CHALLENGE
THE PREMISE

Newsmakers

ARCHIVE - FEBRUARY 2018

Issues, News & Views


NEIL GORSUCH
JOINS SCOTUS




Gorsuch
Sworn In
April 10, 2017




A Tremendous Day for
sound jurisprudence and
our Constitution!



Watch the swearing-in and
savor the prospect of a
Supreme Court Justice
who will defend our
Constitution:




Below is our rating of
Supreme Court justices
based upon judgement of
their fidelity to the
Constitution:


As the chart illustrates,
there are too many rogue
justices on the Supreme
Court. These appointed,
life-term judges take it
upon themselves to
arbitrarily unilaterally and
autocratically over-rule the
will of the people. They are
the equivalent of tyrants.

It is crucial to our
Democracy to fill all open
seats on all Courts, as
they arise, with true-to-
the-law judges. With
originalist, textualist
judges who apply the law
as passed by the
representatives of the
people.

It is NOT the role of judges
to over-rule laws they just
happen to dislike. As
Gorsuch said at the
ceremony:

"A judge who likes every
outcome he reaches is
very likely a bad judge..."



Gorsuch
Confirmed
April 07, 2017






A Supreme Court seat
opened with the passing of
Antonin Scalia just months
before the 2016 election.

President Obama
nominated Merrick Garland
as a replacement, but
Senate Majority Leader
Mitch McConnell (R-KY)
blocked the nomination,
claiming that the voters
should decide.

Elections have
consequences. Democrats
were certain they would
hold the White House and
regain the Senate in 2016,
thereby giving them full
control of the nomination
process.

But the GOP held the
Senate, and won the
White House, against
all predictions.
Republicans campaigned
on the Supreme Court
issue, and won.

And that's why Democrats
lost the Supreme Court
nomination: because they
didn't win the election. The
people spoke. As it should
be.



Gorsuch
Nominated
January 31, 2017




President Trump has
nominated Neil Gorsuch to
the United States Supreme
Court. View the
proceedings at the White
House:


As the President so
appropriately remarked at
the nomination ceremony:

"I have always felt that
after the defense of our
nation, the most important
decision a president of the
United States can make is
the appointment of a
Supreme Court justice.
Depending on their age, a
justice can be active for 50
years and his or her
decisions can last a
century or more and can
often be permanent."


We anticipate that Neil
Gorsuch will be an
outstanding Supreme
Court Justice, just like
Antonin Scalia, the great
man he will replace.

Neil Gorsuch: a judge who
understands both what a
judge's role is; and what a
judge's role is not.

A TRUMP AGENDA, LOOKING FORWARD

2018/02/12 - After President Trump's amazing tax reform victory to finish off the first year of his administration we can now look forward to building on that success to hold the solid Republican advantage in the House and build on the slim majority in the Senate.

The tax reform law is already growing in popularity as it appears to be creating additional economic empowerment that will help the Growth and Opportunity Party withstand the usual mid-term barrage that inflicts a President's party, but more must be done.

And we must also consider the derivative impacts of tax reform as well as other initiatives to maintain the momentum leading to Trump's re-election in 2020.

So we bring you our policy agenda for 2018.

IMMIGRATION REFORM

We expect President Trump to build a wall. Even if Republicans had 60 seats in the Senate that would still not be enough to build a wall outright because some Republicans are not cause conservatives, they do not put America first - they put special interests first. If cause conservatives want a wall then we'll have to give up something. That's the way Democracy works. Sorry if you struggle with that.

So as much as we detest pretending our laws don't exist, and recoil at the moral hazard that goes along with it, we steel our spine and support the offer the President made in his State of the Union – legal status for DACA, in exchange for: a full scale impenetrable border wall; end of the lottery; and end of chain migration.

Here's the thing: Democrats probably won't go along with it. Probably 50 to 100 Republicans in the House will vote No, and that's OK, we understand. It's a centrist compromise, and it can be expected that many conservatives will balk. But that also means that 25 to 75 Democrats will have to vote Yes to make the bill happen.

For the Republicans this is a heads-we-win-tails-you-lose proposition. If the bill passes we finally get the wall we have craved forever. We get a permanent solution in exchange for a never-again concession. Their benefit is in the past and finite; ours is in the future and unlimited. You always take this deal.

Further, the Republicans can take credit for passing the bill and make the case to Hispanics that it was a Republican House, Republican Senate, and Republican President that made this happen. And not the Democrats. So who's got your back?

And if Democrats don't go along, Dreamers will take out their full fury on the Democrats for not coming through. They will be uncloaked of using the Dreamers like pawns.

And not just the Dreamers. The Democrats will be exposed to the entire nation for the scheming manipulative political hacks that they are, that they actually don't care at all about the people they claim to want to help. All Democrats care about is manipulating disadvantaged people to squeeze them for votes. The Democrats will sell out their constituents every time. There will be uncivil war in their party.

The Democrats can see how this plays out - there's a reason they looked so unhappy about the President's State of the Union offer.

There's no perfect conservative solution for this problem. The President's plan is the best opportunity to fix the problem permanently, plus gain political advantage heading toward November.

ENERGY

Abundant affordable energy is a key driver for economic growth. Everything should be done to remove hindrances to development of energy supply, regardless of source. Government should not be picking winners and losers. Regulation should be level and even-handed. Penalties and subsidies should be eliminated. Ensure that an all-of-the-above situation and let free market forces determine winners and losers.

This administration seems to be committed to the free-market all-of-the-above policy that Chalprem supports, but we repeat it anyhow to reinforce the crucial, foundational nature of this policy. So much good derives from it.

We had noted with concern that US oil production had seemed to level off last summer while prices continued to rise, but the anomaly was only temporary. In recent months production has accelerated in the face of rising prices (as we would have wanted and expected), causing inventories to rise of late and now prices to fall again.

US oil production is in the process of surpassing record production from 1970 at over 10 million barrels per day. We will soon overtake Saudi Arabia for #2 and by year end we should overtake Russia as the world's #1 oil producer. Within a few years we are expected to become a net energy exporter. What would that do for our balance of trade?

We expect our energy policy to keep a lid on oil prices and it seems to be happening. Two factors, however, are currently fighting against us.

First, Venezuela has more oil than any country on the planet, yet their production has plummeted under the disastrous progressive regimes of Chavez and Maduro. They now produce less than 20% of what any of the top three countries do, lessening global supply.

Second global supply is further diminished by OPEC. They are curtailing production to keep prices up (and failing to some extent). Saudi Arabia needs to raise funds and wants to do so by staging a public offering of shares in their state-owned oil company Saudi Aramco. In order to get the best price on the company they need to artificially inflate oil prices to keep revenue and margins up. Once they complete the IPO you can expect oil prices to plummet. (Thus I wouldn't touch this IPO)

INFRASTRUCTURE

The President is committed to infrastructure spending and we fully agree. President Trump's deregulatory push has reinvigorated the economy in his first year, just as it appears that his tax reforms are strengthening the economy in his second year. But what of the future, and the continued economic vitality needed to fend off the fake news barrage and secure his reelection?

That's where the President's infrastructure initiatives come in. They are longer term and required lad time to bring their benefits to fruition. President Trump (that still sounds great!) understands this and knows he needs to start now so that the economy will keep humming for years to come.

Infrastructure and deregulation are inextricably intertwined. The permitting process is where good public purpose ideas go to die. We are lucky if there is a ten year lag through the approval process. That's why our infrastructure is lagging behind our global rivals and falling apart. The President know this and is seeking reform to the permitting process.

With regulation disexcessed, the other rail, of course, is money. There is a reason we discussed abundant affordable energy first. The best way to pay for new and improved roads bridges and tunnels is through raising the fuel usage fee.

The cost of gasoline has come down drastically due to the rise of American oil production, and it seems that this trend will continue for decades. After a hundred-plus years of pumping oil, we have more proven reserves now then we've ever had. Low gasoline prices will be with us for a long, long time. Simple supply and demand.

It should be intuitively obvious that we should invest some of those savings in our transportation infrastructure. If the Administration's policies bring down the price of gas by, say, a dollar a gallon, shouldn't we take maybe twenty-five cents and pour it into more and better roads?

The current per-gallon fuel consumption fee has an efficiency of about 99%, meaning that it only costs our economy about 1% of the total take for businesses to comply with and governments to enforce the administration of the fee. Tolls on the other had have an efficiency rating of only about 70%, 30% of the total take goes to administration, compliance and enforcement.

In addition the system for collecting the current road user fee is already universally in place so the incremental cost of increasing the fee and raising the funds is almost zero.

In addition, privacy rights advocates should support the fuel consumption fee over tolls. Not only does the government not track where you drove your car as it can with tolls, it doesn't even know who bought it. And if you pay in cash, then even the fuel supplier doesn't know.

The case for raising the fuel consumption-based road user fee is compelling in every way. Keep energy costs low by maximizing oil production, use some of the saving to raise funds for infrastructure, and streamline the infrastructure permitting process. It's a win-win-win. Make America Great Again.

EDUCATION AND TRAINING

Anyone who has ever bought something on Amazon has interacted with a massive technological revolution that is taking place. The skills needed in a 21st century work force is vastly different from the skills needed in a 20th century work force. Naturally, that has implications, but not necessarily bad ones unless we pursue dysfunctional public policy.

Education and training needs to change radically to meet 21st century needs but it sometimes seems that the changes are in the wrong direction. We need more people with technology training but our schools are pumping out useless Diversity Studies graduates.

School choice is absolutely essential to ensure that parents can direct their children to schools that will outfit their children with a viable common-sense 21st century education rather than radical left-wing progressive indoctrination in metaphysical mumbo-jumbo.

Also necessary is for state governments to facilitate practical vocational training that seeks to match prospective work force entrants with skills training relevant to local and regional opportunities.

One of the benefits of increasing automation is that manufacturing can be re-shored back to America. As labor shrinks as a proportion of a manufacturer's cost mix, other factors such as energy costs and proximity to markets become preeminent. This is where the United States has significant cost advantages over China that will allow us to reclaim our manufacturing heritage.

But only if we have full labor force participation, and a technically competent workforce at that, capable of performing efficiently and effectively in an automated environment.

SPENDING, DEFICITS AND DEBT

The government does not have a revenue problem, it has a spending problem. Entitlement reform is absolutely necessary. People do what you pay them to do. If you pay people to work, they will work. If you pay people to not work, they will not work. If you pay people to be poor, they will be poor.

Let's be clear on this. People do what you pay them to do. If you pay people to be poor, they will be poor. That's what Democrats do – they pay people to be poor. We need to stop providing incentives for people to not work.

We need to attack the core causes of poverty, and that's what Trump's agenda seems to be about - creating as many jobs as possible, as many good jobs as possible. Improving incentives for workers to take those jobs (tax cuts), and, removing incentives (entitlement reform) for workers to spurn those opportunities.

We are not talking about putting children, the elderly, or legitimately disabled to work. Rather we are talking the able-bodied working age individuals who are sponging the system, and about a system that is itself incentivized to propagate problems rather than eliminate them.

What happens to a social services case worker who solves all his problem, who has no more cases? What would happen to the worker, his colleagues? And his boss, what would happen to her? God forbid they should be forced to get a real job in the private sector, making stuff people actually want and earn!

If you stop paying people to not work, you will be surprised how rapidly the amount of not work in America will diminish. And poverty will diminish along with it. And deficits will decline. And we will make America great again.

A RENEWED UNDERSTANDING

The "New Deal" and the "Great Society" should have died with the 20th Century. It is time to kill them. The 21st Century requires a new arrangement, call it the Renewed Society that lays out what is expected of Americans. President Kennedy explicitly laid out the foundation for this Renewed Society, "Ask not what your country can do for you - ask what you can do for your country".

Freedom isn't free. There are no Rights without Responsibility. The greatness of a nation and the goodness of its society is a function of the sum of the life choices made by its people. If too many among us make poor life choices our communities will fail. Crime, poverty and poor health will prevail.

The best thing you can do for your country is stay in school and get a job. Yes, it's that simple. Challenge yourself to take best advantage of your educational opportunities, and then challenge yourself to get the highest paying job.

Our nation is obliged to honor the right of its citizens. In exchange for those rights, citizens are responsible to honor their obligation to society: education and employment.

Of course our society should be benevolent toward those who cannot help themselves – children, seniors, and those who are legitimately unable to hold gainful employment in either physical or clerical occupations. Social Security needs to be overhauled, including the elimination of wasteful fraudulent fake disability claims.

Spot The Cane: examples of probable Social Security fraud, fake disability claims captured by "cane-cam":

We should certainly provide temporary assistance to help those who are currently not supporting themselves for whatever legitimate reason. But we must refuse to help those who refuse to help themselves. Society has no obligations to those who dishonor their obligations to Society.

Policymakers must ensure that public policy towards individuals is oriented toward incentivizing work, and also disincentivizing not-work. No handouts – teach people to fish for themselves, do not give fish away.

Public policy must be pro-business and incentivize job creation. Not with handouts and subsidies. Just a simple deregulated environment conducive to hiring, an environment that inspires individuals to start businesses, and encourages executives to expand businesses. And hire people.

There is nothing more important than work. Any gainful legal employment is a good thing, and the higher the value added the better. People should be lauded for having good paying jobs, not shamed for it. If anything, people should be shamed for not working, for sponging off the hard work of others.




Analysis


February 27, 2018 - New Fed Chairman Jerome Powell testified on Capitol Hill yesterday for the first time. Here are some takeaways...

Chalprem has expected for some time that there is at least a 50% chance of 3 rate hikes this year, with a greater probability of 2 hikes than 4, and little likelihood of 1 or 5. The distribution of 3/2/4 hikes is probably something like 50/30/20, or 60/25/15.

Powell indicated that 4 hikes were a possibility, but the markets reacted negatively to this non-news, with the DOW drifting downward 390 points from its intraday high when Powell's testimony began.

Naturally this is a "Buy" signal. The market seems intent on interpreting 4 hikes as absolutely bad thing (runaway inflation) and inconceivably a good thing (strong economy).

But had Powell played up the possibility of 2 hikes, this too would have been interpreted as absolutely a bad thing (faltering economy), and not inconceivably as a good thing (mild inflation).

When the economy is strong, and yet the markets interpret everything as bad news, that's a "Buy" signal.

Lacy Clay Jr (D-MO01) complained about discriminatory lending, a very serious issue, calling out US Bank by name. Powell expressed empathy and seemed genuinely serious about following up.

And then there were the dumbass politicians:

Maxine Waters: She wants the next NY Fed Governor to be black (yup, that's all she had). Apparently that is her standard for a good hire: skin color. Powell, paraphrased: "Sure, whatever, decision will be based on legitimate qualifications".

Keith Ellison: Tried to drag Powell into DACA. Powell: "I'm not going there". But Chalprem will: Ellison is a hypocrite - if he really cared, the Democrats wouldn't have thrown the Dreamers under the bus by rejecting President Trump's overtures.

Grandstanding white male Congressman: was yelling at Powell about enforcing gender/racial quotas at banks. Powell, paraphrased: This is not the venue. There are other agencies that look after that, we're about full employment and price stability. We will stay in our lane and let the other agencies do their work.




February 14, 2018 - It never ceases to amaze us: the really dumb things said by really smart people.

Goldman Sachs boss Lloyd Blankfein is obviously a really smart guy. But yesterday he came out and said something really dumb: that tax reform is like throwing "lighter fluid on a fire".

Of course, the timing of the tax reform is imperfect from an economic standpoint, but from a political standpoint it had to be now.

The ideal time for tax reform would have been eight years ago, but instead we had the disastrous Spendopotamus plan foisted upon us by the dangerous Democrats.

The fact is that only the Republicans were going to get this done, and only while they control both the Legislative and Executive branches. It was now or never.

Federal taxes and federal spending are both structurally too large, composing to great a share of our economy. We need both tax reform and entitlement reform. So far, so good.

The only time politically that both reforms can happen is here and now. We needed to take advantage of this long-term opportunity, irrespective of short-term timing dislocations.


Seriously, Blankfein, your party is a disaster. Do you really think Democrats would ever pass tax or entitlement reform? Anything this beneficial could only come from the Growth and Opportunity Party.

Lloyd Blankfein needs to switch parties - he's too smart to be basking in foolish public policy, while babbling nonsensical Democrat talking-points.



February 09, 2018 - US stock indices rallied this afternoon, coming off mid-day lows with a strong rebound to finish the day solidly positive.

The S&P trampolined off its 200-day moving average, briefly stretching below the line hitting a low of 2532, but then surging hard to the upside to finish the day at 2619 up +1.49%.

Never forget the quote variously attributed to just about every rich investor - Buffett, Rockefeller, etc. etc.: "When people get greedy, I'm afraid; when people are afraid, that's when I get greedy".

Clichés become clichés because they are so obviously true: buy low, sell high.

So keep your head about you - the stock market will probably end up positive for the month, and you'll probably end up being sorry if you are selling and not buying right now.



February 08, 2018 - We have long preached the virtues and importance of unhindered oil supply to ensure moderate oil prices. And you should rightfully ask what we mean by "moderate", to which we would currently suggest is in the $50-$60 per barrel range.

If oil falls too far below $50, it damages our production ability, causing economic losses in the energy sector, and far worse, forcing us to import oil which is also bad for our national economy and national security.

When oil gets too expensive, that too hurts our economy by squeezing consumers, both individuals as well as companies that use oil in their business, which collectively means absolutely everybody.

However, free markets have again done the right thing. With oil rising above $65 recently, US oil production has surged. We are now producing over 10 million bbl/day, on the brink of record-breaking production, eclipsing the 1970 record.

The United States is now the world's #3 oil producer and closing in on Saudi Arabia for #2 on the list. Many are projecting that we will overtake Russia for #1 by year end.

Ten years ago, or even five, this would be been considered lunacy. But the $140 oil of the 2000's set off a technological revolution, and now greedy OPEC is getting its collective butt handed to its collective self every day - YEE-HAW!!

With increased supply, oil has bowed to the law of supply and demand - as everything must - and prices have declined about $5/bbl this week, now hovering around $60.

Oil in the $50-$60 range is simultaneously profitable for producers and affordable for consumers. It means solid economic growth and tepid inflationary pressures. And yes, it really is as good as it sounds.



February 05, 2018 - Dow Futures are down another 250 points this morning after the Index dropped 666 points (2.5%) on Friday and 1,106 points (4.2%) in total last week.

First of all, don't panic. Nobody ever made money panicking.

Second, this is a "good-new-is-bad-news" sell-off where the market fears a rise in interest rates because the economy is strong. Very strong. It's good. Relax.

Third, Friday was outgoing Fed Chair Janet Yellen's last day, so there is an unwarranted fear-of-the-unknown effect as new Fed Chair Jerome Powell takes the reins today.

Finally, the Dow had been up 1,907 points (7.7%) just in January prior to last week's sell-off, so a retracement was due.

There will be three rate hikes this year (March, July, and November), the economy will continue booming, and profits will continue rising.

And the stock market will continue rising as well, as it should - just not as quickly, as it should.

So don't worry about it, this is what a normal market looks like. Sell-offs are normal. A month from now it will be like this sell-off never happened.

What is to fear? The rising price of oil. It's about $65 per barrel right now, a rising price above $70 should induce concern. But not panic.



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