Wednesday, September 12, 2018

DEMOCRATIC PRIMARY NY | Fake Democratic Senators

A Primary is being held today in New York State. The Independent Democratic Conference, or IDC, was composed of Democratic State Senators who caucused separately from other Democrats, and voted with Republicans. They are sham Democrats and have had a pernicious role in Albany.

The following guide to identifying them was provided to me by Heidi Fiske. Vote for the real Democrats, not the sham IDC.

Tuesday, September 4, 2018

BIG BROTHER'S LITTLE BROTHER | Corporate Surveillance

Pam Martens has a pointed post on the cumulative surveillance by government and private databases.

We may think that this is a small price to pay for fighting terrorism. However, we should be aware of the price–

Another long-tail cost of 9/11 and the U.S. response to it.

Friday, August 10, 2018


($ Bn.)
% of GDP% of World share
World total 1,7392.2
1United States United States610.03.135.0
2ChinaPeople's Republic of China[a]228.01.913.0
3Saudi Arabia Saudi Arabia[a][b]69.4104.0
4Russia  Russia66.34.33.8
5India India63.92.53.7
6France France57.82.33.3
7United Kingdom United Kingdom47.21.82.7
8Japan Japan45.40.92.6
10South Korea South Korea39.22.62.3
11Brazil Brazil29.31.41.7
12Italy Italy29.21.71.7
15Turkey Turkey18.22.21.0
List by the Stockholm International Peace Research Institute
2018 Fact Sheet (for 2017), SIPRI Military Expenditure Database

Polly Cleveland comments on a long-ago article by Mason Gaffney that is worth looking at again. 

It was once too heretical to publish, although it is dry and uses standard economic tools of analysis. Now it is in print.

Wednesday, August 8, 2018

PRIMARY RESULTS | Dana Chasin Update

The following is by my friend Dana Chasin, reposted by permission:
Washington, D.C., August 8, 2018–Last night was another exciting Tuesday primary and special election day in the midst of a slow-moving August recess week. 
From Ohio to Michigan, Washington State, and even Kansas, elections were held that set up competitive general elections in November in purple-red districts around the country. Women candidates once again came out on top.  Some economic policy progressives had less-than-impressive showings.  In Democratic primary races with one male and one female candidate, without an incumbent on the ballot, the woman has now won 69 percent of the time; by contrast, Republican women have won only 34 percent of the races. 
The blue wave is taking a recognizable shape.
KS-03: Davids v. Rep. Yoder (Add)
  • 2016 Pres. Election: Clinton 47/ Trump 46
  • 2012 Pres. Election: Romney 54/Obama 44
  • 2016 House: Yoder (R) 51/Sidie (D) 41
  • Cook PVI: R+4
In KS-03, openly-gay, Native-American attorney and EMILY’s list-endorsee Sharice Davids faced off against Brett Welder, a PCCC-backed progressive candidate. EMILY's List spent $400,000 on an ad campaign for Davids, which highlighted her experience working on economic development programs on the Pine Ridge Reservation in South Dakota and other Native American reservations.
In a close race between two first-time candidates, Davids narrowly came out on top, 37 to 34 percent, and will challenge Rep. Kevin Yoder, who is seen to be the most vulnerable Republican congressman in Kansas, in November. Davids says she chose to focus on the issues that were most relevant to constituents in her district as opposed to campaigning on a purely progressive platform.  Her economic platform focuses on reversing the Republican tax cuts, incentivizing health care benefits for small businesses, creating a childcare tax credit, and supporting efforts to increase broadband access.

MI-01: Morgan v. Rep. Bergman 
  • 2016 Pres. Election: Trump 58/ Clinton 36
  • 2012 Pres. Election: Romney 53/ Obama 45
  • 2016 House: Bergman (R) 55/ Johnson (D) 40
  • Cook PVI: R+9
MI-01 is now a viable pickup chance for Democrats in November.  Matthew Morgan, the only Democratic candidate, was disqualified from running on the ballot in the Democratic primary due to an administrative error by the campaign staff.  Morgan, now having qualified as a write-in candidate, will face incumbent Rep. Jack Bergman in November. A 20-year marine veteran, Morgan is running a campaign focused on healthcare for all.  He also addresses the problems of wage stagnation and crumbling infrastructure -- two important issues for Michigan’s Upper Peninsula.

MI-06: Longjohn v. Rep. Upton 
  • 2016 Pres. Election: Trump 51/ Clinton 42
  • 2012 Pres. Election: Romney 50/ Obama 49
  • 2016 House: Upton 59/ Clements 36
  • Cook PVI: R+4
Dr. Matt Longjohn won what turned out to be an easier-than-expected victory.  Longjohn won 37 percent to moderate George Franklin’s 28 and will now face House Energy Committee Chair Fred Upton, who has been in Congress since 1986. Longjohn will have a tough road, though local Michiganders believe that MI-06 is the third best pickup chance this November. Longjohn will do so with a message on healthcare, an issue he knows well from his experience as the YMCA national health officer.  Though Longjohn has a progressive healthcare message, he has also advocated for some deregulatory policies, saying “community banks must all be supported better by our federal policies by eliminating unnecessary regulations.”

MI-07: Driskell v. Rep. Walberg 
  • 2016 Pres. Election: Trump 56 / Clinton 39
  • 2012 Pres. Election: Romney 51/ Obama 48
  • 2016 House: Walberg 55/ Driskell 40
  • Cook PVI: R+7
In MI-07, former State Rep. Gretchen Driskell easily beat primary challenger and progressive grass roots activist Steven Friday, 85 to 15 percent, to face off once again against Rep. Walberg in November.  The race is a repeat of 2016, but with the blue wave behind her, Driskell is more likely to beat Republican incumbent Tim Walberg this time around. Driskell campaigned on creating jobs, protecting social security and medicare, and investing in public education.

MI-08: Slotkin v. Rep. Bishop
  • 2016 Pres. Election: Trump 51/ Clinton 44
  • 2012 Pres. Election: Romney 51/ Obama 48
  • 2016 House: Bishop 56/ Shkreli 39
  • Cook PVI: R+4
Elissa Slotkin, a formal national security advisor, beat Michigan State University professor Chris Smith, 70 to 29 percent, to become the Democratic challenger to face Rep. Bishop in MI-08 in November.  MI-08 was recently moved from lean Republican to toss-up by Cook Political and is seen as a pickup opportunity for Democrats. Slotkin gained favorable national media attention campaigning on investment in education and infrastructure, ensuring retirement security, fixing the federal budget deficit, and fighting for campaign finance reform.  She has repeatedly called out Rep. Bishop for voting for the Tax Cuts and Jobs Act last year, which she believes was a fiscally irresponsible decision.

MI-11: Stevens v. Epstein
  • 2016 Pres. Election: Trump 50/ Clinton 45
  • 2012 Pres. Election: Romney 52/ Obama 47
  • 2016 House: Trott 53/ Kumar 40
  • Cook PVI: R+4
Haley Stevens emerged as the victor in yesterday’s MI-11 Democratic primary, securing an auspicious win over her other Democratic challengers. Stevens, a former chief of staff of President Obama's Auto Rescue, received a late endorsement from Hillary Clinton, which may have helped tip her over the line.  Stevens campaigned hard on bringing down health care costs in her district and has a strong background in federal economic policy from her experience on the Obama administration's auto bailout task force. Stevens and Slotkin’s races will be the most flippable seats to watch in the Great Lakes State come November.

MO-02: VanOstran v. Rep. Wagner
  • 2016 Pres. Election: Trump 53/ Clinton 42
  • 2012 Pres. Election: Romney 57/ Obama 41
  • 2016 House: Wagner 59/ Otto 38
  • Cook PVI: R+8
MO-02 featured an interesting primary in the only competitive congressional district in the state. The Democrats in MO-02 out-voted the Republicans by 20,000 votes in the primary. Rep. Ann Wagner doesn’t look like she is a candidate on the brink of falling apart, but voters are looking at a more moderate Democratic choice in Cort VanOstran. Having won his primary handily against progressive Matt Osmack, VanOstran will continue to speak against slashing regulations that will hurt our financial system, the Tax Cuts and Jobs Act, and for a progressive policy of raising the minimum wage to a liveable wage.

WA-03: Long v. Rep. Herrera Beutler 
  • 2016 Pres. Election: Trump 50/ Clinton 43
  • 2012 Pres. Election: Romney 50/ Obama 48
  • 2016 House: Herrera Beutler (R) 62/ Moeller (D) 38
  • Cook PVI: R+4
In another top-two primary, Carolyn Long and Rep. Jaime Herrera Beutler advanced to face off against each other in November. Beutler secured 41 percent of the vote, while the five Democratic challengers in the race secured over 50 percent between them. After the primary election, Cook Political moved this race from Likely Republican to Lean Republican making it a much more viable pickup chance this November. On the issues, Long is a staunch supporter of the ACA, campaign finance reform, Social Security and Medicare, progressive tax reform, and gender equity and security for women. The incumbent Beutler will now face a tight race against the former political science professor in November.

WA-05: Brown v. Rep. McMorris Rodgers 
  • 2016 Pres. Election: Trump 52/ Clinton 39
  • 2012 Pres. Election: Romney 54/ Obama 44
  • 2016 House: McMorris Rodgers (R) 60/Pakootas (D) 40
  • Cook PVI: R+8
In WA-05, the blue wave seems to be crashing-in and may claim a member of Republican leadership. The top-two primary yielded the fourth ranked Republican in the House Rep. Cathy McMorris Rodgers and Fmr. State Sen. Majority Leader Lisa Brown. The most exciting news however was the margin, with 64 percent of precincts reporting McMorris Rodgers leads Brown by a stunning 47.5 to 47.1. A sign that come November, McMorris Rodgers could have her work cut out for her. McMorris Rodgers has yet to claim a majority and is looking at a potential loss. Brown, however boasts a progressive agenda, including expansion of medicare and investing in infrastructure and education. A Democrat win here would suggest more of a tsunami than just a wave.

WA-08: Schrier v. State Sen. Rossi 
  • 2016 Pres. Election: Clinton 48/ Trump 45
  • 2012 Pres. Election: Obama 50/Romney 48
  • 2016 House: Reichert (R) 60/Ventrella (D) 40
  • Cook PVI: EVEN
In WA-08, pediatrician Kim Schrier narrowly beat former prosecutor Jason Rittereiser by 1.5 percentage points to emerge as the Democratic primary winner to face State Sen. Dino Rossi in November. An open seat, WA-08 is one of the more than 20 districts held by Republicans that Hillary Clinton won in 2016, making it a viable opportunity for Democrats. Schrier supports a livable wage, increased investments in STEM and infrastructure, and Medicare-for-all.

Ohio Special Election
In an R+7 district that Donald Trump won by 10 points, Democrat Danny O’Connor came within a percentage point of claiming victory over his GOP rival, Troy Balderson in a special election race in OH-12. There are still provisional ballots to be counted, but it looks like Balderson will be able to cling onto his win. Regardless, the district should not have been competitive in the first place, and the razor-thin margin for the GOP is yet another promising sign for Democrats in November.

Bet the House to Save the House?
If Ohio’s special election result in an R+7 district tells us anything, it’s that the Republican control of Congress is teetering on the edge. Republicans hold 24 House seats classified as toss-ups and another 10 seats classified as Lean Democrat or better according to Cook Political Report — Democrats only need to flip 23 to regain the majority in the lower chamber.
The GOP spent nearly a million dollars in get-out-the-vote efforts as they frantically scrambled to secure a win in addition to the millions they had already poured into Balderson’s campaign. With many seats up for grabs and Democrats on the charge, the GOP will need to reach deep into their pockets to try and save their House majority.

Friday, August 3, 2018

TARIFFS | How Are They All Working Out?

Tariffs have not lowered the trade deficit so far.
August 3, 2018–The Trump Administration is now more than year and a half into its program to improve the U.S. balance of trade in goods and services.

 The U.S. Bureau of Economic Analysis (BEA) reported this morning that the goods and services deficit was $46.3 billion in June, up $3.2 billion from $43.2 billion in May, revised.

Year-to-date (see chart), the goods and services deficit increased $19.6 billion, or 7.2 percent, from the same period in 2017. Exports increased $103.6 billion or 9.0 percent. Imports increased $123.2 billion or 8.6 percent.

June exports were down from May by $1.5 billion to $213.8 billion. June imports were up from May by $1.6 billion to $260.2 billion. The June increase in the goods and services deficit reflected an increase in the goods deficit of $3.1 billion to $68.8 billion and virtually no change in the services surplus to $22.5 billion.

The full text of the release on BEA's Web site can be found at

Thursday, August 2, 2018

ACT LOCALLY | Support for Candidates, 2018

A recent issue of the East Hampton Star editorialized about a “First District Dilemma for Democratic Voters” (July 5, 2018). I have been thinking about this.

The editorial addresses the problem of deciding where to donate time and money in elections. Does one give and work locally? Or is it better to send the money to national organizations that will allocate the money to where it is most likely to be effective.

I think that depends on how much one knows about the local candidate. How involved are we? For someone with no time to address the issues, sending a check to a national group that is prioritizing its funding of local campaigns for the House and Senate is a good move. If you have enough money to max out in a local campaign and then give more to a national group, there is no dilemma.

However, if a choice is really necessary, I have some experience to offer. I been volunteering for political campaigns for six decades and I have a point of view on what is effective. Just as investing in companies you understand is more likely to pay off than investment in schemes that you don’t, I have found that time or money spent on local campaigns has always been immensely more effective than the same effort or money invested in distant electoral districts.

A concerted local effort is something we can control and evaluate. We can see the results. Bravo if you can help candidates from out of town as well as local ones, but we should not delude ourselves into thinking that money and volunteering spent in areas we don’t understand is as effective–or as appreciated!–as local involvement.

So in New York Congressional District 1, where Perry Gershon is challenging Tea Party incumbent Lee Zeldin, my wife Alice and I are committing time and money to supporting Perry. He is a hugely superior candidate to Zeldin, someone who is on top of the issues that matter to me and apparently not to Zeldin. He won the Democratic Primary and received the support of all four of his opponents. There is a unity of purpose here that is rare in local politics.

So if you are summering on the East End of Long Island, or live here, support Perry. Send an email to Perry understands the issues and makes thoughtful decisions about policy, and his staff will respond promptly to your interest in giving money or time to his campaign.

Sunday, July 29, 2018

CHINA | Seeking Influence in Latin America

July 29, 2018–The New York Times today has a three-page lead article on “China’s long, quiet push into Latin America.” 

This was the subject of a post five months ago by Heidi Fiske. Heidi’s article focuses on Mexico.  

Friday, July 27, 2018

GOP TAXES | Three House Bills

The following update on new tax bills before the Congress is by Dana Chasin, posted here by permission.

House Ways and Means Committee Chair Brady is on a mission to make tax cuts a winning issue for Republicans in the fall.  His legislative vehicle is “Tax Reform 2.0.”

The problem is that the Tax Cuts and Jobs Act (TCJA), signed last December, has been less popular than expected.

Most Republicans up for re-election have given up even mentioning it on the campaign trail.  The original tax cuts contained embarrassing mistakes and the many and sizable kinks still need to be ironed out with a technical corrections act in the works.
Republicans in the House are now marching on with a new trilogy of tax bills that they hope will resonate with their voters in November, while the Senate leadership sees no urgency.  What comprises this trilogy and what are its prospects?

Recent Legislative Developments
Chair Brady indicates that House Republicans are planning to divide the package into three separate bills: permanency, savings, and innovation.  Dividing the bills increases the chances that they are passed, if not all together, then separately, but creates a false illusion that they won’t aggressively try to pass all three.  Ways and Means is set to mark up the bills in mid-September with the intention of passing them by the end of that month. In the Senate, the package is unlikely to be taken up before the lame duck session.
President Trump’s tax cuts, which permanently reduced the standard corporate rate from 35 to 21 percent, have already had a considerable negative revenue effect, with the New York Times reporting this week that “the amount of corporate taxes collected by the federal government has plunged to historically low levels in the first six months of the year, pushing up the federal budget deficit much faster than economists had predicted.”
While corporate tax payments between January and June fell by 33 percent compared with the same period last year, corporate tax receipts as a share of the economy have fallen to 1.3 percent, nearing a 75-year low.

The Road to Hell is Paved with Permanence
Tax Reform 2.0 is a decisively political move by Republicans to make permanent the changes they enacted in 2017 that are set to expire at the end of 2025 and to introduce other tax changes.  Although there is still no bill language, the rhetoric around the release implies that Republican leadership wants to perpetuate all of the individual income tax changes in the TCJA. These changes include:
  • tax cuts for individuals and pass-through businesses
  • SALT deduction cap
  • Alternative Minimum Tax (AMT) cut
  • standard deduction and child tax credits
Republicans are working on the idea that it will be hard for Democrats to vote against making the individual tax cuts permanent. They believe it is harder for Democrats to vote against individual tax cuts than the corporate ones that were included in TCJA. They also include a variety of new proposals designed to appeal to Democrats.  
A Wolf in Sheep’s Clothing
The new proposals in Tax Reform 2.0 are meant to provide benefits to the middle class at a comparable significance to those in TCJA that clearly favored the wealthiest Americans. These proposals aimed at the middle class are divided into two categories – savings and innovation.

     Savings. Tax savings are generated by three expansions of tax-favored savings accounts:
  • Creating a Universal Savings Account (USA), which is basically a significantly improved Roth Individual Retirement Account (Roth-IRA), that individuals could contribute some of their after-tax income to annually – there is speculation on income contribution limits but nothing has been confirmed yet.  Withdrawals from the USA could be made at any time or for any reason without tax or penalty. Like a Roth-IRA, the USA’s earnings would not be subject to tax. The goal is to incentivize Americans to save more.
  • Expanding the popular, tax-free 529 college savings accounts so it could also be used to pay for apprenticeship fees and home schooling expenses, as well as student debt.
  • Allowing workers to tap into their retirement savings accounts without penalty to cover expenses from the birth of a child or an adoption.
    Innovation. So far there is only one clearly identified idea under this category–permitting start-up businesses to write off more of their initial costs to remove barriers to growth.
Although these measures seem to help the middle class, they are unlikely to be sufficient to offset higher interest rates on mortgages and student and car loans as the result of the ballooning deficit resulting from TCJA’s tax cuts for corporations and the wealthy.

A Tax Cut Catastrophe
Some of the provisions in the Tax Reform 2.0 package would put a further strain on tax revenues at a time when social benefit systems are in dire need of assistance. The Congressional Budget Office (CBO) estimates that extending the individual tax cuts would increase deficits by an additional $650 billion—this at a time when social security had to dip into its trust fund for the first time in 36 years and the federal budget deficit is set to surpass $1 trillion two years earlier than estimated, by 2020.

The TJCA was clear in its “reverse Robin Hood” regressivity. Tax Reform 2.0 is not as blatant, but enacting more provisions that deprive the federal government of vital tax revenue that it needs to fund critical social services is socially irresponsible.

Tax Reform 2.0 also includes provisions that allow for more cuts to the deduction for owners of noncorporate businesses known as “pass-throughs” and larger exemptions to the estate tax and the alternative minimum tax for individuals. Given the predilection of the well-to-do for tax avoidance, this reform makes policies permanent that encourage such activities and suggest that gaming the system is not only good, but recommended. In fact, the lower the pass-through rate, the more attractive abusing the tax code becomes.

Political Lens

With the 2018 midterm election looming, House Republicans are eager to make their individual tax cuts permanent before the Democrats take back control (knock on wood) and they are no longer able to.  Were that to happen, at the end of 2025, corporate tax breaks would remain in place and individual tax cuts would expire, making for very bad optics for the Republican party, if it exists then. So even though Chair Brady is planning to introduce the package as three separate bills, passing the permanency of individual tax cuts will be crucial for him and the future of his party.

Sen. McConnell seems to have hit upon a legislative strategy that serves both Senate and House Republicans regarding Tax Reform 2.0.  The House will pass the bills as a package and be able to pick up political capital; Republican senators (who are in un-gerrymandered and therefore more purple jurisdictions) won’t have to take a difficult vote on these bills before the midterms.  Sen. McConnell won’t take the GOP trilogy up until the lame duck session, enabling the House to have its cake (have its vote), while the Senate doesn’t have to eat it too (swallow a tough vote).

Wednesday, July 25, 2018

UBER, LYFT | Adding to Congestion

In 2015 and 2017 I posted on the fact that traffic congestion on New York City streets seemed to me to be rising pari passu with  the growth of the online ride-hail services like Uber and Lyft.
A new report confirms this hunch:
  • About 60 percent of ride-hail company users “in large, dense cities would have taken public transportation, walked, biked or not made the trip” if those services had not been available.
  • The other 40 percent of users would have taken their own car or a taxi.
  • As a result of rides replacing mass-transit trips, the ride-hall services put 2.8 new vehicle-miles on the road for each mile of personal driving they take away. 
  • It amounts to a 180 percent increase in driving on city streets.
The report was prepared by transportation consultant Bruce Schaller. Read more in The New Automobility: Lyft, Uber and the Future of American Cities.
My point was not that the ride-hail services should necessarily be restricted, but that we can expect more congestion as they grow and we need to prepare.

We need a decongestant stronger than Vicks.

Friday, July 20, 2018

THE HOUSE | Meanwhile, Back in Congress, These Bills Passed

L to R: Democrat Maxine Waters Ranking
Member, Financial Services Committee,
and Chairman Jeb Hensarling (GOP).
The following is from Dana Chasin, posted by permission. He calls it "Update 286: If at First You Do Succeed..."

On Monday, a package of financial regulatory measures (deregulatory in aggregate effect), cleared the House overwhelmingly.

These bills have joined other bills passed by the House among bills on the Senate’s post-recess floor time queue. JOBS 3.0 raises non-Dodd-Frank issues. It also also raises S. 2155 on a smaller scale, with something for everyone to loathe or love.

(Next Tuesday, July 24, Americans For Financial Reform sponsors:  “Regulating Wall Street - Ten Years Later.” Senators Sherrod Brown and Elizabeth Warren are among the participants.  To RSVP, click here.)

JOBS Act 3.0

This week, House Financial Services Chair Jeb Hensarling and Ranking Member Maxine Waters announced a bipartisan agreement on the terms of a broad regulatory rollback package.  (Hensarling interview is here:

The legislation, entitled S.488, the JOBS and Investor Confidence Act of 2018 (or Jobs Act 3.0), is the most comprehensive package of changes to federal securities laws to pass the House with broad and bipartisan support since Congress approved the JOBS Act of 2012.  [NB: in 2015, Congress enacted a much smaller set of tweaks to securities laws as part of broader transportation reauthorization legislation, which some have dubbed “JOBS Act 2.0”.]

S.488 is comprised of 32 previously introduced bills, the vast majority of which have cleared the House or the Financial Services Committee.

This third iteration of the JOBS Act has many of the hallmarks of the JOBS Act of 2012.  It combines a number of disparate and seemingly innocuous pieces of legislation that relax or moderate various existing regulatory requirements relating to U.S. capital markets, in particular, the issuance and sale of securities.

The House passed the package on a 406-4 vote on Tuesday with bipartisan support, including from Ranking Member Maxine Waters and Chairman Jeb Hensarling. It looks like the Senate will consider the bill during the summer.

Public-Private Market Paradox

The JOBS Act 3.0 package contains provisions that simultaneously seek to encourage growth in the public market, while cutting back on regulations in the private market.

The bills include:

H.R.79: The HALOS Act permits issuers of private securities that are exempt from SEC registration requirements pursuant to SEC Rule 506(b) to also be exempt from certain restrictions on the use of general solicitation in the advertising and sale of such securities, further weakening investor protections in a segment of the market that is growing rapidly but plagued by fraud.

Private securities markets are appropriate for certain types of issuers and investors, but they are inherently problematic, given that they are characterized by significant risk -- lack of liquidity, oversight and transparency.  The private nature of these markets also makes it difficult for investors other than large institutional investors or venture funds to obtain information about the security, or otherwise value the security.

H.R.5877: The Main Street Growth Act lays the statutory foundation for the establishment of one or more “venture exchanges.” The Act sets forth a process under which any national securities exchange registered with the SEC can “elect” to become a venture exchange, which is subject to different standards and rules than those that govern all other national securities exchanges in the United States.

The venture exchange provisions in S.488 build upon provisions enacted in Section 501 of S.2155 that dramatically changed the way securities can be recognized as “covered” and exempted from state review by virtue of being listed on a national securities exchange. Taken together, the two provisions will ensure that certain national exchanges in the U.S. will likely operate with significantly lower listing standards than those that currently apply to national exchanges.

H.R.6177: The Developing and Empowering our Aspiring Leaders (DEAL) Act requires the SEC to allow venture capital funds to invest in secondary market shares of venture capital companies instead of primary offerings, complementing the "venture exchange" piece of the larger bill by basically creating an ecosystem for trading shares in private venture companies.

This Act, together with the HALOS and Main Street Growth Acts, further blurs the distinction between public and private securities markets, expanding the “quasi-public” securities market that was the major legacy of the JOBS Act of 2012, and making it more likely that retail investors will soon be solicited and sold securities that are in many respects more speculative and risky than is currently permitted under the securities laws.

H.R.1645: The Fostering Innovation Act ostensibly aims to encourage IPO formation by doubling the time that low-revenue emerging growth companies (EGCs) are exempt from key financial reporting controls. However, the Act is predicted to affect less than 2 percent of publicly traded companies and is therefore unlikely to have a discernible effect on increasing the amount of IPOs. Crucially, the bill gives special treatment to EGCs, opening the door for other issuers to demand the same and potentially precipitating a “special treatment” race to the bottom. The long-term effect of lowering the bar for a few is that the bar gets lowered for all.

A Work in Progress

H.R.1585: The Fair Investment Opportunities for Professional Experts Act sets in statute the definition of an “accredited investor” and codifies the current thresholds for annual income and net worth. The bill would create new qualitative pathways for individuals to become accredited and attempts to address the $1 million asset threshold that was originally set by rule in 1982 by indexing it to inflation every five years. However, even with the inflation adjustments, the bill would see retirees with no experience or sophistication in investment matters qualifying as “accredited investors” by virtue of their retirement savings, or wealth realized from an event such as an inheritance or the sale of a primary residence. This bill could be amended to rectify these important issues in the Senate, but in its current form, it is an example of the unbalanced nature of some of the bills in the JOBS 3.0 package.

Where most bills in the package relate to capital markets access, two pertain to the systemic risk pillars of stress testing and resolution planning.

H.R.4566: The Alleviating Stress Test Burdens to Help Investors Act exempts nonbank financial institutions from DFA company-run stress-testing requirements.

H.R.4292: The Financial Institution Living Will Improvement Act requires banks to submit resolution plans every two years instead of annually. These measures mimic what regulators may already decide with newfound discretion under S.2155.

Improvements to JOBS Act 3.0

JOBS Act 3.0 is modest compared to its predecessors, but underwent significant changes during its crafting. Therefore, in some cases, the bills that have been incorporated in the package are different than the previous iterations. The package has been welcomed by some institutions, such as the Council of Institutional Investors, for its provisions that address insider trading and multiclass share structure disclosure.

Unfortunately, the speed with which the package is and has been moving has made it difficult for those on and off the Hill to properly evaluate its benefits and risks. With so many moving parts, JOBS Act 3.0 needs time to be fleshed out and examined more thoroughly before concrete suggestions can be made. This is likely post-August recess.

Political Developments/State-of-Play

S.488 now moves to the Senate. With the legislative schedule packed with nominations, appropriations bills, and the Farm bill,  Senate Majority Leader McConnell announced that “Senators will continue their ongoing bipartisan discussions as we work towards a vote in the coming months.”

Other Senators have indicated the negotiations and busy schedule could push the floor debate for at least three to four weeks.  Look for the package to reach the Senate floor after the summer recess, perhaps attached to a funding or appropriations bill, or as standalone legislation.

Monday, July 16, 2018

MCCAIN | Trump "Abased" before Putin "Tyrant"

Senator John McCain, Chairman,
Senate Armed Services Committee
Washington, D.C.  July 6, 2018 – U.S. Senator John McCain (R-AZ), Chairman of the Senate Armed Services Committee, released the following statement today on President Trump’s meeting and press conference with Vladimir Putin in Helsinki:
“Today’s press conference in Helsinki was one of the most disgraceful performances by an American president in memory. The damage inflicted by President Trump’s naiveté, egotism, false equivalence, and sympathy for autocrats is difficult to calculate. But it is clear that the summit in Helsinki was a tragic mistake.
“President Trump proved not only unable, but unwilling to stand up to Putin. He and Putin seemed to be speaking from the same script as the president made a conscious choice to defend a tyrant against the fair questions of a free press, and to grant Putin an uncontested platform to spew propaganda and lies to the world.
“It is tempting to describe the press conference as a pathetic rout – as an illustration of the perils of under-preparation and inexperience. But these were not the errant tweets of a novice politician. These were the deliberate choices of a president who seems determined to realize his delusions of a warm relationship with Putin’s regime without any regard for the true nature of his rule, his violent disregard for the sovereignty of his neighbors, his complicity in the slaughter of the Syrian people, his violation of international treaties, and his assault on democratic institutions throughout the world. 
“Coming close on the heels of President Trump’s bombastic and erratic conduct towards our closest friends and allies in Brussels and Britain, today’s press conference marks a recent low point in the history of the American Presidency. That the president was attended in Helsinki by a team of competent and patriotic advisors makes his blunders and capitulations all the more painful and inexplicable.
“No prior president has ever abased himself more abjectly before a tyrant. Not only did President Trump fail to speak the truth about an adversary; but speaking for America to the world, our president failed to defend all that makes us who we are—a republic of free people dedicated to the cause of liberty at home and abroad. American presidents must be the champions of that cause if it is to succeed. Americans are waiting and hoping for President Trump to embrace that sacred responsibility. One can only hope they are not waiting totally in vain.”

OTTAWA | Fiddlers in The Glebe

Backyard Music Festival for Randal's 80th.
OTTAWA, July 15, 2018–The impromptu orchestra assembled in the back of Randal and Elaine's house in The Glebe to celebrate Randal's 80th birthday.

Under the shade of a gazebo and an umbrella, a steady stream of liquid refreshment flowed.


The music went on from 2 pm to 7 pm. At its peak five fiddlers were going, three guitars and the keyboard.

A fine flautist was also contributing to the Irish-themed music early on.

Players filtered in and out, but the keyboard player and a couple of other players were there from beginning to end. Near the end, Randal's violin teacher, Master Violinist Denis Lanctot joined in.

Here are two clips of the music, the first one with dancing! The dancers are Pat Steenberg in black and white and Michele Pronovost in the dress. The music is "Barnburners' Jamboree" and "Maple Sugar."

Birthday Cake

L to R: Randal Marlin, Sneezy Waters and 
Vince Halfhide (legendary musicians
 in Ottawa for decades), Irene 
McCloskey on keyboard, Alex Marlin.
With Randal on the fiddle and two of his sons, Alex and Nick, on the guitar and singing, the family was a music festival of its own.

Then the birthday cakes were brought out. Another movie clip of that.

Marlin Family Photo

At the end of the day, the family assembled for a photo first of Randal and Elaine's six children, three boys and three girls (now men and women), and then the whole family of eight.

Catherine, daughter and youngest child of Elaine and Michael Schintgen, also got into the group photo.

Here are the names of the six children and three grandchildren:
  • Christine Marlin Schintgen (married to Michael Schintgen), of Barry's Bay, Ontario. Children: Carl, Eric, Catherine.
  • Alex Marlin, of Toronto.
  • Greg Marlin, of Ottawa.
  • Nick Marlin, of Ottawa.
  • Laura Marlin, of Calgary, engaged to be married later in July to Emanuel Côté.
  • Marguerite (Margie) Marlin (married to Myles Dunn), of Ottawa.
    L to R: Elaine Marlin, Randal Marlin, Christine and Catherine (one of
    three children) Schintgen, Laura Marlin, Greg Marlin, Margie Marlin,
    Alex Marlin and Nick Marlin.

    See also: Two Poems for Randal from Clyde Sanger . There Is No Planet B