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.

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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.

Im-Politic: Fin de Trump? Again?

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2016 election, Donald Trump Jr., establishment, healthcare, Hillary Clinton, Im-Politic, Immigration, Jared Kushner, Mitch McConnell, Paul Manafort, Paul Ryan, Republicans, Russia, Russiagate, Trade, Trump, Vladimir Putin

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Our So-Called Foreign Policy: Why Opposition to the September 11 Law is Completely Stupid

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Bob Corker, energy, foreign policy establishment, international law, lobbying, Middle East, Mitch McConnell, Obama, oil, Our So-Called Foreign Policy, Paul Ryan, Saudi Arabia, September 11, September 11 bill, sovereign immunity, terrorism

Thanks to foreign policy establishmentarians on the Left and Right, ranging from President Obama to Congress’ Republican leaders, we’ve just gotten a moment when the folks we’ve entrusted to chart our country’s course in world affairs have not only gotten something massively wrong, but literally stopped thinking.

I’m talking about reactions to Congress’ override of the president’s veto of the September 11 bill, which will now enable the families of American victims of terrorism on U.S. soil to seek legal damages from foreign governments found to be responsible. Sure, all or most of the misgivings being expressed by figures like House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, and Senate Foreign Relations Committee Chair Bob Corker could be resulting from lavish campaign contributions they’ve received from Washington’s big Saudi Arabia lobby. (I have no concrete evidence of this, but the Saudis have always been major Beltway players, and they’re one of the governments sure to be sued under the new law.)

But what’s most revealing about the concerns and outright fears being expressed is their content. For the counter-arguments now being made – and made all along by the Obama administration – reflect jaw-dropping misunderstandings about geopolitics and the role of international law in international relations that have practically defined mainstream foreign policy thinking across the American political spectrum.

Two in particular stand out, and they’re related to the principle objection to the September 11 law: If American citizens can now bring court cases against foreign governments, in violation of the longstanding international legal principle of sovereign immunity, then foreign citizens will feel free to file all sorts of lawsuits against the U.S. government and its representatives at home and abroad.

First, though, does anyone really think that it’s international law that keeps American diplomats and official Washington safe from the reach of foreign legal systems (and the flagrant pseudo-legal systems found in so many countries – including Saudi Arabia)? If they do, they shouldn’t be allowed anywhere near the American foreign policy decision-making process.

What has really ensured these results is the shield that has always been America’s most reliable asset: American power in all its forms. This should be obvious when it comes to countries considered allies – since the United States is so inherently secure and prosperous that it needs them militarily and geopolitically much less than they need America. Indeed, if any allies are now considering or have ever even contemplated legally harassing American diplomats for any reason, that would count as a disgraceful failure of U.S. policymaking.

And P.S., that goes double for Saudi Arabia. In case the foreign policy establishment hasn’t noticed, even leaving aside the abundant support for Al Qaeda and other Islamic extremists influential Saudis have provided for decades, the days when the United States and the rest of the world needed to tremble at the thought that Riyadh might push through a big oil price hike or even shut off the spigots ended long ago. Even better, that’s mainly because of the energy production revolution in the United States.

So although Saudi retaliation for the September 11 bill might unnerve its hired guns in Washington, the United States is fully capable of telling its government, “Enjoy fighting Iran by yourself.”

Second, fears about a new global wave of anti-American lawsuits stupidly assume that most and even all foreign governments will react in the same way. The worrywarts don’t seem to understand that the September 11 bill only permits suits against foreign governments accused of supporting terrorism in the United States. Is this new law really likely to worry the British? Or the Japanese? Or even the Chinese?

The September 11 bill fear-mongers aren’t normally the types to softpedal the differences between America’s friends and foes, or between democracies and dictatorships, or even between ordinary foreign governments of whatever stripe and rogue states. So what’s going on? Simply put, their analytical compasses and even bedrock common sense apparently have been thrown off by the assumption – so crucial to modern international law – that all sovereign governments are created equal and much be so treated legally. Therefore, September 11 bill opponents seem convinced that all sovereign governments can be counted on to act in the same way as well.

Dickens famously characterized the law as “an ass” when, as is the case from time to time, its precepts produce head-scratching decisions. But in countries with legal systems worthy of the name, those bloopers are rightly accepted as one price of seeking and enforcing equitable societies and the common standards of behavior they require.

But the international sphere lacks the ingredients needed for effective legal systems – i.e., consensus about those standards. And no such meeting of an adequate number international minds is remotely foreseeable. Therefore, the ludicrous controversy about the September 11 bill should be reminding us that in the foreign policy sphere, the law is especially asinine – and should have no meaningful influence on American decisions and actions.

Im-Politic: Why the Elites’ Trump Bashing Keeps Flopping

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2016 election, Bloomberg, Cheap Labor Lobby, China, Donald Trump, elites, free trade agreements, Im-Politic, Immigration, Jobs, media, Mitch McConnell, Muslim ban, NBC News, Obama, political class, punditocracy, Rasmussen, The New York Times, The Wall Street Journal, Timothy Egan, Trade, Trans-Pacific Partnership, wages

Two weeks ago, I wrote that if opponents of Donald Trump really wanted to stop him in his tracks, they’d support seriously addressing the legitimate economic grievances of his supporters. The firestorm ignited by the Republican presidential front-runner’s proposal temporarily to bar non-citizen Muslims from entering the United States signals that legitimate national and personal security grievances need to be dealt with, too. After all, that would be a constructive response. Instead, most of the anti-Trump forces, especially in the nation’s elite media and political classes, have doubled down on the invective.  

New York Times columnist Timothy Egan’s latest offering was especially revealing in this regard. He both repeated the by-now standard denunciations of Trump as a neo-fascist, bigot, and xenophobe. But then he added an interesting wrinkle. Like some of his colleagues, he made a (typically condescending) nod to how “most” Trump supporters “do not see the shadow of the [Nazi] Reich when they look in the mirror. They are white, lower middle class, with little education beyond high school. The global economy has run them over. They don’t recognize their country. And they need a villain.”

Egan also just as typically charged that “Trump has no solutions for the desperate angst of his followers.” That’s patently false. Trump’s position paper on China, closely resembles the specifics-laden approach taken by many critics of America’s China trade policies in Congress – especially in Democratic ranks. And although his call for mass deportation is surely unworkable (and likely to be replaced by a completely realistic attrition strategy), Trump’s immigration position paper is similarly detailed and entirely practicable – albeit anathema to the corporate Cheap Labor Lobby and the guilt-saturated elitist mass immigration crowd on the Left.

But then Egan did something completely weird. He insisted that “Tearing up trade agreements is not going to happen.” But he himself offered no specifics as to why. After all, all treaties and similar agreements have “out” clauses. Abundant evidence shows that these deals and related policies have slowed growth (and therefore job creation) tremendously in this already miserable economic recovery. And opposition to the latest attempt to add to this destructive record – President Obama’s Trans-Pacific Partnership – keeps mounting. Even so dedicated an outsourcer toady as Senate Republican Leader Mitch McConnell has just urged that Congress not vote on the TPP until after the election.

Which all raises the question: Is Egan ignorant enough to believe that a major course change for U.S. trade policy is still impossible? Or is he one of those boardroom liberals who’s trying to prevent one?

Meanwhile, the futility of trying to marginalize Trump at all costs becomes clearer by the day. The latest evidence comes from the current round of opinion polls. As I’ve often written, they’re often full of problems and this last batch is especially all over the map. But two of them (from Rasmussen and Bloomberg) show that Trump’s Muslim ban – which I oppose – has attracted significant and partly bipartisan backing, and the Rasmussen survey shows it enjoys a plurality.

Perhaps more revealing, NBC and The Wall Street Journal, which pegged backing for the ban at only 25 percent nationally, found in a pre-ban sounding that 54 percent of Americans believed that the United States admits too many immigrants from the Middle East – including more than a third of Democrats. And what does the public think of President Obama’s approach to terrorism and ISIS – which particularly in the former case the punditocracy seems to consider the gold standard? According to a new New York Times-CBS News survey, 57 percent disapprove.

The bottom-line here appears pretty clear. Mainstream political and media elites are increasingly convinced that Trump has “crossed lines” that must never be crossed, and data keeps appearing that, thanks largely and understandably to their clueless insistence that standard approaches are working as well as possible, the lines themselves are moving dramatically.

(What’s Left of) Our Economy: The Exim Bank Fight is Much Ado About Very Little

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Adam Smith, conservatives, Exim, Export-Import Bank, exports, financing, manufacturing, Mitch McConnell, subsidies, Ted Cruz, The Race to the Bottom, Trade

The fight in Washington over resurrecting the Export-Import Bank has gotten so heated that it’s responsible for Texas Republican Senator (and presidential candidate) Ted Cruz calling his Kentucky colleague (and Senate leader) Mitch McConnell a liar, and has the nation’s major business groups lobbying furiously for reauthorization. For the life of me, I still can’t figure out what the big deal is.

In principle, I like the idea of the Bank – which has been forced to suspend most of its operations since its authorizing legislation ran out on June 30. It helps promote U.S. overseas sales by providing low-cost, taxpayer-backed financing for American businesses that want to do business with foreign customers that are sort of risky. The financing needed to clinch sales to these customers – in effect, a subsidy – enables the exporters to compete effectively with foreign rivals that receive similarly “attractive financing” from their governments.

It’s hardly free markets – but America faces a world of trade competitors that aggressively intervene to support their own firms and workers all the time. Matching this particular form of subsidy is simply a variation on Adam Smith’s maxim that an appropriate way to fight foreign trade barriers is to create bargaining chips by erecting your own.

At the same time, as I originally pointed out in my book The Race to the Bottom, by fostering trade with partners that aren’t terribly creditworthy, the Bank’s operations have reinforced the illusory claim that the supposedly “emerging markets” of the third world have become keys to future U.S. prosperity, and that reaching and cultivating these markets should trump other possible trade policy goals (like, say, recapturing the import-controlled portions of America’s home market). After all, if exports to a certain country need to be subsidized, that market probably isn’t very sustainable, and businesses should be wary of relying on them.

In addition, the share of U.S. exports aided by the Bank is miniscule. During fiscal year 2014, Exim says it supported $27.4 billion worth of these transactions. That works out to 1.68 percent of total goods exports. It’s true that, just as not all goods and services produced necessarily have the same long-term value to a national economy, not all exports are created equal. As I’ve repeatedly written, manufacturing plays a special role due to its heavy reliance on research and development, the high wages it pays, and its economy-leading productivity growth. Exim overwhelmingly works with manufacturers, but those $27.4 billion worth of 2014 fiscal year Bank-aided manufactures exports come to only 2.30 percent of the U.S. total that calendar year.

I’m kind of sympathetic to the argument that cutting smallish programs can create outsized political benefits by demonstrating will. In other words, how can politicians who can’t even agree on eliminating trifles ever hope to agree on meaningful spending reductions? In addition, the Bank has had a not-trivial scandal problem in recent years, reinforcing conservative charges that it embodies “crony capitalism.”

Yet the Bank has experienced only very low default rates on its loans, and largely as a result, it’s actually a net contributor to the U.S. Treasury. Its minor role makes clear that the Bank is anything but a game-changer – as its sometimes fevered corporate supporters often imply. (In fact, if they were really concerned about leveling the global playing field for domestic producers, they’d drop their opposition to unilateral U.S. sanctions on currency manipulation and other predatory foreign trade practices.) But Exim’s record adds force to supporters’ arguments that the nation’s economy is better off with its activities than without them.

By the same token, however, although conservatives are right to worry about official overreach and its dangers, Exim is anything but a poster child for government corruption or inefficiency. If their leaner government campaign is serious, Congressional Republican hardliners will target much more appropriate targets than the Export-Import Bank.

(What’s Left of) Our Economy: Another Con Job by Schumer on Trade and Currency?

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Chuck Schumer, currency manipulation, fast track, George W. Bush, House of Representatives, John Boehner, Lindsey Graham, Mitch McConnell, Obama, Senate, TPP, Trade, Trans-Pacific Partnership, veto, {What's Left of) Our Economy

I would hate to think that New York Democratic Senator Chuck Schumer has been conning the nation yet again on the currency manipulation issue, but the new trade compromise announced by Republican leader Mitch McConnell of Kentucky and his Democratic counterpart Harry Reid of Nevada has me scratching my head. In fact, I know that the analysis in this post may be a little difficult follow. But a bit of extra effort to understand this byzantine legislative tale will be well worth your while.    

The deal figures to break the Senate deadlock over President Obama’s request for fast track trade negotiating authority, which was created by yesterday’s defeat of a motion to begin floor debate officially. A major sticking point was McConnell’s refusal to combine the fast track request with a vote on several other trade bills. And one of these included a Schumer measure that would crack down meaningfully on foreign governments that undervalued their currencies in order to undersell competing U.S.-origin goods and services for reasons totally unrelated to free market forces.

The idea reportedly was that Congress’ Republican leaders would summarily reject the connected package as a trap that would doom any chances for new trade deals. For they and other fast track backers have continually claimed that foreign governments are dead set on preserving full freedom to engage in such exchange rate manipulation, and would react by simply refusing to negotiate seriously with Washington.

For reasons that frankly escape me, the Republicans took the bait. As a result, many Senate Democrats who ordinarily vote for such job-killing trade agreements mounted their high horses, joined forces with the trade policy critics in their party, and mustered enough votes to stall the fast track bill. These reasons escape me because a freestanding bill with even the best currency manipulation provisions has almost no chance of becoming law and therefore influencing U.S. trade policy.

After all, Republican Speaker John Boehner of Ohio has fought hard and successfully to keep a strong House currency bill off the floor, and so far his rank and file has been unwilling to openly challenge him and overturn his decision. Even if the legislation passed both House and Senate, unless the majorities were veto-proof (which looks far-fetched), the president could easily turn it aside. And if new trade deals don’t genuinely outlaw currency manipulation, other signatory countries could deter any unilateral American anti-manipulation actions with the threat of their own retaliatory sanctions.

The real way to ensure that American trade policy responds effectively to currency manipulation is by including in the president’s fast track negotiating instructions a flat requirement that he ensure the inclusion in new trade deals – like Mr. Obama’s proposed Trans-Pacific Partnership (TPP) – of enforceable disciplines against this currency protectionism. The manipulators could still frustrate U.S. aims by dismissing even the best documented American complaints. But the link to fast track would matter most by serving as a poison pill, since supporters of the expedited trade procedures insist that strong currency measures would be a fast track deal killer, and their inclusion would likely sink fast track for the time being.

Schumer has loudly championed the idea of cracking down on currency manipulators for many years. But his agreement to separate currency issues from the fast track vote dovetails with a disturbing pattern of failing to follow through with actions at crucial junctures. In particular, in early 2005, he and South Carolina Republican Lindsey Graham introduced a promising anti-currency manipulation bill in the Senate, and spoke passionately about the need to match Washington’s years of words on the issue with deeds. Yet that June, both lawmakers consented to postponed a vote in exchange for a series of flimsy Bush administration promises, and were content later that year to drop their initiative altogether following another series of comparably weak commitments.

In principle, Schumer could argue that a separate currency bill would still be useful to counter Chinese manipulation, since Beijing is not (yet) part of the Pacific Rim trade deal. But again, standalone bills have repeatedly failed on Capitol Hill, and there is no reason to suppose that their chances are any better today.

The fast track bill still faces major, and possibly insuperable, hurdles in the House. And as I wrote yesterday, the previous Senate vote still marks a Congressional milestone – however cynical the motives of many lawmakers might have been. Nonetheless, the maneuvering by Schumer (and, to be sure, like-minded Democratic colleagues) made what’s often called “The World’s Greatest Deliberative Body” a good deal less great. And given the strong odds of Schumer succeeding Reid as Democratic leader, a meaningfully brighter future is looking awfully hard to predict.

(What’s Left of) Our Economy: The Senate’s Messy but Historic Anti-Fast Track Vote

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2016 elections, Africa, AGOA, currency manipulation, fast track, Harry Reid, Jeff Sessions, Mitch McConnell, Obama, Orrin Hatch, Ron Wyden, Senate, TAA, TPA, TPP, Trade, Trade Adjustment Assistance, Trade Promotion Authority, Trans-Pacific Partnership, {What's Left of) Our Economy

So far, the Senate’s vote this afternoon to block debate on granting fast track trade negotiating authority to President Obama stands out mainly for two somewhat contradictory but equally valid reasons.

First, just one look at the actual roll call is enough to remind that even lawmakers’ decisions on the highest profile, emotionally charged issues can be an incredibly nuanced mix of substantive and procedural considerations. For example, Majority Leader Mitch McConnell of Kentucky, who has helped lead the charge to grant the president a virtual blank check for concluding new trade agreements, voted against proceeding, even though the triumph of the Nays puts fast track’s future in major jeopardy. The reasons reportedly were tactical, related to Senate procedures. Alabama’s Jeff Sessions, one of the few Republicans on Capitol Hill understanding the need for fundamentally new approaches to both trade and immigration policy, is recorded as voting for the measure. Unless that’s a typo, I’m dying to find out why.

Then there’s Ron Wyden, Democrat of Oregon and ranking minority member of the Finance Committee – which takes the lead on trade issues in the Senate. Wyden brokered a fast track compromise with Republican Finance Chairman Orrin Hatch of Utah that resulted in a bill strongly opposed by most Democrats in both Houses of Congress. Yet Wyden cast a ballot against starting a fast track debate on the Senate floor – avowedly because McConnell and other Republican leaders refused to guarantee strongly enough that related trade measures would be voted on as well. So did several other Senate Democrats who normally support standard trade deals.

Even stranger, these related bills are at best a mixed bag when it comes to affecting trade policy, trade flows and, most important, the U.S. economy’s growth and hiring performance – which could certainly use a helping hand. For example, one is a measure that would fund so-called Trade Adjustment Assistance (TAA) for workers who lose their jobs because of import competition or trade-related offshoring. These retraining and reeducation programs are widely viewed as chronic failures by those who have studied their results. Their continued popularity in Washington reflects their ability to enable trade deal supporters to claim genuine concern for Americans whose livelihoods they repeatedly vote to devastate. In other words, TAA support historically has provided a measure political cover for trade liberalization votes. But this year so far it’s throwing a major major monkey wrench into the president’s trade agenda.

Another trade-related demand made by fast track opponents is legislative movement on extending a free trade deal with sub-Saharan Africa. Although this arrangement’s impacts on the U.S. economy are modest, it’s involved a sacrifice of American jobs, mainly in the apparel industry, for African jobs. Even those believing that this tradeoff makes sense for U.S. interests should be troubled by how the African deal has become a back door for shipping Chinese-made garments, and clothing made from Chinese, not U.S.-manufactured fabric, into the American market.

At the same time, despite the byzantine array of motives on display, this Senate vote was a genuine milestone. For whatever their narrower and even cynical concerns, Senators who opposed launching the fast track debate had to know that any delay could well doom the measure, and with it any hopes for new trade agreements for the foreseeable future. The reason? The longer these decisions take, the deeper they get pushed into the already unfolding 2016 presidential cycle, when few politicians relish running as champions of current U.S. trade strategies.

Indeed, for all the White House efforts to dismiss today’s events as an “procedural snafu,” this anti-fast track vote represents the first time in decades that the Senate has rejected a major trade policy measure that didn’t require approval in the House as well. (In 2011, the Senate passed a stringent anti-currency manipulation bill, but many of the Yes voters no doubt knew that the measure was going nowhere in the House.)

As a result, Mr. Obama’s trade agenda, including his proposed Pacific Rim trade deal, is by no means dead. Indeed, Senate Minority Leader Harry Reid of Nevada, till now a bulwark of opposition to fast track and that Trans-Pacific Partnership (TPP) agreement reportedly is already trying to figure out how to save the president from complete humiliation. But given the Senate’s usually friendly disposition to standard trade liberalization policies, and given how its reservations may further stiffen the spine of the traditionally balkier House, there can be no doubt that U.S. trade policy history was made today. And given the current strategy’s record of slowing both economic growth and job creation, it’s history that even the most ambivalent, even Machiavellian fast track opponents can be proud to have made.