Cuba and the Philippines were the fantasy of empire, and this illusion dissolved during World War I, the subsequent period of isolationism and the Great Depression.

The genuine American empire that emerged thereafter was a byproduct of other events. There was no great conspiracy. In some ways, the circumstances of its creation made it more powerful. The dynamic of World War II led to the collapse of the European Peninsula and its occupation by the Soviets and the Americans. The same dynamic led to the occupation of Japan and its direct governance by the United States as a de facto colony, with Gen. Douglas MacArthur as viceroy.

The United States found itself with an extraordinary empire, which it also intended to abandon. This was a genuine wish and not mere propaganda. First, the United States was the first anti-imperial project in modernity. It opposed empire in principle. More important, this empire was a drain on American resources and not a source of wealth. World War II had shattered both Japan and Western Europe. The United States gained little or no economic advantage in holding on to these countries. Finally, the United States ended World War II largely untouched by war and as perhaps one of the few countries that profited from it. The money was to be made in the United States, not in the empire. The troops and the generals wanted to go home.

But unlike after World War I, the Americans couldn’t let go. That earlier war ruined nearly all of the participants. No one had the energy to attempt hegemony. The United States was content to leave Europe to its own dynamics. World War II ended differently. The Soviet Union had been wrecked but nevertheless it remained powerful. It was a hegemon in the east, and absent the United States, it conceivably could dominate all of Europe. This represented a problem for Washington, since a genuinely united Europe — whether a voluntary and effective federation or dominated by a single country — had sufficient resources to challenge U.S. power.

The United States could not leave. It did not think of itself as overseeing an empire, and it certainly permitted more internal political autonomy than the Soviets did in their region. Yet, in addition to maintaining a military presence, the United States organized the European economy and created and participated in the European defense system. If the essence of sovereignty is the ability to decide whether or not to go to war, that power was not in London, Paris or Warsaw. It was in Moscow and Washington.

The organizing principle of American strategy was the idea of containment. Unable to invade the Soviet Union, Washington’s default strategy was to check it. U.S. influence spread through Europe to Iran. The Soviet strategy was to flank the containment system by supporting insurgencies and allied movements as far to the rear of the U.S. line as possible. The European empires were collapsing and fragmenting. The Soviets sought to create an alliance structure out of the remnants, and the Americans sought to counter them.

The Economics of Empire

One of the advantages of alliance with the Soviets, particularly for insurgent groups, was a generous supply of weapons. The advantage of alignment with the United States was belonging to a dynamic trade zone and having access to investment capital and technology. Some nations, such as South Korea, benefited extraordinarily from this. Others didn’t. Leaders in countries like Nicaragua felt they had more to gain from Soviet political and military support than in trade with the United States.

The United States was by far the largest economic power, with complete control of the sea, bases around the world, and a dynamic trade and investment system that benefitted countries that were strategically critical to the United States or at least able to take advantage of it. It was at this point, early in the Cold War, that the United States began behaving as an empire, even if not consciously.

The geography of the American empire was built partly on military relations but heavily on economic relations. At first these economic relations were fairly trivial to American business. But as the system matured, the value of investments soared along with the importance of imports, exports and labor markets. As in any genuinely successful empire, it did not begin with a grand design or even a dream of one. Strategic necessity created an economic reality in country after country until certain major industries became dependent on at least some countries. The obvious examples were Saudi Arabia or Venezuela, whose oil fueled American oil companies, and which therefore — quite apart from conventional strategic importance — became economically important. This eventually made them strategically important.

As an empire matures, its economic value increases, particularly when it is not coercing others. Coercion is expensive and undermines the worth of an empire. The ideal colony is one that is not at all a colony, but a nation that benefits from economic relations with both the imperial power and the rest of the empire. The primary military relationship ought to be either mutual dependence or, barring that, dependence of the vulnerable client state on the imperial power.

This is how the United States slipped into empire. First, it was overwhelmingly wealthy and powerful. Second, it faced a potential adversary capable of challenging it globally, in a large number of countries. Third, it used its economic advantage to induce at least some of these countries into economic, and therefore political and military, relationships. Fourth, these countries became significantly important to various sectors of the American economy.

Limits of the American Empire

The problem of the American Empire is the overhang of the Cold War. During this time, the United States expected to go to war with a coalition around it, but also to carry the main burden of war. When Operation Desert Storm erupted in 1991, the basic Cold War principle prevailed. There was a coalition with the United States at the center of it. After 9/11, the decision was made to fight in Afghanistan and Iraq with the core model in place. There was a coalition, but the central military force was American, and it was assumed that the economic benefits of relations with the United States would be self-evident. In many ways, the post-9/11 wars took their basic framework from World War II. Iraq War planners explicitly discussed the occupation of Germany and Japan.

No empire can endure by direct rule. The Nazis were perhaps the best example of this. They tried to govern Poland directly, captured Soviet territory, pushed aside Vichy to govern not half but all of France, and so on. The British, on the other hand, ruled India with a thin layer of officials and officers and a larger cadre of businessmen trying to make their fortunes. The British obviously did better. The Germans exhausted themselves not only by overreaching, but also by diverting troops and administrators to directly oversee some countries. The British could turn their empire into something extraordinarily important to the global system. The Germans broke themselves not only on their enemies, but on their conquests as well.

The United States emerged after 1992 as the only global balanced power. That is, it was the only nation that could deploy economic, political and military power on a global basis. The United States was and remains enormously powerful. However, this is very different from omnipotence. In hearing politicians debate Russia, Iran or Yemen, you get the sense that they feel that U.S. power has no limits. There are always limits, and empires survive by knowing and respecting them.

The primary limit of the American empire is the same as that of the British and Roman empires: demographic. In Eurasia — Asia and Europe together — the Americans are outnumbered from the moment they set foot on the ground. The U.S. military is built around force multipliers, weapons that can destroy the enemy before the enemy destroys the relatively small force deployed. Sometimes this strategy works. Over the long run, it cannot. The enemy can absorb attrition much better than the small American force can. This lesson was learned in Vietnam and reinforced in Iraq and Afghanistan. Iraq is a country of 25 million people. The Americans sent about 130,000 troops. Inevitably, the attrition rate overwhelmed the Americans. The myth that Americans have no stomach for war forgets that the United States fought in Vietnam for seven years and in Iraq for about the same length of time. The public can be quite patient. The mathematics of war is the issue. At a certain point, the rate of attrition is simply not worth the political ends.

The deployment of a main force into Eurasia is unsupportable except in specialized cases when overwhelming force can be bought to bear in a place where it is important to win. These occasions are typically few and far between. Otherwise, the only strategy is indirect warfare: shifting the burden of war to those who want to bear it or cannot avoid doing so. For the first years of World War II, indirect warfare was used to support the United Kingdom and the Soviet Union against Germany.

There are two varieties of indirect warfare. The first is supporting native forces whose interests are parallel. This was done in the early stages of Afghanistan. The second is maintaining the balance of power among nations. We are seeing this form in the Middle East as the United States moves between the four major regional powers — Iran, Saudi Arabia, Israel and Turkey — supporting one then another in a perpetual balancing act. In Iraq, U.S. fighters carry out air strikes in parallel with Iranian ground forces. In Yemen, the United States supports Saudi air strikes against the Houthis, who have received Iranian training.

This is the essence of empire. The British saying is that it has no permanent friends or permanent enemies, only permanent interests. That old cliche is, like most cliches, true. The United States is in the process of learning that lesson. In many ways the United States was more charming when it had clearly identified friends and enemies. But that is a luxury that empires cannot afford.

Building a System of Balance

We are now seeing the United States rebalance its strategy by learning to balance. A global power cannot afford to be directly involved in the number of conflicts that it will encounter around the world. It would be exhausted rapidly. Using various tools, it must create regional and global balances without usurping internal sovereignty. The trick is to create situations where other countries want to do what is in the U.S. interest.

This endeavor is difficult. The first step is to use economic incentives to shape other countries’ behavior. It isn’t the U.S. Department of Commerce but businesses that do this. The second is to provide economic aid to wavering countries. The third is to provide military aid. The fourth is to send advisers. The fifth is to send overwhelming force. The leap from the fourth level to the fifth is the hardest to master. Overwhelming force should almost never be used. But when advisers and aid do not solve a problem that must urgently be solved, then the only type of force that can be used is overwhelming force. Roman legions were used sparingly, but when they were used, they brought overwhelming power to bear.

The Responsibilities of Empire

I have been deliberately speaking of the United States as an empire, knowing that this term is jarring. Those who call the United States an empire usually mean that it is in some sense evil. Others will call it anything else if they can. But it is helpful to face the reality the United States is in. It is always useful to be honest, particularly with yourself. But more important, if the United States thinks of itself as an empire, then it will begin to learn the lessons of imperial power. Nothing is more harmful than an empire using its power carelessly.

It is true that the United States did not genuinely intend to be an empire. It is also true that its intentions do not matter one way or another. Circumstance, history and geopolitics have created an entity that, if it isn’t an empire, certainly looks like one. Empires can be far from oppressive. The Persians were quite liberal in their outlook. The American ideology and the American reality are not inherently incompatible. But two things must be faced: First, the United States cannot give away the power it has. There is no practical way to do that. Second, given the vastness of that power, it will be involved in conflicts whether it wants to or not. Empires are frequently feared, sometimes respected, but never loved by the rest of the world. And pretending that you aren’t an empire does not fool anyone.

The current balancing act in the Middle East represents a fundamental rebalancing of American strategy. It is still clumsy and poorly thought out, but it is happening. And for the rest of the world, the idea that the Americans are coming will become more and more rare. The United States will not intervene. It will manage the situation, sometimes to the benefit of one country and sometimes to another.

https://www.stratfor.com/weekly/coming-terms-american-empire

 

History of North Korea

From Wikipedia, the free encyclopedia
For history of Korea before its division, see History of Korea.
Part of a series on the
History of North Korea
Emblem of Emblem of North Korea
Soviet Civil Administration 1945–46
Provisional People’s Committee for North Korea 1946–48
Kim Il-sung’s rule 1948–94
Korean War 1950–53
Korean DMZ Conflict 1966–69
Juche 1972
Death and state funeral of Kim Il-sung 1994
Kim Jong-il’s rule 1994–2011
North Korean famine 1994–98
Songun 1998
Sunshine Policy 1998–2010
Six-party talks 2003
ROKS Cheonan sinking 2010
Death and state funeral of Kim Jong-il 2011
Kim Jong-un’s rule 2011–present
State Affairs Commission 2016
Flag of North Korea.svgNorth Korea portal

The history of North Korea began with the partition of Korea at the end of World War II in 1945, and the creation of the Communist-aligned Democratic People’s Republic of Korea (DPRK) headed by the former guerrilla leader, Kim Il-sung. In 1950 the Korean War broke out. After much destruction, the war ended with the status quo being restored. The DPRK had failed to unify Korea under its leadership, and the US-led United Nations force had failed to conquer North Korea. The peninsula was divided by the Korean Demilitarized Zone, and a US military force remained in South Korea.

Tension between the two sides continued. Kim Il-sung remained in power until his death in 1994. He developed a pervasive personality cult and steered the country on an independent course in accordance with the principle of Juche (or self-reliance). However, with natural disasters and the collapse of the Soviet Bloc in 1991, North Korea went into a severe economic crisis. Kim Il-sung’s son, Kim Jong-il, succeeded him, and was in turn succeeded by his son, Kim Jong-un. Amid international alarm, North Korea developed nuclear missiles.

Northern Korea before the division

From 1910 to the end of World War II, Korea was under Japanese rule. Most Koreans were peasants engaged in subsistence farming.[1] In the 1930s, Japan developed mines, hydro-electric dams, steel mills, and manufacturing plants in northern Korea and neighboring Manchuria.[2] The Korean industrial working class expanded rapidly, and many Koreans went to work in Manchuria.[3] As a result, 65% of Korea’s heavy industry was located in the north, but, due to the harshness of the terrain, only 37% of its agriculture.[4]

A Korean guerrilla movement emerged in the mountainous interior and in Manchuria, harassing the Japanese imperial authorities. One of the most prominent guerrilla leaders was the Communist Kim Il-sung.[5]

Northern Korea had very little exposure to modern, Western ideas.[6] One partial exception of this was the penetration of religion. Since the arrival of missionaries in the late nineteenth century, the northwest of Korea, and Pyongyang in particular, had been a stronghold of Christianity.[7]

Division of Korea

Main article: Division of Korea

At the Tehran Conference in November 1943 and the Yalta Conference in February 1945, the Soviet Union promised to join its allies in the Pacific War within three months of victory in Europe. On August 8, 1945, after three months to the day, the Soviet Union declared war on Japan.[8] Soviet troops advanced rapidly, and the US government became anxious that they would occupy the whole of Korea. On August 10, the US government decided to propose the 38th parallel as the dividing line between a Soviet occupation zone in the north and a US occupation zone in the south. The parallel was chosen as it would place the capital Seoul under American control.[9] The division placed sixteen million Koreans in the American zone and nine million in the Soviet zone.[10] To the surprise of the Americans, the Soviet Union immediately accepted the division. The agreement was incorporated into General Order No. 1 (approved on 17 August 1945) for the surrender of Japan.[11]

Soviet forces began amphibious landings in Korea by August 14 and rapidly took over the north-east of the country, and on August 16 they landed at Wonsan.[12] On August 24, the Red Army reached Pyongyang.[13] US forces did not arrive in the south until September 8.[10]

During August, People’s Committees sprang up across Korea, affiliated with the Committee for the Preparation of Korean Independence, which in September founded the People’s Republic of Korea. When Soviet troops entered Pyongyang, they found a local People’s Committee established there, led by veteran Christian nationalist Cho Man-sik.[14] Unlike their American counterparts, the Soviet authorities recognized and worked with the People’s Committees.[15][16] By some accounts, Cho Man-sik was the Soviet government’s first choice to lead North Korea.[17][18]

On September 19, Kim Il-sung and 36 other Korean Red Army officers arrived in Wonsan. They had fought the Japanese in Manchuria in the 1930s but had lived in the USSR and trained in the Red Army since 1941.[19] On October 14, Soviet authorities introduced Kim to the North Korean public as a guerrilla hero.[19]

In December 1945, at the Moscow Conference, the Soviet Union agreed to a US proposal for a trusteeship over Korea for up to five years in the lead-up to independence. Most Koreans demanded independence immediately, but Kim and the other Communists supported the trusteeship under pressure from the Soviet government. Cho Man-sik opposed the proposal at a public meeting on January 4, 1946, and disappeared into house arrest.[20][21] On February 8, 1946, the People’s Committees were reorganized as Interim People’s Committees dominated by Communists.[22] The new regime instituted popular policies of land redistribution, industry nationalization, labor law reform, and equality for women.[23]

Meanwhile, existing Communist groups were reconstituted as a party under Kim Il-sung’s leadership. On December 18, 1945, local Communist Party committees were combined into the North Korean Communist Party.[19] In August 1946, this party merged with the New People’s Party to form the Workers’ Party of North Korea. In December, a popular front led by the Workers Party dominated elections in the North.[22] In 1949, the Workers’ Party of North Korea merged with its southern counterpart to become the Workers’ Party of Korea with Kim as party chairman.[24]

Kim established the Korean People’s Army (KPA) aligned with the Communists, formed from a cadre of guerrillas and former soldiers who had gained combat experience in battles against the Japanese and later Nationalist Chinese troops. From their ranks, using Soviet advisers and equipment, Kim constructed a large army skilled in infiltration tactics and guerrilla warfare. Before the outbreak of the Korean War, Joseph Stalin equipped the KPA with modern medium tanks, trucks, artillery, and small arms. Kim also formed an air force, equipped at first with ex-Soviet propeller-driven fighter and attack aircraft. Later, North Korean pilot candidates were sent to the Soviet Union and China to train in MiG-15 jet aircraft at secret bases.[25]

In 1946, a sweeping series of laws transformed North Korea on Stalinist lines. The “land to the tiller” reform redistributed the bulk of agricultural land to the poor and landless peasant population, effectively breaking the power of the landed class.[26] This was followed by a “Labor Law”, a “Sexual Equality Law”, and a “Nationalisation of Industry, Transport, Communications and Banks Law”.[27]

Kim Il-sung with Kim Koo in 1948

As negotiations with the Soviet Union on the future of Korea failed to make progress, the US took the issue to the United Nations in September 1947. In response, the UN established the United Nations Temporary Commission on Korea to hold elections in Korea. The Soviet Union opposed this move. In the absence of Soviet co-operation, it was decided to hold UN-supervised elections in the south only.[28] In April 1948, a conference of organizations from the North and the South met in Pyongyang, but conference produced no results. The southern politicians Kim Koo and Kim Kyu-sik attended the conference and boycotted the elections in the South.[29] Both men were posthumously awarded the National Reunification Prize by North Korea.[30] The elections were held in South Korea on May 10, 1948. On August 15, the Republic of Korea formally came into existence.[31] A parallel process occurred in North Korea. A new Supreme People’s Assembly was elected in August 1948, and on September 3 a new constitution was promulgated. The Democratic People’s Republic of Korea (DPRK) was proclaimed on September 9, with Kim as premier.[32] On October 12, the Soviet Union declared that Kim’s regime was the only lawful government on the peninsula.[citation needed] On December 12, 1948, the United Nations General Assembly accepted the report of UNTCOK and declared the Republic of Korea to be the “only lawful government in Korea”.[31]

By 1949, North Korea was a full-fledged Communist state. All parties and mass organizations joined the Democratic Front for the Reunification of the Fatherland, ostensibly a popular front but in reality dominated by the Communists. The government moved rapidly to establish a political system that was partly styled on the Soviet system, with political power monopolised by the Worker’s Party of Korea (WPK).

The Korean War (1950-1953)

Main article: Korean War

The consolidation of Syngman Rhee‘s government in the South with American military support and the suppression of the October 1948 insurrection ended North Korean hopes that a revolution in the South could reunify Korea, and from early 1949 Kim Il-sung sought Soviet and Chinese support for a military campaign to reunify the country by force. The withdrawal of most U.S. forces from South Korea in June 1949 left the southern government defended only by a weak and inexperienced South Korean army. The southern régime also had to deal with a citizenry of uncertain loyalty. The North Korean army, by contrast, had benefited from the Soviet Union‘s WWII-era equipment, and had a core of hardened veterans who had fought either as anti-Japanese guerrillas or alongside the Chinese Communists.[33] In 1949 and 1950 Kim traveled to Moscow with the South Korean Communist leader Pak Hon-yong to raise support for a war of reunification.[34]

InitiallyJoseph Stalin rejected Kim Il-sung’s requests for permission to invade the South, but in late 1949 the Communist victory in China and the development of Soviet nuclear weapons made him re-consider Kim’s proposal. In January 1950, after China’s Mao Zedong indicated that the People’s Republic of China would send troops and other support to Kim, Stalin approved an invasion.[35] The Soviets provided limited support in the form of advisers who helped the North Koreans as they planned the operation, and Soviet military instructors to train some of the Korean units. However, from the very beginning Stalin made it clear that the Soviet Union would avoid a direct confrontation with the U.S. over Korea and would not commit ground forces even in case of major military crisis.[36] The stage was set for a civil war between the two rival régimes on the Korean peninsula.

For over a year before the outbreak of war, the two sides had engaged in a series of bloody clashes along the 38th parallel, especially in the Ongjin area on the west coast.[37] On June 25, 1950, claiming to be responding to a South Korean assault on Ongjin, the Northern forces launched an amphibious offensive all along the parallel.[38] Due to a combination of surprise and military superiority, the Northern forces quickly captured the capital Seoul, forcing Syngman Rhee and his government to flee. By mid-July North Korean troops had overwhelmed the South Korean and allied American units and forced them back to a defensive line in south-east South Korea known as the Pusan Perimeter. During its brief occupation of southern Korea, the DPRK regime initiated radical social change, which included the nationalisation of industry, land reform, and the restoration of the People’s Committees.[39]According to the captured US General William F. Dean, “the civilian attitude seemed to vary between enthusiasm and passive acceptance”.[40][41]

The United Nations condemned North Korea’s actions and approved an American-led intervention force to defend South Korea. In September, UN forces landed at Inchon and retook Seoul. Under the leadership of US General Douglas Macarthur, UN forces pushed north, reaching the Chinese border. According to Bruce Cumings, the North Korean forces were not routed, but managed a strategic retreat into the mountainous interior and into neighboring Manchuria.[42] Kim Il-sung’s government re-established itself in a stronghold in Chagang Province.[43] In late November, Chinese forces entered the war and pushed the UN forces back, retaking Pyongyang in December 1950 and Seoul in January 1951. According to Bruce Cumings, the Korean People’s Army played an equal part in this counterattack.[44] UN forces managed to retake Seoul for South Korea. The war essentially became a bloody stalemate for the next two years.

2012 rehearsal in Pyongyang for Victory Day, marking the end of the war

American bombing included the use of napalm against populated areas and the destruction of dams and dykes, which caused devastating floods.[45][46] China and North Korea also alleged the US was deploying biological weapons.[47] As a result of the bombing, almost every substantial building and much of the infrastructure in North Korea was destroyed.[48][49] The North Koreans responded by building homes, schools, hospitals, and factories underground.[50] Economic output in 1953 had fallen by 75-90% compared with 1949.[51]

While the bombing continued, armistice negotiations, that had commenced in July 1951, wore on. North Korea’s lead negotiator was General Nam Il. The Korean Armistice Agreement was signed on July 27, 1953. A ceasefire followed, but there was no peace treaty, and hostilities continued at a lower intensity.[52]

Postwar developments

Internal politics

Despite the failure of his attempt at unifying the nation under his rule, Kim Il-sung considered the war a victory in the sense that he remained in power. As a result, the North Korean media made the most of it by focusing entirely on the defeats suffered by the US and UN forces during the failed invasion of North Korea in late 1950. The armistice was celebrated in Pyongyang with a military parade in which Kim declared: “Despite their best efforts, the imperialist invaders were defeated with great loss in men and material.”[citation needed]

Kim began gradually consolidating his power. Up to this time, North Korean politics were represented by four factions: the Yan’an faction, made up of returnees from China; the “Soviet Koreans” who were ethnic Koreans from the USSR; native Korean communists led by Pak Hon-yong; and Kim’s Kapsan group who had fought guerrilla actions against Japan in the 1930s.[53][54]

When the Worker’s Party Central Committee plenum opened on 30 August 1953 Choe Chang-ik made a speech attacking Kim for concentrating the power of the party and the state in his own hands as well as criticising the party line on industrialisation which ignored widespread starvation among the North Korean people. However, Kim neutralised the attack on him by promising to moderate the regime, promises which were never kept. The majority in the Central Committee voted to support Kim and also voted in favour of expelling Choe and Pak Hon-yong from the Central Committee. Eleven of Kim’s opponents were convicted in a show trial. It is believed that all were executed. A major purge of the KWP followed, with members originating from South Korea being expelled.[55]

Pak Hon-yong, party vice chairman and Foreign Minister of the DPRK, was blamed for the failure of the southern population to support North Korea during the war, was dismissed from his positions in 1953, and was executed after a show-trial in 1955.[56][57] Most of the South Korean leftists and communist sympathizers who defected to the North in 1945–1953 were also accused of espionage and other crimes, and subsequently killed, imprisoned, or exiled to remote agricultural and mining villages. Potential rivals from other groups such as Kim Tu-bong were also purged.[citation needed]

The Party Congress in 1956 indicated the transformation that the party had undergone. Most members of other factions had lost their positions of influence. More than half the delegates had joined after 1950, most were under 40 years old, and most had limited formal education.[58]

In February 1956, Soviet leader Nikita Khrushchev made a sweeping denunciation of Stalin, which sent shock waves throughout the Communist world. Encouraged by this, members of the party leadership in North Korea began to criticize Kim’s dictatorial leadership, personality cult, and Stalinist economic policies. They were defeated by Kim at the August Plenum of the party.[59][60] By 1960, 70 per cent of the members of the 1956 Central Committee were no longer in politics.[61]

Kim Il-sung had initially been criticized by the Soviets during a previous 1955 visit to Moscow for practicing Stalinism and a cult of personality, which was already growing enormous. The Korean ambassador to the USSR, Li Sangjo, a member of the Yan’an faction, reported that it had become a criminal offense to so much as write on Kim’s picture in a newspaper and that he had been elevated to the status of Marx, Lenin, Mao, and Stalin in the communist pantheon. He also charged Kim with rewriting history to appear as if his guerrilla faction had single-handedly liberated Korea from the Japanese, completely ignoring the assistance of the Chinese Communist Party. In addition, Li stated that in the process of agricultural collectivization, grain was being forcibly confiscated from the peasants, leading to “at least 300 suicides” and that Kim made nearly all major policy decisions and appointments himself. Li reported that over 30,000 people were in prison for completely unjust and arbitrary reasons as trivial as not printing Kim Il-sung’s portrait on sufficient quality paper or using newspapers with his picture to wrap parcels. Grain confiscation and tax collection were also conducted forcibly with violence, beatings, and imprisonment.[62] During Kim Il-sung’s Moscow visit, the Soviets recommended that he discard the personality cult, adhere to the ideas of collective leadership, remove falsified history accounts from textbooks, and work towards improving the living standards of the Korean people, which remained poor and below prewar standards. Foodstuffs during the initial postwar period were rationed and extremely expensive, as were consumer items. By comparison, South Korea, which had less of an industrial base than the DPRK, had a better food supply and was also flooded with American goods although it should be noted that the overall destruction there during the war was smaller.[citation needed]

In late 1968, known military opponents of North Korea’s Juche ideology such as Kim Chang-bong (minister of National Security), Huh Bong-hak (chief of the Division for Southern Intelligence) and Lee Young-ho(commander in chief of the DPRK Navy) were purged as anti-party/counter-revolutionary elements, despite their credentials as anti-Japanese guerrilla fighters in the past.[55]

Kim’s personality cult was modeled on Stalinism and his regime originally acknowledged Stalin as the supreme leader. After Stalin’s death in 1953, however, Kim was described as the “Great Leader” or “Suryong”. As his personality cult grew, the doctrine of Juche (or self-reliance) began to displace Marxism–Leninism. At the same time the cult extended beyond Kim himself to include his family in a revolutionary blood line.[63] In 1972, to celebrate Kim Il-sung’s birthday, the Mansu Hill Grand Monument was unveiled, including a 22-meter bronze statue of him.[64]

International relations

Like Mao in China, Kim Il-sung refused to accept Nikita Khrushchev‘s denunciation of Stalin and continued to model his regime on Stalinist norms.[65][66] At the same time, he increasingly stressed Korean independence, as embodied in the concept of Juche.[67] Kim told Alexei Kosygin in 1965 that he was not anyone’s puppet and “We…implement the purest Marxism and condemn as false both the Chinese admixtures and the errors of the CPSU”.[68]

Relations with China had worsened during the war. Mao Zedong criticized Kim for having started the whole “idiotic war” and for being an incompetent military commander who should have been removed from power. PLA commander Peng Dehuai was equally contemptuous of Kim’s skills at waging war.[69]

By some analysis, Kim Il-sung remained in power partially because the Soviets turned their attention to the Hungarian Revolution of 1956 that fall.[70] The Soviets and Chinese were unable to stop the inevitable purge of Kim’s domestic opponents or his move towards a one-man Stalinist autocracy and relations with both countries deteriorated in the former’s case because of the elimination of the pro-Soviet Koreans and the latter because of the regime’s refusal to acknowledge Chinese assistance in either liberation from the Japanese or the war in 1950-53.[71]

Stalin continued to be honored in North Korea long after his death in 1953, and a street in Pyongyang bore his name until 1980. By contrast, neighboring Chinese leader Mao Zedong was mostly ignored and Kim Il-sung rejected most of his policies such as the Hundred Flowers Campaign and (later) the Cultural Revolution.[citation needed]

The captured USS Pueblo being visited by tourists in Pyongyang

Tensions between North and South escalated in the late 1960s with a series of low-level armed clashes known as the Korean DMZ Conflict. In 1966, Kim declared “liberation of the south” to be a “national duty”.[72] In 1968, North Korean commandos launched the Blue House Raid, an unsuccessful attempt to assassinate the South Korean President Park Chung-hee. Shortly after, the US spy ship Pueblo was captured by the North Korean navy.[73] The crew were held captive throughout the year despite American protests that the vessel was in international waters and finally released in December after a formal US apology was issued.[74] In April 1969 North Korea shot down an EC-121 aircraft, killing everyone on board. The Nixon administration found itself unable to react at all, since the US was heavily committed in Vietnam and had no troops to spare if the situation in Korea escalated. However, the Pueblo capture and EC-121 shootdown did not find approval in Moscow, as the Soviet Union did not want a second major war to erupt in Asia. China’s response to the USS Pueblo crisis is less clear.[75]

After Khrushchev was replaced by Leonid Brezhnev as Soviet Leader in 1964, and with the incentive of Soviet aid, North Korea strengthened its ties with the USSR. Kim condemned China’s Cultural Revolution as “unbelievable idiocy”. In turn, China’s Red Guards labelled him a “fat revisionist”.[76][77] But by 1970, most of the storm clouds of the Cultural Revolution had blown away and relations with China quickly returned to normal. Chinese premier Zhou Enlai visited Pyongyang that year and apologized for the attacks made on Kim by the Red Guards. At the same time, the Soviets were again criticized by both Chinese and North Korean officials for being too soft on the United States. The Cultural Revolution was now viewed in North Korea as an excellent idea and “completely correct”.

In 1972, the first formal summit meeting between Pyongyang and Seoul was held, but the cautious talks did not lead to a lasting change in the relationship.[78]

With the fall of South Vietnam to the North Vietnamese on April 30, 1975, Kim Il-sung began to feel that the US had shown its weakness and that reunification of Korea under his regime was finally possible. Kim visited Beijing in May 1975 in the hope of gaining political and military support for this plan to invade South Korea again, but Mao Zedong refused.[79] Despite public proclamations of support, Mao privately told Kim that China would be unable to assist North Korea this time because of the lingering after-effects of the Cultural Revolution throughout China, and also because Mao had recently decided to restore diplomatic relations with the US. Afterwards, Kim went home empty-handed.[80]

Meanwhile, North Korea emphasized its independent orientation by joining the Non-Aligned Movement in 1975.[81] It promoted Juche as a model for developing countries to follow.[82] It developed strong ties with the regimes of Bokassa in the Central African Republic, Macias Nguema in Equatorial Guinea, Idi Amin in Uganda, Pol Pot in Cambodia, Gaddafi in Libya, and Ceausescu in Romania.[83]

Economic development

Reconstruction of the country after the war proceeded with extensive Chinese and Soviet assistance.[84][85] Koreans with experience in Japanese industries also played a significant part.[86]Land was collectivized between 1953 and 1958. Resistance appears to have been minimal as landlords had been eliminated by the earlier reforms or during the war.[87]

Although developmental debates took place within the Workers’ Party of Korea in the 1950s, North Korea, like all the postwar communist states, undertook massive state investment in heavy industry, state infrastructure and military strength, neglecting the production of consumer goods.[71]

The first Three Year Plan (1954–1956) introduced the concept of Juche or self-reliance.[88] The first Five Year Plan (1957-1961) consolidated the collectivization of agriculture and initiated mass mobilizations campaigns: the Chollima Movement, the Chongsan-ni system in agriculture and the Taean Work System in industry.[88][89] The Chollima Movement was influenced by China’s Great Leap Forward, but did not have its disastrous results.[88]Industry was fully nationalized by 1959.[90] Taxation on agricultural income was abolished in 1966.[91]

North Korea was placed on a semi-war footing, with equal emphasis being given to the civilian and military economies. This was expressed in the 1962 Party Plenum by the slogan, “Arms in one hand and a hammer and sickle in the other!”[92] At a special party conference in 1966, members of the leadership who opposed the military build-up were removed.[93]

On the ruins left by the war, North Korea had built an industrialized command economy. Che Guevara, then a Cuban government minister, visited North Korea in 1960, and proclaimed it a model for Cuba to follow. In 1965, the British economist Joan Robinson described North Korea’s economic development as a “miracle”.[94][95] As late as the 1970s, its GDP per capita was estimated to be equivalent to South Korea’s.[96][97][98][99] By 1968, all homes had electricity, though the supply was unreliable.[100] By 1972, all children from age 5 to 16 were enrolled in school, and over 200 universities and specialized colleges had been established.[101][102] By the early 1980s, 60–70% of the population was urbanized.[103]

Decline and crisis

North Korean village in the Yalu River delta

In the 1970s, expansion of North Korea’s economy, with the accompanying rise in living standards, came to an end.[104] Compounding this was a decision to borrow foreign capital and invest heavily in military industries. North Korea’s desire to lessen its dependence on aid from China and the Soviet Union prompted the expansion of its military power, which had begun in the second half of the 1960s. The government believed such expenditures could be covered by foreign borrowing and increased sales of its mineral wealth in the international market. North Korea invested heavily in its mining industries and purchased a large quantity of mineral extraction infrastructure from abroad. It also purchased entire petrochemical, textile, concrete, steel, pulp and paper manufacturing plants from the developed capitalist world.[105] This included a Japanese-Danish venture that provided North Korea with the largest cement factory in the world.[106] However, following the world 1973 oil crisis, international prices for many of North Korea’s native minerals fell, leaving the country with large debts and an inability to pay them off and still provide a high level of social welfare to its people. North Korea began to default in 1974 and halted almost all repayments in 1985. As a result, it was unable to pay for Western technology.[107]

Worsening this already poor situation, the centrally planned economy, which emphasized heavy industry had reached the limits of its productive potential in North Korea. Juche’s repeated demands that North Koreans learn to build and innovate domestically had run its course as had the ability of North Koreans to keep technological pace with other industrialized nations. By the mid to late-1970s some parts of the capitalist world, including South Korea, were creating new industries based around computers, electronics, and other advanced technology in contrast to North Korea’s Stalinist economy of mining and steel production.[108] Migration to urban areas stalled.[109]

Despite the emerging economic problems, the regime invested heavily on prestigious projects, such as the Juche Tower, the Nampo Dam, and the Ryugyong Hotel. In 1989, as a response to the 1988 Seoul Olympics it held the 13th World Festival of Youth and Students in Pyongyang.[110][111] In fact, the grandiosity associated with the regime and its personality cult, as expressed in monuments, museums, and events, has been identified as a factor in the economic decline.[112]

In 1984 Kim visited Moscow during a grand tour of the USSR where he met Soviet leader Konstantin Chernenko. Kim also made public visits to East Germany, Czechoslovakia, Poland, Hungary, Romania, Bulgaria and Yugoslavia. Soviet involvement in the North Korean economy increased, until 1988 when bilateral trade peaked at US$2.8 billion.[113] In 1986, Kim met the incoming Soviet leader Mikhail Gorbachev and received a pledge of support.[114]

However, Gorbachev’s reforms and diplomatic initiatives, the Chinese economic reforms starting in 1979, and the collapse of the Eastern Bloc from 1989 to 1991 increased North Korea’s isolation.[115] The leadership in Pyongyang responded by proclaiming that the collapse of the Eastern Bloc demonstrated the correctness of the policy of Juche.[116]

The collapse of the Soviet Union in 1991 deprived North Korea of its main source of economic aid, leaving China as the isolated regime’s only major ally. Without Soviet aid, North Korea’s economy went into a free-fall. By this time in the early 1990s, Kim Jong-il was already conducting most of the day-to-day activities of running of the state. Meanwhile, international tensions were rising over North Korean’s quest for nuclear weapons. Former US president Jimmy Carter made a visit to Pyongyang in June 1994 in which he met with Kim and returned proclaiming that he had resolved the crisis.[117]

Succession by Kim Jong-il

Portraits of Kim Il-sung and his son and successor Kim Jong-il

Kim Il-sung died from a sudden heart attack on July 8, 1994, three weeks after the Carter visit. His son, Kim Jong-il, who had already assumed key positions in the government, succeeded as General-Secretary of the Korean Workers’ Party. At that time, North Korea had no secretary-general in the party nor a president. Minimal legal procedure that had been established was summarily ignored. Although a new constitution appeared to end the war-time political system, it did not completely terminate the transitional military rule. Rather it legitimized and institutionalized military rule by making the National Defense Commission (NDC) the most important state organization and its chairman the highest authority. After three years of consolidating his power, Kim Jong-il became Chairman of the NDC on October 8, 1997, a position described by the NDC as the nation’s “highest administrative authority,” and thus North Korea’s de facto head of state. His succession had been foreshadowed in 1980, when he was introduced to the public at the Sixth Party Congress.[118] In 1982, Kim Jong-il had established himself as a leading theoretician with the publication of On the Juche Idea.[119] In 1984, he had been officially confirmed as his father’s successor.[120]

Meanwhile, the economy was in steep decline. In 1990-1995, foreign trade was cut in half, with the loss of subsidized Soviet oil being particularly keenly felt. The crisis came to a head in 1995 with widespread flooding that destroyed crops and infrastructure, leading to a famine that lasted till 1998.[121] At the same time, there appeared to be little significant internal opposition to the regime. Indeed, a great many of the North Koreans fleeing to China because of famine still showed significant support for the government as well as pride in their homeland. Many of these people reportedly returned to North Korea after earning sufficient money.[122]

In 1998 the government announced a new policy called “Songun“, or “Military First”. This suggested that the Korean People’s Army was now more powerful than the Korean Workers’ Party.[123]

President Kim Dae-jung of South Korea actively attempted to reduce tensions between the two Koreas under the Sunshine Policy, but this produced few immediate results. Since the election of George W. Bush as the President of the United States in 2000, North Korea has faced renewed external pressure over its nuclear program, reducing the prospect of international economic assistance.

In 2002, Kim Jong-il declared that “money should be capable of measuring the worth of all commodities”, followed by some small market-oriented measures, and the creation of the Kaesong Industrial Region with transport links to South Korea was announced.[citation needed] Experiments are under way to allow factory managers to fire underperforming workers and give bonuses. China’s investments increased to $200 million in 2004.[citation needed]

On October 9, 2006, North Korea has announced that it had successfully detonated a nuclear device underground at 10:36 am local time without any radiation leak. An official at South Korea’s seismic monitoring center confirmed a magnitude-3.6 tremor felt at the time North Korea said it conducted the test was not a natural occurrence.[124]

Additionally, North Korea was running a missile development program. In 1998, North Korea tested a Taepondong-1 Space Launch Vehicle, which successfully launched but failed to reach orbit. On July 5, 2006, they tested a Taepodong-2 ICBM that reportedly could reach the west coast of the U.S. in the 2-stage version, or the entire U.S. with a third stage. However, the missile failed shortly after launch, so it is unknown what its exact capabilities are or how close North Korea is to perfecting the technology.

North Korea’s advancements in weapons technology appear to give them leverage in ongoing negotiations with the United Nations and other countries. On February 13, 2007, North Korea signed an agreement with South Korea, the United States, Russia, China, and Japan, which stipulated North Korea would shut down itsYongbyon nuclear reactor in exchange for economic and energy assistance. However, in 2009 the North continued its nuclear test program.

In 2010, the sinking of a South Korean naval ship, the Cheonan, reportedly by a North Korean torpedo, escalated tensions between North and South.

Current situation

A computer lab classroom in the Grand People’s Study House, Pyongyang, 2012

Kim Jong-Il died on December 17, 2011[125] and was quickly succeeded by his son, Kim Jong-un. Tensions between North Korea and other countries increased due to its rocket launches and nuclear bomb testing, and UN sanctions have been tightened.

In 2014, the United Nations Commission of Inquiry accused the government of crimes against humanity.[126]

In 2015, North Korea adopted Pyongyang Standard Time (UTC+08.30), reversing the change to Japan Standard Time (UTC+9.00) which had been imposed by the Japanese Empire. As a result, North Korea was in a different time zone from South Korea.[127]

The 7th Congress of the Workers’ Party of Korea was held in 2016, where Kim Jong-Un further consolidated his control and power within the Workers’ Party of Korea and country.

See also

https://en.wikipedia.org/wiki/History_of_North_Korea

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The Pronk Pops Show 870, April 10, 2017: Story 1: Will President Trump Boldly Cut Taxes and Spending? — A Competitive Race Towards Lower Taxes And Less Government Spending: Replace All Income Based Taxes (All Income, Capital Gain and Payroll Taxes) With Broad-Based Consumption Tax With A Progressive Tax Prebate ( FairTax 23% Less Prebate or Fair Tax Less 20% Less $1,000 Per Month or $12,000 Per Year Prebate) And Real Cuts of 5% Per Year In Government Spending To Balance The Budget In 8 Years Or Less To Pay For Tax Cuts!) — Cut Taxes and Spending — Videos — Story 2: Stagnating United States Economy — The Great Stagnation –Videos

Posted on April 10, 2017. Filed under: American History, Blogroll, Breaking News, Budgetary Policy, Communications, Congress, Countries, Culture, Currencies, Donald J. Trump, Donald J. Trump, Donald Trump, Donald Trump, Economics, Elections, Employment, Fiscal Policy, Foreign Policy, Free Trade, Government Dependency, Government Spending, History, House of Representatives, Labor Economics, Law, Media, Medicare, Monetary Policy, News, Philosophy, Photos, Politics, Polls, President Trump, Raymond Thomas Pronk, Scandals, Senate, Tax Policy, Taxation, Taxes, Trade Policy, U.S. Dollar, Unemployment, United States of America, Videos, Wealth, Welfare Spending, Wisdom | Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , |

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Story 1: Will President Trump Boldly Cut Taxes and Spending?  — A Competitive Race Towards Lower Taxes And Less Government Spending:  Replace All Income Based Taxes (All Income, Capital Gain and Payroll Taxes) With Broad-Based Consumption Tax With Generous Tax Prebate ( FairTax or Fair Tax Less!) And Real Cuts of  5% Per Year In Government Spending To Balance The Budget In 8 Years Or Less To Pay For Tax Cuts!) — Cut Taxes and Spending — Videos —  

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Donald Trump: Simplify the Tax Code

Donald Trump: I pay as little as possible in taxes

Is Donald Trump serious about tax reform?

Sean Spicer: Trump wants to get tax reform right

Will tax reform really happen by August?

Dan Mitchell Discussing GOP Tax Plan and Corporate Rate Reduction

What Tax Reform Could Look Like Under Donald Trump | Squawk Box | CNBC

#Eakinomics – 4 Key Questions on Dynamic Scoring

What is Dynamic Scoring?

Trump Pushes ‘Major Border Tax’ to Keep Jobs in U.S.

Ryan Unexpectedly Joins Forces With Bannon on Border Tax

Kudlow: Freedom Caucus & Trump’s base is opposed to Border Adjustment Tax

Sen. Perdue: Border Adjustment Tax would “shutdown economic growth”

Sen. Tom Cotton: “I have serious concerns” w/ Border Adjustment Tax

Americans Need a Progressive Consumption Tax

Sen. Strange: “I would not” vote for a Border Adjustment Tax

Milton Friedman – Why Tax Reform Is Impossible

Milton Friedman – Is tax reform possible?

CNBC: Steve Forbes on Border Adjustment Tax – “Don’t Do It” 2.8.17

Meg Whitman: Border Adjustment Tax Will Not Create Jobs | CNBC

Art Laffer: Border tax is a major mistake

Border Tax Fight Is Economists Vs. Everybody Else | Squawk Box | CNBC

Dan Mitchell Discussing GOP Tax Plan and Corporate Rate Reduction

What is a Border Adjustment?

Border Tax: What You Need to Know

Will a border adjustment tax help American businesses?

Will a border adjustment tax kill free trade?

Border adjustment tax political suicide?

Fox Pol:l 73% Want Tax Reform This Year – Cavuto

Could the border tax debate stall tax reform?

Is A Border Adjustment Tax A Good Idea?

Border Adjustment Tax: Trump’s MAGA Ace

President Donald Trump Begins First Week By Meeting With Top Business Leaders | NBC News

Dan Mitchell Fretting about GOP Border-Adjustable Tax Plan

FairTax: Fire Up Our Economic Engine (Official HD)

Pence on the Fair Tax

Freedom from the IRS! – FairTax Explained in Details

The FairTax: It’s Time

Dan Mitchell explains the fair tax

Six Reasons Why the Capital Gains Tax Should Be Abolished

Is America’s Tax System Fair?

Sen. Moran Discusses FairTax Legislation on U.S. Senate Floor

What’s Killing the American Dream?

Robert Wolf: Border adjustment not going to happen

Paul Ryan on why he’s confident about tax reform

1/26/17 Border Adjustment Taxes, Tax Reform & Trade: Panel 1

1/26/17 Border Adjustment Taxes, Tax Reform and Trade: Panel 2 Part 2

Border Tax Adjustment and Corporate Tax Reforms: Panel 1

Border Tax Adjustment and Corporate Tax Reforms: Panel 2

Breaking Down The Republican Plan For A Border Tax | CNBC

Harvard Professor: Trump’s Border Tax ‘Misunderstood’

Making Sense Of The 20 Percent Tax Proposal | Morning Joe | MSNBC

Proposed Tax Package A Dramatic Cut Even With A Border Tax?

Treasury Secretary Steve Mnuchin On Tax Reform, Growth, Border Tax, China (Full) | Squawk Box | CNBC

Wilbur Ross On Border Tax: Something Will Be Found To Fill Trillion-Dollar Hole | Squawk Box | CNBC

Trump ditches tax reform plan he campaigned on and considers series of new options – including payroll tax cut in bid to woo Democrats

  • Trump had campaigned on rapid tax reform and a so-called border adjustment tax, which would effectively levy a duty on imports 
  • Now all options are back on the table as he tries to have a reform plan which will get Republican support 
  • There are signs the president will be willing to work with Democrats too as White House officials hold ‘listening sessions’ with the opposition 
  • One plan being considered is a cut in the payroll tax, which would benefit middle-earners and could garner Democratic support 

President Donald Trump has scrapped the tax plan he campaigned on and is going back to the drawing board in a search for Republican consensus behind legislation to overhaul the U.S. tax system.

The administration’s first attempt to write legislation is in its early stages and the White House has kept much of it under wraps. But it has already sprouted the consideration of a series of unorthodox proposals including a drastic cut to the payroll tax, aimed at appealing to Democrats.

Some view the search for new options as a result of Trump’s refusal to set clear parameters for his plan and his exceedingly challenging endgame: reducing tax rates enough to spur faster growth without blowing up the budget deficit.

Administration officials say it’s now unlikely that a tax overhaul will meet the August deadline set by Treasury Secretary Steve Mnuchin.

Off plan: Donald Trump is abandoning the tax overhaul he campaigned on 

Off plan: Donald Trump is abandoning the tax overhaul he campaigned on

Tough deadline: Steven Mnuchin, the Treasury Secretary who was at the table when Trump was briefed on the Syria missile strikes, had set an the August deadline for tax reform

Tough deadline: Steven Mnuchin, the Treasury Secretary who was at the table when Trump was briefed on the Syria missile strikes, had set an the August deadline for tax reform

But the ambitious pace to figure out a plan reflects Trump’s haste to move quickly past a bruising failure to broker a compromise within his own party on how to replace the health insurance law enacted under President Barack Obama.

The White House is trying to learn the lessons from health care. Rather than accepting a bill written by the lawmakers, White House officials are taking a more active role.

Administration officials have signaled that they want to pass tax legislation with only Republican votes, yet they’ve also held listening sessions with House Democrats.

White House aides say the goal is to cut tax rates sharply enough to improve the economic picture in depressed rural and industrial pockets of the country where many Trump voters live.

But the administration so far has swatted down alternative ways for raising revenues, such as a carbon tax, to offset lower rates.

Trump, who brands himself as a deal-maker, has not said which trade-offs he might accept and he has remained noncommittal on the leading blueprint, from Rep. Kevin Brady, chairman of the Ways and Means Committee.

Brady, a Republican from Texas, has proposed a border adjustment system, which would eliminate corporate deductions on imports, to raise $1 trillion over 10 years that could fund lower corporate tax rates.

But that possibility has rankled retailers who say it would lead to higher prices and threaten millions of jobs, while some lawmakers have worried that the system would violate World Trade Organization rules.

Brady has said he intends to amend the blueprint but has not spelled out how he would do so.

Other options are being shopped on Capitol Hill.

One circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security.

The change, proposed by a GOP lobbyist with close ties to the Trump administration, would transform Brady’s plan on imports into something closer to a value-added tax by also eliminating the deduction of labor expenses.

This would bring it in line with WTO rules and generate an additional $12 trillion over 10 years, according to budget estimates.

Those additional revenues could then enable the end of the 12.4 percent payroll tax, split evenly between employers and employees, that funds Social Security, while keeping the health insurance payroll tax in place.

This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay, a possible win that lawmakers could highlight back in their districts even though it would involve changing the funding mechanism for Social Security, according to the lobbyist, who asked for anonymity to discuss the proposal without disrupting early negotiations.

Although some billed this as a bipartisan solution, and President Barack Obama did temporarily cut the payroll tax after the Great Recession, others note it probably would run into firm opposition from Democrats who are loathe to be seen as undermining Social Security.

The White House would not comment on the plan, but said a value-added tax based on consumption is not under consideration ‘as of now,’ according to a White House statement.

The lack of detail about how to significantly rewrite tax laws for the first time in 30 years may provide Trump some time to build consensus among Republicans. But without Trump laying down his hand, lawmakers appear reluctant to back a plan that will likely stir controversy.

How will markets react? Stocks rallied after the election on the promise of lower taxes and fewer regulations, but the Dow has dipped 1.2 percent over the past month

How will markets react? Stocks rallied after the election on the promise of lower taxes and fewer regulations, but the Dow has dipped 1.2 percent over the past month

Stock markets take a hit after Trump’s healthcare defeat

‘Because there are trade-offs, congressmen need cover from the president to withstand the lobbyists and constituents who are going to complain,’ said Bill Gale, an economist at the Brookings Institution who worked at the White House Council of Economic Advisers during President George H.W. Bush’s administration.

The Trump administration appears to have shut out the economists who helped assemble one of his campaign’s tax overhaul plans, which independent analyses show would have increased the budget deficit.

‘It’s a little frustrating that they feel they have to write a new tax plan when they have a tax plan,’ said Steven Moore, an economist at the conservative Heritage Foundation who helped formulate tax policy for the Trump campaign.

Rob Portman, the Republican senator from Ohio, a member of the Senate Finance Committee, said that all of the trial balloons surfacing in public don’t represent the work that’s being done behind the scenes.

‘It’s not really what’s going on,’ Portman said. ‘What’s going on is they’re working with on various ideas.’

Investors are beginning to show some doubts that Trump can deliver. Stocks rallied after his election on the promise of lower taxes and fewer regulations, but the Dow Jones Industrial Average has dipped 1.2 percent over the past month as the path for health care and tax revisions has become muddied.

‘The White House is going to need its own clear direction, or it’s going to need to defer to Congress, but saying that your plan is forthcoming and then not producing a plan kind of puts everything in stasis,’ said Alan Cole, an economist at the conservative Tax Foundation.

http://www.dailymail.co.uk/news/article-4396916/Trump-taxes-President-scraps-tax-plan-timetable-threatened.html#ixzz4dsZ74tNb
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Why the Border Adjustment Tax Should Be Killed

The BAT is a bad idea. There are far better ways to shrink the federal budget deficit.

March 18, 2017

“Anytime I hear border adjustment, I don’t love it,” Donald Trump told The Wall Street Journal shortly before his inauguration, noting that the proposed border adjustment tax was “too complicated.”

Trump isn’t always right when he makes off-the-cuff remarks such as that, but this time he was. The proposed border adjustment tax is so complicated that even its advocates can’t agree on how its disruptive effects on the U.S. economy will play out, and there’s nothing to love about that. The BAT is a bad idea, and it should be scrapped. And while taking it off the table will bring more red ink to the federal budget, there are better ways to stanch the bleeding than subjecting the economy to the trauma of a BAT.

Despite protestations to the contrary, the border adjustment levy is a tax hike embedded in the program of tax reductions that House Republicans put forward last June under the rubric of “A Better Way.” It’s there, presumably, to help offset the effect of the administration’s planned cuts, since the Republicans’ stated aim is to keep those cuts revenue-neutral. Barron’s fully supports the goal of not adding to deficits that, before too long, will be running above $1 trillion a year, given repeated warnings from the nonpartisan Congressional Budget Office about the risk of a financial crisis, due to exploding debt.

The attraction of a BAT is that it could generate an estimated $100 billion a year in revenue. There may be reasons to challenge that estimate, but we’ll accept it for now. There are, however, better ways to slash the fiscal deficit by $100 billion a year than the Better Way plan, and most fall under the heading of spending cuts.

President Trump has spoken about “waste, fraud, and abuse” in “every agency” of the federal government. Indeed, he promised that “we will cut so much, your head will spin.” He should therefore find plenty to love in our proposed reductions in spending. Just for starters, if all corporate welfare were cut from the budget, as much as $100 billion a year could be saved, about matching the total expected from the BAT.

The president also favors slashing the top rate on corporate income to 15% from 35%. Barron’s has proposed a more modest cut, to 22% (“Cut the Top U.S. Corporate Tax Rate to 22%,” Nov. 26, 2016). The Republican package calls for a reduction to 20%, which is close enough to our original proposal and which we believe should boost revenue rather than shrink it.

A list of potential cuts and revenue enhancements, totaling $200 billion, is in the table at the bottom of this page.

THE BETTER WAY PLAN, as noted, would reduce the top federal tax rate on corporate profits to 20% from 35%—which is all to the good. The proposed tax cut would not only be revenue-neutral; it would probably be revenue-enhancing.

In a study released this month by the London-based Centre for Policy Studies, analyst Daniel Mahoney traces the effect on revenue from Britain’s cuts in the corporate tax rate over a 34-year period. According to his calculations, the take from the corporate tax has added three-tenths of a percentage point annually to gross domestic product since rates were slashed.

Similarly, last year, in calling for a maximum U.S. rate of 22%, we traced the significant decline in the average top rate on corporate income for 19 countries in the Organization for Economic Cooperation and Development, which includes the U.S. and the United Kingdom. Over 33 years, their average tax take as a share of GDP rose six-tenths of a percentage point.

While that might not sound like much, every tenth of a percentage point of U.S. nominal GDP is worth $18.9 billion. So if revenue from the corporate tax rises by, say, three-tenths of a percentage point, to 2.5%—a conservative guess—that increase would translate into a bonus of nearly $57 billion a year in revenue. That alone gets us more than halfway to the $100 billion value of a BAT.

The idea of a revenue-enhancing cut in the corporate income tax was put forward in 1978, when economist Arthur Laffer was first cited as arguing that some rate decreases could generate enough added economic growth that the government wouldn’t lose revenue over the long run—and might, in fact, even gain revenue. Laffer also noted that most tax hikes generate less revenue than a conventional “static” analysis indicates, and that most tax cuts lose less.

Laffer’s “dynamic” analysis covered all of the behavioral changes likely to result from a cut. To begin with, if the tax collector claims a lower share of income, there is an incentive to produce more income. Second, a lower rate means there’s less incentive to spend time and effort avoiding the tax.

Corporations don’t pay taxes; only people do. And there is a tendency to forget that if a corporation nets more profits as a result of a lower tax, those funds will soon take the form of salaries, dividends, and capital gains, and will be taxed in those forms.

The second factor, less tax avoidance, applies with special force to a rollback of corporate taxes. As we noted last year, bringing down the top rate to 22% from 35% would dramatically reduce corporate flight to low-tax jurisdictions in the rest of the world.

Following the publication of our article, the CBO released a study confirming that U.S corporate tax rates are among the highest in the world. Among the Group of 20 countries—including Japan, China, Russia, Germany, France, Canada, and the U.K.—the U.S. is No. 1, 3, and 4, respectively, in “top statutory corporate tax rate,” “average corporate tax rate,” and “effective corporate tax rate.” The Better Way plan would narrow this gap significantly and make the U.S. more competitive.

But when it comes to the Better Way plan for cutting tax rates on personal income, Barron’s believes that there would be a loss of revenue even after taking into account behavioral changes. The revenue reduction from the proposed personal income-tax cuts has been estimated, on a static basis, at an average of $98 billion a year. We can assume that dynamic losses would run 10% less, or $88 billion, mainly because lower taxes are likely to encourage people to work.

Still, $88 billion a year is a huge loss of revenue. Barron’s proposes that the Better Way plan consider splitting the difference and going halfway on the tax cut, thus saving $44 billion.

THE REVENUE-ENHANCING corporate tax cut would include a special kicker in the form of the border adjustment tax. The BAT would deny corporations the ability to deduct the cost of imports from their taxable income, while all income earned from exports would be exempt from the 20% levy.

This means that companies selling imported goods in the domestic market would be taxed on the sale’s full proceeds—not just on the profit earned—which could more than offset the gains from the corporate tax reduction. At the same time, as noted, there would be no tax on the sale of exports.

The GOP’s Big Three Key players in the border adjustment tax debate: Senate Majority Leader Mitch McConnell, above, and House Speaker Paul Ryan and President Donald Trump, below. McConnell has said that he hasn’t made up his mind about the levy. Alex Wong/Getty Images

The BAT would bring uncertainty and disruption to the U.S. economy, making it hard to predict whether it really would raise $100 billion annually in revenue. The basic idea is that, because the U.S. imports more than it exports, the export exemption would be more than offset by hitting imports hard. Regardless of how it shakes out, the value of the transactions affected by the BAT is huge.

The U.S. trade deficit—the difference between exports and imports—ran at just 3.4% of real GDP in 2016, much lower than the 5.5% peak of 2005. But the actual gross flows of exports and imports are much larger than the difference between the two flows. Exports last year were valued at $2.2 trillion, or 12.8% of real GDP, and imports at $2.7 trillion, or 16.2% (see chart). Given those magnitudes, the tax plan is likely to require massive readjustments throughout the economy.

That’s why major importers, like Wal-Mart Stores, are objecting—and why exporters are clearly pleased. As you might expect, then, the BAT is pitting exporters against importers, creating needless discord at a time when the country is surely suffering from more discord than it can handle.

THE POSITION PAPER for the Better Way asserts that by “exempting exports and taxing imports,” the BAT does “not” consist of the “addition of a new tax.” But of course, the BAT’s designers know that imports normally exceed exports by about $500 billion a year. Apply a back-of-the-envelope 20% to that $500 billion, and you get the hoped-for $100 billion in revenue. So the maneuver of “exempting exports and taxing imports” certainly looks and sounds like a new tax.

The Better Way statement also argues that there is an imbalance in the tax treatment of imports and exports that the BAT must remedy. “In the absence of border adjustments,” it states, “exports from the United States implicitly bear the cost of the U.S. income tax, while imports do not bear any federal income tax cost. This amounts to a self-imposed unilateral penalty on American exports and a self-imposed unilateral subsidy for U.S. imports.”

Ryan strongly supports the tax. Chip Somodevilla/Getty Images

But all other countries impose this “implicit cost” on exports through their own corporate income tax. And since the Better Way would slash America’s top rate to 20%, this implicit cost would finally become competitive with that of other nations.

Some supporters of the BAT like it precisely because it would help exports and penalize imports. The mercantilist view of economics implicit in that aim was discredited in Adam Smith’s 1776 treatise, The Wealth of Nations. And apart from the massive dislocations that will occur if imports shrink, this calls into question whether the projected $100 billion a year in revenue is realistic. As Alan Greenspan once wisely said, “Whatever you tax, you get less of.”

Then again, whether we really will get fewer imports depends a lot on the exchange value of the dollar. Other supporters of the BAT predict that the dollar will respond by appreciating against other currencies, conforming to the dictates of textbook fundamentals. If the dollar appreciates enough, the advantage to exporters and disadvantage to importers will be nullified. Without getting into the technicalities of how all this would work, we concede that it is all quite possible.

But as currency analysts and traders can tell you, exchange rates are subject to all kinds of forces and can spend long periods flouting textbook fundamentals. So whether the dollar will really strengthen in response to the BAT is anyone’s guess. But even if it does, a much stronger greenback would bring other disruptions. American investors with holdings denominated in foreign currencies would take a huge hit. And America’s tourist industries, which are already hurting from what the Los Angeles Times has called a “Trump slump,” would be hurt even more, as the cost of traveling to the States jumps.

There are other questions. Would the World Trade Organization challenge the BAT? Might our trading partners respond in ways that would be unfavorable to us? The border adjustment tax is an experiment in Rube Goldberg economics that the U.S. can do without.

SINCE REVENUE NEUTRALITY is the goal of the Better Way package, what about making up for the $100 billion a year in revenue that the border adjustment tax is supposed to generate?

Whether this tax really will raise as much as $100 billion depends on how imports and exports respond, which is hard to predict. Also, the reduction in the corporate income tax would probably be revenue-enhancing and could generate more than $50 billion in annual revenue.

The president has declared that “anytime I hear border adjustment, I don’t love it” and has voiced concern that it’s overly complicated. Michael Reynolds/Getty Images

We note that the full title of the House Republican plan is “A Better Way: Our Vision for a Confident America,” which leaves room for a vision that includes cost-cutting, along with tax-cutting.

It’s actually possible to reduce outlays by as much as $8.6 trillion over the next 10 years, as we pointed out in Barron’s Prescription for U.S. Economic Growth” (Dec. 24, 2016).

That discussion revealed much low-hanging fruit. For example, the Medicare system is rife with “improper payments,” which Medicare itself estimates at 11% of its spending in 2016. That’s probably a low estimate, because those who get improperly paid tend to keep these payments hidden. Barron’s calculated that if the improper-payment rate could be halved, it would save more than $400 billion over 10 years.

That would contribute $40 billion a year to the $100 billion shortfall from forgoing the BAT. To that we add $65 billion, and perhaps as much as $100 billion, by eliminating corporate welfare.

The Better Way statement properly criticizes the tax code for being “littered with hundreds of preferences and subsidies that pick winners and losers” and “direct resources to politically favored interests.” Spending on corporate welfare is another form of subsidy that picks winners and losers and directs funds to politically favored interests.

IN A 2012 PAPER, “Corporate Welfare in the Federal Budget,” the Cato Institute identified nearly $100 billion worth of yearly spending on corporate handouts, broadly defined, that could be ended. At Barron’s request, Cato senior fellow Chris Edwards updated the scoring on just 10 of the institute’s 40 categories of corporate welfare and came up with $66 billion in potential cuts.

High on Edwards’ list: farm subsidy programs, which redistribute taxpayer money to relatively rich agribusinesses and landowners. That the farm industry receives subsidies makes about as much sense as channeling funds to the restaurant industry, which could well be riskier than farming, based on its high failure rate. This form of corporate welfare goes back to the Great Depression of the 1930s. But whatever argument might have been made for it then hardly applies today, with the yearly tab currently at $25 billion.

Also on the corporate welfare list: pork-barrel handouts administered by the Department of Housing and Urban Development, totaling $13 billion, which go under the heading of “community development,” and which distribute funds to such recipients as museums, recreational facilities, and parking lots. Whatever one may think about the worthiness of these projects, they are better left to states and localities.

Another $10 billion could be saved by abolishing the Universal Service Fund, through which the Federal Communications Commission subsidizes telecommunications companies, among others. A creation of the Telecommunications Act of 1996, this attempt to pick winners and losers is more unnecessary than ever in this dynamic and competitive industry.

PRESIDENT TRUMP PROMISED to “drain the swamp” of Washington’s special interests. One route toward that admirable goal would be to cut corporate welfare. Trump should repeat his objections to a border adjustment tax that would favor the interests of some businesses over others. He can help make U.S. corporations great again by weaning them off subsidies and reducing their tax burdens.

http://www.barrons.com/articles/why-the-border-adjustment-tax-should-be-killed-1489814286

Concerns About The ‘Border Adjustable’ Tax Plan From The House GOP, Part I

The Republicans in the House of Representatives, led by Ways & Means Chairman Kevin Brady and Speaker Paul Ryan, have proposed a “Better Way” tax plan that has many very desirable features.

And there are many other provisions that would reduce penalties on work, saving, investment, and entrepreneurship. No, it’s not quite a flat tax, which is the gold standard of tax reform, but it is a very pro-growth initiative worthy of praise.

That being said, there is a feature of the plan that merits closer inspection. The plan would radically change the structure of business taxation by imposing a 20 percent tax on all imports and providing a special exemption for all export-related income. This approach, known as “border adjustability,” is part of the plan to create a “destination-based cash flow tax” (DBCFT).

When I spoke about the Better Way plan at the Heritage Foundation last month, I highlighted the good features of the plan in the first few minutes of my brief remarks, but raised my concerns about the DBCFT in my final few minutes.

Allow me to elaborate on those comments with five specific worries about the proposal.

Concern #1: Is the DBCFT protectionist?

It certainly sounds protectionist. Here’s how the Financial Times described the plan.

The border tax adjustment would work by denying US companies their current ability to deduct import costs from their taxable income, meaning companies selling imported products would effectively be taxed on the full value of the sale rather than just the profit. Export revenues, meanwhile, would be excluded from company tax bases, giving net exporters the equivalent of a subsidy that would make them big beneficiaries of the change.

Charles Lane of the Washington Post explains how it works.

…the DBCFT would impose a flat 20 percent tax only on earnings from sales of output consumed within the United States… It gets complicated, but the upshot is that the cost of imported supplies would no longer be deductible from taxable income, while all revenue from exports would be. This would be a huge incentive to import less and export more, significant change indeed for an economy deeply dependent on global supply chains.

That certainly sounds protectionist as well. A tax on imports and a special exemption for exports.

But proponents say there’s no protectionism because the tax is neutral if the benchmark is where products are consumed rather than where income is earned. Moreover, they claim exchange rates will adjust to offset the impact of the tax changes. Here’s how Lane explains the issue.

…the greenback would have to rise 25 percent to offset what would be a new 20 percent tax on imported inputs — propelling the U.S. currency to its highest level on record. The international consequences of that are unforeseeable, but unlikely to be totally benign for everyone. Bear in mind that many other countries — China comes to mind — can and will manipulate exchange rates to protect their own short-term interests.

For what it’s worth, I accept the argument that the dollar will rise in value, thus blunting the protectionist impact of border adjustability. It would remain to be seen, though, how quickly or how completely the value of the dollar would change.

Concern #2: Is the DBCFT compliant with WTO obligations?

The United States is part of the World Trade Organization (WTO) and we have ratified various agreements designed to liberalize world trade. This is great for the global economy, but it might not be good news for the Better Way plan because WTO rules only allow border adjustability for indirect taxes like a credit-invoice value-added tax. The DBCFT, by contrast, is a version of a corporate income tax, which is a direct tax.

The column by Charles Lane explains one of the specific problems.

Trading partners could also challenge the GOP plan as a discriminatory subsidy at the World Trade Organization. That’s because it includes a deduction for wages paid by U.S.-located firms, importers and exporters alike — a break that would obviously not be available to competitors abroad.

Advocates argue that the DBCFT is a consumption-base tax, like a VAT. And since credit-invoice VATs are border adjustable, they assert their plan also should get the same treatment. But the WTO rules say that only “indirect” taxes are eligible for border adjustability. The New York Times reports that the WTO therefore would almost surely reject the plan.

Michael Graetz, a tax expert at the Columbia Law School, said he doubted that argument would prevail in Geneva. “W.T.O. lawyers do not take the view that things that look the same economically are acceptable,” Mr. Graetz said.

A story in the Wall Street Journal considers the potential for an adverse ruling from the World Trade Organization.

Even though it’s economically similar to, and probably better than, the value-added taxes (VATs) many other countries use, it may be illegal under World Trade Organization rules. An international clash over taxes is something the world can ill afford when protectionist sentiment is already running high. …The controversy is over whether border adjustability discriminates against trade partners. …the WTO operates not according to economics but trade treaties, which generally treat tax exemptions on exports as illegal unless they are consumption taxes, such as the VAT. …the U.S. has lost similar disputes before. In 1971 it introduced a tax break for exporters that, despite several revamps, the WTO ruled illegal in 2002.

And a Washington Post editorial is similarly concerned.

Republicans are going to have to figure out how to make such a huge de facto shift in the U.S. tax treatment of imports compliant with international trade law. In its current iteration, the proposal would allow corporations to deduct the costs of wages paid within this country — a nice reward for hiring Americans and paying them well, which for complex reasons could be construed as a discriminatory subsidy under existing World Trade Organization doctrine.

Concern #3: Is the DBCFT a stepping stone to a VAT?

If the plan is adopted, it will be challenged. And if it is challenged, it presumably will be rejected by the WTO. At that point, we would be in uncharted territory.

Would that force the folks in Washington to entirely rewrite the tax system? Would they be more surgical and just repeal border adjustability? Would they ignore the WTO, which would give other nations the right to impose tariffs on American exports?

One worrisome option is that they might simply turn the DBCFT into a subtraction-method value-added tax (VAT) by tweaking the law so that employers no longer could deduct  expenses for labor compensation. This change would be seen as more likely to get approval from the WTO since credit-invoice VATs are border adjustable.

This possibility is already being discussed. The Wall Street Journal story about the WTO issue points out that there is a relatively simple way of making the DBCFT fit within America’s trade obligations, and that’s to turn it into a value-added tax.

One way to avoid such a confrontation would be to revise the cash flow tax to make it a de facto VAT.

The Economistshares this assessment.

…unless America switches to a full-fledged VAT, border adjustability may also be judged to breach World Trade Organisation rules.

Steve Forbes is blunt about this possibility.

One tax initiative that should be strangled before it sees the light of day is to give a tax rebate to exporters and to impose taxes on imports. …It’s a bad idea. Why do we want to make American consumers pay more for products while subsidizing foreign buyers? It also could put us on the slippery slope to our own VAT.

And that’s not a slope we want to be on. Unless the income tax is fully repealed (sadly not an option), a VAT would be a recipe for turning America into a European-style welfare state.

Concern #4: Does the DBCFT undermine tax competition and give politicians more ability to increase tax burdens?

Alan Auerbach, an academic from California who previously was an adviser for John Kerry and also worked at the Joint Committee on Taxation when Democrats controlled Capitol Hill, is the main advocate of a DBCFT (the New York Timeswrote that he is the “principal intellectual champion” of the idea).

He wrote a paper several years ago for the Center for American Progress, a hard-left group closely associated with Hillary Clinton. Auerbach explicitly argued that this new tax scheme is good because politicians no longer would feel any pressure to lower tax rates.

This…alternative treatment of international transactions that would relieve the international pressure to reduce rates while attracting foreign business activity to the United States. It addresses concerns about the effect of rising international competition for multinational business operations on the sustainability of the current corporate tax system. With rising international capital flows, multinational corporations, and cross-border investment, countries’ tax rates and tax structures are of increasing importance. Indeed, part of the explanation for declining corporate tax rates abroad is competition among countries for business activity. …my proposed reforms…builds on the [Obama] Administration’s approach…and alleviates the pressure to reduce the corporate tax rate.

This is very troubling. Tax competition is a very valuable liberalizing force in the world economy. It partially offsets the public choice pressures on politicians to over-tax and over-spend. If governments no longer had to worry that taxable activity could escape across national borders, they would boost tax rates and engage in more class warfare.

Also, it’s worth noting that the so-called Marketplace Fairness Act, which is designed to undermine tax competition and create a sales tax cartel among American states, uses the same “destination-based” model as the DBCFT.

Concern #5: Does the DBCFT create needless conflict and division among supporters of tax reform?

As I pointed out in my remarks at the Heritage Foundation, there’s normally near-unanimous support from the business community for pro-growth tax reforms.

That’s not the case with the DBCFT.

The Washington Examiner reports on the divisions in the business community.

Major retailers are skeptical of the House Republican plan to revamp the tax code, fearing that the GOP call to border-adjust corporate taxes could harm them even if they win a significant cut to their tax rate. As a result, retailers, oil refiners and other industries that import goods to sell in the U.S. could provide a major obstacle to the Republican effort to reform taxes. …The effect of the border adjustment, retailers fear, would be that the goods they import to sell to consumers would face a 20 percent mark-up, one that would force retailers like Walmart, the Home Depot and Sears…to raise prices and lose customers.

A story from CNBC highlights why retailers are so concerned.

…retailers are nervous. Very nervous. …About 95 percent of clothing and shoes sold in the U.S. are manufactured overseas, which means imports make up a vast majority of many U.S. retailers’ merchandise. …If the GOP plan were adopted as it’s currently laid out, Gap pays 20 percent corporate tax on the $5 profit from the sweater, or $1. Plus, 20 percent tax on the $80 cost it paid for that sweater from the overseas supplier, or $16. That means the tax goes from $1.75 to $17 for that sweater, more than three times the profit on that sweater. Talk about a hit to margins. …Retailers certainly aren’t taking a lot of comfort in the economic theory of dollar appreciation. …the tax reform plan will dilute specialty retailers’ earnings by an average of 132 percent. …Athletic manufacturers could take a 40 percent earnings hit… Gap, Carter’s , Urban Outfitters , Fossil and Under Armour are most at risk under the plan.

And here’s another article from the Washington Examiner that explains why folks in the energy industry are concerned.

…the border adjustment would raise costs for refiners that import oil. In turn, that could raise prices for consumers. The border adjustment would amount to a $10-a-barrel tax on imported crude oil, raising costs for drivers buying gasoline by up to 25 cents a gallon, the energy analyst group PIRA Energy Group warned this week. The report warned of a “potential huge impact across the petroleum industry,” even while noting that the tax reform plan faces many obstacles to passage.

Concern #6: What happens when other nations adopt their versions of a DBCFT?

Advocates of the DBCFT plausibly argue that if the WTO somehow approves their plan, then other nations will almost certainly copy the new American system.

That will be a significant blow to tax competition, which would be very bad news for the global economy.

But is also has negative implications for the fight to protect America from a VAT. The main selling point for advocates of the DBCFT is that we need a border-adjustable tax to offset the supposed advantage that other nations have because of border-adjustable VATs (both Paul Krugman and I agree that this is nonsense, but it still manages to be persuasive for some people).

So what happens when other nations turn their corporate income taxes into DBCFTs, which presumably will happen? We’re than back where we started and misguided people will say we need our own VAT to balance out the VATs in other nations.

The bottom line is that a DBCFT is not the answer to America’s wretched business tax system. There are simply too many risks associated with this proposal. I’ll elaborate tomorrow in Part II and also explain some good ways of pursuing tax reform without a DBCFT.

https://www.forbes.com/sites/danielmitchell/2017/01/03/concerns-about-theborder-adjustable-tax-plan-from-the-house-gop-part-i/2/#1edd1775d9e8

MAR 27,2017

Chairman Brady Acknowledges “Valid Concerns” About the Border Adjustment Tax Harming U.S. Businesses

Post by Freedom Partners

After months of insisting that a trillion-dollar Border Adjustment Tax (BAT) on American consumers is the best and only way to achieve pro-growth tax reform without adding to the deficit, Ways and Means Chairman Kevin Brady acknowledged that importers fearful of the new tax have “valid concerns.”

The proposed BAT from House Republicans would mean a new 20 percent tax on everything imported into the U.S., raising up to $1.2 trillion of new government revenue in the form of higher prices, shouldered by consumers. In effect, the regressive tax could undercut positive economic outcomes from lower rates and a simplified tax code through tax reform.

According to Chairman Brady, House Republicans need to “make sure that we allay the valid concerns of those that are importing today,” CNBC reports.

 Freedom Partners Vice President of Policy Nathan Nascimento issued the following statement:

“Some of the ‘valid concerns’ that Chairman Brady acknowledges include a devastating new trillion-dollar tax hike, higher costs on everyday goods, fewer jobs, and less economic opportunity. We hope to work with the administration and Congress to get pro-growth tax reform done, but a 20 percent tax hike on all imports would only undermine the point of tax reform – which is to provide much-needed relief for taxpayers and the economy. A massive tax hike on all imports is bad policy, and Americans deserve a better plan that can unite lawmakers in both the House and Senate behind comprehensive tax reform.”

U.S. manufacturers would be threatened by increased complexity and disruptions to supply chains, resulting in increased costs, fewer sales, and job loss. “Anytime I hear border adjustment, I don’t love it … And it’s too complicated,” President Donald Trump told The Wall Street Journal earlier this year.

Americans for Prosperity has already identified more than $2 trillion in wasteful spending, unnecessary programs, and corporate welfare that ought to be eliminated before any new tax on U.S. consumers. Freedom Partners and its coalition allies support the efforts of Congress and the administration to bring comprehensive tax reform to reality in a way that protects all Americans from a massive tax hike.

READ: Border Adjustment Tax Myth vs. Fact

U.S. Businesses Facing Massive Tax Increases Under A Border-Adjusted Tax System Have “Valid Concerns”

Wall Street Journal: “Some Retailers And Other Big Importers … Warn Of Tax Bills That Would Exceed Profits, Forcing Them To Pass Costs To Consumers. ”Cody Lusk, president of the American International Automobile Dealers Association, says his members are shocked that a Republican Congress is proposing a 20% tax on imports.” (Richard Rubin, “GOP Plan To Overhaul Tax Code Gets Held Up At The Border,” Wall Street Journal, 2/7/17)

LUSK: “We view this as a very, very serious potential blow to the auto sector and the economy.” (Richard Rubin, “GOP Plan To Overhaul Tax Code Gets Held Up At The Border,” Wall Street Journal, 2/7/17)

Financial Times: Border Tax Threatens To Devastate Importers Through Soaring Tax Bills. “Yet for Mr. Woldenberg the hope has turned to horror. Republicans are still promising the most sweeping changes since the Reagan reforms of 1986. But the only firm proposal on the table — from the House of Representatives — threatens to devastate his 150-person business because it includes a 20 per cent tax on imports … The problem for Mr. Woldenberg is that his goods come from China — 98 per cent of the products he sells in the US are imported. US factories could not produce them with the same low costs and specialized skills, he says. So he would have no choice but to pay the import levy. He estimates it would send his tax bill soaring to 165 per cent of earnings.” (Barney Jopson, Sam Fleming & Shawn Donnan, “Trump And The Tax Plan Threatening To Split Corporate America,” Financial Times, 2/13/17)

RICK WOLDENBERG: “To preserve cash flow I [would have to] raise my prices by a third, expect volume to go down by 40 per cent, and fire one out of five people.” (Barney Jopson, Sam Fleming & Shawn Donnan, “Trump And The Tax Plan Threatening To Split Corporate America,” Financial Times, 2/13/17)

RBC Capital Markets: Major Retailers Would Face Tax Bills That Exceed Their Operating Profits. “Major retailers like Wal-Mart, Best Buy, Costco and Dollar Tree would face tax bills that exceed their operating profits under House Republicans’ plans to create a ‘border adjustable’ business tax, RBC Capital Markets said. The investment bank sided with retailers in a debate over the proposal, saying in a research note it would have a ‘seriously adverse’ impact on them. ‘If the US moves to a border-adjusted tax system, most of our retailers would be forced to raise prices (and revenues) or meaningfully change their import/domestic sourcing mix, or their earnings would be materially reduced,’ it said.” (Brian Faler, “RBC Capital Markets: GOP Border-Adjustment Plan Bad For Retailers,” POLITICO Pro, 12/12/16)

POLITICO: “Retailers Fear Massive Tax Increases Under House Republican Tax Plan” “Many retailers fear that, even with Republicans promising to slash the corporate tax rate, they will still face big tax increases that in some cases will exceed their profits. On high alert over the proposal, retailers have begun a big lobbying campaign on the Hill, warning lawmakers and their aides that any tax hikes will get passed on to their constituents in the form of higher prices.” (Brian Faler, “Retailers Fear Massive Tax Increases Under House Republican Tax Plan,” POLITICO, 11/23/16)

The National Retail Federation Warns That A Border Tax Could Shut Businesses Down Completely. “‘Our members have told us that the import tax could be as high as five times their profits,’ said David French, chief lobbyist for the National Retail Federation. ‘I don’t know how viable some retailers would be in the face of this import tax.’” (Brian Faler, “Retailers Fear Massive Tax Increases Under House Republican Tax Plan,” POLITICO, 11/23/16)

POLITICO Pro: “Some Of The Biggest Losers Would Be Retailers Like Walmart, Best Buy And Home Depot That Import Massive Amounts Of Goods And Materials On Which They Would Suddenly Have To Pay Taxes.” “The border adjustment plan would affect individual companies differently, depending in part on how much they import and export. Some of the biggest losers would be retailers like Walmart, Best Buy and Home Depot that import massive amounts of goods and materials on which they would suddenly have to pay taxes.” (Brian Faler, “Some Companies May Never Pay Taxes Under Border-Adjustment Tax Plan,” POLITICO Pro, 1/9/17)

Axios: Cowen Research Released A Study Highlighting Some Of The Big Name Companies That Will Be Hurt By The Border Adjustments High Tax Hikes. “Cowen Research published a report Thursday that estimates the effect of the reform plan, and other planned measures, like eliminating the deductibility of interest and a headline corporate tax cut, on different industries and companies. Here are some of the big-name firms Cowen says will be hurt by reform: 1. Apple: The world’s largest company would see its tax bill jump because it won’t be able to deduct the expense of assembly abroad. 2. Constellation Brands: The largest beer importer in America will not be able to expense the cost of goods it brings across the border, like its Corona brand. 3. Gap: Between 50% and 80% of the retailer’s cost of the goods its sells comes from abroad. Walmart: 4. Walmart’s low margins means that it may not be able to survive a tax hike on imported goods without raising prices. 5. Target: Will suffer from the same conundrum as Walmart, but will be worse off since less of its revenue comes from domestically-sourced groceries. J.C. Penney: The department store has high debt loads, and interest on debt will not be deductible under the Republican plan. (Christopher Matthews, “These Companies Will Be Hit Hardest By GOP Tax Reform,” Axios, 1/27/17)

Border Adjustment Tax Would Result In Higher Costs For Hard-Working Families

Christian Science Monitor: Border Tax Could Raise Car Prices By Thousands Of Dollars. “Michigan-based Baum & Associates says that a border tax–one that applies not only to vehicles imported from factories abroad but also to foreign-made vehicle parts–could increase sticker prices by as much as $17,000 … Most increases would be smaller, but still very substantial. Volvo, for example, would need to up its prices by more than $7,500 to accommodate a border tax. Volkswagen wouldn’t be far behind, with increases of around $6,800. Even Detroit brands would see price upticks: Ford’s would climb $285, and General Motors’ would rise by nearly $1,000. Fiat Chrysler would have to boost prices by closer to $2,000.” (Richard Read, “How Trump’s Border Tax Could Raise Car Prices By Thousands Of Dollars,Christian Science Monitor, 2/8/17)

Auto Sales Would Plummet Under A Border Adjustment Tax. “A report from UBS Securities says that the higher car prices would slash U.S. auto sales by about 2 million vehicles per year. That would more than erase the increased capacity and almost certainly result in layoffs.” (Richard Read, “How Trump’s Border Tax Could Raise Car Prices By Thousands Of Dollars,Christian Science Monitor, 2/8/17)

More Than A Hundred American Businesses Are Opposing The Republican Border Tax: “Don’t Make Hard-Working Families Pay More On Essential Products.” “Nike, Rite Aid, The Gap, Best Buy and Abercrombie & Fitch have joined a new advocacy group aimed at killing House Republicans’ plans to create a border adjustable business tax. They are some of the more than 100 companies and trade associations behind Americans for Affordable Products, an organization launched today that is pushing lawmakers to dump a plan to begin taxing imports as part of a broader tax-code rewrite. The groups, which rely on imports, fear the House Republican plan will mean huge tax increase even as Republicans promise to simultaneously slash the corporate tax rate … Other well-known companies joining the effort include Target, Walmart, QVC, Petco, AutoZone, Macy’s and Levi Strauss.” (Brian Faler, “Border Adjustment Tax Opponents Launch New Group Targeting GOP Proposal,” Politico, 2/01/17)

“A Sweeping Tax Reform Proposal Meant To Boost U.S. Manufacturing Faces Mounting Pressure From Industries That Rely Heavily On Imported Goods …” “A sweeping tax reform proposal meant to boost U.S. manufacturing faces mounting pressure from industries that rely heavily on imported goods as President-elect Donald Trump and congressional Republicans work to finalize new tax legislation. As Republican members of the House of Representatives tax committee prepared to discuss tax reform this week, the panel received a letter from 81 industry groups rejecting the proposal known as ‘border adjustability.’ A lynchpin of the House Republican ‘Better Way’ agenda and viewed favorably by Trump’s team, the policy would help manufacturers by exempting export revenues from corporate taxes. But it would tax imports, hitting import-dependent industries.” (David Morgan, “U.S. Tax Reform Proposal On Border Trade Faces Growing Opposition,” Reuters, 12/15/16)

“Companies That Rely On Global Supply Chains Would Face Huge Business Challenges Caused By Increased Taxes And Increased Cost Of Goods.” “In a Dec. 13 letter to House Ways and Means Chairman Kevin Brady and incoming top Democrat Richard Neal, groups representing the auto and retailing industries, among others, said: ‘Companies that rely on global supply chains would face huge business challenges caused by increased taxes and increased cost of goods.’ They warned of ‘reductions in employment, reduced capital investments and higher prices for consumers’ as potential consequences.” (David Morgan, “U.S. Tax Reform Proposal On Border Trade Faces Growing Opposition,” Reuters, 12/15/16)

CNBC: Coach CEO Victor Luis Acknowledged That “Any Border Tax Will Lead To Higher Prices For The Consumer.” “If we see this border adjustment in an economy where 70 percent of GDP is driven by consumption that is driven on imports, any border tax will lead to higher prices for the consumer … That’s just a reality that we’ll have to face if it comes to that.” (Rachel Cao, “Coach CEO: Any Border Tax Will Lead To Higher Prices For The Consumer,” CNBC, 1/31/17)

National Retail Federation: The Border Adjustment Tax Could Cost The Average Family $1,700 In Just The First Year. “The imposition of a ‘border adjustment tax,’ a key provision of a pending House tax reform proposal, would end up seriously harming U.S. consumers. NRF analysis indicates that this plan could cost the average family $1,700 in the first year alone if the border adjustment provision is enacted. While economic theory suggests that trade flow of imports and exports would balance out over the long run due to offsetting exchange rate and price adjustments, there is no consensus as to the degree or the timing of these adjustments. In the near term, consumers would be left to pick up the significant tab while hoping that the economic theory proves out.” (Mark Mathews, “Border Adjustment Tax Would Cost American Households Up To $1,700 In First Year Alone,” National Retail Federation, 2/3/17)

NRF: Annual Family’s Savings Could Be Wiped Out By Nearly A Third. “For the average family, 27 percent of their savings (income after taxes and expenditures) could evaporate with the cost increases caused by the border tax.” (Mark Mathews, “Border Adjustment Tax Would Cost American Households Up To $1,700 In First Year Alone,” National Retail Federation, 2/3/17)

  • “Unmarried adults without children currently have only $443 left over annually after taxes and expenditures. If the border adjustment tax were enacted, they could see an $836 increase in costs — nearly 200 percent higher than their annual savings.”
  • “One-parent households, which are already in the red, could see an additional $1,000 added to their debt burden as they do what they can to make ends meet. Their apparel and footwear bills would increase by $271
  • “The average family (married with children) could see their apparel costs (including shoes) increase by $437 a year.”
  • “Single people could see their annual gasoline bills rise by $189, a whopping 43 percent of their annual average savings.”
  • “Married couples with children could see their annual gasoline bill could increase by over $400.”

CNBC: “The Republicans’ Plan To Enact A Border Adjustment Tax Will Leave Consumers Digging Deeper Into Their Pockets,” Increasing The Price Of Everyday Goods Like Clothes And Shoes By 20 Percent. “It will force consumers to pay as much as 20 percent more for the products they need. Gasoline is estimated to go up as much as 35 cents a gallon,’ said ‘Americans for Affordable Products’ advisor Brian Dodge … ‘Common household goods, apparel, things that people count on every day, pajamas, will cost more and really just so a certain, select group of corporations can avoid paying taxes forever. We think that’s bad policy…” (Michelle Fox, “Consumers Could See 20% Price Hike With Border Adjustment Tax, Retail Group Says,” CNBC, 2//17)

Economists And Analysts Weigh-In Against Border Adjustments

Dan Mitchell, Cato Institute: “I’ve Never Understood Why Politicians Think It’s A Good Idea To Have Higher Taxes On What Americans Consume And Lower Taxes On What Foreigners Consume.” (Dan Mitchell, “A Remarkably Good And Reasonably Bold Tax Reform Plan From House Republicans,” International Liberty, 6/25/16)

President Of The New York Fed Bill Dudley: “… There Could Be A Lot Of Unintended Consequences.” “Another prominent critic of a ‘border adjustment tax’ emerged Tuesday: the president of the New York Federal Reserve. Bill Dudley was asked by Macy’s CEO Terry Lundgren at a meeting of the National Retail Federation trade group what he thinks of the idea of a border adjustment tax, which involves taxing imports at 20 percent, while making U.S. exports tax-free. … ‘I think that it will lead to a lot of changes in the value of the dollar, the price of imported goods in the U.S., and I’m not sure that would all happen very smoothly,’ Dudley said. ‘I also think there could be a lot of unintended consequences.’” (Michelle Caruso-Cabrera, “NY Fed’s Dudley Sees ‘A Lot Of Unintended Consequences’ From Border-Tax Plan,” CNBC, 1/17/17)

Stephen Moore, Heritage Foundation: Border Tax Unlikely To Be Enacted. “A Heritage Foundation economist who advised President Trump’s campaign said he doubts a proposal from House Republicans to tax imports and exempt exports will gain traction.” (Naomi Jagoda, “Trump Campaign Adviser: Border Tax Unlikely To Be Enacted,” The Hill, 2/7/17)

MOORE: “I think it’s a distraction.” (Naomi Jagoda, “Trump Campaign Adviser: Border Tax Unlikely To Be Enacted,” The Hill, 2/7/17)

Steve Forbes: Border Adjustment Amounts To “Sneaky, Anti-Consumer Tax.” “This levy will cost American consumers at least a trillion dollars over the next ten years …  Prices for everyday items, such as socks, shoes and household appliances, will go up. So will tech devices like the iPad, not to mention automobiles and trucks. Gasoline? Millions of Americans will pay an additional 30 cents or more per gallon at the pump. Lower-income and struggling middle-class Americans will get hit the hardest.” (Steve Forbes, “OMG! House Republicans Are Preparing To Hit Consumers With A Horrible New Tax That Will Harm Trump And Hurt The Economy,” Forbes, 1/11/17)

POLITICO Pro: “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans.” “An economic adviser to President-elect Donald Trump slammed plans to create a so-called border adjustable business tax, and predicted it could kill efforts to overhaul the tax code. The House Republican proposal is overly complicated …  said Larry Kudlow, who helped write Trump’s tax-reform plans.” (Brian Faler, “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans,” POLITICO Pro, 1/12/17)

KUDLOW: “That is an exercise in government planning and complexity that I believe is doomed to fail … I think the whole corporate tax reform, which is the most important pro-growth measure, will go down the drain over this … There’s a problem that exists, but this is not the right solution …” (Brian Faler, “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans,” POLITICO Pro, 1/12/17)

KUDLOW: “GOP’s Border Adjustment Tax Is ‘Voodoo Economics” “President-elect Donald Trump is correct to criticize the House Republican plan to tax cross-border trade … said Larry Kudlow, who served as a senior economic adviser to Trump’s campaign…’I hate to say this, but it’s ‘voodoo economics’” (R. Williams, “Larry Kudlow: GOP’s Border Adjustment Tax Is ‘Voodoo Economics,” Newsmax, 1/17/17)

https://freedompartners.org/latest-news/chairman-brady-acknowledges-valid-concerns-border-adjustment-tax-harming-u-s-businesses/

Concerns about the”Border Adjustable” Tax Plan from the House GOP, Part II

I wrote yesterday to praise the Better Way tax plan put forth by House Republicans, but I added a very important caveat: The “destination-based” nature of the revised corporate income tax could be a poison pill for reform.

I listed five concerns about a so-called destination-based cash flow tax (DBCFT), most notably my concerns that it would undermine tax competition (folks on the left think it creates a “race to the bottom” when governments have to compete with each other) and also that it could (because of international trade treaties) be an inadvertent stepping stone for a government-expanding value-added tax.

Brian Garst of the Center for Freedom and Prosperity has just authored a new study on the DBCFT. Here’s his summary description of the tax.

The DBCFT would be a new type of corporate income tax that disallows any deductions for imports while also exempting export-related revenue from taxation. This mercantilist system is based on the same “destination” principle as European value-added taxes, which means that it is explicitly designed to preclude tax competition.

Since CF&P was created to protect and promote tax competition, you won’t be surprised to learn that the DBCFT’s anti-tax competition structure is a primary objection to this new tax.

First, the DBCFT is likely to grow government in the long-run due to its weakening of international tax competition and the loss of its disciplinary impact on political behavior. … Tax competition works because assets are mobile. This provides pressure on politicians to keep rates from climbing too high. When the tax base shifts heavily toward immobile economic activity, such competition is dramatically weakened. This is cited as a benefit of the tax by those seeking higher and more progressive rates. …Alan Auerbach, touts that the DBCFT “alleviates the pressure to reduce the corporate tax rate,” and that it would “alter fundamentally the terms of international tax competition.” This raises the obvious question—would those businesses and economists that favor the DBCFT at a 20% rate be so supportive at a higher rate?

Brian also shares my concern that the plan may morph into a VAT if the WTO ultimately decides that is violates trade rules.

Second, the DBCFT almost certainly violates World Trade Organization commitments. …Unfortunately, it is quite possible that lawmakers will try to “fix” the tax by making it into an actual value-added tax rather than something that is merely based on the same anti-tax competition principles as European-style VATs. …the close similarity of the VAT and the DBCFT is worrisome… Before VATs were widely adopted, European nations featured similar levels of government spending as the United States… Feeding at least in part off the easy revenue generate by their VATs, European nations grew much more drastically over the last half century than the United States and now feature higher burdens of government spending. The lack of a VAT-like revenue engine in the U.S. constrained efforts to put the United States on a similar trajectory as European nations.

And if you’re wondering why a VAT would be a bad idea, here’s a chart from Brian’s paper showing how the burden of government spending in Europe increased once that tax was imposed.

In the new report, Brian elaborates on the downsides of a VAT.

If the DBCFT turns into a subtraction-method VAT, its costs would be further hidden from taxpayers. Workers would not easily understand that their employers were paying a big VAT withholding tax (in addition to withholding for income tax). This makes it easier for politicians to raise rates in the future. …Keep in mind that European nations have corporate income tax systems in addition to their onerous VAT regimes.

And he points out that those who support the DBCFT for protectionist reasons will be disappointed at the final outcome.

…if other nations were to follow suit and adopt a destination-based system as proponents suggest, it will mean more taxes on U.S. exports. Due to the resulting decline in competitive downward pressure on tax rates, the long-run result would be higher tax burdens across the board and a worse global economic environment.

Brian concludes with some advice for Republicans.

Lawmakers should always consider what is likely to happen once the other side eventually returns to power, especially when they embark upon politically risky endeavors… In this case, left-leaning politicians would see the DBCFT not as something to be undone, but as a jumping off point for new and higher taxes. A highly probable outcome is that the United States’ corporate tax environment becomes more like that of Europe, consisting of both consumption and income taxes. The long-run consequences will thus be the opposite of what today’s lawmakers hope to achieve. Instead of a less destructive tax code, the eventual result could be bigger government, higher taxes, and slower economic growth.

Amen.

My concern with the DBCFT is partly based on theoretical objections, but what really motivates me is that I don’t want to accidentally or inadvertently help statists expand the size and scope of government. And that will happen if we undermine tax competition and/or set in motion events that could lead to a value-added tax.

Let’s close with three hopefully helpful observations.

Helpful Reminder #1: Congressional supporters want a destination-based system as a “pay for” to help finance pro-growth tax reforms, but they should keep in mind that leftists want a destination-based system for bad reasons.

Based on dozens of conversations, I think it’s fair to say that the supporters of the Better Way plan don’t have strong feelings for destination-based taxation as an economic principle. Instead, they simply chose that approach because it is projected to generate $1.2 trillion of revenue and they want to use that money to “pay for” the good tax cuts in the overall plan.

That’s a legitimate choice. But they also should keep in mind why other people prefer that approach. Folks on the left want a destination-based tax system because they don’t like tax competition. They understand that tax competition restrains the ability of governments to over-tax and over-spend. Governments in Europe chose destination-based value-added taxes to prevent consumers from being able to buy goods and services where VAT rates are lower. In other words, to neuter tax competition. Some state governments with high sales taxes in the United States are pushing a destination-based system for sales taxes because they want to hinder consumers from buying goods and services from states with low (or no) sales taxes. Again, their goal is to cripple tax competition.

Something else to keep in mind is that leftist supporters of the DBCFT also presumably see the plan as being a big step toward achieving a value-added tax, which they support as the most effective way of enabling bigger government in the United States.

Helpful Reminder #2: Choosing the right tax base (i.e., taxing income only one time, otherwise known as a consumption-base system) does not require choosing a destination-based approach.

The proponents of the Better Way plan want a “consumption-base” tax. This is a worthy goal. After all, that principle means a system where economic activity is taxed only one time. But that choice is completely independent of the decision whether the tax system should be “origin-based” or “destination-based.”

The gold standard of tax reform has always been the Hall-Rabushka flat tax, which is a consumption-base tax because there is no double taxation of income that is saved and invested. It also is an “origin-based” tax because economic activity is taxed (only one time!) where income is earned rather than where income is consumed.

The bottom line is that you can have the right tax base with either an origin-based system or a destination-based system.

Helpful Reminder #3: The good reforms of the Better Way plan can be achieved without the downside risks of a destination-based tax system.

The Tax Foundation, even in rare instances when I disagree with its conclusions, always does very good work. And they are the go-to place for estimates of how policy changes will affect tax receipts and the economy. Here is a chart with their estimates of the revenue impact of various changes to business taxation in the Better Way plan. As you can see, the switch to a destination-based system (“border adjustment”) pulls in about $1.2 trillion over 10 years. And you can also see all the good reforms (expensing, rate reduction, etc) that are being financed with the various “pay fors” in the plan.

I am constantly asked how the numbers can work if “border adjustment” is removed from the plan. That’s a very fair question.

But there are lots of potential answers, including:

  • Make a virtue out of necessity by reducing government revenue by $1.2 trillion.
  • Reduce the growth of government spending to generate offsetting savings.
  • Find other “pay fors” in the tax code (my first choice would be the healthcare exclusion).
  • Reduce the size of the tax cuts in the Better Way plan by $1.2 trillion.

I’m not pretending that any of these options are politically easy. If they were, the drafters of the Better Way plan probably would have picked them already. But I am suggesting that any of those options would be better than adopting a destination-based system for business taxation.

Ultimately, the debate over the DBCFT is about how different people assess political risks. House Republicans advocating the plan want good things, and they obviously think the downside risks in the future are outweighed by the ability to finance a larger level of good tax reforms today. Skeptics appreciate that those proponents want good policy, but we worry about the long-run consequences of changes that may (especially when the left sooner or late regains control) enable bigger government.

P.S. This is not the first time that advocates of good policy have bickered with each other. During the 2016 nomination battle, Rand Paul and Ted Cruz proposed tax reform plans that fixed many of the bad problems in the tax code. But they financed some of those changes by including value-added taxes in their plans. In the short run, either plan would have been much better than the current system. But I was critical because I worried that the inclusion of VATs would eventually give statists a tool to further increase the burden of government.

https://www.cato.org/blog/concerns-about-theborder-adjustable-tax-plan-house-gop-part-ii

THE CORNER THE ONE AND ONLY. Speaker Ryan’s Use of Reporters’ Recorders to Explain His Border Tax Was Cute — But Misleading

Faced with growing opposition to their border-adjustment tax, congressional Republicans are nonetheless on the offensive trying to sell it. I have expressed my many reasons for opposing the tax, including my disbelief that Republicans would support a massive tax increase alongside what is otherwise a pro-growth tax reform. While they oppose tax increases to pay for spending increases in other contexts and usually make the case that spending increases should be paid for by spending cuts, Republicans continue to push for this massive new source of revenue, in spite of the distortions it would introduce.

Until now, supporters of the tax have used many questionable arguments. For instance, they claim we shouldn’t worry about the protectionist aspect of a tax that imposes a 20 percent rate to imports but exempts exports under the hope that the U.S. dollar will adjust fully and quickly. However, there are reasons to believe that while the U.S. currency will adjust, it won’t adjust fully (Federal Reserve Board chairwoman Janet Yellen is only the latest one to stress that point), it won’t adjust as quickly as they claim (especially if the tax is challenged under the World Trade Organization as the Europeans have warned is going to be the case), and it won’t result in unicorns and rainbows.

But the latest misguided statements about the border-adjustment tax comes from House speaker Paul Ryan — who ought to know better. During a press conference last week, he repeated the claim that United States was at a disadvantage because other countries’ exports are exempted from taxes while U.S. goods aren’t. [Ryan] noted that most other countries already border-adjust their taxes and tax goods based on whether they were consumed in their jurisdiction.

That comment is bound to confuse reporters because, as Mr. Ryan must know, no other country border-adjusts their corporate income tax. They border-adjust their Value Added Tax. Conflating the two is misleading, to say the least.

Ryan continued:

The Speaker picked up two reporters’ recorders to give an example of how goods are taxed currently. He suggested one was American-made and the other was Japanese-made. Early on, he dropped one of the recorders, saying “oops” and receiving laughter from the reporters. “Here’s what Japan does when they make this tape recorder: When they send it for export they take the tax off of it, and then it comes to America and it’s not taxed, and it comes through to compete against our good, which was taxed. Theirs was untaxed twice,” Ryan said. “When America makes something, like a tape recorder, we tax it, and then we send it to Japan. As it enters Japan it’s taxed again, to compete against their tape recorder,” he continued. “So we are doing it to ourselves. We are hurting our manufacturing and jobs. We are putting a bias against making things in America in the tax code. . . . That is why we think this is very important. This is good manufacturing policy.”

Oh boy, where do I begin? First, it is true that U.S. companies are at a disadvantage but it is not because of other countries’ tax codes. It is because our corporate-income-tax system has the highest rate of all OECD countries and because, unlike most of our competitors, it taxes U.S. companies’ profits no matter where they are earned in the world. The solution to this disadvantage is to reduce the rates and move to a territorial system. Oh, and by the way, unlike what Ryan and other proponents of a border-adjustment tax would like you to believe, you do not need to move to an expansive destination-based-cash-flow tax to have a territorial tax.

Now let me address the cute tape-recorder example used by the speaker. It is totally misleading because it conflates foreign countries corporate tax and VAT taxes and it paints a picture that is incorrect. For instance, he claims that Japanese exports are exempt from taxes. No, Japanese products exported to the U.S. are exempt from the Japanese VAT but the Japanese company is still paying U.S. corporate tax on its U.S. profits. And you know what? In that sense, the Japanese export is treated exactly like the U.S. goods sold in the U.S. In other words, the playing field is even! I repeat: Japanese goods in the U.S. are taxed like U.S. goods in the U.S.

How about U.S. exports in Japan? Well, it gets hit by the Japanese VAT in Japan and by the Japanese corporate tax but so are Japanese goods sold in Japan. Again, the only disadvantage faced by U.S. companies selling tape recorders abroad comes from the U.S. tax system, which requires that income earned in Japan be taxed by Uncle Sam at 35 percent after benefiting from a tax credit for tax paid in Japan. If the U.S. company decides to keep its Japanese income outside the U.S., the U.S. rate won’t apply.

Dan Mitchell explains why the VAT doesn’t change the terms of trade in this video.

Finally, economists have debunked the idea implied by the speaker that foreign VATs give an advantage to foreign exports — and therefor boost foreign exports. It is simply not true. It follows that imposing a border-adjustment tax in the U.S. will not boost U.S. exports either. Period.

Let me summarize this for you:

  • No, other countries do not border-adjust their corporate income tax.
  • Comparing other countries’ VATs and our corporate tax is problematic to say the least.
  • No, foreign exports sold in the U.S. do not have an advantage over U.S. goods sold in the U.S. Foreign VATs do not boost foreign exports.
  • A border tax in the U.S. will not boost our exports but it will hurt consumers and many U.S. retailers.
  • The disadvantage faced by U.S. companies exporting goods abroad comes from the terrible worldwide tax and high rates of the U.S. tax regime, not from other countries’ tax system.
  • The way to fix the U.S. disadvantage is not to create a new expansive tax that would penalize imports in the U.S. — including imports for the benefit of U.S. domestic companies — and would penalize U.S. consumers.
  • The solution is to reform our corporate-tax rate by lowering the rate and moving to an origin-based territorial-tax regime. http://www.nationalreview.com/corner/445034/paul-ryan-border-adjustment-tax-mistake

Who’s Afraid of a Big BAT Tax?

The Border Adjustment Tax, a proposal favored by House Speaker Paul Ryan, has aroused serious opposition from Republican senators.

Joshua Roberts / Reuters

Donald Trump is feeling good about taxes. In his gonzo press conference last Thursday, he assured Americans that “very historic tax reform” is absolutely on track and is going to be—wait for it!—“big league.” The week before, he told a bunch of airline CEOs that “big league” reform was “way head of schedule” and that his people would be announcing something “phenomenal” in “two or three weeks.” And at his Orlando pep rally this past weekend, he gushed about his idea for a punitive 35 percent border tax on products manufactured overseas. The magic is happening, people. And soon America’s tax code will be the best, most beautiful in the world.

But here’s the thing. What Trump doesn’t know about the legislative process could overflow the pool at Mar-a Lago. And when it comes to tax reform, even minor changes make Congress lose its mind. Weird fault lines appear, and the next thing you know, warring factions have painted their faces blue and vowed to die on the blood-soaked battlefield before allowing this marginal rate to change or that loophole to close.

Such drama has, in fact, already begun over the proposal percolating in the House. At issue: a provision known as the border adjustment tax—let’s call it BAT—which, shrunk to its essence, incentivizes domestic manufacturing by slapping a 20 percent levy on imports, while making U.S. companies’ export-revenues tax deductible.

BAT fans—most notably House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady—pitch the provision as an economically elegant twofer: an America-First measure that discourages companies from moving operations overseas while creating a revenue stream ($1 trillion every decade or so) that allows the overall corporate tax rate to be slashed.

Opponents—most vocally Senators David Perdue and Tom Cotton—argue that a BAT is another grubby government cash grab that will ultimately hurt consumers when, say, Walmart has to jack up the prices of underwear, bananas, and Playstations. In a February 8 letter to colleagues, Perdue, who spent four decades in the business world, charged that the BAT is “regressive, hammers consumers, and shuts down economic growth.”Thus the battle lines are drawn. And, make no mistake, this will not be some bush-league, penny-ante skirmish. Behind the legislative factions are amassing some of the heaviest hitters in corporate America, ready to spend millions to sway debate on behalf of their team.Roughly speaking, companies that do a lot of exporting dig the BAT (think: Boeing, Merck, and Dow Chemical) while import-dependent retailers (including Target, Nike, and, yes, Walmart) fear it will destroy their bottom lines. The oil industry isn’t feeling much BAT love either. The Koch brothers want it dead, like, yesterday.At this point, anti-BATers have an edge. Why? Partly, because the provision is super complicated and almost impossible to explain in terms that don’t sound like something a coven of economists vomited up. Ask BAT fans why the provision won’t, in fact, hurt retailers or consumers, and you’re instantly hip-deep in talk of currency revaluation, purchasing power, and territorial taxation. Last Wednesday, one day after Paul Ryan tried to educate Senate Republicans on the wonders of BAT at their weekly policy lunch, Tom Cotton (who represents Walmart’s home state of Arkansas) snarked on the Senate floor, “Some ideas are so stupid only an intellectual could believe them.”
This is in no way to suggest that the pro-BAT arguments are wrong. They simply don’t push the same buttons as anti-BAT warnings that Congress is poised to screw consumers in order to fund big tax cuts for corporations.For the past few weeks, in fact, an anti-BAT coalition called Americans for Affordable Products has been busy hawking this exact message. “This is a consumer tax—a means by which House Republicans are paying for other tax deductions,” asserted AAP member Brian Dodge. “It’s not about America First. It’s not a trade-deficit reduction tool. It is a pay-for.”AAP is lobbying lawmakers and staffers and doing public outreach. Last Wednesday, it dispatched eight CEOs to chat with Trump and Vice President Pence. “We view our job as leading a large education campaign,” said Dodge. “We believe the more that lawmakers understand about this proposal, the less inclined they’ll be to support it.”Of course, BAT fans are gearing up as well and promise to be equally aggressive. The day after the AAP roll out, the American Made Coalition launched, with an eye toward helping Ryan’s office spread the good word. “It takes time to educate both policy makers and businesses on what’s on the table,” said Brian Reardon, an adviser to the group.There is no place for subtlety in this war. Part of BAT supporters’ argument is that, without the provision, tax overhaul will implode altogether. Message: Get on board or kiss your once-in-a-lifetime reform opportunity good-bye.It’s a question of Senate math. To pass with a simple majority (and avoid a filibuster by Democrats), the GOP’s plan must go through under the procedure known as reconciliation. But to qualify for reconciliation, the package–which slashes both corporate and upper-bracket taxes–cannot blow a hole in the long-term budget. Without the $1 trillion in revenues from BAT, say advocates, there’s no way that hole can be plugged.“This is the only way at these rates and keeping things revenue neutral,” insisted a senior Republican aide. There is no other viable option. Period. End of story.But anti-BATers are eyeing a different Senate equation. To amass even a simple majority of votes, the BAT can lose only two of the 52 Republican members. (Unless Democrats cross the aisle, of course.) In addition to Cotton’s and Perdue’s open hostility, Senators John Boozman, Mike Rounds, John Cornyn, Tim Scott, and Mike Lee have all expressed reservations. “I have real concerns that this piece of the House blueprint will cause more disruption than necessary,” Lee said. “Will the dollar suddenly shoot up by 20 percent? Will U.S. manufacturers have to redo their international supply chains? These are all open questions.”

With the provision’s Senate prospects iffy, there’s less incentive for House conservatives to support something that smells even faintly like a tax. Both the current chairman of the Freedom Caucus, Mark Meadows, and the former chairman, Jim Jordan, have said they’d like reform done without a BAT.

“My reasoning is very basic,” Jordan told me. “Why in the world would we want to add another revenue stream?” You can debate the impact on exchange rates and purchasing power all day, said Jordan, but that doesn’t address many conservatives’ core objection. “We come at it from fundamental perspective,” he said. “The idea that you’re going to add an entirely new tax is a big problem.”

(BAT fans, for the record, dispute that this is a new tax. It is, they insist, replacing the existing system with an entirely new, far superior one that must be looked at, as Reardon put it, “holistically.”)

The only thing everyone can agree on is that this will be a long, ugly fight. If Trump drops his tariff idea and embraces BAT, it could boost the cause. But even then, he’d need to do major arm-twisting to get Senate skeptics on board (especially with the likes of Walmart and the Kochs twisting the other arm.) Like it or not, this is what the political big leagues are like: slow, messy, and infuriating.

The up side for Trump: He’ll have time to throw a lot more pep rallies on this topic before anything gets decided.

https://www.theatlantic.com/politics/archive/2017/02/border-adjustment-tax-congress/517287/

The Internal Revenue Service has recently released new data on individual income taxes for calendar year 2014, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.[1]

The data demonstrates that the U.S. individual income tax continues to be very progressive, borne mainly by the highest income earners.

  • In 2014, 139.6 million taxpayers reported earning $9.71 trillion in adjusted gross income and paid $1.37 trillion in individual income taxes.
  • The share of income earned by the top 1 percent of taxpayers rose to 20.6 percent in 2014. Their share of federal individual income taxes also rose, to 39.5 percent.
  • In 2014, the top 50 percent of all taxpayers paid 97.3 percent of all individual income taxes while the bottom 50 percent paid the remaining 2.7 percent.
  • The top 1 percent paid a greater share of individual income taxes (39.5 percent) than the bottom 90 percent combined (29.1 percent).
  • The top 1 percent of taxpayers paid a 27.1 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.5 percent).

Reported Income and Taxes Paid Both Increased Significantly in 2014

Taxpayers reported $9.71 trillion in adjusted gross income (AGI) on 139.5 million tax returns in 2014. Total AGI grew by $675 billion from the previous year’s levels. There were 1.2 million more returns filed in 2014 than in 2013, meaning that average AGI rose by $4,252 per return, or 6.5 percent.

Meanwhile, taxpayers paid $1.37 trillion in individual income taxes in 2014, an 11.5 percent increase from taxes paid in the previous year. The average individual income tax rate for all taxpayers rose from 13.64 percent to 14.16 percent. Moreover, the average tax rate increased for all income groups, except for the top 0.1 percent of taxpayers, whose average rate decreased from 27.91 percent to 27.67 percent.

The most likely explanation behind the higher tax rates in 2014 is a phenomenon known as “real bracket creep.” [2] As incomes rise, households are pushed into higher tax brackets, and are subject to higher overall tax rates on their income. On the other hand, the likely reason why the top 0.1 percent of households saw a slightly lower tax rate in 2014 is because a higher portion of their income consisted of long-term capital gains, which are subject to lower tax rates.[3]

The share of income earned by the top 1 percent rose to 20.58 percent of total AGI, up from 19.04 percent in 2013. The share of the income tax burden for the top 1 percent also rose, from 37.80 percent in 2013 to 39.48 percent in 2014.

Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% All Taxpayers
Table 1. Summary of Federal Income Tax Data, 2014
Number of Returns 1,395,620 6,978,102 13,956,203 34,890,509 69,781,017 69,781,017 139,562,034
Adjusted Gross Income ($ millions) $1,997,819 $3,490,867 $4,583,416 $6,690,287 $8,614,544 $1,094,119 $9,708,663
Share of Total Adjusted Gross Income 20.58% 35.96% 47.21% 68.91% 88.73% 11.27% 100.00%
Income Taxes Paid ($ millions) $542,640 $824,153 $974,124 $1,192,679 $1,336,637 $37,740 $1,374,379
Share of Total Income Taxes Paid 39.48% 59.97% 70.88% 86.78% 97.25% 2.75% 100.00%
Income Split Point $465,626 $188,996 $133,445 $77,714 $38,173
Average Tax Rate 27.16% 23.61% 21.25% 17.83% 15.52% 3.45% 14.16%
 Note: Does not include dependent filers

High-Income Americans Paid the Majority of Federal Taxes

In 2014, the bottom 50 percent of taxpayers (those with AGIs below $38,173) earned 11.27 percent of total AGI. This group of taxpayers paid approximately $38 billion in taxes, or 2.75 percent of all income taxes in 2014.

In contrast, the top 1 percent of all taxpayers (taxpayers with AGIs of $465,626 and above) earned 20.58 percent of all AGI in 2014, but paid 39.48 percent of all federal income taxes.

In 2014, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $543 billion, or 39.48 percent of all income taxes, while the bottom 90 percent paid $400 billion, or 29.12 percent of all income taxes.

Figure 1.

High-Income Taxpayers Pay the Highest Average Tax Rates

The 2014 IRS data shows that taxpayers with higher incomes pay much higher average individual income tax rates than lower-income taxpayers.[4]

The bottom 50 percent of taxpayers (taxpayers with AGIs below $38,173) faced an average income tax rate of 3.45 percent. As household income increases, the IRS data shows that average income tax rates rise. For example, taxpayers with AGIs between the 10th and 5th percentile ($133,445 and $188,996) pay an average rate of 13.7 percent – almost four times the rate paid by those in the bottom 50 percent.

The top 1 percent of taxpayers (AGI of $465,626 and above) paid the highest effective income tax rate, at 27.2 percent, 7.9 times the rate faced by the bottom 50 percent of taxpayers.

Figure 2.

Taxpayers at the very top of the income distribution, the top 0.1 percent (with AGIs over $2.14 million), paid an even higher average tax rate, of 27.7 percent.

Appendix

Year Total Top 0.1% Top 1% Top
5%
Between
5% & 10%
Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 2. Number of Federal Individual Income Tax Returns Filed 1980–2014 (Thousands)
Source: Internal Revenue Service.
1980 93,239 932 4,662 4,662 9,324 13,986 23,310 23,310 46,619 46,619
1981 94,587 946 4,729 4,729 9,459 14,188 23,647 23,647 47,293 47,293
1982 94,426 944 4,721 4,721 9,443 14,164 23,607 23,607 47,213 47,213
1983 95,331 953 4,767 4,767 9,533 14,300 23,833 23,833 47,665 47,665
1984 98,436 984 4,922 4,922 9,844 14,765 24,609 24,609 49,218 49,219
1985 100,625 1,006 5,031 5,031 10,063 15,094 25,156 25,156 50,313 50,313
1986 102,088 1,021 5,104 5,104 10,209 15,313 25,522 25,522 51,044 51,044
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 106,155 1,062 5,308 5,308 10,615 15,923 26,539 26,539 53,077 53,077
1988 108,873 1,089 5,444 5,444 10,887 16,331 27,218 27,218 54,436 54,436
1989 111,313 1,113 5,566 5,566 11,131 16,697 27,828 27,828 55,656 55,656
1990 112,812 1,128 5,641 5,641 11,281 16,922 28,203 28,203 56,406 56,406
1991 113,804 1,138 5,690 5,690 11,380 17,071 28,451 28,451 56,902 56,902
1992 112,653 1,127 5,633 5,633 11,265 16,898 28,163 28,163 56,326 56,326
1993 113,681 1,137 5,684 5,684 11,368 17,052 28,420 28,420 56,841 56,841
1994 114,990 1,150 5,749 5,749 11,499 17,248 28,747 28,747 57,495 57,495
1995 117,274 1,173 5,864 5,864 11,727 17,591 29,319 29,319 58,637 58,637
1996 119,442 1,194 5,972 5,972 11,944 17,916 29,860 29,860 59,721 59,721
1997 121,503 1,215 6,075 6,075 12,150 18,225 30,376 30,376 60,752 60,752
1998 123,776 1,238 6,189 6,189 12,378 18,566 30,944 30,944 61,888 61,888
1999 126,009 1,260 6,300 6,300 12,601 18,901 31,502 31,502 63,004 63,004
2000 128,227 1,282 6,411 6,411 12,823 19,234 32,057 32,057 64,114 64,114
The IRS changed methodology, so data above and below this line not strictly comparable
2001 119,371 119 1,194 5,969 5,969 11,937 17,906 29,843 29,843 59,685 59,685
2002 119,851 120 1,199 5,993 5,993 11,985 17,978 29,963 29,963 59,925 59,925
2003 120,759 121 1,208 6,038 6,038 12,076 18,114 30,190 30,190 60,379 60,379
2004 122,510 123 1,225 6,125 6,125 12,251 18,376 30,627 30,627 61,255 61,255
2005 124,673 125 1,247 6,234 6,234 12,467 18,701 31,168 31,168 62,337 62,337
2006 128,441 128 1,284 6,422 6,422 12,844 19,266 32,110 32,110 64,221 64,221
2007 132,655 133 1,327 6,633 6,633 13,265 19,898 33,164 33,164 66,327 66,327
2008 132,892 133 1,329 6,645 6,645 13,289 19,934 33,223 33,223 66,446 66,446
2009 132,620 133 1,326 6,631 6,631 13,262 19,893 33,155 33,155 66,310 66,310
2010 135,033 135 1,350 6,752 6,752 13,503 20,255 33,758 33,758 67,517 67,517
2011 136,586 137 1,366 6,829 6,829 13,659 20,488 34,146 34,146 68,293 68,293
2012 136,080 136 1,361 6,804 6,804 13,608 20,412 34,020 34,020 68,040 68,040
2013 138,313 138 1,383 6,916 6,916 13,831 20,747 34,578 34,578 69,157 69,157
2014 139,562 140 1,396 6,978 6,978 13,956 20,934 34,891 34,891 69,781 69,781
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 3. Adjusted Gross Income of Taxpayers in Various Income Brackets, 1980–2014 ($Billions)
Source: Internal Revenue Service.
1980 $1,627 $138 $342 $181 $523 $400 $922 $417 $1,339 $288
1981 $1,791 $149 $372 $201 $573 $442 $1,015 $458 $1,473 $318
1982 $1,876 $167 $398 $207 $605 $460 $1,065 $478 $1,544 $332
1983 $1,970 $183 $428 $217 $646 $481 $1,127 $498 $1,625 $344
1984 $2,173 $210 $482 $240 $723 $528 $1,251 $543 $1,794 $379
1985 $2,344 $235 $531 $260 $791 $567 $1,359 $580 $1,939 $405
1986 $2,524 $285 $608 $278 $887 $604 $1,490 $613 $2,104 $421
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 $2,814 $347 $722 $316 $1,038 $671 $1,709 $664 $2,374 $440
1988 $3,124 $474 $891 $342 $1,233 $718 $1,951 $707 $2,658 $466
1989 $3,299 $468 $918 $368 $1,287 $768 $2,054 $751 $2,805 $494
1990 $3,451 $483 $953 $385 $1,338 $806 $2,144 $788 $2,933 $519
1991 $3,516 $457 $943 $400 $1,343 $832 $2,175 $809 $2,984 $532
1992 $3,681 $524 $1,031 $413 $1,444 $856 $2,299 $832 $3,131 $549
1993 $3,776 $521 $1,048 $426 $1,474 $883 $2,358 $854 $3,212 $563
1994 $3,961 $547 $1,103 $449 $1,552 $929 $2,481 $890 $3,371 $590
1995 $4,245 $620 $1,223 $482 $1,705 $985 $2,690 $938 $3,628 $617
1996 $4,591 $737 $1,394 $515 $1,909 $1,043 $2,953 $992 $3,944 $646
1997 $5,023 $873 $1,597 $554 $2,151 $1,116 $3,268 $1,060 $4,328 $695
1998 $5,469 $1,010 $1,797 $597 $2,394 $1,196 $3,590 $1,132 $4,721 $748
1999 $5,909 $1,153 $2,012 $641 $2,653 $1,274 $3,927 $1,199 $5,126 $783
2000 $6,424 $1,337 $2,267 $688 $2,955 $1,358 $4,314 $1,276 $5,590 $834
The IRS changed methodology, so data above and below this line not strictly comparable
2001 $6,116 $492 $1,065 $1,934 $666 $2,600 $1,334 $3,933 $1,302 $5,235 $881
2002 $5,982 $421 $960 $1,812 $660 $2,472 $1,339 $3,812 $1,303 $5,115 $867
2003 $6,157 $466 $1,030 $1,908 $679 $2,587 $1,375 $3,962 $1,325 $5,287 $870
2004 $6,735 $615 $1,279 $2,243 $725 $2,968 $1,455 $4,423 $1,403 $5,826 $908
2005 $7,366 $784 $1,561 $2,623 $778 $3,401 $1,540 $4,940 $1,473 $6,413 $953
2006 $7,970 $895 $1,761 $2,918 $841 $3,760 $1,652 $5,412 $1,568 $6,980 $990
2007 $8,622 $1,030 $1,971 $3,223 $905 $4,128 $1,770 $5,898 $1,673 $7,571 $1,051
2008 $8,206 $826 $1,657 $2,868 $905 $3,773 $1,782 $5,555 $1,673 $7,228 $978
2009 $7,579 $602 $1,305 $2,439 $878 $3,317 $1,740 $5,058 $1,620 $6,678 $900
2010 $8,040 $743 $1,517 $2,716 $915 $3,631 $1,800 $5,431 $1,665 $7,096 $944
2011 $8,317 $737 $1,556 $2,819 $956 $3,775 $1,866 $5,641 $1,716 $7,357 $961
2012 $9,042 $1,017 $1,977 $3,331 $997 $4,328 $1,934 $6,262 $1,776 $8,038 $1,004
2013 $9,034 $816 $1,720 $3,109 $1,034 $4,143 $2,008 $6,152 $1,844 $7,996 $1,038
2014 $9,709 $986 $1,998 $3,491 $1,093 $4,583 $2,107 $6,690 $1,924 $8,615 $1,094
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 4. Total Income Tax after Credits, 1980–2014 ($Billions)
Source: Internal Revenue Service.
1980 $249 $47 $92 $31 $123 $59 $182 $50 $232 $18
1981 $282 $50 $99 $36 $135 $69 $204 $57 $261 $21
1982 $276 $53 $100 $34 $134 $66 $200 $56 $256 $20
1983 $272 $55 $101 $34 $135 $64 $199 $54 $252 $19
1984 $297 $63 $113 $37 $150 $68 $219 $57 $276 $22
1985 $322 $70 $125 $41 $166 $73 $238 $60 $299 $23
1986 $367 $94 $156 $44 $201 $78 $279 $64 $343 $24
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 $369 $92 $160 $46 $205 $79 $284 $63 $347 $22
1988 $413 $114 $188 $48 $236 $85 $321 $68 $389 $24
1989 $433 $109 $190 $51 $241 $93 $334 $73 $408 $25
1990 $447 $112 $195 $52 $248 $97 $344 $77 $421 $26
1991 $448 $111 $194 $56 $250 $96 $347 $77 $424 $25
1992 $476 $131 $218 $58 $276 $97 $374 $78 $452 $24
1993 $503 $146 $238 $60 $298 $101 $399 $80 $479 $24
1994 $535 $154 $254 $64 $318 $108 $425 $84 $509 $25
1995 $588 $178 $288 $70 $357 $115 $473 $88 $561 $27
1996 $658 $213 $335 $76 $411 $124 $535 $95 $630 $28
1997 $727 $241 $377 $82 $460 $134 $594 $102 $696 $31
1998 $788 $274 $425 $88 $513 $139 $652 $103 $755 $33
1999 $877 $317 $486 $97 $583 $150 $733 $109 $842 $35
2000 $981 $367 $554 $106 $660 $164 $824 $118 $942 $38
The IRS changed methodology, so data above and below this line not strictly comparable
2001 $885 $139 $294 $462 $101 $564 $158 $722 $120 $842 $43
2002 $794 $120 $263 $420 $93 $513 $143 $657 $104 $761 $33
2003 $746 $115 $251 $399 $85 $484 $133 $617 $98 $715 $30
2004 $829 $142 $301 $467 $91 $558 $137 $695 $102 $797 $32
2005 $932 $176 $361 $549 $98 $647 $145 $793 $106 $898 $33
2006 $1,020 $196 $402 $607 $108 $715 $157 $872 $113 $986 $35
2007 $1,112 $221 $443 $666 $117 $783 $170 $953 $122 $1,075 $37
2008 $1,029 $187 $386 $597 $115 $712 $168 $880 $117 $997 $32
2009 $863 $146 $314 $502 $101 $604 $146 $749 $93 $842 $21
2010 $949 $170 $355 $561 $110 $670 $156 $827 $100 $927 $22
2011 $1,043 $168 $366 $589 $123 $712 $181 $893 $120 $1,012 $30
2012 $1,185 $220 $451 $699 $133 $831 $193 $1,024 $128 $1,152 $33
2013 $1,232 $228 $466 $721 $139 $860 $203 $1,063 $135 $1,198 $34
2014 $1,374 $273 $543 $824 $150 $974 $219 $1,193 $144 $1,337 $38
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 5. Adjusted Gross Income Shares, 1980–2014 (percent of total AGI earned by each group)
Source: Internal Revenue Service.
1980 100% 8.46% 21.01% 11.12% 32.13% 24.57% 56.70% 25.62% 82.32% 17.68%
1981 100% 8.30% 20.78% 11.20% 31.98% 24.69% 56.67% 25.59% 82.25% 17.75%
1982 100% 8.91% 21.23% 11.03% 32.26% 24.53% 56.79% 25.50% 82.29% 17.71%
1983 100% 9.29% 21.74% 11.04% 32.78% 24.44% 57.22% 25.30% 82.52% 17.48%
1984 100% 9.66% 22.19% 11.06% 33.25% 24.31% 57.56% 25.00% 82.56% 17.44%
1985 100% 10.03% 22.67% 11.10% 33.77% 24.21% 57.97% 24.77% 82.74% 17.26%
1986 100% 11.30% 24.11% 11.02% 35.12% 23.92% 59.04% 24.30% 83.34% 16.66%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 100% 12.32% 25.67% 11.23% 36.90% 23.85% 60.75% 23.62% 84.37% 15.63%
1988 100% 15.16% 28.51% 10.94% 39.45% 22.99% 62.44% 22.63% 85.07% 14.93%
1989 100% 14.19% 27.84% 11.16% 39.00% 23.28% 62.28% 22.76% 85.04% 14.96%
1990 100% 14.00% 27.62% 11.15% 38.77% 23.36% 62.13% 22.84% 84.97% 15.03%
1991 100% 12.99% 26.83% 11.37% 38.20% 23.65% 61.85% 23.01% 84.87% 15.13%
1992 100% 14.23% 28.01% 11.21% 39.23% 23.25% 62.47% 22.61% 85.08% 14.92%
1993 100% 13.79% 27.76% 11.29% 39.05% 23.40% 62.45% 22.63% 85.08% 14.92%
1994 100% 13.80% 27.85% 11.34% 39.19% 23.45% 62.64% 22.48% 85.11% 14.89%
1995 100% 14.60% 28.81% 11.35% 40.16% 23.21% 63.37% 22.09% 85.46% 14.54%
1996 100% 16.04% 30.36% 11.23% 41.59% 22.73% 64.32% 21.60% 85.92% 14.08%
1997 100% 17.38% 31.79% 11.03% 42.83% 22.22% 65.05% 21.11% 86.16% 13.84%
1998 100% 18.47% 32.85% 10.92% 43.77% 21.87% 65.63% 20.69% 86.33% 13.67%
1999 100% 19.51% 34.04% 10.85% 44.89% 21.57% 66.46% 20.29% 86.75% 13.25%
2000 100% 20.81% 35.30% 10.71% 46.01% 21.15% 67.15% 19.86% 87.01% 12.99%
The IRS changed methodology, so data above and below this line not strictly comparable
2001 100% 8.05% 17.41% 31.61% 10.89% 42.50% 21.80% 64.31% 21.29% 85.60% 14.40%
2002 100% 7.04% 16.05% 30.29% 11.04% 41.33% 22.39% 63.71% 21.79% 85.50% 14.50%
2003 100% 7.56% 16.73% 30.99% 11.03% 42.01% 22.33% 64.34% 21.52% 85.87% 14.13%
2004 100% 9.14% 18.99% 33.31% 10.77% 44.07% 21.60% 65.68% 20.83% 86.51% 13.49%
2005 100% 10.64% 21.19% 35.61% 10.56% 46.17% 20.90% 67.07% 19.99% 87.06% 12.94%
2006 100% 11.23% 22.10% 36.62% 10.56% 47.17% 20.73% 67.91% 19.68% 87.58% 12.42%
2007 100% 11.95% 22.86% 37.39% 10.49% 47.88% 20.53% 68.41% 19.40% 87.81% 12.19%
2008 100% 10.06% 20.19% 34.95% 11.03% 45.98% 21.71% 67.69% 20.39% 88.08% 11.92%
2009 100% 7.94% 17.21% 32.18% 11.59% 43.77% 22.96% 66.74% 21.38% 88.12% 11.88%
2010 100% 9.24% 18.87% 33.78% 11.38% 45.17% 22.38% 67.55% 20.71% 88.26% 11.74%
2011 100% 8.86% 18.70% 33.89% 11.50% 45.39% 22.43% 67.82% 20.63% 88.45% 11.55%
2012 100% 11.25% 21.86% 36.84% 11.03% 47.87% 21.39% 69.25% 19.64% 88.90% 11.10%
2013 100% 9.03% 19.04% 34.42% 11.45% 45.87% 22.23% 68.10% 20.41% 88.51% 11.49%
2014 100% 10.16% 20.58% 35.96% 11.25% 47.21% 21.70% 68.91% 19.82% 88.73% 11.27%
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 6. Total Income Tax Shares, 1980–2014 (percent of federal income tax paid by each group)
Source: Internal Revenue Service.
1980 100% 19.05% 36.84% 12.44% 49.28% 23.74% 73.02% 19.93% 92.95% 7.05%
1981 100% 17.58% 35.06% 12.90% 47.96% 24.33% 72.29% 20.26% 92.55% 7.45%
1982 100% 19.03% 36.13% 12.45% 48.59% 23.91% 72.50% 20.15% 92.65% 7.35%
1983 100% 20.32% 37.26% 12.44% 49.71% 23.39% 73.10% 19.73% 92.83% 7.17%
1984 100% 21.12% 37.98% 12.58% 50.56% 22.92% 73.49% 19.16% 92.65% 7.35%
1985 100% 21.81% 38.78% 12.67% 51.46% 22.60% 74.06% 18.77% 92.83% 7.17%
1986 100% 25.75% 42.57% 12.12% 54.69% 21.33% 76.02% 17.52% 93.54% 6.46%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 100% 24.81% 43.26% 12.35% 55.61% 21.31% 76.92% 17.02% 93.93% 6.07%
1988 100% 27.58% 45.62% 11.66% 57.28% 20.57% 77.84% 16.44% 94.28% 5.72%
1989 100% 25.24% 43.94% 11.85% 55.78% 21.44% 77.22% 16.94% 94.17% 5.83%
1990 100% 25.13% 43.64% 11.73% 55.36% 21.66% 77.02% 17.16% 94.19% 5.81%
1991 100% 24.82% 43.38% 12.45% 55.82% 21.46% 77.29% 17.23% 94.52% 5.48%
1992 100% 27.54% 45.88% 12.12% 58.01% 20.47% 78.48% 16.46% 94.94% 5.06%
1993 100% 29.01% 47.36% 11.88% 59.24% 20.03% 79.27% 15.92% 95.19% 4.81%
1994 100% 28.86% 47.52% 11.93% 59.45% 20.10% 79.55% 15.68% 95.23% 4.77%
1995 100% 30.26% 48.91% 11.84% 60.75% 19.62% 80.36% 15.03% 95.39% 4.61%
1996 100% 32.31% 50.97% 11.54% 62.51% 18.80% 81.32% 14.36% 95.68% 4.32%
1997 100% 33.17% 51.87% 11.33% 63.20% 18.47% 81.67% 14.05% 95.72% 4.28%
1998 100% 34.75% 53.84% 11.20% 65.04% 17.65% 82.69% 13.10% 95.79% 4.21%
1999 100% 36.18% 55.45% 11.00% 66.45% 17.09% 83.54% 12.46% 96.00% 4.00%
2000 100% 37.42% 56.47% 10.86% 67.33% 16.68% 84.01% 12.08% 96.09% 3.91%
The IRS changed methodology, so data above and below this line not strictly comparable
2001 100% 15.68% 33.22% 52.24% 11.44% 63.68% 17.88% 81.56% 13.54% 95.10% 4.90%
2002 100% 15.09% 33.09% 52.86% 11.77% 64.63% 18.04% 82.67% 13.12% 95.79% 4.21%
2003 100% 15.37% 33.69% 53.54% 11.35% 64.89% 17.87% 82.76% 13.17% 95.93% 4.07%
2004 100% 17.12% 36.28% 56.35% 10.96% 67.30% 16.52% 83.82% 12.31% 96.13% 3.87%
2005 100% 18.91% 38.78% 58.93% 10.52% 69.46% 15.61% 85.07% 11.35% 96.41% 3.59%
2006 100% 19.24% 39.36% 59.49% 10.59% 70.08% 15.41% 85.49% 11.10% 96.59% 3.41%
2007 100% 19.84% 39.81% 59.90% 10.51% 70.41% 15.30% 85.71% 10.93% 96.64% 3.36%
2008 100% 18.20% 37.51% 58.06% 11.14% 69.20% 16.37% 85.57% 11.33% 96.90% 3.10%
2009 100% 16.91% 36.34% 58.17% 11.72% 69.89% 16.85% 86.74% 10.80% 97.54% 2.46%
2010 100% 17.88% 37.38% 59.07% 11.55% 70.62% 16.49% 87.11% 10.53% 97.64% 2.36%
2011 100% 16.14% 35.06% 56.49% 11.77% 68.26% 17.36% 85.62% 11.50% 97.11% 2.89%
2012 100% 18.60% 38.09% 58.95% 11.22% 70.17% 16.25% 86.42% 10.80% 97.22% 2.78%
2013 100% 18.48% 37.80% 58.55% 11.25% 69.80% 16.47% 86.27% 10.94% 97.22% 2.78%
2014 100% 19.85% 39.48% 59.97% 10.91% 70.88% 15.90% 86.78% 10.47% 97.25% 2.75%
Year Total Top 1% Top 5% Top 10% Top 25% Top 50%
Table 7. Dollar Cut-Off, 1980–2014 (Minimum AGI for Tax Returns to Fall into Various Percentiles; Thresholds Not Adjusted for Inflation)
1980 $80,580 $43,792 $35,070 $23,606 $12,936
1981 $85,428 $47,845 $38,283 $25,655 $14,000
1982 $89,388 $49,284 $39,676 $27,027 $14,539
1983 $93,512 $51,553 $41,222 $27,827 $15,044
1984 $100,889 $55,423 $43,956 $29,360 $15,998
1985 $108,134 $58,883 $46,322 $30,928 $16,688
1986 $118,818 $62,377 $48,656 $32,242 $17,302
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 $139,289 $68,414 $52,921 $33,983 $17,768
1988 $157,136 $72,735 $55,437 $35,398 $18,367
1989 $163,869 $76,933 $58,263 $36,839 $18,993
1990 $167,421 $79,064 $60,287 $38,080 $19,767
1991 $170,139 $81,720 $61,944 $38,929 $20,097
1992 $181,904 $85,103 $64,457 $40,378 $20,803
1993 $185,715 $87,386 $66,077 $41,210 $21,179
1994 $195,726 $91,226 $68,753 $42,742 $21,802
1995 $209,406 $96,221 $72,094 $44,207 $22,344
1996 $227,546 $101,141 $74,986 $45,757 $23,174
1997 $250,736 $108,048 $79,212 $48,173 $24,393
1998 $269,496 $114,729 $83,220 $50,607 $25,491
1999 $293,415 $120,846 $87,682 $52,965 $26,415
2000 $313,469 $128,336 $92,144 $55,225 $27,682
The IRS changed methodology, so data above and below this line not strictly comparable
2001 $1,393,718 $306,635 $132,082 $96,151 $59,026 $31,418
2002 $1,245,352 $296,194 $130,750 $95,699 $59,066 $31,299
2003 $1,317,088 $305,939 $133,741 $97,470 $59,896 $31,447
2004 $1,617,918 $339,993 $140,758 $101,838 $62,794 $32,622
2005 $1,938,175 $379,261 $149,216 $106,864 $64,821 $33,484
2006 $2,124,625 $402,603 $157,390 $112,016 $67,291 $34,417
2007 $2,251,017 $426,439 $164,883 $116,396 $69,559 $35,541
2008 $1,867,652 $392,513 $163,512 $116,813 $69,813 $35,340
2009 $1,469,393 $351,968 $157,342 $114,181 $68,216 $34,156
2010 $1,634,386 $369,691 $161,579 $116,623 $69,126 $34,338
2011 $1,717,675 $388,905 $167,728 $120,136 $70,492 $34,823
2012 $2,161,175 $434,682 $175,817 $125,195 $73,354 $36,055
2013 $1,860,848 $428,713 $179,760 $127,695 $74,955 $36,841
2014 $2,136,762 $465,626 $188,996 $133,445 $77,714 $38,173
Source: Internal Revenue Service.
Year Total Top 0.1% Top 1% Top 5% Between 5% & 10% Top 10% Between 10% & 25% Top 25% Between 25% & 50% Top 50% Bottom 50%
Table 8. Average Tax Rate, 1980–2014 (Percent of AGI Paid in Income Taxes)
Source: Internal Revenue Service.
1980 15.31% 34.47% 26.85% 17.13% 23.49% 14.80% 19.72% 11.91% 17.29% 6.10%
1981 15.76% 33.37% 26.59% 18.16% 23.64% 15.53% 20.11% 12.48% 17.73% 6.62%
1982 14.72% 31.43% 25.05% 16.61% 22.17% 14.35% 18.79% 11.63% 16.57% 6.10%
1983 13.79% 30.18% 23.64% 15.54% 20.91% 13.20% 17.62% 10.76% 15.52% 5.66%
1984 13.68% 29.92% 23.42% 15.57% 20.81% 12.90% 17.47% 10.48% 15.35% 5.77%
1985 13.73% 29.86% 23.50% 15.69% 20.93% 12.83% 17.55% 10.41% 15.41% 5.70%
1986 14.54% 33.13% 25.68% 15.99% 22.64% 12.97% 18.72% 10.48% 16.32% 5.63%
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
1987 13.12% 26.41% 22.10% 14.43% 19.77% 11.71% 16.61% 9.45% 14.60% 5.09%
1988 13.21% 24.04% 21.14% 14.07% 19.18% 11.82% 16.47% 9.60% 14.64% 5.06%
1989 13.12% 23.34% 20.71% 13.93% 18.77% 12.08% 16.27% 9.77% 14.53% 5.11%
1990 12.95% 23.25% 20.46% 13.63% 18.50% 12.01% 16.06% 9.73% 14.36% 5.01%
1991 12.75% 24.37% 20.62% 13.96% 18.63% 11.57% 15.93% 9.55% 14.20% 4.62%
1992 12.94% 25.05% 21.19% 13.99% 19.13% 11.39% 16.25% 9.42% 14.44% 4.39%
1993 13.32% 28.01% 22.71% 14.01% 20.20% 11.40% 16.90% 9.37% 14.90% 4.29%
1994 13.50% 28.23% 23.04% 14.20% 20.48% 11.57% 17.15% 9.42% 15.11% 4.32%
1995 13.86% 28.73% 23.53% 14.46% 20.97% 11.71% 17.58% 9.43% 15.47% 4.39%
1996 14.34% 28.87% 24.07% 14.74% 21.55% 11.86% 18.12% 9.53% 15.96% 4.40%
1997 14.48% 27.64% 23.62% 14.87% 21.36% 12.04% 18.18% 9.63% 16.09% 4.48%
1998 14.42% 27.12% 23.63% 14.79% 21.42% 11.63% 18.16% 9.12% 16.00% 4.44%
1999 14.85% 27.53% 24.18% 15.06% 21.98% 11.76% 18.66% 9.12% 16.43% 4.48%
2000 15.26% 27.45% 24.42% 15.48% 22.34% 12.04% 19.09% 9.28% 16.86% 4.60%
The IRS changed methodology, so data above and below this line not strictly comparable
2001 14.47% 28.17% 27.60% 23.91% 15.20% 21.68% 11.87% 18.35% 9.20% 16.08% 4.92%
2002 13.28% 28.48% 27.37% 23.17% 14.15% 20.76% 10.70% 17.23% 8.00% 14.87% 3.86%
2003 12.11% 24.60% 24.38% 20.92% 12.46% 18.70% 9.69% 15.57% 7.41% 13.53% 3.49%
2004 12.31% 23.06% 23.52% 20.83% 12.53% 18.80% 9.41% 15.71% 7.27% 13.68% 3.53%
2005 12.65% 22.48% 23.15% 20.93% 12.61% 19.03% 9.45% 16.04% 7.18% 14.01% 3.51%
2006 12.80% 21.94% 22.80% 20.80% 12.84% 19.02% 9.52% 16.12% 7.22% 14.12% 3.51%
2007 12.90% 21.42% 22.46% 20.66% 12.92% 18.96% 9.61% 16.16% 7.27% 14.19% 3.56%
2008 12.54% 22.67% 23.29% 20.83% 12.66% 18.87% 9.45% 15.85% 6.97% 13.79% 3.26%
2009 11.39% 24.28% 24.05% 20.59% 11.53% 18.19% 8.36% 14.81% 5.76% 12.61% 2.35%
2010 11.81% 22.84% 23.39% 20.64% 11.98% 18.46% 8.70% 15.22% 6.01% 13.06% 2.37%
2011 12.54% 22.82% 23.50% 20.89% 12.83% 18.85% 9.70% 15.82% 6.98% 13.76% 3.13%
2012 13.11% 21.67% 22.83% 20.97% 13.33% 19.21% 9.96% 16.35% 7.21% 14.33% 3.28%
2013 13.64% 27.91% 27.08% 23.20% 13.40% 20.75% 10.11% 17.28% 7.31% 14.98% 3.30%
2014 14.16% 27.67% 27.16% 23.61% 13.73% 21.25% 10.37% 17.83% 7.48% 15.52% 3.45%
  1. For data prior to 2001, all tax returns that have a positive AGI are included, even those that do not have a positive income tax liability. For data from 2001 forward, returns with negative AGI are also included, but dependent returns are excluded.
  2. Income tax after credits (the measure of “income taxes paid” above) does not account for the refundable portion of EITC. If it were included, the tax share of the top income groups would be higher. The refundable portion is classified as a spending program by the Office of Management and Budget and therefore is not included by the IRS in these figures.
  3. The only tax analyzed here is the federal individual income tax, which is responsible for more than 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than federal payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government), and are more progressive than most state and local taxes.
  4. AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, and others.
  5. The unit of analysis here is that of the tax return. In the figures prior to 2001, some dependent returns are included. Under other units of analysis (like the Treasury Department’s Family Economic Unit), these returns would likely be paired with parents’ returns.
  6. These figures represent the legal incidence of the income tax. Most distributional tables (such as those from CBO, Tax Policy Center, Citizens for Tax Justice, the Treasury Department, and JCT) assume that the entire economic incidence of personal income taxes falls on the income earner.

[1] Individual Income Tax Rates and Tax Shares, Internal Revenue Service Statistics of Income, http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Rates-and-Tax-Shares.

[2] See Congressional Budget Office, The Budget and Economic Outlook: 2017 to 2027, Jan. 2017, https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/reports/52370-outlook.pdf.

[3] There is strong reason to believe that capital gains realizations were unusually depressed in 2013, due to the increase in the top capital gains tax rate from 15 percent to 23.8 percent. In 2013, capital gains accounted for 26.6 percent of the income of taxpayers with over $1 million in AGI received, compared to 31.7 percent in 2014 (these calculations apply for net capital gains reported on Schedule D). Table 1.4, Publication 1304, “Individual Income Tax Returns 2014,” Internal Revenue Service, https://www.irs.gov/uac/soi-tax-stats-individual-income-tax-returns-publication-1304-complete-report.

[4] Here, “average income tax rate” is defined as income taxes paid divided by adjusted gross income.

https://taxfoundation.org/summary-latest-federal-income-tax-data-2016-update/

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The Great Stagnation by Tyler Cowen

National Income and Product Accounts
Gross Domestic Product: Fourth Quarter and Annual 2016 (Third Estimate)
Corporate Profits: Fourth Quarter and Annual 2016
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of
2016 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the
third quarter of 2016, real GDP increased 3.5 percent.

The GDP estimate released today is based on more complete source data than were available for the
"second" estimate issued last month.  In the second estimate, the increase in real GDP was 1.9 percent.
With this third estimate for the fourth quarter, the general picture of economic growth remains largely
the same; personal consumption expenditures (PCE) increased more than previously estimated (see
"Updates to GDP" on page 2).

Real GDP: Percent Change from Preceding Quarter
Real gross domestic income (GDI) increased 1.0 percent in the fourth quarter, compared with an
increase of 5.0 percent in the third. The average of real GDP and real GDI, a supplemental measure of
U.S. economic activity that equally weights GDP and GDI, increased 1.5 percent in the fourth quarter,
compared with an increase of 4.3 percent in the third quarter (table 1).

The increase in real GDP in the fourth quarter reflected positive contributions from PCE, private
inventory investment, residential fixed investment, nonresidential fixed investment, and state and local
government spending that were partly offset by negative contributions from exports and federal
government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The deceleration in real GDP in the fourth quarter reflected downturns in exports and in federal
government spending, an acceleration in imports, and a deceleration in nonresidential fixed investment
that were partly offset by accelerations in private inventory investment and in PCE, and upturns in
residential fixed investment and in state and local government spending.

Current-dollar GDP increased 4.2 percent, or $194.1 billion, in the fourth quarter to a level of $18,869.4
billion. In the third quarter, current-dollar GDP increased 5.0 percent, or $225.2 billion (table 1 and
table 3).

The price index for gross domestic purchases increased 2.0 percent in the fourth quarter, compared
with an increase of 1.5 percent in the third quarter (table 4). The PCE price index increased 2.0 percent,
compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index
increased 1.3 percent, compared with an increase of 1.7 percent (appendix table A).


Updates to GDP

The upward revision to the percent change in real GDP primarily reflected upward revisions to PCE and
to private inventory investment that were partly offset by downward revisions to nonresidential fixed
investment and to exports. Imports, which are a subtraction in the calculation of GDP, were revised
upward. For more information, see the Technical Note. For information on updates to GDP, see the
"Additional Information" section that follows.

                                       Advance Estimate          Second Estimate            Third Estimate

                                                     (Percent change from preceding quarter)
Real GDP                                     1.9                       1.9                       2.1
Current-dollar GDP                           4.0                       3.9                       4.2
Real GDI                                     ---                       ---                       1.0
Average of Real GDP and Real GDI             ---                       ---                       1.5
Gross domestic purchases price index         2.0                       1.9                       2.0
PCE price index                              2.2                       1.9                       2.0


2016 GDP

Real GDP increased 1.6 percent in 2016 (that is, from the 2015 annual level to the 2016 annual level),
compared with an increase of 2.6 percent in 2015 (table 1).

The increase in real GDP in 2016 reflected positive contributions from PCE, residential fixed investment,
state and local government spending, exports, and federal government spending that were partly offset
by negative contributions from private inventory investment and nonresidential fixed investment.
Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The deceleration in real GDP from 2015 to 2016 reflected downturns in private inventory investment
and in nonresidential fixed investment and decelerations in PCE, in residential fixed investment, and in
state and local government spending that were partly offset by a deceleration in imports and
accelerations in federal government spending and in exports.

Current-dollar GDP increased 3.0 percent, or $532.5 billion, in 2016 to a level of $18,569.1 billion,
compared with an increase of 3.7 percent, or $643.5 billion, in 2015 (table 1 and table 3).

Real GDI increased 1.6 percent in 2016, compared with an increase of 2.5 percent in 2015 (table 1).

The price index for gross domestic purchases increased 1.0 percent in 2016, compared with an increase
of 0.4 percent in 2015 (table 4).

During 2016 (that is, measured from the fourth quarter of 2015 to the fourth quarter of 2016), real GDP
increased 2.0 percent, compared with an increase of 1.9 percent during 2015.  The price index for gross
domestic purchases increased 1.5 percent during 2016, compared with an increase of 0.4 percent during
2015.  Real GDI increased 1.9 percent during 2016, compared with an increase of 1.5 percent during
2015 (table 7).


Corporate Profits (table 12)

Profits from current production (corporate profits with inventory valuation adjustment and capital
consumption adjustment) increased $11.2 billion in the fourth quarter of 2016, compared with an
increase of $117.8 billion in the third quarter.

Profits of domestic financial corporations increased $26.5 billion in the fourth quarter, compared with
an increase of $50.1 billion in the third. Profits of domestic nonfinancial corporations decreased $60.4
billion, in contrast to an increase of $66.4 billion. The estimate of nonfinancial corporate profits in the
fourth quarter was reduced by a $4.95 billion ($19.8 billion at an annual rate) settlement between a U.S.
subsidiary of Volkswagen and the federal and state governments. For more information, see the FAQ,
"What are the effects of the Volkswagen buyback deal on GDP and the national accounts?”. The
rest-of-the-world component of profits increased $45.1 billion, compared with an increase of $1.3 billion.
This measure is calculated as the difference between receipts from the rest of the world and payments to
the rest of the world. In the fourth quarter, receipts increased $9.1 billion, and payments decreased
$36.0 billion.

In 2016, profits from current production decreased $2.3 billion, compared with a decrease of $64.0
billion in 2015. Profits of domestic financial corporations increased $20.5 billion, compared with an
increase of $8.5 billion. Profits of domestic nonfinancial corporations decreased $47.0 billion, compared
with a decrease of $47.3 billion. The rest-of-the-world component of profits increased $24.3 billion, in
contrast to a decrease of $25.2 billion.


                                      *          *          *
                           Next release:  April 28, 2017 at 8:30 A.M. EDT
                   Gross Domestic Product:  First Quarter 2017 (Advance Estimate)




                                       Additional Information

Resources

Additional Resources available at www.bea.gov:
•	Stay informed about BEA developments by reading the BEA blog, signing up for BEA’s email
        subscription service, or following BEA on Twitter @BEA_News.
•	Historical time series for these estimates can be accessed in BEA’s Interactive Data Application.
•	Access BEA data by registering for BEA’s Data Application Programming Interface (API).
•	For more on BEA’s statistics, see our monthly online journal, the Survey of Current Business.
•	BEA's news release scheduleNIPA Handbook:  Concepts and Methods of the U.S. National Income and Product Accounts

Definitions

Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy
less the value of the goods and services used up in production. GDP is also equal to the sum of personal
consumption expenditures, gross private domestic investment, net exports of goods and services, and
government consumption expenditures and gross investment.

Gross domestic income (GDI) is the sum of incomes earned and costs incurred in the production of GDP.
In national economic accounting, GDP and GDI are conceptually equal. In practice, GDP and GDI differ
because they are constructed using largely independent source data. Real GDI is calculated by deflating
gross domestic income using the GDP price index as the deflator, and is therefore conceptually
equivalent to real GDP.

Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is,
at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.”
Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes.
The gross domestic purchases price index measures the prices of final goods and services purchased by
U.S. residents.

The personal consumption expenditure price index measures the prices paid for the goods and services
purchased by, or on the behalf of, “persons.”

Profits from current production, referred to as corporate profits with inventory valuation adjustment
(IVA) and capital consumption adjustment (CCAdj) in the NIPAs, is a measure of the net income of
corporations before deducting income taxes that is consistent with the value of goods and services
measured in GDP. The IVA and CCAdj are adjustments that convert inventory withdrawals and
depreciation of fixed assets reported on a tax-return, historical-cost basis to the current-cost economic
measures used in the national income and product accounts.

For more definitions, see the Glossary: National Income and Product Accounts.


Statistical conventions

Annual rates. Quarterly values are expressed at seasonally-adjusted annual rates (SAAR), unless
otherwise specified. Dollar changes are calculated as the difference between these SAAR values. For
detail, see the FAQ “Why does BEA publish estimates at annual rates?”

Percent changes in quarterly series are calculated from unrounded data and are displayed at annual
rates, unless otherwise specified. For details, see the FAQ “How is average annual growth calculated?”

Quantities and prices. Quantities, or “real” volume measures, and prices are expressed as index
numbers with a specified reference year equal to 100 (currently 2009). Quantity and price indexes are
calculated using a Fisher-chained weighted formula that incorporates weights from two adjacent
periods (quarters for quarterly data and annuals for annual data). “Real” dollar series are calculated by
multiplying the published quantity index by the current dollar value in the reference year (2009) and
then dividing by 100. Percent changes calculated from real quantity indexes and chained-dollar levels
are conceptually the same; any differences are due to rounding.

Chained-dollar values are not additive because the relative weights for a given period differ from those
of the reference year. In tables that display chained-dollar values, a “residual” line shows the difference
between the sum of detailed chained-dollar series and its corresponding aggregate.


Updates to GDP

BEA releases three vintages of the current quarterly estimate for GDP:  "Advance" estimates are
released near the end of the first month following the end of the quarter and are based on source data
that are incomplete or subject to further revision by the source agency; “second” and “third” estimates
are released near the end of the second and third months, respectively, and are based on more detailed
and more comprehensive data as they become available.

Annual and comprehensive updates are typically released in late July. Annual updates generally cover at
least the 3 most recent calendar years (and their associated quarters) and incorporate newly available
major annual source data as well as some changes in methods and definitions to improve the accounts.
Comprehensive (or benchmark) updates are carried out at about 5-year intervals and incorporate major
periodic source data, as well as major conceptual improvements.
The table below shows the average revisions to the quarterly percent changes in real GDP between
different estimate vintages, without regard to sign.

Vintage                               Average Revision Without Regard to Sign
                                         (percentage points, annual rates)
Advance to second                                     0.5
Advance to third                                      0.6
Second to third                                       0.2
Advance to latest                                     1.1
Note - Based on estimates from 1993 through 2015. For more information on GDP updates, see Revision
Information on the BEA Web site.

The larger average revision from the advance to the latest estimate reflects the fact that periodic
comprehensive updates include major statistical and methodological improvements.

Unlike GDP, an advance current quarterly estimate of GDI is not released because data on domestic
profits and on net interest of domestic industries are not available. For fourth quarter estimates, these
data are not available until the third estimate.

https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm 

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Pronk Pops Show 808: December 6, 2016

Pronk Pops Show 807: December 5, 2016

Pronk Pops Show 806: December 2, 2016

Pronk Pops Show 805: December 1, 2016

 

Story 1: Conservative and Libertarian Talk Radio Could Turn On Trump For Attacking Freedom Caucus and Failure To Completely Repeal Obamacare By Law (Statute) Not Discretion of Secretary of Health and Human Services Dr. Thomas Price — Establishment Republican House Speaker Ryan’s Bad Faith, Bad Process, Bad Bill — Socialized Medicine Obamacare Lite  vs. Good Faith, Good Process, Good Bill — Free Enterprise Market Capitalism Competitive Health Insurance Premiums and Deductibles Decreases! — Close The Deal Mr. President — Videos —

 

“Effective as of Dec. 31, 2017, the Patient Protection and Affordable Care Act is repealed, and the provisions of law amended or repealed by such Act are restored or revived as if such Act had not been enacted,”

 Image result for trump tweet freedom caususImage result for Trump on freedom caucus ring leaders

Image result for cartoons obama spyied on trump

Image result for obama spied on trump

Limbaugh on Trump’s Shots at Freedom Caucus: These Guys Are Not the Enemy — Dems Are the Enemy

Laura Ingraham: ‘Really Unhelpful’ to Trump’s Agenda for Him to Be Slamming House Freedom Caucus

Hannity 3⁄31⁄17 ¦ HANNITY Fox News March 31, 2017

Laura Ingraham: Trump’s Attacks on Freedom Caucus ‘Ridiculous’

Hannity: Freedom Caucus not to blame for health care failure

Newt Gingrich outlines why GOP health care bill failed

Freedom Caucus Jim Jordan: Ryan’s Legislation Doesn’t Lower Premiums For Americans!

Rep. Mo Brooks Files A Bill To Repeal Obamacare

Published on Mar 27, 2017

On the same day that the House of Representatives canceled its vote on Ryancare, Alabama Rep. Mo Brooks filed a simple one-line bill to repeal Obama’s signature health care law.
The Huntsville Republican titled the bill ‘Obamacare Repeal Act.” It is short and to the point, AI.com reported.
“Effective as of Dec. 31, 2017, the Patient Protection and Affordable Care Act is repealed, and the provisions of law amended or repealed by such Act are restored or revived as if such Act had not been enacted,” the bill reads.
Brooks, a member of the House Freedom Caucus, told constituents last week that he was a “no” vote on the Obamacare repeal/replace bill offered by Republican Speaker of the House Paul Ryan.
Also last week, in an interview with SiriusXM host Alex Marlow, Brooks called the Speaker’s bill “a horrible replacement bill.”

Rep. Brooks: We need a bill that repeals Obamacare

Rep. Mo Brooks: ‘Deceptive’ to call GOP’s plan a repeal of Obamacare

Donald Trump THREATENS The Freedom Caucus, said Rush Limbaugh

SEAN SPICER ON TRUMP’S ANTI FREEDOM CAUCUS TWEET

Rand Paul: 75 Percent Chance We Repeal Obamacare

Ep. 239: Trump Needs To Lead Not Oppose The Freedom Caucus

Employers Will Cut Wages and Workers to Pay for Obamacare Premiums

News Wrap: Trump takes aim at the Freedom Caucus

SMOKING GUN Devastating New Email Released, Look What Obama’s Caught Ordering His Spy Ring To Do

The House Freedom Caucus: What You Need To Know | TIME

Wh On Changes Of President Trump Working With House Freedom Caucus Again: It Depends – Cavuto

Mark Levin Interviews Freedom Caucus Chair Mark Meadows

Is The House Freedom Caucus Unwilling to take “Yes” For an Answer?

Freedom Caucus’s reasonable demand on Obamacare repeal

Poll: Just 17 percent of voters back ObamaCare repeal plan

 

Poll: Just 17 percent of voters back ObamaCare repeal plan

A majority of American voters oppose the Republicans’ plan to repeal and replace ObamaCare, while very few voters support it, a new poll finds.

A poll published Thursday by Quinnipiac University found that 56 percent of voters disapprove of the GOP healthcare plan, while just 17 percent support it.

Even among Republicans, only 41 percent support the American Health Care Act, while 24 percent oppose it. And 80 percent of Democrats and 58 percent of Independent voters disapprove of the plan.

Republicans are scrambling to shore up support for the repeal-and-replace bill ahead of an expected House vote later Thursday. President Trump is meeting with members of the conservative Freedom Caucus, who are seeking a number of changes to the bill in exchange for their support.But centrist Republicans are fleeing from the bill as it changes to fit the conservatives’ desires, complicating efforts to get the bill passed in the House.

The poll found that 46 percent of voters say they will be less likely to vote for their Congressional representative if they vote to approve the GOP health insurance plan.

The Quinnipiac University poll was conducted from March 16 to 21 and surveyed 1,056 voters. The margin of error is 3 percentage points.

http://thehill.com/policy/healthcare/325448-poll-majority-of-voters-disapprove-of-gop-obamacare-repeal-plan

 

Essential health benefits

From Wikipedia, the free encyclopedia

In the context of health care in the United States, essential health benefits (EHBs) are a set of benefits that certain health insurance plans are required to cover for patients.[1]

Essential health benefits must be offered by health plans in individual and small group markets, both inside and outside of the Health Insurance Marketplace.[2][3] Large-group health plans, self-insured ERISA plans, and ERISA-governed multiemployer welfare arrangements not subject to state insurance law are exempt from the EHB requirement.[4]

Essential health benefits

The ACA sets forth the following ten categories of essential health benefits,[5][6] at Section 1302(b)(1) of the Affordable Care Act, codified at 42 U.S.C. § 18022(b):[7]

  1. Ambulatory patient services. [outpatient care]
  2. Emergency services.
  3. Hospitalization. [inpatient care]
  4. Maternity and newborn care
  5. Mental health and substance use disorder services, including behavioral health treatment.
  6. Prescription drugs.
  7. Rehabilitative and habilitative services and devices.
  8. Laboratory services
  9. Preventive and wellness services and chronic disease management;
  10. Pediatric services, including oral and vision care.

The essential health benefits are a minimum standard: “Qualified health plans are not barred from offering additional benefits, and states may require that qualified health plans sold in state health insurance exchanges also cover state-mandated benefits.”[8]

The ACA’s list of essential health benefits is defined in terms of ten broad classes.[9] The act gives “considerable discretion” to the Secretary of Health and Human Services to determine, through regulation, what specific services within these classes are essential. However, the Act provides certain parameters for the secretary to consider. The secretary (1) must “ensure that such essential health benefits reflect an appropriate balance among the categories … so that benefits are not unduly weighted toward any category”; (2) may “not make coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life”; (3) must take into account “the health care needs of diverse segments of the population, including women, children, persons with disabilities, and other groups”; and (4) must ensure that essential benefits “not be subject to denial to individuals against their wishes on the basis of the individuals’ age or expected length of life or the individuals’ present or predicted disability, degree of medical dependency, or quality of life.”[10]

According to a Commonwealth Fund report in 2011:

As it stands, federal regulations for 2014 and 2015 do not establish a single, nationally uniform package of health services. Instead, the U.S. Department of Health and Human Services (HHS) gave states discretion to determine the specific benefits they deem essential. This approach was well-received by many state officials, who valued the opportunity to tailor benefit standards to reflect state priorities, and by insurers, who retained more control over benefit design. Groups representing consumers and providers were less supportive, however, expressing concern that the degree of flexibility found in the rules undermines the law’s promise of consistent, meaningful coverage.[11]

History

Coverage of essential health benefits was first required by the Patient Protection and Affordable Care Act (PPACA or ACA) of 2010, which was a major piece of health care reform legislation.[1] The EHB provisions of the ACA was an amendment to the Public Health Service Act.[12]

Dr. Shana Alex Lavarreda, the director of health insurance studies for the UCLA Center for Health Policy Research, explains that before the ACA’s passage, U.S. health insurance sector experienced “a race to the bottom, with insurers cutting benefits to lower premiums.”[1] The establishment of essential health benefits “set a standard for insurance. Anything below that is not true health insurance.”[1] The EHB requirement came into effect on January 1, 2014.[1]

Revision and repeal of essential health benefits coverage was proposed in the Republican part American Health Care Act of 2017.[13] House Freedom Caucus members lobbied during legislation discussion with House Speaker Paul Ryan to remove EHBs as a condition for approval of the AHCA bill.[14]

Comparison with minimum essential coverage

Essential health benefits should not be confused with minimum essential coverage (MEC). MEC is the minimum amount of coverage that an individual must carry to meet the individual health insurance mandate, while EHBs are a set of benefits that qualified health plans (QHPs) must offer.[15] MEC is a low threshold; many forms of coverage that do not provide essential health benefits are nevertheless considered minimum essential coverage.[15]

Notes

  1. ^ Jump up to:a b c d e Frank Lalli, The Health Care Law’s 10 Essential Benefits: The Affordable Care Act ensures you’ll have access to these medical and wellness services, AARP The Magazine (August/September 2013).
  2. Jump up^ Essential Health Benefits, HealthCare.gov (accessed November 12, 2015).
  3. Jump up^ Rosenbaum, Teitelbaum & Hayes, p. 2.
  4. Jump up^ Rosenbaum, Teitelbaum & Hayes, p. 3.
  5. Jump up^ 10 health care benefits covered in the Health Insurance Marketplace, HealthCare.gov (accessed November 12, 2015).
  6. Jump up^ Alexandra Ernst, 10 Essential Health Benefits Insurance Plans Must Cover Starting in 2014, FamiliesUSA (March 28, 2013).
  7. Jump up^ 42 U.S. Code § 18022 – Essential health benefits requirements
  8. Jump up^ Rosenbaum, Teitelbaum & Hayes, p. 3.
  9. Jump up^ Rosenbaum, Teitelbaum & Hayes, p. 3.
  10. Jump up^ Rosenbaum, Teitelbaum & Hayes, pp. 3-4
  11. Jump up^ Giovannelli, Lucia & Corlette, p. 2.
  12. Jump up^ Rosenbaum, Teitelbaum & Hayes, p. 2.
  13. Jump up^ “Republicans may gut an overlooked provision of Obamacare — and disrupt health insurance”. Business Insider. Retrieved 2017-03-26.
  14. Jump up^ Luhby, Tami. “Essential Health Benefits and why they matter”. CNN. Retrieved 2017-03-26.
  15. ^ Jump up to:a b Susan Grassli & Lisa Klinger, Understanding the Difference between Minimum Essential Coverage, Essential Health Benefits, Minimum Value, and Actuarial Value, Leavitt Group (January 27, 2014).

Sources

External links

Patient Protection and Affordable Care Act

From Wikipedia, the free encyclopedia
Patient Protection and Affordable Care Act
Great Seal of the United States
Long title The Patient Protection and Affordable Care Act
Acronyms(colloquial) PPACA, ACA
Nicknames Affordable Care Act, Health Insurance Reform, Healthcare Reform, Obamacare
Enacted by the 111th United States Congress
Effective March 23, 2010; 7 years ago
Most major provisions phased in by January 2014; remaining provisions phased in by 2020
Citations
Public law 111–148
Statutes at Large 124 Stat.119through 124 Stat.1025(906 pages)
Legislative history
  • Introduced in the Houseasthe “Service Members Home Ownership Tax Act of 2009” (H.R. 3590) byCharles Rangel (DNY) on September 17, 2009
  • Committee consideration byWays and Means
  • Passed the House on October 8, 2009 (416–0)
  • Passed the Senate as the “Patient Protection and Affordable Care Act” on December 24, 2009 (60–39) with amendment
  • House agreed to Senate amendment on March 21, 2010 (219–212)
  • Signed into law by PresidentBarack Obamaon March 23, 2010
Major amendments
Health Care and Education Reconciliation Act of 2010
Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011
United States Supreme Court cases
National Federation of Independent Business v. Sebelius
Burwell v. Hobby Lobby
King v. Burwell

The Patient Protection and Affordable Care Act, often shortened to the Affordable Care Act (ACA) and nicknamed Obamacare, is a United States federal statute enacted by the 111th United States Congress and signed into law by PresidentBarack Obama on March 23, 2010. Under the act, hospitals and primary physicians would transform their practices financially, technologically, and clinically to drive better health outcomes, lower costs, and improve their methods of distribution and accessibility.

The Affordable Care Act was designed to increase health insurance quality and affordability, lower the uninsured rate by expanding insurance coverage and reduce the costs of healthcare. It introduced mechanisms including mandates, subsidies and insurance exchanges.[1][2] The law requires insurers to accept all applicants, cover a specific list of conditions and charge the same rates regardless of pre-existing conditions or sex.[3]

The ACA has caused a significant reduction in the number and percentage of people without health insurance, with estimates ranging from 20-24 million additional persons covered during 2016.[4][5] Increases in overall healthcare spending have slowed since the law was implemented, including premiums for employer-based insurance plans.[6] The Congressional Budget Office reported in several studies that the ACA would reduce the budget deficit, and that repealing it would increase the deficit.[7][8]

As implementation began, first opponents, then others, and finally the president himself adopted the term “Obamacare” to refer to the ACA.[9]

The law and its implementation faced challenges in Congress and federal courts, and from some state governments, conservativeadvocacy groups, labor unions, and small business organizations. The United States Supreme Court upheld the constitutionality of the ACA’s individual mandate as an exercise of Congress’s taxing power,[10]found that states cannot be forced to participate in the ACA’s Medicaid expansion,[11][12][13] and found that the law’s subsidies to help individuals pay for health insurance are available in all states, not just in those that have set up state exchanges.[14]

Together with the Health Care and Education Reconciliation Act amendment, it represents the U.S. healthcare system‘s most significant regulatory overhaul and expansion of coverage since the passage of Medicare and Medicaid in 1965.[15][16][17][18]

Contents

 [show] 

Provisions

The President and White House Staff react to the House of Representatives passing the bill on March 21, 2010.

The ACA includes provisions to take effect between 2010 and 2020, although most took effect on January 1, 2014. Few areas of the US health care system were left untouched, making it the most sweeping health care reform since the enactment of Medicare and Medicaid in 1965.[15][16][17][19][18] However, some areas were more affected than others. The individual insurance market was radically overhauled, and many of the law’s regulations applied specifically to this market,[15] while the structure of Medicare, Medicaid, and the employer marketwere largely retained.[16] Most of the coverage gains were made through the expansion of Medicaid,[20] and the biggest cost savings were made in Medicare.[16] Some regulations applied to the employer market, and the law also made delivery system changes that affected most of the health care system.[16] Not all provisions took full effect. Some were made discretionary, some were deferred, and others were repealed before implementation.

Individual insurance

Guaranteed issue prohibits insurers from denying coverage to individuals due to pre-existing conditions. States were required to ensure the availability of insurance for individual children who did not have coverage via their families.

States were required to expand Medicaid eligibility to include individuals and families with incomes up to 133% of the federal poverty level, including adults without disabilities or dependent children.[21] The law provides a 5% “income disregard”, making the effective income eligibility limit for Medicaid 138% of the poverty level.[22]

The State Children’s Health Insurance Program (CHIP) enrollment process was simplified.[21]

Dependents were permitted to remain on their parents’ insurance plan until their 26th birthday, including dependents that no longer live with their parents, are not a dependent on a parent’s tax return, are no longer a student, or are married.[23][24]

Among the groups who remained uninsured were:

  • Illegal immigrants, estimated at around 8 million—or roughly a third of the 23 million projection—are ineligible for insurance subsidies and Medicaid.[25][26] They remain eligible for emergency services.
  • Eligible citizens not enrolled in Medicaid.[27]
  • Citizens who pay the annual penalty instead of purchasing insurance, mostly younger and single.[27]
  • Citizens whose insurance coverage would cost more than 8% of household income and are exempt from the penalty.[27]
  • Citizens who live in states that opt out of the Medicaid expansion and who qualify for neither existing Medicaid coverage nor subsidized coverage through the states’ new insurance exchanges.[28]

Subsidies

Households with incomes between 100% and 400% of the federal poverty level were eligible to receive federal subsidies for policies purchased via an exchange.[29][30] Subsidies are provided as an advanceable, refundable tax credit[31][32] Additionally, small businesses are eligible for a tax credit provided that they enroll in the SHOP Marketplace.[33] Under the law, workers whose employers offer affordable coverage will not be eligible for subsidies via the exchanges. To be eligible the cost of employer-based health insurance must exceed 9.5% of the worker’s household income.

Subsidies (2014) for Family of 4[34][35][36][37][38]
Income % of federal poverty level Premium Cap as a Share of Income Incomea Max Annual Out-of-Pocket Premium Premium Savingsb Additional Cost-Sharing Subsidy
133% 3% of income $31,900 $992 $10,345 $5,040
150% 4% of income $33,075 $1,323 $9,918 $5,040
200% 6.3% of income $44,100 $2,778 $8,366 $4,000
250% 8.05% of income $55,125 $4,438 $6,597 $1,930
300% 9.5% of income $66,150 $6,284 $4,628 $1,480
350% 9.5% of income $77,175 $7,332 $3,512 $1,480
400% 9.5% of income $88,200 $8,379 $2,395 $1,480
a.^ Note: In 2014, the FPL was $11,800 for a single person and $24,000 for family of four.[39][40] See Subsidy Calculator for specific dollar amount.[41] b.^ DHHS and CBO estimate the average annual premium cost in 2014 would have been $11,328 for a family of 4 without the reform.[36]

Premiums were the same for everyone of a given age, regardless of preexisting conditions. Premiums were allowed to vary by enrollee age, but those for the oldest enrollees (age 45-64 average expenses $5,542) could only be three times as large as those for adults (18-24 $1,836).[42]

Mandates

Individual

The individual mandate[43] is the requirement to buy insurance or pay a penalty for everyone not covered by an employer sponsored health plan, Medicaid, Medicare or other public insurance programs (such as Tricare). Also exempt were those facing a financial hardship or who were members in a recognized religious sect exempted by the Internal Revenue Service.[44]

The mandate and the limits on open enrollment[45][46] were designed to avoid the insurance death spiral in which healthy people delay insuring themselves until they get sick. In such a situation, insurers would have to raise their premiums to cover the relatively sicker and thus more expensive policies,[43][47][48] which could create a vicious cycle in which more and more people drop their coverage.[49]

The purpose of the mandate was to prevent the healthcare system from succumbing to adverse selection, which would result in high premiums for the insured and little coverage (and thus more illness and medical bankruptcy) for the uninsured.[47][50][51] Studies by the CBO, Gruber and Rand Health concluded that a mandate was required.[52][53][54] The mandate increased the size and diversity of the insured population, including more young and healthy participants to broaden the risk pool, spreading costs.[55] Experience in New Jersey and Massachusetts offered divergent outcomes.[50][53][56]

Business

Businesses that employ 50 or more people but do not offer health insurance to their full-time employees pay a tax penalty if the government has subsidized a full-time employee’s healthcare through tax deductions or other means. This is commonly known as the employer mandate.[57][58] This provision was included to encourage employers to continue providing insurance once the exchanges began operating.[59] Approximately 44% of the population was covered directly or indirectly through an employer.[60][61]

Excise taxes

Excise taxes for the Affordable Care Act raised $16.3 billion in fiscal year 2015 (17% of all excise taxes collected by the Federal Government). $11.3 billion was an excise tax placed directly on health insurers based on their market share. The ACA was going to impose a 40% “Cadillac tax” on expensive employer sponsored health insurance but that was postponed until 2018. Annual excise taxes totaling $3 billion were levied on importers and manufacturers of prescription drugs. An excise tax of 2.3% on medical devices and a 10% excise tax on indoor tanning services were applied as well.[62]

Insurance standards

Essential health benefits

The National Academy of Medicine defined the law’s “essential health benefits” as “ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care”[63][64][65][66][67][68][69] and others[70] rated Level A or B by the U.S. Preventive Services Task Force.[71] In determining what would qualify as an essential benefit, the law required that standard benefits should offer at least that of a “typical employer plan”.[68] States may require additional services.[72]

Contraceptives

One provision in the law mandates that health insurance cover “additional preventive care and screenings” for women.[73] The guidelines mandate “[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity”.[74] This mandate applies to all employers and educational institutions except for religious organizations.[75][76] These regulations were included on the recommendations of the Institute of Medicine.[77][78]

Risk management

ACA provided three ways to control risk for insurers in the individual and business markets: temporary reinsurance, temporary risk corridors, and permanent risk adjustment.

Risk corridor program

The risk-corridor program was a temporary risk management device defined under the PPACA section 1342[79]:1 to encourage reluctant insurers into the “new and untested” ACA insurance market during the first three years that ACA was implemented (2014-2016). For those years the Department of Health and Human Services (HHS) “would cover some of the losses for insurers whose plans performed worse than they expected. Insurers that were especially profitable, for their part, would have to return to HHS some of the money they earned on the exchanges”[80][81] According to an article in Forbes, risk corridors “had been a successful part of the Medicare prescription drug benefit, and the ACA’s risk corridors were modeled after Medicare’s Plan D.”[82] They operated on the principle that “more participation would mean more competition, which would drive down premiums and make health insurance more affordable” and “[w]hen insurers signed up to sell health plans on the exchanges, they did so with the expectation that the risk-corridor program would limit their downside losses.”[80] The risk corridors succeeded in attracting ACA insurers. The program did not pay for itself as planned with “accumulated losses” up to $8.3 billion for 2014 and 2015 alone. Authorization had to be given so that HHS could pay insurers from “general government revenues”. Congressional Republicans “railed against” the program as a ‘bailout’ for insurers. Then-Rep. Jack Kingston (R-Ga.), on the Appropriations Committee that funds the Department of Health and Human Services and the Labor Department “[slipped] in a sentence” — Section 227 — in the “massive” appropriationsConsolidated Appropriations Act, 2014 (H.R. 3547) that said that no funds in the discretionary spending bill “could be used for risk-corridor payments.” This effectively “blocked the administration from obtaining the necessary funds from other programs”[83] and placed Congress in a potential breach of contract with insurers who offered qualified health plans, under the Tucker Act[79] as it did not pay the insurers.[84][84] On February 10, 2017, in the Moda Health v the US Government, Moda, one of the insurers that struggled financially because of the elimination of the risk corridor program, won a “$214-million judgment against the federal government”. Justice Thomas C. Wheeler stated, “the Government “made a promise in the risk corridors program that it has yet to fulfill. Today, the court directs the Government to fulfill that promise. After all, ‘to say to [Moda], ‘The joke is on you. You shouldn’t have trusted us,’ is hardly worthy of our great government.”[85]

Temporary reinsurance

Temporary reinsurance for insurance for insurers against unexpectedly high claims was a program that ran from 2014 through 2016. It was intended to limit insurer losses.[citation needed]

Risk adjustment

Of the three risk management programs, only risk adjustment was permanent. Risk adjustment attempts to spread risk among insurers to prevent purchasers with good knowledge of their medical needs from using insurance to cover their costs (adverse selection). Plans with low actuarial risk compensate plans with high actuarial risk.[citation needed]

Other provisions

In 2012 Senator Sheldon Whitehouse created this summary to explain his view on the act.

The ACA has several other provisions:

  • Annual and lifetime coverage caps on essential benefits were banned.[86][87]
  • Prohibits insurers from dropping policyholders when they get sick.[88]
  • All health policies sold in the United States must provide an annual maximum out of pocket (MOOP) payment cap for an individual’s or family’s medical expenses (excluding premiums). After the MOOP payment cap is reached, all remaining costs must be paid by the insurer.[89]
  • A partial community rating requires insurers to offer the same premium to all applicants of the same age and location without regard to gender or most pre-existing conditions (excluding tobacco use).[90][91][92] Premiums for older applicants can be no more than three times those for the youngest.[93]
  • Preventive care, vaccinations and medical screenings cannot be subject to co-payments, co-insurance or deductibles.[94][95][96] Specific examples of covered services include: mammograms and colonoscopies, wellness visits, gestational diabetes screening, HPV testing, STI counseling, HIV screening and counseling, contraceptive methods, breastfeeding support/supplies and domestic violence screening and counseling.[97]
  • The law established four tiers of coverage: bronze, silver, gold and platinum. All categories offer the essential health benefits. The categories vary in their division of premiums and out-of-pocket costs: bronze plans have the lowest monthly premiums and highest out-of-pocket costs, while platinum plans are the reverse.[68][98] The percentages of health care costs that plans are expected to cover through premiums (as opposed to out-of-pocket costs) are, on average: 60% (bronze), 70% (silver), 80% (gold), and 90% (platinum).[99]
  • Insurers are required to implement an appeals process for coverage determination and claims on all new plans.[88]
  • Insurers must spend at least 80–85% of premium dollars on health costs; rebates must be issued to policyholders if this is violated.[100][101]

Exchanges

Established the creation of health insurance exchanges in all fifty states. The exchanges are regulated, largely online marketplaces, administered by either federal or state government, where individuals and small business can purchase private insurance plans.[102][103][104]

Setting up an exchange gives a state partial discretion on standards and prices of insurance.[105][106] For example, states approve plans for sale, and influence (through limits on and negotiations with private insurers) the prices on offer. They can impose higher or state-specific coverage requirements—including whether plans offered in the state can cover abortion.[107] States without an exchange do not have that discretion. The responsibility for operating their exchanges moves to the federal government.[105]

State waivers

From 2017 onwards, states can apply for a “waiver for state innovation” that allows them to conduct experiments that meet certain criteria.[108] To obtain a waiver, a state must pass legislation setting up an alternative health system that provides insurance at least as comprehensive and as affordable as ACA, covers at least as many residents and does not increase the federal deficit.[109] Such states can exempt states from some of ACA’s central requirements, including the individual and employer mandates and the provision of an insurance exchange.[110] The state would receive compensation equal to the aggregate amount of any federal subsidies and tax credits for which its residents and employers would have been eligible under ACA plan, if they cannot be paid out due to the structure of the state plan.[108]

In May 2011, Vermont enacted Green Mountain Care, a state-based single-payer system for which they intended to pursue a waiver to implement.[111][112][113] In December 2014, Vermont decided not to continue due to high expected costs.[114]

Accountable Care Organizations

The Act allowed the creation of Accountable Care Organizations (ACOs), which are groups of doctors, hospitals and other providers that commit to give coordinated, high quality care to Medicare patients. ACOs were allowed to continue using a fee for service billing approach. They receive bonus payments from the government for minimizing costs while achieving quality benchmarks that emphasize prevention and mitigating chronic disease. If they fail to do so, they are subject to penalties.[115]

Unlike Health Maintenance Organizations, ACO patients are not required to obtain all care from the ACO. Also, unlike HMOs, ACOs must achieve quality of care goals.[115]

Others

Legislative history

President Obama signing the Patient Protection and Affordable Care Act on March 23, 2010

Background

An individual mandate coupled with subsidies for private insurance as a means for universal healthcare was considered the best way to win the support of the Senate because it had been included in prior bipartisan reform proposals. The concept goes back to at least 1989, when the conservativeHeritage Foundation proposed an individual mandate as an alternative to single-payer health care.[125] It was championed for a time by conservative economists and Republican senators as a market-based approach to healthcare reform on the basis of individual responsibility and avoidance of free rider problems. Specifically, because the 1986 Emergency Medical Treatment and Active Labor Act (EMTALA) requires any hospital participating in Medicare (nearly all do) to provide emergency care to anyone who needs it, the government often indirectly bore the cost of those without the ability to pay.[126][127][128]

President Bill Clintonproposed a healthcare reform bill in 1993 that included a mandate for employers to provide health insurance to all employees through a regulated marketplace of health maintenance organizations. Republican Senators proposed an alternative that would have required individuals, but not employers, to buy insurance.[127]Ultimately the Clinton plan failed amid an unprecedented barrage of negative advertising funded by politically conservative groups and the health insurance industry and due to concerns that it was overly complex.[129] Clinton negotiated a compromise with the 105th Congress to instead enact the State Children’s Health Insurance Program (SCHIP) in 1997.[130]

John Chafee

The 1993 Republican alternative, introduced by Senator John Chafee as the Health Equity and Access Reform Today Act, contained a “universal coverage” requirement with a penalty for noncompliance—an individual mandate—as well as subsidies to be used in state-based ‘purchasing groups’.[131] Advocates for the 1993 bill included prominent Republicans such as Senators Orrin Hatch, Chuck Grassley, Bob Bennett and Kit Bond.[132][133] Of 1993’s 43 Republican Senators, 20 supported the HEART Act.[125][134] Another Republican proposal, introduced in 1994 by Senator Don Nickles (R-OK), the Consumer Choice Health Security Act, contained an individual mandate with a penalty provision;[135] however, Nickles subsequently removed the mandate from the bill, stating he had decided “that government should not compel people to buy health insurance”.[136] At the time of these proposals, Republicans did not raise constitutional issues with the mandate; Mark Pauly, who helped develop a proposal that included an individual mandate for George H. W. Bush, remarked, “I don’t remember that being raised at all. The way it was viewed by the Congressional Budget Office in 1994 was, effectively, as a tax.”[125]

Mitt Romney’s Massachusetts went from 90% of its residents insured to 98%, the highest rate in the nation.[137]

In 2006, an insurance expansion bill was enacted at the state level in Massachusetts. The bill contained both an individual mandate and an insurance exchange. Republican Governor Mitt Romney vetoed the mandate, but after Democrats overrode his veto, he signed it into law.[138] Romney’s implementation of the ‘Health Connector’ exchange and individual mandate in Massachusetts was at first lauded by Republicans. During Romney’s 2008 presidential campaign, Senator Jim DeMint praised Romney’s ability to “take some good conservative ideas, like private health insurance, and apply them to the need to have everyone insured”. Romney said of the individual mandate: “I’m proud of what we’ve done. If Massachusetts succeeds in implementing it, then that will be the model for the nation.”[139]

In 2007, a year after the Massachusetts reform, Republican Senator Bob Bennett and Democratic Senator Ron Wyden introduced the Healthy Americans Act, which featured an individual mandate and state-based, regulated insurance markets called “State Health Help Agencies”.[128][139] The bill initially attracted bipartisan support, but died in committee. Many of the sponsors and co-sponsors remained in Congress during the 2008 healthcare debate.[140]

By 2008 many Democrats were considering this approach as the basis for healthcare reform. Experts said that the legislation that eventually emerged from Congress in 2009 and 2010 bore similarities to the 2007 bill[131] and that it was deliberately patterned after Romney’s state healthcare plan.[141]

Healthcare debate, 2008–10

Healthcare reform was a major topic during the 2008 Democratic presidential primaries. As the race narrowed, attention focused on the plans presented by the two leading candidates, Hillary Clinton and the eventual nominee, Barack Obama. Each candidate proposed a plan to cover the approximately 45 million Americans estimated to not have health insurance at some point each year. Clinton’s proposal would have required all Americans to obtain coverage (in effect, an individual mandate), while Obama’s proposal provided a subsidy but rejected the use of an individual mandate.[142][143]

During the general election, Obama said that fixing healthcare would be one of his top four priorities as president.[144] Obama and his opponent, Sen. John McCain, proposed health insurance reforms though they differed greatly. Senator John McCain proposed tax credits for health insurance purchased in the individual market, which was estimated to reduce the number of uninsured people by about 2 million by 2018. Obama proposed private and public group insurance, income-based subsidies, consumer protections, and expansions of Medicaid and SCHIP, which was estimated at the time to reduce the number of uninsured people by 33.9 million by 2018.[145]

President Obama addressing Congress regarding healthcare reform, September 9, 2009

After his inauguration, Obama announced to a joint session of Congress in February 2009 his intent to work with Congress to construct a plan for healthcare reform.[146][147] By July, a series of bills were approved by committees within the House of Representatives.[148] On the Senate side, from June to September, the Senate Finance Committee held a series of 31 meetings to develop a healthcare reform bill. This group — in particular, Democrats Max Baucus, Jeff Bingaman and Kent Conrad, along with Republicans Mike Enzi, Chuck Grassley and Olympia Snowe — met for more than 60 hours, and the principles that they discussed, in conjunction with the other committees, became the foundation of the Senate healthcare reform bill.[149][150][151]

Congressional Democrats and health policy experts like MIT economics professor Jonathan Gruber[152] and David Cutler argued that guaranteed issue would require both community rating and an individual mandate to ensure that adverse selection and/or “free riding” would not result in an insurance “death spiral”.[153] This approach was taken because the president and congressional leaders had concluded that more progressive plans, such as the (single-payer)Medicare for All act, could not obtain filibuster-proof support in the Senate. By deliberately drawing on bipartisan ideas — the same basic outline was supported by former Senate majority leaders Howard Baker, Bob Dole, Tom Daschle and George J. Mitchell—the bill’s drafters hoped to garner the votes necessary for passage.[154][155]

However, following the adoption of an individual mandate, Republicans came to oppose the mandate and threatened to filibuster any bills that contained it.[125] Senate minority leader Mitch McConnell, who led the Republican congressional strategy in responding to the bill, calculated that Republicans should not support the bill, and worked to prevent defections:[156]

It was absolutely critical that everybody be together because if the proponents of the bill were able to say it was bipartisan, it tended to convey to the public that this is O.K., they must have figured it out.[157]

Republican Senators, including those who had supported previous bills with a similar mandate, began to describe the mandate as “unconstitutional”. Journalist Ezra Klein wrote in The New Yorker that “a policy that once enjoyed broad support within the Republican Party suddenly faced unified opposition.”[128] Reporter Michael Cooper of The New York Times wrote that: “the provision … requiring all Americans to buy health insurance has its roots in conservative thinking.”[127][134]

Tea Party protesters at the Taxpayer March on Washington, September 12, 2009

The reform negotiations also attracted attention from lobbyists,[158] including deals between certain lobby groups and the advocates of the law to win the support of groups that had opposed past reforms, as in 1993.[159][160] The Sunlight Foundation documented many of the reported ties between “the healthcare lobbyist complex” and politicians in both parties.[161]

During the August 2009 summer congressional recess, many members went back to their districts and held town hall meetings on the proposals. The nascent Tea Party movement organized protests and many conservative groups and individuals attended the meetings to oppose the proposed reforms.[147] Many threats were made against members of Congress over the course of the debate.[162][163]

When Congress returned from recess, in September 2009 President Obama delivered a speech to a joint session of Congress supporting the ongoing Congressional negotiations.[164] He acknowledged the polarization of the debate, and quoted a letter from the late Senator Edward “Ted” Kennedy urging on reform: “what we face is above all a moral issue; that at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.”[165] On November 7, the House of Representatives passed the Affordable Health Care for America Act on a 220–215 vote and forwarded it to the Senate for passage.[147]

Senate

The Senate began work on its own proposals while the House was still working. The United States Constitution requires all revenue-related bills to originate in the House.[166] To formally comply with this requirement, the Senate used H.R. 3590, a bill regarding housing tax changes for service members.[167] It had been passed by the House as a revenue-related modification to the Internal Revenue Code. The bill became the Senate’s vehicle for its healthcare reform proposal, discarding the bill’s original content.[168] The bill ultimately incorporated elements of proposals that were reported favorably by the Senate Health and Finance committees. With the Republican Senate minority vowing to filibuster, 60 votes would be necessary to pass the Senate.[169] At the start of the 111th Congress, Democrats had only 58 votes; the Senate seat in Minnesota ultimately won by Al Franken was still undergoing a recount, while Arlen Specter was still a Republican (he became a Democrat in April, 2009).

Negotiations were undertaken attempting to satisfy moderate Democrats and to bring Republican senators aboard; particular attention was given to Republicans Bennett, Enzi, Grassley and Snowe. On July 7 Franken was sworn into office, providing a potential 60th vote. On August 25 Ted Kennedy—a longtime healthcare reform advocate—died. Paul Kirk was appointed as Senator Kennedy’s temporary replacement on September 24.

After the Finance Committee vote on October 15, negotiations turned to moderate Democrats. Majority leader Harry Reid focused on satisfying centrists. The holdouts came down to Joe Lieberman of Connecticut, an independent who caucused with Democrats, and conservative Nebraska Democrat Ben Nelson. Lieberman’s demand that the bill not include a public option[153][170] was met,[171] although supporters won various concessions, including allowing state-based public options such as Vermont’s Green Mountain Care.[171][172]

Senate vote by state.

  Democratic yes (58)
  Independent yes (2)
  Republican no (39)
 Republican not voting (1)

The White House and Reid addressed Nelson’s concerns[173] during a 13-hour negotiation with two concessions: a compromise on abortion, modifying the language of the bill “to give states the right to prohibit coverage of abortion within their own insurance exchanges”, which would require consumers to pay for the procedure out of pocket if the state so decided; and an amendment to offer a higher rate of Medicaid reimbursement for Nebraska.[147][174] The latter half of the compromise was derisively termed the “Cornhusker Kickback”[175] and was repealed in the subsequent reconciliation amendment bill.

On December 23, the Senate voted 60–39 to end debate on the bill: a cloture vote to end the filibuster. The bill then passed, also 60–39, on December 24, 2009, with all Democrats and two independents voting for it, and all Republicans against (except Jim Bunning, who did not vote).[176] The bill was endorsed by the AMA and AARP.[177]

On January 19, 2010, Massachusetts Republican Scott Brown was elected to the Senate in a special election to replace Kennedy, having campaigned on giving the Republican minority the 41st vote needed to sustain Republican filibusters.[147][178][179] His victory had become significant because of its effects on the legislative process. The first was psychological: the symbolic importance of losing Kennedy’s traditionally Democratic Massachusetts seat made many Congressional Democrats concerned about the political cost of passing a bill.[180][181]

House

House vote by congressional district.

  Democratic yes (219)
  Democratic no (34)
  Republican no (178)
  No representative seated (4)

Brown’s election meant Democrats could no longer break a filibuster in the Senate. In response, White House Chief of StaffRahm Emanuel argued that Democrats should scale back to a less ambitious bill; House SpeakerNancy Pelosi pushed back, dismissing Emanuel’s scaled-down approach as “Kiddie Care”.[182][183]

Obama remained insistent on comprehensive reform. The news that Anthem Blue Cross in California intended to raise premium rates for its patients by as much as 39% gave him new evidence of the need for reform.[182][183] On February 22, he laid out a “Senate-leaning” proposal to consolidate the bills.[184] He held a meeting with both parties’ leaders on February 25. The Democrats decided that the House would pass the Senate’s bill, to avoid another Senate vote.

House Democrats had expected to be able to negotiate changes in a House-Senate conference before passing a final bill. Since any bill that emerged from conference that differed from the Senate bill would have to pass the Senate over another Republican filibuster, most House Democrats agreed to pass the Senate bill on condition that it be amended by a subsequent bill.[181] They drafted the Health Care and Education Reconciliation Act, which could be passed by the reconciliation process.[182][185][186]

As per the Congressional Budget Act of 1974, reconciliation cannot be subject to a filibuster. But reconciliation is limited to budget changes, which is why the procedure was not used to pass ACA in the first place; the bill had inherently non-budgetary regulations.[187][188] Although the already-passed Senate bill could not have been passed by reconciliation, most of House Democrats’ demands were budgetary: “these changes—higher subsidy levels, different kinds of taxes to pay for them, nixing the Nebraska Medicaid deal—mainly involve taxes and spending. In other words, they’re exactly the kinds of policies that are well-suited for reconciliation.”[185]

The remaining obstacle was a pivotal group of pro-life Democrats led by Bart Stupak who were initially reluctant to support the bill. The group found the possibility of federal funding for abortion significant enough to warrant opposition. The Senate bill had not included language that satisfied their concerns, but they could not address abortion in the reconciliation bill as it would be non-budgetary. Instead, Obama issued Executive Order 13535, reaffirming the principles in the Hyde Amendment.[189] This won the support of Stupak and members of his group and assured the bill’s passage.[186][190] The House passed the Senate bill with a 219–212 vote on March 21, 2010, with 34 Democrats and all 178 Republicans voting against it.[191] The next day, Republicans introduced legislation to repeal the bill.[192] Obama signed ACA into law on March 23, 2010.[193] Since passage, Republicans have voted to repeal all or parts of the Affordable Care Act over sixty times; no such attempt by Republicans has been successful.[194] The amendment bill, The Health Care and Education Reconciliation Act, cleared the House on March 21; the Senate passed it by reconciliation on March 25, and Obama signed it on March 30.

Impact

Coverage rate, employer market cost trends, budgetary impact, and income inequality aspects of the Affordable Care Act.

This chart illustrates several aspects of the Affordable Care Act, including number of persons covered, cost before and after subsidies, and public opinion.

Coverage

The law has caused a significant reduction in the number and percentage of people without health insurance. The CDC reported that the percentage of people without health insurance fell from 16.0% in 2010 to 8.9% during the January–June 2016 period.[195] From Q4-2013 to Q1-2016, a Gallup survey found that the uninsured rate among adults declined from 17.1% to 11.0%, a decline of 6.1 percentage points.[196] In a 2016 review, Obama presented data showing that the uninsured rate had declined by 43%, from 16.0% in 2010 to 9.1% in 2015, mostly in 2014.[197] The uninsured rate dropped in every congressional district in the U.S. between 2013 and 2015.[198]

In March 2016, the CBO reported that there were approximately 27 million people without insurance in 2016, a figure they expected would range from 26-28 million through 2026. CBO also estimated the percentage of insured among all U.S. residents would remain at 90% through that period, 92-93% excluding unauthorized immigrants.[4]

Those states that expanded Medicaid had a 7.3% uninsured rate on average in the first quarter of 2016, while those that did not expand Medicaid had a 14.1% uninsured rate, among adults aged 18 to 64.[199] As of December 2016 there were 32 states (including Washington DC) that had adopted the Medicaid extension, while 19 states had not.[200]

The Congressional Budget Office reported in March 2016 that there were approximately 12 million people covered by the exchanges (10 million of whom received subsidies to help pay for insurance) and 11 million made eligible for Medicaid by the law, a subtotal of 23 million people. An additional 1 million were covered by the ACA’s “Basic Health Program,” for a total of 24 million.[4] CBO also estimated that the ACA would reduce the net number of uninsured by 22 million in 2016, using a slightly different computation for the above figures totaling ACA coverage of 26 million, less 4 million for reductions in “employment-based coverage” and “non-group and other coverage.”[4] The Department of Health and Human Services (HHS) estimated that 20.0 million adults (aged 18–64) gained healthcare coverage via ACA as of February 2016, a 2.4 million increase over September 2015. HHS estimated that this 20.0 million included: a) 17.7 million from the start of open enrollment in 2013-2016; and b) 2.3 million young adults aged 19–25 who initially gained insurance from 2010-2013, as they were allowed to remain on their parent’s plans until age 26. Of the 20.0 million, an estimated 6.1 million were aged 19–25.[5]

By 2017, nearly 70% of those on the exchanges could purchase insurance for less than $75/month after subsidies, which rose to offset significant pre-subsidy price increases in the exchange markets.[201] Healthcare premium cost increases in the employer market continued to moderate. For example, healthcare premiums for those covered by employers rose by 69% from 2000-2005, but only 27% from 2010 to 2015,[6] with only a 3% increase from 2015 to 2016.[202]

The ACA also helps reduce income inequality measured after taxes, due to higher taxes on the top 5% of income earners and both subsidies and Medicaid expansion for lower-income persons.[203] CBO estimated that subsidies paid under the law in 2016 averaged $4,240 per person for 10 million individuals receiving them, roughly $42 billion. For scale, the subsidy for the employer market, in the form of exempting from taxation those health insurance premiums paid on behalf of employees by employers, was approximately $1,700 per person in 2016, or $266 billion total in the employer market. The employer market subsidy was not changed by the law.[4]

Insurance exchanges

As of August 2016, 15 states operated their own exchanges. Other states either used the federal exchange, or operated in partnership with or supported by the federal government.[204]

Medicaid expansion

Medicaid expansion by state.[205]

  Adopted the Medicaid expansion
  Medicaid expansion under discussion
  Not adopting Medicaid expansion

As of December 2016 there were 32 states (including Washington DC) that had adopted the Medicaid extension, while 19 states had not.[200] Those states that expanded Medicaid had a 7.3% uninsured rate on average in the first quarter of 2016, while those that did not expand Medicaid had a 14.1% uninsured rate, among adults aged 18 to 64.[199] Following the Supreme Court ruling in 2012, which held that states would not lose Medicaid funding if they didn’t expand Medicaid under the ACA, several states rejected expanded Medicaid coverage. Over half of the national uninsured population lived in those states.[206] In a report to Congress, the Centers for Medicare and Medicaid Services (CMS) estimated that the cost of expansion was $6,366 per person for 2015, about 49 percent above previous estimates. An estimated 9 million to 10 million people had gained Medicaid coverage, mostly low-income adults.[207] The Kaiser Family Foundation estimated in October 2015 that 3.1 million additional people were not covered because of states that rejected the Medicaid expansion.[208]

States that rejected the Medicaid expansion could maintain their Medicaid eligibility thresholds, which in many states were significantly below 133% of the poverty line.[209]Many states did not make Medicaid available to childless adults at any income level.[210] Because subsidies on exchange insurance plans were not available to those below the poverty line, such individuals had no new options.[211][212] For example, in Kansas, where only able-bodied adults with children and with an income below 32% of the poverty line were eligible for Medicaid, those with incomes from 32% to 100% of the poverty level ($6,250 to $19,530 for a family of three) were ineligible for both Medicaid and federal subsidies to buy insurance. Absent children, able-bodied adults were not eligible for Medicaid in Kansas.[206]

Studies of the impact of state decisions to reject the Medicaid expansion calculated that up to 6.4 million people could fall into this status.[213] The federal government initially paid for 100% of the expansion (through 2016). The subsidy tapered to 90% by 2020 and continued to shrink thereafter.[214] Several states argued that they could not afford their 10% contribution.[214][215] Studies suggested that rejecting the expansion would cost more than expanding Medicaid due to increased spending on uncompensated emergency care that otherwise would have been partially paid for by Medicaid coverage,[216]

A 2016 study led by Harvard University health economics professor Benjamin Sommers found that residents of Kentucky and Arkansas, which both accepted the Medicaid expansion, were more likely to receive health care services and less likely to incur emergency room costs or have trouble paying their medical bills than before the expansion. Residents of Texas, which did not accept the Medicaid expansion, did not see a similar improvement during the same period.[217] Kentucky opted for increased managed care, while Arkansas subsidized private insurance. The new Arkansas and Kentucky governors have proposed reducing or modifying their programs. Between 2013 and 2015, the uninsured rate dropped from 42% to 14% in Arkansas and from 40% to 9% in Kentucky, compared with 39% to 32% in Texas. Specific improvements included additional primary and preventive care, fewer emergency departments visits, reported higher quality care, improved health, improved drug affordability, reduced out-of-pocket spending and increased outpatient visits, increased diabetes screening, glucose testing among diabetes patients and regular care for chronic conditions.[218]

A 2016 DHHS study found that states that expanded Medicaid had lower premiums on exchange policies, because they had fewer low-income enrollees, whose health on is worse than that of those with higher income.[219]

Healthcare insurance costs

U.S. healthcare cost information, including rate of change, per-capita, and percent of GDP. (Data source: Centers for Medicare and Medicaid Services[220])

The law is designed to pay subsidies in the form of tax credits to the individuals or families purchasing the insurance, based on income levels. Higher income consumers receive lower subsidies. While pre-subsidy prices rose considerably from 2016 to 2017, so did the subsidies, to reduce the after-subsidy cost to the consumer. For example, a study published in 2016 found that the average requested 2017 premium increase among 40-year-old non-smokers was about 9 percent, according to an analysis of 17 cities, although Blue Cross Blue Shield proposed increases of 40 percent in Alabama and 60 percent in Texas.[221] However, some or all of these costs are offset by subsidies, paid as tax credits. For example, the Kaiser Foundation reported that for the second-lowest cost “Silver plan” (a plan often selected and used as the benchmark for determining financial assistance), a 40-year old non-smoker making $30,000 per year would pay effectively the same amount in 2017 as they did in 2016 (about $208/month) after the subsidy/tax credit, despite large increases in the pre-subsidy price. This was consistent nationally. In other words, the subsidies increased along with the pre-subsidy price, fully offsetting the price increases.[222]

Healthcare premium cost increases in the employer market continued to moderate after the implementation of the law. For example, healthcare premiums for those covered by employers rose by 69% from 2000-2005, but only 27% from 2010 to 2015,[6] with only a 3% increase from 2015 to 2016.[202] From 2008-2010 (prior to Obamacare) health insurance premiums rose by an average of 10% per year.[223]

Several studies found that the financial crisis and accompanying recession could not account for the entirety of the slowdown and that structural changes likely share at least partial credit.[224][225][226][227] A 2013 study estimated that changes to the health system had been responsible for about a quarter of the recent reduction in inflation.[228] Paul Krawzak claimed that even if cost controls succeed in reducing the amount spent on healthcare, such efforts on their own may be insufficient to outweigh the long-term burden placed by demographic changes, particularly the growth of the population on Medicare.[229]

In a 2016 review of the ACA published in JAMA, Barack Obama himself wrote that from 2010 through 2014 mean annual growth in real per-enrollee Medicare spending was negative, down from a mean of 4.7% per year from 2000 through 2005 and 2.4% per year from 2006 to 2010; similarly, mean real per-enrollee growth in private insurance spending was 1.1% per year over the period, compared with a mean of 6.5% from 2000 through 2005 and 3.4% from 2005 to 2010.[230]

Effect on deductibles and co-payments

While health insurance premium costs have moderated, some of this is because of insurance policies that have a higher deductible, co-payments and out-of-pocket maximums that shift costs from insurers to patients. In addition, many employees are choosing to combine a health savings account with higher deductible plans, making the impact of the ACA difficult to determine precisely.

For those who obtain their insurance through their employer (“group market”), a 2016 survey found that:

  • Deductibles grew by 63% from 2011 to 2016, while premiums increased 19% and worker earnings grew by 11%.
  • In 2016, 4 in 5 workers had an insurance deductible, which averaged $1,478. For firms with less than 200 employees, the deductible averaged $2,069.
  • The percentage of workers with a deductible of at least $1,000 grew from 10% in 2006 to 51% in 2016. The 2016 figure drops to 38% after taking employer contributions into account.[231]

For the “non-group” market, of which two-thirds are covered by the ACA exchanges, a survey of 2015 data found that:

  • 49% had individual deductibles of at least $1,500 ($3,000 for family), up from 36% in 2014.
  • Many marketplace enrollees qualify for cost-sharing subsidies that reduce their net deductible.
  • While about 75% of enrollees were “very satisfied” or “somewhat satisfied” with their choice of doctors and hospitals, only 50% had such satisfaction with their annual deductible.
  • While 52% of those covered by the ACA exchanges felt “well protected” by their insurance, in the group market 63% felt that way.[232]

Health outcomes

Insurance coverage helps save lives, by encouraging early detection and prevention of dangerous medical conditions. According to a 2014 study, the ACA likely prevented an estimated 50,000 preventable patient deaths from 2010 to 2013.[233]City University public health professors David Himmelstein and Steffie Woolhandler wrote in January 2017 that a rollback of the ACA’s Medicaid expansion alone would cause an estimated 43,956 deaths annually.[234]

Federal deficit

CBO estimates of revenue and impact on deficit

The CBO reported in several studies that the ACA would reduce the deficit, and that repealing it would increase the deficit.[7][8][235][236] The 2011 comprehensive CBO estimate projected a net deficit reduction of more than $200 billion during the 2012–2021 period:[8][237] it calculated the law would result in $604 billion in total outlays offset by $813 billion in total receipts, resulting in a $210 billion net deficit reduction.[8] The CBO separately predicted that while most of the spending provisions do not begin until 2014,[238][239] revenue would exceed spending in those subsequent years.[240] The CBO claimed that the bill would “substantially reduce the growth of Medicare’s payment rates for most services; impose an excise tax on insurance plans with relatively high premiums; and make various other changes to the federal tax code, Medicare, Medicaid, and other programs”[241]—ultimately extending the solvency of the Medicare trust fund by 8 years.[242]

This estimate was made prior to the Supreme Court’s ruling that enabled states to opt out of the Medicaid expansion, thereby forgoing the related federal funding. The CBO and JCT subsequently updated the budget projection, estimating the impact of the ruling would reduce the cost estimate of the insurance coverage provisions by $84 billion.[243][244][245]

The CBO in June 2015 forecasted that repeal of ACA would increase the deficit between $137 billion and $353 billion over the 2016–2025 period, depending on the impact of macroeconomic feedback effects. The CBO also forecasted that repeal of ACA would likely cause an increase in GDP by an average of 0.7% in the period from 2021 to 2015, mainly by boosting the supply of labor.[7]

Major new sources of increased tax receipts include:[95] higher Medicare taxes; annual fees on insurance providers; fees on the healthcare industry such as manufacturers and importers of brand-name pharmaceutical drugs and certain medical devices; limits on tax deductions of medical expenses and flexible spending accounts; a 40% excise tax on plans with annual insurance premiums in excess of $10,200 for an individual or $27,500 for a family; revenue from mandate penalty payments; a 10% federal sales tax on indoor tanning services. Predicted spending reductions included a reduction in Medicare reimbursements to insurers and drug companies for private Medicare Advantage policies that the Government Accountability Office and Medicare Payment Advisory Commission found to be excessively costly relative to government Medicare;[246][247] and reductions in Medicare reimbursements to hospitals that failed standards of efficiency and care.[246]

Although the CBO generally does not provide cost estimates beyond the 10-year budget projection period because of the degree of uncertainty involved in the projection, it decided to do so in this case at the request of lawmakers, and estimated a second decade deficit reduction of $1.2 trillion.[241][248] CBO predicted deficit reduction around a broad range of one-half percent of GDP over the 2020s while cautioning that “a wide range of changes could occur”.[249]

Opinions on CBO projections

The CBO cost estimates were criticized because they excluded the effects of potential legislation that would increase Medicare payments by more than $200 billion from 2010 to 2019.[250][251][252] However, the so-called “doc fix” is a separate issue that would have existed whether or not ACA became law – omitting its cost from ACA was no different from omitting the cost of other tax cuts.[253][254][255]

Uwe Reinhardt, a Princeton health economist, wrote. “The rigid, artificial rules under which the Congressional Budget Office must score proposed legislation unfortunately cannot produce the best unbiased forecasts of the likely fiscal impact of any legislation”, but went on to say “But even if the budget office errs significantly in its conclusion that the bill would actually help reduce the future federal deficit, I doubt that the financing of this bill will be anywhere near as fiscally irresponsible as was the financing of the Medicare Modernization Act of 2003.”[256]Douglas Holtz-Eakin, CBO director during the George W. Bush administration, who later served as the chief economic policy adviser to U.S. Senator John McCain‘s 2008 presidential campaign, alleged that the bill would increase the deficit by $562 billion because, he argued, it front-loaded revenue and back-loaded benefits.[257]

Scheiber and Cohn rejected critical assessments of the law’s deficit impact, arguing that predictions were biased towards underestimating deficit reduction. They noted that for example, it is easier to account for the cost of definite levels of subsidies to specified numbers of people than account for savings from preventive healthcare, and that the CBO had a track record of overestimating costs and underestimating savings of health legislation;[258][259] stating, “innovations in the delivery of medical care, like greater use of electronic medical records[260] and financial incentives for more coordination of care among doctors, would produce substantial savings while also slowing the relentless climb of medical expenses… But the CBO would not consider such savings in its calculations, because the innovations hadn’t really been tried on such large scale or in concert with one another—and that meant there wasn’t much hard data to prove the savings would materialize.”[258]

In 2010 David Walker, former U.S. Comptroller General then working for The Peter G. Peterson Foundation, stated that the CBO estimates are not likely to be accurate, because they were based on the assumption that the law would not change.[261] The Center on Budget and Policy Priorities objected that Congress had a good record of implementing Medicare savings. According to their study, Congress followed through on the implementation of the vast majority of provisions enacted in the past 20 years to produce Medicare savings, although not the payment reductions addressed by the annual “doc fix”.[262][263]

Economic consequences

CBO estimated in June 2015 that repealing the ACA would:

  • Decrease aggregate demand (GDP) in the short-term, as low-income persons who tend to spend a large fraction of their additional resources would have fewer resources (e.g., ACA subsidies would be eliminated). This effect would be offset in the long-run by the labor supply factors below.
  • Increase the supply of labor and aggregate compensation by about 0.8 and 0.9 percent over the 2021-2025 period. CBO cited the ACA’s expanded eligibility for Medicaid and subsidies and tax credits that rise with income as disincentives to work, so repealing the ACA would remove those disincentives, encouraging workers to supply more hours of labor.
  • Increase the total number of hours worked by about 1.5% over the 2021-2025 period.
  • Remove the higher tax rates on capital income, thereby encouraging additional investment, raising the capital stock and output in the long-run.[7]

In 2015 the Center for Economic and Policy Research found no evidence that companies were reducing worker hours to avoid ACA requirements[264] for employees working over 30 hours per week.[265]

The CBO estimated that the ACA would slightly reduce the size of the labor force and number of hours worked, as some would no longer be tethered to employers for their insurance. Cohn, citing CBO’s projections, claimed that ACA’s primary employment effect was to alleviate job lock: “People who are only working because they desperately need employer-sponsored health insurance will no longer do so.”[266] He concluded that the “reform’s only significant employment impact was a reduction in the labor force, primarily because people holding onto jobs just to keep insurance could finally retire”, because they have health insurance outside of their jobs.[267]

Employer mandate and part-time work

For more details on health insurance mandates, see Health insurance mandate.

The employer mandate requires employers meeting certain criteria to provide health insurance to their workers. The mandate applies to employers with more than 50 employees that do not offer health insurance to their full-time workers.[268] Critics claimed that the mandate created a perverse incentive for business to keep their full-time headcount below 50 and to hire part-time workers instead.[269][270] Between March 2010 and 2014 the number of part-time jobs declined by 230,000, while the number of full-time jobs increased by 2 million.[271][272] In the public sector full-time jobs turned into part-time jobs much more than in the private sector.[271][273] A 2016 study found only limited evidence that ACA had increased part-time employment.[274]

Several businesses and the state of Virginia added a 29-hour-a-week cap for their part-time employees,[275][unreliable source?][276][unreliable source?] to reflect the 30-hour-or-more definition for full-time worker.[268] As of yet, however, only a small percent of companies have shifted their workforce towards more part-time hours (4% in a survey from the Federal Reserve Bank of Minneapolis).[270] Trends in working hours[277] and the effects of the Great Recession correlate with part-time working hour patterns.[278][279] The impact of this provision may have been offset by other factors, including that health insurance helps attract and retain employees, increases productivity and reduces absenteeism; and the lower training and administration costs of a smaller full-time workforce over a larger part-time work force.[270][277][280] Relatively few firms employ over 50 employees[270] and more than 90% of them offered insurance.[281] Workers without employer insurance could purchase insurance on the exchanges.[282]

Most policy analysts (on both right and left) were critical of the employer mandate provision.[269][281] They argued that the perverse incentives regarding part-time hours, even if they did not change existing plans, were real and harmful;[283][284] that the raised marginal cost of the 50th worker for businesses could limit companies’ growth;[285] that the costs of reporting and administration were not worth the costs of maintaining employer plans;[283][284] and noted that the employer mandate was not essential to maintain adequate risk pools.[286][287] The effects of the provision generated vocal opposition from business interests and some unions not granted exemptions.[284][288]

A 2013/4 survey by the National Association for Business Economics found that about 75 percent of those surveyed said ACA hadn’t influenced their planning or expectations for 2014, and 85 percent said the law wouldn’t prompt a change in their hiring practices. Some 21 percent of 64 businesses surveyed said that the act would have a harmful effect and 5 percent said it would be beneficial.[289]

Hospitals

From the start of 2010 to November 2014, 43 hospitals in rural areas closed. Critics claimed that the new law caused these hospitals to close. Many of these rural hospitals were built using funds from the 1946 Hill–Burton Act, to increase access to medical care in rural areas. Some of these hospitals reopened as other medical facilities, but only a small number operated emergency rooms (ER) or urgent care centers.[290]

Between January 2010 and 2015, a quarter of emergency room doctors said they had seen a major surge in patients, while nearly half had seen a smaller increase. Seven in ten ER doctors claimed that they lacked the resources to deal with large increases in the number of patients. The biggest factor in the increased number of ER patients was insufficient primary care providers to handle the larger number of insured patients.[291]

Insurers claimed that because they have access to and collect patient data that allow evaluations of interventions, they are essential to ACO success. Large insurers formed their own ACOs. Many hospitals merged and purchased physician practices. The increased market share gave them more leverage in negotiations with insurers over costs and reduced patient care options.[115]

Public opinion

Prior to the law’s passage, polling indicated the public’s views became increasingly negative in reaction to specific plans discussed during the legislative debate over 2009 and 2010. Polling statistics showed a general negative opinion of the law; with those in favor at approximately 40% and those against at 51%, as of October 2013.[292][293] About 29% of whites approve of the law, compared with 61% of Hispanics and 91% of African Americans.[294]Opinions were divided by age of the person at the law’s inception, with a solid majority of seniors opposing the bill and a solid majority of those younger than forty years old in favor.[295]

Congressional Democrats celebrating the 6th anniversary of the Affordable Care Act in March 2016 on the steps of the U.S. Capitol.

Congressional Democrats celebrating the 6th anniversary of the Affordable Care Act in March 2016 on the steps of the U.S. Capitol.

Specific elements were popular across the political spectrum, while others, such as the mandate to purchase insurance, were widely disliked. In a 2012 poll 44% supported the law, with 56% against. By party affiliation, 75% of Democrats, 27% of Independents and 14% of Republicans favored the law overall. 82% favored banning insurance companies from denying coverage to people with pre-existing conditions, 61% favored allowing children to stay on their parents’ insurance until age 26, 72% supported requiring companies with more than 50 employees to provide insurance for their employees, and 39% supported the individual mandate to own insurance or pay a penalty. By party affiliation, 19% of Republicans, 27% of Independents, and 59% of Democrats favored the mandate.[296] Other polls showed additional provisions receiving majority support, including the creation of insurance exchanges, pooling small businesses and the uninsured with other consumers so that more people can take advantage of large group pricing benefits and providing subsidies to individuals and families to make health insurance more affordable.[297][298]

In a 2010 poll, 62% of respondents said they thought ACA would “increase the amount of money they personally spend on health care”, 56% said the bill “gives the government too much involvement in health care”, and 19% said they thought they and their families would be better off with the legislation.[299] Other polls found that people were concerned that the law would cost more than projected and would not do enough to control costs.[300]

Some opponents believed that the reform did not go far enough: a 2012 poll indicated that 71% of Republican opponents rejected it overall, while 29% believed it did not go far enough; independent opponents were divided 67% to 33%; and among the much smaller group of Democratic opponents, 49% rejected it overall and 51% wanted more.[296] In June 2013, a majority of the public (52–34%) indicated a desire for “Congress to implement or tinker with the law rather than repeal it”.[301] After the Supreme Court upheld the individual mandate, a 2012 poll held that “most Americans (56%) want to see critics of President Obama’s health care law drop efforts to block it and move on to other national issues”.[302]A 2014 poll reported that 48.9% of respondents had an unfavorable view of ACA vs. 38.3% who had a favorable view (of more than 5,500 individuals).[303]

A 2014 poll reported that 26% of Americans support ACA.[304] Another held that 8% of respondents say that the Affordable Care Act “is working well the way it is”.[305] In late 2014, a Rasmussen poll reported Repeal: 30%, Leave as is: 13%, Improve: 52%, i.e., 65% wanted to leave ACA alone or improve upon it.[306]

In 2015, a CBS News / New York Times poll reported that 47% of Americans approved the health care law. This was the first time that a major poll indicated that more respondents approved ACA than disapproved of it.[307] The recurring Kaiser Health Tracking Poll from December 2016 reported that: a) 30% wanted to expand what the law does; b) 26% wanted to repeal the entire law; c) 19% wanted to move forward with implementing the law as it is; and d) 17% wanted to scale back what the law does, with the remainder undecided.[308]

Separate polls from Fox News and NBC/WSJ both taken during January 2017 indicated more people viewed the law favorably than did not for the first time. One of the reasons for the improving popularity of the law is that Democrats who opposed it in the past (many prefer a “Medicare for All” approach) have shifted their positions since the ACA is under threat of repeal.[309]

A January 2017 Morning Consult poll showed that 35% of respondents either believed that Obamacare and the Affordable Care Act were different or did not know.[310] Approximately 45% were unsure whether the repeal of Obamacare also meant the repeal of the Affordable Care Act.[310] 39% did not know that “many people would lose coverage through Medicaid or subsidies for private health insurance if the A.C.A. were repealed and no replacement enacted,” with Democrats far more likely (79%) to know that fact than Republicans (47%).[310]

A 2017 study found that personal experience with public health insurance programs leads to greater support for the Affordable Care Act, and the effects appear to be most pronounced among Republicans and low-information voters.[311]

Political aspects

“Obamacare”

The term “Obamacare” was originally coined by opponents as a pejorative. The term emerged in March 2007 when healthcare lobbyist Jeanne Schulte Scott used it in a health industry journal, writing “We will soon see a ‘Giuliani-care’ and ‘Obama-care’ to go along with ‘McCain-care’, ‘Edwards-care’, and a totally revamped and remodeled ‘Hillary-care‘ from the 1990s”.[9][312] According to research by Elspeth Reeve, the expression was used in early 2007, generally by writers describing the candidate’s proposal for expanding coverage for the uninsured.[313] It first appeared in a political campaign by Mitt Romney in May 2007 in Des Moines, Iowa. Romney said, “In my state, I worked on healthcare for some time. We had half a million people without insurance, and I said, ‘How can we get those people insured without raising taxes and without having government take over healthcare?’ And let me tell you, if we don’t do it, the Democrats will. If the Democrats do it, it will be socialized medicine; it’ll be government-managed care. It’ll be what’s known as Hillarycare or Barack Obamacare, or whatever you want to call it.”[9]

By mid-2012, Obamacare had become the colloquial term used by both supporters and opponents. In contrast, the use of “Patient Protection and Affordable Care Act” or “Affordable Care Act” became limited to more formal and official use.[313] Use of the term in a positive sense was suggested by Democrat John Conyers.[314] Obama endorsed the nickname, saying, “I have no problem with people saying Obama cares. I do care.”[315]

In March 2012, the Obama reelection campaign embraced the term “Obamacare”, urging Obama’s supporters to post Twitter messages that begin, “I like #Obamacare because…”.[316]

In October 2013 the Associated Press and NPR began cutting back on use of the term.[317] Stuart Seidel, NPR’s managing editor, said that the term “seems to be straddling somewhere between being a politically-charged term and an accepted part of the vernacular”.[318]

Common misconceptions

“Death panels”

Main article: Death panel

On August 7, 2009, Sarah Palin pioneered the term “death panels” to describe groups that would decide whether sick patients were “worthy” of medical care.[319] “Death panel” referred to two claims about early drafts.

One was that under the law, seniors could be denied care due to their age[320] and the other that the government would advise seniors to end their lives instead of receiving care. The ostensible basis of these claims was the provision for an Independent Payment Advisory Board (IPAB).[321] IPAB was given the authority to recommend cost-saving changes to Medicare by facilitating the adoption of cost-effective treatments and cost-recovering measures when the statutory levels set for Medicare were exceeded within any given 3-year period. In fact, the Board was prohibited from recommending changes that would reduce payments to certain providers before 2020, and was prohibited from recommending changes in premiums, benefits, eligibility and taxes, or other changes that would result in rationing.[322][323]

The other related issue concerned advance-care planning consultation: a section of the House reform proposal would have reimbursed physicians for providing patient-requested consultations for Medicare recipients on end-of-life health planning (which is covered by many private plans), enabling patients to specify, on request, the kind of care they wished to receive.[324] The provision was not included in ACA.[325]

In 2010, the Pew Research Center reported that 85% of Americans were familiar with the claim, and 30% believed it was true, backed by three contemporaneous polls.[326] A poll in August 2012 found that 39% of Americans believed the claim.[327] The allegation was named PolitiFact‘s “Lie of the Year”,[319][328] one of FactCheck.org‘s “whoppers”[329][330] and the most outrageous term by the American Dialect Society.[331]AARP described such rumors as “rife with gross—and even cruel—distortions”.[332]

Members of Congress

ACA requires members of Congress and their staffs to obtain health insurance either through an exchange or some other program approved by the law (such as Medicare), instead of using the insurance offered to federal employees (the Federal Employees Health Benefits Program).[333][334][335][336][337]

Illegal immigrants

ACA does not provide benefits to illegal immigrants.[338] It explicitly denies insurance subsidies to “unauthorized (illegal) aliens”.[25][26][339]

Exchange “death spiral”

One argument against the ACA is that the insurers are leaving the marketplaces, as they cannot profitably cover the available pool of customers, which contains too many unhealthy participants relative to healthy participants. A scenario where prices rise, due to an unfavorable mix of customers from the insurer’s perspective, resulting in fewer customers and fewer insurers in the marketplace, further raising prices, has been called a “Death Spiral.”[340]During 2017, the median number of insurers offering plans on the ACA exchanges in each state was 3.0, meaning half the states had more and half had fewer insurers. There were five states with one insurer in 2017; 13 states with two; 11 states with three; and the remainder had four insurers or more. Wisconsin had the most, with 15 insurers in the marketplace. The median number of insurers was 4.0 in 2016, 5.0 in 2015, and 4.0 in 2014.[341]

Further, the CBO reported in January 2017 that it expected enrollment in the exchanges to rise from 10 million during 2017 to 13 million by 2027, assuming laws in place at the end of the Obama administration were continued.[342] Following a 2015 CBO report that reached a similar conclusion, Paul Krugman wrote: “But the truth is that this report is much, much closer to what supporters of reform have said than it is to the scare stories of the critics–no death spirals, no job-killing, major gains in coverage at relatively low cost.”[343]

Opposition

Opposition and efforts to repeal the legislation have drawn support from sources that include labor unions,[344][345]conservative advocacy groups,[346][347] Republicans, small business organizations and the Tea Party movement.[348] These groups claimed that the law would disrupt existing health plans, increase costs from new insurance standards, and increase the deficit.[349] Some opposed the idea of universal healthcare, viewing insurance as similar to other unsubsidized goods.[350][351] President Donald Trump has repeatedly promised to “repeal and replace” it.[352][353]

As of 2013 unions that expressed concerns about ACA included the AFL-CIO,