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Tag Archives: American Enterprise Institute

Making News: New Spectator Article on Trump’s Mexico Tariffs Threat – & More!

13 Thursday Jun 2019

Posted by Alan Tonelson in Making News

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American Enterprise Institute, Breitbart.com, Claude Barfield, consumers, i24News, inflation, John Carney, Making News, Mexico, migrants, tariffs, The Spectator USA, Trade, Trump

I’m pleased to announce my publication of my newest magazine article.  The piece, which appears in The Spectator USA, explains why President Trump won his bet that a tariff threat would push Mexico to work harder to stop migrants traveling through its territory to the United States – and why he shouldn’t resort to this gambit again.

In addition, it was great to be quoted in John Carney’s post on Tuesday for Breitbart.com reporting that all those supposed experts who predicted raging consumer price inflation resulting from Mr. Trump’s various tariffs were dead wrong.  Here’s the link.

The video is also available of my Tuesday appearance on the American-Israeli TV network i24News.com.  Click here, and press the download button to access this interview on the Trump Mexico tariffs threat.  I also appeared (on short notice) on this subject on i24 on June 5, but unfortunately, the recording is no longer available.

Last Friday, June 7, I debated trade specialist Claude Barfield of the American Enterprise Institute at a lunchtime event at AEI.  The program was not video-ed, though.

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

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Making News: Video of Today’s CNBC Segment on Today’s U.S. Trade Figures Now On-Line!

06 Wednesday Mar 2019

Posted by Alan Tonelson in Making News, Uncategorized

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American Enterprise Institute, CNBC, James Pethokoukis, Making News, tariffs, Trade, Trade Deficits, Trump

This morning I got a short notice invitation to appear on CNBC to dissect the new U.S. trade figures and explain the message they’re sending us about President Trump’s tariff-heavy trade policies.  There were so many numbers to crunch beforehand that I didn’t have a chance to send out a heads-up.  But since the network does a great job of archiving segments (and making them available for free), you can see the conversation (also featuring James Pethokoukis of the American Enterprise Institute) at this link.

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

Im-Politic: Elites’ Learning Curve on Populism is Still Largely MIA

24 Saturday Nov 2018

Posted by Alan Tonelson in Im-Politic

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American Enterprise Institute, asylum seekers, Brookings Institution, chattering classes, David Brooks, establishment, Europe, Hillary Clinton, Im-Politic, Immigration, Jobs, migrants, migration, Open Borders, Populism, refugees, The Guardian, The New York Times, Trade, Trump, working class

While we’re still (I hope!) in a Thanksgiving frame of mind, let’s not forget to give thanks to America’s ever clueless bipartisan political establishment and chattering classes. As just made glaringly obvious by a Hillary Clinton interview and a New York Times pundit, these utterly intertwined – and indeed incestuous – elites not only mostly remain just as dumbfounded about the developments that have triggered the rise of populism in the Western world as they were the day after Donald Trump became president. They helpfully keep reminding us of how little they’ve learned – and therefore how completely undeserving they are of returning to power.

Clinton’s obliviousness (again) came through loud and clear in a lengthy sit-down earlier this week with the United Kingdom’s Guardian newspaper. According to the Democratic presidential nominee, whose inept campaign strategy and transparently canned messaging helped key Mr. Trump’s victory, Europe “needs to get a handle on migration.”

That contention’s hard to argue with. But Clinton’s main reason was anything but. According to the former Secretary of State, European leaders’ overly “generous and compassionate approaches” to migration “lit the flame” that have “roiled the body politic” and strengthened the positions of Trump-like populists who have used “immigrants as a political device and as a symbol of government gone wrong, of attacks on one’s heritage, one’s identity, one’s national unity….”

In other words, Clinton apparently has no concerns that a massive influx of migrants – or refugees, or so-called asylum-seekers, or even economically motivated immigrants – could drive down wages for the working class or lower income cohorts of a country’s native-born population, or wind up admitting criminals and terrorists from violence-ridden regions, or swamp a country with newcomers either ignorant or actively contemptuous of its cultural values (e.g., its treatment of women).

She’s simply advocating that establishment politicians do the proverbial – but never well defined “something” – to keep on the fringes counterparts who are mindful of the above, and completely legitimate, concerns. In fact, Clinton’s continuing contempt for such leaders, and their followings, is made clear by her contention that populist voters are defined by

“a psychological as much as political yearning to be told what to do, and where to go, and how to live and have their press basically stifled and so be given one version of reality.

“The whole American system was designed so that you would eliminate the threat from a strong, authoritarian king or other leader and maybe people are just tired of it. They don’t want that much responsibility and freedom. They want to be told what to do and where to go and how to live … and only given one version of reality.”

In other words, “deplorables,” anyone?

If anything, New York Times columnist David Brooks is even brain dead-er on the lessons of 2016. On Thanksgiving day, the paper posted a column of his contending that at least some of America’s establishment has been “chastened” by populism’s successes, and recently has been “working together across ideological lines” to “build the bipartisan governing coalitions” that “pay attention to actual Americans and actual solutions” to the problems that have so divided the nation.

One of his prime examples? A joint effort by the establishment liberal Brookings Institution and the establishment conservative American Enterprise Institute (AEI) to develop policies aimed at “Restoring Opportunity for the Working Class.”

On the one hand, it’s good to see that Brookings and AEI aren’t simply dismissing American populism’s main political base as racists and xenophobes. Even better: The report they’ve just issued recognizes job and income loss resulting from offshoring-friendly trade deals and other wrongheaded globalization-related policies as major sources of working Americans’ economic decline and political anger. And the recommendations for trade policy fixes are pretty good – even including an endorsement of unilateral U.S. tariffs in certain situations. In fact, combining these ideas with many of the more purely domestic policy proposals in the study could make a real difference.

On the other hand, the study’s authors decided to ignore the impacts of Open Borders-friendly immigration policies, because they regard “the perception that immigration is responsible for what ails the working class” as “mistaken.”

And some skepticism is warranted on the trade front as well. After all, experts from both think tanks have been among the strongest critics of Trump administration trade policies – no doubt because so many of their donors are businesses that profit from the trade status status quo, and (in Brookings’ case), many of the very foreign governments in the same category.

But what I found especially revealing was Brooks’ description of the report. It ignored the trade recommendations completely and zeroed in on the measures that, unless accompanied by trade and/or immigration policy overhauls (at least), would wind up as an approach that essentially substitutes various forms of welfare for work: “wage subsidies, improved parental leave, work requirements for some federal benefits, child care tax credits.”

And by the way, of course Brooks endorses the study’s calls for more government aid for education that reduces the current emphasis on sending all young Americans to four-year colleges and increases the emphasis on “career education and training.” That’s fine except that there’s little point to vocational type training if family wage jobs keep fleeing overseas or becoming ever lower-wage jobs because immigrants keep supercharging the labor supply.

Nor have any of the education boosters ever responded to two related points I made in my globalization book, The Race to the Bottom: First, people all over the world as just as capable of being retrained and reeducated as Americans; and second, governments all around the world know this, especially in countries with such immense labor surpluses that they’ll long be able to under-sell American workers.

Brooks closes his article by wondering whether the United States contains “enough chastened members of establishments, who have governing experience, who acknowledge past mistakes, who take the time to reconnect with the country and apply their expertise in new ways” to lead the nation successfully. The Brookings-AEI report provides some grounds for optimism. Unlike Hillary Clinton and Brooks himself.

Im-Politic: Enough with the Neocons Already

13 Sunday May 2018

Posted by Alan Tonelson in Im-Politic

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American Enterprise Institute, Cato Institute, chattering class, Eric Levitz, Im-Politic, journalism, libertarians, media, neoconservatives, New York magazine, think tanks, Trump

Boy, am I glad I read Eric Levitz’ recent piece in New York magazine all the way through! Not that the author sprung any pleasant surprises on me. Based on the headline, I was expecting just another example of arrogant, intolerant liberalism, and Levitz’ certainly didn’t disappoint in this respect. His main argument: that major liberally oriented opinion publications and op-ed pages should no longer seek left-right ideological and political balance nowadays because the only American conservatism in the age of Donald Trump that has any influence is yahoo-ism in various forms. Instead, these liberal referees of the national political debate generally should keep their forums open almost exclusively to voices from more responsible and rational the left of center.

But within this laughably tendentious claim is a point that’s entirely valid, and that in fact has been bugging me for many years. It concerns the – long-time – practice of either liberal or even nominally neutral opinion forums (i.e., most of the national media) for publishing viewpoints, from whatever perspective, that obviously have no notable constituencies outside the bounds of the interlocking and increasingly hidebound ranks of America’s chattering class elites.

And in my mind, the viewpoint that sticks out more than any other in this respect is neoconservatism. This branch of conservatism began as an interesting hybrid of (a) the kind of Big Government-oriented liberalism that since the New Deal era has dominated the views of Democrats on domestic issues, and (b) the kind of aggressive anti-communism and, more recently, broader global activism that many Democrats have rejected since the Vietnam War began going bad. In addition, much neoconservatism was animated by what its pioneers considered the Democrats’ abandonment of the goal of racial integration in favor of various programs of racial preferences and forms of racial pandering.

As documented in this insightful article by Michael J. Lind of the New America Foundation, the neoconservatives steadily became more conventionally conservative on domestic issues – including a strong enthusiasm for standard free trade policies and mass immigration. But something that still hasn’t changed has been their stunning talent for attracting media attention – a record that genuinely qualifies as stunning because there’s never been a shred of evidence that neoconservatives have any significant following among the general public.

Of course there are many Americans who support the low-tax, small-government positions now taken by neoconservatives these days. There are many fewer who support their brand of foreign policy activism, but at least this position hasn’t completely disappeared from the electorate. Yet have you encountered many friends, neighbors, and relatives who believe in slashing federal spending and shrinking the national tax base on the one hand; sending American troops to the furthest, least important corners of the world to nation-build, spread democracy, fight extremism etc on the other; and opening the national doors wide open to imports from places like China and immigrants the world over? In fact, have you ever met anyone fitting this description?

Just as important (and not unrelated), can you identify many national politicians or office-seekers who embody this set of views? After Republican Senators John McCain and Jeff Flake of Arizona (the former of course afflicted with aggressive brain cancer and the latter deciding to leave office before suffering certain defeat in his state’s Republican primary), and their South Carolina GOP colleague Lindsey Graham?

Until recently, you could have added Florida Republican Senator Marco Rubio to this short list, but in recent months, he’s definitely been reading the handwriting on the wall. Just look at his new stances on confronting China both militarily and economically, and complaining about important aspects of the latest tax cuts passed by Congress.

All the same, however, the neoconservative presence in the national media remains impressive. Writers from neoconservative publications like The Wall Street Journal, The Weekly Standard, and Commentary appear constantly on the nation’s talk shows, and they’re frequently joined by neoconservative colleagues from less doctrinaire publications and from think tanks like the American Enterprise Institute. Maybe most revealing, when the proudly mainstream liberal New York Times chose the latest columnist to add to its roster of regulars, it picked card-carrying neoconservative Bret Stephens – a Wall Street Journal alum.

Now it’s true that President Trump, who generally is loathed by neoconservatives, has chosen two of their leading lights as major foreign policy aides – John R. Bolton to serve as his White House national security adviser, and former Kansas Republican Congressman Mike Pompeo to serve as his Secretary of States (after a year of running the CIA). And some important Trump foreign policies look awfully neocon-y, most prominently his approach to countering the influence of ISIS-like terrorists and the Iranian government in the Middle East (combined so far with a loudly stated aversion to massive American boots on the ground). But Trump as a neoconservative-in-the-making? Talk about a wildly premature judgment at best.

So why is the mainstream media still so enamored with neoconservatives? Four main reasons. First, many are still strongly anti-Trump, so featuring them on the air, on-line, and in print enables Trump-hating news organizations to pretend that most opposition to the President remains bipartisan. Second, the United States was governed by a largely neoconservative administration as recently as 2008. And since former this-es and that-s are so skilled at finding post-government careers in Washington, neoconservatives make up an abundant supply of voices with governing experience on which journalists can rely for right-of-center analyses. Third, neoconservatives are still so easy to find in Washington (and secondarily in New York City) largely because although this faction has almost no grassroots, it’s generously funded. So think tank perches and related jobs (including a wide variety of non-tenure university appointments) in the two cities tend to be readily available for individual neoconservatives, and their publications tend to be at least adequately funded.

Fourth, precisely because neoconservatives have been so numerous in the nation’s two main media centers for so long, they’ve become thoroughly familiar to the media. In addition to their widespread and easy availability to newsmen and women as sources of information and analysis, neoconservatives can socialize routinely with their journalistic counterparts. Not only is there no shortage of conferences and receptions at which these segments of the chattering class can socialize (many of which are sponsored by neoconservative or neoconservative-leaning organizations). But neoconservatives (along with other think tankers and the like) and journalists tend to live in the same small group of affluent neighborhoods and send their children to the same first-rate public schools and exclusive private academies.

And as is common with people who hang out a lot together, neoconservatives (and other think tankers) and journalists often become very chummy. The more so if they’re college buddies, or went to the same school, and took the same kinds of courses from the same kinds of professors. The latter of course increases the odds of media types finding themselves in broad agreement with the neoconservatives, and thus regarding these figures as doubly appealing.

New York‘s Levitz argues that conservatives generally shouldn’t be shut out of the news media entirely – and decidedly deserve to appear if they have something new and/or especially interesting to say. I believe the same about neoconservatives. But no doubt largely because these thinkers have had such easy access to the mainstream media, and enjoyed all the associated glistening economic and status prizes, they’ve had little incentive to change their fundamental tune, and surmount this hurdle. So given their predictability and lack of influence, maybe news organizations could at least dial down the overexposure?

Incidentally, for the same reasons, I’d favor treating libertarians the same way. Their funding is impressive, indeed lavish. (Doubt me? Check out the Cato Institute‘s Washington, D.C. headquarters sometime, along with its wide-ranging agenda of conference and similar events). But where are their grassroots? In particular, which noteworthy portions of the electorate share their enthusiasm for unilaterally opening America’s markets no matter how protectionist trade rivals remain, erasing U.S. borders and requiring American workers to compete against an immense new influx of very low-wage foreign counterparts even for high-skill jobs, trusting the private sector (including Wall Street) to regulate itself, and eliminating the major entitlement programs? Even individually, these stances command precious little popular support. Taken together, they comprise a modest minority. That’s surely why Americans have elected exactly zero libertarians as President, and why even Republicans have resoundingly rejected them in presidential primaries even well before the Trump phenomenon appeared. Moreover, read libertarian writings on any of the above issues from decades ago, and you won’t see much difference in terms of their analytic framework with libertarian writings today.

Of course, simply ostracizing neoconservatives, or neoconservatives plus libertarians, from major opinion forums, or at least sharply limiting their presence, would leave the national political debate nearly as narrow, and phony, as following a Levitz-type approach. So what the media referees need to do is work much harder to find contributors who represent not only reasonably coherent emerging schools of thought (like populism’s conservative and liberal variants) but who are trying to turn American politics less rigidly formulaic and exploring various combinations of positions that have never, or not recently, been combined before, along with those who are seeking wholly new answers to pressing national questions.  Moreover, it should go without saying, important new factual findings should always be welcome, no matter how they cut politically.

The op-ed editors and talk show hosts will face a formidable challenge in achieving this goal. After all, success would require exercising judgment, rather than flipping through their familiar (electronic rolodexes). But success is urgently needed – for it would mean a national opinion universe that looks much less like the tiny, inbred communities in which they’re embedded, and much more like America.

(What’s Left of) Our Economy: Trade Derangement Syndrome

24 Wednesday Jan 2018

Posted by Alan Tonelson in (What's Left of) Our Economy

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American Enterprise Institute, consumers, establishment, Henry McMaster, Mark J. Perry, Samsung, solar panels, South Carolina, South Korea, tariffs, Trade, Trump, {What's Left of) Our Economy

The immediate aftermath of the Trump administration announcement of tariffs on imports of foreign government-subsidized solar panels and modules and washing machines once again made clear that such developments trigger among the silliest comments heard in the economics world. Let’s call this behavior “Trade Derangement Syndrome.”

Exhibit One: Several South Carolina politicians, including Governor Henry McMaster, expressed agreement with Samsung, one of the South Korean companies hit with the washing machine tariffs, that the duties “are a great loss for American consumers and workers.” The consumers part is understandable – though not very credible unless you believe that it’s easy for companies to raise prices significantly in current and foreseeable U.S. economic conditions. But the workers part is completely off the wall.

After all, Samsung is now completing construction of a washing machine factory in the Palmetto State. Further, the company has admitted that the likelihood of the tariffs led it to begin producing in the United States. One of its senior executive American executives, John Herrington, stated earlier this month that, “Because we are committed to supplying the U.S. market from Newberry [South Carolina], no [tariff] remedy is necessary,” Locating the new factory in South Carolina was a separate decision, but Samsung’s rationale couldn’t be more clear. Ditto for the win for South Carolina and its economy.

So what’s with the state’s complaints? According to Herrington, although Samsung intends to supply most of its U.S. needs from the South Carolina facility, “We can’t supply all of those needs immediately in January. We will need to import washers so that we can supply a full range of products to our retailers and consumers during the ramp-up period.

“If we are unable to offer our full range of products to retailers and consumers, we will lose floor space and sales, impacting the success of our South Carolina operation. So the ultimate impact of the proposed tariff is a lose-lose scenario for U.S. production, U.S. employers and U.S. consumers.”

But this explanation makes absolutely no sense – unless you believe that Samsung will cut production even after the factory is running full tilt, and even permanently. What doubtless will happen is that the company will keep importing some products until that point; due to the tariffs, it will absorb lower profits in the process; and then they’ll be restored as the ramp up is completed.

So either the state’s politicians are completely ignorant about manufacturing realities, or they’ve decided that their bottom line is serving as Samsung spokespersons – not promoting South Carolina’s economic fortunes. I.e., maybe they’re not really deranged after all?

The second example of tariff derangement syndrome comes from American Enterprise Institute economist Mark J. Perry. In a post yesterday on the think tank’s blog, Perry blasted the Trump tariffs as an example of the administration’s “American Consumers Last” trade policy. That’s entirely reasonable.

What was entirely goofy was Perry’s claim that the “voice of the American consumer” has been “unheard” as the administration considered the solar and washing machine cases. Can anyone doubt that that’s been a major argument made by the plethora of politicians, lobbyists, academics, think tankers, and editorial writers who opposed the tariffs?

It’s probable that what’s thrown Perry’s compass off is not the absence of pro-consumer arguments in the trade policy debate, but the fact that the President’s decisions could indicate that a multi-decade period of overwhelmingly and singlemindedly pro-consumer American trade policies is ending. If that’s the case, then expect ever greater disorientation in establishment ranks. But what a negligible price to pay for restoring reasonable balance to the nation’s approach to the global economy.

Our So-Called Foreign Policy: Why Establishment Thinking About Containing China Remains Far from Serious

26 Wednesday Apr 2017

Posted by Alan Tonelson in Our So-Called Foreign Policy

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allies, American Enterprise Institute, Asia, burden sharing, China, Daniel Blumenthal, defense budget, East Asia, entitlements, foreign policy establishment, free-riding, Japan, Our So-Called Foreign Policy, RealClearPolitics.com, South Korea, taxes, tech transfer, Trade

Congratulations to the American Enterprise Institute’s Daniel Blumenthal for coming up with some genuinely new insights into the U.S.-China balance of power and especially its relationship with the evolving economies of the two countries. Unfortunately, Blumenthal’s new essay for RealClearPolitics.com also shows that gaping blind spots remain in establishment thinking about the China challenge its members claim to be analyzing seriously.

For the purposes of this post, let’s grant Blumenthal’s mainstream assumption that it matters greatly to the United States which great power dominates East Asia politically. I disagree, but the point here is that if America does want to fend off a China challenge, greater policy changes will be needed than Blumenthal and other conventional wisdom-mongers seem ready to contemplate.

The author’s main theme is that the United States has no legitimate reason to doubt its economic capacity to prevent China from becoming Asia’s kingpin, and his new wrinkle involves measuring economic power by looking more at national wealth, and less at national economic growth. Since the U.S. wealth levels are both much greater than China’s, and since the gap has just resumed growing according to statistics he cites, America can easily afford the military forces needed to put China back in its place. And he blames China’s recent and impressive catch-up on this score on Americans’ recent (Blumenthal doesn’t specify the time frame) political decision to skimp on military spending while continue to devote exorbitant sums to entitlement spending – which has indeed long dominated the budget outlays (along with, as he’s noted, interest payments on the resulting ballooning national debt).

According to Blumenthal, Americans and their leaders as a result have chosen to elevate “the intergenerational transfer of wealth” over national security. Strictly speaking, he’s right. But other interpretations of national priorities seem just as legitimate.

For example, as the author briefly notes, the U.S. population is aging. So a major national retirement funding challenge will face even the most defense-minded politicians. That doesn’t let American leaders or the recipients of these entitlements off the hook in terms of making sacrifices needed to safeguard national security. But it’s bound to raise the question of whether the burden of sacrifice should be limited to middle class Americans. The great increase in national wealth mentioned by Blumenthal makes clear that the nation has many other resources on which it can draw to fund a bigger military – especially since the private economy’s wealth has led the surge. In other words, why not tax the rich or corporations more heavily to pay for new personnel and weapons?

One obvious rejoinder is that modest levels of taxes on wealthy Americans and on American companies are needed to ensure the economic growth needed to keep national wealth levels robust. But even accepting the doctrinaire trickle-down economics underlying this assumption, should upper-level individual incomes and business profits be completely exempted from any responsibility to pay for the military? If so, why? And wouldn’t that policy greatly loosen the relationship between national wealth and military capability emphasized by Blumenthal?

The author also neglects another big pool of resources that can be brought to bear on countering China: the wealth of America’s regional allies. Stunningly, after decades of American pleading for greater burden-sharing, countries with a far greater stake than the United States in resisting Chinese regional domination continue free-riding on U.S. defense guarantees. Why should American entitlements recipients see any reduction in benefits before Japanese and South Koreans pay at least as much for their own security (relatively speaking) as the much more geographically distant United States does? And their contributions could be immense. Japan alone, for example, is the world’s third largest national economy (behind the United States and China, respectively). 

Finally, as with nearly all the rest of the establishment, Blumenthal completely neglects the opposite side of the U.S.-China defense resources equation: The decisive extent to which American economic policy continues enriching China, and therefore continuing to enable it to afford lots of both “guns and butter” (as economists and political scientists have dubbed military and social spending). Thanks in part to literally trillions of dollars of earnings from the trade surpluses it’s long run with the United States, the Chinese pie keeps expanding strongly (that’s the economic growth whose importance Blumenthal softpedals). As a result, more new resources are generated for whatever priorities or combination of priorities the Chinese government chooses.

Even worse, as I’ve long noted, recklessly lax tech transfer policies on America’s part have for decades given the Chinese much of the knowhow needed to turn out increasingly advanced weapons and other military systems. Some signs of official concerns about this outflow have appeared in Washington lately, but U.S. leaders (and the rest of the establishment) remain woefully behind the curve.

When America’s East Asia security strategy stops bolstering the Chinese threat it depicts as such a huge concern, when it insists that local countries act like they have at least as great a stake in remaining independent of China as does the United States, when the wealthiest Americans are required to devote more of their recent immense windfalls to the common defense, and if all of those changes still leave China closing fast on the combined forces of the United States and its neighbors, it would become legitimate to ask Main Street Americans to start shouldering greater burdens. Until then, the U.S. working and middle classes will be entirely justified in demanding that the nation’s Asia strategy pass a minimal seriousness test first.

Following Up: Link to Today’s CNBC Interview

20 Monday Mar 2017

Posted by Alan Tonelson in Following Up

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American Enterprise Institute, Bill Griffith, CNBC, Following Up, G20, James Pethokoukis, Kelly Evans, Trade, Trump

I’m pleased to present the link to the video of my appearance today on CNBC discussing the Trump administration’s precedent-breaking performance at this past weekend’s big global economic summit.  Click here to see a great discussion of this possible landmark event, and its possible implications, among anchors Kelly Evans, Bill Griffith, James Pethokoukis of the American Enterprise Institute, and yours truly.

And keep checking back with RealityChek for notices of upcoming media appearances and other news.

Im-Politic: Mainstream Conservatives’ Sovereignty Concerns are Way too Selective

20 Friday Mar 2015

Posted by Alan Tonelson in Im-Politic

≈ 2 Comments

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American Enterprise Institute, Buy American, Constitution, COOL, Financial Stability Board, food safety, free trade agreements, G-20, Im-Politic, NAFTA, regulation, sovereignty, The Wall Street Journal, TPP, Trade, Trans-Pacific Partnership, Wall Street, World Trade Organization

Ever since the NAFTA negotiations launched the current era of U.S. trade policy 20 years ago, critics on both the left and right-wing fringes (and I’m not using the word pejoratively) of American politics have complained that many new trade deals have threatened American sovereignty. Joining this chorus over the years have been voices from the far right that have detected the same danger from international organizations like the United Nations. These critics, who typically finger one-world-er American officials as co-conspirators, invariably are dismissed by mainstream journalists and pundits as a paranoid “black helicopter crowd.”

So imagine how strange it is to see a member of the U.S. government’s Securities and Exchange Commission (SEC) co-author an op-ed for The Wall Street Journal claiming that Washington has secretly outsourced some key financial regulatory authority to a little-known international body called the Financial Stability Board (FSB). According to SEC Commissioner Daniel Gallagher and former senior Treasury Department official Peter Wallison, the Obama administration :

“has consistently moved to implement the FSB’s decisions without telling Congress, or the public, that it regards the FSB’s decisions as binding. There’s a reason for this lack of candor. Congress has never endorsed the idea that FSB decisions are binding on U.S. agencies. The FSB’s authority, if any, flows from the G-20 [a grouping of the world’s 20 biggest economies]. Allowing its decisions to dictate U.S. policy means that an American president can create authority to issue domestic regulations simply by making an agreement with the G-20 or other foreign leaders.”

The purpose of this post isn’t to evaluate whether Gallagher and Wallison are right in contending that “This is a dangerous precedent. The FSB’s decisions cover the financial system. But there is nothing to stop similar agreements about the environment, telecommunications and other crucial matters if the precedent is allowed to stand. The result would unravel the separation of powers and the role of Congress in the U.S. constitutional system.”

Rather, the point is to ask where these two, and other establishment conservatives, have been for the last two decades – during which nearly any American laws and regulations having any effect on U.S. trade flows have been vulnerable to the decisions of the World Trade Organization (WTO). And to wonder whether they will finally take off their blinders?

The WTO technically cannot strike down U.S. policy decisions. But it can bring about their elimination, and prevent their enactment, by authorizing countries claiming to be victimized by these measures to respond with tariffs versus American goods and services aimed at their markets.

Nor is this a theoretical possibility. For example, the WTO right now is ruling on whether Washington can require food producers to tell U.S. consumers whence their products come.  And its rules helped President Obama and the offshoring lobby defeat proposals to broaden the Buy American requirements governing federal purchasing policies – which would have greatly increased U.S. production of real world goods and services, and employment in those sectors, at the depths of the Great Recession, when they were desperately needed. (In fact, they still are.) Stronger and wider Buy American rules would have limited multinationals’ ability to supply the U.S. government from their foreign factories and other facilities – at U.S. taxpayer expense.

Moreover, other U.S. trade agreements have generated the same dangers, thanks to dispute-resolution systems that give all signatories equal say and votes, even though the American market is invariably the largest single national market at stake.

In principle, Washington’s submission to these global organizations is constitutional, because American membership and participation were expressly approved by Congress. But how many legislators do you suppose actually read the full texts? And how many do you suppose believed then-U.S. Trade Representative Mickey Kantor, who championed the WTO’s creation with a classic piece of Clinton-style parsing: “[T]he WTO does not require the United States to change any law, regulation at the federal or state or local level as the result of any decision made under this use — dispute settlement process. That’s up to the Congress or other legislative bodies, whether or not they wish to take that act. We’ve not given up any sovereignty in that regard.”

Now of course, President Obama is asking Congress to approve another major trade agreement – the Trans-Pacific Partnership (TPP) – that because of its sweeping regulatory scope arguably contains more threats to America’s sovereignty than the WTO. Yet both the Wall Street Journal editorial page staff that published the Wallison-Gallagher piece, and the American Enterprise Institute that employs Wallison, strongly favor TPP ratification. Which makes it hard to avoid concluding that they think it’s more important for the Constitution protect Wall Street than to protect American workers and the rest of the nation’s productive economy.

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  • Guest Posts
  • Housekeeping
  • Housekeeping
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