POITOU, FRANCE – Senator John McCain spoke for millions yesterday.

“I’m a pretty intelligent guy,” he said, speaking of President Trump’s sudden lurch to the left side of the aisle, “but I don’t understand this.”

On the surface, the political events of this week are baffling. Underneath, they follow an ineluctable logic.

No Legislative Win

This past Wednesday, the administration, like a mischievous boy putting a mouse in the girls’ bathroom, threw the issue of the “Dreamers” – the 800,000 illegal immigrant children granted permission to stay in the country by President Obama – to Congress.

Shrieks could be heard from coast to coast. What was the meaning of this?

What would Congress do about it?

Nobody quite knew. But one thing was certain: It would get in the way of everything on the legislative docket.

This seemed, again on the surface, to be the last thing the Trump Team needed. The White House needs a win.

After more than 200 days in control of the White House and Congress, and nothing to show for it, the administration is starting to look like a loser.

No O’care repeal and replace at home. No end to losing wars overseas. The money still flows, unimpeded, to the zombies and the cronies. The swamp grows.

Behind the Sturm und Drang of hysterical press reports, it is business as usual – which is exactly what was coming all along.

Backstabber in Chief

Key to draining the swamp – the last spade left that fiscal conservatives might use to dig a ditch – was the debt limit.

For 100 years, the “debt ceiling” imposed a requirement on Congress to confront the implications of its own spendthrift ways. The bigger the deficits, the more it needed to raise the debt ceiling.

Not that there was ever any doubt about what Congress would do. It’s raised the ceiling 90 times already. It wasn’t about to stop now.

Still, the requirement forces the politicians to fess up to what they are doing… and sometimes make compromises.

In particular, House conservatives were hoping to use the coming debate to focus attention on what they see as runaway spending, boondoggles, and excess debt.

So you can imagine their disappointment when it came out on Wednesday that the president had stabbed them in the back.

Yes, dear reader, it was appalling. Donald Trump has now gone Full Deep State.

First, he stabbed the “America First” foreign policy crowd in the back. There will be no cutback in the military’s disastrous romp through the Middle East.

He stuck a knife in the backs of those who looked to him to rein in runaway entitlements spending, too. Not a single cent has been cut from Social Security, Medicare, or Medicaid.

And those hoping to get the big banks and Wall Street out of their pockets and off their backs also got shanked. Trump filled his administration with Goldman alums.

Now, the president has pulled out a shiv and gone to work on Speaker Paul Ryan and his remaining conservative supporters.

Deep State in Control

In addition to colluding with liberal Democrats to continue the spending spree with no discussion or amendment, Mr. Trump has made a devil’s deal with the deepest of Deep State Dems on Capitol Hill, Chuck Schumer and Nancy Pelosi, to crash the whole debt ceiling limit.

At nearly $20 trillion, we have plenty of debt already, in our opinion.

Scheduled to rise by about $1 trillion a year over the next 10 years… it’s growing five times faster than the economy that supports it – you’d think that would be enough.

And now the president and his new Democrat allies are planning to take away the last tool budget conservatives have left: their right to approve fed borrowing. Reports The Washington Post:

President Trump and Senate Minority Leader Chuck Schumer have agreed to pursue a deal that would permanently remove the requirement that Congress repeatedly raise the debt ceiling, three people familiar with the decision said.

Trump and Schumer discussed the idea Wednesday during an Oval Office meeting. The two, along with House Minority Leader Nancy Pelosi, agreed to work together over the next several months to try to finalize a plan, which would need to be approved by Congress.

One of the people familiar described it as a “gentlemen’s agreement.”

Frankly, we’re shocked. We didn’t think it was possible to do a “gentleman’s agreement” between Trump, Schumer, and Pelosi.

Where were the gentlemen?

As for “The Donald,” all we can say for sure is that he’s got one helluva collection of knives.

Regards,

Signature

Bill

Market Insight: Bond Investors Stay the Course

BY CHRIS LOWE, EDITOR AT LARGE, Bonner & partners

So far at least, Treasury bond investors are shrugging off concerns over Washington’s growing debt pile.

Today’s chart tracks the yield on the benchmark 10-year Treasury note.

Rising Treasury yields are widely considered a signal that investors are worried about growing deficits, rising inflation… and even the risk of default.

Falling yields signal investors are less concerned about these issues.

As you can see, since President Trump took office in January, the 10-year Treasury yield is down 15%.

– Chris Lowe

Featured Reads

Bitcoin: The New Gold?
Some cryptocurrency traders believe bitcoin could one day replace gold as a safe store of wealth. And with the value of all bitcoins nearing the value of all gold held in ETFs, the idea is starting to gain traction.

The Retail Apocalypse Continues
Brick-and-mortar retailers continue to struggle in the age of e-commerce and Amazon. And these 10 retailers are in the crosshairs of short sellers.

America Is Unprepared for This Cyberwar
Cybercrime is on the rise in the U.S. The financial damage from cybercriminals is expected to triple in the next five years. Bill’s chief technology analyst Jeff Brown gives you an inside look at this new criminal element.

Mailbag

In today’s mailbag, Bill’s recent Diary, “The Absurdity of the ‘Living Wage’,” continues to draw a response.

But what good is a living wage if you can’t get a job? Sounds like they will next decide that we need to guarantee jobs for all, at a living wage, of course. A guaranteed job means that you can’t be fired or laid off, so there would be no need for measures of productivity or performance, or to even show up, for that matter.

Sounds to me like just another version of the Universal Basic Income, but with more government control. We sure better hope that robotic production improves enough to meet the needs of all those masses who will be left with nothing to do that needs doing. A few will actually use this freedom to do amazing things, and others will still be employed (at wages well above the UBI) for those jobs that still need to be done by humans.

But we better hope that someone is developing soma, to keep the masses calm and under control. I doubt that legalized marijuana will be up to the task, all by itself.

– Gordon F.

I believe you have a good case on setting wages. McDonald’s and places like it were entry level jobs for the kids in school, then all of a sudden, they became jobs for a family of 4. Why not just say everyone earns this amount, no matter what type of job you have? A person in Oregon tried that and I believe he lost his business.

– Sharon S.

When contractual agreements are no longer honored, such as employment agreements, trust, an essential component of the free market system, is destroyed. As trust disintegrates, so does the free market. Corruption, coercion and chaos follow.

– Steve C.

Was reading your new wage suggestions. What about the military? Or police? They both put their lives on the line every day and are worth much more than 50k. In fact, I think if the entire pay scale were raised by 25k on the low end and maybe as much as 50k on the high end, it would  stop all this greed by the corporate execs.

There would be a lot more money to go around, and prices wouldn’t have to be as high as they are for the necessary things in life. You are right in so many ways and I would love to see a cap on salaries to bolster the real bread earners.

– Jim L.

I have never thought of myself as a socialist, but Bernie’s championing of worker-owned co-operatives makes sense to me.

Here in Oregon we have a worker-owned grocery chain called Winco that gets all of my business because their prices are not just cheaper than the competition, they are amazingly cheaper. In the hugely successful Mondragon Corporation, the tenth largest business in Spain consisting of over 250 companies, the ratio of pay between the highest-paid manager and lowest-paid worker in each company is determined by vote. It averages 5:1. Worker-owners participate in decision-making bodies.

Professor Richard D. Wolff argues that we have no democracy in the workplace under capitalism. He’s right! I know from personal experience how speaking truth to power can get you fired. The worker-owned co-op is a way to the future that avoids government ownership and puts workers in charge of their own lives.

– Larry K.

Love the article! One suggestion however… given the “perks” of being a government employee, like not being straddled with SSI and instead having medical and retirement plans that will likely survive better than those thrust upon the rest of us, pension plans that are completely out of whack with the private sector jobs, etc.… etc.… I think that $30,000 needs to be “minus benefits”…

– Joseph J.

Thanks for the good laugh. I’d just recommend that we cut government employment salaries in half.

– Bonnie T.

Your Diary was brilliant and I am not sure why people around the world would not accept this. I am sure some will quibble about the little differences, but overall quite good. I will add one category of Public Employee pensioners and set those blood suckers at $30,000.

-James D.

Son of a gun… I had never considered setting wages for the non-working class. Splendid idea. Perhaps those serving in Congress should receive the minimum wage.

– Ted K.

Enjoyed this article immensely. Just wish such common sense could prevail on this and all other such issues. I have always thought that those in Congress who make proposals ought to show that they are willing to put their wallets where their mouths are: by taking a 50% pay cut so that those making just “minimum” wage could get a 25-cent raise. Wonder how that vote would turn out?

– Mike C.

You are spot on with this. It should be read by anyone who has ever uttered the phrase “living wage” or suggested that the minimum wage should be raised. Please submit it as an editorial or op-ed piece to every newspaper that has not yet gone out of business. Maybe the counterfeit news network (CNN) can do a segment on it or have a political talking head panel discuss it.

– Anonymous

I have a recommendation for your “fairer” wages. Politicians should not be paid. It was never designed to be a career. They should each serve 2 years in a “volunteer” capacity. They then could use that experience on a resume. That would truly be “serving.” It would be win-win. Just my 2 cents.

-Gary K.

Well put. If the cost of wages is too high, Mom-and-Pop stores would not hire help but would put in the extra hours themselves. Over the years, countless studies have shown that when the minimum wage is increased, employment falls, especially for those most in need of a job.

-A.C.

I cannot help but notice you left out the greatest and most ignored and forgotten workers of all… The Military.

I can only conclude this was a mistake and was never done intentionally. I have a big huge soft spot for the military since I served 22 years in the Air Force from 1967-1989. Vietnam vet to boot. I was also stationed in Thailand, Germany twice, England twice, and Turkey. I have seen how hard our troops work on a daily basis to keep this world free and the rich richer.

-Robert B.

You’re onto something with your revised salaries, but there may be just a couple of complications.

What about the time, throughput, equality factors? Do prostitutes have to work as many hours as burger flippers? What measure of output do we assign to soldiers, poets, and flimflam artists? Do male and female, old and young workers get the same pay? Just a little more work for you to do on this before sending a proposal to Mr. Trump. Good luck!

-Richard S.