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“What if Trump was elected in 2008, would his policies have had helped the US recover faster and better than Obama’s policies?”The mood of the Republican party at the time of the Bush Crash was one of extreme austerity. Every Republican propaganda organ trumped austerity, and would brook no Keynesian intervention.In fact, a number of states underwent austerity regimes between 2009 and 2015, together with tax cuts and other incentives. Every state which embraced austerity took longer and recovered more slowly than those which did not. The best example is Kansas, of course, which executed severe tax cuts while cutting government and suspending regulation. Virtually the entire Trumpian program, encapsulated.In the end, Kansas NEARLY COLLAPSED after cutting welfare, transportation, health care and education. Even an austerity government could not raise enough tax revenue to offset costs and debt. It paralleled precisely the debt spiral that Greece found itself in. In 2017 the Republican Kansas legislature finally rebelled and raised corporate taxes to try to bring sanity back to the state.Now imagine a US economy headed by Trump in 2009, with 800,000 jobs per month being lost, a party hostile to the Fed and unwilling to spend anything to salvage the economy. If you’ll recall, Treasury Secretary Paulson came to Congress in late 2008 and begged them to create a $trillion-dollar fund to save the US - and world - financial structure, whose collapse was imminent.On inauguration day, 2009, the economy was in free-fall. The financial world was in full-fledged panic. Markets had already collapsed by half and would fall another half in the next two months. Most people who had relied on 401k’s were eviscerated; over the next year many of those targeted investment funds, components of the 401k world, would collapse and merge.Banks refused to lend money to other banks overnight. They could not be guaranteed the security of those funds, even through the Fed. Lending to business froze. Any business which relied on credit or forward sales of receivables to make month-end payroll faced immediate closure. That’s why layoffs were increasing, not decreasing.Counterparty risk was at the root of the financial failure: the hundreds of $trillions in derivatives all looked to someone backing them when they matured. The biggest of these was AIG. The potential for counterparty failure in 2009 dwarfed all the bad things that had happened so far - and threatened to throw the world so deeply into debt that it could never have emerged. We’re talking about many multiples of global GDP.Over the next three years, seemingly every corporation cut its dividends. Investors, retirees and pensioners dependent on those payouts were cut off at the knees.So here’s the thing. Let’s say Trump comes in and does his tax cut thing. So absurdly and totally ineffective that it’s just gas on the fire. I mean, even more absurdly ineffective than it is today. At the same time, he castrates government and with his new Republican congress goes full-bore into austerity mode. Hits the ‘consultant’ community hard, rolls back minimum wage on everyone else. The federal government lays off a million workers; state governments are forced to lay off millions more.[In fact, the austerity states did lay off hundreds of thousands, mostly education employees, in an effort to (a) stymie Obama’s success and (b) cripple government unions. They took a full point off national GDP in doing so, and eventually legislated successfully against union power. Which is holding down wages today, even under full employment.]The global financial panic intensifies. Business lending evaporates. Half the business in the country disappears; the other half teeters. The world follows suit. Due to losses, virtually no business owes or pays tax in 2009, 2010, or 2011. Or 2012. Or 2013. By the beginning of 2010, the government has no national income with which to offset the national debt, and enters its debt spiral. It tries to offset by issuing Treasuries, which eventually fail. The government cancels all payments for medical and senior and welfare aid. The over-65 population is immediately thrown out onto the street. Widespread hunger and sickness envelopes the bottom half of the population. Hospitals close everywhere. Senior, assisted living and nursing homes collapse. No city can afford to maintain a public hospital; private hospitals disappear, with the entire medical support network. Maternal and infant mortality rise to third-world levels, even higher than in Texas today.The world goes into complete financial and economic collapse within a year. Virtually anyone in the US who owes a mortgage, defaults. Banks collapse everywhere; most cities are deserts. Depository banks, no longer subject to the regulatory restrictions of Glass-Steagall, collapse en masse as their investment portfolio losses overwhelm their depository obligations. Deregulation is a fine thing, isn’t it?Obama, in contrast, nationalized GM’s employment and risk. (Over loud Republican opposition.) Then he nationalized AIG and its counterparty risk. (Over extreme Republican opposition.) Then he nationalized Fannie Mae and Freddie Mac and eliminated the counterparty risk on their mortgage portfolios (overcoming implacable Republican opposition and a chorus of NO’s). He worked TARP and stimulus programs through Congress, supported and rescued business wherever possible. He put money into taxpayer’s hands. Republicans hated, hated, hated that.Meanwhile, Bernanke began a program of rescuing banking systems around the world, exploding the Fed’s asset base and practically forcing banks to resume interbank lending. Even Europe, after years of unsuccessful austerity that was doomed to cost them the entire southern tier of nations, began to follow suit after the US rescued D-bank and numerous others.The two succeeded, by mid-March of 2009, in halting the bleeding due to financial panic. The markets turned around (after most portfolios had lost 75% of their value) and peaked quickly through 2011, recouping a big share of the loss.In 2008–12, Republicans were all about austerity, applauding European and Red State efforts to slough off the dead weight of bad business so that new shoots could appear. But they didn’t. Spain, Italy and Greece were being written off. Kansas was on the verge of debt implosion and Louisiana under Jindal wasn’t far behind. Even a decade after the Crash, few of the Red State austerity economies have come roaring back the way the Blue State economies did.So the likelihood is that, in the US, city centers would be plagued today by extreme hunger, sickness and poverty, with most of their taxable realty vacant (foreclosures began trailing off around 2014, lagging the employment crisis).The likelihood is that authoritarian states, like Russia, would be the most powerful reconstructed countries in the world, dictating to third-world countries like the US.So, yes, we still have that.[Edit: it is true that the GSE’s were placed into conservatorship in early Sept of 2008, placing $1 Billion in senior preferreds plus warrants for nearly 80% of the stock in Treasury hands - against a $5 Trillion liability. Whatever you may call it, Treasury effectively owned the GSE’s at that point. Virtually every GOP organ screamed in anger. Obama spent the next five years working to recapitalize the GSE’s and ensure that any subsequent liability was a private, not public, responsibility. I suspect Trump would have taken the opposite course, immediately selling the Treasury assets and letting the GSE’s float to whatever harbor, if any, would receive them.The Treasury release at the time whined that action was taken because “ambiguities in their Congressional charters created a perception of government backing” (Treasury Office of Public Affairs release, Sept 7, 2008).GSE mortgage securities were held in the asset vaults of banks all over the world. They were the basis for slice ’n’ dice derivatives written against them, and derivatives written against them, and so on. When the world discovered that the CDO’s and CMO’s they had in their vaults were NOT truly AAA-rated, a few hearts stopped beating. The potential liabilities were simply breathtaking.It was during that September that the word “Trillion” first became associated with dollar amounts, and liabilities, in common parlance.][Edit 2: The package passed in October of 2008 was Paulson’s desperation package. It gave him $700 billion to add to bank reserves. He was able to force those reserves into the banks in exchange for some of their deeply-soiled assets. The assumption was that it would be used for lending. However, nearly all of it sat as cash in bank vaults, never to be filtered out to businesses gasping for it. It was thought that $700B would be a huge stimulus - but it landed on the financial floor with a thud, and was scorned by the right as a “bailout”.Following the absorption of the principal market-makers into the nation’s top-tier banks, nothing really improved. The country was in the midst of the worst credit freeze it had seen in a century, a crisis which had begun in the middle of 2007. The stock market, which began its crash in September, collapsed with grim losses through the end of the year. Debt instruments were laughable as regulators were about to connect rating agencies and woodsheds. Auction-rate preferreds, which relied on monthly auctions, received no bids - and that market utterly disappeared along with the huge dollar financing it represented.In September, 2008, a money market fund - the Reserve Primary Fund - petrified the financial and consumer worlds. It “broke the buck”, with an NAV of only 97 cents. MMFs are the staple for parking loose change, the safest of the safe in short-term money. But they were no longer safe. In October, 2008, nothing was safe. Nothing. For instance, in April, 2008, oil had broken $120. Ten months later, WTI crude listed at $34. Strong people wept.In early 2009, Obama was able to obtain an $800B package that he did wield as stimulus, though its application stretched through his term.]

“Is it true that Donald Trump gave most Americans a tax cut and they didn’t notice? Why?”No.Every analysis of Mr. Trump’s tax bill, other than those propounded by Fox “3 Mexican Countries” News and similar ilk, points out that the cuts will increasingly benefit the wealthiest individuals and corporations. In fact, the tax bill is structured so that it already penalizes middle-class taxpayers of traditionally “blue” states.For example, Mr. Trump’s hatred of all things Californian (other than its money) has long been as obvious as the orange on his head, although he did come out here last month to try to harvest campaign contributions. The state did not vote for him in 2016 and likely never will.Here in Southern California we shake our heads at the home prices we see on HGTV, knowing that those amounts won’t even buy a two-car garage in South Central Los Angeles. This means that virtually every homeowner in the major cities here who has had their home for less than 20 years more than exhausts the new deductibility limits for home mortgage interest, property taxes or both. Obviously this is echoed by other states with high real estate values, which are also overwhelmingly “blue” states. This results in an automatic increase in income tax.Other evidence of his California hatred is his refusal to release Federal emergency funds following last year’s devastating fires, relenting only when he realized that he wasn’t suckering anyone with his narrative that state officials were somehow responsible for Federal forest policies that aggravated the destruction. Or his continuing threat to dump “yuge” numbers of illegal immigrants in the middle of so-called sanctuary cities.This is despite the fact that over the last few years the average Californian pays $348 more in Federal taxes per year than they get back in Federal services, as compared to red states like Mississippi, where the average resident receives $7,900 more in Federal services than they paid in taxes. Yet this wasn’t enough to satisfy Mr. Trump’s need to stick it to the “Golden State.” He wants an ever-greater share of that “gold,” even though the state realistically no longer has any effect on Presidential elections.The sad truth of the matter is that even though Mr. Trump and his supporters love to demonize California, with epithets like “Commiefornia” and “Don’t Californicate our state,” America needs to take far more from California than it returns ($13.5 billion in FY ending September 2017 alone) merely to survive the Republican fiscal policies of Mr. Trump’s government and of states such as Kansas.He will continue to increase his plunder of California as it comes with no political cost to him.11 states pay more in federal taxes than they get back — here's how every state fares

1874: The Year of the LocustA Kansas farm family fights a losing battle with the relentless "hoppers" in a cartoon by 19th-century illustrator Henry Worrall. (Kansas State Historical Society)‘They beat against the houses, swarm in at the windows, cover the passing trains. They work as if sent to destroy’Late one July morning in 1874, 12-year-old farm girl Lillie Marcks watched the sunlight dim and a peculiar darkness sweep over the Kansas sky. A whirring, rasping sound followed, and there appeared, as she later recalled, “a moving gray-green screen between the sun and earth.” Then something dropped from the cloud like hail, hitting her family’s house, trees and picket fence. A child in Jefferson County, Kansas, who had gone out at midday to draw water from the well exclaimed: “They’re here! The sky is full of ’em. The whole yard is crawling with the nasty things.” A settler in Edwards County, Kansas, reported: “I never saw such a sight before. This morning, as we looked up toward the sun, we could see millions in the air. They looked like snowflakes.” What this Kansas trio saw that summer was also observed by others statewide and across Dakota Territory, Montana Territory, Wyoming Territory, Colorado Territory, Iowa, Minnesota, Missouri, Nebraska, Indian Territory (present-day Oklahoma) and Texas. What Marcks described as “a moving, struggling mass” of grasshoppers—technically, Rocky Mountain locusts (Melanoplus spretus)—had invaded the Great Plains.Farmers, their pants legs cinched with string, ran to cover their valuable wells. In many cases their drinking water was about the only thing they could save. As the swarms landed on houses, fields and trees, the skies cleared, but then the real devastation began. The locusts soon scoured the fields of crops, the trees of leaves, every blade of grass, the wool off sheep, the harnesses off horses, the paint off wagons and the handles off pitchforks. They washed in waves against the fences, piling a foot or more deep. They feasted for days, even devouring the clothing and quilts farmhands threw protectively over the vegetable gardens. Livestock feasted on the locusts, and farm families killed many of the invaders by building bonfires. But there were just too many of the “nasty things” for man or beast to control. The locusts, farmers grimly quipped, “ate everything but the mortgage.”Taxonomically speaking, locusts and grasshoppers are the same. When these insects are nonmigratory and nondestructive, with a low-density population, they are considered grasshoppers. When they are both migratory and destructive, with a high-density, concentrated population, they are considered locusts. The particular locusts that caused $200 million in crop damage across the Great Plains in 1874—temporarily stalling Western migration and forcing many homesteaders either to return east or to move farther west—seemed ubiquitous on the frontier at that time.One report released in 1874 suggested that just one family in 10 had enough provisions to last through the coming winter. To avoid starvation, many desperate settlers, especially in western Kansas and Nebraska, abandoned their homestead claims and their dreams of a new life to return east. Kansas alone lost as much as one-third of its population. Meanwhile, the flow of westbound emigrants to the Plains fell by as much as 20 percent.Debts prevented some from leaving. Others were loath to cede their investments of time and energy. Still others had forged ties to the land they struggled to tame. “I have lost my all here,” one man wrote, “and somehow I believe that if I find it again, it will be in the immediate neighborhood of where I lost it.” Furthermore, he continued, “I have a child buried on my claim, and my ties here are stronger and more binding on that account.” Those who stuck it out often turned to federal and territorial governments for help, borrowed money from family and friends or even mortgaged their land.Reverting to an earlier time, some pioneers tried to feed their families by hunting. Other desperate souls survived by gathering discarded buffalo bones from the prairie, hauling them to railroad hubs and selling them for up to $4 per ton; buffalo horns fetched up to $8 per ton. According to period reports, in 1874 the amount of buffalo bone transported by the railroads was three times what it had been the year before and six times that of 1872.Enter Charles Valentine Riley. The Missouri state entomologist noted that livestock and wild animals happily ate the locusts and that man had used the insect as food since ancient times. Riley thus proposed “entomophagy”—simply put, eating the bugs—as a way to reduce their numbers while nourishing hungry settlers. The insects, he insisted, yielded an agreeable nutty flavor when one removed their legs and wings and fried their bodies in butter. He added that the rendered locusts also made a palatable soup. To prove his point, Riley sent a bushel of scalded locusts to one St. Louisan caterer, who insisted he would have them on his menu every day if he could get them.Hard-pressed pioneers gave Riley’s recipes a try. Gourmands claimed that locust coated in butter, fried and seasoned with salt and pepper tasted just like crawfish. Others elected to add their crispy locusts to broths and stews. But a number of settlers who had watched the locusts destroy their farms said they would just as soon starve as eat those horrible creatures.More palatable help was forthcoming. As the scope of the disaster became clear, state and territorial governments held special legislative sessions, issued bonds to relieve the destitution and dispatched agents to the East to secure aid, particularly seed for the 1875 growing season. The nation responded with money and supplies, often hauled free of charge by the railroads. The federal government exempted those homesteaders hit hard by the locust infestation from residency requirements, enabling them to briefly leave their land (and perhaps relocate their families) to work elsewhere and recoup their losses without fear of losing their claim. Settlers were required to provide two witnesses to corroborate the destruction of their crop. The act provided for an extended leave should the locusts return in 1875. Homesteaders had to provide proof of resettlement upon their return. In January 1875 Congress also earmarked $30,000 to supply seed to the beleaguered areas.