Rats and Repatriation

Author: David R. Kotok, Post Date: August 21, 2017

“Rats have been said to be the first to sense an impending disaster, such as a sinking ship or a gas leak in a mine – so if rats are leaving, it’s a good idea to follow!”

“Early records of the expression [‘like rats deserting a sinking ship’] go back all the way to Pliny the Elder’s Natural History (77 AD): ‘When a building is about to fall down, all the mice desert it.’” (Source: bookbrowse.com)

It also appears in a form closer to the modern usage in Shakespeare’s The Tempest, Act I, Scene II (1610):

“Prospero: In few, they hurried us aboard a bark,
Bore us some leagues to sea; where they prepar’d
A rotten carcass of a boat, not rigg’d,
Nor tackle, sail, nor mast; the very rats
Instinctively had quit it.”

The exodus of White House-related folks runs the gamut from arts to economics to religious leaders to business CEOs, to staff. The list is huge. When the President’s Committee on the Arts and the Humanities resigned en masse, they sent a letter to President Trump in which the first letter of each paragraph spells out the word resist. See cnn.com/2017/08/19/entertainment/white-house-arts-committee-letter-resist-trnd/. The head of New York City’s largest evangelical church resigned from the president’s panel of evangelical advisers. See voanews.com/a/religious-leader-digital-economy-advisers-sever-ties-with-trump/3992975.html.

My adult or near-adult political memory starts with President Eisenhower. I cannot personally recall chaos in governance as we now see it. Maybe the end of Nixon’s time is a close second place, but that is a subject of debate. And we observe that our president’s approval ratings now rival the lowest ever for a president who has held the office for 30 weeks.

The debt-ceiling fight approaches with Republicans in disarray and Democrats smelling blood and a possible takeover of the House in next year’s midterm elections. Pelosi’s censure motion is designed to embarrass Republican congressional members regardless of their vote. A “yes” vote or a “no” vote puts members on the defensive in their respective districts. The failure of Speaker Ryan and his Republican House majority to accomplish anything puts the Republican caucus on the defensive, as would an agreement to do something instead. The president has trapped House members in a lose-lose position, the classic political Hobson’s choice.

But Republican members of the House do have a way to recover.

The House can pass an infrastructure bill funded by a repatriation tax code change. They can dynamically score it. They can send it to the Senate as a clean bill without muddying the process. This bill would allow the House Republican majority to demonstrate leadership that is independent of the president. And it would enable Senate Republicans to show independent leadership, too. Trump might claim the credit for the bill in the end, but the country would know that the leadership to get the job done originated with the Congress.

Such an initiative puts Democrats on the defensive. Do they vote ‘no’ to repatriate stale cash abroad? Do they vote ‘no’ to rebuild roads or schools? Or do they join Republican majorities who take this leadership path?

I’m not saying this option will be easy. But I’m suggesting that there is a way for Congress to lead without depending on a wounded White House. By the way, within that White House, as of this writing, we still have Cohn, Mnuchin, Kelly, and others who know the benefits of the repatriation-infrastructure linkage and can argue for it.

And with all the CEO advisers gone, it actually becomes harder for detractors to argue that the CEOs are supporting infrastructure-repatriation for their personal or corporate gain. Hat tip to Chuck Gabriel and his colleagues at Capital Alpha Partners for exquisitely dissecting this intricacy of American politics.

The case for infrastructure rebuilding is profound. Any citizen needs only to look around to see it.

A terrific macro summary was presented by Philippa Dunne and Doug Henwood in the August 14th Liscio Report. I will excerpt, starting on page 7:

“Public investment gets less attention for its contribution to productivity growth, but it’s hard to see why, since much of it is about infrastructure, which, as the dictionary tells us, is ‘the basic physical and organizational structures and facilities (e.g., buildings, roads, and power supplies) needed for the operation of society.’ Net civilian public investment was 0.5% of GDP in 2016, less than a third its 1950–2000 average. Recent levels are the lowest since World War II, when the civilian sector was squeezed to fund the military; they averaged 2.6% of GDP during the Great Depression.”

Dunne and Henwood argue strongly that letting the “basic physical and organizational structures and facilities … needed for the operation of a society” deteriorate and eventually “go to seed” is a horrible long-term strategy.

So the Republican House and Senate have a redemption opportunity without President Trump.

The infrastructure-repatriation ball is squarely in the Ryan–McConnell court. All they need to do is pick up that ball and take the shot.

Note that financing of this initiative is still available at very low interest rates and implementation can proceed at very low inflation rates. There is every reason to start now and no reason to wait.

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