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The Obama administration's proposed budget for fiscal 2013- for the year beginning Oct. 1, 2012- shows the budget deficit for the year at over $1 trillion. It shows new revenue of $1.7 trillion over 10 years mostly from ending the Bush period tax cuts on families earning more than $250,000 a year, restoring the estate tax to the 2009 level and limiting subsidies for oil and gas companies. It proposes raising the tax rate on dividends from 15% to as much as 39.6%, for households earning more than $250,000 a year. This measure is expected to generate $206 billion over 10 years. The budget also offers "principles" for future tax reform by proposing the Buffett rule replace the Alternative Minimum Tax (AMT). The AMT was not indexed for inflation so it has the weakness of putting more middle class taxpayers into AMT, leading to temporary solutions by Congress. The Buffett rule would have people earning more than $1 million pay a tax rate of at least 30%. Many wealthy Americans like Mitt Romney paid lower taxes using deductions to lower tax rates- Romney's tax disclosures show he paid effective tax rate of 14%. The White House says the budget will reduce the deficit by $3 trillion over 10 years through the new taxes, and small changes to Medicare and Medicaid and other spending cuts. This is in addition to the $1 trillion in spending cuts agreed to in a deficit reduction agreement in 2011 between Democrats and Republicans in Congress. The budget proposal proposes investment in education and transportation projects of $137 billion, and continuing through Dec. 2012, a tax break for businesses to increase investment. It includes mandatory spending of $2.7 billion for new community college programs, $6 billion to modernize schools, and $1.8 billion to make homes more energy efficient. It also increases the resources of the Securities and Exchange Commission and the CFTC (two agencies overseeing the banks), $26 million for a new Interagency Trade Enforcement Center to counter unfair trade practices, and cuts U.S. postal delivery to 5 days a week. The result is a program designed to be balanced in terms of economic fairness, making modest investments in the future for education and energy, continuing policies to stimulate growth, and extending the date for bringing the deficit under control to 2018 instead of 2014 as planned earlier....

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Speaker Boehner's difficulties getting Republican votes in the U.S. House of Representatives. 151 Congressmen and majority leader Cantor voted against the McConnell-Biden fiscal cliff agreement of Jan. 1, 2013.

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Donald Trump in the week before the Republican caucuses in Iowa. Trump says he will be the winner in Iowa. He is introduced at an event in Pella, Iowa, by Senator Chuck Grassley, who has not formally endorsed Trump. He stays at an Holiday Inn Express in Sioux Center, Iowa, and attends church sunday service at Muscatine, Iowa.

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Tom Friedman of the NYT talks with retiring Israeli defense minister, and former prime minister, Ehud Barak, in Tel Aviv. Barak makes the case for seizing opportunities as they arise in a difficult situation, which might be lost if Israel adopts a permanently pessimstic state of mind about the prospect of peace with Arab countries. Barak and Friedman suggest the approach of the Israeli government of prime minister Netanyahu has risks of highlighting the dangers to Israel at its borders, to the point where Israel could lose the ability to make wise and sensible judgements as these opportunities arise, and the Middle East itself changes. Because of the political struggles and conflict in the Middle East this may obscure the newly emerging Middle East, which needs economic advancement to support the aspirations of the overwhelmingly young populations in these countries. This has the potential for a new dynamic that could see the Middle East move beyond Israel to seizing the opportunities presented by economic and technical progress. Similiar to the other nations of Asia, including the Muslim nations of Turkey and Indonesia. ...

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This report in the Economist magazine says views in the Trump base of support in rural areas and among white working class voters are likely to persist for some time. One reason given is that many of these people live in isolation and little contact with the more educated urban voters in America. Another factor cited here is that only a fifth of voters follow politics closely, and of these voters only a small fraction have a good grasp of the positions of the two major parties. Most people follow the instincts and thinking of the groups they are with. As a result many of the issues covered in the media such as climate change and U.S. withdrawal from the Paris agreement, the Comey firing and the Mueller investigation into Russian meddling in the election, president Trump's Twitter comments, are not having much impact on the president's ratings among his support base at this early stage of the Trump presidency. Yet it is too early to tell only 6 months into the Trump term in office. After 8 years of president Obama's two terms in office voters who feel left out are not likely to change their views in so short a time. Republican voters as distinct from the core Trump base voter are also unlikely to change their views after 8 years of Democratic party administration. By staying close to traditional Republican party positions president Trump is likely to continue to have the support of the lifelong Republican party voters unless things change. Can a centrist position emerge after voter fatigue with excessive partisan opinion, as voters seek to make America a more quieter place and a consensus on working together to lift all boats emerges. This could be expected as time passes.   ...

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Indifference on the Republican side, and a sense that not much is going to get done on the Democratic side, as President Obama pitches a $447 billion second stimulus plan in a speech to both houses of the U.S. Congress on September 8, 2011. Dana Milbank documents the attitudes and skepticism with which members of Congress received the proposals- a general sense that President Obama was too weak and ineffective to get things done and has lost credibility. John Taylor, senior economic advisor on the Republican side pointed out in a Wall Street Journal column a few days before the speech, that the jobs proposals Obama and economic advisor Alan Krueger were presenting were similiar to old plans that have not produced results. Taylor viewed them as placing too much reliance on government and not enough on the private sector to generate economic growth and jobs.

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Krugman points out that about 13 million Americans without insurance gained health insurance under the Obama plan. He says if it is turned back 8 million whites without a college degree in that 13 million will lose health insurance. Of these eight million about two out of three voted for Trump, so that 5 million Trump supporters could now lose health insurance even though they are older and have more health conditions. Krugman says this aspect of the election campaign was not covered well in the misinformation and social media information of the 2016 campaign, and the lack of media focus on the important issues in the election. On manufacturing jobs he says most of the jobs lost are not returning, and only token jobs such as at a Carrier plant in the news will take their place.

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Glenn Hubbard describes how the difference in approach between Romney and Obama matters, as it did between Carter and Reagan. The basic difference being the importance of getting long term policy on the right track. See the Reagan memo in Groups for the importance of setting the right tone and emphasis on a consistent long term direction, which was advice given in the memo by Shultz and other advisors to Ronald Reagan. The belief in growth from private sector investment and job creation and putting the right policies in place is a distinct difference between the Romney and Obama plans.

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The authors, Becker, Davis and Murphy, are from the University of Chicago. They point out that the uncertainty created by the Obama administration's programs including healthcare and social investments in education, energy conservation, and the desire to reduce carbon emissions, all tend to slow business expansion and investments to create jobs by putting additional costs on business. The expanding federal deficit and national debt also create additional uncertainty. Their point is that it was a mistake to start making major changes to transform the U.S. economy at this time, and that it would have been wiser to do these changes after the economy had recovered completely from the crisis. All efforts they say should have been concentrated on establishing conditions for a strong recovery. When combined with the lack of regulatory reforms to fix problems left behind from the crisis, and other failures, serious questions arise about how things will turn out in coming years. See Krugman- The Feeling of 1937, where Krugman takes this up from another angle, again with concerns about the future....

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U.S. president Obama in his speech at the Democratic National Convention describes Hillary Clinton as someone "who has been there for us- even if we haven't always noticed."  He warned against "home grown demagogues," and said " there were no serious solutions to pressing problems" at the Republican convention that was "not conservative, and wasn't particularly Republican."  

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This Washington Post editorial following the New York primary points out the misstatements, exaggerations, and extreme statements that have characterized the Trump campaign, about women, minorites, the media, and other candidates.

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Out of the rubble of failed policies, lack of far sighted leadership, and the failure of Middle Eastern elites and leaders, must arise the right way forward.

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With the strong positions taken by Clinton and Trump on China in the 2016 election campaign, U.S. relations with China enter a new phase. The strident tone in the campaign on China on trade deficit, women's issues, human rights, comes with the issues relating to China's role in the South China Sea and cyber espionage already in the background.

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Newly elected president Poroshenko's personal relations with Putin and his connections to Russia's business interests will help him improve relations with Putin. He wants to have substantive preparations for talks with Russia so that progress is made in relations and in other issues. Putin has said he will respect the results of the Ukraine election. Senators Portman and Cardin, and former Secretary of State Madeleine Albright were in Kiev to monitor the elections, and found them to be fair and properly conducted. Turnout was high and voters rejected the old world politics of the main rival candidate Tymoshenko, who received only 13% of the vote compared to Poroshenko's 54%. Poroshenko is a businessman who started out in chocolate, but has business interests in automobiles and owns television station 5. He was Speaker of parliament, and Trade minister in previous governments. The election result and voter rejection of the old politics gives a fresh start, and a chance for Russia, Germany and the EU to move forward. Russian president Putin had serious problems with the old politicians and may find it easier to work with Poroshenko. American led sanctions provide Russia an incentive to resolve the situation to give Russia's economy a chance to recover from serious capital outflows. Poroshenko is pro-EU, with enough Russian connections to maintain confidence in Russian-Ukrainian relations, for the fresh start Ukrainians are looking for. His focus is on economic development, with jobs as a priority for the young people facing extremely high unemployment....