Author: Frank V. Vernuccio, Jr.

As part of an extensive package of tax increases, Biden proposes eliminating the Trump Tax cuts.

Contrary to the White House claims, preserving the Trump tax cuts will not starve the federal government’s income.  House Ways and Means Chairman Jason Smith (Missouri)notes that “The truth is, the Trump tax cuts resulted in economic growth that was a full percentage point above CBO’s forecast, and federal revenues far outpaced the agency’s predictions. In fact, under Trump tax policies in 2022, tax revenues reached a record high of nearly $5 trillion, and revenues averaged $205 billion above CBO predictions for the four years following implementation of the law. Beyond what the Trump tax cuts did for economic growth and federal revenues, it provided major benefits to working families. The officially reported poverty level fell to its lowest rate in 50 years and unemployment rates for minorities and those without a college degree hit all-time lows. Real median household income rose by $5,000, and wages went up by nearly 5 percent. Americans earning under $100,000 saw an average tax cut of 16 percent. And while the tax burden on low-income families went down, the top one percent saw their share of federal taxes go up…On the other hand, President Biden’s promise for the expiration of the Trump tax cuts, means a family of four making $75,000 today will owe Uncle Sam an extra $1,500 in taxes. The Child Tax Credit will be slashed in half; small businesses will see their tax rates top 40 percent; and farmers may have to weigh selling the family business to pay a rising death tax. In his budget, President Biden has called for upwards of $7 trillion in new taxes.”

The Tax Foundation estimates that the “…tax changes in the president’s budget would reduce long-run GDP by 2.2 percent, the capital stock by 3.8 percent, wages by 1.6 percent, and employment by about 788,000 full-time equivalent jobs. The budget would decrease American incomes (as measured by gross national product, or GNP) by 1.9 percent in the long run, reflecting offsetting effects of increased taxes and reduced deficits, as debt reduction reduces interest payments to foreign owners of the national debt. Raising the corporate income tax rate to 28 percent is the largest driver of the negative effects, reducing long-run GDP by 0.9 percent, the capital stock by 1.7 percent, wages by 0.8 percent, and full-time equivalent jobs by 192,000.”

A CATO analysis presents a grim description of what the tax hikes would result in. “The Biden tax hikes would primarily fall on capital income, leading to less domestic investment, fewer jobs, and slower economic growth. According to estimates from the Tax Foundation, the budget proposal would reduce long‐​run GDP by 2.2 percent, hurt wages, and eliminate 788,000 jobs. This is likely a significant understatement of the negative economic effects. The analysis notes that the budget’s proposals will make America an international outlier on individual and corporate taxes…The United States currently exceeds the OECD average in all four tax measures. The charts also show that under Biden’s budget proposals, American tax rates move from just above average to an outlier nation, with some of the highest tax rates in the OECD.”

The American Enterprise Institute emphasizes that “Although his proposals would raise significant revenue, they would not significantly affect the federal government’s short-run and long-run debt burden… in the long term, his plan would not raise enough to stabilize debt-toGDP and would lead to a 0.2 percent smaller economy.”

Illustration: Pixabay

President Biden’s tax proposals, including allowing the Trump tax cuts to expire, will have a profound and damaging impact on an economy already reeling from the inflationary effects of both his energy policy and his extraordinary spending. 

The U.S. Treasury summarizes Biden’s proposals:

Raise corporate income tax rate to 28%, Increase the corporate alternate minimum tax to 21%, Increase the excise tax rate on repurchase of corporate stock and close loopholes, Tax corporate distribution as dividends, Limit tax avoidance, Limit losses recognizes in liquidation transactions, Prevent basis shifting by related persons through partnerships, Conform definitions of “control” with corporate affilitiation test, Strengthen limitation on losses for noncorporate taxpayers, Expand limitation on deductibility of employee renumeration in excess of $1 million, Revise the global minimum tax regime, limit inversions, Adopt undertaxed profits rule.

Providing Washington with more revenue will neither balance the budget nor reduce the federal deficit, in the same manner that giving more booze to an alcohol will not end his addiction. Washington has accumulated more income than ever, but continues its deficit spending. The House Ways and Means Committee found that In fiscal year 2022, federal tax revenues reached a record-high of $4.9 trillion. Corporate tax revenues reached a record-high of $425 billion – $128 billion or 43 percent higher than when the Trump tax cuts were passed and $72 billion higher than CBO’s projections for 2022.

Individual tax revenues reached a record-high of $2.6 trillion – over $1 trillion or 66 percent higher than when the Trump tax cuts were passed and $642 billion higher than CBO’s projections for 2022.

On average, revenues increased $205 billion per year over CBO’s projections.

In the first two years after passage of the Trump tax cuts, GDP growth was a full percentage point higher than CBO’s pre-TCJA forecast.

According to the White House Office of Management and Budget, every additional one percent of sustained GDP growth will result in $600 billion in new revenues over 5 years and $2.8 trillion over 10 years.

Following passage of the Trump tax cuts…

Real median household income rose by $5,000 – a bigger increase in just two years than in the prior eight years combined. 

Wages increased 4.9 percent, the fastest two-year growth in real wages in 20 years. 

The poverty rate and unemployment rate reached their lowest levels in 50 years, with all-time lows in unemployment among African American and Hispanic workers, and those without a high-school degree.

The bottom 20 percent of earners saw their federal tax rate fall to its lowest level in 40 years.

Americans earning under $100,000 received an average tax cut of 16 percent.

The share of taxes paid by the top 1 percent of households increased while the tax burden paid by lower income earners decreased.

Allowing the Trump tax cuts to expires will mean higher taxes on working families and businesses, including…

A family of four earning $75,000 will owe an additional $1,500 in taxes.

A family of five with two earners making around $100,000 will owe an additional nearly $7,500 in taxes.

The Child Tax Credit will be slashed in half from $2,000 down to $1,000.

The guaranteed deduction that 90 percent of taxpayers use to simplify their tax filing will be slashed in half.

The 20 percent deduction that helps small businesses compete with larger corporations goes away leaving small businesses facing a 43.4 percent tax rate.

There have been no changes to CBO’s methodology to address other miscalculations…

For fiscal year 2023, CBO under projected the budget deficit by $1 trillion.

The green tax provisions in the Inflation Reduction Act (IRA) were originally estimated to cost $400 billion through FY 2031. This has since been revised up by two-thirds, to about $660 billion through FY 2031 or $790 billion through FY 2033.

The article concludes tomorrow

Illustration: Pixabay

As Americans celebrate the 248th anniversary of the Declaration of Independence, it is startling to realize that progressives, an influential political grouping that dominates the Democratic Party, Hollywood, most of the media, and even education, would have sided more with King George III rather than George Washington.   Their attitude towards the Revolution, its beliefs and even its symbols which brought about the greatest advance in human freedom in history, is disdainful.   They have rejected the concept of individual rights, preferring that edicts from unelected bureaucrats from federal agencies take precedence over most aspects of our daily lives. They believe that expressions of beliefs should be subjected to partisan officials who will determine what is and is not “disinformation,” really just a code word for censorship. They believe that the right of self-defense, so valiantly displayed at the fields at Lexington and Concord where the Revolution began, should be repealed. Today, the battlefields are in stores and streets, where innocent civilians and store owners get in more trouble for defending themselves from robbers and rapists than the criminals perpetuating heinous acts.   They reject the basic attributes of Independence itself. They endorse the concept that international treaties have more weight than the Bill of Rights. The open borders so vehemently commenced by President Biden in violation of existing laws, is really a rejection of American sovereignty itself. Their belief that the U.S. must provide for the world population is really a statement that American citizenship is an illusion. Throughout the nation, the stunning cost of feeding, housing, medicating, and educating illegals have bankrupted cities, sharply diminished services and public safety, and ejected American veterans from homeless shelters, and American children from parks. In a number progressive jurisdictions, moves are being made to grant noncitizens the right to vote, the ultimate rejection of American nationhood.   The heroes of the Revolution are under constant attack.  Just one example: The New York City Council’s statue of Thomas Jefferson was removed, a decision made by the municipality’s Public Design Commission at the urging of progressives.   The symbols of the Revolution are under no less assault. President Obama demanded that the Famous “Don’t Tread on Me” flag, a symbol of defiance by the colonists against foreign domination, be removed from Naval vessels.  In recent days, another Revolutionary war banner, the “Appeal to Heaven” flag, was removed from the San Francisco Civic Center Plaza. According to National Review, the banner dates “back to 1775 [and] was flown on George Washington’s ships during the Revolutionary War. It was formally adopted for the Massachusetts navy’s use a year later. In some American schools, Marxist screeds such as Howard Zin’s text on American History and the “1619 Project” have been placed in curriculum, ignoring or downplaying objective texts on the Revolution. Historian Larry Schweikart argues that many history textbooks now employed by progressive educators distort Revolutionary war history to push a progressive agenda. He argues that as a result, students graduate from high schools with “twisted beliefs” about America’s origin and the foundations of the Republic.  The concept of a nation founded on the principle of individual rights was a startling change in the course of the human story. Monarchs, emperors, dictators, military strongmen and more had been the norm. Only a few times had only a very limited version of individual rights even been tried.  The American Revolution changed that to a stunning degree. As the progressive philosophy of collectivism over personal freedom gains greater influence, the guiding  philosophy of personal rights that the Revolution succeeded in achieving becomes a target.  Once more, the American people have to decide on American Independence.

Biden was asleep at the switch when it came to inflation, notes our first guest, radio personality Lee Habeeb. Maureen Castle Tusty, director of the new movie “She Rises Up” reveals how women across the world are using entrepreneurship to climb out of poverty, far more effectively than any government program. If you missed the program on your local station, watch it here.

Beijing’s influence operations in Hong Kong are a form of psychological warfare that is challenging to oppose. In an analysis of five gray media outlets, Sze-Fung Lee of the Jamestown Foundation found that during the consultation period for Article 23 legislation passed in 2023, the organizations echoed Hong Kong government talking points and coordinated to “produce collaborative content across popular social media channels.” Article 23, a part of the National Security Act, updates or creates new laws in Hong Kong to prohibit treason, sabotage, sedition, the theft of state secrets and espionage, according to a Reuter report. The new provisions redefine “external forces” and outlaw “external interference,” which potentially tightens control over foreign political organizations operating in Hong Kong.

Lee says that “Gray media outlets in Hong Kong now incorporate legal and cognitive warfare tactics to support Beijing’s political agenda” by “targeting Hong Kongers as a part of a broader national security strategy aimed at further cracking down on free expression in the city.” Few studies of Hong Kong’s grey media information ecosystem exist. Fewer still have examined their affiliation with Chinese state entities or the tactics deployed despite the differences from Beijing’s influence operations inside China and abroad. The outlets use both legal and cognitive warfare tactics to reinforce Beijing’s political agenda. As part of the Chinese Communist Party’s (CCP) effort to target Hong Kongers’ ability to freely express their views, the authorities create a façade to suggest that the population supports the legislation. They portray themselves as nonpartisan yet, in pragmatic terms, they employ tactics as featuring a small set of so-called subject matter experts while omitting their affiliations and failing to flag conflicts of interest, according to Lee. 

China achieves amplification of the media posts by disseminating the content in other channels, including via private group chats on other platforms. Viewership and engagement in the authorities’ narratives, according to Lee, is higher than it initially appeared in Western research. China is becoming adept at steering public opinion in Hong Kong and also aggressive in arresting those who violate Article 23 by redeploying the falsified public endorsements to justify and legitimize crackdowns. The five most prominent pro-Beijing media outlets, according to Lee, are Speak Out Hong Kong, Silent Majority, Today Review, GRT Great Bay Area Channel, and Kinliu HK. Support by the pro-nationalistic outlets, he says, hinge on two points: 1) condemning Western interference, and 2) attacks “smearing” the city’s domestic politics.

The grey media may be financed indirectly by companies linked to the mainland or their work is positively acknowledged by Chinese officials, according to a  report in Asia Sentinel. The five media outlets collaborate on videos and posts and are mainly conducted in Cantonese on Facebook and You Tube. These outlets are more popular in the city than WeChat or Weibo. As each of the grey media outlets share each other’s posts, they maximize Beijing’s position on the issues more than the initial following indicates. “First, these posts are widely shared among pro-Beijing and pro-establishment groups in social networks including private group chats—something that the publicly available engagement data does not include,” notes Lee. 

The older generation are generally more supportive of the authorities’ actions and often circulate these pro-government narratives in their own various social media groups. Hong Kongers hearing from their own are more likely to believe the disinformation is credible. “This mode of distribution exacerbates echo chamber and filter bubble effects and fosters cognitive biases that reinforce pre-existing beliefs when encountering people with similar dispositions,” according to a Jamestown Foundation report.

A July 2016 report on disinformation from RAND Corp. suggests that featuring an organization as nonpartisan, when it is not, having it publish op-eds and interviews with “experts,” and then relying on them for quotes, creates the illusion that multiple sources all point to the same conclusion. The sense of familiarity adds to the “illusory truth effect.” Lee says this is especially effective with low-literacy populations who lack critical thinking skills.

Target groups in Hong Kong are increasingly susceptible to Chinese influence operations. As elsewhere in the world, the more a single message is repeated, the more likely an individual is to believe it, especially when it is complicated  information from a source they trust. Past campaigns, when integrated with legal and cognitive warfare tactics, have sown confusion, polarized public opinion, generated mistrust, and magnified divisions within societies. It appears Beijing has been very successful in polarizing the pro-democracy and pro-government camps over the last half dozen years. As Beijing’s tactics continue to evolve, it is likely the state of repression in Hong Kong will continue and the democratic resistance will suffer. Perhaps learning a lesson from Beijing’s actions in Hong Kong can be applied to Taiwan before it, too, experiences a major change in its information environment.

Daria Novak served in the U.S. State Dept.

Photo: Hong Kong (Pixabay)

Admiral John C. Aquilino, U.S. Navy Commander, U.S. Indo-Pacific Command, recently testified to Congress about the threats America faces in the Indo-Pacific region.

He warned that America must “move at the speed and pace required to address the rapidly evolving security environment.” He noted that “The complexity of the threats we face requires the U.S. to mobilize the whole of government and use all elements of national power to “counter revisionist powers and their proxies committed to overturning the rules-based order for the benefit of themselves and at the expense of everyone else. However, we must recognize that the most dangerous national security challenges are evolving faster than our current government processes allow us to address them. “

Admiral Aquilino stressed that Each of our three major state threats in the Indo-Pacific region, including the People’s Republic of China, Russia, and North Korea  “are taking unprecedented actions that challenge international norms and advance authoritarianism. These adversarial regimes are increasingly interconnected, which is evident in Xi and Putin’s declaration of a ‘no limits friendship’ as well as Kim Jong Un’s materiel deliveries to Putin in support of the illegal invasion of Ukraine.”

The Admiral emphasized that China is the only country that has the capability, capacity, and intent to upend the international order. “Even amidst slowing economic growth, China  continues its aggressive military buildup, modernization, and coercive “gray-zone operations.”

According to his analysis, “All indications point to the PLA meeting President Xi Jinping’s directive to be ready to invade Taiwan by 2027. Furthermore, the PLA’s actions indicate their ability to meet Xi’s preferred timeline to unify Taiwan with mainland China by force if directed.”

Recently, Delays in delivering essential weapons system are jeopardizing international security. As the New York Analysis of Policy and Government has frequently noted, the U.S. Navy will be smaller at the end of President Biden current term than it was when he first took the oath of office.

A key example is the vital program to build more Virgina-class submarines, which are two years behind schedule.   Theses vessels may well play the most important role in a dispute with China. According the Government Accountability Office. https://www.gao.gov/products/gao-23-106059  The subs are not the only problem. According to the U.S. Accountability Office, “The Department of Defense (DOD) continues to face challenges quickly developing innovative new weapons. These challenges persist even with recent reforms to its acquisition process intended to help deliver systems to the warfighter in a timelier manner. From DOD’s 2020 submission of reports on their major defense acquisition programs to 2022, the number of these programs declined. However, the portfolio’s total cost increased, and the average planned cycle time to deliver operational capabilities shows new delays. Over half of the 26 major defense acquisition programs GAO assessed that had yet to deliver operational capability reported new delays. Driving factors included supplier disruptions, software development delays, and quality control deficiencies. Additionally, these programs continue to make investment decisions without sufficient knowledge, which can increase the risk of delays. Net costs for the 32 major defense acquisition programs that GAO assessed both this year and last year increased by $37 billion. Rising modernization costs, production inefficiencies, and supply chain challenges drove the majority of costs.”

Aquilino addressed the issue bluntly, stating “…the risk we assume is high and trending in the wrong direction, specifically due to delayed delivery of military construction, advanced capabilities, and resources to persistently project and maintain forces west of the International Date Line. “Without a credible deterrent, China, Russia, and other revisionist powers will be emboldened to take action to counter U.S. interests. “

The recently passed budget, signed by the president in March, essentially cuts Defense appropriations when inflation is taken into account.

The irony is that as China gets stronger, Russia gets more aggressive, North Korea becomes a formidable nuclear power, and Iran is about to enter the atomic club, the U.S. is cutting back and dealing with a smaller and increasingly obsolescent force.

Photo: CNS Nanchang, A Chinese Type 055 guided-missile destroyer. (China Defence Ministry)

Clearly, the heightened presence of enemy forces throughout Latin America has the Pentagon worried.

In February, Daniel Erikson, the Deputy Assistant Secretary of Defense for the Western Hemisphere noted that “China and Russia each pose different challenges for Latin America and the Caribbean, so there needs to be adjustments to the Defense Department’s strategies as well.

“The Department of Defense clearly plays a very important role in terms of working with partner militaries in the region and enhancing defense cooperation and our ability to work together more seamlessly across multiple domains, including air, land, sea, space, and cyberspace,” Erikson emphasized at an Atlantic Council event dedicated to  Countering China and Russia in Latin America and the Caribbean.

The Deputy Secretary noted that there are some very important elements to the challenges posed by both China and Russia that require a whole-of-government response because they are pursuing economic, political and diplomatic interests. “With so many challenges, the department has had to prioritize and deal with core risks or threats to U.S. and allies’ interests. The importance of democracy and democratic governance in this region is one of the United States’s core ideals…We at DOD take very seriously the need for civilian control of the military, respect for human rights, and ensuring that militaries are abiding by the constitutional norms put forth by their democratic governments…”

Erickson added that “Besides military partnerships, it’s critical that the U.S. private sector, U.S. industry and relevant U.S. agencies are engaging with this region “to ensure that we can make available offerings — whether it’s in defense, cyber, or in other areas — to meet the core national security needs of the countries there, Erikson said. 

For example, it’s important for nations to protect their critical, national-security infrastructure and ensure that they are only using trusted vendors for such items as telecommunications equipment, which could have military benefits to China…I also think that across U.S. industry, there really needs to be a deeper dive into what we can do to provide Latin American and Caribbean countries with the capabilities that they require at a price that they can afford…”

Latin American governments are fiscally constrained and, in many cases, have underinvested in critical infrastructure for many years, he added. 

Countries in the region are facing transnational criminal organizations, climate threats, and border disputes. “So,” the Deputy Secretary noted,  “…they look at the risk posed by [China] as something that is going to come, perhaps, in the future — but not today. And so, really, educating our partners and making sure they’re aware of how some of the decisions that they make today could create long-term risk for them is really critical.”

South American nations have been using their military equipment for years, which limits interoperability with the U.S. and allies, he stated. “At the end of the day, the way that the United States can meet the challenge that’s posed by great power competition in Latin America and the Caribbean is, really, by having a very proactive, affirmative and engaged U.S. agenda with the region and not just telling other countries what they shouldn’t be doing with other partners, but what they can do with the United States…”

Discussions about equipment, alliances and the like are important. However, without the resolute will to counter enemy forces on America’s own doorstep, it will be irrelevant. According to some reports, President Biden considered suspending a U.S. submarine visit to Guantanamo Bay while the Russian naval flotilla. More rational individuals at the Pentagon stressed that this would send a terrible message of weakness, not just to the Russians and Chinese but to our allies worldwide.

Photo: Colombian Aerospace Force HH-60 Black Hawk helicopter prepares to take off during combined Exercises Angel de los Andes and Relampago VIII in Palanquero, Colombia, Aug. 22, 2023. U.S. Southern Command and 12th Air Force (Air Forces Southern) are committed to strengthening partnerships in Latin America and the Caribbean to improve collective ability to meet complex global challenges (DoD photo)

In 1962 the Soviet Union began installing missiles in Cuba that could launch attacks on U.S. cities. In response, John F. Kennedy blockaded the island nation to prevent Nikita Khruschev’s plan from going forward. Despite the dramatic risk that brought the world to the edge of a nuclear confrontation, the nation rallied around the young President. It was a strategic and moral victory for America and the West.

Sixty- two years later, the Russian navy has deployed a nuclear submarine and support vessels to the same general area. Along with China and Iran, Moscow’s military has been making significant inroads throughout the western hemisphere.  The response by the media has been a collective yawn. Robert K. Kennedy Jr.,  nephew of the late JFK, in a truly incredible example of bad timing, has called for cutting the defense budget in half.

The new Russian naval presence has teeth. According to a report by Zona Militar . The information released by the Cuban government reveals that “…the flotilla is led by the nuclear-powered attack submarine Kazan (K-561), accompanied by the missile frigate Admiral Gorshkov and support vessels. the Yasen-M class [is] one of the most modern in service with the Russian Navy. Conceived as part of the Russian Armed Forces’ strategic renewal projects, their design was based on experiences gained with ships from the Soviet era, such as the Akula and Alfa classes. With a displacement of 8,600 tons, these submarines are equipped with vertical launchers compatible with the Kalibr and Oniks anti-surface missiles. They also have 10 533mm torpedo tubes. In addition to the Kazan, the flotilla consists of the Admiral Gorshkov missile frigate, the lead ship of its namesake class, and one of the most advanced surface vessels in the Russian Navy …One of their main capabilities is the ability to conduct anti-surface attacks using the hypersonic 3M22 Zircon missiles.”

The Kremlin flotilla is not an isolated instance in the western hemisphere. Russian inroads into Latin America have increased significantly in recent years, according to the  Army University Press.  Russian inroads into Latin America have increased significantly in recent years. The National Defense University Press Russia’s growing strategic presence in the U.S. near abroad empowers anti-U.S. populist authoritarian regimes while gaining potentially important access points for Russia in the Western Hemisphere. Understanding and developing a comprehensive response to this asymmetric threat should be a hemispheric priority as the United States faces numerous strategic challenges with waning influence in the region. 

In one way the latest Caribbean challenge is more severe than the 1962 Cuban Missile Crisis. Instead of just one adversary, The U.S. Naval Institute notes that China has a worrisome presence in the region. In testimony before the House Armed Services Committee, Army Gen. Laura Richardson, the  U.S. Southern Command’s commander, reports that China has the ability to flip its big money investments in the Caribbean and South American – ports, 5G telecommunications networks, space infrastructure and clean energy – from civilian to military use. Maj Gen Evan L. Pettus, USAF,  Commander of 12th Air Force (Air Forces Southern) outlined his concern last year: “I underestimated the extent of the influence operations conducted by the Chinese Communist Party–led government of the People’s Republic of China (PRC) in the region. As I approach the one-year mark in my command, I am increasingly concerned about the strategic risks the PRC’s actions pose to the national security interests of the United States and the sovereignty of our partner nations in Latin America. The PRC adopts various methods to enhance its access and influence in the Western Hemisphere, employing both subtle and overt approaches. The PRC establishes aggressive and coercive economic ties with nations in the region and uses those ties to exert deep influence over local and national governments. Levers of power include building and operating critical infrastructure, controlling information technology networks, and monopolizing access to vital supply chains. Additionally, the PRC strategically constructs ports near crucial maritime chokepoints that could potentially facilitate future military activities. Their investment in critical infrastructure extends to ostensibly civilian space facilities, which thinly veil their military connections and potential military applications.”

The article concludes tomorrow

Photo: The dry cargo/ammunition ship USNS William McLean refuels the hospital ship USNS Comfort off the coast of Panama (US DOD photo, 2018)