Ted Cruz and Wall Street - Talking Out of Both Sides of One's Mouth

In this posting, I want to take a look at Ted Cruz and how he really feels about Wall Street when he's not talking down to America.

Here is a video of Ted Cruz showing his alleged feelings about people in New York City, particularly those who live in Manhattan:

...and, here he is, talking to those of us who sweat while we work about what he would do to Wall Street at the 4 minute mark:

Note his comments on how the big banks are getting bigger and bigger.  As you will see, it's those big banks otherwise known as the investment industry that are actually playing an important role in Mr. Cruz's campaign.  A non-thinker would almost believe that the Harvard-educated, second-place candidate in the GOP fight for presidential actually believed that he is rabidly anti-Wall Street, an oddity given that his wife, Heidi, was in the executive ranks at Goldman Sachs.

Well, it looks like Mr. Cruz is begging for the right kind of attention from Wall Street; the green kind of attention that has the pictures of presidents on it.  Here is a screen capture showing an invitation to a fundraiser to be held at the Harvard Club of New York City on April 18th, 2016 pictured here:

Here is a screen capture showing the more interesting part of the invitation:

Note that to attend the "general reception", you'll get to fork over a measly $1,000 per person.  If you want to attend the VIP reception where you might actually get to shake the hand of the presidential hopeful, it will cost you $2,700 per person.  If you take the easy way out and just donate or raise $10,800 or $25,000, you will be considered a real Cruz campaign insider!  Actually, given that we're talking about a Manhattan-based crowd, the cost of admission is remarkably low.

Here is a screen capture from the website of the Harvard Club of New York City:

Go ahead, take a couple of minutes and take a tour of the place so that you can get a sense of the demographic that comprises its membership.  I'll wait.

Now, let's look at how much Mr. Cruz's campaign committee and Leadership PAC has received from Wall Street so far in this campaign cycle:

The securities and investment industry has donated a total of $917,947, the miscellaneous finance industry has donated another $591,584, the commercial banking industry has donated $308,680 and the insurance industry has donated $142,880.  While all of these sectors are not necessarily Wall Street dwellers, they are part of the financial business sector that is closely associated with Manhattan.

Let's look at the biggest contributors to the Super PACs that are backing him:

Let's look at his number two donor, Renaissance Technologies, which has donated a total of $11 million so far in this cycle.  This company, co-chaired by Robert Mercer, is an "investment management firm" (aka hedge fund) founded back 1982 by mathematician James Simons.  It has about $44 billion in assets under management.  Interestingly, Robert Mercer and James Simons both come up in the top ten list of individual contributors to the conservative cause in the 2012 election cycle as shown here:

Here is a listing of Robert Mercer's donations in this cycle:

Here is a more detailed look at Keep the Promise I, the Super PAC backing Ted Cruz:

There's also a Wall Street connection with New Vernon Capital, another asset management firm, JW Childs Associates is a private equity firm that specializes in recapitalizations and leveraged buyouts and PRIMECAP Management Company is an independent investment management company headquartered in California.

So much for Mr. Cruz and his populist views on Wall Street.  I guess one can speak out of both sides of one's mouth when it comes to money and politics.  Surprise, surprise.

Enjoy your evening out at the Harvard Club of New York City.  I'm sure that you'l receive a warm welcome.  Let me know how it went.

 

Comparing the GOP Tax Plans - Who Benefits and Who Loses?

Updated April 2016

A very interesting analysis by Citizens for Tax Justice compares the tax plans for each of the three key remaining GOP presidential candidates Ted Cruz and Donald Trump.  All of these plans will contribute to the federal debt which is already at crippling levels.

Let's open by looking at the most recent Budget and Economic Outlook for the period from 2016 to 2026 from the non-partisan Congressional Budget Office for some background information on the current state of America's fiscal situation.  While the Obama Administration and Congress are congratulating themselves for seeing the size of the deficit decline for the past six years as shown on this graph from FRED:

...the federal fiscal situation is far from healthy with the total federal debt at $19.125 trillion, up by nearly $8.5 trillion since Barack Obama took office.   The CBO's analysis shows that the federal deficit for 2016 will rise to $544 billion, an increase of $105 billion over fiscal 2015.  This means that the deficit for 2016 will be 2.9 percent of GDP.  Why will the deficit grow in 2016?  The CBO analysis states that the increase is largely attributable the legislation that has been enacted since August 2015; this legislation retroactively extends the provisions that reduce corporate and individual income taxes.

Not only is the deficit increasing in fiscal 2016, the CBO analysis shows that the growth in spending will outpace the growth in tax revenues over the next decade.  The budget deficit increases are modest to fiscal 2018 but grow sharply by 2026, rising to $1.4 trillion, which adds up to $9.4 trillion over the decade between 2016 and 2026.  As a percentage of GDP, the federal deficit will rise from 2.9 percent of GDP in 2018 to 4.9 percent in 2026.  This would push the debt held by the public up to 86 percent of GDP from its current level of 76 percent of GDP as shown on this graphic:

Keep in mind that part of the reason that the growth in the federal debt and deficit has been so modest over the past three or four years is the prolonged period of ultra-low interest rates on the outstanding marketable federal debt, a situation that will likely change over the coming decade.  As well, the CBO analysis does not allow for a recession which would reduce federal tax revenues and increase federal spending as Washington would likely be forced into stimulus spending.  Even with those two unusual circumstances not accounted for in their analysis, the CBO calculates that three decades from now, the public debt would reach a whopping 155 percent of GDP if current laws remain in place.

With that data in mind, let's look at CTJ's analysis of the Cruz, Rubio and Trump tax plans.  The analysis assumes that half of the tax changes for each of the presidential candidates would be paid for by cuts in spending and half by an across-the-board income tax increase, similar to what happened after the 1981 Ronald Reagan promised tax cuts became clearly unaffordable.

Here are the highlights of the tax plans:

1.) Ted Cruz:  Mr. Cruz's tax plan would cut taxes by $13.9 trillion over the next ten years by reducing personal income tax and replacing corporate income tax, estate tax and patrol tax with a 16 percent federal value-added tax (VAT).  This plan is set to benefit higher income people (i.e. the one percent) who would see an average tax cut of $435,854 while the bottom 20 percent would see their taxes rise by $3,161 and the middle 20 percent seeing their taxes rise by $1,943.  Essentially, only 20 percent of taxpayers would receive any benefit from the Cruz tax plan.

2.) Donald Trump:  Mr. Trump's tax plan would cut taxes by $12 trillion over the next ten years by reducing marginal tax rates and increasing the standard deduction.  While the Trump tax plan reduces taxes for all income groups, it is skewed to the rich with the top one percent seeing their taxes reduced by an average of $227,225 compared to only $250 for the bottom 20 percent and $2,571 for the middle 20 percent.  Again, when the impact of future spending cuts and tax increases are included in the analysis, only the top 5 percent of taxpayers would see a net benefit.

Keeping in mind that when the impact of the cuts in tax revenue have to be paid for through reductions in spending, the net impact of the tax cuts that I've noted above are significantly reduced.  In the case of the lowest 20 percent, the impact of "plan and pay-fors" reduces the Cruz income reduction from -$3,161 to -$6,234 and the Trump income gain from +$250 to -$2,541.

From the CTJ analysis, we can see that the two front-runners in the GOP race certainly know how to look after their wealthy peers despite their protestations that they are in it for "the little guy".  With the Congressional Budget Office's analysis of the coming decade looking rather dire, it really appears that, as Ronald Reagan found out in 1981, all of these campaign promises of tax cuts have to be paid for by cutting spending on government services, an issue that could prove to be problematic during the upcoming recession (whenever that may be...and it will be).

A Young Ted Cruz and World Domination

Here is a video of a very young Ted Cruz telling us about his goals in life:

I have nothing more to add.

Truthiness in American Political Theatre Part I - Trump, Cruz and Rubio

As most of us are (or should be) aware, politicians are quite capable of spouting "facts" to back their stances on various issues, particularly during campaign season.  A very interesting website, PolitiFact, checks and rates the accuracy of claims made by American politicians.  PolitiFact is operated by the editors and reporters of the Tampa Bay Times, a Florida independent newspaper.  Staff at PolitiFact research statements and claims made by politicians and ranks their accuracy on their "Truth-o Meter" ranking from True to False with the most egregious and erroneous statements receiving their "Pants on Fire" ranking as shown here:

"TRUE – The statement is accurate and there’s nothing significant missing.

MOSTLY TRUE – The statement is accurate but needs clarification or additional information.

HALF TRUE – The statement is partially accurate but leaves out important details or takes things out of context.

MOSTLY FALSE – The statement contains an element of truth but ignores critical facts that would give a different impression.

FALSE – The statement is not accurate.

PANTS ON FIRE – The statement is not accurate and makes a ridiculous claim."

To help them assess the plethora of political statements, they use the following criteria:

"Is the statement rooted in a fact that is verifiable? PolitiFact doesn't check opinions, and recognize that in the world of speechmaking and political rhetoric, there is license for hyperbole.

Is the statement leaving a particular impression that may be misleading?

Is the statement significant? PolitiFact avoids minor "gotchas" on claims that obviously represent a slip of the tongue.

Is the statement likely to be passed on and repeated by others?

           

Would a typical person hear or read the statement and wonder: Is that true?"

For the purposes of this posting, I would like to take a look at the overall ratings for the top three contenders for the 2016 Republican presidential nominee (according to Real Clear Politics), Donald Trump, Ted Cruz and Marco Rubio.

Let's start with Donald Trump:

Here's an example of one of his "Pants on Fire" statements that is gleaned from his first television ad of the 2016 cycle:

That video of people flooding toward a wall that appears at the 21 second mark when the "Stop Illegal Immigration " text appears is not located along the U.S. - Mexican border, rather, it is located in Morocco and shows migrants crossing the border into Melilla, one of two Spanish enclaves on the Moroccan coast, located 5000 miles from the United States as shown here: 

Now, let's look at Ted Cruz's record:

Here's an example of one of his "Pants on Fire" statements on Chuck Hagel's nomination as Secretary of Defense from his op-ed piece on Politico in 2013:

"Hagel’s nomination has been publicly celebrated by the Iranian government — surely an occurrence without precedent for a nominee for secretary of Defense. And Iran’s belief that Hagel will not stand against their acquiring nuclear weapons capacity makes it more likely they will charge ahead, which makes it more likely the United States will be drawn into military combat." (my bold)

Here's what was actually reported by Iran's Fars News Agency:

“We hope that the U.S. officials will favor peace instead of warmongering and recognize the rights of nations instead of interfering in the countries’ internal affairs. If such a trend is adopted (by the American officials), hatred for the U.S. hostile policies will decrease, although, that assessment only can be made in action."

Other experts stated that Iran's response to Hagel's nomination was far from "celebratory".

Lastly, let's look at Marco Rubio's track record:

Here's an example of one of his more interesting "Pants on Fire" statements from his 2013 FoxNews op-ed pieces:

"If you are a small business with about 47, 48 or 49 employees and you want to hire more people, ObamaCare encourages you to hold back on hiring new workers or cut the hours of existing ones so that you don’t reach 50 employees. That is why 75% of small businesses now say they are going to be forced to either fire workers or cut their hours." (my bold)

Marco Rubio sources his 75 percent claim from a survey released by the U.S. Chamber of Commerce in its quarterly Small Business Outlook Study.  The survey polls 1300 small businesses with fewer than 500 employees and with annual revenue of less than $25 million.  The actual results of the study showed that, of all small businesses, only 5 to 9 percent would either cut back hours or replace full-time workers in response to the Obamacare changes.  If you are interested in the details of Mr. Rubio's erroneous assessment of the survey, please click here.

As we can quite clearly see, among the top three GOP presidential candidates, according to PolitiFact, Donald Trump's statements are least likely to be truthful while Marco Rubio's are most likely to be at least half true or better.  In total, Donald Trump's statements are likely to be Mostly False or worse 77 percent of the time, Ted Cruz's statements are likely to be Mostly False or worse 66 percent of the time and Marco Rubio's statements are likely to be Mostly False or worse 41 percent of the time.  On the truth side of the spectrum, Donald Trump's statements are likely to be Mostly True or better only 7 percent of the time, Ted Cruz's statements are likely to be Mostly True or better 22 percent of the time and Marco Rubio's statements are likely to be Mostly True or better 37 percent of the time.      

I think that's enough for this posting.  Unfortunately, in politics, what passes as the "truth" is fluid and public perception, whether misguided or not, often becomes the "truth".  In the next part of this posting, I will take a look at the "truthiness" of the two main Democrat presidential candidates; Hillary Clinton and Bernie Sanders.