Part III – Prediction: Jim DeMint Will Join The Trump Administration…


♦In Part-I we explained how legislation is actually constructed in 2017. NOT how most people think it is constructed – SEE HERE

♦In Part-II we explained what that modern reality means with a Trump administration, and what will be needed to overcome the corrupted swamp – SEE HERE

The final paragraphs include accepting the reality and pondering:

[…] President Trump is not going to sit and wait for congress to evolve in their ability to turn away from existing lobbyists hanging around to defend their interests.  Sooner or later President Trump is going to do something dramatic to break the impasse within the broken legislative system.

Considering that Trump is not a politician, that “something” could get rather ugly.

We are not going to get bogged down in the weeds and loose the capacity to see the larger, more consequential, picture.  Staying elevated – However, as if guided by a prescient cue, part of the possible answer to the quagmire becomes evident today:

The controversial president of The Heritage Foundation, former Sen. Jim DeMint, may soon be out of a job, following a dispute with board members about the direction of conservative think tank, according to three people with knowledge of the situation.

Some Heritage board members believe that DeMint has brought in too many Senate allies and made the think tank too bombastic and political — to the detriment of its research and scholarly aims.

[…]  “If Heritage pushes Jim DeMint out, it was because a few board members, who are close to the Republican establishment, never wanted him to be president and have been working to push him out ever since,” said one operative who has worked with Heritage. “DeMint is one of the most respected and selfless conservative leaders in the country and pushing him out would be a big mistake.” (link)

During his keynote remarks at the NRA convention in Atlanta today, President Trump noted the high regard carried for Jim DeMint:

[…] And also from Heritage, Jim DeMint.  It’s been amazing.  I mean, those people have been fantastic.  They’ve been real friends.

Former South Carolina Senator Jim DeMint, now head of the Heritage Foundation has been pushing the organization toward more political activism because it is necessary for the exact reason we have outlined in the previous discussions:  “There are almost zero organizational entities within K-Street presenting any legislative constructs or legislative briefs intended to advance any of Trump’s policy objectives.” (link)

Virtually all of the K-Street policy and lobbying influence is targeted to grow government and present legislation that grows the scale, scope and interests of the financial political class.  DeMint’s efforts toward providing a counter-balance to the influence of the singular policy agenda is exactly what’s needed to begin to deconstruct the UniParty institutions.

The House and Senate, and all of the membership therein, are mired in the swamp by the legislative priorities of the financial influences and lobbyists upon them.  The scale of the lobbying is jaw-dropping when you consider over $3 billion spent in 2016 alone.

The Citizens United SCOTUS decision injected massive fuel into the swamp to expand the scale and scope of multinational corporate influence.   There is now virtually unlimited money pouring in to Super-PAC’S who target politicians for legislative influence.

If President Trump is going to make inroads to advance his America-First agenda, he is going to have to find a way through the financial network pressure now leveraging and choking all members of congress.  The UniParty dynamic cannot be broken without directly confronting this issue.

Senator Jim DeMint, founder of the Senate Conservative Fund (SCF), is the original Tea Party politician who generated support for grassroots conservative politicians.  It was specifically through DeMint’s pre-CU fund many of the modern leaders of conservatism gained their office.

Senator DeMint began slaying incumbent GOPe candidates and raising up challengers to GOPe preferred primary candidates.   He was remarkably successful, and the professional republican class hated him for wiping out their establishment next-in-liners.

However, empowered by the SCOTUS Citizens United decision (2010), the professional GOPe machine changed their strategy and began fighting back against DeMint’s firebrand of conservative primary politics.

The establishment GOP (McConnell, Hatch, Cornyn, Blunt, Thune etc) used the CU decision to coordinate with lobbyists like CoC President Tom Donohue and fund Super-PAC’s with tens of millions of dollars for attacks against republican primary candidates they viewed as outside the party norms.

By the 2012 election the GOPe strategy was working and most of the incumbent republicans were considered safe and secure.  The defeat of Mitt Romney didn’t matter to the UniParty republican leadership; what mattered most was their ability to remain in power.

If the UniParty republicans lose an election to a democrat nothing changes; the leadership remains in power and influence regardless of the flag color atop the spire.  However, if the UniParty republicans lose an election to a real conservative their power is threatened; this is why the professional GOPe attack their own.

For all of these reasons it just makes sense for Jim DeMint to join the Trump administration.  DeMint could be a great Chief-of-Staff replacement for Priebus, or DeMint could be the COO inside DC to guide the architecture of legislative constructs that are in line with Trump’s policy objectives.   Jim DeMint and Mike Pence are strong allies and good friends from all earlier battles on Capitol Hill.

Jim DeMint would be a natural asset to the administration because the battle has now evolved beyond party affiliation; and the UniParty, including the GOPe, must be confronted if any success is to be achieved.

To fight this:

…You Need This:

….Because ultimately the battle looks like this: 

.

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Part II – Why President Trump Has Not Received Legislative Action From Congress – and What Can Be Done…


In Part I we explained why President Trump has not received any legislation:

To Wit: President Donald Trump winning the election threw a monkey wrench into the entire DC system…. The modern legislative machine is frozen in place.

The “America First” policies represented by candidate Donald Trump are not within the legislative constructs coming from the authors of the legislation.   Congress has no bills to advance because all of the myriad of bills and briefs written are not in line with President Trump policy.

That’s why congress has not passed any legislation for President Trump to sign.

There’s no entity within DC writing legislation that is in-line with President Trump’s economic and foreign policy agenda.  Exactly the opposite is true.  All of the DC pipeline legislative briefs and constructs are antithetical to Trump policy.

There are almost zero organizational entities within K-Street presenting any legislative constructs or legislative briefs intended to advance any of Trump’s policy objectives.

Think about how much money is behind the legislative business when those who control the legislation are willing to spend $3.1 BILLION in a single year to achieve their needs.

♦The “Associated American Southern Border Wall and Security Builders” – special interest and lobbying group – simply doesn’t exist. Nor are there any entities creating legal briefs (bills) to facilitate the southern border wall construction.

♦There is no “Associated Illegal Immigrant and Deportation Enforcement” group lobbying for the removal of undocumented illegal aliens; or writing legislation to fast-track deportation of illegal aliens.

♦There’s also no official corporate political action committee or group office on K-Street creating legislation to repeal ObamaCare, or lobby for the removal of government interventionism into the healthcare system.  etc.

The DC legislative pipeline is devoid of any bill, brief or construct for any of the platform priorities of the Trump administration.   Quite the opposite is true.  Almost all of the K-Street institutions -which create the legislative priorities- are capable of producing a product that flows in one direction.

This reality is the epicenter of the UniParty problem.

Voters can demand change and switch the House of Representatives from Democrat to Republican control, but politicians don’t actually write legislation.  The legislative product coming through the system remains the same regardless of which party is in control of the House of Representatives.

Voters can go further and change out the Senate from Democrat to Republican control; but again, you find little difference because the legislative product hasn’t changed.  K-Street may (usually they don’t) modify the special interest ingredients a little – but the progressive sausage is still a progressive sausage; it’s not a hamburger.

Voters go one step further and change the Executive Branch away from progressive control.  However, there again, the legislative product has not changed.  The DC system is creating the same ideological product regardless of the dynamic of party affiliated politics.

The problem in 2017 is systemic because there’s no counter-balancing legislative or lobbying enterprise within the epicenter of the DC Swamp, K-Street.  There’s virtually no alternative legislative product being generated which would coincide with the change in representative political ideology.

This UniParty system is why Paul Ryan and Mitch McConnell voted to fund and approve every one of President Obama’s priorities.  Omnibus, Bailouts, Porkulous, DACA, Healthcare Exhanges, Stimulus etc. are the only game in town with support – there simply are no alternatives being pushed by interest groups.

Yes, there are a few modestly sized groups like Heritage Foundation who can generate alternate legislative products and some advertizing. But for every one of them there’s a hundred going in the other direction.

When you think about it, it simply makes sense.  It’s a self-fulfilling prophecy. Why would there be an organizational entity inside the system whose primary purpose would be to spend money in order to generate less spending or smaller government?  They would essentially be advocating against their own interests.

Remember the grand fiasco that was the 2013/2014 Comprehensive Immigration Reform bill (Gang-of-Eight)?

That Go8 bill was an outcome of the same lobbying process, same K-Street legislative construct etc.  The controversial bill was not majority supported outside the beltway.  Despite the electorate lack of support it passed the Senate and Speaker Boehner, Paul Ryan, Eric Cantor and Kevin McCarthy were only two days from a vote in the House when Cantor was primaried.

When ObamaCare was passed on December 23rd at 1:38am a full 70% of the country when polled did not support it.  But the DC lobbying and legislative system created it and found a way to get it passed.

Jump to 2017 – President Trump takes over the White House in January, and there’s really no Pro-Trump legislative product from congress because there’s no Pro-Trump legislative construct coming from the people who write legislation, K-Street.

Instead, crickets.

The only special interest group that President Trump advocating for him are the voters.

The DC swamp (writ large) is a singular organism with multiple visible components that seem disconnected; but in direction or pathway they are not dissimilar.  Under the visible surface the UniParty roots are all intertwined and connected around principles of self-sustaining common interest.  Their commonality lies in growth of government.

President Trump’s fiscal and economic policies are adverse to those UniParty interests.  President Trump’s first full-year budget proposal was a trillion dollar reduction in spending.  As a consequence the combined weight of all visible DC interests immediately aligned toward diminishment of the proposal.

Within the DC Swamp the flow of legislative interest travels in only one direction.  Albeit there are multiple organizations able to construct legislation for sale; the direction of the product they are producing is going in one progressive direction.

There are no K-Street lobbyists demanding smaller/lesser government.  There are no lobbyists walking in to House and Senate offices and asking for representatives to spend less money.  The only people doing that are voters.   How do reps generally deal with those annoyances?  They turn off the phone, disconnect the fax machine and ignore the emails.

Accepting the reality of who controls legislative constructs also helps to understand why those same entities will not allow prior legislative accomplishments to be undone.  Modern K-Street considers prior legislation ‘paid-for investments‘, they will not allow removal.

Retention priorities:

♦Retention of ObamaCare. ♦Deep Federal Spending. ♦NO border wall. ♦Open-ended immigration until congress delivers comprehensive immigration reform to include amnesty. ♦Tax Cuts (corporate revenue enhancements) are permitted.

They did however suffer defeats on legislation that had not yet passed, but were prepped for Hillary Clinton, like: Trans-Pacific-Trade (TPP) and Common Core federalization of education.

So the next obvious question is: what can be done about it?

The only viable solution, under the current system in place, is for the Trump Administration to generate their own legislative product to deliver to congress for passage.  It sounds weird, but essentially that appears to be what is taking place right now with the White House staffing up with their own groups of bill authors, constructionists and administration lobbyists.

President Trump’s team will create the legislative product, and hopefully the republican controlled house and senate will pass it.

However, even this process also runs head first into the positions of the UniParty.

Example: Commerce Secretary Wilbur Ross sends the Senate Committee on Commerce, Science and Transportation a statutorily required “letter of intent” to renegotiate NAFTA (North American Free Trade Association) mid-March, and the Republican Committee Chairman John Thune doesn’t accept it. (Today is 4/28/17).

Now what?  The GOP wing of the UniParty is beholden to lobbying interests (U.S. CoC) who are adverse to NAFTA renegotiation.   See who is on the committee HERE.

This example is not even a legislative product that needs a vote.  This example is simply a statutorily required notification that requires being accepted.  What do you think would be the outcome if Senator McConnell was given a legislative product containing similar pre-paid lobbying conflicts for his membership?

This reality also helps to explain the frustration from the White House when they do have a legislative product that moves the needle (ie. healthcare), road-mapped primarily by HHS Secretary Tom Price, and yet the House of Reps can’t even bring it to a vote.

The Freedom Caucus can wax philosophically about the Price/Ryan bill not being a full repeal; and they can argue accurately about the bill having flaws remaining from the influence of the ObamaCare lobbyists, but what is the actual alternative?  Nothing.

Nothing is not an option.

The White House paying for their own staff to hire outside people to write legislation because congress doesn’t have an ideological enterprise to create their own is what has lead to this ridiculous situation we are in right now.

This DC quagmire might improve over time as new enterprises (legislation builders) move into DC to do work with a more favorable ideological outlook in-line with the new administration.  But in the interim nothing is getting done, the simple tasks of budgets are at loggerheads, and time is wasting.

Fortunately for congress, right now foreign policy is taking up a lot of intellectual and administrative energy.  The current domestic economic policy outcomes are being driven by the executive office alone without congress having to do any work.

However, understandably, President Trump is not going to sit and wait for congress to evolve in their ability to turn away from existing lobbyists hanging around to defend their interests.  Sooner or later President Trump is going to do something dramatic to break the impasse within the broken legislative system.

Considering that Trump is not a politician, that “something” could get rather ugly.

 

The Confidence Game – The Next Crisis


Confidence-wide

QUESTION: Martin, I started following your models shortly after college in 2000 when I entered the financial advisor world. I soon realized how clueless this industry was and formed a hedge fund in Tampa in March 2007 to short retail and housing, largely based on your models & my understanding of cycles. I reached the top 1% in Morningstar through Sept of 2008 right up until the government banned shorting. I could not receive quotes from my Goldman Sachs trading platform and I lost a lot of money in a few short hours. I eventually had to shut down the fund and my investors took losses. It was this period where I learned the error in my thought process, I underestimated the length to which the Government & politicians would go to kick the can further down the road and underestimated the big banks inside influence on the “free markets”.

Your recent post regarding inflation and the end of Quantitative Easing had me thinking, wouldn’t the moment the politicians realize there is a recession on the horizon and inflation begins to cripple the housing followed by retail, etc, wouldn’t they re-institute QE and expand the balance sheet further regardless of the future implications? It seems politicians will do whatever it takes to avoid the worst and continue to kick the can down the road to save their own careers.

Thank you for your provoking thought and mindful awareness while everyone else buries their heads in the sand.

R

credit-anstalt

ANSWER: The outcome always depends upon confidence. It is what you believe that counts rather than the facts. When Credit Anstalt went belly-up in 1931, why did an obscure bank in Austria set in motion the 1931 Panic and Sovereign Debt Defaults that made a recession into a Great Depression? The answer was found in the name. One of the owners was the Rothschilds. When people heard the Rothschilds went bust, they began selling all the banks because if they went down, everyone else surely would. They were the Goldman Sachs of the day.

Hoover - Loose Cannon

I suggest reading Herbet Hoover’s Memiors from 1931. This is a confidence game. Just because QE appeared to work before does not mean it will work a second time. The middle-class lost money and their living standards were sharply reduced. Retail investment in equities has not yet returned to even 50% of 2007 levels. Most people who lost their homes were those who could never have bought one before. Yes, the middle-class who borrowed more against their house were put under stress. Home equity loans dried up so industries like selling pianos dropped by more than 50% since people borrowed using home equity to fund expensive things like a piano.

Fed v Congress

Energizer-BunnyThe difference this time is the fiscal budget. Back in 2007, the Fed only had to worry about its policy and the contracting economy. The problem they created is that government just keeps going like the Energizer Pink Bunny – it never stops spending regardless of the level of interest rates.

The Fed cannot neutralize the Fiscal spending of government. This is deeply entrenched. Just look at the table below on the annual deficits since 2007. This has increased about 364% since the 2007 crisis began.

Government has become addicted to cheap interest rates. If rates go back just to 5%, we are looking at a fiscal deficit explosion the Fed cannot overcome.

US Deficits 2007-2016

The crisis has to hit before a politician would ever act. Once the crisis begins, you cannot restore confidence. The whole thing will have to play out. Moreover, the crisis in Europe helped to send capital to the USA easing the economic pressure here. This is why the USA is holding up the entire world economy right now and a stiff wind will blow over the European banking system. I seriously doubt that anyone can stop the next crisis and whatever they do will then be seen as a failure.

glassDuring the late 1970s, the IMF held gold auctions trying to stop its advance. The first auctions in 1975-1976 caused gold to drop by 50%. However, then continued auctions had no effect and they were seen as a validation of the bull market they could not prevent. We are looking at the same type of collapse in confidence this time around. The same fundamental act can have different interpretations. It is the glass half full or half empty.

Part I – Understanding Why President Trump Has Not Received Legislative Action From Congress…


There are many new commentators at CTH, and even more new people taking notice of politics for perhaps the first time in their lives.   There is also some confusion noticed between two distinct groups who appear to be talking above and around each other.  Two groups trying to communicate from two entirely divergent sets of understanding.

Perhaps it is valuable to reset the larger frames of reference and provide clarity.

Many, heck, most people think when they vote for a federal politician -a representative- they are voting for a person who will go to Washington DC and write or enact legislation. This is the old-fashioned “schoolhouse rock” perspective based on decades past.

There is not a single congress person who writes legislation or laws.

In 2017 not a single member of the House of Representatives or Senator writes a law, or puts pen to paper to write out a legislative construct.  This simply doesn’t happen.

Over the past several decades a system of constructing legislation has taken over Washington DC that more resembles a business operation than a legislative body.  Here’s how it works.

Outside groups often called “special interest groups” are entities that represent their interests in legislative constructs.  These groups are often corporations, banks, financial groups or businesses; or smaller groups of people with a similar business connection who come together and form a larger group under an umbrella of interest specific to their like-minded affiliation.

Sometimes the groups are social interest groups; activists like climate groups, environmental interests etc.   The social interest groups are usually non-profit constructs who depend on the expenditures of government to sustain their cause or need.

The for-profit groups (mostly business) have a purpose in Washington DC to shape policy, legislation and laws favorable to their interests.   They have fully staffed offices just like any business would – only their business is getting legislation for their unique interests.

These groups are filled with highly-paid lawyers who represent the interests of the entity and actually write laws and legislation briefs.  In the modern era this is actually the origination of the laws that we eventually see passed by congress.  Within the walls of these buildings within Washington DC is where the ‘sausage’ is actually made.

Again, no elected official is usually part of this law origination process.

Once the corporation or representative organizational entity has written the law they want to see passed they hand it off to the lobbyists.  The lobbyists are people who have deep contacts within the political bodies of the legislative branch, usually former House/Senate staff or former House/Senate politicians themselves.

The lobbyist takes the written brief, the legislative construct, and it’s their job to go to congress and sell it.

“Selling it” means finding politicians who will accept the brief, sponsor their bill and eventually get it to a vote and passage.   The lobbyist does this by visiting the politician in their office, or, most currently familiar, by inviting the politician to an event they are hosting.  The event is called a junket when it involves travel.

Often the lobbying “event” might be a weekend trip to a ski resort, or a “conference” that takes place at a resort.  The actual sales pitch for the bill is usually not too long and the majority of the time is just like a mini vacation etc.

The size of the indulgences within the event, the amount of money the lobbyist is spending, is customarily related to the scale of the bill the sponsoring business entity needs to get support for.   If the sponsoring business or interest group can gain a lot of financial benefit for the legislation they spend a lot on the indulgences.

Recap:  Corporations (special interest group) writes the law.  Lobbyists take the law and go find politician(s) to support it.  Politicians get support from their peers using tenure and status etc.  Eventually, if things go according to norm, the legislation gets a vote.

Within every step of the process there are expense account lunches, dinners, trips, venue tickets and a host of other customary way-points to generate/leverage a successful outcome.

But the important part to remember is that the origination of the entire system is EXTERNAL to congress.

Congress does not write laws or legislation, special interest groups do.  Lobbyists are paid, some very well paid, to get politicians to go along with the need of the legislative group.

When you are voting for a Congressional Rep or a U.S. Senator you are not voting for a person who will write laws.  Your rep only votes on legislation to approve or disapprove of constructs that are written by outside groups and sold to them through lobbyists who work for those outside groups.

While all of this is happening the same outside groups who write the laws are providing money for the campaigns of the politicians they need to pass them.  This construct sets up the quid-pro-quo of influence, although much of it is fraught with plausible deniability.

This is the way legislation is created.

If your frame of reference is not established in this basic understanding you can often fall into the trap of viewing a politician, or political vote, through a false prism.  The modern origin of all legislative constructs is not within congress.

“we’ll have to pass the bill to, well, find out what is in the bill” etc.  ~ Nancy Pelosi 2009

“We rely upon the stupidity of the American voter” ~ Johnathan Gruber 2011, 2012

Now, think about this reality against the backdrop of the 2016 Presidential Election.  The entire system within DC was not structurally set-up to receive a Donald Trump presidency.

If Hillary Clinton had won the election, her Oval Office desk would be filled with legislation passed by congress which she would be signing.  Heck, she’d have writer’s cramp from all of the special interest legislation that would be flowing to her desk.

Why?  Simply because the authors of the legislation, the special interest and lobbying groups, were spending millions to fund her campaign.  President Hillary Clinton would be signing K-Street constructed special interest legislation to repay all of those donors/investors.  Congress would be fast-tracking the passage because the same interest groups also fund the members of congress.

President Donald Trump winning the election threw a monkey wrench into the entire DC system…. The modern legislative machine is frozen in place.

The “America First” policies represented by candidate Donald Trump are not within the legislative constructs coming from the authors of the legislation.   Congress has no bills to advance because all of the myriad of bills and briefs written are not in line with President Trump policy.

That’s why congress has not passed any legislation for President Trump to sign.

There’s no entity within DC writing legislation that is in-line with President Trump’s economic and foreign policy agenda.  Exactly the opposite is true.  All of the DC legislative briefs and constructs are antithetical to Trump policy.

There are hundreds of file boxes filled with thousands of legislative constructs that became worthless when Donald Trump won the election.

Those legislative constructs (briefs) representing tens of millions of dollars worth of time and influence and are now just sitting there piled up in boxes under desks and in closets amid K-Street and the congressional offices.

Any current legislation must be in-line with an entire new political perspective, and there’s no-one, no special interest or lobbying group, currently occupying DC office space with any interest in synergy with Trump policy.

Think about the larger ramifications within that truism.

That is also why there’s so much opposition.

No legislation by outside interests means no work for lobbyists who sell it.   No work means no money.  No money means no expense accounts.  No expenses means politicians paying for their own indulgences etc.

However, no K-Street expenditures -because of the futility of it- also means more money available for opposition and activist activity.

Lastly, when you understand this reality you begin to see the difference between legislation with a traditional purpose and faux-legislation with a political agenda.

Remember, politicians don’t write laws – outside groups do.

If you asked a DC Senator or House Member to actually write a law they’d look back at you like a cow just licked them on the forehead.  The politician would have no clue what you are asking them to do, and would immediately look to their staff as their closest reference point (the go-betweens) for outside lobbyist assistance.

This helps to understand when Senator Rand Paul, Mike Lee or Ted Cruz are “pitching” a “bill they’ve written”, it’s a gimmick – a ruse – a pure fundraising ploy.  Nothing more.  That’s why the bills they talk about (ie. El Chappo, Clean Repeal etc.) never actually materialize…. they are raising money, not legislation.

And that’s why Trump’s legislative inbox is empty.

Staffers with nothing to do…

Latest Interview with Martin Armstrong


OMB Director Mick Mulvaney Discusses The Pending Economic Policy Confrontation…


Office of Management and Budget Director Mick Mulvaney appears on Bloomberg News to discuss the seismic, epic, thundershock confrontational clash that is about to take place between the Trump administration and the DC UniParty.

There are no adjectives capable of describing the scope and immeasurable scale of the battle that is about to transpire between the White House and the Democrat/Republican UniParty.

MONEY is where every entity within the full-swamp goes nuclear against President Trump and the administration.  Despite all prior discussions toward this end, it is doubtful that more than one-in-a-million people can fully grasp the dynamic at play.

Because the procedural wonk is so inherently riddled with ten thousand tentacles of political schematics, I will defray the wonk-speak until after the video.

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If you are interested in deep political weeds, keep reading. However, if you have blood pressure issues or are concerned about your physical or mental health, STOP HERE and go enjoy life. Believe me.

From a political perspective the outline of the assembled enemy forces are evident.  Next week former President Obama is scheduled to reappear in Chicago.  This is not coincidental.  There are trillions of dollars at stake.

Every vested financial interest has been, and is now, prepared to do battle against President Trump.  All of the body blows from the media, including their professional gaslighting efforts, was merely to soften Trump up for the pending attacks.

All of the previous accusations, ridicule, marginalization, probes and diminishment efforts by the media and their multinational corporate entities will pale in comparison to what lies ahead.

If you listen to Mulvaney carefully, and accept that the UniParty apparatus is real and purposeful, then you can see the scope of the financial strategy coming from DC.  Remember, the BIG CLUB has paid for legislative policy.  They will not allow those payments to be non-reciprocated, all of the DC politicians are now commissioned to fight without limits or rules on their behalf.

BIG CLUB: ♦Retention of ObamaCare. ♦Deep Federal Spending. ♦NO border wall. ♦Open-ended immigration until congress delivers comprehensive immigration reform to include amnesty. ♦Tax Cuts (corporate revenue enhancements).

♦House Speaker Paul Ryan will use the budgetary rules process, as a backdoor, to leverage the U.S. CoC Lobbyists construct of the Border Adjustment Tax (BAT).

♦No-one paid by the Big Club in Washington DC will willingly support the Border Wall.

Think about what Director Mulvaney is saying in the video above.   Mulvaney is highlighting the point that tax/budget will either use the reconciliation process, or not – depending on the opposition and depending on the support.

Any budget can pass the house with a simple majority, the Republicans have full control.

However, when the budget reaches the Senate if they are going to use “reconciliation” (simple majority/republicans only) the budget must be revenue neutral beyond 10 years – if the tax plan/budget is going to be permanent.

If the Tax-Plan/Budget delivered to the Senate is not deemed revenue neutral (scored by CBO) beyond 10 years, it cannot be permanent and use the reconciliation process (simple majority).   Such a plan must contain a sunset provision or an expiration date.

A permanent tax plan/budget that is: not deficit neutral, and beyond the 10 year scope, will require support from more than just 52 republican senators to pass; because it will mean long-term deficit spending.

Here’s where the FUBAR of the UniParty comes into play.  This is not a Democrat -vs- White House issue.

President Trump cannot present a balanced budget with drastic cuts to government, because UniParty republicans will not support it.  They, along with Democrats, will demand more spending.

Most of those same UniParty republicans are already opposed to the border wall.  They view funding for the border wall as a negotiation tool to keep the federal government spending on other facets.   President Trump cannot fund the wall, and simultaneously fund their big government spending indulgences without deficit spending.

Enter Paul Ryan.

Ryan will propose this Border Adjustment Tax, a program Trump hates, as the revenue tool to provide the funding for the tax/budget that contains the border wall funding.

See how that works?

[U.S. CoC and Ryan ] – The U.S. CoC get their B.A.T, which is essentially a tax against consumers allowing big corporations to fatten their bottom line, by forcing Trump to give up his border wall or go along with their proposal.

Wait, you ask: …what about renegotiated trade deals with (Mexico) via NAFTA that will, essentially, provide the revenue that more than pays for the wall?

Great question.  Yes, the renegotiated NAFTA deals would easily provide the treasury revenue that will offset any wall expenditures.

However, now you understand why congress is refusing to accept the NAFTA “letter of intent” from Commerce Secretary Ross.  The republican UniParty congress is blocking, well, actually they are ‘strategically delaying‘, Wilbur Ross from renegotiating the trade deal with Mexico – and by doing so they are blocking the revenue that would undermine their tax/budget scheme and argument in favor of the B.A.T.

Remember, accepting the letter of intent triggers the start of a 90-day waiting period before Ross can open NAFTA.   Congress is waiting to accept, until the end of the 90-day period falls AFTER October 1st 2017, the beginning of Fiscal Year 2018.

This UniParty approach robs the White House from using the anticipated Mexican money as a point of reference (political talking point) for the current tax and budget proposals which begin October 1st for fiscal year 2018.  (The B.A.T also impacts the possibility of a greater economic trade deal with Mexico from the tax side.)

See how that works?

[Hence, the blood pressure warnings]

This is not a Democrat party working against the White House.  This is a republican UniParty working against the White House.

Speaker Ryan is positioning funding for the border wall contingent upon Trump accepting the blanket B.A.T as revenue to pay for it.  This is the position of the Lobbyists within the U.S. CoC. If Ryan wins we are all screwed because essentially the tax revenue will be on our backs for every product imported and exported.   But the big corporations love the enhancements to their bottom lines.

OMB Director Mick Mulvaney is trying to position and protect President Trump from having to accept the B.A.T. because the BAT is antithetical to the economic trade policy, targeted tariff approach, President Trump wants to take.

Simultaneously, Mulvaney is trying to get President Trump the initial start up money for the Border Wall so he doesn’t have to accept Ryan’s BAT.

Ergo Mick Mulvaney is trying to draw in Democrat votes to offset the scheme of Ryan which is relying only upon Republican votes.  If Mulvaney can get Democrats to vote for funding the border wall by giving them funding to continue ObamaCare, Mulvaney won’t need Ryan’s BAT revenue because he’ll have votes to support a deficit bill.

However, Democrats don’t want the border wall either; but they also don’t want ObamaCare to collapse earlier due to funding shortages within the insurance reimbursement program (cost share programs).

FUBAR.

When challenged about the UniParty, it always helps to remind and re-emphasize to people that Republicans in congress (House and Senate – ’10 through ’16) fully funded all of Obama’s policies and programs.

UniParty – Oh, About That “New” Healthcare Plan Push…


There are many people rightly concerned about legislative issues seemingly stuck in the mud.   However, what many of those same people seem to forget is the basic reality of President Trump’s America-First agenda being opposed by professional republicans even more than it is opposed by professional Democrats.  DC is a UniParty.

Republican and Democrat political leadership, the UniParty writ large, have been paid to protect the legislative priorities of the multi-billion lobbying group known as K-Street.

The fallacy of false choice lies behind the concept of controlled opposition.

Prior to Donald Trump there was only one political party in DC, the Uniparty. President Trump represents the alternative; the second party.

For almost five years we have been pointing out the construct.  The UniParty have three unwavering primary objectives as purchased by the lobbying groups: 1) Retention of Obamacare; 2) Budgetary spending to retain growth of government; and 3) comprehensive immigration reform to include amnesty.

These three primary legislative issues are not up for debate, modification or discussion.  The legislative outcomes have been purchased, multi-million-dollar investments made, and the interests behind the legislative constructs will not allow any elimination or concession.

Beyond that reality, the rest is simply political optics and gamesmanship.  If you refuse to accept this baseline, you will continue to find yourself frustrated as you try to reconcile what is not happening.

Congress, as salesmen for the interests funding their activity, does that which is important to it; and congress does not do that which is antithetical to its pre-purchased interests.

President Trump, through his proposed policy objectives, is antithetical to those interests.

FULL STOP.

Essentially, President Trump has requested the following:

  • A budget with actual baseline reductions in spending.  Where Trump’s cabinet, individually and collectively, will actually reduce scale, scope and reach of federal government.
  • Healthcare reform to include the elimination of ObamaCare and a return to free market principles to drive down the cost of insurance products.
  • Funding funding to enhance enforcement of existing immigration law and a border wall to ensure the long-term reductions in the ease of illegal, unauthorized migration.

All three of those requests are opposed by Republicans and Democrats in congress.  You can beat your head against the wall in frustration, but the reality doesn’t change.  The big money interests who write legislation have paid all members of congress to block these basic principles of President Trump policy.

EXAMPLE – You might remember seeing Senator Rand Paul on TV for 10-consecutive-days (March), proclaiming that RyanCare must be defeated.  Toward that end Senator Paul put on a tuxedo went to the House of Representatives, lobbied them personally, and handed out instructions and books telling Hillary’s Favorite Caucus (HFC) if they simply blocked President Trump and Secretary Price he (Paul) would, within two weeks, provide a clean repeal bill from the Senate.  Senator Rand Paul said he and Senator Ted Cruz and Senator Mike Lee already had the legislation written for the clean repeal.  Senator Paul stated if the House members simply followed his plan he would guarantee the “repeal only” bill would advance within two weeks.

.

.

Remember that?

Well?…

This is the same UniParty that approved Trade Promotion Authority, a Republican Bill, that allowed President Obama to construct TPP and congress reversed the threshold for approval – making it necessary for two-thirds of the Senate to oppose passage to stop it, instead of two-thirds necessary to approve passage.  Why would a republican controlled congress make it easier for Obama-Trade to pass and make it harder to stop?

This is the same UniParty that has refused to accept the ‘Notification of Intent’ letter from Secretary of Commerce Wilbur Ross permitting him to renegotiate NAFTA.  Why would a republican controlled congress block President Trump from re-negotiating NAFTA?

Go back and look at the lobbying money spent by the U.S. CoC.

You see, this is where CTH refuses to be co-dependents in our own abuse.  We fully understand, and more importantly ‘accept’, the DC UniParty congress has no intention of: Providing a budget to lower spending; repealing and replacing ObamaCare; allowing enforcement of immigration law to include deportation and a southern border wall.

It can be difficult to accept these realities.  It can be difficult to confront your abuser.  However, until the larger electorate understand the structural concept of the UniParty, there will be hours-upon-hours of talking in circles, and tens of thousands of column inches typed in an effort to reconcile the irreconcilable and avoid accepting the diagnosis:

….Battered Conservative Syndrome !

Codependent no more!

French Elections on Sunday


Le Pen Marine

The first round of the 2017 French presidential election is set to be held this coming Sunday on the 23rd of April 2017. Should no candidate win a majority, which is usually the case in France, a run-off election between the top two candidates will be held on May 7th, 2017.

Macron and Le Pen are tied at 22% each – a far cry from a majority. Yet, what people fail to comprehend is regardless of who wins, a sizable portion of the population throughout all of Europe is anti-EU. Economically, if Le Pen does not win, it will be a very hard landing for the EU going forward for the politicians will refuse to reform and assume they have beaten the “populist” movement.

NuclearLike many Euro countries, France’s economy has reached a dead-end, or in French an economic cul-de-sac. This creates the social unrest, which is the seed of Revolution. France, as strange as it may sound, is actually closer to Britain than Germany or Italy. However, the French labor market is even more socialistic than that in Britain and it is in a major crisis. France has a major energy problem that is very specific to France. France uses primarily nuclear power. However, it does import energy from Britain.

With the elections coming up this Sunday, the EU suffered a major shock with the BREXIT vote in 2016. Then the election of Donald Trump smacked them square in the face, yet a deep-haze manifested in their eyes as the politicians refused to recognize that they were the targets.

Macron EmmanuelPanic has given way to confidence in the last few months and politicians are preparing to blame Russia for their own failures. Before the first round of the elections in France, the EU is on guard desperately trying to defeat Le Pen at all costs. They cling to the large portion of undecided and they are calling in all the markers desperately trying to get the press to manipulate this election to save Brussels.

The polls reflect considerable uncertainty. Many voters, perhaps 30 to 40% of the total, have not yet decided. This reflects the 22% poll for both Le Pen and Macron.

What is clear is that a Le Pen victory will provide a soft-landing for the Euro. If she loses, then this is going to be a very hard landing indeed in 2018. There will be no hope of reform and Brussels will push it into collapse cheering how they have defeated the “populist” movement

The End of Quantitative Easing – Perhaps Now It Will Be Inflationary?


yellen-draghi

One of the greatest monetary experiment in financial history has been the global central bank buying of government debt. This has been touted as a form of “money printing” that was supposed to produce hyperinflation. That never materialized as predicted by the perpetual pessimists. Nevertheless, the total amount of Quantitative Easing (QE) adding up the balance sheets of the Fed, the ECB and BOJ is now around $13.5 trillion dollars, which by itself is a sum greater than that of China’s economy or the entire Eurozone.

Fed Excess Reserves

QE-rIf QE failed to produce inflation, then ending QE may actually produce the inflation people previously expected. Where’s the strange logic in that one? Well you see, it really does not matter how much money you print, if it never makes it into the economy, it will not be inflationary.

The craziest think the Fed did was create excess reserves. The bankers complained that the Fed was buying the government debt so they would have no place to park their money. The Fed then accommodated them creating the excess reserves and paid them interest for absolutely no reason whatsoever.  Almost $3 trill was parked at the Fed collecting interest so that $4.5 trillion of “printing” money never made it out the door. Hence, there was no inflation to speak of (outside of healthcare which always rises no matter what).

So how does stopping QE actually create inflation? The withdrawal of the Federal Reserve (Fed), the European Central Bank (ECB) and the Japanese central bank from the QE programs will lead to an increase in yields on the bond markets sending the financing costs for the states higher. This is predicated upon the notion that people will continue to buy government debt. Governments have increased their spending sharply because interest rates were effectively zero and the central banks were buyers. Now comes the moment of truth. Has QE undermined the bond market to such an extent that only a blind fool will buy government debt in an atmosphere of rising rates?

Moreover, other sectors of the global financial system have been seriously disrupted. For one, European banks were shipping cash to their US branches and also parking it at the Fed whereas the ECB was charging negative rates. Furthermore, of the $13.5 trillion on the balance sheets in central banks, they are now trapped and cannot sell that debt. This means they are themselves screwed and they have to wait for that debt to mature in order to reduce their balance sheets. They have no way out.

The Fed had a balance sheet of about $900 billion in 2008, whereas it currently stands at about $ 4.5 trillion. The Bank of Japan recorded an increase of 107 trillion yen in the same period of time to about 490 trillion yen or also about $4.5 trillion. Then we have the ECB which has more than doubled its balance sheet from EUR 2 trillion to EUR 4.1 trillion or also about $4.5 trillion.

The central banks bought the government bonds from the commercial banks and paid them money created out of nothing which is how the pessimist put it. In theory, that is elastic and if the government debt matures, it then evaporates from the balance sheet. Here comes the problem. The governments continue to borrow. With the central banks no longer buyers, then interest rates can rise faster than anyone expects because they will have to entice fresh buyers. If that fails to materialize, then we come to the Sovereign Debt Default crisis.

The Federal Reserve had recently announced that it would no longer reinvest its gains on government bonds that had matured into new US securities, resulting in a shortening of the balance sheet. Bills of $426 billion will be due at the Fed in 2018, and again about $357 billion a year later. So if the Fed will not repurchase that debt, then the amount of new debt coming to the market will DOUBLE.

The Treasury will be forced to find ways to absorb the additional supply if the Fed wants it’s cash back so the Treasury must find a lot more private buyers. The shrinking of the balance sheets represents the continued deflationary trend from a real economic expansion trend. The government will be competing for cash in an ever growing tighter economy.

The balance sheet of the Japanese central bank is likely to be expanded for a while as long as the targeted inflation target of 2 percent is not reached. The ECB’s balance sheet will continue to grow at least until the end of the year, as the borrowing program has been running until then. However, the negative effects of the balance sheet shortening of several central banks will mutually reinforce each other in 2018 and help to bring the financial crisis to a head for 2018-2020.

The withdrawal of the ECB’s purchases of securities that also included European corporate paper will lead to secondary effects even outside Europe and help to further maintain the deflationary aspects with respect to economic growth. This will serve to demonstrate the unintentional impact of this entire unorthodox monetary policy experiment.

Therefore, at this year’s WEC, we will be looking at this complex crisis. The inflation will be asset inflation – not demand inflation. So hold on – this is going to be the craziest ride in monetary history of human kind.

President Trump Smartly Navigating A Stable Foreign Policy…


During a February interview which broadcast just before the Superbowl, President Trump recalled riding with former President Barack Obama to the Inauguration on Jan. 20 when he asked Obama to list the three greatest issues America was facing.

[…] “I asked him what you think our biggest problem is and he told me,” Trump said, recalling the limousine ride to the U.S. Capitol with Obama.

“I can’t tell you,” Trump said after O’Reilly interrupted to ask about specifics. “But it’s a problem, its a military problem with a certain place. No, it’s not China. But it is – he did mention, cause I did ask him what would you say our number one, two, three problems are and the number one problem that he felt – I was a little bit surprised, but I fully understand.” (link)

Almost every mainstream political pundit and political observer believes the concerning country within that conversation was North Korea. Indeed, if you were to evaluate the comment in isolation, against the backdrop of world media headlines, N-Korea seemingly becomes a natural conclusion.

However, CTH does not believe North Korea was the country of concern. President Obama viewed and acted upon all foreign affairs through the prism of ideological belief. Every action taken by the Obama administration was in furtherance of an ideological world-view that was personal to the small circle of like-minded fellow travelers.

Outgoing President Obama would not respond to such a question from an abject detachment to the same ideological road-map that drove his foreign policy positions.

No, if it was a country of concern to Obama it would have a personal element to it; North Korea just doesn’t fit.

President Trump went on to say he did not believe Obama would mind if he had shared his answer, but said he did not want that country to know it is viewed as the number one concern to the U.S.

Businessman Trump is President Trump and in both roles Trump has shown through action a keen forward approach. Trump games-out long term objectives and strategies.

Often by the time you see a visible Trump action there has been months of pre-planning.

The President Xi Jinping visit with President Trump at Mar-a-Lago is one example that people are only just now beginning to understand. Trump seeded the objectives of the meeting with President Xi months before their April 6th and 7th meeting (emphasis mine):

[…]  “You gotta work on North Korea,” Trump told a Chinese official on February 27, the senior administration official said, apparently pointing to a brief meeting at the White House between Trump and Chinese State Councilor Yang Jiechi, the highest-ranking Chinese official Trump has met with since taking office. (link)

In the events surrounding Syria and Russia President Trump also had mapped out a long-term strategy.  Instructions that did not come from Trump’s team, but rather from President Trump personally.

Back in January, before taking office, President Trump told his National Security landing team to approach the intelligence communities and request “outside the box” solutions to Syria (Via Russia/Iran), as one regional issue; and North Korea (using China) as another.

The responsibility for assembling the information fell upon the administration’s IC liaison Deputy NSA Advisor  KT McFarland.

The media do not talk about President Trump having the acumen to approach global issues with specific personally generated strategy.  The MSM obviously prefer to sell Trump’s approach as reactionary or emotional; however, as we have seen from the results so far, nothing could be further from the truth than the media’s false narrative.

So where does that bring us?

Well, considering everything outlined above; and considering the location of the MOAB as utilized; and considering the location where President Trump directed his National Security Advisor to go…

Well, I would make an argument the Obama-Trump conversation was about a tenuous nuclear country who hid Osama Bin Laden for ten years, Pakistan.

National security advisor H.R. McMaster, left, with Pakistani Prime Minister Nawaz Sharif in Islamabad on April 17. /Reuters

(Via World Tribune) […] McMaster visited Islamabad on April 17, a day after holding talks with Afghan leaders in Kabul.

He delivered a public message to leaders in Pakistan, whom Afghan officials accuse of permitting Taliban jihadists to establish sanctuaries and conduct attacks into Afghanistan with the help of Pakistan’s intelligence agency, Voice of America reported.

“As all of us have hoped for many many years … that Pakistani leaders will understand that it is in their interest to go after these groups less selectively than they have in the past and the best way to pursue their interests in Afghanistan and elsewhere is through diplomacy not through the use of proxies that engage in violence,” McMaster said.

The Pakistani government said in a statement that the U.S. delegation included Lisa Curtis, a researcher with the Heritage Foundation think tank in Washington, who McMaster has hired to oversee South Asia affairs.

In February, Curtis co-authored an article calling for Washington to “levy heavy costs on Pakistan for policies that help perpetuate terrorism in the region.”

In his first trip to the region since being named national security adviser, McMaster met with Pakistani Prime Minister Nawaz Sharif and his top foreign policy aides before holding talks with the country’s powerful military chief, Gen. Qamar Javed Bajwa.  (link)

Syria (via Russia), North Korea (via China) are, in large measure, diplomatic matters with clear White House objectives and political goals.  Secretary of State Rex Tillerson has been intensely successful so far in handling all of these regional issues with exceptional diplomacy and international support.

President Trump, T-Rex and to a lesser extent Nikki Haley, have aptly navigated through the issues surrounding Syria and China; and with ongoing diplomatic endeavors continuing Vice-President Pence is dispatched as a sincere, stable and trustworthy closer.

However, Pakistan is an entirely different kettle-of-fish.  Pakistan policy currently involves higher priority intelligence community and military efforts; ergo, McMasters doing the advanced recon, and a rather noisy knock at the door just prior to arrival.

[…]  This is the majors now. Trump has to outwit world-class adversaries and “frenemies” by defining the deals that they will agree to. One minute they will think Trump is their friend – the next minute, a cunning, bitter foe.

And he has to do this with evil cheerleaders like Warhead, Linderace, Dipsy Dowd, Maggie Haterman, and Fake Yapper trashing him or praising him alternately, no matter which way he goes. They can’t keep up, either.

Neither can many around him. I think that half of the problem with advisers crashing into each other is they don’t realize what Trump is doing.

And people will trash you, and they will trash me. Get used to it. I’ve already caught plenty of people mocking me. Well, just wait a week in Trump time. Look stupid and conned by Trump one minute, and you look like a sage three days later.

Trump will not find perfect solutions. He will find OPTIMAL solutions. We cannot ask for more. Trump has stood by and watched Perfect murder Good for 8 years – maybe longer. He’s not gonna do it. He’s going to deliver the best outcome possible, and he’s not waiting for us to feel relaxed about it.

[…]  Trump is Jupiter moving through the asteroid belt. He is going to pull people into his orbit. A few will get slung off into space, but most will come along for the ride of their lives.  (more)