Author: Warren Coats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon. I live in National Landing Va 22202

Our dysfunctional Congress

Congress is failing to do its job. It sometimes overrides states’ laws when it shouldn’t. At other times it fails to exercise its authority over the Executive branch, which then exceeds its constitutional authority. For many years it has failed to build broad consensus for important public policies resulting in laws with narrow partisan support or no action at all. This rather long note examines several examples of the above.

The rule of law requires that properly adopted laws be enforced. I favor states’ rights to the maximum extent consistent with the Constitution, such as the overriding federal principle of equal protection of the law for everyone. In particular, I favor the right of each state to determine whether growing, selling and consuming marijuana is legal within that state. Federal law has made dealing with pot illegal. The conflict is untenable and the dominant jurisdiction of laws on pot should be clarified. I favor the states’ right to determine the law in this area.

With regard to national laws, I favor legalizing the residency status of immigrants brought to the United States illegally when they were children (the Dream Act) as well as broad immigration reforms. Currently there is no such law and what to do with and about the rest of those here illegally remains highly controversial.

I also (sort of) support Attorney General Session’s move to rescind the Obama Administration’s enforcement guidelines for the federal enforcement of its anti marijuana laws. “Those guidelines had finessed the state-federal conflict by saying, in effect, that federal prosecutors wouldn’t go after people who complied with state laws, but would instead concentrate on drug cartels, money laundering and other high-priority targets…. In a memo, [Session] said the federal pot statutes “reflect Congress’s determination that marijuana is a dangerous drug and that marijuana activity is a serious crime.” “Is this stuff legal? federal-position-on-pot-makes-situation-foggy-draws-pushback” However, given that resources are always limited, law enforcement agencies must prioritize their law enforcement efforts. With or without DOJ guidelines they are likely to adhere to the priorities suggested by the Obama Administration.

And I strongly support President Trump’s rescinding of Obama’s executive order halting the deportation of those who came to the U.S. illegally as children.

In this note I want to explain why I hold these seemingly contradictory views—pro legalization of pot and dreamers and pro rescinding the executive orders that accomplished each of those. More broadly I want to appeal to our dysfunctional legislative branch to shape up and do its job for the citizens and residents of this country.

Immigration Policy

The history of our immigration laws is complex reflecting compromises between interests with very different motives and objectives. It is currently a mess that does not serve the broad interests of the country very well. As Ilya Shapiro put it: “Immigration is quite possibly the most feckless part of the federal government. More than advancing bad policy, our immigration system consists of schizophrenic laws that don’t advance any particular goal.  If you tried to draw up rules for how foreigners enter a country, how long they can stay, and what they can do here, you’d be hard-pressed to come up with anything worse than our hodge-podge of conflicting regulations. This immigration non-policy serves nobody’s interest, except perhaps lawyers and bureaucrats. And yet Congress has shamelessly refused to fix it.“ President Obama’s DAPA order oversteps his Immigration Powers

The 1965 Immigration and Nationality Act expanded the annual number of permitted immigrants and extended the preference given to members of nuclear families (spouses and underage children) to extended family members (aunts and grandmothers, etc.). Extended family members now take the majority of slots allowed annually—so called chain migration. In my opinion, the preference for extended family members should be rolled back to the nuclear family and preference given to those with the skills and education demanded in the labor market. We must not lose the enormous benefits we have enjoyed from our immigrants. See: A nation of immigrants

A particularly contentious issue concerns what to do with the 11 or so million people who are here illegally, often by overstaying their visas. Deporting them would disrupt their lives as well as the enterprises that depend on their labor. But letting them stay seems unfair to those waiting patiently to enter legally. Jeb Bush and Clint Bolick provide an excellent discussion of these issues in their book: Immigration Wars: Forging an American Solution. See also my earlier blog on: Illegal-aliens.

Early on broad, across the aisle, agreement was reached to single out those who were brought into the country as minors and remain illegally, while continuing the debate about what to do with the rest. These illegal residents did not knowingly break the law on their own and many cannot even remember their earlier lives abroad.

Legislation to grant this group conditional residency leading eventually to permanent residency and maybe citizenship, which later became known as the Dream Act (Development, Relief, and Education for Alien Minors Act) was first introduced in 2001 but failed to received the required 60% in the Senate needed to avoid a filibuster. Over the succeeding years it was reintroduced, some times as part of broader immigration reforms, on a number of occasions without success. The 2011 attempt added stronger enforcement provisions against illegal alien workers by requiring employers to verify the legality of each worker in the government’s E-Verify database, the government’s Internet-based work eligibility verification system. But even with this compromise it again fell short of the 60% favorable votes needed in the Senate.

Giving up on Congress, President Obama announced on June 15, 2012 that the government would stop deporting undocumented immigrates matching the criteria covered by the failed DREAM Act. His executive order was called the Deferred Action for Childhood Arrivals (DACA) program.

A year earlier President Obama had said:  “America is a nation of laws, which means I am obligated to enforce the law…With respect to the notion that I can just suspend deportations through executive order, that’s just not the case…There are enough laws on the books by Congress that are very clear in terms of how we have to enforce our immigration system that for me to simply through executive order ignore those congressional mandates would not conform with my appropriate role as President.” (March 28, 2011)

Though I sympathize with the President’s impatience with Congress, his reversal of his earlier understanding of his executive powers is more than a stretch. In recognition of this stretch, DACA only granted temporary residency and work authorization, which would have to be reauthorized from time to time. This is not a very satisfactory solution, even if legal, which is very questionable.

On November 14, 2014 President Obama issued another executive order “offering temporary legal status to millions of illegal immigrants, along with an indefinite reprieve from deportation called the Deferred Action for Parents of Citizens and Lawful Permanent Residents (DAPA) policy.

The executive action would have two key components:

  1. “It would offer a legal reprieve to the undocumented parents of U.S. citizens and permanent residents who’ve resided in the country for at least five years. This would remove the constant threat of deportation. Many could also receive work permits.
  2. “It would expand the 2012 Deferred Action for Childhood Arrivals (DACA) program that allowed young immigrants, under 30 years old, who arrived as children to apply for a deportation deferral and who are now here legally. Immigrants older than 30 now qualify, as do more recent arrivals.

“People in both groups will have to reapply every three years.“ WashPost complete guide to Obama’s immigration-order

DAPA not only protected five million undocumented immigrants from being expelled, but also permitted them to have work permits. This order was blocked in the courts—ultimately by a divided Supreme Court. In Mr. Shapiro’s and the Cato Institute’s view, DAPA was good policy, bad law, and terrible precedent.

In September of last year the Trump administration also withdrew DACA. In making the announcement to rescind DACA Attorney General Jeff Sessions said:  ‘The program, called Deferred Action for Childhood Arrivals, or DACA, put a temporary halt to the deportation of immigrants who came to the United States illegally as children and who have grown up in the country going to school or working.

“We are a people of compassion and we are a people of law. But there is nothing compassionate about the failure to enforce immigration laws,”

Homeland Security Acting Secretary Elaine Duke said the decision was not taken lightly, but was an attempt to reconcile the program with existing law.

“As a result of recent litigation, we were faced with two options: wind the program down in an orderly fashion that protects beneficiaries in the near-term while working with Congress to pass legislation; or allow the judiciary to potentially shut the program down completely and immediately,” Duke said in a statement. “We chose the least disruptive option.”

The Trump administration said no current beneficiaries would be impacted before March 5, 2018, giving Congress time to act.” Session terminates Obama’s immigration executive order

In my opinion Trump/Sessions did the right thing in terms of the law and of the desirability of finding a more permanent determination of the status of DREAMers, which can only be provided by Congress. Now it is Congress’ turn to finally fix this.

While they are at it (but without holding up the Dream Act) they should fix as much of the immigration mess as possible. For example, the Immigration Act of 1990 allows the Attorney General to provide temporary protected status (TPS) to immigrants in the United States who are temporarily unable to safely return to their home country because of ongoing armed conflict, an environmental disaster, or other extraordinary and temporary conditions in their home country. This authority was transferred to the Department of Homeland Security last October.

The TPS program currently covers about 300,000 people from ten countries, namely El Salvador, Haiti, Honduras, Liberia, Nepal, Nicaragua, Somalia, Sudan, South Sudan, Syria, and Yemen. The DHS recently announced the termination of TPS status for about 2,500 immigrants from Nicaragua and 45,000 Haitians and most recently 200,000 Salvadorians. They will all have about two years to find a new status or pack up and leave. Most of them have been here since devastating earthquakes struck Central America in 2001. Some 192,000 U.S.-born children, who are therefore U.S. citizens, have at least one Salvadoran parent who holds TPS. In my opinion, children born in the U.S. to nonpermanent residents should not automatically receive citizenship. But a compassionate and realistic treatment of TPS residents requires ignoring existing laws. The rule of law requires that laws be enforced. But then we need to be sure that we only have laws we want enforced. This is a dilemma with an obvious solution, which has not been easy to achieve.

Marijuana and States’ Rights

In the case of the legalizing marijuana, the issue is the rights of state versus federal law. Racial discrimination allowed and/or promoted by some state laws in the past tarnished the image of states’ rights. The constitution (XIV Amendment) and related federal laws appropriately deal with such discrimination in the market place, though the poison in some hearts remains a problem that only education and public debate and good will can address. States should be given the maximum latitude possible to regulate their own affairs. Bad ideas and approaches will be exposed through their experience and good ones demonstrated and copied by other states. Congress should rescind any laws that label marijuana a dangerous or restricted substance.

I support shifting more responsibility to the states for fashioning the details of medicaid within each state.

War powers and the eternal war on terror

In other instances Congress has given away powers that should only belong to it. We should not fight abroad unless Congress approves it. Yet at the moment the U.S. military is involved directly or indirectly in our “Global war on Terror” in 76 countries largely without explicit congressional approval. “Seeing_our_wars_for_the_first_time”.

Congress has not declared war since World War II. It has authorized military engagements on a number of occasions since then without actually declaring war on anyone. The Korean War was dubbed a police action and undertaken under a UN Security Council Resolution. The Vietnam and related wars were fought under the authorization of the Gulf of Tonkin Resolution of Aug 7, 1964. The Persian Gulf War with Iraq (remember that) was authorized by the UN and by our Congress in the Authorization for Use of Military Force Against Iraq Resolution of January 12, 1991.

Three days after the 9/11 attach on New York and Washington DC, Congress enacted the Authorization for Use of Military Force (AUMF). The law provided that: That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.

The law was passed one vote short of unanimously. “The lone dissenter, Representative Barbara Lee, warned that the resolution gave a “blank check to the president to attack anyone involved in the Sept. 11 events — anywhere, in any country, without regard to our nation’s long-term foreign policy, economic and national security interests, and without time limit.” Rome’s empire without end and the endless U.S. war on terror. This law provides the continuing authority under which the U.S. and a few other countries attacked and still fight in Afghanistan as well as in Yemen, Somalia, Philippines, Pakistan, Libya, Iraq, and Syria.

President George W Bush signed the Authorization for Use of Military Force Against Iraq Resolution on Oct 16, 2003.

Individual liberty takes second place to security in times of war. But we now live in an era of permanent war and we are not escaping its price.

“The Committee for Responsible Foreign Policy – a bipartisan initiative designed to advocate for more oversight of U.S. military intervention abroad – commissioned research on U.S. citizens’ positions on war intervention. The coalition announced [recently] that the results prove a majority of Americans are mostly skeptical of the benefits of military intervention overseas and military aid in the form of funds or equipment…. The research showed that 67.4% of American voters disapprove of Congressional leadership allowing our involvement in conflict overseas without formally approving military action – or even allowing a debate.” http://responsibleforeignpolicy.org  “A November poll from J. Wallin Opinion Research showed the vast majority of Americans, over 70%, want Congress to impose at least some specific limits on overseas conflicts and exercise more direct oversight.” “Yemen-proves-US-needs-get-handle-war-making-powers”

Our polarized Congress

In the latest Gallup poll (Dec 4-11, 2017) 78% of those responding “disapproved of the way Congress was handling its job.” Congress’ failure to build broad inter party consensus on important public issues such as immigration, medical care and insurance, taxation, use of our military, marijuana and states rights more generally, has led the executive branch to over reach its proper authority, state and federal law to conflict as the Federal government extends its reach, the failure of Congress to resolve dysfunctional laws such as immigration, and the failure of Congress to agree on budget priorities that would arrest the upward march of our national indebtedness.

There are many reasons for Congress’ dysfunction and the deepening division of public attitudes toward our government and fellow citizens. The gerrymandering of congressional districts into safe Republican and safe Democratic districts has encouraged the selection in primary elections of each party’s more extreme candidates. I place considerable fault on the extent to which government has grown and dictates more and more aspects of our lives. This forces us to take public positions on one side or the other of issues that we used to be able to deal with (or ignore) privately allowing a more live and let live environment. Our sources of news have also become more siloed making it more difficult to confront all of the pros and cons of public policy issues.

What can we do? To name but a few ideas, we should each strive to restore civil public discussion. We should each commit to regularly consulting at least two sources of news from reputable sources coming from different sides of each debate. For example, I read the Washington Post and the Wall Street Journal every day. We must open our ears and minds and listen to what others say. Check out the following from what I bet is a different (and I think refreshing) side of the sexual harassment issue: “Catherine Deneuve denounces #metoo”. I will do my best to convince you that a more limited government will promote greater social harmony, individual freedom, and economic prosperity. And I will demand (if the courts don’t do it first) that my crazy congressional district (Maryland’s 6th congressional district—look it up and be amazed) be redrawn more sensibly. Even-a-gerrymandering-ban-cant-keep-politicians-from-trying-to-shape-their-districts

Uri Avnery on Israel

Uri Avnery is an amazing Israeli Jew. I have never met him but receive articles from him regularly and would like to share the last three of them with you. His history is remarkable. You can read part of it in the second article below (December 23) and more of it here: https://en.wikipedia.org/wiki/Uri_Avnery. Needless to say I share his views, as do many (but by no means all) of the Israelis I have met and worked with in Israel. You can keep up with his writing here: http://uriavnery.com/en/hatur.html

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Uri Avnery

November 18, 2017

  A History of Idiocy

I am furious. And I have good reason to be furious.

I was going to write an article about a subject I have been thinking about for a long time.

This week I opened the New York Times and lo, my yet unwritten article appeared on its opinion pages in full, argument after argument.

How come? I have only one explanation: the author – I have forgotten the name – has stolen the ideas from my head by some magical means, which surely must be branded as criminal. A person once tried to kill me for doing the same thing to him.

So I have decided to write this article in spite of everything.

THE SUBJECT is idiocy. Particularly, the role of idiocy in history.

The older I get, the more convinced I am that sheer stupidity plays a major role in the history of nations.

Great Thinkers, compared to whom I am a mere intellectual dwarf, have pursued other factors to explain what has turned history into a mess. Karl Marx blamed the economy. The economy has directed humankind from its earliest beginnings.

Others blame God. Religion has caused awful wars, and still does. Look at the Crusades, which for almost two hundred years raged in my country. Look at the 30-year War, which devastated Germany. No end in sight.

Some accuse Race. Whites against Red Indians. Aryans against Untermenschen. Nazis against Jews. Terrible.

Or geopolitics. The White Man’s Burden. The Drang-nach-Osten.

For many generations, Great Thinkers have been searching for some deep explanation for war. There must be such an explanation. After all, terrible historical events cannot just happen. There must be something profound, something sinister, which is causing all this untold misery. Something that has accompanied the human race from its very beginnings, and that still directs our destiny.

I HAVE adopted most of these theories in my time. Many of them impressed me very much. Great thinkers. Deep thoughts. I have read many thick volumes. But in the end, they left me unsatisfied.

In the end it hit me. There is indeed one factor common to all these historical events: foolishness.

I know that this sounds incredible. Foolishness? All these thousands of wars? All these hundreds of millions of casualties? All these emperors, kings, statesmen, strategists? All fools?

Recently I was asked for an example. “Show me how it works,” an incredulous listener demanded.

I mentioned the outbreak of World War I, an event that changed the face of Europe and the world forever, and which ended just five years before I was born, My earliest childhood was spent in the shadow of this cataclysm.

It happened like this:

An Austrian archduke was killed in the town of Sarajevo by a Serbian anarchist. It happened almost by accident: the planned attempt failed, but later the terrorist happened upon the duke and killed him.

So what? The duke was a quite unimportant person. Thousands of such acts have happened before and since. But this time the Austrian statesmen thought that this was a good opportunity to teach the Serbs a lesson. It took the form of an ultimatum.

No big deal. Such things happen all the time. But the powerful Russian empire was allied with Serbia, so the Czar issued a warning: he ordered the mobilization of his army, just to make his point.

In Germany, all the red lights went on. Germany is situated in the middle of Europe and has no impregnable natural borders, no oceans, no high mountains. It was trapped between two great military powers, Russia and France. For years the German generals had been pondering how to save the Fatherland if attacked from the two sides simultaneously.

A master-plan evolved. Russia was a huge country, and it would take several weeks to mobilize the Russian army. These weeks must be used to smash France, turn the army around and stop the Russians.

It was a brilliant plan, worked out to the finest detail by brilliant military minds. But the German army was stopped at the gates of Paris. The British intervened to help France. The result was a static war of four long years, where nothing really happened except that millions upon millions of human beings were slaughtered or maimed.

In the end a peace was made, a peace so stupid that it virtually made a Second World War inevitable. This broke out a mere 21 years later, with even larger numbers of casualties.

MANY BOOKS have been written about “July 1914”, the crucial month in which World War I became inevitable.

How many people were involved in decision-making in Europe? How many emperors, kings, ministers, parliamentarians, generals; not to mention academicians, journalists, poets and what not?

Were they all stupid? Were they all blind to what was happening in their countries and throughout their continent?

Impossible, one is tempted to cry out. Many of them were highly competent, intelligent people, people versed in history. They knew everything about the earlier wars that had ravaged Europe throughout the centuries.

Yet there you are. All these people played their part in causing the most terrible war (up to then) in the annals of history. An act of sheer idiocy.

The human mind cannot accept such a truth. There must be other reasons. Profound reasons. So they wrote innumerable books explaining why this was logical, why it had to happen, what were the “underlying” causes.

Most of these theories are certainly plausible. But compared to the effects, they are puny. Millions of human beings marched out to be slaughtered, singing and almost dancing, trusting their emperor, king, president, commander-in-chief. Never to return.

Could all these leaders be idiots? They certainly could. And were.

I DON’T need the examples of the thousands of foreign wars and conflicts, because I live in the middle of one right now.

Never mind how it came about, the present situation is that in the land that used to be called Palestine there live two peoples of different origin, culture, history, religion, language, standard of living and much more. They are now of more or less equal size.

Between these two peoples, a conflict has now been going on for more than a century.

In theory, there are only two reasonable solutions: either the two peoples shall live together as equal citizens in one state, or they shall live side by side in two states.

The third possibility is no solution – eternal conflict, eternal war.

This is so obvious, so simple, that denying it is sheer idiocy.

Living together in one state sounds logical, but is not. It is a recipe for constant conflict and internal war. So there remains only what is called “two states for two peoples”.

When I pointed this out, right after the 1948 war, the war in which Israel was founded, I was more or less alone. Now this is a world-wide consensus, everywhere except in Israel.

What is the alternative? There is none. Just going on with the present situation: a colonial state in which 7 million Israeli Jews oppress 7 million Palestinian Arabs. Logic says that this is a situation that cannot go on forever. Sooner or later it will break down.

So what do our leaders say? Nothing. They pretend to be oblivious to this truth.

At the top of the pyramid we have a leader who looks intelligent, who speaks well, who seems competent. In fact, Binyamin Netanyahu is a mediocre politician, without vision, without depth. He does not even pretend that he has another solution. Nor do his colleagues and possible heirs.

So what is this? I am sorry to have to say it, but there is no other definition than the rule of idiocy.

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Uri Avnery

December 23, 2017

  Cry, Beloved Country

ANYONE PROPOSING the death penalty is either a complete fool, an incorrigible cynic or mentally disturbed – or all of these.

There is no effective therapy for any of these defects. I wouldn’t even try.

A fool would not understand the overwhelming evidence for the conclusion. For a cynic, advocacy of the death penalty is a proven vote catcher. A mentally disturbed person derives pleasure from the very thought of an execution. I am not addressing any of these, but ordinary citizens of Israel.

LET ME start by repeating the story of my own personal experience.

In 1936, the Arab population of Palestine launched a violent uprising. The Nazi persecution in Germany drove many Jews to Palestine (including my own family), and the local Arabs saw their country slipping away from under their feet. They started to react violently. They called it the Great Rebellion, the British talked of “disturbances” and we called it “the events”.

Groups of young Arabs attacked Jewish and British vehicles on the roads. When caught, some of them were sent by the British courts to the gallows. When the Arab attacks did not stop, some right-wing Zionists started a campaign of “retaliation” and shot at Arab vehicles.

One of these was caught by the British. His name was Shlomo Ben-Yosef, a 25 year old illegal immigrant from Poland, a member of the right-wing youth organization Betar. He threw a grenade at an Arab bus, which failed to explode, and fired some shots that hit nobody. But the British saw an opportunity to prove their impartiality.

Ben-Yosef was sentenced to death. The Jewish population was shocked. Even those who were totally opposed to “retaliation” pleaded for clemency, rabbis prayed. Slowly the day of the execution drew near. Many expected a reprieve at the last moment. It did not come.

The hanging of Ben-Yosef on June 29, 1938 sent a powerful shockwave through the Jewish public. It caused a profound change in my own life. I decided to fill his place. I joined the Irgun, the most extreme armed underground organization. I was just 15 years old.

I repeat this story because the lesson is so important. An oppressive regime, especially a foreign one, always thinks that executing “terrorists” will frighten others away from joining the rebels.

This idea stems from the arrogance of the rulers, who think of their subjects as inferior human beings. The real result is always the opposite: the executed rebel becomes a national hero, for every rebel executed, dozens of others join the fight. The execution breeds hatred, the hatred leads to more violence. If the family is also punished, the flames of hatred rise even higher.

Simple logic. But logic is beyond the reach of the rulers.

Just a thought: some 2000 years ago, a simple carpenter was executed in Palestine by crucifixion. Look at the results.

IN EVERY army, there are a number of sadists posing as patriots.

In my army days, I once wrote that in every squad there is at least one sadist and one moral soldier. The others are neither. They are influenced by either of them, depends on which of the two has the stronger character.

Last week something horrible happened. Since the announcement of the American Clown-In-Chief about Jerusalem, there have been daily demonstrations in the West Bank and the Gaza Strip. The Palestinians in the Gaza Strip approach the separation fence and throw stones at the soldiers on the Israeli side. The soldiers are instructed to shoot. Every day Palestinians are wounded, every few days Palestinians are killed.

One of the demonstrators was Ibrahim Abu-Thuraya, a 29 year old legless Arab fisherman. Both of his legs were amputated nine years ago, after he was injured in an Israeli air-strike on Gaza.

He was pushed in his wheelchair over the rough terrain towards the fence when an army sharpshooter took aim and killed him. He was unarmed, just “inciting”.

The killer was not an ordinary soldier, who may have shot without aiming in the melee. He was a professional, a sharpshooter, used to identify his victim, take careful aim and hit the exact spot.

I try to think about what went on in the shooter’s brain before shooting. The victim was close. There was absolutely no way not to see the wheelchair. Ibrahim posed absolutely no threat to the shooter or to anyone else.

(A cruel Israeli joke was born immediately: the sharpshooters were ordered to hit the lower parts of the bodies of the demonstrators. Since Ibrahim had no lower parts, the soldier had no choice but shoot him in the head.)

This was a criminal act, pure and simple. An abhorrent war crime. So, did the army – yes, my army! – arrest him? Not at all. Every day, a new excuse was found, each more ridiculous than the other. The shooter’s name was kept secret.

My God, what is happening to this country? What is the occupation doing to us?

Ibrahim, of course, became overnight a Palestinian national hero. His death will spur other Palestinians to join the fight.

ARE THERE no rays of light? Yes there are. Though not many.

A few days after the murder of Ibrahim Abu-Thuraya, an almost comic scene was immortalized.

In the Palestinian village Nabi Saleh in the occupied West Bank, two fully armed Israeli soldiers are standing. One is an officer, the other a sergeant. A group of three or four Arab girls, about 15 or 16 years old, approach them. They shout at the soldiers and make abusive gestures. The soldiers pretend not to notice them.

One girl, Ahd Tamimi, approaches a soldier and hits him. The soldier, much taller than her, does not react.

The girl comes even closer and hits the face of the soldier. He defends his face with his arms. Another girl records the scene with her smartphone.

And then the incredible happens: both soldiers walk backwards and leave the scene. (Later it appears that the cousin of one of the girls was shot in the head a few days earlier.)

The army was shocked by the fact that the two soldiers did not shoot the girl. It promised an investigation. The girl and her mother were detained that night. The soldiers are in for a rebuke.

For me, the two soldiers are real heroes. Sadly, they are the exceptions.

Every human being has the right to be proud of his or her country. To my mind, it’s a basic human right as well as a basic human need.

But how can one be proud of a country that is trading in human bodies?

In Islam, it is very important to bury the dead as soon as possible. Knowing this, the Israeli government is withholding the bodies of dozens of “terrorists”, to be used as trading chips for the return of Jewish bodies held by the other side.

Logical? Sure. Abhorrent? Yes.

This is not the Israel I helped to found and fought for. My Israel would return the bodies to the fathers and mothers. Even if it means giving up some trading chips. Isn’t losing a son punishment enough?

What has become of our common human decency?

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Uri Avnery

December 30, 2017

 The Man Who Jumped

NOBODY DESCRIBED the outbreak of the Palestinian-Israeli conflict better than the historian Isaac Deutscher.

A man lives in a house that catches fire. To save his life, he jumps out of the window. He lands on a passer-by in the street below and injures him grievously. Between the two a bitter enmity arises. Who is to blame?

Of course, no parable can reflect reality exactly. The man who jumped out of the burning house did not land on this particular passer-by by chance. The passer-by became an invalid for life. But on the whole, this parable is better than any other I know.

Deutscher did not provide an answer to the question of how to solve the conflict. Are the two condemned to fight each other forever? Is there a solution at all?

COMMON SENSE would say: of course there is. True, the injured person cannot be restored to his former condition. The man who caused the injury cannot return to his former home, which was destroyed by the fire. But…

But the man can – and must – apologize to his victim. That is the minimum. He can – and must – pay him compensation. That is what justice demands. But then the two can become friends. Perhaps even partners.

Instead, the man continues to harm the victim. He invades the victim’s home and throws him out. The victim’s sons try to evict the man. And so it goes on.

Deutscher himself, who fled the Nazis from Poland to England in time, did not see the continuation of the story. He died a few days after the Six-day War.

INSTEAD OF quarreling endlessly about who was right and who was wrong, how wonderful we are and how abhorrent the others are, we should think about the future.

What do we want? What kind of a state do we want to live in? How do we end the occupation, and what will come after?

Israel is divided between “Left” and “Right”. I don’t like these terms – they are obvious misnomers. They were created in the French National Assembly more than two hundred years ago by the accidental seating of the parties in the hall at the time, as seen by the speaker. But let’s use them for convenience sake.

The real division is between those who prefer the people to the land, and those who prefer the land to the people. Which is more sacred?

In the early days of the state there was a joke making the rounds. God summoned David Ben-Gurion and told him: you have done great things for my people, make a wish and I shall grant it.

Ben-Gurion answered: I wish that Israel will be a Jewish state, that it will encompass all the country between the Mediterranean Sea and the Jordan River and that it be a just state.

“That is too much even for me,” God said. “But I will grant you two of your three wishes.”

Since then we have the choice between a Jewish and just state in part of the country, or a Jewish state in all the country that will not be just, or a greater and just state, that will not be Jewish.

Ben-Gurion must be weeping in his grave.

SO WHAT are the solutions proposed by the two major forces in Israeli politics?

The “Left” has by now an orderly program. I am proud of having contributed to it. It says, more or less:

(a) A State of Palestine will come into being next to the State of Israel.

(b) Between the two states there will be peace, based on an agreement that will provide for open borders and close mutual relations.

(c) There will be joint institutions as necessary, by consent.

(d) The united city of Jerusalem will be the capital of both states, West Jerusalem the capital of Israel and East Jerusalem the capital of Palestine.

(e) There will be a limited, agreed, one-to-one exchange of territory.

(f) There will be a limited, symbolic return of refugees to Israel, all other refugees will receive generous compensation and “return” to the State of Palestine or remain where they are.

(g) Israel will remain a mainly Jewish state, with Hebrew as its first official language and open for Jewish immigration according to its laws.

(h) Both states will join regional institutions.

This is a clear picture of the future. Both ardent Zionists and non-Zionists can accept it wholeheartedly.

WHAT IS the program of the “Right”? How do its ideologues see the future?

The simple fact is that the Right has no picture of the future, no program, not even a dream. Only vague sentiments.

That may be its strength. Sentiments are a strong force in the life of nations.

What the Right would really like is the endless continuation of the present situation: the military occupation of the West Bank and East Jerusalem, and the indirect occupation of the Gaza Strip, enforced by blockade.

Cold logic says that this is an unnatural situation that cannot go on forever. Sooner or later it has to be institutionalized. How?

There are two possibilities, and only two: an apartheid state or a binational state.

That is so obvious, that even the most fanatical right-winger cannot deny it. No one even tries to.

There is a vague hope that the Arabs in Palestine will somehow pack up and just go away. That will not happen. The unique circumstances of 1948 will not and cannot repeat themselves.

A few well-to-do Palestinians may actually leave for London or Rio de Janeiro, but their demographic weight will remain negligible. The mass of people will remain where they are – and multiply.

Already now, there live between the sea and the river, in the Greater Israel of the dream, according to the last count (July 2016): 6,510,894 Arabs and 6,114,546 Jews. The Arab birthrate is bound to fall, but so will the Jewish one (except for the Orthodox).

What would life be like in the Israeli apartheid state? One thing is certain: it would not attract masses of Jews. The split between Jewish Israelis and Jews in the USA and other countries would widen slowly and inexorably.

Sooner or later, the disenfranchised majority would rise, world opinion would condemn and boycott Israel, and the apartheid system would break down. What would remain?

What would remain is the thing almost all Israelis dread: the binational State. One person – one vote. A country very different from Israel. A country from which many Israeli Jews would depart, either slowly or rapidly.

This is not propaganda, but simple fact. If there is a right-wing ideologue somewhere who has an answer to this – let them stand up now, before it is too late.

I CANNOT resist the temptation of telling again the old joke:

A drunken British lady stands on the deck of the Titanic, with a glass of whisky in her hand, and sees the approaching iceberg. “I did ask for some ice,” she exclaims, “but this is ridiculous!”

 

Improving Intercultural Understanding

My friend Yael Luttwak, a film maker, undertook a brilliant project in Palestine (now comprising Israel, the West Bank and the Gaza Strip) in 2007 to improve relations between Jewish Israeli and Palestinian women. In her own words she “filmed A Slim Peace, documenting what happened when women who were secular Israeli Jews, Jewish settlers, West Bank Muslims, and Bedouin came together in a health and nutrition group run by a Jewish and a Muslim woman. Most had never met the likes of their counterparts before, and most never would have. But in that setting, they connected and empathy and understanding grew.” These women met in Gush Etzion, outside Jerusalem, not for the ostensible purpose of improving Israeli Palestinian relations, but to explore how to improve their diets and lose weight. That is the brilliance of the project. Improved understanding of each other as people was a by-product rather than the main focus. It is worth reading Yael’s full account of the project: “About A Slim Peace”

With Yael’s project in mind, I read with some dismay the experience of white and black fraternity and sorority students at the University of Tennessee in Chattanooga with what seemed a similar project. In the 1990s well meaning white students joined receptive and welcoming black students in learning the African American “step” routines that back students had performed annually for many years. But in October 2016 “black fraternities and sororities at the University of Tennessee at Chattanooga had decided to [step] on their own. They took the show off campus, abandoning a glitzy annual homecoming event that had long included black and white students — and produced a program they felt was a more authentic reflection of stepping’s African American origins.” What was going on? “The-show-was-supposed-to-bring-black-and-white-students-together-it-almost-tore-them-apart”.

It is important to understand the profound difference between Yael’s Palestinian project and what happened at the University of Tennessee. The gatherings of Israeli and Palestinian women did not result in merging and blending, melting pot style, their respective cultures. Rather it resulted in improved understanding and cross-cultural bonding.

According one black student at the U of Tennessee: “The show no longer felt like a sharing of tradition but, rather, was one more element of black culture and identity that had been usurped…. This isn’t just entertainment for us,… When white students performed, it was just a performance. It had no greater meaning, or a sense of why. We don’t step without a ‘why.’ It connects us to something bigger.’”

“’Stepping isn’t yours,’ Hicks recalled responding. ‘This experience was so essential, and it’s so tied to the history of [black Greeks], and I think it just became something you have stolen and you are using it as your own’…. Kaitibi [a black student] told the audience that the black Greeks wanted to do something to ‘preserve our heritage and honor our traditions.’ It wouldn’t necessarily be bad if a white group wanted to do the same, ‘but we have to wonder: What traditions are you honoring?’”

“Black students [explained that] they were trying to find a balance between self-affirmation and racial reconciliation.”

In other words, the goal of racial and religious harmony and equal treatment under the law is not best served be attempting to obliterate or denying cultural/racial/religious differences. It is better served by developing and strengthening cross-cultural understanding and mutual respect.

American Exceptionalism—where has it gone?

Americans are among the most generous people in the world.  World Giving Index – published by the Charities Aid foundation – averages the percent of the population giving money to charities, the percent who have volunteered time for an organization in the past month, and the percent who have helped a stranger in the past month. Americans are sixth, tied with Switzerland with a score of 55%. Australia and New Zealand are first and second with 57% followed by Ireland and Canada with 56%. Germany is 19th with 44% and France is 93rd with a score of 27%.

I have always been proud that visitors to the United States have generally found Americans to be friendly, helpful, and good-hearted. I realize that this is a bit hard to imagine these days with the negativism thrown from the right and the left at each other, but we still manage the occasional smile in the grocery store as we wait at the checkout line. However, views of America abroad have been declining for some years and have plummeted this year. http://www.pewglobal.org/2017/06/26/u-s-image-suffers-as-publics-around-world-question-trumps-leadership/

The reasons for this decline that leap out to me reflect the propensity of our government to throw its weight around. We have been at war almost continuously since 9/11 (Afghanistan, Iraq, Somalia, Syria, Libya, Yemen, Nigeria, and who knows where else). The U.S. has 662 overseas bases in 38 foreign countries and military personnel in 130 countries. Most American soldiers are fine young men but no one likes foreign soldiers on their streets for very long, even went they are well behaved most of the time.

I was discussing with a Pakistani friend the “special” qualities of the American government and American people that make us exceptional https://works.bepress.com/warren_coats/35/. He suggested that a growing number of people around the world see the United States as exceptional in the sense that it doesn’t think it needs to follow the rules it sets out for everyone else. We are seen as bullies. Ouch.

The most recent and embarrassing example of this was President Trump’s announcement that the United States recognized Jerusalem as the capital of Israel and would move the U.S. Embassy there. As background, on May 14, 1948 the British agreed when Israel declared its independence from the British mandate that ruled Palestine. The State of Israel was immediately recognized by the United States. After several rejections by the UN Security Council, Israel’s UN membership application was accepted by the General Assembly on May 11, 1949 in Resolution 273, which, among other things, defined the new country’s boundaries. Between June 5 to 10, 1967 Israel attacked and captured surrounding territories in Egypt, Jordan and Syria in what became known as the Six-Day War. Except the Gaza Strip and the West Bank most of the captured territory was returned as part of a peace agreement. Israel ended its occupation of the Gaza Strip in August 2005.

The termination of Israel’s “temporary” occupation of the West Bank, including East Jerusalem remains the subject of the Israeli-Palestinian peace negotiations. “Under the 1947 UN Partition Plan to divide historical Palestine between Jewish and Arab states, Jerusalem was granted special status and was meant to be placed under international sovereignty and control. The special status was based on Jerusalem’s religious importance to the three Abrahamic religions.”  “Jerusalem-capital-Israel”

In general, the international community rejects the use of brute force to change borders. Russia’s annexation of Crimea into Russia (though it was previously part of Russia before Khrushchev gave it to Ukraine in 1954) violated this understanding.

President Trump’s announcement about the status of Jerusalem violates standing U.S. and international policy. It was almost universally condemned. The US vetoed a Security Council condemnation of Trump’s action but the General Assembly overwhelmingly (128 to 9, with 35 abstentions) passed a resolution declaring that, “any decisions and actions which purport to have altered the character, status or demographic composition of the Holy City of Jerusalem have no legal effect, are null and void and must be rescinded.” White-House-vows-to-stand-firm-on-trumps-recognition-of-jerusalem-as-israels-capital/2017/12/23/

The General Assembly vote used a rarely exorcised power as explained by Paul Pillar. “Among the principal takeaways from the General Assembly’s action is that an international sense of justice and fairness matters.  Many states reject the notion that might makes right, which is how the Israeli government has treated its relations with the Palestinians, and how the Trump administration approached its lobbying on this resolution.” “Uniting-against-trumps-policies-for-peace”

When the UN voted Thursday (Dec 22) to condemn this action “Only seven countries—Guatemala, Honduras, Togo, Nauru, Palau, Micronesia and the Marshall Islands—were willing to stand with Uncle Sam and Israel and vote against the resolution.” “Next-year-in-Jerusalem”

Aside from keeping the favor Israeli Prime Minister “Bibi” Netanyahu and some wealthy American Jewish donors, there is no upside to this step to be found. The peace talks, such as they were, have been damaged. Even the “Permanent Observer Mission of the Holy See to the United Nations called for maintaining of the status quo of Jerusalem.” In its letter to the President of the General Assembly it stated that: “The unique identity of Jerusalem, which is of universal interest, consists in its particular nature as a Holy City, most sacred to the three monotheistic religions and a symbol for millions of believers worldwide who consider it their “spiritual capital”. Its significance goes beyond the question of borders and this reality should be considered a priority in every negotiation for a political solution.” “Holy-See-supports-Jerusalem’s-historical-status-quo”

Israelis themselves are deeply divided on this issue. The continued and unresolved occupation of the West Bank by Israel has and continues to provoke terrible behavior by both sides. Uri Avnery, an Israeli freedom fighter in his youth, decries acts by his country against occupied Palestinians in passionate terms (email me if you are interested in his email) as does Phillip Weiss: Ending-crisis-Zionism/

But American bullying did not stop there. Nikki Haley, U.S. Ambassador to the UN, delivered a disgusting and threat-filled speech condemning the U.S. rebuke. “The crude tactics included Nikki Haley’s rhetoric about ‘taking names’ and Donald Trump’s bombast about cutting off U.S. aid.  Among the Arab states that supported the resolution were the two states—Egypt and Jordan—that receive more U.S. aid than anyone other than Israel.  The very crudeness of the tactics, and the offense taken to bullying, probably made the tactics counterproductive.” (see Pillar article above).

Good hearted and freedom loving Americans are increasingly represented by governments that push our views and interests on the rest of the world. The rest of the world’s resistance is building. This does not serve our economic or security interests. How did the “essential country”—the “exceptional country”—become a big bully? In recent weeks we have also been asking ourselves how prominent leaders in the media, industry, and Congress have become sexual bullies. It seems that power corrupts. Eternal vigilance is still needed.

The Wedding Cake

Americans harbor many conflicting views on many subjects. Our right to freely express them is guaranteed in the American Constitution’s First Amendment. It is precisely this right that has enabled the LGBT community to convince an ever-growing number of our fellow citizens that they should be entitled to the same protections under the law as anyone else.

Public discussion of conflicting opinions in a spirit of civility and mutual respect is an important aspect of developing consensus as well as tolerance for other beliefs and ways of living. While we are required by the Civil Rights Act of 1964 to set aside our personal opinions and tastes when we open for business to serve the public (the non discriminatory public accommodations requirement), our personal views are much more likely to be meaningfully changed by persuasion than by legal requirements. “There-will-be-no-winners-in-the-supreme-courts-wedding-cake-case/2017/12/04/”

In 2012, Charlie Craig and David Mullins, a same-sex couple, walked into Masterpiece Cakeshop in Lakewood Colorado to order a cake for a celebration of their wedding. Jack C. Phillips, the owner and cake designer of the shop, refused to bake it on the grounds that he opposed same-sex marriage. In the case of Masterpiece Cakeshop v. Colorado Civil Rights Commission, now before the Supreme Court, Colorado’s Civil Rights Commission maintains that Mr. Phillips has violated the state’s public-accommodations law, which forbids discrimination against LGBT customers. The case pits the Constitution’s First Amendment protection of the right to free speech against the right of everyone, including gay and lesbian Americans, to the equal protection of the law on non discriminatory public accommodation. The Supreme Court must now decide how to balance these two rights.

Phillips argued that making him create a cake that celebrates a same-sex wedding would violate his First Amendment rights to free speech and free exercise of religion, by forcing him to express a message, and celebrate an event, that runs against his beliefs.  Messrs. Craig and Mullins argued that the cake shop had discriminated against them.  How can the rights and needs of each best be satisfied in our society of diverse beliefs?

There were many other cake shops happy to bake the desired cake. Why would Messrs. Craig and Mullins want to give their business to an unwilling baker? What goal was served by challenging the baker’s refusal in court? Did they think that a judge could force the baker to change his views about same sex marriage? Really? Public attitudes toward LGBTs have improved dramatically in recent years including attitudes toward same-sex marriage because of persuasion, not because of legal coercion. In fact, in 1996 legal coercion was used to prevent same-sex marriage with passage of the Defense of Marriage Act (DOMA). The Supreme Court fortunately overturned it in June 2015 in the case of Obergefell v. Hodges. What ever the Supreme Court decides, the LGBT community looses from this case. George Will: “A-cake-is-food-not-speech-but-why-bully-the-baker”/2017/12/01/

Everyone should worry about the threat of state-compelled speech, says gay marriage supporter Andrew Sullivan:  “It always worries me when gays advocate taking freedom away from other people. It worries me as a matter of principle. But it also unsettles me because some gay activists do not seem to realize that the position they’re taking is particularly dangerous for a tiny and historically despised minority. The blithe unconcern for the First Amendment in the war on ‘hate speech,’ for example, ignores the fact that, for centuries, the First Amendment was the only defense the gay minority ever had — and now, with the first taste of power, we are restricting the rights of others in this respect? Ugh. Endorse the state’s right to coerce speech or conscience and you have ceded a principle that can so easily come back to haunt you.” New York Magazine December 8, 2017.

The LGBT community should look first to improved understanding and then to tolerance of diversity. The courts are the last place to search for a workable balance between free speech and conscience and equal treatment of everyone under the law.

We will always have terrorists

The cancer of ISIS is metastasizing. As it losses its caliphate in the Levant, it is being reborn here and there across the globe. We will always have it or its successors or something like it, in the same way that we have always had gangs, mafia, murderers, and thieves. We can and should minimize their number and the damage they do but we will never eliminate them. The real issue is determining where we want the balance between freedom and security.

There are many reasons for the eternal existence of criminals and their crimes but one is that we are unwilling to create the police state and its repressive and intrusive measures that would be needed to eradicate them totally. In short, we prefer to live relatively free and accept some risks of terrorist acts relative to a safer alternative with significantly curtained freedom. As we evaluate government policies to protect us from terrorists, it is worth reviewing and keeping in mind where we have drawn the line between the risks of freedom and the restraints of greater and greater degrees of security. The line is always under review and adjusted a bit this way or that depending on conditions.

Some data from the U.S. helps us keep perspective. Over the past twelve months in the U.S. 104 people were killed by terrorists, 6 of whom were killed at the hands of Islamists. In comparison, 37,461 people died in automobile accidents in 2016. In response to the risk of death on the highway we regulate the right to drive, requiring a license, and enforce speed and other traffic regulations but we have not prevented people who qualify for a license from taking the risks of driving. A year ago I shared some interesting data on the causes of unnatural deaths in the U.S. in the following blog: https://wordpress.com/post/wcoats.blog/1025

On average 2,500 people choke to death per year while eating, yet the activity remains relatively unregulated.

General Michael Flynn

We all deserve to know whether Donald Trump colluded or cooperated with Putin and Russia in any way to illegally help his presidential campaign. I have full confidence that special counsel Robert Mueller’s investigation will provide us with the truth of that question one-way or the other.

I also strongly support former President Obama’s (Russian restart) and President Trump’s desires to build the closest and most cooperative relationship possible with Mr. Putin’s Russia that is consistent with American interests and values. This means that conversations—many conversations—between the Trump administration and Russian officials are not only proper, but also highly desirable.

The revelations that such conversations occurred tell us nothing about whether the Trump administration has been doing anything improper. Then enter General Michael Flynn.

Sunday’s Washington Post contains an article with the headline “Inside the day that set in motion Michael Flynn’s guilty plea”. The day in question was Dec 29, 2016, well after Trump’s election and four weeks before his inauguration. The day before President Obama had “imposed sanctions against Russia for its alleged interference in the election.” Flynn called Russian Ambassador Sergey Kislyak, “urging Moscow not to retaliate — and Russia later surprisingly agreed.”

On the face of it this is neither appropriate nor inappropriate. We would need additional information to come to such a conclusion. However, Flynn lied to the FBI about having such a conversation, which raises the suspicion that it was inappropriate. Unrelated to his work with the Trump administration, General Flynn failed to get clearance before doing work with foreign governments, nor did he register as their agent, as required by law. Generally Flynn seems to have a habit of lying. Later Flynn pleaded guilty to perjury as part of a deal to fully cooperate with Mueller’s investigation in exchange for not being charged with these other crimes.

So if Flynn was not making improper deals with Russia, why did he lie about it? Hopefully we will know in the course of time, but it could be because he belatedly learned that his “conversations with Kislyak violated the Logan Act, a 1799 law that prohibits private citizens from conducting U.S. foreign affairs without the permission of the government.”

No one has every been convicted of violating the Logan Act and a strong argument could be made that such acts by a President elect and his team are not covered.

I want to know the truth. Trump lies so regularly that he has no trust from anyone who really cares about the truth. But to be fair, Flynn’s conversations with Kislyak is not evidence of anything inappropriate. Let’s not jump to conclusions until we have enough information to do so with some confidence that they are correct.

What is SALT really about?

Here is the proper way to understand the SALT issue—whether State and Local Taxes should be deducted from taxable income on which federal taxes are levied.

Assume that taxpayer 1 (Jack) in state A and taxpayer 2 (Mary) in state B both have earned incomes of $150,000 each. If Uncle Sam needs to raise $60,000 each year from its income tax and applies a flat tax on each taxpayers’ total income, it would need to impose a tax rate of 20% (150,000+150,000=300,000*0.2=60,000). Each taxpayer would pay $30,000 in federal taxes.

Assume that Jack chooses to buy an expensive car costing $100,000 while Mary makes a more frugal choice and buys a $40,000 car. No one would think that they should be allowed to deduct the cost of their cars from their incomes for purposes of their federal income tax, but what if they could? Jack would now have $50,000 in federally taxable income (150,000-100,000) while Mary would have taxable income of$110,000 (100,000-40,000). To raise the same $60,000 needed by the Feds, the federal tax rate would need to be increased to 37.5% (50,000+110,000=160,000*0.375=60,000). Of the $60,000 in federal tax revenue, Jack would pay $18,750 (50,000*0.375) and Mary would pay $41,250 (110*0.375). Not only does Jack get a better car but he also pays less taxes. In fact, this tax treatment subsidizes Jack’s expensive car to the amount of $11,250 (30,000-18,750). This is likely to lead Jack to buy a more expensive car than he would have chosen if spending only his own money. Clearly that would be neither fair nor economically efficient.

Replace “car” in the above example with “state government expenditures”. Jack may well choose to have (and pay the higher taxes to finance) more extensive state government services than does Mary. That is fine as long as you are free to choose whether you live in state A or state B. But should Mary be forced to pay (subsidize) some of Jack’s tastes for larger state government expenditures? Surely not, but that is exactly what allowing tax payers to deduct their SALT from their taxable income for federal tax purposes does. Eliminating that deduction would restore fairness and remove any artificial inducement for larger state expenditures. In this way, every one would be free to support the level of state spending they are willing to pay for.

Our Free Press

A free press is an important pillar of a free society. In addition to reporting what is going on—who said and did what—the hard hitting investigative reporting of The Washington Post and other news outlet has exposed corruption and abuse of power from the Watergate scandal of Richard Nixon to the sexual misconduct of Donald Trump, Bill Clinton, Roy Moore, Harvey Weinstein, Bill O’Reilly, Roger Ailes, Kevin Spacey, Charlie Rose, Mark Halperin, Al Franken, and Representative John Conyers to name a few (more on this later). Such scrutiny of the behavior of those in positions of power is a critical service that is vital to the preservation of the integrity of our government.

One way to undermine the role of our free press is to challenge its integrity—to create doubts about the honesty of news reports—to label news as “fake news.” I am not suggesting for a second that news reports are never wrong or that we should not scrutinize them with some care and skepticism, but if the public comes to believe only those news sources that repeat what they already believe, one of the most important institutions protecting our freedoms (the fourth estate) would be seriously weakened.

We know that Mr. Putin’s Russia has been actively undermining faith in Western institutions by their citizens. In the U.S. and Europe Russia has used social media to plant fake news with both the right and the left in order to fan social divisions. One element of this campaign has been to undermine confidence in news reporting in general.

According to Hedrick Smith, former New York Times Moscow Bureau Chief and author of the global best-seller, The Russians: “Putin has turned to cyber warfare, using his intelligence services and computer hackers rather than military force to disrupt the West – and we can expect more of that in the 2018 elections and beyond…. It’s kind of Putin’s revenge for the fact that we pushed the Russian bear back in the cave by moving the frontiers of NATO into the Baltic states—Lithuania, Estonia and Latvia. And (Putin) sees us as being behind the overthrow of the pro-Russian president in the Ukraine. So he’s hitting back.” (Putin wants new cold war) Putin also needs external enemies—external distractions—to divert the attention of Russians from deficiencies at home.

As part of this attack on American institutions they have called the news media “the enemy of the American people,” and planted statements such as: “It’s frankly disgusting the way the press is able to write whatever they want to write, and people should look into it.” New York Times /2017/10/12/ And in a direct attack on the First Amendment, this: “Why Isn’t the Senate Intel Committee looking into the Fake News Networks in OUR country to see why so much of our news is just made up-FAKE!” Money CNN/2017/10/05/

If you didn’t catch it already, I played a little trick on you in the previous paragraph. Those of you who have been paying attention will have spotted that the above quotes attacking the American press and fake news were not Russian propaganda but from President Trump. He also said in a February White House press conference:

“I’m making this presentation directly to the American people with the media present … because many of our nation’s reporters and folks will not tell you the truth and will not treat the wonderful people of our country with the respect they deserve.

“Unfortunately, much of the media in Washington, D.C., along with New York, Los Angeles, in particular, speaks not for the people, but for the special interests and for those profiting off a very, very obviously broken system.

“The press has become so dishonest that if we don’t talk about it, we are doing a tremendous disservice to the American people, a tremendous disservice. We have to talk about it. We have to find out what’s going on because the press, honestly, is out of control. The level of dishonesty is out of control.”  (Trump: media out of control)

Why does Trump do this? Some think that Trump’s attempt to undermine confidence in the news media is part of a well thought out strategy to raise doubts about the veracity of news reports critical of him. It is all “fake news.” I am more inclined to think that he is simply unable to control his anger whenever his ever present and huge ego is bruised. He and his ego are more important than the health and well being of our country, as when he complained about a lack of gratitude for his helping get the release of three UCLA basketball players caught shoplifting in China. On November 15, Trump tweeted:

“Do you think the three UCLA Basketball Players will say thank you President Trump? They were headed for 10 years in jail!”

A few hours later at a press conference the three did just that, but the father of one of them, LaVar Ball, downplayed Trump’s role in his son’s release precipitating the following Presidential tweet:

“Now that the three basketball players are out of China and saved from years in jail, LaVar Ball, the father of LiAngelo, is unaccepting of what I did for his son and that shoplifting is no big deal. I should have left them in jail!”

Are you shocked or have you acclimated to the new normal? I leave it to you to decide whether Trump is reflecting his concern for the well being of our country or his ego. (Trump-college-basketball-players-helped-free-china-left-jail)

Undermining our faith in our institutions and in particular our news media is a serious matter. It is dangerous whether promoted by Russia or Trump. (Trump’s dangerous attacks on the press.) The press and its supporters, to their credit, are fighting back. (US-press-freedom-tracker-documenting-press-freedom-violations)

As David Ignatius put it: “Amid the slithering mess of problems that emerged in 2017, the one that bothers me most is that people don’t seem to know what’s true anymore. “Facts” this year got put in quotation marks.

“All the other political difficulties of the Donald Trump era are subsumed in this one. If we aren’t sure what’s true, how can we act to make things better? If we don’t know where we are on the map, how do we know which way to move? Democracy assumes a well-informed citizenry that argues about solutions — not about facts.” He suggests the reestablishment of newspaper ombudsmen and would “like to see [Google, Facebook, etc.] using machine learning to interrogate supposed facts to establish where they’ve been — how they first surfaced, and how they were passed from user to user.” (“Getting-back-to-facts/2017/11/23/”)

At the same time, the American press deserves some of the criticism it has received. The following article by Chris Wallace puts the case very well: Trump-is-assaulting-our-free-press-but-he-also-has-a-point The distinction between news and opinion is sometimes blurred.

Here are two quick examples: The-FCC-has-unveiled-its-plan-to-rollback-its-net-neutrality-rules. The Post article linked here provides a reasonably balanced report on those favoring and those opposing the FCC’s proposed return to more or less the legal situation prior to 2015. The problem, as is often the case, is that the article’s headline is not written by the article’s authors and the headline gives a totally misleading impression of what is proposed: “FCC plan would give Internet providers power to choose the sites customers see and use” However, the headline writer probably reflects the better disguised biases of the reporters (to their credit). My own blog on the subject from last May is far more balanced if I may say so myself: https://wcoats.blog/2017/05/17/net-neutrality/

The discussion now underway on Republican tax reform legislation provides another example of press bias. Every morning I read the Wall Street Journal followed by the Washington Post, which should provide a bit of balance. But I have found press reporting (editorials and opinion pieces are free to say whatever they want) on this subject sufficiently biased to provoke me to blog twice on it: https://wcoats.blog/2017/11/12/tax-reform-and-the-press/    https://wcoats.blog/2017/11/18/salt-more-press-nonsense-on-tax-reform/

And finally from my highly selective short list was the recent Post headline: Trump boosts Moore in Ala. Senate race despite sexual misconduct allegations (Trump-boosts-Moore-in-ala-senate-race-despite-sexual-misconduct-allegations)  This is very interesting (and amazing) on several levels.

Trump does not indorse Moore in this article but speaks out against his opponent: “’We don’t need a liberal person in there, a Democrat,’ Trump said about Moore’s opponent, former federal prosecutor Doug Jones, who has led in some recent polls in the state.”

The WSJ version of the same story was titled: “Trump Signals Support for Roy Moore Over Democratic Opponent.” WSJ 11/22/2017 With regard to the multiple sexual misconduct claims against Mr. Moore, “Mr. Trump pointed to the can­di­date’s state­ments: ‘Look, he de­nies it… He to­tally de­nies it. He says it didn’t hap­pen. And, you know, you have to lis­ten to him also.’”

A few hours later this article was updated as follows: “Trump said, ‘He totally denies it.’ Previously, the White House said that Mr. Trump believed Mr. Moore should leave the race if the allegations proved to be true.”

From CNN news: “President Donald Trump on Tuesday defended embattled Alabama Republican Roy Moore, all but endorsing the Senate candidate who has been accused of sexual assault and child sex abuse. “He denies it. Look, he denies it,” Trump said of Moore. “If you look at all the things that have happened over the last 48 hours. He totally denies hit. He says it didn’t happen. And look, you have to look at him also.” But to repeat, Trump did not endorse Moore.

Trump’s tolerance of “questionable” behavior by Republican’s is not extended to Democrats. When he returned from Asia he tweeted on Nov 16 about a picture in which Al Franken is holding his hands above Leeann Tweeden’s breasts, while they were on a 2006 USO tour to entertain U.S. troops.

“The Al Frankenstien picture is really bad, speaks a thousand words. Where do his hands go in pictures 2, 3, 4, 5 & 6 while she sleeps?”

He continued in a second tweet, “And to think that just last week he was lecturing anyone who would listen about sexual harassment and respect for women.”

Trump seems to suggest that we should believe the denials of Republicans and investigate the denials of Democrats. He had wisely kept silent to that point about Moore’s pedophile charges, presumably not to remind the public of his own admitted sexual misdeeds (plus the large number of claims he has denied). Here is the full list: President Trump-and-accusations-of-sexual-misconduct-the-complete-list . The mystery is why when he consulted his advisor on such things (himself, of course) he decided to break silence on the subject—condemning Sen. Franken while giving Moore a pass. I suggest that he change advisors.

We have sadly and dangerously grown used to the routine lying of Trump and others. We live in a world of fake news. There have always been limits on our generally wide-ranging freedom of speech, however. Famously, we may not shout fire in a theater when we know there is none. The balance between the First Amendment’s protection of free speech and protection against willful defamation, for example, can be tricky. The following article provides a useful discussion of this balance in the context of the defamation case against Trump by one of his claimed sexual abuse victims, Summer Zervos, a contestant on Trump’s reality television show, “The Apprentice.” “She accused then-presidential candidate Trump of sexual harassment that purportedly occurred in 2007. Trump denied the allegations, and, in his characteristically understated style, tweeted that those allegations, and similar allegations made by other women, were “nonsense,” lies,” “phony” and “100 percent fabricated.” Zervos then claimed that Trump’s comments amounted to defamation.” (Trump’s attack on Summer Zervos blows hole first amendment) This might prove more damaging to Trump than the Russia investigation.

SALT—More press nonsense on tax reform

The elimination of State and Local Tax (SALT) deductions from the proposed tax reforms working their way through Congress has become a hot topic. Fine, but please keep the discussion honest. Sadly my local newspaper, The Washington Post, is not setting a good example: “In-towns-and-cities-nationwide-fears-of-trickle-down-effects-of-federal-tax-legislation”

First a word about tax reform vs tax reduction. We are now in the 9th year of economic recovery, one of the longest on record. It won’t go on forever. Ideally the Federal government’s budget should balance its expenditures and revenue over the business cycle. That allows for aggregate demand stimulating deficits during business downturns. These deficits result from so called automatic stabilizers—the fall in tax revenue from the fall in taxable income plus increased transfer payments to the unemployed. But a cyclically balanced budget also requires budget surpluses during the business expansion phase. The U.S. economy is now fully employed (in fact, unfilled vacancies exceed those looking for work). The Federal Reserve has finally increased inflation to its target rate of 2%. We should now have budget surpluses to make room for the deficits that will follow during the upcoming downturn.

But our fiscal situation is much worse than that. The large increase in “entitlement” expenditures for my greedy generation as we retire (greatly increasing unfunded social security and health benefits) will push our fiscal debt held by the public, now at 77% of our Gross Domestic Product (GDP), to over 150% of GDP within 30 years if current laws remain unchanged. See the figure below.

Taxes will either need to be increased (not reduced) or entitlement expenditures reduced (which means increased less than current law provides). My point is that reducing tax revenue at this time is irresponsible without at least matching expenditure cuts. The proposed tax reforms now in congress would increase the debt by $1,500 billion dollars over the next ten years on a static forecast basis, meaning without taking into account the increased growth and thus tax revenue that might result from the tax reforms, which no one expects to wipe out all of the static forecast of $1,500 billion.

Fed debt      Congressional Budget Office forecasts

While it is irresponsible to cut tax revenue at this time, it is highly desirable to reform how that revenue is raised. The existing taxes distort the economy and thus reduce our incomes in a number of ways. They grant favors to many special interest groups via allowing them to deduct specific expenditures from their taxable incomes (i.e. from the tax base). These so called tax subsidies encourage activities over what the private economy would otherwise under take. One very damaging example is the deduction of interest payments by businesses and individuals, which has encouraged excessive borrowing and indebtedness. The most popular of these is the mortgage interest deduction by homeowners. This tax subsidy benefits homeowners relative to renters, i.e. it benefits the wealthier at the expense of the poor. How well meaning middle and upper income American’s can justify this with a straight face is beyond me.

But what about the SALT deductions? By eliminating such deductions, i.e. by broadening the tax base, the same revenue can be raised with a lower tax rate. Other things equal (such as revenue), lower tax rates are good because they influence taxpayer decisions less. For example, companies are more likely to invest in the U.S. rather than abroad if the corporate tax rate is reduced from its current 35%, virtually the highest in the world, to 20%, which is closer to the rate in most developed countries.

Reducing tax subsidies to state and local governments is also good because it reduces an artificial encouragement for larger state and local government expenditures. If Californians are willing to pay more state taxes for larger state expenditures they are welcome to do so. But there can be no justification for transferring federal tax revenue from states with lower expenditures and matching taxes to California and other high spending states. To a large extent the existing SALT deductions transfer income from poorer states to wealthier ones. Who can support that with a straight face?

How information is presented can have a significant effect on how it is understood or viewed. How did Renae Merle and Peter Jamison of The Washington Post (see link above) report the proposed elimination of the SALT deduction? They reported that, “In San Diego County, the elimination of what is commonly called the “SALT” deduction could affect about a third of households, said Greg Cox, a member of the board of supervisors. The average middle-income resident would lose a $16,000 deduction.” They failed to note that the third of households affected are the wealthiest third. According to CNBC: “More than half of taxpayers who are earning $75,000 and above claim SALT deductions on their federal income tax returns as do more than 90 percent of taxpayers who make $200,000 or more.”

share of SALT

Furthermore, the figure $16,000 is misleading in two respects. The loss of a $16,000 deduction would increase taxes for a single person earning $200,000 annually by $5,280 at the current tax rate of 33%. However, broadening the tax base by eliminating the SALT and other deductions allows raising the same revenue with a lower tax rate. To measure the actual tax impact both effects must be combined. Current congressional proposals are to reduce the rate for the above person to 25%, which would result in an increased tax of $4,000. None of this would affect the poor directly. I assume that Renae Merle and Peter Jamison were just careless rather than letting their biases get the best of them, but you can make your own judgment.

The SALT deduction cannot be justified on either economic or fairness grounds, but there is sadly a good chance congress will cave in to the pressure from the wealthier states to keep it or at least some of it.