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Donald Trump’s election triumph is among the more astonishing in history.

Yet if he wishes to become the father of a new “America First” majority party, he must make good on his solemn promise:

To end the trade deficits that have bled our country of scores of thousands of factories, and to create millions of manufacturing jobs in the USA.

Fail here, and those slim majorities in Michigan, Pennsylvania and Wisconsin disappear.

The president-elect takes credit for jawboning William Clay Ford to keep his Lincoln plant in Louisville. He is now jawboning Carrier air conditioning to stay in Indiana and not move to Mexico.

Good for him. But these are baby steps toward ending the $800 billion trade deficits in goods America runs annually, or bringing back factories and creating millions of new manufacturing jobs in the USA.

The NAFTA Republicans tell us the plants and jobs are never coming back, that we live in a globalized world, that production will now be done where it can be done cheapest — in Mexico, China, Asia.

Yet, on Nov. 8, Americans rejected this defeatism rooted in the tracts of 19th-century British scribblers and the ideology of 20th-century globalists like Woodrow Wilson and FDR.

America responded to Trump’s call for a new nationalism rooted in the economic principles and patriotism of Hamilton and the men of Mount Rushmore: Washington, Lincoln, Jefferson and Theodore Roosevelt.

The president-elect has declared the TPP dead, and says he and his negotiators will walk away rather than accept another NAFTA.

Again, good, but again, not good enough, not nearly.

The New International Economic Order imposed upon us for decades has to be overthrown.

For the root cause of the trade deficits bleeding us lies in U.S. tax laws and trade policies that punish companies that stay in America and reward companies that move production overseas.

Executives move plants to Mexico, Asia and China for the same reason U.S. industrialists moved plants from the Frost Belt to the Sun Belt. Given the lower wages and lighter regulations, they can produce more cheaply there.

In dealing with advanced economies like Japan, Germany, and the EU, another critical factor is at work against us.

Since the Kennedy Round of trade negotiations, 50 years ago, international trade deals have reduced tariffs to insignificance.

But our trade rivals have replaced the tariffs with value-added taxes on imports from the USA. Even to belong to the EU, a country must have a VAT of at least 15 percent.

As Kevin Kearns of the U.S. Business and Industry Council writes, Europeans have replaced tariffs on U.S. goods with a VAT on U.S. goods, while rebating the VAT on Europe’s exports to us.

Some 160 countries impose VAT taxes. Along with currency manipulation, this is how European and Asian protectionists stick it to the Americans, whose armed forces have defended them for 60 years.

We lose at trade negotiations, even before we sit down at the table, because our adversaries declare their VAT nonnegotiable. And we accept it.

Trump has to persuade Congress to deal him and our trade negotiators our own high cards, without our having to go to the WTO and asking, “Mother, may I?”

ORDER IT NOW

Like this writer, Kearns argues for an 18 percent VAT on all goods and services entering the United States. All tax revenue raised by the VAT — hundreds of billions — should be used to reduce U.S. taxes, beginning by ending the income tax on small business and reducing to the lowest rate in the advanced world the U.S. corporate income tax.

The price of foreign-made goods in U.S. stores would rise, giving a competitive advantage to goods made in America. And with a border VAT of 18 percent, every U.S. corporate executive would have to consider the higher cost of leaving the United States to produce abroad.

Every foreign manufacturer, to maintain free access to the U.S. market of $17 trillion, greatest on earth, would have to consider shifting production — factories, technology, jobs — to the USA.

The incentive to produce abroad would diminish and disappear. The incentive to produce here would grow correspondingly.

Inversions — U.S. companies seeking lower tax rates by moving to places like Ireland — would end. Foreign companies and banks would be clamoring to get into the United States.

With a zero corporate tax, minority businesses would spring up. Existing businesses would have more cash to hire. America would shove China aside as the Enterprise Zone of the world.

Most important, by having Americans buy more from each other, and rely more on each other for the necessities of life, U.S. trade and tax policies would work to create a greater interdependence among us, rather than pull us apart as they do today.

Why not write new tax and trade laws that bring us together, recreating the one nation and people we once were — and can be again?

Patrick J. Buchanan is the author of the new book “The Greatest Comeback: How Richard Nixon Rose From Defeat to Create the New Majority.”

Copyright 2016 Creators.com.

 
• Category: Economics, Ideology • Tags: Donald Trump, Free Trade, Taxes 
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  1. Rehmat says:

    Dear Buchanan, the readers would love to know which US president had ever fulfilled his promises during his election campaign?

    In western democratic system, it’s kosher for the political leaders to lie.

    Look at yourself. You support Donald Trump because you believe in his anti-Muslim, anti-immigration rants. Only White racists and pro-Israel fools believe Trump can do that. Russian analyst believe that Trump will act as Israeli poodle just like Barack Obama or Bill Clinton.

    On Tuesday, Alexander Bratersky in an article at Russia Insider, entitled, Trump’s Jewish Ties May Be Key to Moscow’s Outreach, claims that Putin’s support for Donald Trump is based on common denominator – their Jewish family ties.

    “Jewish Republicans are pinning a lot of hope on Trump. Furthermore, many Middle Eastern commentators expect that Trump intends to ‘Israelize’ US policy in the region,” Bratersky said.

    Mawan Bishra, editor Al-Jazeera English posted at The Jew York Times: “Expect America’s new president to work closely with Egypt’s president, Abdel Fattah el-Sisi, and Israel’s prime minister, Benjamin Netanyahu. Trump has embraced Netanyahu’s positions on Jerusalem as the capital of Israel and on abandoning the two-state solution. Instead of Americanizing the Middle East, Trump seems set on Israelizing” America, stirring fear of Muslims and trying to wall out the other.”

    Bishra is too late to acknowledge that reality. Former Congressman Paul Findley, said that on October 15, 2007: “There is an open secret in Washington. I learned it well during my 22-year tenure as a member of the US House of Representatives. All members swear to serve the interests of the United States, but there is an unwritten and overwhelming exception: The interests of a small foreign country almost always trump US interests. The nation of course is Israel.”

    https://rehmat1.com/2016/11/23/russian-journalist-trump-to-israelize-me-policy/

  2. Rurik says:

    Why not write new tax and trade laws that bring us together, recreating the one nation and people we once were — and can be again?

    because especially since the Clinton regime, we have had a fecal government that is overtly hostile to the (white, [read racist]) middle and working class of this nation.

    Just like with the carbon tax scheme, they’ve been obsessed with ways to disenfranchise middle America in particular, and the back bone of Western civilization/Europe in general.

    Anything that harmed middle America and was perceived to uplift everyone else was considered de-facto policy.

    All Trump has to do is impose some moderate tariffs and stop trying to (overtly and covertly) destroy the American middle class. We are the most productive and resilient and innovative and creative and colossal force the world has ever known, if they’d just get the **** out of our way and let us explode this economy, instead of considering us and our children as all cannon fodder for more wars for Israel.

    The huge existential difference between Trump and the previous administrations is that Trump doesn’t seem to hate our guts, and want us all dead or at least enslaved. That in and of itself is going to play huge on the economy. Believe me.

    • Replies: @jacques sheete
  3. Paddy really needs to end the bullshit that the US occupation of Europe was about defending it.

    • Agree: jacques sheete
  4. Realist says:

    “The NAFTA Republicans tell us the plants and jobs are never coming back, that we live in a globalized world, that production will now be done where it can be done cheapest — in Mexico, China, Asia.”

    This is an example of how damn stupid the elite Republicans are. They want to allow companies to produce product in places where labor is cheap then bring it back to the US and sell it to people working at McDonalds or other part time jobs….this could be a problem….ya think.

  5. Pat’s tax plan is regressive and will hurt the poorest Americans the most. It would “encourage” them to buy more American made goods, which is good but the economy would take a big hit, at least for a while. I’d like to think there exists a more nuanced and better way.

  6. David says:

    I don’t understand what’s unfair about Europe’s VAT’s. If all comparable products, both domestic and foreign, are equally subject to the tax, what’s the problem? If US-produced goods were re-exported from the EU, just like for EU-produced goods being exported, the VAT would be refunded.

    • Replies: @anon
  7. Energy, energy, energy. That’s for starters. Exporting crude, coal, natural gas and then expanding the grid and updating facilities to enable a return to manufacturing is first order of business. It’s all fallen into disrepair. Detroit? How do you start over there? Who is going to move their people to crime capitols? It took decades to build it to begin with, decades to fall apart, the rebuilding cycle will outlast Trump’s Administration, who’s to say it all doesn’t get reversed with the next globalist President?

    But opening up our energy reserves, completing the pipelines to move crude, rebuilding electrical grids where we MIGHT get factories to open has to be done because without those resources, no one can make long-range plans to manufacture no matter how advantageously you set up taxes. Transportation, water, sewers, comm nets, it all has to be put together along with schools, housing, police, fire, it’s just not as simple as declaring we’re open for business. Civilizations have to be rebuilt from scratch as surely as suburbs were built to give business and families a place to run to when the big cities became crime capitols.

    Doable? Sure, but then there are the people. We’re a soft country now, the past three generations don’t know a crescent wrench from a screwdriver. And so, do we have the workforce, the top-level engineers to build robotics, program them and maintain them? Wild card, who knows? We’ve blown too many billions on too many liberal arts degrees, not enough on training engineers, technicians, electricians and building tradespeople. When your skills-trust, your brain trust goes away, you have to rebuild it and that takes generations. We’re going to have to target student loans on skills we need to go forward and not on merely extending adolescence for half the population with no return on investment afterward. Again, generational attitudes and educational changes are going to have to be FORCED. Are we ready for that?

    Love ya, Pat, but the up-front expenses and infrastructure and human resources issues are huge. Not sure it’s doable starting from scratch, over decades, but it’s well-nigh impossible to rebuild the high-crime regions of Detroit, Chicago and the Northeast. Because, what to do with the Blacks? How do you protect people in those regions to rebuild? Since THAT issue can’t even be discussed, those areas can’t even be considered. My 2 cents, but it’s two cents that aren’t considered in the rhetoric of Trump & Company.

  8. attonn says:

    Love Pat, but what he doesn’t understand is that it’s USD’s perpetual overvaluation (due to its reserve status) that prevents America from becoming a net exporter.
    If USA manages to somehow improve its trade balance, then there will be a shortage of dollars overseas, the world trade, most of which is transacted in those dollars will slow down, the price for US currency will spike up, and US exports will deteriorate again.
    And it will go like that ad infinitum, irrespective of tax policy (Greece has VAT, but can’t export because its currency is too strong)
    We need the new world trade currency, otherwise nothing will work.

  9. Xerxes says:

    Hi Pat,

    The state Sales Tax (where there is one) is the same as VAT. Are you suggesting replacing the former with the latter?

  10. VAT is imposed on all commodities: imported and domestically produced (although there are some minor exceptions: domestically produced food, usually). Therefore, VAT is not an equivalent of tariffs. What it does, is suppressing domestic consumption. I suppose suppressing domestic consumption does have a slight indirect effect of suppressing imports and encouraging exports, but surely tariffs is a much more direct and effective mechanism of protectionism…

  11. @Rurik

    … if they’d just get the **** out of our way and let us explode this economy, instead of considering us and our children as all cannon fodder for more wars for Israel.

    Amen.

    The Trumpsters are gonna be as disappointed in the Trump brand of Hope and Change as the Obummers should be and the Hillaristas would have been.

    Trump is no Mother Theresa and I’d like to see some evidence that Trump gives a flip about anyone but Trump.

    • Replies: @Rurik
  12. geokat62 says:

    Why not write new tax and trade laws that bring us together, recreating the one nation and people we once were — and can be again?

    I agree that it is important to recreate the one nation and people America once was, but writing new tax and trade laws won’t do it.

    And that’s because the key motivator for offshoring jobs overseas to China and India is not tax differentials, but substantial wage differentials. These differentials are measured in 100s of percent (i.e. as high as 900%), whereas the tax differential is measured in the 10s of percent.

    IMHO, the way to address this issue is to make the conditions such that multinationals cease to exist. Corporations must become national once again and they must demonstrate which nation they are loyal to by setting up shop there and nowhere else.

    This is how it used to work before the idea of globalism took root. Henry Ford would never have considered moving his car factories to Mexico to increase his personal profits at the expense of his American workers. Henry Ford was imbued with the spirit of American nationalism that made him place the interests of the American worker on the same level as his own personal interests. With the breakdown of the nationalist spirit and the growth of the globalist spirit, however, this sense of patriotism in corporate American CEOs was destroyed. The CEOs of America’s top corporations decided to put their personal interests ahead of the interests of their fellow Americans. Once this pernicious idea took root, it was game over for America’s middle class.

    The only way jobs will come back is if this nationalist spirit in corporate American CEOs is revived. Henry Ford understood what it meant to be an American corporation. He understood that American corporations and American workers played on the same team, they wore the same jerseys and were prepared to compete against all other teams that wore different jerseys.

    For this to work, however, the American consumer has an important role to play. They must put pressure on the CEOs of former American corporations to relocate their factories to the US by buying products made in USA. Once these CEOs realize that the game of globalism is over and that they can no longer place their personal interests above those of their fellow Americans, they will have no choice but to relocate the factories back to America.

    The bottom line: for this to work, the spirit of nationalism must overtake the pernicious spirit of globalism.

    • Replies: @Mao Cheng Ji
  13. @geokat62

    And that’s because the key motivator for offshoring jobs overseas to China and India is not tax differentials, but substantial wage differentials. These differentials are measured in 100s of percent (i.e. as high as 900%), whereas the tax differential is measured in the 10s of percent.

    Agreed, but I don’t think this is a matter of the public and CEOs spirit, as much as government policies. The CEOs only care about the stock price, and the consumers are highly unlikely to boycott cheap imported product.

    It’s the ruling elite. It serves the interests of global capital; banksters, hedge-fund billionaires. The population has no political party acting in its collective interests. The population is split along the identity-politics lines; men-women, black-white-hispanic, pro-anti-abortion, etc. The culture wars, the stuff Mr Buchanan likes. This will need to go away.

    • Replies: @Realist
  14. geokat62 says:

    Agreed, but I don’t think this is a matter of the public and CEOs spirit, as much as government policies.

    Although I’ve thought long and hard about what policies the gov’t might introduce to address this issue without having some well-paid lawyer exploit it by discovering a loophole, I am open to others putting forth workable solutions that can be implemented through gov’t policies. Do you have any?

    • Replies: @Mao Cheng Ji
  15. @geokat62

    It’s not one all-encompassing law, it’s the general mindset, or, like you said, the spirit, only exercised by the government.

    Anecdotally, if you try to register a business in Switzerland, the first thing they will ask you is this: how many Swiss nationals are you planning to employ? That’s the main criterion (as it should be, naturally): whatever it is we do, how is it going to benefit the local community, the canton, and the whole of Switzerland? Not any abstract idea (“trade is good!”, “free market!”, “equality!”); not any particular ideology, but a purely pragmatic cost/benefit analysis with respect to the actual people, the constituency. It’s that simple, I think.

  16. geokat62 says:

    Not any abstract idea (“trade is good!”, “free market!”, “equality!”); not any particular ideology, but a purely pragmatic cost/benefit analysis with respect to the actual people, the constituency. It’s that simple, I think.

    I wish it were that simple. But the crux of the issue is related to the phrase, “the constituency,” as you’ve stated in your comment.

    It’s relatively easy for Switzerland to ask the question: how many Swiss nationals are you planning to employ? Just as it for China and India to do the same. But this doesn’t get at the heart of the offshoring issue: which is like asking the converse question: how many Americans are you planning to unemploy?

    The CEO’s’ cost/benefit analysis doesn’t take into consideration the impact of their decisions on the larger constituency. It only takes into consideration the impact on share price and their bonuses and share options. This is why I think it is difficult to resolve this issue through laws and regulations. Henry Ford did not require laws and regulations to keep him from relocating his auto plants to Mexico, which would have made him an even richer man. He implicitly understood which constituency was involved when he performed his cost/benefit analysis.

    I think that the ideology of liberalism/cultural Marxism has elevated the individual far above the constituency and it will take the revitalization of the ideology of nationalism to put things back to where they belong. Once the cultural underpinnings of society are rehabilited, the proper economic drivers will fall into place.

  17. The CEOs are not supposed to take into consideration the impact on the larger constituency. That’s not their role, it’s not what they do. Their obligation is to generate the highest possible value for the shareholders — within the legal constraints. The role of the government is to provide these constraints…

    • Replies: @geokat62
  18. This is a great VAT primer for the ignorant American.
    Pat, you have access to Trump, suggest that he revive the FDR fireside chats and use this for one of them.

  19. geokat62 says:
    @Mao Cheng Ji

    The role of the government is to provide these constraints…

    Agreed. But I’m still waiting for you to give a hint as to what a workable version of those constraints might look like. You put forward a workable solution and I’ll be supportive of it.

    • Replies: @Mao Cheng Ji
  20. @geokat62

    I suspect it can only be done via mass-participation, a mass-movement pressuring politicians. Usually it’s done by trade unions; unions of the industrial workers. But in the US it’s too late for that. So, I don’t know…

  21. This talk about VAT is silly – yes, US exports to Portugal pays 23% of VAT; but Portuguese products sold in Portugal also pay 23% of VAT – then, there is not any special protection to Portuguese products over US products (both pay the same taxes).

  22. Realist says:
    @Mao Cheng Ji

    “The CEOs only care about the stock price, and the consumers are highly unlikely to boycott cheap imported product.”

    You mean the ‘consumers’ that work at McDonalds and other part time jobs?

  23. anon • Disclaimer says:
    @David

    VAT is ‘unfair’ because it is used to fund government. In the US, government is funded, in part, by corporate taxes. So when we export a product, it includes costs from corporate taxes. But we don’t ‘rebate’ these.

    An obvious issue is health care costs. US manufacturing employers must pay a significant chunk of health costs which have to be recovered in pricing. Europe (mostly) doesn’t load up exports with these costs.

    It’s basically impossible to make the playing field level. But something to tilt it a bit more in our favor sounds reasonable.

    The problem with neo mercantilism is that the ‘victim’ gets to buy stuff cheaper. Or … if/when we ‘fight back’ American consumers will pay more. Just something to think about.

    Finally …. importing cheap labor is much worse than importing cheap goods. For all sorts of reasons.

    In spite of the rhetoric, the US is doing better than almost all developed countries. Europe and the BRICS? Not so much.

    So it won’t take a miracle or a rocket scientist to fix things. Just do better deals.

  24. Anonymous [AKA "John Hildo"] says:
    @Astuteobservor II

    Taking the handle “AstuteObservor” while misspelling observer has to be one of the most ironic things I’ve seen this month. Apparently you ain’t astute enough to have observed the proper spelling, friendo. Also, many of his voters will be pleased; while many others will not be pleased with the result of the judgment.

  25. Anonymous [AKA "Jamez"] says:

    Who cares what the Jesuit knight of Malta, and papal stooge pat Buchanan thinks on any issue? No doubt whatever he says is in the interest of the papacy. I suggest all to google the reason the Knights of Malta ever came into existence, and pats role in the media. He’s been everywhere from Fox News, CNN, and even the Alex jones show. I see I have to wait for “moderation” lol. What’s the chances of this getting posted? Haha!!

    • Replies: @Anon
  26. @Anonymous

    ha, thanks for noticing, as that is one of it’s purposes 🙂 thanks for the heads up, friendo 🙂

    please? please by the fact that they would not get pay for their work? aha.

  27. @Anonymous

    Thanks to the astute Mr Unz, it’s possible to review the previous comments of all commenters. A quick look at ‘s history reveals lots of observations that I tend to agree with. You might not share that view but that’s why we spend time at The Unz Review. Cheers

  28. Rolando says: • Website

    In the United States the manufacturing companies have to pay much higher wages, as well as higher taxes; comply with various environmental regulations, of protection to the worker and also to the consumer, that although in some cases also exist in Mexico, rarely they are applied.
    In Mexico, two thirds of the economically active population earns 3 minimum wages or less, or the equivalent of 300 dollars a month, at the current exchange rate. In the United States, the minimum wage set by the federal government is $ 7.25 per hour, against a daily average in Mexico of $ 1.25 per hour. That is, in the United States the companies have to pay the worker an additional 580% if we only take into account the current federal minimum wages. Obviously in the manufacturing industry higher wages are paid.
    On the other hand, in the United States large corporations are required to pay a corporate tax of 35%, which President-Elect Trump now wants to reduce to only 15%. But the reality is that these corporations actually end up paying about a 20% tax, because of accounting practices, tax loopholes existing in the US Tax Code and the location of the matrices of such corporations in tax havens , in order to pay less taxes to the US Treasury.
    Even so, in the case of Mexico, the situation is much more favorable for large corporations, since the 400 largest corporations (transnational and Mexican ones), which mainly benefit from the North American Free Trade Agreement (NAFTA), only pay 1.7% of the income tax, when they have incomes close to 500 billion dollars per year.
    So for US corporations, being located in Mexico reports a decrease in their tax payments of the order of 1,176%.
    Even some Asian corporations such as the Korean KIA, which also take advantage of NAFTA, reach agreements with the government, such as not paying for 15 years taxes, for the plant it has just built in central Mexico.
    The reality is that NAFTA is used by a handful of large transnational and Mexican companies (17% of the total), which account for 82% of the value of manufacturing exports, while 62% of small and medium-sized enterprises only participate with 9%.
    Hence Trump could demand from the Mexican government the following:
    1. To keep tariffs low or non-existent between Mexico and the United States, Mexico would have to commit itself to raise the minimum wage to at least half of what is paid in the United States; with the goal of increasing it year by year, to match it in about 5 years.
    2. The Mexican government would have to actually apply an income tax of 15% (not 1.7% on average, as it now does) to large corporations; Equal to the corporate tax that will be established in the United States.
    3. There will now be bilateral panels that will thoroughly review all environmental, worker and consumer protection rules in the United States and Mexico, and apply them in reality in both countries, to avoid undue advantages.
    4. Finally, a Binational Anti-Corruption and Anti-Organized Crime Committee should be established to ensure that companies participating in NAFTA do not gain undue advantages from corruption or engage in “money laundering” of organized crime .
    In this way, President Trump would oblige the Mexican government to match the conditions in which trade is carried out between both countries, and with it, indirectly, would benefit the Mexican worker and consumer, since the labor and market conditions would have to be equated with those of the United States, so that Mexico does not take advantage of the miserable wages paid in the country, the non-payment of taxes by large corporations, and the non-application of environmental, worker and consumer protection laws.

  29. Rurik says:
    @jacques sheete

    Trump is no Mother Theresa

    Perhaps Jacques, but then surely we don’t want a Mother Theresa as potus.

    there are times when a president should be ruthless, and cunning, and even deceptive, no?

    and I suspect a healthy ego is a good thing in a president. I want him to chase a legacy. I want him to want to go down in history as a great president. And be remembered thus, and leave that to his children and grandchildren. And why not? He seems not to be beholding to anyone, so I continue to have hope against hope.

    But then my cynicism has been built up over many decades, alas, and I’m not Pollyanna. Especially when I read stuff like this..

    At a conference on U.S.-Arab ties in Washington last month, Petraeus advocated a no-fly zone in Syria and more military support for Syrian groups that are fighting against President Bashar al-Assad as well as those combating Islamic State. He also said that the U.S. should be ready to face down Assad’s Russian backers, while Trump has suggested the U.S. could work more closely with Moscow to fight Islamic State.

    “I think that it is inaccurate to say, as some do, that there is no military solution to this problem,” Petraeus said. “At the very least, I’m not sure that Bashar al-Assad and Vladimir Putin have gotten that memo.”

    http://www.msn.com/en-us/news/politics/trump-to-meet-petraeus-as-state-dept-fight-continues/ar-AAkR4Ej?OCID=ansmsnnews11

    Trump could still be a ruse of the oligarchs, and we might have all been chumped.

    Nevertheless, as long as the media is still soiling their diapers and calling Trump ‘Putin’s stooge’ and acting for all the world like petulant little crybabies, I hold out precious.. ~ however ephemeral and ethereal and evanescent… hope

  30. Floda says:

    As always, a very clear and practical suggestion from the great PB. I’m in OZ and I noted that last month we had more vehicles sold in our country made in THAILAND than in either Nippon or Korea. Like much else the geniuses who rule here have negotiated our manufacturing away under ‘free’ trade agreements.

    After 90 years in Australia FORD have ceased manufacturing here, next year GM will no longer build HOLDEN cars in this country and Toyota also will leave. What is to happen to the hundreds of thousand’s who worked there is not known. One thing clear however, most will never have a steady well paying wage again. Australia has gone way past de-industrializing than has America.

  31. Anon • Disclaimer says:
    @Anonymous

    the reason the Knights of Malta ever came into existence

    You mean, to tend hospitals in Jerusalem?

    If that’s what Pat is trying to do, I second him.

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