Fear: Trump in the White House

In this episode of the USC Bedrosian Bookclub Podcast, Lisa Schweitzer hosts a discussion with Christian Grose, Jeff Jenkins, and me about Bob Woodward’s latest reportage on the Presidency: Fear. How does this stack up to other Woodward titles and how does the principal-agent theory work its way into conversation with these political junkies? Click below to find out!

Letter to a Trump Supporter #8: Hillary Clinton’s Character

This is the eighth in my series of “Letters to a Trump Supporter,” from correspondence with a family friend who supports Mr. Trump.

With two days left in this election season, I will dedicate my last two letters to the issue that has attracted the most attention in the race: the character of the candidates. Today, I will begin with Hillary Clinton.

My interlocutor sent me a series of “debate questions“ that Rush Limbaugh wanted to ask Secretary Clinton, along with a couple other conspiracy theories that are floating around the Internet.

Below is my response.

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Dear Mr. ——,

Thanks for sending this list of questions. Obviously, I don’t know how Hillary Clinton would answer them, but I can tell you what I would say if I were her:

(1.) When you were Secretary of State, why did you let a Russian company purchase half of the United States uranium reserves?

The Secretary of State cannot veto foreign purchases of American companies. Only the President has that power.

The deal you’re referring to, I assume, is when the Russian company JSC Atomoredzoloto purchased Uranium One, a Canadian firm. Their U.S. reserves account for 20 percent of America’s uranium production capacity, not “half.”

If you’re worried that Russia will somehow use that uranium to build bombs, they can’t. They’re not allowed to export it. It stays here, and we continue to regulate it as before. That’s why nine government agencies and two independent regulatory agencies approved the deal.

(2.) How much money was donated by Russian companies to your Foundation?

How much money has Donald Trump made in Russia? I’ll answer yours when he answers mine. All he has to do is release his tax records like I’ve done

If you’re implying that Russian donations were bribes, you’ll be relieved to learn that my Foundation has been thoroughly investigated by the press, and there has been no evidence of corruption.

The Trump Foundation, in contrast, actually has engaged in corrupt behavior. Donald Trump used $250,000 from his Foundation for personal business disputes. They conveniently forgot to register with the State of New York, leading to an investigation by the Attorney General. And the Trump Organization is actively expanding into the Middle East, Ukraine, and…surprise, surprise: Russia.

Somehow no one ever asks Donald Trump about all the profits he’s planning to reap in Russia. All they care about is the money I raised to help sick kids in Africa.

Maybe that explains why Mr. Trump has professed his admiration for Vladimir Putin, why he hired a campaign manager who advised the top Putin ally in Ukraine, why his foreign policy advisor on Russia has spent a career working with their oil and gas companies, and why Mr. Putin’s media outlets are actively supporting Mr. Trump.

Given all those facts, maybe you can identify the author of this quote: “Russians make up a disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia.”

You think it was me? Or maybe my husband? Or my daughter?

Nope. It was Donald Trump Jr.

(3.) When you worked for the State Department, how did you conduct Secret Classified business without using a secure email server?

Because I was careless. Out of tens of thousands of emails that the FBI investigated, they only found three with classification markers. They concluded that there’s no evidence that I intentionally mishandled the information.

In hindsight, it was a mistake to follow Colin Powell’s advice to use a private email account. I assume Donald Trump plans to thoroughly investigate Secretary Powell’s private emails if he is elected president.

(4.) What kind of assault weapons were you funneling through Benghazi to ISIS in Syria before Ambassador Stevens was murdered?

We didn’t funnel arms through Benghazi to ISIS. We funneled them through our ally Qatar to Libyan rebels to overthrow the murderous dictator Muammar el-Qaddafi, the exact same strategy that Republican administrations have been using for decades. Perhaps you recall the Iran-Contra scandal orchestrated by Ronald Reagan?

But I digress. We eventually learned that Qatar was giving some of the arms to Islamic militants, and we urged them not to do so.

It’s basically impossible to prevent this from happening, though, since there are Islamic militants on both sides of most fights.

Either you work with them to defeat your enemies, or you retreat from the Middle East entirely. Donald Trump would face the exact same problem if he wanted to, in his words, “utterly destroy ISIS.”

(5.) When you left the White House after your husband’s last term as president, why did you steal $200,000 worth of furniture, China, and artwork that you were forced to return?

We didn’t steal anything. We returned some gifts when the National Park Service decided that they were gifts to the government, not to us, although they were donated during my husband’s administration.

(6.) When you were Secretary of State, why did you solicit contributions from foreign governments for the Clinton Foundation after you promised President Obama you would not?

I never made such a promise, and there’s no evidence that I solicited contributions from foreign governments while I was Secretary of State. The Foundation did receive foreign contributions at the time, but I was not involved.

(8.) Why do you and your husband claim to contribute millions of dollars to charity for a tax write-off when it goes to your family foundation that gives out less than 15% of the funds you collect, and you use the balance to support yourself tax-free?

Unlike Donald Trump, I don’t use my charity to “support myself.” So, you just made that up.

And my family foundation does not give “out less than 15% of the funds“ it collects. That’s a lie too.

You really want to talk about who runs their foundation better? Alright, you asked for it…

Charity Navigator, which evaluates charities based on financial health and accountability/transparency, gives the Clinton Foundation their highest rating. Charity Watch, a similar organization that uses an A-F scale, gives the Clinton Foundation an “A.” Guidestar, yet another nonprofit watchdog, awarded the Clinton Foundation with its “transparency seal.”

The Trump Foundation, on the other hand, doesn’t even qualify for such ratings. Why? Because, as Guidestar says, “the Trump Foundation’s approach would certainly not meet the standard of focused, proactive grant making.”

Oh, and for what it’s worth, Guidestar also says, “the Clinton family has — at least over the last several years — donated more money (and at a far higher proportion of their wealth) than the Trump family.”

(9.) Why are you unable to account for $6 billion of State Department funds that seem to have disappeared while you were Secretary of State?

We were not “unable to account for $6 billion.” The Inspector General found that the contract files were incomplete. He specifically wrote a letter to the editor of the Washington Post to clarify the misconception. None of the money is missing. Some of the paperwork was just inadequate, a problem that happens in every large organization in the world.

(10.) Why did you say you were broke when you left the White House, but you purchased a $2 million home, built an addition for the Secret Service, and charge the taxpayers of the United States rent in an amount equal to the entire mortgage?

I should not have said “dead broke.” That was a regrettable phrase, though not as offensive as when Donald Trump bragged about profiting from American families losing their homes in the last recession.

What I meant was that our liabilities exceeded our assets, meaning we were technically insolvent because we were deeply in debt. The only reason we got a mortgage was because the bank knew we would earn more income after we left the White House.

We have never charged the taxpayers any rent. That’s a ridiculous lie. On the contrary, the Secret Service offered to pay rent, as is customary in these situations, and we refused to take it.

(11.) How is it that your daughter, Chelsea, can afford to buy a $10.5 million apartment in New York City shortly after you left the White House?

Chelsea and her husband bought the apartment thirteen years after we left the White House, not “shortly after.” She has earned a six-figure salary at NBC News, as have George W. Bush’s daughter Jenna (at NBC News) and John McCain’s daughter Megan (at MSNBC and Fox News). But most of their $15 million net worth comes from her husband, who is a successful investment banker.

In other words, they didn’t get any of that money from us…unlike Donald Trump’s children, who are each worth about $150 million thanks to their father’s company.

(12.) Speaking of Chelsea, how is it that her first paying job, in her late 20s, was for more than the salary of the President of the United States? Was there a quid pro quo of any sort involved?

I’m glad you mentioned the salary of the President of the United States. The President earns $400,000. The average Fortune 500 CEO earns $16 million. Since Republicans are always complaining that public workers are overpaid, they should be very proud of the fact that our Presidents have been paid so little compared to their peers, despite managing an organization that is far larger than any Fortune 500 company.

But, to your point, if there was a quid pro quo, it wasn’t a very good one. Harvard’s media experts scoured all the major news reports and found that I received far more negative coverage than any of the other candidates, and Donald Trump’s coverage was unusually positive.

(13.) Why did you lose your law license? Why did your husband lose his?

I didn’t lose my law license. That’s a complete lie. I stopped practicing because I was busy being a U.S. Senator.

My husband’s law license was suspended for lying under oath about his relationship with Monica Lewinsky.

Of course, Donald Trump has also committed infidelity, and he has lied more than any other presidential candidate in modern history, according to expert fact-checkers.

(14.) Why did you lie to the American people about the terrorist attack in Benghazi but managed to tell the truth to your daughter the same night it happened?

I never lied to the American people about the terrorist attack in Benghazi. You can read the transcripts. I announced the attack that night. I did not confirm who perpetrated the attack. I speculated in an email to my daughter that it might be “an al Qaeda-like group,” but I didn’t have enough information to confirm that speculation to the public until later. This is standard protocol, as well as just being good sense and good morals not to accuse people without solid evidence.

(15.) Why were multiple commando teams given the order to “stand down” when the diplomatic compound was attacked in Benghazi?

There was no “stand down” order. The CIA annex, which was a mile away from the compound, told the security team to wait a half hour until they figured out who was attacking the compound. They didn’t want to accidentally get into a fight with friendly militia, which is a real possibility in these situations. They were not told to “stand down.” That’s a completely different kind of order, where they’re not on alert anymore. They were on alert, they just waited for confirmation that it was an enemy attack. It’s standard protocol.

And to be very clear: It was the CIA annex that made this call, not the White House or the State Department. Neither Barack Obama nor I had been alerted yet. When they did finally call us, we ordered them to do everything in their power to save the Ambassador and his team.

(16.) Why did you ignore pleas from Benghazi for more security? Why did you send Ambassador Chris Stevens into harm’s way?

Why did Ronald Reagan send 800 Marines into harm’s way in Lebanon in 1982? Why did he leave them there after militants bombed the embassy in Beirut, killing 63 people? Why did a Congressional investigation find that “very serious errors in judgment” led to the death of 241 Americans six months later?

Why did George W. Bush ignore multiple warnings that Osama bin Laden was going to attack the United States before 9/11?

And why didn’t Republicans investigate those mistakes as relentlessly as they have investigated Benghazi?

Kevin McCarthy, the Republican House majority leader, gave one answer: “Everybody thought Hillary Clinton was unbeatable, right? But we put together a Benghazi special committee, a select committee. What are her numbers today? Her numbers are dropping.”

If you actually want to know the facts, here they are:

First, we actually did make security improvements in the year before the attack.

Second, I didn’t send Ambassador Stevens to Benghazi. According to two former ambassadors, “In-country travel is solely at the discretion of the ambassador, and he did not need to seek Department of State approval.”

And third, the chief counsel of the Republican-led investigation committee said “nothing could have affected what occurred in Benghazi.” He told my counterpart Leon Panetta, the Defense Secretary at the time, “I think you ordered the right forces… I don’t disagree with the actions you took, the recommendations you made, and the decisions you directed.”

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I don’t think there’s any doubt that Hillary Clinton has made mistakes in her career. (Who hasn’t?) But the evidence points in a completely different direction than these lies and character attacks suggest.

That, of course, is how conspiracies get started. They begin with one little grain of truth, especially if it’s a grain of truth that upsets a lot of people, and then they draw ridiculous, false conclusions that people will believe because they want to believe it.

The trick is not to let our beliefs about a person get in the way of judging them fairly based on the facts.

Best regards,
Anthony

How We Stopped Investing in the Future: A Florida Case Study

In June 2009, ten Florida Congressmen sent a letter to the Department of Transportation, requesting over $2 billion from the federal government. They wanted to build a high-speed rail line, shuttling passengers from Tampa to Orlando and eventually Miami in only two hours. The money was supposed to come from the American Recovery and Reinvestment Act, the $787 billion “stimulus” bill that newly-elected President Barack Obama signed in February of that year.

Of the ten Florida Congressmen, three were Republicans, and all three had voted against the stimulus: Lincoln Diaz-Balart, Mario Diaz-Balart, and Adam Putnam.

This kind of about-face wasn’t unusual. Many Republicans were begging for a piece of the stimulus after they had tried to kill it in Congress. Even party leaders like Paul Ryan and Eric Cantor got in on the action.

John Boehner defended this contradiction by saying that the stimulus would fund “shovel-ready projects that will create much-needed jobs.” Only a few months earlier, he had been saying the exact opposite — and relentlessly trashing anyone who dared to disagree with him.

The Tampa-Orlando rail line really did fit Boehner’s definition. It was shovel-ready because almost all the land and permits were already lined up, and according to the U.S. Conference of Mayors, it would create 27,000 jobs.

Moreover, it was good fiscal policy. According to two separate reports, the project would produce an annual surplus of $31 million to $45 million by 2026 — and that didn’t include the much more profitable connection to Miami that was likely to follow.

And it was good environmental policy. High-speed rail emits far less greenhouse gas than cars, especially in densely populated regions like central and southeastern Florida, which is why overflowing cities in China, Europe, and Japan have surged so far ahead of us in this vehicle of the future. It saves time, money, and pollution. Unsurprisingly, it’s very popular.

Fifty years ago, this would have been a no-brainer. In the 1950s and the 1960s, politicians were dedicated to investing in new technology and staying one step ahead of the Soviet Union. It’s no coincidence that economic growth was faster and more widespread in those days.

Back then, the federal government spent 2.6 percent of the nation’s income on nonmilitary investment. In the last twenty years, it has averaged 1.8 percent per year. That difference of 0.8 percent may not seem like a lot, but it adds up to trillions and trillions of dollars that could have gone into research and development, education, and new infrastructure — and, if previous investments are any indication, would have yielded benefits many times higher than the costs.

As economist Eugene Steuerle put it, “We have a budget for a declining nation.”

On January 28, 2010, the White House granted Florida’s request. By December, the Department of Transportation had allocated $2.4 billion against a cost of $2.65 billion, and they promised to cover any cost overruns. Had Florida accepted the money, its workers would be laying rail for the Sunshine State bullet train at this very moment.

Instead, Governor Rick Scott rejected the deal, citing cost concerns that didn’t make much sense since the feds were on the hook for any losses.

Thus did the dreams of high-speed rail die in Florida. Thus do many dreams of the future die in the modern political arena.

In Tampa, there’s a street called Bayshore Boulevard. It’s the longest continuous sidewalk in the world. It’s a beautiful walk, with a balustrade that overlooks the water below. It was built in the 1930s by the Public Works Administration, part of the federal government’s response to the Great Depression. It’s just one of many breathtaking feats of construction that dot this great land of ours, each a reminder that, as Transportation Secretary Ray LaHood said during the high-speed rail fiasco, “We still know how to do big things in this country.”

I’d like to think that’s true. I’d like to think we still care about the future. I’d like to think we can build a better tomorrow. I only wish Governor Scott and his fellow ideologues felt the same way.

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This op-ed was published in today’s South Florida Sun-Sentinel.

It’s the Housing Bubble, Stupid!

A few years ago, we had a housing bubble. Have you heard? Apparently, many writers haven’t.

Check the major newspapers. Everyone is writing about the economy. For almost five years now, they’ve been predicting strong economic growth just around the corner. And for almost five years, they’ve been wrong. Stumped. Surprised.

The recession ended three years ago, they say. How can unemployment still be so high? How can growth be so slow?

So they make up explanations, usually political. Their economic models failed. Their credibility is in doubt. They must blame someone else. So they blame the government.

Taxes are too high, they say, even though taxes are lower than they were before the recession. Regulations are too strict, they say, even though corporations are making record profits. The stimulus slowed growth, they say, even though it created or saved over 3 million jobs.

And they never mention the housing bubble. Even though everyone and their dog knows that the collapse of the housing bubble caused the recession.

From the end of World War II to the late 1990s, housing prices tracked inflation. There were booms and busts in the 1970s and 1980s, but they always came back to the same long-run average. Then, from 1998 to 2006, they rose approximately 90 percent, after adjusting for inflation. They’ve been falling ever since.

Real housing prices are now about 10 percent above their long-run average, as is the price-to-rent ratio. Which means they still have further to fall, but we can finally see the light at the end of the tunnel.

If you’ve taken Econ 101, you’ve probably heard of the “housing wealth effect.” It says that, for every dollar that housing wealth declines, consumption shrinks by 5 to 7 cents. Since the peak of the housing bubble, we’ve lost almost $8 trillion in housing wealth. That’s $400 to $560 billion less consumption. And that doesn’t include indirect effects, like the resulting stock market decline, which lost another $4 trillion in wealth.

It takes an even bigger chunk out of overall output when you add residential investment, which fell 24 percent in 2008, 22 percent in 2009, and 4 percent in 2010.

Given that knowledge, it’s hard to imagine anyone predicting a strong economic recovery while housing prices still have further to fall.

But the housing market is improving. Residential investment has started to grow again, as has construction employment. Whereas there was a huge glut of unsold homes in 2009, that inventory is almost back to normal levels. Existing home sales have been increasing for the last six months, though new home sales are still stuck near their post-recession low.

The decrease in unemployment is what everyone is talking about, but it’s mostly due to people dropping out of the workforce — being so discouraged that they stop looking for work — rather than a significant increase in jobs. The number of job openings was unchanged in November. 200,000 new jobs in December may sound like a lot, but it would take 100 more months just like it — that’s 8 years — to return to full employment.

A lot is riding on a turnaround in the housing market, including Barack Obama’s re-election. If the administration wants to increase its odds of staying in the White House, it’s not taxes or regulations or government spending that need easing. It’s struggling homeowners.

They can start by appointing an FHFA director who will encourage borrowers with government-backed loans to refinance at lower interest rates. And they need to be more aggressive in investigating widespread mortgage servicing fraud at major lenders.

We are nearing the end of the Great Housing Bubble. It has gone up, and now it’s almost done coming down. Let’s hope we learned our lesson…at least for a little while.

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This op-ed was published in yesterday’s South Florida Sun-Sentinel.

Quote of the Day: Christina Romer

When I was in the White House, I used to bristle when people would say I was a Keynesian economist. They acted as if I believed that fiscal stimulus mattered because of some theoretical book written in 1936, or because of what I was taught in graduate school. I used to say that I am not a Keynesian economist, I am an empirical economist. I believe what I do because of the empirical evidence.

— Christina Romer (University of California, Berkeley)