Im-Politic: So What Happened to Trump?

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2016 election, conservatives, Donald Trump, Fox News Debate, Im-Politic, Immigration, Iowa Caucus, Marco Rubio, Megyn Kelly, New Hampshire primary, Republicans, Ted Cruz

Iowa has now come and gone, and there’s no question that last night’s results were bad news for real estate magnate Donald Trump – who seemed to be the clear Republican front-runner before the state’s caucuses. His stumble seems rooted in a number of problems, some of which should be pretty easy to correct or overcome, and some of which appear certain to dog him throughout the campaign.

Regarding the second type of challenge, there’s little doubt now that Trump’s decision to boycott the final pre-caucus debate hurt him, especially with voters who chose their candidate late in the game, and with that overlapping group that never became hard-core Trump-ites. But that’s not to say that if he shows up at all the remaining such events, Trump is home free on this score. For I suspected that one of his concerns was being subjected to a blast of videos showing him expressing all sorts of views that don’t pass muster with Iowa Republicans – or Republicans anywhere. Both Senators Ted Cruz of Texas and Marco Rubio of Florida got this treatment from the debate’s Fox organizers on the immigration issue – which is obviously just good journalism. But those rivals boasted solid conservative pedigrees.

I agree that many Republican voters no longer care about ideological purity. But Trump was certain to pay a higher price for prior “sins” with those who value conservative principles because his departures sound so much more egregious. And litmus test challenges will face Trump throughout the primaries, simply because staunch conservatives dominate the GOP primary electorate (much the way staunch liberals represent the lion’s share of Democratic primary votes). Ditto for ostensibly incriminating videos broadcast at debates.

In addition, whether Trump’s debate decision reflected animosity toward Fox anchor Megyn Kelly or not, his accusations of bias and other insulting comments could only reinforce fears even of voters still in his camp that he lacks the temperament to be president. Moreover, if Trump calculated that a feud with Kelly would enable him to dominate media coverage of the debate – which initially seemed like a good bet – his disappointing Iowa showing may be a sign that this act is wearing thin. It’s true that snubbing the debate might have been especially damaging in Iowa, where voters expect candidates to court them with special fervor. But New Hampshire voters demand similar treatment, so Trump may have created a hurdle for himself in the Granite State, too.

The Iowa results could also reveal another big character-related problem with Trump: The more viable his candidacy appears, the larger such issues could loom. When Trump could be dismissed as a flash in the pan, many voters arguably could become enthused and choose him in polls fully confident that their positions would be ultimately harmless protests. But as Trump ascended to front-runner status, the prospects of him actually winning the Republican nomination and occupying the Oval Office appears to have struck at least some of his erstwhile supporters and – more important – some leaners as unnerving. More troubling for Trump, there’s little evidence yet that he can pass this bedrock credibility test.

Finally, the organizational weakness that clearly hurt Trump in a retail-politics-dominated state like Iowa might have exposed a broader weakness in his campaign. Most immediately, as noted above, New Hampshire-ites also typically demand lots of individual attention from political contenders. Trump hasn’t done many town halls, much less coffee klatches, or other small meetings in the state. The vote is a week away. How many Granite State voters can he meet face-to-face during this time? And will his ground game get out the New Hampshire vote more effectively than in Iowa?

Moreover, if Trump survives New Hampshire, it’s still not clear that he can create the organizational structure needed to translate his existing popularity into support that can last through November. His business experience of course means that he’s good at mobilizing resources and completing major projects. But we’re not talking about building a casino – even in a business-unfriendly city or state. Some Republican political consultants and some portions of some candidates’ organizations will offer their talents to Trump, but will they – and former partisans of more establishment-oriented GOP contenders – work for him enthusiastically enough? Can the the true believers match the experience of their Democratic counterparts (who might of course be dealing with an enthusiasm gap of their own if Hillary Clinton wins that party’s crown)? Visible organizational weakness in turn, could aggravate Trump’s gravitas problem?

Nonetheless, other Trump issues seem correctable or surmountable. As I’ve written, Iowa was highly unlikely to be Trump country. His “New York values” were destined to be a problem whether his rivals brought them up or not. Although the kind of evangelical voters who dominate Iowa Republican ranks may be a more complex group than previously judged, Trump never had much to offer them on social issues. Further, Iowa isn’t the epitome of prosperity suggested by many political reporters, but the state is one of the few in America that’s benefited on net from the trade policies blasted by Trump. His economic populism will undoubtedly play better in economically weaker New Hampshire and across the nation, and this message will become increasingly convincing unless the slowing economy revives suddenly and strongly. Moreover, Trump’s Republican competitors are anything but problem-free themselves – including the not-easily-solvable kind.

Finally, as with anyone who has achieved major success, Trump no doubt has a reasonably steep learning curve. As his critics love pointing out, notwithstanding his “winner” mantra, his business ventures have suffered bankruptcies and other big setbacks. That he’s still prominent and uber-wealthy attests to the ability to adapt and adjust – as his opponents implicitly concede with their chameleon charges.

At the same time, Trump has never faced a spotlight as intense as that of a presidential campaign – not to mention a deadline as tight, thanks to the still-compressed primary season. I’d be the last person to count him out. So for once the conventional political wisdom in this presidential campaign looks right on target: Iowa has completely scrambled the Republican race.

Im-Politic: 2016’s Real Trump Effect

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2016 election, Chris Christie, CNBC, Donald Trump, economy, Fox Business, Fox News, Im-Politic, Immigration, Iowa Caucus, Jeb Bush, Jobs, John Kasich, Marco Rubio, Obamacare, Rand Paul, Republican debates, Republicans, Ted Cruz, wages

I have no idea who’s going to win tonight’s Iowa presidential caucuses in either party, but I feel confident in making one prediction: If and when Republican front runner Donald Trump either drops out at some point on the primary trail, or gets denied the delegate count needed to win the nomination either before or during the convention, most serious talk in the Republican race about the economy’s biggest problems will come to an abrupt halt.

Right now, given Trump’s strong showings in the latest Iowa polls, and even better performances in New Hampshire, South Carolina, and other surveys, such speculation seems besides the point. But I can’t dismiss out of hand one possible result unfolding tonight: A Trump defeat, or relatively poor second-place showing, could – as many commentators have suggested – puncture the aura of invincibility that’s been created by a combination of his unexpectedly broad appeal and his brash personality. In other words, a disappointing showing tonight could turn this “winner” into a hype-dependent “loser” in the public eye.

And as I’ve written, even – or especially – if Trump survives Iowa in good shape, the Republican establishment he’s run against could start consolidating behind a single champion as the more “conventional” hopefuls drop out. This candidate might start winning near-majorities in the polls while Trump remains stuck in the 30s or at best low 40s.

If and when the campaign becomes Trump-less, most signs indicate that the Republican campaign will give the shortest possible shrift to the pocketbook issues that matter most to the public. The most compelling evidence so far? The last Republican debate, on October 28 in Iowa, was Trump-less (by his choice). And judging from the proceedings, you’d never know that the United States has spent more than six years crawling out of an historically deep recession at an historically slow rate, and that living standards for the typical family have been stagnating literally for decades.

Economic subjects weren’t completely ignored. But throughout the two-hour event, they were a clear afterthought. There were zero questions on jobs and wages, and when the Fox News panelists did touch on the economy, it was for two main purposes. They either wanted to draw the candidates out on philosophical questions, like the ideal size and role of government, that Trump’s rise in particular suggest have become marginal even to committed “movement” conservatives. Or they sought to plumb the candidates’ views on the Iowa-specific issue of ethanol subsidies.

Of course, immigration figured prominently that evening. But the candidates almost exclusively focused on its national security aspects, not its potential to either strengthen or weaken American growth or employment.

Exceptions to these patterns did pop up. Though the topics were completely ignored by the Fox interrogators, Governors Chris Christie and John Kasich touted their job growth records in New Jersey and Ohio, respectively, as did Jeb Bush for his years in the statehouse in Florida. Texas Senator Ted Cruz did promise to end welfare payments to illegal immigrants, while Florida Senator Marco Rubio mentioned the need to ensure that immigrant flows contain more skilled and educated newcomers ready to contribute economically upon their arrival, and fewer immigrants whose only entry qualifications were family connections to existing legal residents. Kentucky Senator Rand Paul used his closing statement to warn of the dangers of the national debt. And Cruz answered the single question about Obamacare in impressive detail – in the process calling it the nation’s “biggest job-killer.”

But that paragraph pretty well sums it up.

It’s entirely possible that the Fox panel neglected the economy because its members thought Iowa is prospering, and that therefore the issue hasn’t resonated. (Here’s why they’re wrong.) So maybe when the primaries move into states with more obvious troubles, this focus will shift – for all the networks. In principle, Fox might also have concluded that the Fox Business debate in Milwaukee in November covered the economy adequately (along with the October CNBC debate in Colorado, which wildly veered into numerous other areas as well).

It’s also revealing, however, that unlike Trump, few of the other Republican contenders consistently take the opportunity to pivot to economic issues when asked other questions. Perhaps they believe the economy has been superseded by terrorism and related national security issues? Could they be holding their economic fire for the general election? Are they convinced that the economy simply is no longer bad enough to harp on? That last possibility has me particularly intrigued, since it strikes me as so stunningly wrong. But by the same token, it could be just the latest evidence that the Republican party’s mainstream power brokers really are out of touch with the national mood.

(What’s Left of) Our Economy: The Establishment’s Dead-End Thinking on Trade

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2016 election, Ben Bernanke, China, Donald Trump, Financial Crisis, Global Imbalances, imports, Iowa Caucus, Jobs, Josh Barro, Michael Pettis, NAFTA, North American Free Trade Agreement, Steven Rattner, tariffs, taxes, The New York Times, TPP, Trade, Trans-Pacific Partnership, transfer payments, wages, {What's Left of) Our Economy

The new year has brought a positively weird confluence of events in the trade policy world. On the one hand, a spate of Trans-Pacific Partnership (TPP) endorsements by the Offshoring Lobby and a big study on its effects from a major Washington, D.C. think tank suggests that a strong campaign to push the Pacific Rim trade deal through Congress is in the works. On the other, recent weeks have also seen a flurry of acknowledgments from national policy mainstays that the U.S. trade strategy on which the TPP is based has backfired powerfully.

Stranger still (or not?), these expressions of buyers’ remorse make clearer than ever that the country’s economics and business establishment has no realistic ideas for solving the serious problems they admit their favored trade measures have created.

The most glaring example comes from Ben Bernanke. As I’ve written, the former Fed Chair is one of the economics profession superstars who has linked the last financial crisis to the buildup of historic trade-centered imbalances in the global economy. Given the rebound during the current economic recovery in both the Chinese trade surplus and the American deficit at the heart of the previous meltdown, you’d think that Bernanke would be thinking seriously about how to prevent a rerun. But you’d be wrong.

New York Times economics writer Josh Barro has just reminded us that Bernanke rejects out of hand widespread calls to punish China and other countries that have long manipulated their currencies to steal growth and jobs from countries like the United States – and which, in the case of China, are still realizing the trade benefits of long years of manipulation that have distorted price structures to its advantage. But the only response he suggests is rightly dismissed by Barro as “asking nicely.” In Bernanke’s words:

“countries do respond I think to diplomatic overtures and to pressure from their trading partners when what they’re doing is perceived as, you know, counterproductive to the global economy.”

Barro’s article also shows that many of the second thoughts voiced lately on trade policy have been sparked by another new study – this one on the impact of greatly expanded U.S.-China trade– and by Republican presidential front runner Donald Trump’s (so far short-lived) call for a 45 percent U.S. tariff on imports from China. Such measures of course are still taboo throughout the policy community. But are we hearing about any good alternatives? Not judging from the debate so far.

Michael Pettis is one of the world’s genuinely knowledgeable observers of China and the founder of a must-read blog on its economy. But his solution to China’s dangerous mercantilism mirrors Bernanke’s almost to the word. After telling Fortune magazine that his “really big concern [about the weak world economy nowadays] is that we’re going to see a soaring trade deficit in the U.S. which could derail the U.S. economy, which is the only bright spot right now,” Pettis was asked if American leaders should “enact protectionist policies to prevent a soaring trade deficit.” His answer:

“The best thing would be for the world to get together and say we can’t allow [1930s-style trade wars] to happen, it would be incredibly stupid.” He then added, “But I’m not confident that this will happen.”

Other thinkers have proposed counter-measures that don’t literally depend on the kindness (or enlightenment) of strangers. But they hold no more potential to put either the U.S. economy or its beleaguered workers on a sounder financial footing. An especially noteworthy example was former Obama administration official Steven Rattner’s New York Times column last week asking “What’s Our Duty to the People Globalization Leaves Behind?”

Rattner, a former Times reporter, Wall Street-er, and an architect of the Obama administration’s auto industry rescue plan, not only rejected the notion that automation and other efficiencies are the main causes of job destruction and wage lag in the trade-centric manufacturing sector. He actually blamed specific trade deals like the North American Free Trade Agreement (NAFTA).

Also to his credit, Rattner didn’t dredge up failed recommendations for better training and re-education programs as the cure for what ails America’s workers. But his apparent first choice – “huge tax redistribution, both as a moral matter and as a mechanism for ensuring political support for free trade” – is entirely conventional. It’s just a variation of the classic “compensate the losers” option that enjoys widespread support in the economics profession, but that dangerously pretends government transfer payments can adequately substitute for earned income. As one former colleague of mine cracked years ago, “It’s work-to-welfare.”

The upcoming Iowa Caucus results – and other early primary season contests – will reveal much about whether Americans favor candidates who stand for incremental changes in the policy frameworks long established by the two major parties, or politicians who favor breaking the mold. If the latter prevail, surely one reason will be a trade policy consensus that keeps offering the working public either more of the same debilitating results, dispairing shrugs, or bigger handouts.