Emails past and present

by digby

Somebody help me out here.  Who all is still in jail over this?  I can’t remember:

• The number of White House officials given RNC e-mail accounts is higher than previously disclosed. In March 2007, White House spokesperson Dana Perino said that only a “handful of officials” had RNC e-mail accounts. In later statements, her estimate rose to “50 over the course of the administration.” In fact, the Committee has learned from the RNC that at least 88 White House officials had RNC e-mail accounts. The officials with RNC e-mail accounts include Karl Rove, the President’s senior advisor; Andrew Card, the former White House Chief of Staff; Ken Mehlman, the former White House Director of Political Affairs; and many other officials in the Office of Political Affairs, the Office of Communications, and the Office of the Vice President.
• White House officials made extensive use of their RNC e-mail accounts. The RNC has preserved 140,216 e-mails sent or received by Karl Rove. Over half of these e-mails (75,374) were sent to or received from individuals using official “.gov” e-mail accounts. Other heavy users of RNC e-mail accounts include former White House Director of Political Affairs Sara Taylor (66,018 e-mails) and Deputy Director of Political Affairs Scott Jennings (35,198 e-mails). These e-mail accounts were used by White House officials for official purposes, such as communicating with federal agencies about federal appointments and policies.
• There has been extensive destruction of the e-mails of White House officials by the RNC. Of the 88 White House officials who received RNC e-mail accounts, the RNC has preserved no e-mails for 51 officials. In a deposition, Susan Ralston, Mr. Rove’s former executive assistant, testified that many of the White House officials for whom the RNC has no e-mail records were regular users of their RNC e-mail accounts. Although the RNC has preserved no e-mail records for Ken Mehlman, the former Director of Political Affairs, Ms. Ralston testified that Mr. Mehlman used his account “frequently, daily.” In addition, there are major gaps in the e-mail records of the 37 White House officials for whom the RNC did preserve e-mails. The RNC has preserved only 130 e-mails sent to Mr. Rove during President Bush’s first term and no e-mails sent by Mr. Rove prior to November 2003. For many other White House officials, the RNC has no e-mails from before the fall of 2006.
• There is evidence that the Office of White House Counsel under Alberto Gonzales may have known that White House officials were using RNC e-mail accounts for official business, but took no action to preserve these presidential records. In her deposition, Ms. Ralston testified that she searched Mr. Rove’s RNC e-mail account in response to an Enron-related investigation in 2001 and the investigation of Special Prosecutor Patrick Fitzgerald later in the Administration. According to Ms. Ralston, the White House Counsel’s office knew about these e-mails because “all of the documents we collected were then turned over to the White House Counsel’s office.” There is no evidence, however, that White House Counsel Gonzales initiated any action to ensure the preservation of the e-mail records that were destroyed by the RNC.

Emptywheel has a nice timeline of the Bush administration email controversy, here. And that wasn’t all. Here’s the CNN story which has Fox commentator Dana Perino, then White House press secretary, admitting that millions of official emails might have been deleted:

Millions of White House e-mails may be missing, White House spokeswoman Dana Perino acknowledged Friday.

“I wouldn’t rule out that there were a potential 5 million e-mails lost,” Perino told reporters.

The administration was already facing sharp questions about whether top presidential advisers including Karl Rove improperly used Republican National Committee e-mail that the White House said later disappeared.

The latest comments were a response to a new report from a liberal watchdog group, Citizens for Responsibility and Ethics in Washington (CREW), alleging that over a two-year period official White House e-mail traffic for hundreds of days has vanished — in possible violation of the federal Presidential Records Act. (Watch CREW’s comments on the missing messages Video)

“This story is really now a two-part issue,” CREW’s Melanie Sloan told CNN. “First there’s the use of the RNC e-mail server that’s inappropriate by White House officials and secondly we’ve also learned that there were between March of 2003 and October of 2005 apparently over 5 million e-mail that were not preserved and these are e-mail on the regular White House server.”

Perino stressed there’s no indication the e-mails were intentionally lost, but she was careful not to dispute the outside group’s allegations. “I’m not taking issue with their conclusions at this point,” Perino said. “We’re checking into them. There are 1,700 people in the Executive Office of the President.”

The Wikipedia entry about the Bush White House email matter is here. As far as I know, no emails were ever recovered and the matter was quietly dropped.

Oh, and in case you were wondering, yes,  the FBI is now looking at all of Clinton’s personal emails. And as Kevin Drum pointed out the other day, we’ll undoubtedly see all the juicy details, dribbled out with the most drama the new Spite Girls can drum up:

Today, the company that manages Hillary Clinton’s email server says that although her personal emails were deleted, the server was never “wiped.” Thus, it might still be possible to recover the deleted emails.

That’s it. That’s the news. But somehow the Washington Post managed to occupy three reporters and 1,500 words telling us this. You can skip most of it. Here’s the only part that matters:

On Saturday, Sens. Charles E. Grassley (R-Iowa) and Ron Johnson (R-Wis.), chairmen of the Judiciary and Homeland Security committees, respectively, said they would push for the deleted e-mails to be reviewed if they can be recovered.

Gee, no kidding. I’m sure the nation’s security hinges on this. And if Hillary’s personal emails are successfully recovered, I’m equally sure that a few of the most embarrassing ones will somehow get leaked to friendly reporters.

Hillary Clinton is well aware of what happens when a Republican Congress starts investigating a prominent Democrat. That’s why she deleted her personal emails in the first place. The 2015 version of the GOP is apparently bent on proving that nothing has changed since the 90s.

Meanwhile, we will all ignore the fact that Jeb Bush did the exact same thing and nobody seems to care. Funny that.

When the Benghazi obsession first happened, some of us who have good antenna for GOP bullshit knew what it was all about.

The committee isn’t looking for evidence of Benghazi! or anything else like that. The press doesn’t really care about “transparency.” This is all about finding embarrassing personal information, for reasons only a psychiatrist can explain:

An email from Hillary Clinton to Huma Abedin: “Just knock on the door to the bedroom if it’s closed.” http://t.co/tB6jXCcW28

— The New York Times (@nytimes) August 25, 2015

And, by the way, that tweet is not some intern making a mistake. It’s the lede of the article:

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What would America see if it looked in a mirror?

by Gaius Publius

While many of us have been enjoying the Trump Show, live on a news clip near you, a small stream of writers has considered what this all means — not only what it means for our electoral and political future, but what it means for us as a nation, that we’re as captured as we are by the Donald Trump candidacy. Even his opponents are fascinated.

Is it the showmanship? The racism? The economic populism? All of that? Something else?

Or is it something in us — in many of us, at least — that draws so many like flies to his brand of honey?

What is the Trump phenomenon about, and who is it about?

I can’t say I’ve decided on the answer, but I can say the following needs considering. After all, I’m the one who wrote that elections are a test of the electorate, not the candidates, or to put that more playfully, in an election you “vote for the public of your choice.”

Now Adele Stan, writing at The American Prospect, takes up the same question. Stan starts by considering what Trump means for the near future, the electoral future:

A Nation of Sociopaths? What the Trump Phenomenon Says About America

To ask if the rogue Republican’s surge is good for Democrats is the wrong question.

The Republican Party has a Donald Trump problem—and that has some Democrats thanking Lady Luck for apparently blowing on their dice. The casino mogul, after all, has thrown the GOP into a disarray even greater than that wrought by the Koch brothers and the Tea Party, dashing the hopes of Reince Priebus, chairman of the Republican National Committee, to launch a nominee who could reach out to racial and ethnic minorities, or one who at least would not say terrible things about women.

With his continued antagonism of Spanish-speakers, his incendiary denouncement of the Black Lives Matter movement, and his base comments about actor Rosie O’Donnell and Fox News host Megyn Kelly, as Trump continues to surge in polls of Republican primary voters, he threatens to lay Priebus’s plans to waste.

This is no way to win a general election, the thinking goes. And so in some corners of Democratland, there is happy dancing in the streets.

Trump offers other benefits, as well, to liberals and progressives in the form of the monkey wrench he could throw into the works of Charles and David Koch, who have been positioning their organizational network as the party within the party, replete with resources for candidates who would run on their platform of smashing unions and coddling private capital.

I too find this aspect fascinating, especially the way the (apparently) pro–”Tax the Rich” Trump is threatening the Kochs’ hostile takeover of the Republican Party, which was, until recently, almost a done deal. Stan looks at other Trump-centered considerations, such as, “Beyond the question, though, of whether Trump is good for Democrats lies the question of whether his candidacy is good for America.”

All good and important thoughts. But then she pivots to the key question — Is the Trump phenomenon a statement about Trump or about us? And if the latter, what is that statement?

What is wrong with America that this racist, misogynist, money-cheating clown should be the frontrunner for the presidential nomination of one of its two major parties? …

Donald Trump is a rich man despite having driven several businesses into the ground, resurrecting himself through the bankruptcy process—meaning that he essentially cheated his creditors out of what they were owed. According to CNN, “no major U.S. company has filed for Chapter 11 more than Trump’s casino empire in the last 30 years.” …

[Yet it’s] not just the wing-nuts who are watching. America just can’t get enough of this guy!

It’s time to put down the mesmerizing kaleidoscope of the Trump media spectacle, and examine the Trump phenomenon through a more penetrating lens. Revealed is America as a deeply troubled, even sociopathic, nation.

But, damn, it’s one heck of a show.

She asks really tough questions, and offers tougher answers. But even if we decide not to agree, quite, it’s as important a set of questions as any we will ask. It’s tough for a nation to look in the mirror, knowing that if it does, the Trump may be what looks back.

Here’s part of how I put that back in 2003, when George W. Bush, fully revealed as his brutal awful self, was running for a second term:

Vote for the Public of Your Choice

I’ve written in an earlier article that the 2004 election will be a referendum, not on the candidates, but on the voters, on the American people. After watching the seemingly inexplicable poll results of the last few weeks, I believe this even more strongly.

The current round of Republicans has made the obvious blatant. The ground cover, the plausible-sounding explanation, has eroded laughably; we’ve blown right past plausible headed toward childish and desperate.

Even a fool must understand the choices by now. Do we torture the non-white races or don’t we? Do we imprison dissent or don’t we? Do we bomb Moslems or don’t we? Do we rake to our Reaganesque selves the goods of the earth, or don’t we?

Do we fight with the whole rest of the world?

As a people, a nation, who are we?

The current crew has made these questions more explicit than any in a lifetime. It’s an excellent time to take a vote. If Bush is indeed elected in 2004, the people will truly have spoken.

What goes around … apparently never leaves. Until we force it out. I think Stan’s point is larger than mine, however, and frankly, more concerning if true. After all, she’s asking why Democrats can’t keep their eyes off him either. “Damn, it’s one heck of a show” indeed.

(A version of this piece appeared at Down With Tyranny. GP article archive here.)

GP

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Oh, yeah? Name five.
by Tom Sullivan

It was surprising last night to flip on the TV and see live coverage of Donald Trump’s speech in Dallas. Yesterday morning it seemed Bernie Sanders’ speech at Liberty University would draw lots of press, but nothing like this.

I lost count of the times Trump used “decimated.” John Kerry is a “schmuck.” America’s leaders are incompetent and everybody hates us. But Donald? Donald loves everybody who hates us. Watching Trump campaign is like watching a bad movie version of democracy. What is more disheartening is watching a stadium full of people cheer wildly for one empty boast after another:

“Nobody’s going to be able to do the job that I’m going to do.”

“You will see numbers like you’ve never have seen before.”

“We can do things with oil and gas that will be unbelievable. Unbelievable.”

“We can do things with energy that will be so, so incredible.”

Like watching an old Johnny Carson monologue, you want the crowd to shout, “How incredible is it?” Only they don’t, and there’s no punchline. Just more boasting.

Trump thinks he can simply call up captains of industry, impose a 35 percent tax on imports on his say so, and stop them from moving billion-dollar factories overseas overnight. Donald knows how to negotiate.

He just knows nothing about the office he’s running for, or about how our democracy works. And neither do the people cheering.

A close friend used to have this joke he did where when someone made vaporous, unsupported statements like Trump’s, his stock response was, “Oh, yeah? Name five.”

Oh, we’re negotiating? Okay then, name three. I know. We’re going to love them.

The acid hasn’t fully kicked in

by digby

… because he’s still not peaking:

What a nice steady upward climb for Trump and Carson.

Still, here’s Nate Silver with a bracing reality check:

The GOP 44 percenters who want to burn the house down

by digby

Ok, so the American public does not think it’s a good idea to shut down the government over Planned Parenthood. Not a good idea at all:

The poll finds that 71 percent of adults say it is more important for Congress to approve a spending bill to keep the government open, compared to 22 percent who say it is more important to eliminate all federal funds for Planned Parenthood.

The poll comes as Republicans grapple with how to avoid a shutdown. GOP leaders in the House are coming under heavy pressure from conservatives to block funding for Planned Parenthood. Congress must pass a funding bill by Oct. 1.
The percentage looking to avoid a shutdown is somewhat larger than it was in September 2013, ahead of a shutdown fight over ObamaCare. That year, a CNN/ORC poll found 60 percent prioritized avoiding a shutdown, while 31 percent wanted to cut off ObamaCare funds more. The government still ended up shutting down for 16 days that year.

Here’s the problem:

The poll Monday shows that Republicans slightly prioritize avoiding a shutdown over defunding Planned Parenthood, by a margin of 48 percent to 44 percent.

I’m going to guess that Ted Cruz would really like to lock up that 44 percent. And he believes he’s got the chops to make this happen. It’s unknown if he does but let’s just say that there are a whole bunch of congressional Republicans who have constituents among that 44 percent. And a whole bunch of them — including all of the Republicans in the House — are running for re-election.

This could end up being the circus of all circuses featuring gory tales of “feticide” and pictures of bloody body parts flying around the floor of the US Congress. Lovely …

Special delivery for Shelly

by digby

Joan Walsh has a good piece up today about Scott Walker’s latest pathetic attempt to revive his campaign. (The Great Whitebread Dope is currently polling at 3% in Iowa which was the state that was supposedly his to lose.) He’s giving a speech in Las Vegas about his plans to bust all union membership in America:

The flailing Walker has previewed a policy agenda that includes eliminating unions for federal employees, making all workplaces “right-to-work” unless states opt out, and eliminating the National Labor Relations Board.

“This will not be easy,” Walker told the Associated Press. “Many — including the union bosses and the politicians they puppet — have long benefited from Washington rules that put the needs of special interests before needs of middle-class families.”

The time and place of Walker’s announcement ought to prove to America once and for all that he’s dumb as a box of rocks. Walker is rolling out his anti-union agenda in Las Vegas, one of the most heavily unionized cities in America. Ninety percent of the jobs in Vegas hotels are union jobs, and almost half of all non-supervisor positions in the hotel, restaurant and gaming industries are unionized, compared to 19 percent of such jobs nationwide.

Meanwhile, in the last few days analysts have drilled to the core of Donald Trump’s base to identify his most fervent supporters: working class white men. That once-loyal Democratic voting bloc has been steadily trending Republican since the days of Richard Nixon. Now they see their savior in a bloviating billionaire who brags about how he’s going to improve their lives but never quite says how.

So does Walker think he’s got a plan to win these men back from Trump? I’m pretty sure they aren’t sitting around the tavern grousing, “That damn NLRB! That’s the reason I haven’t gotten a raise in 15 years!”

It would be really weird that Walker chose the heavily unionized Las Vegas for such a speech except for the fact that there is one very special man there who will undoubtedly be sitting in a place of honor. Here’s a piece about him by Rick Perlstein from 2012:

Let’s start at the very beginning. Adelson remembers meeting Gingrich in Washington in 1995, when Gingrich was House Speaker and Adelson was lobbying to get the U.S. embassy in Israel moved from Tel Aviv to Jerusalem. Other reports have them being introduced in 1996 by a far-right anti-union operative in Nevada who worked for Adelson. Details of the subsequent courtship are murky, although the huge favor Gingrich did for Adelson in 1996 by turning off a federal investigation of the gambling industry probably did a lot to cement their friendship.

Two years later, Nevada conservatives sponsored a “Paycheck Protection” ballot initiative – the right-wing term for measures weakening unions by banning them from automatically deducting dues from members’ pay. Adelson was gung-ho for it – and “would spend any amount of money,” D. Taylor, secretary-treasurer of Las Vegas’s Culinary Workers Union Local 226, told me; however, the Nevada Republican Party was split over whether to take on the powerful Vegas unions. That was when Gingrich did the anti-labor side a solid, recording a videotaped message in support of the measure at a Nevada GOP dinner at the height of the intra-party civil war. And, in another detail the Times missed, Gingrich also promised to block an IRS proposal to tax meals that casinos provide employees. (An amendment to that effect, costing the U.S. Treasury $316 million, indeed ended up in an IRS reform law.) Soon after, Gingrich enjoyed a fundraiser at the Vegas convention center owned by Adleson. Ah, young love.

In 1999, Adelson closed one casino, the Sands, and completed work on a new one, the Venetian, stiffing so many contractors that there were at one time 366 liens against the property. Taylor, of the Culinary Workers, said he and his colleagues presumed that “like every other casino that had done that, workers in the [closed] hotel would be given priority when the [new] hotel was built.” Instead, Adelson refused even to talk. All this, in a union town like Vegas, was unprecedented. “Even when you’re having battles, you continue to have talks. Shit, we’re talking to the North Koreans right now!” he told me. “The Israelis talk to the Arabs. Talking doesn’t necessarily solve anything, but at least you understand the other guy’s position.” Adelson, not much interested in understanding the other guy’s position, proceeded to launch a campaign against the Culinary Workers that Taylor calls “beyond aggressive.”

Right before the grand opening of the Venetian, in 1999, the Culinary Workers staged a demonstration on the public sidewalk out front. Adelson told the cops to start making arrests; the cops refused. Glen Arnodo, an official at the union at the time, relates what happened next: “I was standing on the sidewalk and they had two security guards say I was on private property, and if I didn’t move they’d have to put me under ‘citizen’s arrest.’ I ignored them.” The guards once again told the police to arrest Arnodo and again, he says, they refused. The Civil Rights hero Rep. John Lewis, in town to support the rally, said the whole thing reminded him of living in the South during Jim Crow.

Marvels Arnodo, “Here you have a sidewalk that 12 billion people walk down, [and] the only people who can’t use it are the union!” The Culinary Workers argued before the National Labor Relations Board that Adelson’s attempts to keep them from demonstrating violated federal labor law. Adelson’s lawyers countered that their client’s First Amendment rights were being violated – because his threats of arrests were an instance of “petitioning the government.” The union won the right to protest; Adelson refused to comply with the settlement, copies of which the union passed out on that very same sidewalk. That was “fraudulent use of the seal of a government agency,” the Venetian argued, further claiming that union workers had “impersonated” NLRB officials, and that the volunteer labor activists had been coerced. The great civil liberties attorney Alan Dershowitz got involved – on Adelson’s side. “The Venetian has no property rights to the sidewalk,” a federal appeals judge told them in 2007. Unmoved, Adelson tried, without success, to take the case all the way to the Supreme Court. After all, Adelson told the Wall Street Journal, radical Islam and the right to more easily join a union were the two most “fundamental threats to society.”

Did I mention Adelson is nuts? But don’t take my word for it – it was George W. Bush who called him “some crazy Jewish billionaire.”

Read on, there’s much more. people think Adelson is all about Israel, and he is a fanatic on the issue to be sure, but union busting is his other obsession. And Scott Walker is delivering.I’d expect Adelson to be delivering a nice fat check very soon.

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QOTD: The Ferguson Commission

by digby

“We know that talking about race makes a lot of people uncomfortable. But make no mistake: this is about race.”

That’s the conclusion of the Ferguson Commission set up by Missouri Governor Jay Nixon in the wake of the protests following the shooting of Michael Brown:

Assembled by an executive order from Governor Jay Nixon, the commission’s sixteen members have spent the past ten months compiling data, holding public hearings and listening to experts. Among their goals? Catalog the racial inequalities in the St. Louis region — which affect everything from income to life-expectancy to education — that place black residents in Jim Crow conditions and propose meaningful reforms.

It’s that last part where the Commission’s work has attracted cynicism and, in some circles, outright derision. And while today marks the release-date for the Ferguson Commission’s landmark report, its authors haven’t succumbed to delusion. “There is a limit to the influence over decision-making that we as a Commission can have,” the report states in its introduction. “No matter how sound our calls to action, they are calls — the Commission does not have the power to enact them.”

But that doesn’t mean the Commission pulled its punches. The 198-page report features the 47 “signature” actions culled from roughly 200 recommendations published in draft-form earlier this summer. Among the report’s policy suggestions are:

Creating a public, statewide database that tracks statistics on use of force incidents and police killings.

Increasing annual officer training by 24 hours, with a focus on “tactical, wellness, and anti-bias training.”

Institute statewide policies for dealing with protests and demonstrations that “prioritize the preservation of human life.”

Designating the Attorney General to prosecute police “use of force” cases that result in death, officer-involved shootings resulting in injury or death, and in-custody deaths.

Consolidating municipal courts and police departments.

The full slate of recommendations is dense but, in most cases, is written in layman’s terms. The task of digesting the report is made even easier by the simultaneous release of an interactive version of the report, located here, which weaves the commission’s findings with photos, personal accounts and summaries of the issues at play.

And this:

“What we are pointing out is that the data suggests, time and again, that our institutions and existing systems are not equal, and that this has racial repercussions. Black people in the region feel those repercussions when it comes to law enforcement, the justice system, housing, health, education, and income.”

Republican means never having to say you’re sorry

by digby

Somebody forgot to tell Ben Carson:

The retired neurosurgeon explained his apology to Donald Trump in a new interview, saying that he was not questioning the real estate mogul’s faith but rather talking about his own. And he does not blame Trump for retaliating.

“I said something that sounded like I was questioning his faith. I really wasn’t, I was really talking more about mine. But it was said in an inappropriate way, which I recognized and I apologized for that. It’s never my intention to impugn other people,” the Republican presidential candidate said in an interview with The Wall Street Journal published Monday.

The imbroglio began last week at a campaign appearance in which Carson credited his faith for his success, in contrast to Trump, a Presbyterian who has said that he has never asked God for forgiveness and declined to name his favorite Bible verse in a previous interview, calling it “very personal.”

“I’ve realized where my success has come from, and I don’t in any way deny my faith in God,” Carson said last week in Anaheim, California. “And I think that is the big difference.”
Trump took umbrage at the remark, tweeting about his success with Evangelical voters and later calling Carson “not a great religious figure.”

“He took the bait because it was presented to you as, ‘Carson’s attacking you,’” Carson told the WSJ. “And I understand that. I don’t blame him for that.”

That’s nice. But remember folks, he’s not really the “anti-Trump”. His ideas are even further out than The Donald’s are.

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If only we were Swiss

by digby

I wrote about guns today for Salon today. Again. Because it’s important. Here’s an excerpt:

Read on. They have guns because they are part of a government militia. Now why does that ring a bell??? I know I’ve seen that somewhere else …

Another $40 Billion Left the Country in July

by Gaius Publius

We Americans usually focus on the government’s deficit with, mainly, its citizens, often called the “national deficit.” This is an almost completely artificial number, since the government isn’t a household, but the manufacturer of something most of us very much want — money. (Think of it this way; every dollar the government doesn’t spend, every dollar it keeps in its back pocket, is a dollar that will never get into your back pocket, ever. Every dime the government doesn’t spend is a dime you’ll never see. Please think about the implications of that.)

But the trade deficit, the “balance of payments” deficit — the difference between the amount of money we actually give to foreigners, and the money we take from them — is real. If you were the United States, in July you handed a net $40 billion to foreign individuals and corporations. And you’ve been doing the same each month for the past year. Multiply that by 12 months and you’re looking at roughly $500 billion (half a trillion) going out the door in a year.

Here’s what that looks like over a longer period of time:

That $40 billion that went out the door in July is actual money, it’s actually gone, and it will only come back to the U.S. when the foreign entities who own it offer to buy your assets with it — your house, say, or all of the stock in Burger King — and you’re so broke you’re eager to sell it to them.

Dave Johnson, our go-to writer on trade, with the news:

The U.S. Census Bureau reported Thursday that the July goods and services trade deficit was an enormous, humongous $41.9 billion. This is down from a revised $45.2 billion in June.

This is an increase from May’s enormous, humongous $40.9 billion trade deficit.

We had the highest ever level of imports in autos and auto parts, at $30 billion.

The trade deficit with China was $31.57 billion. This is the highest monthly trade deficit of this year, and it was 75 percent of our July trade deficit.

The U.S. goods deficit with Japan was $5.7 billion, up from $5.2 billion in June.

The U.S. goods deficit with South Korea was $2.6 billion, up from $2.3 billion in June.

Note that these numbers do not reflect China’s big currency devaluation, which happened in August. Even without that, this trade deficit measures a terrible situation for American manufacturers and workers.

We’re giving away the store, month after month, year after year. Eagerly, in the case of the wealthy, since a lot of that wealth comes back to them in the form of higher profit and CEO compensation. Or blindly, in the case of our middle class, since Tom Brady’s problems are of greater interest, it seems, than their own. (I blame the men and women who own our media, but you may have other thoughts on that.)

How to Think About the Trade Deficit

The simplest way to think of the trade deficit, and why it’s happening, is this. Imagine a man (usually it’s a male we’re talking about, though Carly Fiorina qualifies) whose company makes $100 million in revenue in a given year, who pays $30 million of that in non-CEO wages, and whose company, when it’s all done, sees $20 million in profit.

From that $20 million, he takes a CEO salary of, say, $3 million in cash and other benefits, including stock options. His company’s stock is a solid $10 per share, and has been for a while.

Then he figures it out. He closes all his U.S. factories, fires those workers, and outsources all of his manufacturing to “contractors” in Asia. Now, instead of paying $30 million in wages, he pays just $5 million in U.S. wages and $10 million to his manufacturing contractors, saving $15 million on what used to cost him $30 million. Nothing else has changed in this example, neither his sales nor his prices.

Since he doesn’t drop his retail price, his profit swells from $20 million to $35 million on the same sales volume. With the extra money, he bumps his own pay from $3 million to $6 million. In the process the stock price jumps to $15 per share (because of the jump in profit), which further sweetens his own take, since his pile of company stock, part of his “executive compensation package,” is now worth 50% more.

Next year he’ll use company money to buy back a big pile of stock and take it off the market, making his personal stock pile (sorry) even more valuable. And he’ll look for an even cheaper foreign “contractor” to manufacture his goods.

What Just Happened? Making CEOs Rich at Your Expense

Simply by changing his manufacturing base, the following occurred:

• All of his U.S. manufacturing workers lost their jobs. 
• $10 million that would have stayed in the U.S. (as U.S. wages) went to a foreign “contractor,” thus adding to the trade deficit. 
• The company pocketed $15 million in increased profit, which boosted its stock price.
• Of that $15 million, the CEO pocketed an extra $3 million. 
• The stock market is buoyed by stock buybacks and the need by CEOs to keep prices high.

Bottom line, the CEO sent $10 million overseas so he could skim $3 million from the savings. In essence this is a kickback scheme. Multiply that across the entire U.S. manufacturing (and part of the service) economy, and you’ll see (a) why CEOs everywhere are handing U.S. money as fast as they can to foreign entities so they can pocket the skim, and (b) why this will never stop until someone makes it stop.

Want to watch it in real time? Watch the monthly trade deficit report. 

The Crumbling American Middle Class

In the meantime, all of those fired workers buy fewer and fewer goods even as foreign-produced goods become cheaper and cheaper. Or, to quote the decidedly right-leaning International Living, a magazine for libertarian expat-wannabes, the consumer action is rapidly moving abroad (Sept 2015, print only):

Want to Profit? Look Abroad

“The U.S. is no longer the consumer market it once was,” writes Jeff D. Opdyke of TheSovereignInvestor.com. “And that is all you need to know to find your future investment opportunities.

“McDonalds, for instance, has set its sights on high-growth markets outside the U.S. Across Asia/Pacific, the Middle East, and Africa MCD is planning to open 550 new restaurants, with 200 additional eateries slated for China alone.

“Though I am not a proponent of investing in multinationals, as an investor, you can see where you should look for opportunities by watching where companies like McDonald’s are shifting their focus. Go there, and large profits await for you.”

As writers like Thom Hartmann have written (for example, in his excellent book The Crash of 2016), the American middle class is crumbling as we watch. If you want the reason, look no further than the trade deficit, the “balance of payments.” Again, that money is gone, and will only come back when its new owners want to buy our assets, because frankly, that’s mainly all we have left to sell them.

(A version of this piece appeared at Down With Tyranny. GP article archive here.)

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