All posts by Dr. ESP

Economic Idealism

Economics

You can’t have everything.  Where would you put it?

~Comedian Steven Wright

The new economy still plays by the old economy rules.

~Nobel Laureate Economist Paul Romer

Wright was half-right, half wrong. Case in point?  At the height of post-COVID inflation, every economist west of the Atlantic coastline predicted the Biden administration faced an inevitable recession and higher unemployment if the Federal Reserve Bank raised interest rates to tamp down inflation.  However, unlike Wright’s warning, the American economy got everything it wanted–no recession, lower inflation, unprecedented job growth, record low unemployment, increase in wages, a stock market at all-time highs and rising consumer confidence.

How was the Biden administration able to do this?  Two very simple reasons.  Policy makers did not get drawn into the false choice between fiscal and monetary methods of juicing the economy.  And they had decades of historic data which provided guidance about the purpose and timing of these competing economic theories.

Remember, before Joe Biden took his oath of office, the unemployment rate peaked at 14.8 percent in April 2020.  In March 2021, Biden signed the American Rescue Act which provided $1.9 trillion in fiscal stimulus.  By the first anniversary of the law’s passage (March 2022), the unemployment rate fell to a historic low of 3.7 percent. 

That same month, the Federal Reserve Bank (The Fed) raised interest rates on “federal funds” (the short-term interest rate at which banks lend money to each other overnight to ensure liquidity) from 0.25 to 0.50 percent, the first increase since the beginning of the pandemic in March 2020.  The Fed would continue to raise the federal funds rate for the next 16 months to fight the inflationary impact of the stimulus package and disruptions in the supply chain for goods and services, until it reached a high of 5.50 percent in July 2023.

Where did Steven Wright miss the boat?  American voters did find a place to put this surprisingly ideal economic environment.  OUT OF SIGHT, OUT OF MIND.  Thanks in part to poor messaging by the Biden administration.  But mostly due to the “glass totally empty” fairy tale shared with sleepwalking Americans nightly on Trump state media.  Could the government have brought down inflation more quickly through even higher increases in interest rates or less fiscal stimulus?  Of course, but at what cost?  That is the point at which we need to heed Paul Romer.  The old economic rules would still apply.  Such drastic actions would probably have made the economists’ prediction of a recession a self-fulfilling prophecy.  Would the MAGA-verse and its media echo chamber be any less critical with a lower inflation rate but more Americans without jobs and income to take advantage of the more stable pricing?  I think you know the answer.

So now we have an administration that is on the path of applying both fiscal and monetary policy for the wrong reasons and at the wrong time.  John Maynard Keynes, the father of fiscal economic policy, would tell us economic stimulus is most effective during downturns, not when the U.S. economy has experienced four years of sustained growth despite the odds of a recession.  To make matters worse, Donald Trump wants to eliminate The Fed’s independence to set interest rates, making that function more susceptible to political whims rather than impartial analysis.

SPOILER ALERT.  The regional Fed bank in Atlanta is now predicting the U.S. economy will shrink 1.5 percent from January-through-March 2025.  This decline, which is attributable to uncertainty associated with Trump’s across-the-board tariffs and lower consumer confidence, will give Trump and the MAGA Congress a justification for a stimulus package made up largely of tax breaks for the wealthy and major corporations.  Seems like the only history the Trump economic team has been reading is the infamous quote by Vietnam War era Lt. Colonel John Paul Vann to justify napalm bombing as a counterinsurgency tactic.  “It became necessary to destroy the village in order to save it.”  And how did that turn out?

POSTSCRIPT

On last night’s edition of HBO’s “Last Week Tonight,” John Oliver honed in on Trump’s proposal to eliminate federal income tax on tips, a targeted gimmick to appeal primarily to hospitality industry workers.  Sadly, Kamala Harris chose to also endorse the change in tax policy.  Oliver gave a number of reasons why the no-tax-on-tips idea might not be a good one and why it would be extremely hard to implement.  But he left out what may the most obvious reason this tax break would be unfair.

Since Trump originally made his no-tax-on-tips pledge at a campaign rally in Las Vegas, I will use the hospitality industry there as an example.  According to the website GLASSDOOR.COM, “The estimated salary range for a food server at the Bellagio in Las Vegas is between $54,510 and $168,543per year, depending on seniority.”  In contrast, SALARY.COM reports:

As of March 01, 2025, the average annual salary for a Public School Teacher in Las Vegas, NV is $59,989. According to Salary.com, salaries can range from a low of $41,053 to a high of $85,207, with most professionals earning between $50,077 and $73,189.

No one should be surprised.  Oliver pointed out that most servers at many lower-end restaurants, even with tips, do not make enough money to have any income tax liability; so the proposal would be of no benefit to them.  However, those at establishments that cater to the most wealthy would be the primary beneficiaries, while school teachers would likely face a tax increase based on the “Big Beautiful Bill” working its way through the House of Representatives.  One more reason Trump says, “I love the uneducated.”  They cannot do the math.

For what it’s worth.
Dr. ESP

Missing the Key Point

Culture

This morning, the Huffington Post reprinted a post on X from a USDA worker in Kentucky who was fired on Valentine’s Day.  In case you missed it here are a couple of excerpts.

Donald J. Trump. Hello Sir. I am one of the probationary employees terminated by the Doge at 9:00pm last night; February 14. I voted for you, Sir, three times, and I still support you.  My termination letter said I was being let go for performance reasons. I know that’s not true; I am an excellent employee. 

I’m the only [redacted] in the State of Kentucky and my work here is valued and honorable. Each time I voted for you, it was because I knew you’d make things right and you’d fix the wrongs. I’m counting on you now to make this right too.  I’m pleading with you to reinstate my employment and give me my job back.  Please, Mr. President.  Thank you.

As of this morning, there were more than 2.5 million replies on X. As expected, responses from the non-MAGA community were laced with schadenfreude.

Do these people think they are going to get an exception because they are Trumpers? The leopard is not going to put your face back on.

More surprising were the responses from MAGA loyalists.  As HuffPost reported, “In response to the post, little sympathy was found from MAGA-supporting commenters.”  They provided the following as an example.

This is business ppl. You don’t sacrifice a country with bankruptcy to let ppl keep a job. They are very employable. Does it suck. Yes but it is a necessary evil.

What the HuffPost writer missed was the extent to which Trump supporters on both sides of this discourse are now captives of MAGA-THINK.  Let’s begin with the laid-off Kentucky USDA employee.  In the above excerpts from his original post he uses the word “I” or “my” a dozen times.  Not once does he suggest there might be other USDA staff whose work is also “valued and honorable” or were terminated for cause despite being “an excellent employee.”  Nor does he defend USDA.  Does he not realize his “valued and honorable” work derives from the agency’s congressionally mandated mission?  His main message?  “Help me.  To hell with everyone else.” 

He also makes it perfectly clear he believes in identify politics though I’d bet the farm he cheered when Trump signed an executive order shutting down all federally fundrf DEI programs.  It may not be race or gender, but claiming you should be privileged solely because you are a full-fledged member of MAGA-World smacks of the worse kind of favoritism.  Being part of this preferred class does not depend on some accident of birth or inherent trait.  Anyone can join.  All you have to do is make a Faustian deal and hand over your moral soul to King Donald.

The same holds true for those who suggested laid-off employees need to realize their termination was “a necessary evil” of Trump’s divine plan to make America great again.  Will they feel the same way when they lose their Medicaid benefits or they have thousands of dollars in daycare expenses because their young children no longer go to Head Start classes?  Or when they finally realize Elon Musk will get a multi-million dollar tax break while the cost of everyday goods and services rise as a result of Trump’s tariffs?  Are they going to rush to Truth Social and post, “I voted for you three times.  I still support you.  But please, I thought you were only going to punish the non-faithful.”

My message to both these segments of  the MAGA universe.  “Does it suck?  Yes, but it’s the unnecessary evil you made possible.”

For what it’s worth.
Dr. ESP

UPA, UPA

Comic Relief

The Washington Post is reporting there was a little publicized side-bet between Canadian Prime Minister Justin Trudeau and King Donald.  Usually such wagers involve a culinary delight symbolic of the cities represented in major sporting events.  For example, following the Eagles victory in Super Bowl LIX, Kansas City mayor Quinton Lucas sent Philadelphia mayor Cherelle Parker a shipment of Gates BBQ.  If the Chiefs had completed the three-peat, Parker would have reciprocated with Philly Cheesesteaks.

However, the stakes associated with last night’s final game in the National Hockey League’s “4 Nation Face-Off” between the United States and Canada were much, much higher.  A bucket of KFC extra crispy versus a bowl of poutine would not suffice.  Based on the fact that Team USA defeated Canada just five days earlier during the round robin phase of the tournament and the game would be played on America’s home ice (the Boston Garden), Trump prepared an executive order challenging Trudeau to the equivalent of a WWE death match.  Assuming his support would assure a USA victory, Trump saw the contest as a shortcut to fulfilling his pipe dream of Canada becoming the 51st state.

In other words, the losing team must cede sovereignty to the winner.  Which explains Trudeau’s tweet (above) immediately following Connor McDavid’s sudden death goal at 8:18 of the first overtime period, giving Canada a 3-2 victory.  Therefore, on July 1, the 158th anniversary of the British North America Act by which Canada became a self-governing member of the British Empire, all 50 U.S. states will become members of the Canadian federation, also known as the United Provinces of America.

An official ceremony, reminiscent of Robert E. Lee’s surrender to Ulysses S. Grant at the Appomattox, Virginia courthouse, will be held on Parliament Hill in Ottawa, Ontario.  While the details have not been finalized, the word on “la rue” is that the observance will culminate with Trump laying down his bull horn and five iron.  Trudeau and Parliament will then appoint a commission to determine the boundaries and names of the new provinces.  While everything is on the table, one MP suggested there is no need to have two provinces with similar names.  “One Dakota, Carolina or Virginia is enough.”

I cannot wait until the 2026 Winter Olympics when attendees from North America will be rooting for their home team, “UPA, UPA.”

The Upside

During my tenure as a professor at Miami University, we had a colleague who, like Trump, had the uncanny ability to pick losers in every major and minor sporting event.  It was, however, impossible to definitively prove if this relationship was causal or mere correlation.  Based on his picks for the Super Bowl and the 4 Nations Face-Off, Trump appears to be the heir apparent to our colleague, ensuring negative outcomes for favored teams.  Whether causal or correlation is irrelevant.  Both have an upside.  For example, if you are New York Yankees hater, just post on Truth Social that Hal Steinbrenner (Yankee owner) thinks the 4 Nations Face-Off final game and Trump is still the president of what Google maps has labeled Lower Canada.  Trump will surely reply “#me too,” thus ensuring the Bronx Bombers will have another under-achieving season.

For what it’s worth.
Dr. ESP

Huh?

Media, Politics

One of my favorite segments on “Late Night with Seth Meyers” is “Amber Says What.”  It features Late Night writer and comedian Amber Ruffin in which she races through the most outrageous headlines since her last appearance followed by various intonations of the word, “What?”  The goal is to share the absolute absurdity of current events.  Since January 20, I have created more unfinished posts than I have published on this site.  Why?  Because none of the topics merit the kind of explanation which requires a detailed entry to clarify the issue or make a point.  The headline is self-declarative.  Therefore, today I am offering a new Deprogramming101 feature, “Dr. ESP says HUH.”

Today, the U.S. Senate will vote to confirm Robert F. Kennedy, Jr. to be secretary of the Department of Health and Human Services.  Just to make sure I was not missing something, I Googled the phrase, “Rotary International Opposes RFK, Jr. Nomination.”  Why?  Because this organization has spent the last 35 years and more than $2.5 billion to eradicate polio.  The headline on the first hit referred to a letter from the Leadership Conference on Civil and Human Rights to each U.S. senator.  It began, “The undersigned 87 organizations representing diverse interests and sectors urge you to vote against Robert F. Kennedy, Jr.’s nomination to serve as secretary of (HHS) and to publicly announce your opposition as soon as possible if you have not already done so.”  Rotary International was not among the signatories.  HUH?

Donald Trump signs declaration formally renaming the Gulf of Mexico as the Gulf of America during flight on Air Force One to attend the Super Bowl in New Orleans.  Trump was interrupted by the following announcement by the pilot.

Ladies and Gentlemen, if you could please direct your attention outside the right side of the aircraft, Air Force One is currently in international waters.  For the first time in history we are flying over the recently renamed Gulf of America.

HUH?  Didn’t the pilot’s acknowledgement that the Gulf is actually “international waters” undercut Trump’s ability to rename it.

During an Oval Office press conference, Elon Musk justifies his role as head of the “Department of Government Efficiency.”  While Trump sat quietly at the Resolute desk, Musk responded to a reporter’s question about his authority to overhaul the federal government.

And if you asked the founders today and said, what do you think of the way things have turned out? Well, we have this unelected, fourth unconstitutional branch of government, which is the bureaucracy, which has in a lot of ways currently more power than any elected representative. And this is not something that people want, and it does not match the will of the people. So it’s just something we’ve got to fix.

HUH?  As pointed out by everyone from the New York Times to “The Daily Show,”  Musk’s lack of self-awareness may be bigger than his net worth and his teenage protege Edward Coristine’s (aka “Big Balls”) genitalia.

Trump suggests U.S. sovereignty should expand to Canada, Panama, Greenland and Gaza.  HUH?  Didn’t he run on a foreign policy platform of “no more nation-building or regime change?”  In defense of Trump’s plan to rebuild Gaza, press secretary Carolyn Leavitt quoted Albert Einstein, “Insanity is doing the same thing over and over again and expecting different results.”  Yet Trump’s plan to rebuild Gaza sounds an awful lot like the U.S. experiences in Vietnam, Afghanistan and Iraq.

Iowa Senator Joni Ernst says she’s loving what DOGE is doing.  (Source: Fox Business, February 10, 2025)  Ernst seeks to exempt farm and small business assets in deciding who gets financial aid.  (Source: Des Moines Register, February 11, 2025)  HUH?  Pretty clear message.  Slash federal spending but don’t you dare touch my voters’ share.

I hope you enjoyed this inaugural edition of “Dr. ESP says HUH.”  Somehow, I doubt it will be the last one.

For what it’s worth.
Dr. ESP

Populism, My Ass

Random Thoughts

In 1971, the Oscar winner for best animated short was a 2 minute 18 second cartoon by Ted Petok titled “The Crunch Bird.”  In search of a gift for her grumpy and unhappy husband, the wife decides he might like a pet.  After rejecting a dog or a cat, she decides her husband would prefer a bird.  Despite warnings by the pet shop owner this particular bird might be dangerous, she purchases it and brings it home to surprise her husband.  I suggest you watch the original (link below) before reading my 2025 revision of the script.

THE CRUNCH BIRD

The revised 2025 script.

NARRATOR:  Once upon a time there was a political party that set out to give America a gift.  America was not bankrupt.  Or angry.  Or cruel.  In fact, most Americans were too busy trying to get ahead at work, raising a family and enjoying occasional recreational opportunities.  But America was frustrated with the cost of living, efforts to make everyone feel welcome and spending taxpayer dollars on foreign wars.

POLITICAL PARTY:  I know.   I’ll give America a new governing philosophy.

NARRATOR:  So the political party found the philosophy store and told the shopkeeper that it wanted to give America a new and very different political philosophy.

SHOPKEEPER:  Perhaps America would like supply-side economics.

POLITICAL PARTY:  No, we tried that, more than once, and America didn’t like it.

SHOPKEEPER:  Then maybe America would like compassionate conservatism.

POLITICAL PARTY:  No, we tried that too.  And America was so turned off, it made a black man the country’s leader.  Say, what’s that?  (pointing at a foreboding looking political philosophy)

SHOPKEEPER:  Oh, that’s populism.  But America wouldn’t want that.  It’s too dangerous to have around.  Let me show you.  Populism, the Constitution.  (Populism devours the Constitution)

POLITICAL PARTY.  That’s amazing.  America will love this. We can promise no more deficit spending.  No more ObamaCare.  No more nation building.  How much does that cost?  (Rumor has it the retail price was $288 million.  To no one’s surprise, the political party recruited the richest man in the world to write the check.)

NARRATOR:  So the political party offered America populism and promised it would devour all the things that made America less wealthy, less safe and, of course, less Eurocentric.  Soon America came home after a long day at work.  She turns on the TV and sees the political party espousing the virtues of the new political philosophy.

AMERICA:  What is that?  What the hell is that ugly thing?

POLITICAL PARTY:  It’s for you.   Populism.

AMERICA:  Populism, my ass.

For what it’s worth.
Dr. ESP