Seventy-six years ago, December 7, the Japanese bombed Pearl Harbor, drawing the United States into a World War that had been raging, formally, for over two years, since Germany invaded Poland on September 2, 1939. But Nazi militancy had begun earlier. They had re-armed beyond what they were allowed under the Treaty of Versailles in the early ‘30s. They had reoccupied the Rhineland in 1936 and they had annexed Austria in March 1938. A year later, in March 1939, Czechoslovakia fell. But the Allies did nothing. Eight years earlier, in September 1931, the Kwantung Army of the Empire of Japan invaded Manchuria. The world was aflame when Pearl Harbor was attacked. But a giant was stirred, and by war’s end over 60 million people (roughly three percent of the world’s population) were dead – approximately one killed every three seconds!
The most consequential news for the U.S. this past month, and perhaps for all of 2017, was the passage and signing of the Tax Cuts and Jobs Act of 2017. Its support was narrow and partisan, so has been compared to the Affordable Care Act of 2010. But, there is a significant difference. The ACA was designed to give government more resources, and greater control and power. This Bill gives government fewer resources, and less control and power. Its center piece is the reduction in the stated federal corporate tax rate from 35% to 21%, which is slightly below the world average. The Bill allows businesses to expense capital expenditures (investments) when occurred. As well, companies are incentivized to re-patriate about $2.5 trillion held abroad. Tax rates for individuals were lowered, albeit modestly. The deductibility of state and local income taxes (SALT), which serves to mask aggressive spending on the part of many states, including California, New York, Illinois, New Jersey and my state of Connecticut, will be limited. That will negatively affect high-earners in those states. I would have preferred a simpler bill, and one, for instance, that acknowledges that “carried interest” is income. But this was the first time in a generation major tax reform has been achieved. The Bill should help boost economic growth.
As significant for economic growth has been the rolling back of regulations. For example, an apple farm in upstate New York, according to The New York Times, is subject to 5,000 rules. The repeal of Net Neutrality was a victory for free markets. The Act had nothing to do with neutrality and everything to do with regulation. It re-categorized broadband from Title I to Title II under the 1934 Communications Act, which meant carriers would be regulated as public utilities. Its elimination was a win for competition and the promise of 5G wireless, which may obviate the monopolies and duopolies of cable and fixed-line carriers.
Elsewhere domestically, the Mueller investigation suffered credibility issues, as anti-Trump bias was shown to be prevalent with a number of Mueller’s senior personnel: Bruce Ohr, Peter Strzok, Andrew Weissmann, Jeanie Rhee and Andrew McCabe. Increasingly, it looks like the collusion that should be investigated was that between the Clinton campaign and the FBI, rather than Russia and the Trump campaign. The Santa Barbara County wildfire in California became the State’s largest. Governor Jerry Brown said such fires are the “new normal!” Late in the month, the Northeast and Midwest of the U.S. were subjected to a prolonged arctic freeze. President Trump signed an Executive Order substantially reducing acreage in Utah’s Bears Ears National Monument, a tract of land so-named on December 28, 2016 by President Obama. Mr. Trump’s decision caused an uproar about separation of powers. However, National Monuments are created by Presidential edict, while National Parks are established by Congress. Doug Jones beat Ray Moore for the Alabama Senate seat vacated by Attorney General Jeff Sessions. Whether this proves good for the citizens of Alabama remains to be seen, but it was good for the nation and especially for the Republican Party. In a 7-2 decision, the Supreme Court backed the President’s travel ban from six predominantly Muslim nations. ISIS-inspired Akayed Ullah, a U.S. citizen and native of Bangladesh, was badly hurt when his suicide vest detonated prematurely on a Times Square subway platform. There were no other injuries.
