(What’s Left of) Our Economy: Trump’s NAFTA Rewrite Blueprint is an Encouraging Start

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The Trump administration is out with its detailed statement of renegotiation objectives for the North American Free Trade Agreement (NAFTA), and if you’ve favored turning U.S. trade policy from an engine of debt-creation and offshoring into one of production-fueled growth and domestic job creation, you should be pretty pleased.

As critics have noted, yesterday’s statement does lack numerous important details about how the administration intends to achieve its goals, and some of these omissions (as will be explained) raise legitimate questions about the depth of the president’s commitment to these changes. But the statute requiring the release of such statements doesn’t mandate disclosure of every – or any – specific strategy for reaching these goals. Moreover, the talks haven’t even started, and these tactics naturally tend to change with circumstances. So those accusing the administration of excessive vagueness should start holding their fire.

As indicated in yesterday’s post, the most important change needed in NAFTA is the addition of teeth to the agreement’s existing rules of origin – the requirements that goods sold within the NAFTA free trade zone comprised of the United States, Mexico, and Canada be made overwhelmingly of parts, components, and materials made inside the zone.

After all, manufacturing dominates trade not only inside NAFTA, but between the NAFTA countries and the rest of the world. Without imposing teeth, non-NAFTA countries will have no meaningful incentive to invest in new NAFTA-area facilities to produce the intermediate goods that comprise the content of final products, like automobiles. And the economies, businesses, and workers in the three countries will be denied immense opportunities to boost production and employment. Indeed, this is precisely this opportunity that’s been missed under the current NAFTA.

It’s difficult to imagine these teeth taking a form other than steep tariffs on goods imports from outside NAFTA, and the Trump blueprint never mentions that “t” word. But it does contain a call to “Update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.” And it specifies that these improved origin rules must “incentivize the sourcing of goods and materials from the United States and North America.” How could anyone supporting more U.S. manufacturing production and employment not be heartened?

Also impressive – as widely reported, the administration has prioritized preserving America’s ability to “enforce rigorously its trade laws, including the antidumping, countervailing duty, and safeguard laws” chiefly by eliminating the NAFTA provisions that established international tribunals as the last word in resolving trade complaints among the signatories, rather than the U.S. trade law system. The Trump administration is also seeking to reestablish America’s unfettered authority to impose “safeguard” tariffs on imports from Mexico and Canada when they begin to surge into the United States. So if you’re worried that NAFTA and other recent U.S. trade agreements have needlessly undermined American sovereignty, this blueprint is for you.

Similarly, critics have long complained about NAFTA’s overriding of the Buy America provisions of U.S. public procurement regulations aimed at maximizing the American taxpayer dollars used to purchase goods and services for government agencies. The Trump strategy laid out in the blueprint seeks to preserve these and other key domestic preference programs.

It’s true, as is being contended, that in areas ranging from promoting high labor rights and environmental standards, to dealing more effectively with the trade distortions created by state-owned enterprises (SOEs), the Trump NAFTA blueprint looks a lot like the Trans-Pacific Partnership (TPP) trade deal that the president condemned as a candidate and withdrew from on his first day in office.

It’s just as true, however, that formidable obstacles were bound to prevent effective enforcement of those proposed TPP rules. These loom as large as ever – notably, the huge numbers of U.S. government officials that would be needed to monitor the even huge-er Mexican manufacturing sector on anything close to an ongoing basis. But the final TPP text demonstrated beyond reasonable doubt that the Obama administration failed to address these concerns adequately. Maybe the Trump administration will come up with viable answers.

Finally, the Trump NAFTA blueprint contains two conceptual objectives that have never been prioritized since the current world trading system was created shortly after World War II, and that trade policy critics should be applauding vigorously. The first is the endorsement of reciprocity as a lodestar of American trade strategy. The second is an emphasis on reducing America’s mammoth trade deficits.

Although reciprocity (i.e., America opens its markets to certain trade partners only to the extent that their markets are open to U.S.-origin goods and services) seems like an uncontroversial trade goal for Washington to seek, and is often presumed to be the goal, nothing until now could be further from the truth. In particular, the foundational principles of the world trade system under the General Agreement on Tariffs and Trade (GATT), and the World Trade Organization (WTO) are national treatment and non-discrimination.

National treatment simply insists that countries deal with foreign enterprises the same way they deal with their own domestic enterprises. Non-discrimination simply mandates that countries treat imports from all trade partners’ identically. The big problems? They enable closed economies to maintain way too many trade barriers. For instance, countries that favor certain companies over others for either political reasons (as with China’s state-owned sector) or reasons of national economic strategy (as with Japan’s efforts to limit entrants into certain industries to prevent excessive domestic competition) can continue discriminating in similar ways against foreign competitors. And countries can maintain high trade barriers as long as they apply equally to all imports.

As for trade deficit reduction, it’s a great way to promote healthy, production-led American growth, rather than the kind of debt-led, bubble-ized growth that’s been engineered arguably going back to the 1990s. But here’s where the Trump blueprint can be faulted. Especially if the new NAFTA contains better rules of origin, it’s likeliest to reduce the U.S. trade deficit with non-NAFTA countries, not with the treaty signatories that the blueprint targets. And nothing would be wrong with that result at all.

Two other aspects of the NAFTA objectives deserve comment – and merit genuine concern. First, although it’s good that the administration has included on the list currency manipulation, critics are right to note that specifics are urgently needed. Their development, moreover, is important not mainly because Canada and Mexico have been important culprits (they haven’t been) but because this is a challenge that President Trump needs to meet in connection with countries that clearly have manipulated in the past and could well do so again.

Second, the Trump blueprint makes no mention of value-added taxes (VATS). Mexico’s is 16 percent, Canada’s is five percent at the federal level and eight percent at the provincial level. As with all other VATs, these levies act as barriers to imports and subsidies for exports. Candidate Trump rightly called for American countermeasures in order to level the trade playing field inside NAFTA. President Trump should take heed.   

Making News: Radio Interview This AM = & More!

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I’m pleased to announce that I’m scheduled to appear this morning at 9:35 on WAKR-AM’s(Akron, Ohio) Ray Horner Morning Show to talk about the major decisions on trade policy that have started to come from the Trump administration this week.  Click here to listen live.  WAKR doesn’t post many podcasts, but if it does in this case, I’ll put up the link as soon as it’s available.

In addition, I was quoted yesterday in Lifezette.com‘s analysis of the president’s new blueprint for renegotiating the North American Free Trade Agreement (NAFTA).  Here’s the link.

On Sunday, China specialist and John Batchelor Show co-host Gordon Chang featured my views on the final results of President Trump’s 100-day plan to reduce the U.S. trade deficit with China.  The announcement could come any day this week, so click here to read his new Forbes.com post on the issue.

Finally, last Friday, Plastics News spotlighted my analyses of the latest U.S. manufacturing jobs and real wages figures – which didn’t exactly knock it out of the park. Here’s the link.

And keep checking in with RealityChek for news of upcoming media appearances and other events.

(What’s Left of) Our Economy: It’s “Big Week” on Trade

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During World War II, the United States and the United Kingdom launched a massive multi-day strategic bombing campaign against Nazi Germany called “Big Week.” The stakes are considerably less apocalyptic, but yesterday began a period for U.S. trade policy that qualifies as a big week, too. Here’s why, and what to look for.

First, yesterday marked the deadline for the 100-day plan announced at the summit between President Trump and his Chinese counterpart Xi Jinping to start bringing down America’s immense trade deficit with the People’s Republic. Some near-term deals were announced in May, and the Chinese seem to be playing along, to at least some extent. But even the American offshoring lobby, which has greatly soured on China since its full-court-press lobbying campaign convinced Washington to expand U.S.-China trade exponentially, has been complaining that agreements of this scope are way too small to solve their own problems with Beijing in the Chinese market. These deals have even less potential to stop most of the damage still being inflicted on the American domestic economy from wide-ranging predatory Chinese economic practices.

The results are due to be announced this week – and may be delayed to take into account whatever can be accomplished by a new high-level economics dialogue that will hold its first session in Washington this week. Will they produce some big wins for the administration and the domestic economy? As I see it, reasons for pessimism outweigh reasons for optimism.

The former include the president’s continuing statements about the threat posed by China’s imports (in this case, of steel), and the awareness demonstrated by his campaign of how varied and unconventional (meaning they went far beyond tariffs and quotas) China’s trade and trade-related transgressions have been. Among the reasons for pessimism, though, are intra-administration divisions that entail both economic issues (with the administration’s economic populists arrayed against what’s been called the pro-free trade “Goldman Sachs” gang comprised of top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin) and security issues (pitting the populists against traditional foreign policy thinkers like national security adviser H.R. McMaster and Defense Secretary James Mattis, who would sympathize with notions like the claim that China should be courted to enlist its help in sitting on North Korea). In addition, the kinds of staffing woes still dogging the administration typically make sharp departures from a policy status quo difficult to engineer.

In fairness, Commerce Secretary Wilbur Ross, who has forthrightly described the China economic challenge, acknowledged when announcing the 100-day trade plan’s first results that three months worth of talks couldn’t possibly be a game-changer precisely because China’s mercantilism was so pervasive. But in so doing, he unintentionally made the argument – which I support for U.S. trade policy generally – for dispensing with talks altogether and capitalizing on China’s urgent need to export to the United States by addressing this issue unilaterally.

Certainly, this kind of course change would be much more consistent with the president’s numerous campaign statements emphasizing the destructive effect of Chinese predation on America’s economy and working class. It’s also the kind of strategy you’d expect from a chief executive whose non-trade agenda is almost completely stalled in Congress, who’s under intense political pressure, and who could badly use a big economic win in order to prevent major Congressional losses in the next off-year elections – whose campaign cycle will be here before he knows it.

Another big (self-imposed) administration deadline falls today. It marks the date by which the White House said it would submit its detailed plan to renegotiate NAFTA – the North American Free Trade Agreement. In May, U.S. Trade Representative Robert Lighthizer sent Congressional leaders a brief letter alluding generally to some objectives, but by tomorrow he needs to fill in critical details. Many might have been contained in a draft letter released March 30, and that plan looked pretty impressive. The big question of course is which ones will wind up surviving – and whether the administration is open to other ideas.

As I’ve written, the most important issue concerns the treatment of “rules of origin” – the provisions of NAFTA aimed at ensuring that any goods sold in the three signatory countries (the United States, Canada, and Mexico) are overwhelmingly made in some combination of those countries. The deal that’s currently in place specifies North American content levels that need to be met to qualify for duty-free treatment inside the free trade zone. But the tariff penalties for goods not meeting these standards aren’t nearly high enough to achieve the goal of increasing the entire region’s competitiveness.

The March 30 letter suggested that the administration would seek origin rules that promote U.S. production and jobs more effectively, but it didn’t say how. If much higher external tariffs aren’t proposed in the plan due today, it’s doubtful that any reforms will result in non-NAFTA countries to make more of their products in any of the countries inside the NAFTA zone. Moreover, it’s of course going to be easier for Washington to persuade Canada and Mexico to go along if it re-emphasizes what President Trump has been saying since his meeting last summer, before the election, with his Mexican counterpart: NAFTA should aim to boost the competitiveness of all three countries.

The brief May 18 Lighthizer letter also suggested obliquely the need to change NAFTA’s dispute-resolution procedures, and the March 30 draft discussed the issue at greater length. But even its recommendations to strengthen America’s authority both to respond to import surges from its NAFTA partners (called “safeguards”) and to apply its own Buy American government procurement rules to intra-NAFTA trade may not go far enough.

As I’ve explained, the fundamental problem is that the current dispute-resolution process treats the three NAFTA countries as legal equals, even though the U.S. market is nearly 90 percent of the total NAFTA market, and clearly remains the most valuable prize for all three signatories. Without closing or somehow changing acceptably, the yawning gap between the NAFTA legal regime and the economic facts on the ground, it’s hard to imagine the system serving U.S. interest on net.

At this point, you might be wondering why I haven’t mentioned NAFTA’s labor and environmental provisions. The reason? Although they’ve been major objectives of Democratic party and other left-of-center NAFTA and broader trade policy critics, as with their counterparts in the Trans-Pacific Partnership (TPP) deal, they’re largely unenforceable. As I’ve asked before, how many American bureaucrats will be needed to run around how many factories in a signatory country (in this case, Mexico) to ensure that companies aren’t abusing workers or dumping sewage into nearby streams? With more effective rules of origin, however, producers in Mexico will feel less pressure to remain competitive versus rivals in China and elsewhere in Asia by offering the worst possible working conditions and ignoring environmental considerations completely.

Finally, there’s the steel tariff issue. The administration has delayed announcing its decision to impose national security-related tariffs on U.S. steel imports, but is expected to reveal its intentions this week. For what it’s worth, the president sounds determined to approve some levies on some countries’ steel. The main question is who the main targets will be. It will also be crucial to see whether and how prominently the announcement emphasizes the need to deal decisively with the underlying problem – the ocean of subsidized steel from China that has flooded and distorted world markets in recent years.

At the same time, there’s a reason for Mr. Trump to punt – or to punt for the most part: At their summit earlier this month in Hamburg, Germany, the leaders of the world’s twenty largest economies (the “G20”) agreed to require an international commission on the subject to deliver a report by November containing “concrete policy solutions that reduce excess steel capacity.” Postponing unilateral action until this mandate is fulfilled could prove a tempting option for a president who doesn’t exactly need to come under fire from new fronts.

Moreover, if the commission’s ideas don’t pass U.S. muster, Mr. Trump would be in a much stronger position to slap the tariffs on everyone, and vow to maintain or even increase them until meaningful, concrete agreements are reached.

President Trump has been sending surprisingly (at least to me) mixed signals on trade since his Inauguration Day two-step – killing the TPP but refraining from labeling China a currency manipulator. Big Week in trade isn’t likely to clarify the picture fully, but we’re bound to know more at its end than we do here at the beginning.

(What’s Left of) Our Economy: Real Wage Growth Keeps Disappointing

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The economics world is becoming ever more puzzled by the sluggishness with which American wages have been rising during the current economic recovery despite very low rates of official unemployment. Judging by the new June inflation-adjusted wage figures released today by the Labor Department, all the usual suspects are going to be wondering about wages lag for some time to come.

The new data left unrevised both the finalized (for now), April figures, and the still preliminary May results.

For the former, constant dollar wages were flat month-to-month and up 0.28 percent year-on-year, and for the latter, they increased by 0.28 percent on month and 0.56 percent on year.

The June numbers? In the same neighborhood, with a monthly advance of 0.19 percent and a yearly improvement of 0.84 percent. For some context, real private sector wages increased nearly twice as fast between the previous Junes – by 1.62 percent.

Manufacturing, once the economy’s wages leader, kept its recent laggard status. Its (now final) April and (still preliminary) May results were unrevised, too – which in this case contained some good news. The former monthly increase of 0.55 percent, the best since August, 2015’s 0.66 percent, stayed intact. So did the annual increase – which was identical. At the same time, May’s 0.28 percent monthly decline is still on the books, too, as was the year-on-year change – which was zero.

As with after-inflation wages in the private sector overall, after-inflation manufacturing wages performed slightly better in June. They inched up by 0.09 percent on month and rose 0.37 percent on year. But the latest annual increase was much slower than that between June, 2015 and June, 2016 – 1.32 percent.

And nothing makes clearer the long-time stagnation of overall private sector and manufacturing wages than seeing their inflation-adjusted change during the economic recovery – which marked its eighth birthday last month. For the private sector, they’re up a total of 4.46 percent. For the manufacturing sector, the rate has been less than a third as fast – 1.32 percent. Which raises the question, “What comes first: the end of the recovery or the end of wage stagnation?

(What’s Left of) Our Economy: New Fed Figures Support Case for U.S. Steel and Aluminum Tariffs

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Today’s Federal Reserve industrial production figures contain data supporting claims that the American domestic steel and aluminum industries face heavy global competitive pressures rooted in predatory trade practices that require vigorous responses.

According to the new data, which update the U.S. manufacturing picture through June on a preliminary basis, inflation-adjusted output for all American factories rose by 0.19 percent month-to-month, and by 1.36 percent year-on-year.

Real production of iron and steel products fell by 0.51 percent sequentially in June, and are up by just 0.47 percent on year. For primary aluminum products, the figures are better: monthly after-inflation output improved by 0.26 percent, and it advanced by 1.79 percent over the June, 2016 levels.

Longer term, though, the trends in these two sectors, and in U.S. domestic industry as a whole, have diverged sharply. Since the Great Recession officially broke out, the Federal Reserve data show that American manufacturing’s constant dollar output still hasn’t fully recovered. Indeed, it’s still down by 4.03 percent.

But real iron and steel products production is still 18.55 percent lower than at the recession’s onset – more than nine years ago. Inflation-adjusted primary aluminum production stands at less than half its December, 2007 levels, having plummeted by 53.01 percent.

The plight of steel and aluminum is also apparent from the capacity utilization figures. For all of domestic American manufacturing, utilization rates were 75.88 percent. That’s 3.72 percent below the last pre-recession level of 78.81 percent.

For iron and steel products, the drop has been much steeper – capacity utilization is down 21.47 percent from its December, 2007 level of 92.11 percent. And although the latter level looks unusually high, it had been achieved regularly by these producers during previous decades.

The Fed doesn’t keep capacity utilization figures for aluminum. But statistics for the broader primary metals sector indicate that its fate has been nearly as bad. Capacity utilization since the end of 2007 has sunk from 83.52 percent to 68.24 percent – an 18.30 percent plunge.

As widely reported, this deterioration has coincided – at the very least – with an explosion in the production and export of subsidized steel and aluminum from China. As has been much less widely reported, U.S.-based producers have borne the brunt of the costs. Although comparable numbers are not available for aluminum, the American share of the global steel market has fallen by considerably more during the current economic recovery than the shares of other steel-production countries and regions. In addition, the United State runs by far the world’s biggest steel trade deficit.

It’s still unclear whether or not President Trump will decide to impose any national security-related tariffs on steel imports, which countries’ shipments will or won’t be hit, or what other measures he might approve if the tariff route is rejected. But it’s all too clear that without significant action from Washington, two more important American manufacturing sectors could needlessly fall victim to foreign trade and broader economic policies having nothing to do with either free trade or free markets.

Making News: John Batchelor Podcast On-Line – & More!

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I’m pleased to announce that the podcast is now on-line of my appearance last night on John Batchelor’s nationally syndicated radio show.  Click here for a great discussion among John, co-host Gordon Chang, and me, of President Trump’s upcoming decision on curbing U.S. imports of steel, and how it may affect the entire global economy – including (what’s left of) America’s.

Moreover, I just finished recording an interview on similar subjects with Larry Rifkin at Americatrendspodcast.com.  Like John and Gordon, Larry is a terrific broadcast journalist and I hope his new venture wins a wide audience.  I’ll keep you posted regarding plans to post our wide-ranging conversation.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

(What’s Left of) Our Economy: Former White House Economists Serve Up Steel Trade Fakeonomics

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Just because none of the signers displayed the slightest ability to foresee the approach of an horrific national and global economic crisis is no reason to laugh off the letter released by former White House economists warning President Trump not to impose national security-related tariffs on steel imports. Instead, the letter should be laughed off because none of the signers appears to know anything about manufacturing competitiveness.

According to the letter, endorsed by fifteen former Chairs of the White House Council of Economic Advisers, steel tariffs of any kind “actually damage the U.S. economy” partly because they “would raise costs for manufacturers, reduce employment in manufacturing….”

If you think about it for just a minute, what these economists are really arguing is that American steel-using industries can’t possibly achieve reasonable levels of competitiveness without continuing supplies of a key input that are kept artificially cheap by massive subsidies from governments in China and elsewhere. That’s some recipe for preserving and extending free market and free trade practices around the world.

Even worse, however, is that even this dubious claim is directly contradicted by the best data available – including the newest multi-factor productivity statistics released by the Labor Department yesterday.

These data in particular strongly reinforce worries not only that American manufacturing is suffering major productivity problems, but that these problems have been worsening for many years. And just as important, they show that the steel users in particular have suffered from absolutely no shortage of artificially cheap steel.

For example, from 2009 (when the current economic recovery began) through 2015 (the latest data, multi-factor productivity in these industries (which measures the output resulting from a wide range of inputs, including materials like steel) has fallen by 2.17 percent. In durable goods industries as a whole (a super-sector that uses a lot of steel), it rose by 3.92 percent, which sounds OK. But it’s much weaker multi-factor productivity growth than these sectors achieved during the last recovery (which was considerably shorter): 22.27 percent.

What happened to steel imports from 2009 through 2015, measured by value? They surged by 71.87 percent. And these purchases were kept at that level mainly because during the last year of that stretch, steel imports sank by 20.91 percent. In other words, between 2009 and 2014, steel imports jumped by 117 percent – and presumably left over lots of steel for use by durable goods manufacturers the following year.

Steel imports soared during the previous, 2001-2007 recovery as well (by 156 percent). But whereas they increased at roughly double the rate during the first six years of the current recovery, steel users recorded multi-factor productivity gains that were 5.7 times greater.

During the long 1990s expansion (which technically lasted from 1991 to 2001), steel imports increased by only 28.67 percent. And even so, durable goods manufacturers managed a total productivity gain of 22.72 percent – just about the same improvement as during the import-happy early 2000s, even though import growth was only a seventh as great. And this productivity advance was orders of magnitude better than that of the current recovery, even though import growth has been less than a third as strong.

Now it’s true that durable goods productivity numbers have been boosted significantly by the spectacular performance of the information technology hardware sector (whose use of steel is relatively modest). But examining multi-factor productivity trends for much bigger steel users also yields head-scratching results if you take the former White House economists as gospel.

For example, during the first six years of the current recovery, when steel imports rose by nearly 72 percent, multi-factor productivity for fabricated metal makers actually sank by 4.02 percent. In machinery, it was down 0.93 percent. In electrical equipment, appliances, and components, multi-factor productivity dipped fractionally.

Transportation equipment is the only big steel-using sector where multi-factor productivity grew impressively during this period – by a total of 11.09 percent. But during the final year – 2014-15 – it dropped by 4.39 percent. And again, these companies were benefiting from plenty of artificially cheap steel.

So it’s clear that the former White House advisers’ steel trade analysis is anything but data-dependent. That leaves as their only anti-tariff argument their fears about setbacks in American diplomacy – where they possess no special expertise or even knowledge. Far better for these macro-economists to stick to macro-economics – though again, the overall U.S. performance here should inspire no confidence in their judgment, either.

Making News: Talking Trade (Wars?) on National Radio Tonight

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I’m pleased to announce that I’m scheduled to appear tonight on John Batchelor’s nationally syndicated radio show. Subject: Will President Trump really start moving to shake up the world trade scene – and broader global economy?

This show will be a little different, in that my segment will be pre-recorded. So I don’t know exactly when it will air. But John’s program starts at 9 PM EST, and you can listen live on-line here.  As always, I’ll post a link to the podcast as soon as one’s available.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Im-Politic: Fin de Trump? Again?

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The latest Trump-Russia revelations make me feel like the Bill Murray character in “Groundhog Day.” I’ve already written posts to the effect that “[Candidate] Trump could really be in trouble this time.” I’ve also already written posts to the effect that “[Candidate] Trump could really be in trouble and this time it could be different.” Like practically everyone else I read and communicate with, I’ve been wrong on these scores, but I’ll be plowing the same fields again – if only because the circumstances are so extraordinary, and especially because so much is still unknown.

First, my bottom lines: I remain skeptical that the emails Donald Trump, Jr. released yesterday (after he was told they’d be published) will result in the end of his father’s presidency in any direct sense (i.e., impeachment and removal, or resignation). I remain equally skeptical of meaningful (and I know that’s an important qualifier, as I’ll discuss below) Trump-ian collusion with Russia’s government (which includes lots of operatives without official positions) to undermine his chief presidential opponent Hillary Clinton’s campaign.

I am, however, more convinced than I had been that what is different about the newest disclosures is that Washington will remain preoccupied with “Russiagate” for most of the rest of the President’s (first?) term, that they’ve just about ruled out any meaningful policy accomplishments through 2020, and that one reason is that Mr. Trump will have bigger reasons than ever to toe a standard Republican establishment policy line that’s highly unpopular even with his own base, but that’s still gospel with a Washington wing of the party whose loyalty is vital to his survival.

Second, let’s knock down the main talking points offered by Mr. Trump’s aides and other supporters (full disclosure: I support much of his agenda, and most of his establishment-bashing). As should be obvious, the failure of the Russian lawyer actually to produce any damaging information on the Clinton campaign does not absolve the president’s son – or son-in-law cum adviser Jared Kushner, or then campaign manager Paul Manafort, of the charges that they tried to cooperate with foreign agents to affect an American political campaign (the heart of the politically salient collusion charge).

The email exchange showed that this information was the principal reason that all three figures attended the meeting. Their motives are completely unaffected by the false pretenses under which they acted.

Just as obvious, and just as bogus, is Trump, Jr.’s claim that he and his colleagues viewed an offer from Russia as nothing special because the Russia-gate charges had not proliferated. Manafort, for example, formally joined the Trump campaign manager on March 29. Certainly by May 2 – a month before Trump, Jr. first heard about the supposed Russian information – Manafort’s longstanding lobbying for pro-Russia politicians in Ukraine was making news. As a result, even if the president’s son was politically inexperienced enough not to recognize the potential dangers, Manafort himself, a veteran Washington operative, surely knew the score.

Even more important, the Russia business ties of Trump, Sr. himself were being scrutinized and fretted about at least as early as March 15.

Have any laws been broken? Beats me. That’s now officially the responsibility of Robert Mueller, te Justice Department’s Special Counsel, to determine. But much of this uncertainty centers on how much is known about this meeting, and how much is known about similar activities. Further, neither impeachment nor the future of the Trump presidency will necessarily hinge on such legal questions. A president, as I’ve noted previously, can be impeached for anything the House of Representatives believes satisfies the definition of “high crimes and misdemeanors” – which itself is a political, not a legal, concept. The Senate, moreover, can remove a president from office for equally political reasons.

So public opinion will be crucial. There are no signs yet that Russia-related charges have significantly damaged President Trump’s support either with the general public or among Republicans. But the more such Russia-related material keeps coming out, the likelier such erosion becomes.

Nor will the president’s political support depend completely, or even largely, on politicians’ often less than steely backbones. The new Trump, Jr. emails – and the continuing and utter failure of anyone in the Trump circle (including the president himself) to provide straight, durable answers to perfectly reasonable questions – understandably revive questions of how extensively individuals associated in any significant way with Mr. Trump or his campaign worked with the Russian government to sway election results.

Until yesterday, as I’ve written, I’ve felt confident that no important collusion evidence would emerge because none had yet been leaked – even though the matter had been probed for months by several official and many unofficial investigations, and even though bureaucrats at the highest levels have been positively eager to reveal incriminating Trump information even if national security could be undermined.

In addition, it’s never been clear to me why Russian interference with the election ever required cooperation from the Trump campaign – or any other American source. As long as Moscow was so motivated, its formidable hacking and disinformation capabilities were amply capable of producing the desired results on their own. Moreover, the U.S. intelligence community’s January report on the Russian interference campaign itself reported that Russian leader Vladimir Putin was wary of praising candidate Trump too enthusiastically precisely for fear of generating a backlash.

At the same time, even the canniest political leaders and other figures don’t always behave logically or sensibly. It’s also now clear at least that many in the Trump circle have been less than canny or, when it comes to explaining controversial events, even minimally competent. As a result, as stated above, there’s now indisputable evidence of receptivity to collusion by three extremely influential Trump aides (including two family members).

If the June Trump, Jr. meeting represents the extent of the collusion, there’s still an excellent chance that the president ultimately will survive the Russia mess. After all, what kind of (serious) collusion effort, once started, would feature no follow up? But because no one close to Mr. Trump now enjoys (or deserves) much credibility on these matters outside hardcore Trump-supporter circles, Democrats now have the pretext they need to force the administration to keep trying to prove a negative – a challenge no one should relish. Special Counsel Mueller has a comparable justification for prolonging his own investigation considerably.

Yet even before the possible crumbling of the president’s political support, for either legal or political reasons or some combination of the two, the Trump administration’s Russia-related problems could profoundly impact the nation’s policy agenda – and not in a good way if you’ve hoped Mr. Trump would be an agent of serious change. Here’s what I mean.

Recall that last year, Mr. Trump did not simply assume the leadership of the Republican party after winning its presidential primaries. He engineered a hostile takeover, supplanting a party mainstream that strongly opposed him on his two signature issues – trade and immigration policies. The shocking Trump fall victory, however, gave the incoming president crucial leverage in this relationship, and for a very powerful, concrete reason. The Republicans’ establishment leaders in Congress gave his campaign, and especially the inroads he made with new constituencies, abundant credit for saving the party’s control of both the House and Senate.

Once the Russia-gate charges and Team Trump’s failures to address them adequately began gaining critical mass, though, the dynamics of this relationship began changing dramatically. President Trump’s future became more dependent on the establishment GOP’s support. Therefore, he needed to warm to its establishment agenda – notably their budget and healthcare proposals – despite the poor poll numbers they’ve been drawing. Additionally, his ability to reach across the aisle on promising areas of bipartisan agreement, like infrastructure, turned into a function of the overall party’s flexibility – which seems pretty limited to date.

Since such vast new – and, due to the Trump circle’s constantly changing responses, legitimate – investigative frontiers have been opened up by the new emails, the Trump wagon now looks to be hitched to the Congressional Republican star more tightly than ever. That’s not to say that House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell will never stray from their party’s orthodoxy. McConnell, at least, has hinted that bipartisan compromise may be needed on healthcare. Moreover, the party establishment is by no means united on all major issues, either. Consequently, intra-party divisions may widen the scope for bipartisanship (as has generally been the case to avoid or mitigate various budget crises).

But the main point here is that at this point, these decisions are likeliest to be driven by the establishment, not the president. And the tragedy, at least for anyone rooting for the president or any of his agenda, is how many of the resulting White House political and policy wounds will have been entirely self-inflicted.

(What’s Left of) Our Economy: What “Retail-pocalypse”?

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Could the evidence be clearer? President Trump constantly bewails job losses in parts of the economy like manufacturing and coal mining. But he’s ignoring the much larger employment bloodbath in the nation’s retail sector. Worse, the contrast shows what a racist and sexist Trump is, since minorities and women make up much larger shares of the workforce in retail than in factories and mines.

Here’s one answer: The evidence for these propositions could be a lot clearer. Indeed, according to the U.S. government’s employment statistics, it doesn’t exist.

I decided to look at the numbers because the JOLTS data for May came out this morning, and I was once again amazed at the results for retail. As known by RealityChek regulars, these data measure turnover in the labor force, and are highly regarded by no less than Fed Chair Janet Yellen – a leading labor economist. The new figures, which are still preliminary, show that American retailers claimed 638,000 job openings in their businesses, and hired 718,000 new workers (the latter data represent total positions filled, not net new hires).

It’s true that the openings numbers in particular can be dicey. But those for this past May seem pretty consistent with the data going back many years. Moreover, they show that over the last eight years (practically the length of the current economic recovery), retail openings have more than doubled, and hires are up by nearly 31 percent. Both indicators are lower than that for the private sector as a whole (where job openings are up 140.14 percent, and hires are up 45.24 percent since May, 2009). But the gap is hardly yawning. Nor is there any indication from the JOLTS data that retail openings or hires have lost major – or any – momentum in the last few years.

The actual net new job-creation numbers don’t reveal any “retail-pocalyse,” either. Since June, 2009 (when the current recovery officially began) retail payrolls have grown by nine percent. That’s slower than the increase overall private sector employment (14.39 percent). But the gap proportionately was actually greater during the previous recovery, when private sector employment rose by 5.83 percent, and the retail sector’s staffing was up by 3.18 percent.

Maybe this is because, as widely reported, jobs are migrating from bricks and mortars retail stores to on-line shopping businesses? Absolutely. And this trend is indeed rising in importance. During the previous recovery (which only lasted six years, from the end of 2001 through the end of 2007), electronic retail employment rose by 64 percent – just about a third as fast as during the current recovery (174.44 percent).

But in absolute terms, the electronic retail sector is hardly a mass employer. Its workforce totaled less than 260,000 as of this May. Retail overall employed just under 15.85 million that month, and during the recovery, bricks and mortars payrolls grew by a not-too-shabby 1.14 million.

At the same time, the actual employment figures do show that retail hiring is running out of steam, at least for the time being. Year-on-year, the sector boosted payrolls by just 0.12 percent. The previous two May-May annual increases? 1.37 percent between 2015 and 2016, and 1.71 percent the year before. By contrast, employment grew by 12.22 percent in electronic retailing from May, 2016 to May, 2017, and by 12.60 percent the year before. So conventional stores are now losing employees on net.

At the same time, these results are a far cry from a blood-letting. And annual job-creation in the overall private sector has been slowing as well. Further, many observers insist that bricks and mortars companies long built way too many stores. So their payrolls (and overall scale) may, at least to some extent, simply be returning to more sustainable levels. These conclusions obviously won’t satisfy the Trump-haters among us. They’re simply consistent with the facts.