Category: corporate tax

A Real Minimum Wage

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November 18, 2018

by Steve Stofka

Near the top of the Democratic agenda in the new Congress is a minimum wage of $15. The bill is unlikely to pass the Senate, but it will signal to the voters that the Democratic House is meeting campaign promises. The states with the most solid Democratic support are those on the west coast and northeast coast where the cost of living is much higher. A single minimum wage for the entire country is not appropriate. Republicans control the Senate and they are from states with much lower costs of living. They will reject an ambitious minimum wage that is one-size fits all.

Housing is the largest monthly expense for most families. Below is a graph of home prices in several western metropolitan areas (MSAs) and the national average of twenty large MSAs. Home prices in Dallas and Phoenix are a 1/3 less than Los Angeles and San Francisco. Housing costs in many smaller cities will be below Dallas and Phoenix.

CaseShillerComps

Why isn’t the minimum wage indexed to inflation? Because politicians of both parties, but particularly Democrats, have used it as a wedge issue to gain voter support. If the House Democrats wanted to pass bi-partisan legislation on a minimum wage, they could use a flexible minimum wage that is indexed to the average wages for each region within the country. These are published regularly by the Bureau of Labor Statistics, the same agency that publishes the monthly report of job gains and the unemployment rate. I’ve charted the annual figures for those same cities.

HourlyEarnComp

A $15 minimum wage is 40% of the average wage in San Francisco, and a bit more than half of the average wage in Los Angeles. It is almost 60% of the national average. The current minimum of $7.25 is 28% of the national average.

If the House passed a minimum wage bill that set the wage to 40% of the average wage for each region, Senate Republicans might at least consider it. In Denver and L.A., the minimum wage would be about $11.50. In Dallas and Phoenix, it would be about $10.60. Democrats could show that they are in Washington to pass legislation for working families, not pound some ideological stump as Republicans did for eight years with the repeal of Obamacare.

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Stocks and Taxes

There is a close correlation between stock prices and corporate tax collections. The tax bill passed last December lowered corporate tax revenues in the hope that businesses would invest more in the U.S. The divergence between prices and collections has to correct. Either tax collections increase because of greater profitability or stock prices come down.

StocksVTaxes
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Income Growth

The financial crisis severely undercut income growth. Real, or inflation-adjusted, per capita income after taxes decreased for three years from 2008 through 2010, and again in 2014. It is the longest period of negative growth since the 1930s Depression.

IncomeRealPerCapGrowth

The Bubble of Average

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November 26, 2017

by Steve Stofka

December is the 10-year anniversary of the start of the recession that culminated in the Financial Crisis of 2008. Four years later, an investor finally broke even.

Since that breakeven point in early 2012, the total return of the SP500 has more than doubled.  The rising market and historically low volatility sparks predictions of a bubble and a crash. The Shiller CAPE ratio, an inflation adjusted measure of price-earnings, is not as high as the ratio of the dot-com boom but it is very high.  Stocks are expensive.

Let’s turn to some long-term returns for a different perspective. The 10-year annual return is only 8.13%, almost 2% less than the average for the past 90 years. The 20-year return is even worse – just 7%.

From July 2000 to August 2006 an investor made nothing. As a rule of thumb, savings needed in the next five years should not be invested in the stock market. Both downturns are good examples. The 2000-2006 downturn lasted six years. The 2007-2012 lasted more than four years.

Let’s turn to a 30-year period, 1988 to 2017. The period begins just after the October 1987 meltdown. All the froth has been taken out of the market. The 1990s included the historic run up of the dot-com boom. The 30-year return is above average but not by much – .6%.

The most disturbing truth about these averages is the average or below average returns of these periods.  Investor surveys regularly show that people disregard averages and overestimate future returns.  That fantasy is the true bubble.

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Corporate Taxes

Next week the Senate will attempt to pass a tax cut bill. As I noted last week, both the Senate and House bills cut the corporate income tax to 20%. The administration and Republican lawmakers state that this tax cut will help working families the most. They must be too busy to read the analysis of their own Treasury department.

The Department periodically analyzes the distribution of the tax burden on various types of taxpayers. In their latest analysis, they estimate that labor income bears only 19% of the costs of corporate income taxes. Steve Mnuchin, the head of the department, claims that workers bear 2/3rds of the cost of the corporate tax. He uses this fantasy number to support a corporate tax cut.

Who will benefit most from a cut in the corporate income tax? The report states “the top 10 percent of families bears 72.5 percent of the burden” and will be the winners.

Over the decades, through Republican and Democratic administrations, the cost burden of labor has changed only slightly. Economists might argue the finer points, but the distribution is well understood. Mnuchin’s job is to sell the boss’s tax cuts. Facts be damned and full steam ahead.

Rocky Tax Road

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November 19, 2017

The House passed a tax cut bill this week as the Senate Finance Committee passed a separate version that must still go to the full Senate for a vote. There’s a hard road ahead for this bill to reach the President’s desk.

The Process…

The full Senate will take up the bill after Thanksgiving. If the Senate passes the bill, there are still more steps. Bills submitted by Congress must have identical language from both the House and Senate.

The House passed its tax bill first, so the Senate could adopt the House version and approve it. Highly unlikely. If the Senate passes a bill, both bills will likely go to a House-Senate conference committee to resolve differences in the two bills and produce a unified bill. The Republicans will hold a majority on that committee and do not need Democratic votes.

If the committee can produce a unified bill, it will be sent to the House and Senate for a vote. If either body rejects the bill, it can be sent back to the joint committee, but that rarely happens. The bill would be effectively dead.

Republican leaders regard passage of the bill as critical to the 2018 Senate races. After the Republican majority failed to pass a health care bill earlier this year, big dollar donors have advised party leaders that they are closing their wallets if the party cannot pass a tax bill. Fundraising for the 2018 campaigns kicks off in a month.

The Provisions…for business

Both bills cut the corporate income tax to 20%. Both bills will tax pass-through and passive income at 25% or 32%.

Pass-through income consists of profits earned by businesses that flow to the business owner as personal income. Half of all pass-through income goes to the top 1% of incomes.

Passive income can be the profits from rental property, or dividends paid by an REIT (Real Estate Investment Trust). Under current law, such income is taxed at personal rates as high as 40%.

Republican Senator Ron Johnson opposes the bill as it came out of the Finance Committee. The bill gives an estimated $1.3 trillion in tax cuts to corporations, more than three times the $362 billion in tax cuts to taxpayers with pass-through income. Each sector currently pays half of the taxes on business profits. Small businesses and farmers get 25 cents of the tax cut dollar, while big corporations get 75 cents.

With only a two-person majority, Senate Republicans cannot afford to lose more than two votes and pass this bill. Susan Collins from Maine, a state dominated by small businesses, has echoed Johnson’s objections. Rand Paul from Kentucky says he will not vote for a bill that increases the deficit, which this bill does. Unless there are some key changes made to the Senate bill during the Thanksgiving break, the bill is unlikely to pass.

Both bills keep the 1031 exchange clause which allows real estate owners to avoid capital gains taxes on the sale of a property when they reinvest the gains in a similar class property. Owners of equities do not enjoy this tax subsidy. An investor who sells a stock, mutual fund, or ETF must pay any capital gains even if the investor buys another equity with the gains.

The Provision…for individuals

The House bill promises to save a median income family $1182 in taxes. Not about $1200. $1182. The precision of that number indicates that it is more a selling tool than a reality. The Senate version will likely tout something similar.

Half of taxpayers will notice little change in either bill because they pay almost no income taxes. Both bills retain the Earned Income Tax Credit (EITC). Lower income taxpayers will see no relief from the bite of FICA taxes.

The standard deduction is doubled but personal exemptions are eliminated and the child tax credit is increased by $600 per child but only for five years. Have you got that? Paul Ryan, the House Majority Leader, assured us that the tax bill would be simpler. Sound simple to you?

The Senate bill includes a repeal of Obamacare penalties for not having health insurance. Oddly enough, this saves the government $332 billion over ten years. Wait, how does that happen? The Congressional Budget Office (CBO) estimates that many younger people who would be eligible for subsidies under Obamacare will simply forgo insurance if the penalty is eliminated. Republican leaders get two birds with one tax stone. Senators can register their disapproval of the most hated part of Obamacare and the savings enable the Senate bill to meet the deficit requirements under reconciliation rules.  These rules allow the Senate to pass legislation with a simple majority.

As I noted two weeks ago, both bills eliminate or reduce the current deduction for state and local taxes (SALT). High tax states like California, New York, New Jersey, Connecticut and Massachusetts have no Republican Senators. If Republican leaders lose the votes of Johnson, Collins and Paul, they would have to reinstate a full SALT deduction to have any hope of gaining one or two Democratic votes.

The Senate eliminates the SALT deduction entirely and uses the tax money to continue the deductions for medical expenses, student loans, mortgage interest and charitable donations. The House bill eliminated these deductions but allowed some SALT deduction in order to appease Republican House members from high tax states.

The House bill simplifies the tax brackets from the current seven to four. The Senate version has seven brackets.

The Conclusion…

Imagine a rough dirt road after a lot of rain. The tax bill has just turned off the paved highway and onto the dirt road. Expect a lot of muttered cursing, pushing and digging to move a tax bill to its final destination, the desk of President Trump.

 

The BUT Economy

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December 9th

An eventful week in what I will call the BUT economy:  GDP revisions, Corporate Profits, Consumer Confidence and the Labor Report.  Let’s get into it!

At the end of last week, the Commerce Dept issued their customary revisions to 3rd quarter Gross Domestic Products (GDP).The first number that came out in October was a preliminary estimate.  As more data comes in, the Commerce Dept. revises its figures, and will have another revision in December.  From the initial estimate of 2.0% annualized growth, the Commerce Dept revised 3rd quarter GDP growth up to 2.7%, below the historical average of about 3% but good news is YAAY! Right?  Wait for it now…BUT upward revisions were due largely to companies building inventories.  Final sales actually declined from the initial estimate of 2.1% to 1.9%.  Excluding exports, final sales were revised from a growth of 2.3% to 1.7%.

The boom in natural gas production has led many power generators to convert their plants from coal to natural gas, when they can.  Total coal production is down this year (Source) but exports of U.S. coal to the rest of the world have surged, so that we are exporting a record 25% of the total coal production in this country.  The U.S. Energy Information Administration (EIA) estimates that coal exports will total about 133 million short tons this year, or 2-1/2 times the average of the past decade. (EIA Source)

The process of drilling for natural gas, called Fracking, has also led to a high production of crude oil (EIA source).

GDP includes both exports (+) and imports (-), what is called “net exports” and it has been negative for several decades as we import far more goods than we export.  This serves as a negative drag on GDP growth.

Exports have risen over the past decade.  As natural gas prices have fallen, surging coal exports in the past few years have helped buoy up lackluster GDP growth.

Another contributor to GDP growth has been a more confident consumer, in contrast to the rather cautious attitude of businesses in the past six months.  An upswing in student debt and car loans has halted the decline as households have shed debt (delevered) either by foreclosure, default, paying down balances or not charging as much.  Household Credit Market Debt outstanding (includes mortgages, car loans, student loans, revolving credit) indicates a growing willingness of consumers to take on more debt. 

On a per person basis, our debt has declined slightly from the peak of 2007 but is still way too high, leaving many of us vulnerable to a subsequent downturn, slight though it might be.

Just how bad has this recession been?  In previous recessions, households cut back their debt to “only” a 5% growth rate.  For the first time ever, the American people reduced their debt growth rate below 0. It is only in the past two years that this rate of negative debt growth is approaching 0.

Here’s the BUT. The underlying fragility of confidence was revealed this past Friday when the U. of Michigan Consumer Sentiment poll showed a plunge in confidence from over 82 in September to 74 in October. For the first time since the recession started in late 2007, the consumer confidence index had finally surpassed 80, only to fall back again the following month.  In a relatively healthy economy, this index is above 90.

To summarize so far, we have a consumer slowly and haltingly gaining more confidence, spending more and keeping the growth rate of her debt in check.  We have an overall economy that is behaving rather tiredly, growing tepidly as though on the downhill of a long boom cycle; that’s a problem since this has not been a boom cycle in the past few years.  So how are corporate profits doing?  Fine! Thank you!

In this past quarter, profits rose by 18%.

Starbucks, the coffee giant, announced this week that they would voluntarily pay some British income tax this year instead of moving the profits to some low tax country and avoiding British income taxes.  It appears that their customers discovered that they had been (legally, mind you) avoiding paying income taxes and were mobilizing to boycott Starbucks’ stores in Great Britain.

Interest rates kept near zero by the Federal Reserve have been a feast for many international corporations.  At the end of October, U.S. companies have issued $1.1 trillion in investment grade and high yield bonds (Source), responding to investors’ thirst for higher yields. That is an increase of 26% over last year’s bond issuance. International companies are, quite rationally, borrowing at the lowest interest rate they can find around the world, then spread that money to their subsidiaries in other countries.  They pay the lowest income taxes they can find internationally and shuffle the paper profits around the world. 

Ok, where were we? Oh yeah, cautious but more confident consumer, tepid but possibly improving GDP growth and record corporate profits.  Oh yeah, and record Federal Debt – over $16 trillion and counting.

Pity the poor corporations who pay the highest income tax rate in the world – except that they don’t.  In 2011, it was about 20%.

Record corporate profits, record low effective corporate tax rates, record low borrowing costs for corporations and record high Federal Debt.  The largest companies heavily lobby Congress to keep their tax rates low.  No matter how high profits are, companies publicly worry about their profit forecast and the economic outlook.  These large companies have become adept at convincing Congress that they are struggling.  Half of the Congress thinks that they must help these poor companies create jobs; key committee members craft more tax goodies and bury these goodies inside large appropriations bills.  Congress underfunds regulatory agencies so that they are effectively outmanned by corporate legal departments.

The lack of corporate tax revenues contributes to the Federal debt; over the past fifty years that share has declined from 20% of Federal revenues to about 10%.  If the share of Federal revenues had remained at the 20% level of the 1960s, the Federal Debt would be $7.4 trillion today, not $16 trillion.  Calculating savings on interest paid on the smaller debt would lower the actual debt to about $6.8 to $7 trillion.

Big increases in productivity have helped fuel the strong rise in profits.  Investments in technology as well as higher skill and education levels have enabled American workers to record levels of production but they have not shared in the gains from those increasing levels of production.  The U.S. has risen to the same levels of income inequality as some emerging countries:  China, Venezuela, Ecuador and Argentina.

To recap:  record high corporate profits due to record high worker productivity which has not benefited the workers, record low effective corporate tax rates and share of the costs of government, record low borrowing costs for corporations, and record high Federal Debt.

All of this largesse to multi-national U.S. corporations begs the question: Where are the jobs? But that I’ll leave for next when we look at the November Labor Report released this past Friday.

Income Tax and the Constitution

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The Constitution of the United States was designed to protect the individual states who feared the power of a large central government.  In keeping with that design, the Constitution enumerates the various powers of the Federal Government. This past week a majority of the Supreme Court decided that the health care law known as Obamacare was constitutional, basing its decision on the taxing power granted by the Constitution and the 16th Amendment.

A fundamental presumption of writing the Constitution is the self-preservation of the new nation as such.  Various powers of defense, the ability to make war and treaties with foreign countries are some of the enumerated powers granted to the Federal Government to ensure the country’s continued existence.  What is not enumerated but assumed is the right, the duty of the Federal Government to protect the country as a whole.  At a time of armed conflict within a fractured nation, President Lincoln understood this point more clearly than most – that the utmost responsibility of a President is not spelled out in the Constitution that he had sworn to uphold.

There are two common faults that have caused the downfall of all nations, particularly nation empires: 1) the internal struggle for power by factions; and 2) the inexorable concentration of wealth and property.  The second leads to the first.

In the Federalist Paper No. 9, Alexander Hamilton wrote “It is impossible to read the history of the petty Republics of Greece and Italy, without feeling sensations of horror and disgust at the distractions with which they were continually agitated, and at the rapid succession of revolutions, by which they were kept in a state of perpetual vibration, between the extremes of tyranny and anarchy.”  Periods of calm within those empires were short-lived, “soon to be overwhelmed by the tempestuous waves of sedition and party-rage.”  As we look at and listen to the debates regarding health care, what do we see?  Party-rage.  Day after day, proponents on both sides of the issue make claims that are either blatantly untrue or a tortured stretching of fact.  There are so many dubious claims that reporters at Politifact.org  can only examine the more widely spread claims.

In Federalist Paper No. 10, James Madison, the chief constructor of the Constitution, wrote: “Among the numerous advantages promised by a well constructed Union, none deserves to be more accurately developed than its tendency to break and control the violence of faction.”  Further, he writes “Complaints are every where heard … that the public good is disregarded in the conflicts of rival parties.”  He explained what he meant by the word faction: “By a faction, I understand a number of citizens, whether amounting to a majority or minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community.” 

What is to be done?  Madison wrote “There are two methods of curing the mischiefs of faction: the one, by removing its causes; the other, by controling [sic] its effects.  There are again two methods of removing the causes of faction:  the one by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests.”  The first of these methods is undesireable; the second is impractical. Madison concluded “The latent causes of faction are thus sown in the nature of man.”  He does not condemn people for this tendency to form factions; a well constructed government must deal with this part of man’s nature.

Madison saw “A zeal for different opinions concerning religion, concerning Government, …an attachment to different leaders ambitiously contending for pre-eminence and power [who] have in turn divided mankind into parties, inflamed them with mutual animosity, and rendered them much more disposed to vex and oppress each other, than to co-operate for their common good.  So strong is this propensity of mankind to fall into mutual animosities, that where no substantial occasion presents itself, the most frivolous and fanciful distinctions have been sufficient to kindle their unfriendly passions, and excite their most violent conflicts.  But the most common and durable source of factions, has been the various and unequal distribution of property.  Those who hold and those who are without property, have ever formed distinct interests in society. [Many different interests] grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views.  The regulation of these various and interfering interests forms the principal task of modern Legislation, and involves the spirit of party and faction in the necessary and ordinary operations of Government.” [emphasis added]  These astute observations by Madison are true today just as they were two hundred years ago.

In its own self-preservation, a government must ameliorate the “unequal distribution of property” which Madison considers to be the chief cause of factions.  How is a government to do that and preserve the respect for property rights that Madison and the framers deemed essential to a free people?  Madison wrote “From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results: and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.”  As with factions, this contradiction is an essential process of being a free people.  To use the same sentence construction as Madison: there are two methods for removing the causes of the concentration of wealth and property:  the one, by abolishing individual property rights which are essential to a nation of free people; the other, by giving every citizen the same amount of property.  The first is undesireable; the second invalidates the first principle and impractical, as Communist societies discovered.

A well constructed government uses its taxing authority to fund its operation and control the inevitable concentration of wealth and property. Many conservatives of today argue on principle that government’s role is not to transfer wealth from one person to the next.  They ignore the history of the decline of many nations whose wealth concentration reached a critical mass that ignited revolution.  They forget that the first principle of a nation is its own preservation; that a nation MUST transfer enough wealth to slow its concentration among a small portion of its citizens.  By its very nature, a property or income tax takes, by threat of force, the property of a person.  The principle of respect for individual private property rights can not be sustained in the ideal if a nation is to survive.

The income tax, or 16th, amendment was “sold” to the state legislatures as a way to tax corporations and very wealthy individuals.  For corporations, the income tax was to be an excise tax or a fee for the exemption from liability that a corporate structure afforded its stockholders.  Today many conservatives advocate a flat tax or a less progressive tax rate structure, citing the uneven distribution of the tax burden on the rich.  When the legislatures voted on this amendment, they did so on the premise that almost all people would not be subject to the income tax.   Corporations and those with extremely large incomes were to shoulder the entire burden of the income tax.  Those state house members who voted for ratification would be shocked that the top 1% of income earners paid only 38% of the personal income tax collected in 2008 (National Taxpayers Union).  They would be indignant that corporations paid only 22.1% of the combined total of personal and corporate income taxes collected in 2008 (IRS Statistics  Table 1).  When the 16th Amendment was sold to the American people in 1910 through 1913, these two groups combined were to shoulder most, if not the entire, burden of the income tax.  In 2008, they paid a little less than 52%.

In the coming months billions of dollars will be spent to sway or negate our vote.  The people and corporations who spend these vast amounts of money will try to convince us that we should vote a certain way on principle, out of loyalty to a particular ideal, party or policy.  Those who spend this money are not evil – they are simply promoting their own interests, hoping that they will convince each of us that we share an interest with theirs.  Given a choice of two competing parties, some voters will be undecided, feeling lukewarm or conflicted about the interests of either faction.  We may wish for some alternative to these dominant factions, or a menu where we could pick and choose the narrow interests that most closely align with ours.  It is the nature of mankind that we can not either live or vote in the ideal; that we must make compromises and choose the faction which most closely aligns with our interests.

From the beginnings of this nation, parties have arisen, trying to wrest control of the government, hoping to grab control of its power for their own self-interest.  For its own self-preservation, a well constructed government MUST constantly strive to distribute competing interests and power; since money and property form the core of power, a government must spread just enough money from the richest of its citizens and corporations to the rest of its citizens.   How well a government can do so determines whether the nation survives.

Corporate Taxes

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Both conservative and “mainstream” media pundits, as well as candidates In the Republican primary debates, assert that U.S. corporations pay a 35% federal income tax rate, “one of the highest in the world.”  After the corporation pays this tax, it distributes dividends to its shareholders, who then pay tax on the dividend.  Capital gains and dividends are taxed at a lower 15% rate, resulting in a net tax of 50% federal tax on corporate profits.  In arguing for lower corporate tax rates and rationalizing the lower rate on dividends, conservatives ask should the federal government get half of corporate profits?

The federal government may get too much of profits but it is not 50%.  The international accounting firm PricewaterhouseCoopers calculated an effective tax rate of 27% in the years 2006 – 2009.  Sixty years of data from the Bureau of Economic Analysis show that the corporate tax rate has declined markedly since World War 2. (Click to enlarge in separate tab)

Using a three moving average highlights the downward trend.  For those in the Ronald Reagan cult, it may come as some surprise to see the “hump” in rates during the Reagan years.

Zooming in on the past ten years, we see an effective tax rate of 30% or less.  Some might explain that the lower average rate is due to smaller corporations who pay less than the 35% tax but IRS data shows that smaller companies who qualify for these lower rates make up less than 10% of corporate profits.

If companies had paid a 35% rate on their profits this past decade, what would they have paid?  Almost a trillion dollars extra in taxes.

When someone mentions the “35% corporate tax rate”, that is the statuatory rate, not the actual rate companies pay.   In 2009, the three year moving average rate had dropped to 21%.  That is a far cry from 35%.  We can have a discussion – or disagreement – about what a fair tax rate is for U.S. companies.  We should at least start that discussion from some realistic data.

Pay As You Go

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For some historical perspective, here are some notes I made January 20th, 2009.

As of early October, Obama’s plan was still pay as you go. Pelosi and the blue dog (economic moderates) Democrats were convinced this was a doable plan even with a recession. However, the economic malaise has since proved to be so systemic both in this country and around the world, that revenues will probably fall short.

WSJ reported today (1/20/09) that, after the increase in the AIG bailout last night, there was talk among Democrats over the weekend that the bailouts are probably going to cost more than $700B even before Obama takes office. Secondly, the promised return of some of the money to the taxpayers from AIG is going to take longer than Paulson and Bernanke predicted.

Lastly, there was a cute little move that Paulson announced in September that went under most people’s radar – a change in Sec 382 of the tax code. It voids the tax that banks pay when they merge. The only ones who did notice this change were the mergers and acquisitions guys at US banks. It may mean as much as $140B in tax revenue gone this year and next. It sweetens the after tax bottom line for banks who want to merge.

I’m sure Paulson did this to encourage banks to buy failing assets and banks instead of the Treasury bailing them out but he made no announcement and the CBO was not notified to change their tax revenue projections because of the change. Corporations pay about $350-$400B in taxes each year so a $140B tax break to merging corporations is huge.

Barney Frank is questioning whether Paulson’s move was even legal, given a law that was passed in 1986. At any rate, tax revenues will be far less than even recently revised projections.

Obama can probably get some savings by drawing down troops in Iraq, which is costing us over $10B a month. General Petraeus is calling for more troops in Afghanistan so it is doubtful that there will be any savings in that combined military theater in the next 6 – 12 months. Iraq currently has a $70+ billion surplus and the U.S. may be able to get a down payment on the amount of money we have put into that country.

There is always cleanup to be done when Presidents like Reagan and Bush champion low taxes and high security. Reagan tripled the U.S. debt in his eight years, Bush has doubled it in his 8 years. Neither of them were very analytical, preferring to trust their guts and “shoot from the hip”. Each of them talked small government but delivered bloated government. Now we have a president who talks big government. Maybe we are living in a “bizarro” backwards universe where events turn out the opposite of presidential promises and projections.