Donald Trump tax cut: Huge, vague and likely mild boost for economy
President Donald Trump‘s team boasted Wednesday that its tax-cut plan would lighten Americans’ financial burdens, ignite economic growth and vastly simplify tax filing. Yet the proposal so far remains short of vital details, including how it would be paid for. And based on the few specifics spelled out so far, most experts suggest that it would add little to growth while swelling the budget deficit and potentially handing large windfalls to wealthier taxpayers. Trump’s plan would replace the current seven income tax brackets with three, and the top bracket would drop from 39.6 percent to 35 percent. It would also slash the corporate rate from 35 percent all the way to 15 percent, a boon to most companies even though many don’t pay the full tax now. With tax credits and other loopholes, most corporations pay closer to 20 percent, according to calculations by JPMorgan. Perhaps the most contentious plank would enable taxpayers with business income — including those wealthy enough to pay the top tax rate — to instead pay the new 15 percent corporate rate. That’s because Trump would apply the corporate rate to “pass through” businesses. Pass-throughs include partnerships such as law firms and hedge funds as well as most small businesses — from the local florist to the family-owned restaurant on Main Street. What’s more, some privately held large companies — including Trump’s own real estate empire — are structured as pass-throughs and would benefit, too. Here’s a closer look at Trump’s proposal and its likely impact: ___ WHO BENEFITS? It’s hard to say because the administration has released so few details. The three new income tax rates would be 10 percent, 25 percent and 35 percent. But Trump’s top economic adviser, Gary Cohn, and Treasury Secretary Steven Mnuchin, weren’t ready Wednesday to say at what income levels these new rates would kick in. Tax experts said far more details were needed to determine how average Americans would be affected. “The impact on Joe Taxpayer is unknown,” said Marc Gerson, vice chair of the tax department of law firm Miller & Chevalier in Washington. “There’s not enough specificity. It’s hard for taxpayers to determine where they’ll come out.” Cohn asserted that the plan would cut taxes “especially for low and middle income families.” It purports to do so in part by doubling the standard deduction, which is used by taxpayers who don’t itemize their tax deductions. At the same time, the Trump plan would eliminate the estate tax and the alternative minimum tax, thereby benefiting some of the richest taxpayers. And that’s on top of shrinking the corporate tax rate that many affluent individuals could likely capitalize on. ___ WHY CUT CORPORATE TAXES? By making corporations more profitable, the Trump administration hopes to encourage more business spending on equipment — from computers to factories and machinery. Doing so, in turn, could make the economy more efficient and accelerate growth and hiring. Economic growth has been stuck at about 2 percent a year since the recession ended in 2009. Mnuchin says the administration wants to accelerate it above 3 percent, a pace it hasn’t touched since 2005. The corporate tax cuts are also intended to encourage more businesses to stay in the United States, which now has the highest corporate rate among advanced economies. Many large corporations are enthusiastic about lower rates and say they support the elimination of loopholes, which both reduce revenue and make taxes more complicated. ___ WHO’D BENEFIT FROM THE CORPORATE RATE CUT? Aside from most large companies, many partnerships and small businesses would benefit because they’re structured as pass-throughs, which derives from the fact that they pass on their profits to their owners. Those owners now pay individual income tax rates, which top out at 39.6 percent. With the pass-through rate dropped to 15 percent, those taxpayers could enjoy an enormous tax cut. The Trump team stressed the benefits that might flow to small businesses. But the richest windfalls would flow to the wealthy — lawyers, hedge fund managers, consultants and other big earners. Nearly 75 percent of pass-through income flows to the 10 percent wealthiest taxpayers, according to the liberal Center on Budget and Policy Priorities. “It would tremendously help high earners,” says Brian Thompson, a certified public accountant in Chicago. In Kansas, Gov. Sam Brownback eliminated state taxes on pass-throughs, which turned out to be a boon for Bill Self, the coach of the University of Kansas’ men’s basketball team. He had previously set up his own company, according to state media reports. As a result, he paid little state income tax despite earning nearly $3 million a year. Many people, particularly wealthy Americans, could set up companies and reclassify their paychecks as “business income” and have it taxed at 15 percent, experts say. In Kansas, the number of pass-through businesses jumped to more than double the level the state expected, according to the nonpartisan Tax Policy Center. That cost the state revenue without spurring more job creation. Mnuchin said the Treasury would issue rules to prevent wealthy people from capitalizing on the lower rate. But many experts are skeptical. “Good luck with that,” said Mark Mazur, director of the nonpartisan Tax Policy Center and a former Treasury official under President Barack Obama. “The tax agencies tend to be at least a couple of steps behind the businesses.” ___ HOW ELSE WOULD BIG BUSINESSES BENEFIT? The administration is also proposing to tax only corporate income earned in the United States. This is known as a “territorial” system. It would replace the current worldwide system, under which corporations pay tax on income earned in the U.S. and overseas. Yet companies can avoid the tax if they keep their foreign earnings overseas. Many businesses have kept hundreds of billions of dollars outside the United States. Mnuchin said Trump’s plan would encourage corporations to return the money to the United States and invest it in plants and equipment. Some analysts counter that corporations might instead use the money to pay dividends to
Winners and losers in Donald Trump’s first budget plan
Military spending would get the biggest boost in President Donald Trump‘s proposed budget. Environmental programs, medical research, Amtrak and an array of international and cultural programs — from Africa to Appalachia — would take big hits, among the many parts of the government he’d put on a crash diet. The budget proposal out Thursday is a White House wish list; it’ll be up to Congress to decide where money goes. If Trump gets his way, there will be more losers than winners among government departments and programs. Some programs would tread water: WIC grants — money to states for health care and nutrition for low-income women, infants and children — are one example. Monday for states grants for water infrastructure projects would be held level as well. Some others would lose everything: Trump proposes to eliminate money for the Corporation for Public Broadcasting, the national endowments for the arts and the humanities and more than a dozen other independent agencies financed by the government. A sampling: WINNERS —The Pentagon. Trump proposes a 10 percent increase in the massive defense budget, adding $52 billion in military spending in one year top expand personnel, equipment and capability. Another $2 billion would go to nuclear weapons. —Veterans Affairs. Up 5.9 percent. That’s an additional $4.4 billion, driven by ever-growing health care costs. —Homeland Security. Up 6.8 percent. That’s $2.8 billion more. Most of the increase, $2.6 billion, would be to help kick-start Trump’s promised border wall. The president has repeatedly said Mexico would pay for the wall; Mexican officials are adamant that they won’t. Trump also wants an extra $1.5 billion for more immigration jails and deportations, and $314 million to hire 1,500 immigration enforcement and border patrol agents. —The National Nuclear Security Administration, which oversees the maintenance and safety of the nuclear arsenal and its research labs. The agency would grow by 11.3 percent, or $1.4 billion, so that it takes up more than half the Energy Department’s budget, which would shrink overall. —Opioid prevention and treatment: a proposed $500 million increase in the Health and Human Services Department to counter the epidemic and more money for the Justice Department to combat the problem. —School choice: $1.4 billion more to expand school choice programs, bringing spending in that area to $20 billion, even as the Education Department’s overall budget would be cut by $9 billion, or 13 percent. LOSERS: —EPA, facing a 31.4 percent cut, or $2.6 billion. The plan would cut 3,200 jobs at the agency, eliminate a new plan for tighter regulations on power plants, and “zero out” programs to clean up the Great Lakes and the Chesapeake Bay. —Health and Human Services, facing the largest cut in dollar terms: $12.6 billion, or 16.2 percent. The plan would cut $5.8 billion from the nearly $32 billion National Institutes of Health, the nation’s premier medical research agency, bringing its total to $25.9 billion. It’s not clear what research on diseases or disorders would lose the most money, although the budget plan specifically calls for elimination of a division that focuses on global health. Already, the NIH’s budget hasn’t kept pace with inflation over the last decade, making it dramatically harder for scientists around the country to win money for research projects into potential new treatments or better understanding of disease. —State Department and U.S. Agency for International Development. Down 28 percent, or $10 billion. Foreign aid would be reduced, as would money to the U.N. and to multilateral development banks including the World Bank. Some foreign military grants would be shifted to loans. —Labor Department. A more than 20 percent cut, or $2.5 billion. To be eliminated: a $434 million program that has helped more than 1 million people 55 and older find jobs, according to the department. The blueprint says the Senior Community Service Employment Program is inefficient and unproven. —Agriculture Department. A nearly 21 percent cut, or $4.7 billion, achieved in part by cutting land acquisition in the National Forest System, rural water infrastructure and statistical capabilities at the department. Trump also proposes reduced staff in county USDA offices, an idea that fell flat in Congress when President Barack Obama proposed a similar reduction. —Transportation Department. Trump proposes a cut of nearly 13 percent, or $2.4 billion. Amtrak, local transit agencies, and rural communities that depend on federal subsidies to obtain scheduled airline service would take the brunt. Trump would eliminate subsidies for Amtrak long-distance train routes, which would most likely mean the end of those routes since they are generally not profitable. Money for the Federal Transit Administration grant program for new light rail and subway construction would be eliminated except for multi-year projects the government has already committed to help fund. —Internal Revenue Service: After years of cuts, the IRS budget would be cut again — by $239 million from this year’s spending levels. The IRS budget is down about $1 billion from its height in 2010. Since then, the agency has lost more than 17,000 employees. As a result, the chances of getting audited have rarely been so low. —Commerce Department. A 16 percent or $1.5 billion cut. The plan would eliminate more than $250 million in National Oceanic and Atmospheric Administration grants, including a program that helps coastal communities adapt to climate change, deal with invasive species and maintain healthy water and fisheries. Also on the chopping block: the Economic Development Administration, which provides federal dollars to foster job creation and attract private investment; and the Minority Business Development Agency, which is dedicated to helping minority-owned business get off the ground and grow. The Trump administration says the two agencies duplicate work done elsewhere. —School programs: The plan would eliminate a $1.2 billion initiative that supports before- and after-school programs as well as summer programs. —Independent agencies supported by tax dollars. If Trump prevails, a hefty contingent of entities would lose all federal money and be shut. Among them, the public broadcasting corporation, the Appalachian Regional Commission, the Chemical Safety Board, the United States
Fitzgerald Washington: Alabama’s workforce continues to grow
We’re at the beginning of another year, and ready to see continued improvement in our economy. At the Alabama Department of Labor, we are busy wrapping up the facts and figures for 2016. There were many improvements last year, and I’d like to let people know about them. We ended the year with our wage and salary employment only 17,000 jobs away from reaching two million. I can’t emphasize how great this news is! The last time our economy supported two million jobs was back in 2007, before the recession, before tens of thousands of Alabamians were relying on unemployment compensation to help support their families, and before our unemployment levels reached record highs. A wage and salary employment level of two million is considered to be a benchmark employment figure. I’m hopeful that we’ll reach that milestone in 2017. As employers’ confidence was sustained and hiring rose, Alabamians continue to join the workforce. We ended 2016 with the largest workforce we’ve had in more than five years. Additionally, more people were working in December 2016 than at any time since April 2008. Employers are hiring, and workers are working. Those who don’t have jobs are looking for jobs, which tells us they believe there are jobs to be had. All of these are positive signs for our economy. Our manufacturing industry continues to lead our economy. In 2016, Alabama ranked third nation-wide in manufacturing employment growth (year over year December). These competitive, sought-after jobs carry wages of more than $20 an hour. As far as unemployment compensation goes, the amount we are paying in benefits and the number of people filing for those benefits are at seven year lows. Those who are receiving benefits are only doing so, on average, for around 14 weeks, which is significantly less than during the recession, when up to 99 weeks were available and some were using all of them. Last year, we paid out over $183 million in Work Opportunity Tax Credits, more than $71 million higher than in 2015. These are credits that employers can take advantage of when they hire certain individuals, such as the long-term unemployed and food stamp recipients, among others. These are dollars that are going right back into our economy to spur spending and encourage hiring. Job orders on the state’s free jobs database, joblink.alabama.gov, were at five year highs, with several months registering more than 30,000 orders! With all of these positives, we still realize that there is work to be done. Even though there are more people working now than in nearly a decade, there are still more than 130,000 Alabamians who are out of work. Our mission, just like that of Governor Robert Bentley, is to make sure that these citizens have the opportunity to get a job, to support their families, and to live a quality life. In order to meet these obligations, we’re setting a few goals: First, we’re aiming to keep 2017’s yearly average unemployment rate below the yearly average unemployment rate of 2016 (5.9%). In order to keep the unemployment rate low, it’s important that we maintain employment levels. This means working with the Governor, state agencies, economic development groups, and local governments in order to keep jobs in Alabama and recruit new ones. Since taking office in 2011, Governor Bentley’s administration recruited 92,000 jobs to the state. These cooperative agreements are beneficial to all involved. We’re also focusing our efforts to surpass economists’ estimates for job growth in 2017. In January of this year, economists predicted that Alabama will gain 18,700 jobs in 2017. We hope to surpass that number, as we have for the past three years. In 2016, the prediction was for growth of 29,450. For the period covering January 2016 to December 2016, jobs grew by 49,600, bypassing the predictions by 20,150! Again, as employers maintain their confidence in the economy and continue to hire, hopefully, this goal will be an easy one to meet. We want to increase awareness of free, valuable services available at our 49 Career Centers located throughout the state. Our Career Centers offer so many wonderful services for both jobseekers and employers. The best part is that they are offered at no charge! Nearly half a million Alabamians were served in 2016, and we hope to increase that number this year. Our regional job fairs, hosted in Montgomery, Dothan, and Birmingham last year, drew more than 12,000 jobseekers to speak with more than 400 employers. We’re bringing our job fairs to other regions of the state this year. Come out and see us! Find out more information about any of our services at labor.alabama.gov. ••• Fitzgerald Washington is the Secretary of the Alabama Department of Labor
Congress to grill Fed Chair amid uncertainty over Donald Trump’s plans
Federal Reserve Chair Janet Yellen faces two tasks when she delivers her semiannual testimony to Congress starting Tuesday: As always, she’ll sketch a picture of how she expects the economy to fare in coming months and how the Fed’s interest rate policy may unfold. But lawmakers are sure to press her also to spell out how the Fed might react to the ambitious economic program President Donald Trump is preparing to unveil soon. The proposals are expected to include deep tax cuts, stimulus spending, trade actions and deregulation. Investors will be eager to hear whatever Yellen says about them — or doesn’t say. Analysts caution, though, that Yellen may remain mum in her assessment of the possible consequences of Trump’s plans given that the details remain mostly unknown. Equally unclear is how much of the program will survive through Congress. “A lot of what the Federal Reserve will do this year will depend on what President Trump and Congress do, and at the moment we have no idea what will emerge from Congress,” said Mark Zandi, chief economist at Moody’s Analytics. “Until there is some clarity about what President Trump and Congress have in mind, I think the Fed is going to be cautious.” In December, the Fed modestly raised its benchmark short-term rate to a range of 0.5 percent to 0.75 percent, its first increase since December 2015. Until then, the Fed had left its key rate unchanged at a record low near zero for seven years to energize an economy pummeled by the most severe recession in decades. In December, the Fed also forecast that it would raise rates three times in 2017. After it met again early this month, the Fed issued a statement that noted improved sentiment among consumers and businesses. And the Fed said it had become more confident that inflation will reach its 2 percent target. But it offered no hints about when it would resume raising rates. Many economists caution that the pace of rate increases could change quickly depending on how much success Trump has in getting his economic initiatives enacted. The president is expected to formally present his program in the coming weeks, offering tax cuts for individuals and businesses and increased spending on infrastructure projects and a rollback of government regulations. Trump has said his goal is to double economic growth, as measured by the gross domestic product, from the lackluster 2 percent annual rate that’s prevailed since the Great Recession ended in 2009 to a robust 4 percent rate or better. Comments he made late last week reiterating his commitment to major tax relief helped drive up stock indexes to fresh record highs. But Fed officials could grow concerned that a big stimulus package at this stage of the recovery, with job growth solid and unemployment below 5 percent, might overheat the economy and trigger unwanted inflation pressures. If that were to happen, the central bank could decide to accelerate its rate hikes. “The Fed has been pretty consistent that it wants the rate hikes to come at a gradual pace, but that could change if Fed officials believe the budget-and-tax package that Trump is pushing is too big and coming too late in the economic cycle, with the economy already at full employment,” said Diane Swonk, chief economist at DS Economics. Swonk said she thinks Yellen will avoid responding directly to questions from Congress this week about Trump’s economic proposals until more is known about them. “She is going to want to fly under the radar as much as possible this week,” Swonk said. Yellen will likely also face questions about a key Republican priority: To undo much of the Dodd-Frank financial regulatory law, which was intended to curb the kind of excessive risk taking in the banking system that fueled the 2008 financial crisis. Yellen has been a staunch defender of the law. But Trump and his allies argue that the law has imposed too many constraints on banks, thereby slowing lending and economic growth. Beyond Dodd-Frank, Yellen could be pressed about Republican efforts to diminish the Fed’s independence, in part by subjecting it to more intensive audits. With a Republican in the White House, those efforts now stand a greater chance of success. Trump now also has the opportunity to fill three vacancies on the Fed’s seven-member policymaking board after Daniel Tarullo, a board member who was guiding the Fed’s regulatory efforts, announced Friday that he would resign this spring. With Tarullo’s exit and the selection of a successor, Trump and likeminded Republicans in Congress could be able to soften the Fed’s approach to regulation. Republished with permission of the Associated Press.
Donald Trump takes aim at Dodd-Frank financial overhaul
The Latest on President Donald Trump (all times local): 1:28 p.m. President Donald Trump has signed an executive order that will direct the Treasury secretary to review the 2010 Dodd-Frank financial overhaul. It’s Trump’s first step at scaling back regulations on financial services. Trump has called the law a “disaster” and said it failed to address some of the causes of the 2008-2009 financial crisis. The president has also signed a presidential memorandum related to retirement planning. The administration’s move will delay implementing an Obama-era rule that requires financial professionals who charge commissions to put their clients’ best interests first when giving advice on retirement investments. ___ 1 p.m. The Trump administration says it has thawed its temporary freeze on contract and grant approvals at the Environmental Protection Agency, with all $3.9 billion in planned spending moving forward. A media blackout at the agency also appears to have been partially lifted, as a trickle of press releases were issued by EPA this week. However, the agency still has not posted to its official Twitter feed since President Donald Trump’s Jan. 20 inauguration. The Associated Press and other media outlets reported last week that Trump political appointees had instructed EPA staff not to issue press releases or make posts to the agency’s official social media accounts without prior approval. Contract and grant spending at the agency was also put on hold, prompting confusion and concern among state agencies expecting funding. ___ 12:05 p.m. Foreign leaders and groups are finding new ways to make known their disagreement with President Donald Trump’s policies. An international school in Bosnia announced Friday it would extend scholarships to students affected by Trump’s travel ban on citizens from seven Muslim-majority countries. The United World College’s branch in Mostar said it was motivated by its belief in equal opportunities. In Portugal, the parliament there voted to condemn the U.S. travel ban and highlighted the role of the U.S. to promote tolerance and human rights. In Sweden, Deputy Prime Minister Isabella Lovin posted on Facebook a photo of her signing the country’s new climate law while surrounded by seven female members of her staff. Swedish media say it resembles photos of Trump in the Oval office surrounded by male advisers. ___ 10:25 a.m. President Donald Trump is applauding the January jobs report, saying it shows there’s a “great spirit in the country right now.” Trump addressed last month’s job report, which showed the U.S. economy adding 227,000 jobs and the unemployment rate at 4.8 percent. The report also says that more Americans started looking for work, although not all of them found jobs immediately. Trump is joining business leaders and CEOs in the White House and also previewing some of his economic priorities. He says he expects “to be cutting a lot out of Dodd-Frank,” the financial regulations put in place in response to the Great Recession. The president says they’ll be discussing how to bring back jobs, lower taxes and reduce regulations. ___ 8:15 a.m. President Donald Trump says that a “new radical Islamic terrorist” is behind an attack outside the Louvre Museum in Paris. Trump tweeted early Friday that America needs to “get smart,” in light of the incident. He writes, “a new radical Islamic terrorist has just attacked in Louvre Museum in Paris. Tourists were locked down. France on edge again.” A knife-wielding man shouting “Allahu akbar” — “God is Great,” in Arabic — attacked French soldiers on patrol near the museum Friday in what officials described as a suspected terror attack. The soldiers first tried to fight off the attacker and then opened fire, shooting him five times. There were no immediate details about the identity of the suspect. ___ 7:40 a.m. President Donald Trump says reports of his contentious conversation with Australia’s prime minister are “fake news.” In a tweet Friday morning, Trump thanked Prime Minister Malcolm Turnbull “for telling the truth about our very civil conversation that FAKE NEWS media lied about. Very nice!” Turnbull told journalists that Trump had agreed to honor a deal to resettle refugees from among around 1,600 asylum seekers. Most are in island camps on the Pacific nations of Nauru and Papua New Guinea. Turnbull also said the U.S.-Australia relationship is strong. Australia has refused to accept them and instead pays for them to be housed on the impoverished islands. Trump earlier took to Twitter to call the agreement with Australia a “dumb deal.” ___ 7:04 a.m. President Donald Trump says movie star Arnold Schwarzenegger “tried hard” to make “Celebrity Apprentice” a success, but has failed. In an early morning Twitter post Friday, the president kept alive a theme he brought up a day earlier during his first appearance at the National Prayer Breakfast. Trump, who once hosted the NBC reality TV show, took a pot shot there at Schwarzenegger, the current host and former California governor, over a ratings nosedive for the show. On Friday, Trump said in his tweet, “Yes, Arnold Schwarzenegger did a really bad job as Governor of California and even worse on the Apprentice … but at least he tried hard!” Schwarzenegger responded quickly to Thursday’s remarks in a video on his verified Twitter account, suggesting that he and Trump switch jobs. Republished with permission of The Associated Press.
Fed is likely to leave rates alone at a time of uncertainty
At some point in the coming months, the Federal Reserve is widely expected to resume raising interest rates. Just not quite yet. On Wednesday, the Fed will likely end its latest policy meeting with an announcement that it’s keeping its benchmark rate unchanged at a time of steady economic gains but also heightened uncertainty surrounding the new Trump administration. In its statement, the Fed will likely acknowledge that the economy has continued to move toward the central bank’s dual goals of full employment and annual inflation of roughly a moderate 2 percent. But the Fed is nevertheless expected to signal that it wants more time to monitor the economy’s performance and that it still expects those rate increases to occur gradually. “We are moving in the direction of more rate hikes this year, but the January meeting is not where that will start,” said David Jones, chief economist at DMJ Advisors. At the moment, most economists foresee no rate increase even at the Fed’s next meeting in March, especially given the unknowns about how President Donald Trump‘s ambitious agenda will fare or whether his drive to cancel or rewrite trade deals will slow the economy or unsettle investors. It’s always possible that the central bank could surprise Fed watchers Wednesday by sending a signal that a rate hike is coming soon. In Fed parlance, that signal could be as slight as changing language in its statement to say “near-term risks to the economic outlook appear in balance,” instead of “roughly in balance,” the phrase it has been using. The statement will not be accompanied by updates to the Fed’s economic forecasts or by a news conference with Chair Janet Yellen, both of which occur four times a year . Last month, the Fed modestly raised its benchmark short-term rate for the first time since December 2015, when it had raised it after keeping the rate at a record low near zero for seven years. The Fed had driven down its key rate to help rescue the banking system and energize the economy after the 2008 financial crisis and the Great Recession. When it raised rates last month, the Fed indicated that it expected to do so three more times in 2017. Yet confusion and a lack of details over what exactly Trump’s stimulus program will look like, whether he will succeed in getting it through Congress and what impact it might have on the economy have muddied the outlook. And while Trump’s tax and spending plans are raising hopes for faster growth, his proposals to impose tariffs on such countries as China and Mexico to correct trade imbalances could slow the economy if U.S. trading partners retaliate and collectively impede the flow of imports and exports. “The Fed is unlikely to signal intentions to raise rates as early as March given the heightened uncertainty about the timing and scope of fiscal and protectionist policies,” said Sal Guatieri, senior economist at BMO Capital Markets. Nariman Behravesh, chief economist at IHS Markit, predicts that the economy will grow a modest 2 percent to 2.5 percent this year, before accelerating next year to 2.6 percent to 2.7 percent on the assumption that Trump’s policy proposals will have begun to take full effect by then. The outlook for both years would mark an improvement over the economy’s lackluster growth of 1.6 percent in 2016, its weakest performance since 2011. Even though economic growth, as measured by the gross domestic product, was underwhelming last year, the job market appears close to full health. Hiring was consistently solid in 2016, and the unemployment rate ended the year at 4.7 percent, just below the 4.8 percent level the Fed has identified as representing full employment. And inflation, by the Fed’s preferred measure, rose 1.6 percent in the 12 months that ended in December, moving closer to the Fed’s 2 percent goal. Republished with permission of The Associated Press.
New study: Donald Trump to inherit $559B deficit, stable economy
President Donald Trump has inherited a stable economy and a government that is on track to run a $559 billion budget deficit for the year, congressional analysts said Tuesday. The estimates from the nonpartisan Congressional Budget Office say the economy will hold relatively steady, with economic growth rising slightly to 2.3 percent this year and unemployment averaging less than 5 percent for the duration of Trump’s term. Trump is promising higher growth as his administration curbs regulations, overhauls the tax code, and repeals the Affordable Care Act, former President Barack Obama‘s signature accomplishment. The latest CBO figures are in line with previous projections. The deficit continues to be an intractable problem that would steadily worsen over time and CBO continues to warn that such rising deficits and debt “would have significant consequences” and act as a drag on the economy if left unchecked. “After declining for several years, federal budget deficits are on a path to rise during the next decade,” the report says. The projections come as Trump and Republicans controlling Congress are working to repeal much of President Barack Obama’s signature health care law, boost the Pentagon budget, and reform the loophole cluttered tax code. Balancing the budget would require crushing cuts to domestic agencies and big health programs like Medicare. Trump’s nominee to run the White House Budget office, Rep. Mick Mulvaney, R-S.C., testified before the Senate Budget Committee Tuesday morning. His remarks offered few clues about the direction the new administration will take in tackling the deficit. Trump has made clear that he’s not interested in unpopular cuts to Medicare and Social Security, though reductions in the Medicaid program for the poor, disabled and elderly are being contemplated. Obama inherited an economy in recession and deficits exceeding $1 trillion a year. Deficits moved lower over his two terms, registering $587 billion last year. For Trump, however, CBO says that “the economy will grow, during the coming decade, at roughly the modest rate observed since the end of the 2007-2009 recession,” the report says. But there’s also the risk of a downturn in the economy after a recovery that spanned Obama’s tenure. Economists generally prefer to measure the deficit against the size of the economy. By that gauge, the current-year deficit would register 2.9 percent of gross domestic product, a level that many economists say is sustainable, at least in the short term. But deficits would gradually rise as a percentage of GDP, which CBO warns could provoke a debt crisis in coming years and limit the options of policymakers to respond to unanticipated challenges. Budget Committee Chairman Diane Black, R-Tenn., called the latest study “Obama’s legacy of an unsustainable national debt and an economy that’s leaving too many people behind.” Black promised that Trump and the Republicans controlling Congress “are preparing pro-growth legislation that will get our economy moving at full steam again and tackle our fiscal problems head-on.” The health insurance markets created under so-called Obamacare will average 10 million customers a month signed up this year, CBO said. That’s fewer than the congressional agency had previously estimated and also less than what the outgoing Obama administration projected, an average of 11.4 million a month. Medicaid expansion — the other arm of Obama’s program — will cover an average of 12 million people a month this year, CBO said. Republished with permission of The Associated Press.
Daniel Sutter: The new power of sharing
Economic growth often involves new factories manufacturing more goods for us. But new forms of economic activity also contribute to prosperity. Ongoing innovations in the sharing economy can increase our standard of living without providing more goods. The best known firms in this new sector are ride- and home-sharing services Uber, Lyft, Airbnb and Home Away. These companies enable people to provide rides or lodging using their own cars or residences in exchange for payment. The use of existing cars and homes is the element of sharing. Many successful businesses have long facilitated sharing. The Uber and Airbnb examples show us that taxis, car rentals, and hotels all represent businesses built around sharing. Lawn services, bowling alleys and libraries also involve sharing. A lawn service uses its mowers to mow one lawn after another. By contrast, the mower you own and use sits in the garage most of the time. The new forms of sharing typically employ new technology, including the internet, smart phones, and social media. Technology is reducing transaction costs, which are the costs of carrying out buying, selling, and trading. Transaction costs often go unnoticed in the retail sector, but only because many innovations have routinized shopping at grocery or department stores, or now shopping online. Commerce-facilitating innovations include department stores, brand names, advertising, and credit cards. Many economists overlook transaction costs. But economists Douglas North and Oliver Williamson won Nobel Prizes for studying transaction costs. Some economic historians now view transaction cost reducing institutions as the fundamental source of modern prosperity. The market for used books illustrates how lower transaction costs make new trades profitable. The great challenge for exchange here is for sellers to find buyers interested in their books. Used bookstores offered a place for buyers to go to find a decent selection of titles. The excitement of discovering books you really wanted, however, really highlighted the limits of the process. Today anyone can buy or sell almost any book on Amazon Marketplace or eBay. Many new forms of sharing take the rental model. Social media allows the borrowing of tools, cookware, and trucks among a wider circle of friends. Extending borrowing circles is crucial in allowing people to find needed items. Sharing economy businesses are facilitating trading. And different modes of sharing exist. Uber offers rides by others, while Zipcar and Car2go rent cars owned by these companies for people to drive. Zipcar used technology to automate the rental process, allowing cars to be parked near where customers live. Most sharing economy businesses are really marketing innovations that reduce transaction costs. Airbnb’s background checks and rating systems, for example, increase the number of people willing to rent their homes, or pay to stay in a stranger’s home. Wise sharing will allow Americans to own less stuff, and the self-storage industry illustrates how valuable this might be. Today over 55,000 facilities nationwide have 2.5 billion square feet of space and earn annual revenues of $27 billion. About 10% of households rent a unit, and 65% and 47% of customers already have a garage or an attic – and still pay for more room. Sharing will let people tie up less of their wealth owning things that they rarely use. A University of California study found that each Car2go vehicle reduced the number of cars operated by residents of a city by 7 to 11. Essentially this means that one shared car can replace up to ten. Sharing allows people to avoid car payments, insurance, and parking, instead renting only when needed. A University of Massachusetts study estimates that many households could benefit $275 per year, which could rise to $1,000 with really extensive sharing. These savings will increase our prosperity, primarily by allowing peoples’ incomes to go further. We will instead have new and less expensive ways to access things we want to use. Innovative uses of technology constantly improve our lives, often by reducing transactions costs. The sharing economy is doing this today, providing an example where less is more. ••• Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Why a stronger US dollar could hinder Donald Trump’s economic plans
President-elect Donald Trump‘s ambitious plans to revive exports, return jobs to the United States and increase oil drilling are running up against a home-grown threat: The surging U.S. dollar. Since the Nov. 8 election, the dollar has shot up 5 percent. An index that tracks the dollar against other major currencies reached a 14-year high after the election before dipping a bit since then. In part, the dollar’s gain reflects the U.S. economy’s strength and investor confidence that Trump will accelerate growth by slashing taxes and pumping money into roads, bridges and other infrastructure. The dollar could rise even more now that the Federal Reserve has raised interest rates and foresees three more hikes next year. With rates far lower elsewhere in the world, many investors will shift money to the United States to capitalize on higher yields – a shift that could send the dollar even higher. Which creates a problem: An expensive dollar makes U.S. goods costlier overseas – and imports cheaper in the U.S. That’s a recipe for more pain for American manufacturers. A high dollar can also lead some U.S. multinational companies to move operations to countries where their dollars go further. And a high-priced dollar tends to shrink oil prices, thereby discouraging the increased energy production that Trump has made a centerpiece of his economic plans. “A strong dollar will make it more challenging to boost the international competitiveness of U.S. manufacturing, bring back jobs and increase exports,” says Eswar Prasad, professor of trade policy at Cornell University. Even before the election, a comparatively strong dollar had slowed U.S. exports for much of the past two years. Exports of goods and services had peaked in October 2014 at $200 billion. The figure fell to $179 billion in March before recovering slightly as the dollar weakened. But then the dollar marched back up and accelerated after Trump’s victory. It was no surprise when U.S. exports fell nearly 2 percent in October, according to the Commerce Department. Consider what the strong dollar does to U.S. corporate earnings, too: Whatever revenue American companies earn in foreign currencies is worth less once it’s exchanged into U.S. dollars and returned home. In recent weeks, American companies, from Whirlpool to Apple, have complained that the strong dollar has dented their earnings. At Vaughn Manufacturing Co. in Nashville, Tennessee, the company president, Mark Vaughn, is fretting about the dollar’s 11 percent rise against Mexico’s peso since the election. Around 20 percent of Vaughn’s tool-and-die business is done in Mexico. And the company competes with Chinese and Korean companies that aren’t saddled with an expensive currency. “It’s a concern,” he says. A rising dollar can encourage U.S. companies to move factories and jobs overseas because it makes foreign investments cheaper. Trump, of course, has pledged to stop American companies from taking operations offshore. He’s even threatened to impose a 35 percent tax on companies that leave America and then ship goods back to the United States. The dollar’s rally could also complicate the president-elect’s plans to spur oil drilling by reducing environmental regulations. Oil is usually bought in dollars. So the higher the dollar’s value, the fewer dollars are needed to buy a barrel of oil. The result is that the dollar-denominated price of oil drops. When oil prices drop, energy companies tend to cut investment in drilling and production. Low oil prices are the main reason U.S. business investment plummeted late last year and in the first half of 2016, thereby slowing the economy. Oil prices have risen since Trump’s victory but could retreat again if the dollar keeps rising. The Trump transition team didn’t respond to requests for comment. William Cline, senior fellow at the Peterson Institute for International Economics, says he worries that the strong dollar could incite conflicts between the U.S. and its trading partners – something that happened during the Reagan administration in the 1980s. Despite his reputation as a free trader, Reagan used tariffs against Japanese motorcycles and semiconductors, which had enjoyed a price edge in the U.S. market resulting from a sharp rise in the dollar. It took an extraordinary 1985 meeting at New York’s Plaza Hotel to craft an arrangement with Japan, Germany and Britain to reduce the dollar’s value and ease tension. Trump, who threatened to tear up trade treaties and impose tariffs against Mexico and Japan, might be even quicker to impose sanctions against what he sees as unfair trade practices, potentially triggering a wider trade war. In an analysis it did before the election, the Peterson Institute warned that the United States could lose nearly 4.8 million jobs in a trade war that would result if Trump imposed the tariffs on Mexico and China – and they responded with equal tariffs of their own. “The tricky thing in the case of Trump is if his administration sees trade deficits as the result of unfair trade” and not of economic forces that are pushing the dollar higher, Cline says. “You could get into a lot of trade conflicts.” Republished with permission of The Associated Press.
Cuba’s Fidel Castro, who defied U.S. for 50 years, dies at 90
Former President Fidel Castro, who led a rebel army to improbable victory in Cuba, embraced Soviet-style communism and defied the power of 10 U.S. presidents during his half-century rule, has died at age 90. With a shaking voice, President Raul Castro said on state television that his older brother died at 10:29 p.m. Friday. He ended the announcement by shouting the revolutionary slogan: “Toward victory, always!” Castro’s reign over the island-nation 90 miles (145 kilometers) from Florida was marked by the U.S.-backed Bay of Pigs invasion in 1961 and the Cuban Missile Crisis a year later that brought the world to the brink of nuclear war. The bearded revolutionary, who survived a crippling U.S. trade embargo as well as dozens, possibly hundreds, of assassination plots, died 10 years after ill health forced him to hand power over to Raul. Castro overcame imprisonment at the hands of dictator Fulgencio Batista, exile in Mexico and a disastrous start to his rebellion before triumphantly riding into Havana in January 1959 to become, at age 32, the youngest leader in Latin America. For decades, he served as an inspiration and source of support to revolutionaries from Latin America to Africa. His commitment to socialism was unwavering, though his power finally began to fade in mid-2006 when a gastrointestinal ailment forced him to hand over the presidency to Raul in 2008, provisionally at first and then permanently. His defiant image lingered long after he gave up his trademark Cohiba cigars for health reasons and his tall frame grew stooped. “Socialism or death” remained Castro’s rallying cry even as Western-style democracy swept the globe and other communist regimes in China and Vietnam embraced capitalism, leaving this island of 11 million people an economically crippled Marxist curiosity. He survived long enough to see Raul Castro negotiate an opening with U.S. President Barack Obama on Dec. 17, 2014, when Washington and Havana announced they would move to restore diplomatic ties for the first time since they were severed in 1961. He cautiously blessed the historic deal with his lifelong enemy in a letter published after a month-long silence. Obama made a historic visit to Havana in March 2016. Carlos Rodriguez, 15, was sitting in Havana’s Miramar neighborhood when he heard that Fidel Castro had died. “Fidel? Fidel?” he said, slapping his head in shock. “That’s not what I was expecting. One always thought that he would last forever. It doesn’t seem true.” “It’s a tragedy,” said 22-year-old nurse Dayan Montalvo. “We all grew up with him. I feel really hurt by the news that we just heard.” Fidel Castro Ruz was born Aug. 13, 1926, in eastern Cuba’s sugar country, where his Spanish immigrant father worked first recruiting labor for U.S. sugar companies and later built up a prosperous plantation of his own. Castro attended Jesuit schools, then the University of Havana, where he received law and social science degrees. His life as a rebel began in 1953 with a reckless attack on the Moncada military barracks in the eastern city of Santiago. Most of his comrades were killed and Fidel and his brother Raul went to prison. Fidel turned his trial defense into a manifesto that he smuggled out of jail, famously declaring, “History will absolve me.” Freed under a pardon, Castro fled to Mexico and organized a rebel band that returned in 1956, sailing across the Gulf of Mexico to Cuba on a yacht named Granma. After losing most of his group in a bungled landing, he rallied support in Cuba’s eastern Sierra Maestra mountains. Three years later, tens of thousands spilled into the streets of Havana to celebrate Batista’s downfall and catch a glimpse of Castro as his rebel caravan arrived in the capital on Jan. 8, 1959. The U.S. was among the first to formally recognize his government, cautiously trusting Castro’s early assurances he merely wanted to restore democracy, not install socialism. Within months, Castro was imposing radical economic reforms. Members of the old government went before summary courts, and at least 582 were shot by firing squads over two years. Independent newspapers were closed and in the early years, homosexuals were herded into camps for “re-education.” In 1964, Castro acknowledged holding 15,000 political prisoners. Hundreds of thousands of Cubans fled, including Castro’s daughter Alina Fernandez Revuelta and his younger sister Juana. Still, the revolution thrilled millions in Cuba and across Latin America who saw it as an example of how the seemingly arrogant Yankees could be defied. And many on the island were happy to see the seizure of property of the landed class, the expulsion of American gangsters and the closure of their casinos. Castro’s speeches, lasting up to six hours, became the soundtrack of Cuban life and his 269-minute speech to the U.N. General Assembly in 1960 set the world body’s record for length that still stood more than five decades later. As Castro moved into the Soviet bloc, Washington began working to oust him, cutting U.S. purchases of sugar, the island’s economic mainstay. Castro, in turn, confiscated $1 billion in U.S. assets. The American government imposed a trade embargo, banning virtually all U.S. exports to the island except for food and medicine, and it severed diplomatic ties on Jan. 3, 1961. On April 16 of that year, Castro declared his revolution to be socialist, and the next day, about 1,400 Cuban exiles stormed the beach at the Bay of Pigs on Cuba’s south coast. But the CIA-backed invasion failed. The debacle forced the U.S. to give up on the idea of invading Cuba, but that didn’t stop Washington and Castro’s exiled enemies from trying to do him in. By Cuban count, he was the target of more than 630 assassination plots by militant Cuban exiles or the U.S. government. The biggest crisis of the Cold War between Washington and Moscow exploded on Oct. 22, 1962, when President John F. Kennedy announced there were Soviet nuclear missiles in Cuba and imposed a naval blockade of the island. Humankind held its
End Dodd-Frank? Unlikely, but consumer agency in crosshairs
President-elect Donald Trump pledged in his campaign to throw out what he called stifling regulations, including the stricter financial rules that Congress built to prevent another crisis. Now, as his transition team asserts itself, an all-out repeal of the 2010 Dodd-Frank law – Trump called it a “disaster” and a “disgrace” – seems unlikely. But experts foresee a gradual but potentially significant chipping away of key parts of the law. “I don’t think it eviscerates Dodd-Frank, but I think it takes away some parts,” James Cox, a Duke University expert on securities law, said of the Trump team’s approach. The transition team’s stated goal is a stark one: “To dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.” Republicans have long attacked Dodd-Frank and a central component, the Consumer Financial Protection Bureau. The CFPB vastly expanded regulators’ ability to police consumer products – from mortgages to credit cards to student loans. Critics say Dodd-Frank and the CFPB went too far to hinder banks from making loans that people and businesses need to spend and hire. Yet many experts say a relaxing of Dodd-Frank’s rules – the most sweeping such changes since the Depression – could raise the likelihood of another crisis fed by high risk-taking. Dodd-Frank limits many of the high-risk practices that ignited the 2008 financial crisis and led to a recession that wiped out $11 trillion in household wealth. Taxpayers were stuck bailing out Wall Street giants and other financial firms. Beyond the CFPB, other elements of Dodd-Frank that could be vulnerable to a Trump-driven attack are: The Financial Stability Oversight Council. The council, made up of top regulators, monitors the banking system for any risks that could trigger another crisis. It can label a company as so big and entwined with the financial system that its fall could imperil the economy. That label then puts the company under tighter oversight. Critics say the council, which makes decisions behind closed doors, wields excessive power. Rules that critics say especially hurt regional and community banks that had little to do with the financial crisis. Their cost of complying with the new rules is so high, critics charge, as to impede their ability to lend and help fuel economic growth. The Volcker Rule, which in most cases bars the biggest banks from trading for their own profit. The idea was to prevent high-risk trading bets that could implode at taxpayer expense. Many banks argue that the Volcker Rule stifles legitimate trading on behalf of customers and the banks’ ability to limit risks. If opponents manage to weaken those parts of Dodd-Frank, they could leave the law with much of its core intact yet without crucial elements. Among the elements left in place could be these: Stricter requirements for how much capital large banks must hold to protect against potential losses and for what proportion of their holdings must be high quality. Expanded oversight and greater transparency involving derivatives, the risky financial tools that helped ignite the 2008 crisis. Scrutiny of hedge funds, which had previously faced scant oversight and now must reveal information about investments and business partners. Restrictions on the mortgage system to discourage risky lending. The right of shareholders to provide a nonbinding vote on executive pay packages. Among the provisions Cox thinks may be eliminated is one that empowers the Securities and Exchange Commission to impose a stricter standard for brokers when they provide investment advice. Like investment advisers, brokers would have to put their clients’ interests first. All that said, no one is sure what critics will manage to achieve. Though Republicans control the House, they’ll have only 52 seats in the 100-member Senate, well short of the 60 needed to defeat filibusters and advance most legislation. Sen. Elizabeth Warren, the liberal Democrat and fiery critic of Wall Street, will likely lead the resistance through filibusters. Warren was the architect of the CFPB, and President Barack Obama tried to install her as its first director but was blocked by her Republican opponents. For all the attacks on Dodd-Frank, most Wall Street banks already have baked in many of its rules and aren’t clamoring to unwind them. They have, for example, built up capital buffers against major potential losses and are on track to meet regulators’ requirements ahead of deadlines. And since Trump’s victory, financial stocks have surged, partly in anticipation of an easing of Dodd-Frank rules. Still, the CFPB remains a bullseye for critics, and among their targets is the agency’s leadership structure. Opponents want to eliminate a single director in favor of a new five-member commission. That would lessen the power of the director, who’s appointed by the president. Those critics got a boost last month when a federal appeals court ruled that the CFPB’s structure was unconstitutional because it allowed the president to fire the director only for cause. The court said the president must have authority to dismiss the director at will. Opponents also want to put the agency’s funding under Congress’ power rather than coming from the Federal Reserve as it does now. Whatever happens, the CFPB and the broader Dodd-Frank law are almost sure to be modified. The details, though, remain far from clear. “We’ll see some significant changes to Dodd-Frank,” says Tom Quaadman, a Chamber of Commerce executive. “We’re not necessarily going to see a wholesale repeal.” Republished with permission of the Associated Press.
Libertarian’s Gary Johnson has never been the typical politician
Ronald Reagan won a historic landslide victory in the 1984 election, taking 49 of 50 states. But he failed to win the vote of a young Republican businessman in New Mexico whose willingness to go against the political grain has made him this presidential campaign’s X-factor. Outraged at the GOP president’s budget deficits, Gary Johnson for the first time voted for the Libertarian candidate. Ten years later, Johnson became New Mexico’s governor, and was known for vetoing bill after bill before he became a national curiosity for advocating legalized marijuana. Now, at age 63, he’s the Libertarian Party’s presidential nominee, a marijuana-promoting fitness aficionado who summited Mount Everest and now climbs a political mountain with tough odds of reaching the top. Though Johnson has grabbed more attention for his stance on drugs and difficulty answering foreign-policy questions, fiscal conservatism remains his animating force. “I always pushed the envelope,” said Johnson, who’s proposed deep cuts to military and other government spending as well as elimination of the federal departments of Homeland Security, Commerce, Education, and Housing and Urban Development. “I wasn’t a wallflower when I was governor and I do think government spends too much money in areas that don’t make a big difference in people’s lives.” Before he came out for legalizing marijuana shortly after his re-election as New Mexico governor in 1998, Johnson was nicknamed “Governor Veto.” He piled up a record 700-plus vetoes during his two terms in Santa Fe. Admirers liked his dedication to limiting the size of government. Detractors considered him narrow-minded and incurious about the outside world. “He just does not believe government should be involved in dealing with social problems,” said state Sen. Jerry Pino y Ortiz, who ran two social service agencies during Johnson’s administration and feels the former governor let down his achingly poor state. “It’s like the dad who’s proud that his kid gets by on the smallest allowance at school, but the kid’s shoes have holes in them.” Rod Adair is a Republican political strategist and former state lawmaker who agrees with Johnson’s small-government philosophy. The problem, Adair said, is that the former governor knows relatively little beyond that. He says Johnson prefers to focus on his obsessive fitness routine — he’s an ultramarathoner and triathelete who summited Mount Everest in 2003 after leaving office as governor— rather than learn about unfamiliar areas like foreign policy. “Running for president, I don’t care where you’re governor, it’s very different and you need to have a degree of intellectual curiosity,” Adair said. “He doesn’t have that.” Supporters and admirers in New Mexico agree that Johnson was an unusual politician. He didn’t horse trade or hold grudges, they say, and was generally direct and honest. Those are attributes that have won him an unusually wide swath of support in the current presidential race, helping him appeal both to some disaffected liberal Bernie Sanders voters and more traditional libertarians. He and running mate Bill Weld, Massachusetts’ former GOP governor, are the only third-party ticket on the ballot in all 50 states Johnson has fallen short of the 15 percent threshold in national polling needed to enter the presidential debates, polling at about 8 percent for several months. If he receives 5 percent of the vote in November, that would be a bonanza for the Libertarian Party, assuring it of a valuable place on state ballots in the 2020 election. Johnson’s deer-in-the-headlights response to a question from a television interviewer about what he’d do to deal with the crisis in the Syrian city of Aleppo — “What’s Aleppo?” — earned him derision in September, though he quickly apologized. Weeks later, Democrats feared Johnson was pulling enough young voters from [Hillary] Clinton to throw some swing states to [Donald] Trump. Johnson’s campaign put out a lengthy statement urging Republicans disgusted with Trump’s taped boasts about forcing himself on women to vote Libertarian instead. Johnson says he’s happy to criticize Clinton, even though his running mate says his focus is solely on Trump. In an interview at a hotel near his Santa Fe home, Johnson predicted the national debt would more than double to $50 trillion should Clinton implement her various plans. She’s proposed spending that would be paid for by $1.4 trillion in tax increases on the wealthy. Johnson said those would doom the economy. “If those tax hikes go through, I think the recession of 2008 is mild by comparison,” Johnson said. Johnson was born in North Dakota, but his father moved the family to New Mexico when the future governor was 13. Raised by a school teacher and an accountant for the federal Bureau of Indian Affairs, Johnson founded a construction company while he was still at the University of New Mexico. The firm grew and became a major contractor on Intel’s chip factory in Albuquerque, making Johnson his fortune. In 1994 he entered a competitive four-way Republican primary for governor. Johnson squeaked through with just over 30 percent of the primary vote, then defeated an incumbent Democrat whose party was so badly split that his own lieutenant governor ran against him. The new Republican governor confronted a Democratic-controlled legislature and it was ugly. Johnson vetoed more than half of the bills that came to his desk that first year and kept rejecting ones afterward. “When you have both houses of the legislature in the opposite party you’re always going to have a lot of sparks that fly, especially on financial issues,” said David Harris, Johnson’s longtime finance secretary. “He always applied the same test to everything,” Harris added — veto it “if it didn’t improve the government or it raised taxes.” Over the years Johnson routinely shot down efforts to create commemorative license plates that would collect extra money for wildlife preservation, firefighters or West Point graduates. He vetoed a proposal for a state holiday recognizing Hispanic labor icon Cesar Chavez. He vetoed a $2 hotel room fee increase in the city of Las Cruces. He even vetoed the entire budget in
