Following Up: More Data on America’s Dependence on Foreign Healthcare Goods

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Barack Obama, Department of Health and Human Services, facemasks, Following Up, George W. Bush, health security, healthcare goods, imports, Lena H. Sun, manufacturing, masks, Mike Bowen, Prestige Ameritech, Rachel Siegel, supply chain, The American Conservative, Trump, Washington Post

Since news organizations can be so unreliable, I always do whatever I can to use information from primary sources instead of items in the media. I’m making an exception this morning, however, because I’ve failed to find a government document mentioned in several news articles, and reportedly it contains such important data that it deserves mention. Specifically, this document seems to add vital detail to my recent description in The American Conservative of how extensively the United States relies on foreign sources for crucial health care goods, and how long this gaping hole in the nation’s healthcare security has existed.

The document I can’t find has been described in this Washington Post piece as “a 2014 briefing released by the Office of the Assistant Secretary for Preparedness and Response in the U.S. Department of Health and Human Services.” Among its findings, according to Post correspondents Lena J. Sun and Rachel Siegel:

“Up to 95 percent of surgical masks are made outside the continental United States, in places like China and Mexico….”

The 2014 date, of course, is revealing in that it was two years before Donald Trump was elected President. Also revealing: The authors interviewed a domestic mask manufacturer who showed them letters he’s written to American Presidents warning that mask availability could be disrupted during a pandemic outbreak.

The first was written to Barack Obama in 2010. And apparently little or nothing was done. But the manufacturer, Mike Bowen of Texas-based Prestige Ameritech, says he reached out to George W. Bush’s administration as well – with the same results.

But just in case you think this is an establishment-bashing exercise, it’s important to note also that Bowen says he sent the same warning in 2017 – when Mr. Trump did occupy the Oval Office.

Contrary to much (self-serving) conventional wisdom, I’m not at all opposed to finger-pointing and blame-casting, even during a crisis. In fact, I view it as critical to ensuring that mistakes aren’t repeated. But I am opposed to cherry-picking finger-pointing. Because by now it should be abundantly clear that when it comes to U.S. national leaders and American health security, both Democrats and Republicans and liberals and conservatives and even populists have let the country down.

And the faster all partisans get off their high horses and focus on identifying lessons that need to be learned regardless of political effect, the faster Americans will overcome this crisis and the lower the chances of a rerun.

Im-Politic: Selective CCP Virus Finger-Pointing

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Barack Obama, CCP Virus, coronavirus, COVID 19, Dan Diamond, Daniel Lippman, Defense Production Act, DPA, George W. Bush, health security, healthcare goods, Im-Politic, Jessica Silverman-Greenberg, Mainstream Media, MSM, Nahal Toosi, National Security Council, Nicholas Kulish, pandemic, regulations, Sarah Kliff, The New York Times, Trump, ventilators, Wuhan virus

Mainstream Media accounts of the Trump administration’s CCP Virus response keep appearing emphasizing how lousy and lackadaisical it’s been compared with the federal response to potentially dangerous disease outbreaks during the Obama years – and especially given supposedly prescient pandemic warnings that the Obama-nauts sounded to their successors that allegedly were ignored.

So RealityChek is going to have to keep pointing out major flaws in these accounts that both reporters and their editors should have noted, and questions they should have asked.

Keep in mind, moreover, that today’s pushback comes on top of (1) this blog’s description of a 2011 Commerce Department report on America’s increasingly dangerous vulnerability to foreign cutoffs of vital healthcare goods that was completely ignored; and (2) a similar presentation of federal economic data making clear the nation’s healthcare security – another way to think of this vulnerability – has been weakening for at least two decades.

Let’s start with the article in today’s New York Times detailing how a George W. Bush administration plan continued under Barack Obama failed to plug what its public health officials viewed as “one of the medical system’s crucial vulnerabilities: a shortage of ventilators.” The effort entailed finding businesses willing to try to build ventilators that were cheaper, more portable, and easier to use than were then available, and then awarding the contract to the best proposal.

According to Times reporters Nicholas Kulish, Sarah Kliff, and Jessica Silver-Greenberg (and presumably their editors), the eventual failure mainly highlighted “the perils of outsourcing projects with critical public-health implications to private companies; their focus on maximizing profits is not always consistent with the government’s goal of preparing for a future crisis.”

And although this point wasn’t made, the obvious message that the piece meant to send readers is that the President continues making a big mistake by not unleashing the full power of the Defense Production Act (DPA)– which creates vast government power to order whatever companies it wishes to make whatever products it considers necessary as quickly as possible, and to prioritize sales to Washington, not other customers. Underlying this position, of course, is the (completely ignorant) belief that this 1950 law (amended several times since) enables a Chief Executive to snap his fingers and instantly start assembly lines churning out ventilators and face masks and pharmaceuticals, etc.

But let’s leave aside this DPA fetishism. As I tweeted, the following sentence in the piece isn’t completely uninteresting given the unmistakable importance of quick results: After an initial failure (that shouldn’t be pinned on either of those two administrations), “The federal government started over with another company in 2014, whose ventilator was approved only last year and whose products have not yet been delivered.”

That doesn’t sound like the regulatory process reflected particular urgency – and clearly the problem extended into the Trump administration. But this business-as-usual attitude reigned even though, as the article noted, the ventilator project “came in the wake of a parade of near-miss pandemics: SARS, MERS, bird flu and swine flu.” In other words, evidence abounded that pandemics weren’t a rarity. Recently, they were becoming frequent. And still apparently no thought was given to any regulatory fast-tracking.

Finally in connection with this episode. It’s commendable that these pre-Trump public health officials tried to do something new. Less commendable, and less understandable, is why none of them recognized the foreign vulnerability problem and the offshoring-happy trade policies that fostered them.

Two other recent articles seeking to pin the blame for U.S. CCP Virus unpreparedness on Mr. Trump came out March 16 and March 25 in Politico. The first documented that on January 13, 2017 – seven days before the Trump inauguration – a team of outgoing Obama administration officials held a briefing for a team of incoming Trump-ers “intended to hammer home a new, terrifying reality facing the Trump administration, and the incoming president’s responsibility to protect Americans amid a crisis” – the distinct possibility that a major, deadly pandemic would sweep over the United States from abroad.

Further, the briefers specified that the new administration “could face specific challenges, such as shortages of ventilators, anti-viral drugs and other medical essentials, and that having a coordinated, unified national response was ‘paramount’….” Unfortunately, continued the article by Nahal Toosi, Daniel Lippman, and Dan Diamond, the Trumpers seemed pretty apathetic. And that’s pretty damning, right?

In principle, yes. But why did the Politico staff bury this observation: “None of the sources argued that one meeting three years ago could have dramatically altered events today”? Because it would take much of the punch out of this supposed bombshell?

Also buried: An observation in the apparently actual briefing document that, when in terms of “U.S. hospital preparedness and response,” “State and local governments lead public health response.” That’s an important piece of the current American response – even though it’s been relentlessly portrayed in the press another example of the administration’s failure. And P.S. – this document said nothing about ensuring adequate national screening capability.

Politico wasn’t finished, however. Nine days later, it ran another piece – by two of the same reporters – charging that the Trump administration’s CCP Virus policies have “failed to follow” a detailed pandemic playbook prepared by the Obama National Security Council that, it seems, would have prevented much of the virus damage inflicted on the nation.

Again, it’s a plausible claim – although, like the first Politico piece, this article left out the development of the Trump administration’s own pandemic strategy by the fall of 2018 (which means that work on it throughout the federal government began months before).

Also, like the first article, it failed to pose these crucial questions: If the Obama pandemic specialists were so utterly convinced that a pandemic would strike sooner rather than later, and that Team Trump was falling down on the preparation job, why didn’t they alert Democrats in Congress, or Never Trumper Republicans? Certainly there’s been no shortage of lawmakers (especially Democrats) looking for any opportunity to slam the administration (especially if this activity could do some good).

Additionally, if these pandemic warriors did send their message to these lawmakers, why did the public hear so little about it?

My hunch: For three years, the Never Trumpers of both parties had much higher priorities. Think “Russia” and “impeachment.”

Our So-Called Foreign Policy: The Ukraine Mess that Really Counts

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Adam B. Schiff, America First, Barack Obama, Blob, George W. Bush, globalism, impeachment, NATO, North Atlantic treaty Organization, Our So-Called Foreign Policy, Russia, Senate impeachment trial, Trump, Ukraine

Ever since U.S.-Ukraine relations became front-page news as Russia began its military and paramilitary campaign against the former Soviet “republic” (and cradle of Russian civilization), and especially ever since American Presidents and lawmakers have sought to help Kyiv resist, I’ve been writing that whatever emotions this struggle stirs, U.S. leaders have never viewed Ukraine’s security as a remotely vital interest of the United States – and with good reason.

Located right on Russia’s doorstep, the country is impossible to defend without using nuclear weapons (and thus running the risk of nuclear war), and its multi-decade span under the Soviet thumb never had the slightest impact on America’s safety, independence, or well-being. Indeed, even a card-carrying globalist like former President Barack Obama has stated that precisely because Ukraine is a core interest of Russia’s but not of the United States, it’s “going to be vulnerable to military domination by Russia no matter what we do.”

These observations have seemed especially important in recent months, as backers of impeaching President Trump have strenuously argued to the contrary. Indeed yesterday, in his formal presentation at Mr. Trump’s Senate trial, House Intelligence Committee and lead House Impeachment Manager Adam B. Schiff once more joined the chorus that has raised the stakes of protecting Ukraine considerably higher. The California Democrat endorsed a claim that Ukraine’s takeover by Russia would directly threaten America’s allies in the rest of Europe, and indeed, the U.S. homeland itself.

Quoting a previous impeachment witness (and eerily echoing a major argument for continuing to fight endless wars in the Middle East), Schiff declared, “The United States aids Ukraine and her people so that they can fight Russia over there, and we don’t have to fight Russia here.”

Not that Schiff nor any impeachment supporters my research has come across has ever called for the logical – indeed, the essential – follow-on to their Ukraine analyses (urging the permanent stationing of major American military units on Ukraine soil to deter the Russians.  And not that they’ve supported the Pentagon budget increases needed to deploy these forces without cannibalizing other missions). So it’s reasonable to conclude that their words amount to just so much bluster (and possibly Trump Derangement Syndrome).

At the same time, it’s important to note that there’s been no shortage of statements by Mr. Trump’s predecessors (including Obama) that draw connections between Ukraine’s fate and America’s.

For example, George W. Bush was a strong supporter of bringing Ukraine into the North Atlantic Treaty Organization (NATO). This step would legally commit Washington to come to Ukraine’s defense against outside aggression just as strongly as the United States is committed to come to the defense of France, Germany, the United Kingdom, and other European allies whose security has long been deemed vital. And in 2008, the alliance officially endorsed this goal – though without any timetable or specific plan for achieving it.

In the context of endorsing greater efforts to help Ukraine strengthen its defenses, Obama himself in 2014 emphasized the importance of keeping NATO “open” to “countries that meet our standards and that can make meaningful contributions to allied security.” And in the same speech, he vowed, “we will not accept Russia’s occupation and illegal annexation of Crimea or any part of Ukraine.”

Further, although President Trump hasn’t been the biggest fan of Ukraine or NATO, his administration officially has kept the membership door open to Kyiv. Just as officially, and more diisturbingly, the United States still considers Ukraine a “strategic partner” and indeed actually calls “a strong, independent, and democratic Ukraine” a “vital interest.”

The big takeaway isn’t that my prior descriptions of U.S. policy toward Ukraine were flawed. (Although they were.) Instead, it’s that support for bringing Ukraine into NATO and saddling the United States with yet another security commitment it can’t meet without incurring the risk of nuclear attack is strong in both the Democratic and Republican wings of the intervention-happy, globalist foreign policy establishment. And unless the presidency continues to be held by leaders with powerful America First-type instincts, this Blob’s dangerous ambitions could well become reality.

Im-Politic: Another Possible Impeachable Offense: The Globalists’ Afghanistan War

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Afghanistan, Barack Obama, Craig Whitlock, George W. Bush, globalism, House Judiciary Committee, Im-Politic, impeachment, jihadism, Matt Gaetz, nation-building, Presidents, terrorism, Washington Post

It almost looks providential that within 48 hours, all these events transpired:

>The House Judiciary Committee continued its hearing on impeaching President Trump;

>Florida Congressman Matt Gaetz, a Republican Judiciary Committee member suggested that former Presidents can be impeached; and

>The Washington Post began publishing a lengthy series documenting literally decades of official U.S. government deceit – including by former Presidents – surrounding the 18-year long war in Afghanistan.

It looks providential because if Gaetz is right (and, at least according to this analysis, there’s no legal consensus yet on the matter), it’s tough to think of more important abuses of power than the flood of dishonestly upbeat statements issuing from the administrations of George W. Bush and Barack Obama about encouraging progress on the military and nation-building fronts in that protracted and ongoing conflict.

After all, the consequences of such abuses weren’t simply a short delay in providing military aid to a country (Ukraine) whose security and independence weren’t seen as remotely vital U.S. concerns even during the Cold War. Instead, according to Pentagon and other figures the Post cites, the war’s toll so far has included:

>2,300 dead American servicemen

>20,589 wounded in action

>Nearly one trillion taxpayer dollars – an inflation-adjusted figure that doesn’t include expenditures by the intelligence community and the costs of caring for wounded veterans.

It’s true that some of these casualties and spending date from the early years of the war – when no serious person can doubt the need to intervene militarily in Afghanistan to destroy its potential to serve as a terrorist base for planning and launching September 11-style terrorist attacks. But the vast majority date from the long years after the ouster from power of the Taliban and the destruction of Al Qaeda.

At that point, it should have been clear that the best American strategy for preventing the reemergence of jihadist organizations with global reach was maintaining small-scale special forces operations in the country that would focus on harassing extremists effectively enough to keep them off balance and incapable of organizing large-scale inter-continental violence. Stronger border security measures could also help keep them away from the U.S. homeland.  Instead, U.S. leaders embarked on campaign to nation-build in a region that historically has been so divided that no true nation had ever existed. 

(Actually, I first publicly critiqued the focus on nation-building in Afghanistan and touted the need for better border controls at a 2002 Washington, D.C. policy conference summarized here.  It wasn’t till 2014, however, when ISIS had replaced Al Qaeda as the main Middle East terrorist threat to the United States, that I first wrote about the need for harassment forces.)   

But the Bush and Obama administrations ignored this advice because they had drunk the globalist Kool-aid insisting that overseas threats can be dealt with adequately only by literally turning troubled parts of the world into the political, economic, and social successes that they have never been. These Afghanistan policies per se weren’t high crimes or misdemeanors – unless you favor criminalizing stubbornness persistent and extreme enough to qualify as stupidity.

What was arguably criminal? As documented by Post reporter Craig Whitlock, even though the documents (which exist because of a federal research project undertaken to analyze failure in Afghanistan) make clear widespread official recognition of the debacle on the ground, they “contradict a long chorus of public statements from U.S. presidents, military commanders and diplomats who assured Americans year after year that they were making progress in Afghanistan and the war was worth fighting.”

And more to the point: “Several of those interviewed [by the project’s researchers] described explicit and sustained efforts by the U.S. government to deliberately mislead the public. They said it was common at military headquarters in Kabul — and at the White House — to distort statistics to make it appear the United States was winning the war when that was not the case.”

I’ve only read Whitlock’s summary articles about the documents, not the documents themselves, but undoubtedly if he’d found evidence that Bush and Obama personally knew about the distortion efforts or, worse, ordered them, he’d have reported it. At the same time, determining Presidential guilt wasn’t the government research project’s mission. In fact, although the Post is still suing the government for release of the names of the more than 400 “insider” interview subjects whose statements represent most of the raw material gathered by the researchers, it’s not clear whether the two former Presidents were among them. Moreover, it appears that not all the documentary evidence produced by the project has been released, either with names attached or not.

So the question made famous by the late Tennessee Senator Howard Baker during 1973 Watergate hearings – “What did the President know, and when did he know it?” – can legitimately be asked about Bush and Obama. Any answers eventually shaken loose in impeachment or similar investigations will be too late to undo the enormous damage of the Afghanistan war to date. But they might hasten a decision by Mr. Trump finally to act on his instincts and cut the nation’s losses. More important, the prospect of sitting at a witness table might persuade future Presidents to be far less reckless when they spend America’s blood and treasure.

(What’s Left of) Our Economy: The Case for Confidence in the Consumer Confidence Surveys May be Weakening

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Barack Obama, confidence, consumers, Democrats, George H.W. Bush, George W. Bush, independents, Republicans, Ronald Reagan, Trump, University of Michigan Surveys of Consumers, {What's Left of) Our Economy

Since psychology and emotions can affect how much individuals and companies spend and invest, and since U.S. economic growth does show signs of slowing from a solid but less-than-torrid pace, surveys purporting to track levels of consumer and business confidence understandably have attracted much more attention than usual.

One big possible problem, though: This era’s white hot political partisanship may be undercutting the usefulness of these soundings. The evidence comes from the widely followed University of Michigan survey of consumer sentiment, and it indicates both that such partisanship has greatly increased and influenced the results since the 1980s administration of President Ronald Reagan, and that most recently, more of this bias has been demonstrated by Democrats than Republicans.

The Michigan findings – which break out results according to whether respondent “usually think” of themselves as Republicans, Democrats, Independents, “or what?” – don’t permit conclusions on longer term trends to be drawn with great confidence. That’s mainly because the university’s Survey Research Center presents only five months worth of results for the Reagan administration, which lasted for eight years, and only twelve months worth for George W. Bush’s similar two-term presidency. Nonetheless, the data for those two periods do contrast significantly with those for the Obama and Trump administrations, which are complete (and bring the story up through this month).

My measure of partisanship compares the degree to which the results for Republican and Democratic identifiers (for the headline Michigan number) diverge from the results for Independent identifiers – which I use as a proxy for non-partisanship, based on the assumption that such Americans don’t permit politics to impact their views on the economy. For example, if during a given month, Independents’ assessment of the economy registers as a 50, Democrats’ as a 20, and Republicans as a 60, the Democrats’ views would be judged to be more partisan. In order to produce figures for each presidency, I calculated the average monthly totals for each of the three political groups for the duration of that President’s administration.

This method shows, not surprisingly, that partisanship has always influenced assessments of confidence. That is, when Democratic Presidents hold office, Democrats’ confidence levels are invariably higher than Republicans’, and vice versa. But during the Reagan years, the average monthly ratings for the economy found by the Michigan researchers were Democrats, 87.66; Independents, 98.14; and Republicans, 108.12.

So the partisan effect clearly was present, but the Democrats’ and Republicans’ perceptions diverged from those of the Independents by about the same degree.

No results are presented for either George H.W. Bush’s nor Bill Clinton’s administrations, but the results for George W. Bush’s presidency were Democrats, 63.48; Independents, 66.04; and Republicans, 78.38. That is, Democrats were only slightly more downbeat. More specifically, their ratings of the economy were 96.12 percent as good as the Independents’, while the Republicans’ was 118.69 percent of the Independents’.

During the Obama years, these results were almost exactly reversed: The average confidence level recorded for Democrats was 84.61; for Independents, 72.67; and for Republicans, 69.63. In this case, the Republican ratings were 95.12 percent as good as the Independents’, while the Democrats’ were 116.43 percent of the Independent’ score. But the partisanship showed by the Democrats under President Obama was still almost exactly as great as that showed by the Republicans when George W. Bush served in the Oval Office.

This pattern has continued through Donald Trump’s presidency so far, but Democratic partisanship looks somewhat stronger compared with the results for the Obama years. During the 32 Trump months, the average Democrat’s rating for the economy has been 76.61, the average Independent’s was 96.37, and the average Republican’s was 120.14. As a result, the Democrats’ judgments on the economy have been only 79.50 percent as positive as the Independents,’ but the Republicans’ has been 124.67 percent the size of the Independent score.

Put differently, during the Obama years, the Republicans’ judgments about the economy nearly matched the Independents’ (being 96.12 percent of the Independents’ average), but during the Trump years, the Democrats’ judgments came to only 79.50 percent of the Independents’ average. Both Democrats and Republicans were much more bullish on the economy under their respective Presidents than were Independents, but the Republicans’ “over-optimism” under Mr. Trump hasn’t been dramatically greater than the Democrats’ “over-optimism” under Mr. Obama.

Another sign of relatively great Democratic partisanship:  According to the Michigan research, Democrats’ optimism about the economy so far this year has weakened much faster than Republicans’.  And Independents’ confidence is actually up slightly so far. 

One cause for optimism about assessing consumer confidence stems from the divergence between the results for the Trump presidency and those for his predecessors recorded by the Michigan researchers. They could suggest that the Trump years are outliers, and that if he’s defeated in 2020, partisanship will remain significant, but will return to normal levels – at least for recent decades. Pessimists, however, can just as reasonably argue that the Trump years might represent a decisive break from the recent past. If the latter group is right, assessing the economy’s prospects by using consumer sentiment surveys – already a challenging task –will become more difficult than ever.

Making News: Back on National Radio Tonight Talking China, & CNBC Interview Now On-Line

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China, CNBC, George W. Bush, Gordon G. Chang, investment, Making News, national security, tech, The John Batchelor Show, Trade, Trump

I’m pleased to announce that I’m scheduled to return to John Batchelor’s nationally syndicated radio show tonight to help examine where President Trump’s economic conflict with China stands.  Click here to listen live on-line to what’s sure to be an informative discussion among John, co-host Gordon G. Chang, and me.  And our special focus will be U.S. efforts to restrict China’s access to cutting-edge (including  defense-related) technology.  The segment is slated to start at 10 PM EST.

As usual, if you can’t tune in, I’ll be posting a link to the podcast as soon as one’s available.

Speaking of podcasts (or podcast-like links), click here to see the video of my interview on CNBC Monday on U.S.-China trade tensions.  Especially interesting is that my interlocutor was a former top George W. Bush’s aide who was trying to claim that his administration handled China just swimmingly.

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

 

Following Up: More on the Trump Tariffs

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aluminum, Australia, Canada, David J. Lynch, Defense Department, defense manufacturing base, downstream industries, European Union, Following Up, George W. Bush, Gordon Hanson, James Mattis, Kentucky, manufacturing, Mitch McConnell, multiplier, Paul Krugman, Paul Ryan, steel, steel-consuming industries, tariffs, terrorism, The New York Times, Trade, Trump, U.S. Business and Industry Council, United Kingdom, Washington Post, Wisconsin

I could spend all day today rebutting ignorant, biased, and simply inane commentary on President Trump’s Thursday announcement that stiff tariffs will be imposed on U.S. imports of steel and aluminum (along with watching the plethora of college hoops on TV today!). Instead, I’ll offer some follow-on thoughts to the tariff talking points I posted yesterday.

>The European Union in particular seems outraged by the Trump decision, and has threatened to retaliate with tariffs on its own on a wide range of products, including some from Wisconsin and Kentucky. These of course happen to be the home states of House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. It’s an understandable, and certainly clever, impulse, and in 2003, something like it succeeded in convincing former President George W. Bush to lift steel tariffs he had imposed 18 months earlier.

Of course, Bush 43 was no Trump. He was a committed free trader and globalist, and/or agent of of America’s powerful corporate offshoring lobby. But here’s something that needs to be considered by Messrs Ryan, McConnell, and other lawmakers at whom the Europeans or other powers may take aim: What if, shortly after September 11, Osama Bin Laden had threatened to destroy major targets in their home states or districts unless the United States withdrew militarily from Afghanistan and left him alone. Would the affected legislators have run to the White House to plead for an abandonment in the war on terror? Not likely.

I know that war and economics are different (although given the importance of economic strength as a source of military strength and overall national success, the similarities and overlap are widely overlooked). But don’t doubt for a minute that American politicians’ reactions to these European threats will be watched closely in all the world’s capitals, and that signs of weakness will be factored into foreign decisions to abide by or violate current trade agreements at the U.S.’ expense, or take other measures to gain advantage in their own, American, or third-country markets that clash with free market and free trade norms.

So here’s hoping that American Members of Congress and Senators will show some backbone, and make clear to the nation’s trade partners that they won’t permit themselves and the country at large to be hanged separately.

>Speaking of hanging separately, quite naturally, U.S. steel- and aluminum-consuming industries are concerned that their global competitiveness will be harmed if they’re forced to use more domestic metal in their products. They need to keep two considerations in mind. First, if foreign governments are permitted by Washington’s inaction to dump major American industries like aluminum and steel out of existence, consuming sectors would be next in line. 

Second, there is indeed no inherent reason to make the consuming industries pay any penalty at all. When I was at the U.S. Business and Industry Council, which represented many steel-consuming companies and industry groups, we persuaded them that the best solution would be tariff protection for them as well. The tariff complaints coming from such sectors today reveals that the Trump administration hasn’t put this possibility on the table. That’s a major missed opportunity, and the President should realize that such offers not only can build support for the steel and aluminum tariffs. They can also expand the constituency for broader America First trade policies. (New Trump statements on possible auto tariffs make clear exactly the types of steps needed, although as is usually the case, they work best when applied across-the-board.)   

>Speaking of missed opportunities, here’s another (big) one – the handling of some allied countries’ indignation about being treated as threats to America’s national security because of their steel and/or aluminum shipments. In several major cases, these complaints could have been prevented had the administration recognized that Australia, Canada, and the United Kingdom are defined by American law as part of the nation’s defense “technology and industrial base.”

I’m not necessarily a supporter of this policy, but since it exists, these countries have an entirely legitimate point regarding their possible inclusion in the metals’ tariff regime. And the Trump administration should have explained to them that they were of course being exempted. Moreover, the Defense Department should have told the rest of the administration about the legal and legislative situation. Yet Pentagon chief James Mattis’ memo to his administration colleagues outlining his department’s position on the tariffs never mentioned it.

Not that these allied countries are entirely blameless for the row. They could have raised the issue when the prospect of sweeping U.S. tariffs was first raised. But all indications are that they preferred to grandstand.

>As should now be expected, the media coverage of the tariff controversy has often veered off into economics and policy La-La Land. Two of the funniest examples I’ve seen so far (and they’re nearly identical): criticizing the announced tariffs because they only boast the potential of bringing back high-value manufacturing to the United States instead of lots of industrial jobs.

Think I’m kidding? Here’s Washington Post correspondent David J. Lynch: “If tariffs prompt companies to move production back to the United States, they would likely opt for highly automated plants that require fewer workers. Trump’s tariffs ‘would bring back 21st-century factories where we lost 20th-century factories,” [economist Gordon] Hanson said this week at the National Association for Business Economics conference in Washington.”

Here’s no less than Nobel Prize-winning economist and New York Times columnist Paul M. Krugman: “[T]he tariffs now being proposed would boost capital-intensive industries that employ relatively few workers per dollar of sales; these tariffs would, if anything, further tilt the distribution of income against labor.”

What both authors are somehow missing is how manufacturing is valuable for much more than high wage employment. It’s long been the nation’s leader in productivity growth. It generates nearly 69 percent of private sector American spending on research and development. And don’t forget its high employment and output multipliers – which mean that each dollar of manufacturing output punches far above its weight in generation production and jobs elsewhere in the economy.

That last point is particularly relevant to Krugman’s claim about labor’s low share of national incomes. The manufacturing employment multiplier tells us that adding to industry in America – including capital-intensive industry – will promote employment in related sectors like logistics, plus revitalize the retail and other service sectors of the towns and cities and counties where the new factories are built. Those jobs may not pay as well as the manufacturing jobs lost. But they’re sure better than the economic death that often results when communities lose their factories.

Our So-Called Foreign Policy: Laughable Mainstream Media Ignorance on U.S. China Policy

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Angela Merkel, China, George W. Bush, H.R. McMaster, international order, Mainstream Media, Mark Landler, North Korea, Ooffshoring Lobby, Our So-Called Foreign Policy, responsible stakeholder, Robert Zoellick, The New York Times, Trump, Ukraine

Bad as it was, the worst aspect of Mark Landler’s New York Times piece yesterday about the first year of President Trump’s foreign policy wasn’t his contention that “liberal, rules-based international order” is a reasonable way to describe the international scene in recent memory. I mean, anyone seen much order out there lately? Or any country paying much attention to rules?

Nor was it endorsement of the conviction held by German Chancellor Angela Merkel – and much of the U.S. foreign policy establishment – that Ukraine is “a vital part of the trans-Atlantic relationship.” That’ll come as news to anyone remotely familiar with the history of either the United States or Western Europe from 1924 to 1989 – when the region was a part of the Soviet Union and its admittedly tragic fate had absolutely no discernible impact on any member of the Atlantic alliance whatever.

Instead, the worst aspect of Landler’s thinly disguised paean to the globalist approach to international affairs was his choice of former President George W. Bush’s top trade negotiator, Robert Zoellick as an authority on dealing with China.

Actually, I agree with Zoellick (though for somewhat different reasons) that Mr. Trump has made a major mistake in basing America’s China trade policy on Beijing’s efforts to help resolve the North Korea nuclear weapons crisis peacefully (and on acceptable terms of course). This week, even the president may have acknowledged this, as he’s tweeted criticism of China based on reports that Beijing has been violating UN sanctions by continuing to sell crude oil to the Kim Jong Un regime.

But the choice of Zoellick to make this accusation is laughably ignorant. Of course, it was the entire foreign policy establishment – as well as the offshoring-happy multinational corporations that finance so much of it – that made the historically foolish and dangerous mistake of assuming that indiscriminately expanding the world’s trade and other commercial ties with China would turn the People’s Republic into a country fundamentally easier to deal with on all fronts, and promote economic and political reform of its communist system.

Zoellick, however, took this naivete to a whole ‘nother level. For he was the American leader who, in 2005, declared that the time was ripe to turn China into a “responsible stakeholder” in the “international system.” The then-U.S. Trade Representative acknowledged that China had a long way to go reach this objective.

But this high profile address (to a quintessential Offshoring Lobby organization) unmistakably signaled the U.S. government’s belief that it was eminently attainable (along with the development of a relationship built on “shared interest and shared values”), and specified that its fate depended on the U.S. side on a campaign by that Offshoring Lobby to pacify those Americans who “perceive China solely through the lens of fear.” Is it any surprise that years of coddling China on trade and national security issues followed (including praise for China’s “constructive role” vis-a-vis North Korea)?

And upon considering Beijing’s ongoing refusal to curb its North Korea trade dramatically and its expansionism in the South China Sea, not to mention its intensified crack down on dissent at home and ever more brazen violation of global economic and commercial norms, can anyone reasonably doubt that Zoellick has been spectacularly wrong?

Interestingly, at one point in his article, Landler quotes Trump national security adviser H.R. McMaster as admitting that, on foreign policy, the president “has moved a lot of us out of our comfort zone, me included.” It’s a move that Landler, and most of his Mainstream Media colleagues, would be well advised to make.

Im-Politic: What that Alabama Senate Race Really Means

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2004 presidential election, 2008 presidential election, 2012 presidential election, African Americans, Alabama, Barack Obama, Christine O'Donnell, Doug Jones, establishment Republicans, evangelicals, exit polls, George W. Bush, Hillary Clinton, Im-Politic, independents, Jeb Bush, John McCain, Luther Strange, Mitch McConnell, Mitt Romney, Mo Brooks, moderates, off-year elections, Populism, presidential elections, Republicans, Roy Moore, Senate, Steve Bannon, suburbanites, Todd Akin, Trump, Virginia

Last week’s Alabama Senate race results remain worth studying carefully for two main reasons. First, the bizarro and self-destructive intra-Republican politics that handed victory to a Democrat in this deeply red state keep playing out. And second, reading the tea leaves correctly will be critical to figuring out whether, as is widely claimed, the triumph of former federal prosecutor Doug Jones does indeed herald the demise of the currently Trump-influenced brand of the Republican Party.

My overall conclusion: The fate of Trump-ism post-Alabama is still very much up in the air for most of the same reasons that its fate was up in the air pre-Alabama. Because as suggested above, the President and his main allies and surrogates have done such a lousy job of turning a reasonably coherent populist 2016 presidential campaign message into even a minimally coherent governing program.

And from this overall conclusion flow two follow-on conclusions: First, the conventional wisdom surrounding the Republican defeat in Alabama seems considerably off-base. The totality of the polling data shows that it can be mainly blamed on the deep personal and policy flaws of candidate Roy S. Moore rather than on any serious weakening of Trump-ism in the state. That’s lucky both for the President and for Republicans smart enough to recognize that the party’s continued viability depends on abandoning the orthodox conservative agenda still championed by its Washington/establishment wing but so roundly rejected by the voters.

Second, and much more troubling for Mr. Trump and his supporters: In the Alabama intra-party politicking, they showed no greater ability to get their messaging act – and competence – act together than they have in the national political and policy arenas as a whole. And the most glaring sign of this continuing confusion was the decision of the President and initially of his putative ideological guru, Steven K. Bannon to endorse Moore.

The by-now-standard interpretation of Alabama is that a closely related combination of anti-Moore and anti-Trump sentiments pushed black voter turnout in the state way up, turned off many moderate or independent white suburbanites who had gone for the president in 2016, and tipped the election to Jones. Moreover, these Alabama trends supposedly mirrored developments in the November Virginia gubernatorial race in particular, where a Democrat also prevailed – and look like a promising formula for a Democratic comeback in next year’s off-year Congressional races big enough to flip the House or Senate or both, and for regaining the White House in 2020.

But even without the Moore factor, these claims overlook big differences between Alabama and Virginia. Principally, the latter is steadily becoming reliably Democratic, as voters from more liberal areas of the country have flocked to the Old Dominion’s Washington, D.C. suburbs, attracted by government and government-related jobs. In fact, it’s voted blue in the last three presidential contests after staying in the GOP column every year since 1964.

With the Moore factor, the Alabama conventional wisdom looks even weaker, at least if you take the exit polls seriously. (Unless otherwise indicated, the following soundings come from the official exit polls for Alabama from the 2004, 2008, and 2012 presidential general elections, for the 2016 Republican primary in the state, and for last week’s Senate election.)

It’s true that black turnout was impressive – especially for an off-year election. At 29 percent, it even exceeded the African-American vote in 2012 (a presidential year, when all turnout tends to rise, and when black Americans obviously found Barack Obama a more compelling choice than 2016 nominee Hillary Clinton). It’s also true that because President Trump is reviled in the black community (with approval ratings in the mid-single digits), his endorsement of Moore prompted many Alabama African-Americans to “send him a message.” At the same time, in the 2004 presidential race (the last pre-Obama campaign), Republican president George W. Bush attracted only six percent of their vote (with somewhat lower – 25 percent – turnout). So it’s quite possible that whatever image problems Alabama blacks have with Republicans started well before the Trump era.

There’s also considerable polling evidence for the view that overlapping blocs of moderates, independents, and suburbanites, which gave Trump such noteworthy support in 2016, displayed some buyer’s remorse last week. For example, Moore did win the burbs – but only by a 51 percent to 47 percent margin. That’s much smaller than Mitt Romney’s 66 percent to 33 percent performance. And although there were no Alabama exit polls conducted for the 2016 presidential election, the primary polls report Trump winning fully half of Republican suburbanites – more than twice the share garnered by the next most successful GOP candidate (in a large field), Texas Senator Ted Cruz.

What about the self-described political moderates? In 2012, 52 percent supported Romney – much more than Moore’s 25 percent. Moore’s appeal to these voters also looks paltry compared with Trump’s last year. The president was backed by 40 percent of these voters – many more than supported the runner-up in this category, Florida Senator Marco Rubio.

And the same picture is created by self-described independent voters. Fully three quarters pulled a Romney lever in 2012 – three times the share won by Moore. (The 2016 exit poll lacked any data on this question.)

Yet I find more compelling the evidence that Alabama is sui generis. For starters, although by 53 percent to 42 percent, the state’s voters said that the sexual misconduct allegations against Moore were not “an important factor” in their vote, by 60 percent to 35 percent, they described them as “a factor.”

Let’s drill down a little further. Jones won 49.9 percent of the total vote, and slightly more Alabama voters (51 percent) expressed a favorable opinion of him. Moore won 48.4 percent of the total, but 56 percent of the state’s voters viewed him unfavorably. In addition, whereas 65 percent of Jones’ supporters favored him “strongly,” that was the case for only 41 percent of Moore supporters.

These Moore favorable ratings indicate that he suffered from a distinct enthusiasm gap among his core evangelical backers, and several exit poll indicators support this supposition. Evangelical turnout was slightly lower in 2017 (44 percent of the electorate) than in 2012 or 2008 (47 percent). Moreover, although Moore captured 81 percent of this vote, that share was down from Romney’s 90 percent in 2012, Senator John McCain’s 92 percent in 2008, and George W. Bush’s 88 percent.

And although the size of the 2016 primary field makes comparisons with last year difficult, evangelicals made up 77 percent of the Republican vote (a little lower than last week), and 43 percent went for Trump – nearly twice as many (22 percent) as those who voted for Cruz, the next best performer.

Among the signs that Moore dismay was evident among other voting blocs? He lost parents with children by 56 percent to 42 percent, and mothers with children by a much wider 66 percent to 32 percent. But although losing women overall by 57 percent to 41 percent, Moore won white women by 63 percent to 34 percent.

As for the impact on the President himself? Clearly negative. Mr. Trump remains significantly more popular in Alabama (48 percent approve of his performance as president) than nationwide (just under 38 percent approval according to the RealClearPolitics.com average of the latest soundings). But he won the state by a 62.9 percent to 34.6 percent margin over Clinton, so that’s a huge drop off.

Yet although the president’s nationwide ratings are quite low compared with those of his most recent predecessors at this point in their terms, it’s nothing unusual for them to take a dive after a year in office. Further, 51 percent of Alabama voters told the exit pollsters that Mr. Trump was “not a factor” in their decisions. In fact, the president’s approval ratings among Alabamians are higher than those of the Republican (43 percent) and Democratic (47 percent) parties overall. They’re also higher than those of Senate Majority Leader Mitch McConnell of Kentucky (46 percent), whose support of incumbent fill-in Alabama GOP Senator Luther Strange (appointed to replace now Attorney General Jeff Sessions) was deeply resented by many Republicans in the state.

All the same, as the end of his first year in office approaches, the President obviously is less popular than at the start of his term, and it’s easy to see why from simply considering the ideologically scrambled squabbling among Republicans that marked the process of choosing their Alabama Senate nominee. Given his party’s painful experiences with fringe-y candidates in previous campaigns – like Todd Akin of Missouri and Christine O’Donnell of Delaware – it was understandable that McConnell and the rest of the party’s establishment wanted someone far safer to run against Moore. But Strange lacked any ability to connect with the populism and broader voter anger that remains white hot throughout Alabama and nationwide. Even less explicable, a third candidate in the Republican Senate primary – Congressman Mo Brooks – appeared to have combined populist fire with a record that raised no Moore-like questions whatever. Why was McConnell so uninterested in him?

Much more mysteriously, why did Bannon opt for Moore over Brooks – who shared all of his economic nationalist and small-government impulses? His choice is all the more baffling given his acknowledgment last week that “Judge Moore has never been, really, an economics guy. If Mo Brooks had been running here, immigration and trade would’ve been at the top of the agenda — and bringing jobs back to Alabama.” And how come Bannon with all his contacts in the state couldn’t uncover the information about Moore’s sexual past that was reported by Washington Post journalists in the state on temporary assignment? The White House, of course, flunked this basic test, too. 

The president’s endorsement of Strange makes some sense, however, at least according to narrow political criteria. He supported McConnell’s choice because, as I’ve written, he believes he needs to maintain the backing of the Republican Party’s Washington-Congressional wing to survive any possible impeachment proceedings. In other words, at least some of the blame for the contradictions that have been hampering Mr. Trump on both substance and politicking lies with the Democrats. But of course, the president and his aides have given their opponents plenty of Russia-gate ammunition. And whoever or whatever is mainly at fault, the chief problem created by this bind is a powerful one. For the Republican establishment’s agenda remains as unpopular this year as it was last – which is largely why the Obamacare repeals have failed and why the Republican tax bill remains so unpopular with the public.

In other words, the kind of chaos (and yes, I’ve deliberately used former 2016 GOP presidential hopeful Jeb Bush’s description of the Trump campaign and personality) on display in this Alabama scrum surely reminded voters there about everything that’s always made them uneasy about the president. Although ready to roll the dice with him as a candidate, it’s easy to see why they find his presidency far more troubling – and why these doubts could easily spread further nation-wide, and take deeper root, unless Mr. Trump finds a way to squelch them.

(What’s Left of) Our Economy: The Republican Tax Plans’ Biggest Flaw

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Alan Greenspan, Barack Obama, Bill Clinton, budget deficits, business spending, capital gains, corporate taxes, dividends, Federal Reserve, fiscal policy, George W. Bush, House, income taxes, monetary policy, multinationals, non-residential fixed investment, Paul Volcker, repatriation, Republican tax bills, Ronald Reagan, Senate, tax cuts, taxes, {What's Left of) Our Economy

The tax bills passed by the Republican-controlled House and Senate and strongly supported by President Trump (despite some important differences between them) can be fairly criticized for any number of big reasons: the mess of a drafting process in the Senate, the impact on already bloated federal budget deficits and the national debt, the cavalier treatment of healthcare reform, the seemingly cruel hits to graduate students and to teachers who buy some of their students’ school supplies.

My main concern is different, though. I could see an argument for the main thrust of the bills – even taking into account most of the above flaws – if they boasted the potential to achieve its most important stated aim. In Mr. Trump’s words, “We’re going to lower our tax rate to the very competitive number of 20 percent, as I said. And we’re going to create jobs and factories will be pouring into this country….” Put less Trump-ishly and more precisely, the idea is that by slashing tax rates for corporations and so-called pass-though entities, along with full-expensing of various types of capital investment, American businesses will build more factories, labs, and other productive facilities; buy more equipment, materials and software; hire more workers and increase their pay (since the demand for labor will soar).

Actually, since automation will surely keep steadily reducing the direct hiring generated by all this promised productive investment, let’s focus less on the jobs promise (keeping in mind that manufacturing in particular generates lots of indirect jobs per each direct hire), and more on the business spending that will boost output – since faster growth is the ultimate key to robust employment and wage levels going forward.

Unfortunately, after spending the last few days crunching some relevant numbers, I can’t see the GOP tax plans living up to their billing – which makes their flaws all the more damning.

What I’ve done, essentially, is look at inflation-adjusted business spending during American economic recoveries (to ensure apples-to-apples data by comparing similar stages of the business cycle) going back to the Reagan years of the 1980s, and examine whether or not individual and especially business tax cuts have set off a factory etc building spree. And I didn’t see anything of the kind, except possibly over the very short term. Moreover, even these increases may have had less to do with the tax cuts than with other influences on such investments – like the overall state of the economy and the monetary policies carried out by the Federal Reserve (which help determine the cost of credit).

Let’s start with the expansion that dominated former President Ronald Reagan’s two terms in office – lasting officially from the fourth quarter of 1982 through the second quarter of 1990 (by which time he had been succeeded by George H.W. Bush). The signature Reagan tax cuts, which focused on individuals, went into effect in August, 1981 – when a deep recession was still underway.

Interestingly, business investment kept falling dramatically through the middle of 1983 – when an even stronger rebound kicked in through the end of 1984. Indeed, that year, corporate spending (known officially as private non-residential fixed investment surged by 16.66 percent. But this growth rate then began slowing dramatically – and through 1987 actually dropped in absolute terms.

A major tax reform act was signed into law by the president in October, 1986, and individuals were its focus as well. Two provisions did affect business, but appeared to be at least somewhat offsetting in their effects, in line with the law’s overall aim of eliminating incentives and disincentives for specific kinds of economic activity. They were a reduction in the corporate rate and a repeal of the investment tax credit – whose objective was precisely to foster capital spending. Other provisions had major effects on business but principally by encouraging more companies to change over to so-called pass-through entities, not (at least directly) on investment levels. Business spending recovered, but its peak for the rest of the decade (5.67 percent of real GDP in 1989) never approached the earlier highs.

Arguably, fiscal and monetary policy were much more influential determinants of business spending, along with the recovery’s dynamics. The depth of the early 1980s recession practically ensured that the rebound would be strong, as did the massive swelling of federal budget deficits, which strengthened the economy’s overall demand levels, and their subsequent reduction.

Perhaps most important of all, the Federal Reserve under Chairman Paul Volcker cut interest rates dramatically from the stratospheric levels to which he drove them in order to tame double-digit inflation. And yet for most of 1984, when business spending soared, the federal funds rate (FFR) was rising steeply. Capex also strengthened between 1987 and mid-1989, which also witnessed a scary stock market crash (in October, 1987).

The story of the long 1990s expansion, which mainly unfolded during Bill Clinton’s presidency, was simultaneously simpler and more mysterious from the standpoint of business taxes – and macroeconomic policy. Following a shallow recession, Clinton raised both personal and corporate tax rates while government spending was so restrained that the big budget deficits he inherited actually turned into surpluses by the late-1990s. For good measure, the FFR began rising in late 1993, from 2.86 percent, and between early 1995 and mid-2000, stayed between just under six percent and just under 6.5 percent.

And what happened to capital spending? In late 1993, right after the tax-hiking, spending- cutting, deficit-shrinking Omnibus Budget Reconciliation Act was passed, and the Fed was tightening, businesses went on a capex spending spree began that saw such investment reach annual double-digit growth rates in 1997 and stay in that elevated neighborhood for the next three years.

It’s true that Clinton and the Republican-controlled Congress passed tax cut legislation in August, 1997, that among other measures lowered the capital gains rate. But the acceleration of business spending began years before that. And although we now know that much of this capital spending went to internet-centered technology hardware for which hardly any demand existed then at all, from a tax policy perspective, the key point is that this category of spending rose strongly – not whether the funds were spent wisely or not.

The expansion of the previous decade casts major doubt on whether any policy moves can significantly juice business spending. Just look at all the stimulative measures put into effect, tax-related and otherwise. The recovery lasted from the end of 2001 to the end of 2007, and during this period, on the tax front, former President George W. Bush in June, 2001 signed a bill featuring big cuts for individuals, and in May, 2003 legislation that sped up the phase-in of those personal cuts and added reductions in capital gains and dividends levies. For good measure, in October, 2004, the “Homeland Investment Act” became law. It aimed to use a tax “holiday” (i.e., a one-time dramatically slashed corporate rate) to bring back (i.e., “repatriate“) to the U.S. economy for productive investment hundreds of billions of dollars in profits earned by American companies from their overseas operations.

In addition, under Bush, the federal budget balance experienced its biggest peacetime deterioration on record, and starting in the fall of 2000, the Federal Reserve under Alan Greenspan cut the FFR to multi-decade peacetime lows, and didn’t begin raising until mid-2004.

The business investment results underwhelmed, to put it mildly. Such expenditures fell significantly throughout 2001 and 2002, and grew in real terms by only 1.88 percent the following year. Thereafter, their growth rate did quicken – to 5.20 percent rate in 2004, 6.98 percent in 2005, and 7.12 percent in 2006. But they never achieved the increases of the 1990s and by 2007, that expansion’s final year, business investment growth had slowed to 5.91 percent.

There’s no doubt that something needs to be done to boost business spending nowadays, which has lagged for most of the current recovery and turned negative last year – even though the federal funds rate remained near zero for most of that time and the Federal Reserve’s resort to unconventional stimulus measures like quantitative easing as well, despite unprecedented budget deficits (though they began shrinking dramatically in 2013), and despite the continuation of all the Bush tax cuts (except the repatriation holiday, and the imposition of a small surcharge on all investment income to help pay for Obamacare). Business investment’s record during the current recovery has been even less impressive considering a Great Recession collapse that was the worst in U.S. history going back to the early 1940s, and that should have generated a robust bounceback.

But if history seems to teach that tax cuts and even other macroeconomic stimulus policies haven’t been the answer, what is? Two possibilities seem well worth exploring. First, place productive investment conditions on any tax cuts and repatriation (the 2004 tax holiday act did contain them) and then actually monitor and enforce them (an imperative the Bush administration neglected). And second, put into effect some measures that can boost incomes in some sustainable way – and thus convince business that new, financially healthy customers will emerge for the new output from their new facilities. To me, that means focusing less on ideas like raising the national minimum wage to $15 per hour (though the rate should, at long last, be linked to inflation), and more on ideas like trade policies that require business to make their products in the United States if they want to sell to Americans, and immigration policies that tighten labor markets and force companies to start competing more vigorously for available workers by offering higher pay.

In that latter vein, the 20 percent excise tax on multinational supply chains contained until recently in the House Republican tax plan could have made a big, positive difference. Sadly, it looks like it’s been watered down to the point of uselessness, and the original has little support in the Senate. The House Republican tax plan also had included a border adjustment tax that would have amounted to an across-the-board tariff on U.S. imports (and a comparable subsidy for American exports), but the provision was removed from the legislation partly due to (puzzling) Trump administration opposition.

Mr. Trump clearly has acted more forcefully to relieve immigration-related wage pressures on the U.S. workforce, but it’s unclear how quickly they’ll translate into faster growing pay.  If such results don’t appear soon, and barring Trump trade breakthroughs, expect opponents of the Republican tax plan to keep insisting that it’s simply a budget-busting giveaway to the rich, and expect these attacks to keep resonating as the off-year 2018 elections approach.