(What’s Left of) Our Economy: What the Mini-Deal Says About Trump’s China Policy

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agriculture, business investment, censorship, China, decoupling, democracy, Democrats, election 2020, Elizabeth Warren, Hong Kong, Hong Kong protests, human rights, impeachment, Populism, Republicans, tariffs, Trade, trade talks, trade war, Trump, Uighurs, Ukraine, Ukraine Scandal, {What's Left of) Our Economy

The “Phase One” min-deal reached by the United States and China tamping down bilateral trade tensions for the moment, speaks volumes about the three major forces that are now driving President Trump’s China policy, and that will keep shaping it through the next U.S. election – though not always in consistent ways. They are:

>the President’s evident belief that his reelection hopes are being threatened mainly by revived impeachment threats but also by an economic slowdown that has unmistakably been influenced by the so-called trade war with China;

>his consequently increased need for political support from the establishment Republicans so numerous in Congress who have never boarded the Trump Tariff Train and who are worried about their own reelection chances next year; and

>Mr. Trump’s consistent (though generally unstated) belief that no matter how the formal trade talks proceed, America’s national security as well as economic interests require the U.S. economy to continue steadily decoupling from China’s.

The strength of the impeachment drive faced by the president is now indisputable. Some polls are even showing growing Republican support for not only impeachment by the House but removal by the Senate. Moreover, this political challenge comes at a time when the President’s strongest suit by far (at least according to polls) – his economic policy record – is looking somewhat weaker.

Few signs point to a recession breaking out by Election Day, much less during the preceding weeks or months. But growth has been slowing to levels that Mr. Trump himself has deemed unacceptable – in no small measure because they were the rates that prevailed for most of the Obama administration.

The tariff-heavy Trump trade policies hardly deserve all the blame. (See, e.g., this recent post.) But the failure of business investment to stay elevated following passage of major tax cuts for business is especially telling. It buttresses claims that both the President’s various sets of tariffs and the inconsistency with which they’ve been both threatened and applied have inhibited companies from approving big new expenditures on new factories and other facilities.

As a result, nothing that can reasonably be expected from Washington (in other words, ruling out a big infrastructure spending bill) is likelier to boost the economy more than a nerve-calming trade truce with China mainly featuring some Chinese market opening or re-opening (especially for agricultural products) in return for some U.S. tariff cuts, promises to refrain from new levies, or some some combination of such moves. At the least, such an agreement would in theory help growth maintain the momentum it has remaining.

A mini-deal along these lines would also please the Senate Republicans who might ultimately judge the President’s fate, and who generally have lagged far behind the GOP base in turning against pre-Trump China and broader trade policies. Moreover, as I’ve written, impeachment politics have greatly magnified their sway over Mr. Trump before. Despite his sky-high popularity with Republican voters, the President was heavily dependent on their political backing until this spring in order to neutralize any impeachment chances while his Russia ties were being investigated. That’s surely why his early policy initiatives were dominated by traditional Republican priorities, like tax cuts and repeal of former President Barack Obama’s healthcare overhaul, rather than by populist priorities like an infrastructure bill and the prompt imposition to tariffs.

Once the Special Counsel and other investigations flopped for various reasons, Mr. Trump had a much freer hand. But because of the emergence of “UkraineGate,” for now, those days are over. Probes growing out of those events are certain to last for months. Therefore, continued, much less higher, tariffs on China that could further drag on the economy and further frustrate the rural constituencies so crucial to the President and many other Republicans seem out of the question.

The President is so hamstrung that he’s been unable to marshal greater public support for staying the tariff course even though China is antagonizing American public opinion with its harsh suppression of the Hong Kong protests and the Muslim Uighur minority, and with its heavy handed efforts to extend its censorship practices to the National Basketball Association and other U.S. businesses. And don’t forget: These developments have placed China in a much weaker position, too.  

One reason that the President hasn’t been able to capitalize could well be his reluctance to declare publicly the functional equivalent of economic war, or his intent to decouple – presumably because any such statements would prompt the Chinese to crack down even further on American companies even doing business in the PRC that have nothing to do with job and production offshoring aimed at serving the U.S. market from super-cheap and highly subsidized Chinese facilities, as opposed to serving Chinese customers. And that reasoning has been entirely understandable.

Much less understandable – the President’s insistence that a trade war with China would be easy to win and inflict no economic harm on Americans, rather than choosing to challenge his compatriots to endure some sacrifices in order to beat back a mortal threat to their national security as well as prosperity. No wonder public support for so-called hard-line policies remotely strong enough to offset the opposition and reservations of the Congressional Republicans and most Democratic politicians is nowhere to be seen.

And don’t doubt that the Chinese fully understand. Whatever problems they initially experienced in figuring Mr. Trump out, they surely have concluded that they’re best advised to play the waiting game on the broader and deeper so-called structural issues dividing the two countries (e.g., intellectual property theft, technology extortion, massive subsidies) until the President is replaced by a Democrat who’s much easier to deal with.

Indeed, the evidence for this conclusion is abundant. China issues have played a small role in the Democratic primary campaign so far – even when it comes to long-time critics of pre-Trump trade policies like Democratic Socialist Vermont Senator Bernie Sanders, and Massachusetts Senator Elizabeth Warren. One likely explanation: In recent years, Democratic voters and leaners have markedly flipped on those pre-Trump approaches, from deep dislike to general approval. This shift in public opinion (matched in part by a trade flip in the other direction among Republicans and leaners) may also warrant some Chinese confidence that even a President Warren might prove a more acceptable interlocutor than Mr. Trump.

Nonetheless, the formal talks are not the only track on which the Trump administration’s China trade policies are running. And the other track – featuring unilateral U.S. moves to restrict Chinese involvement in the American economy, and thereby foster decoupling – is much less controversial than the trade talks and especially the tariffs and tariff threats clearly required to spur any meaningful progress.

Highly revealing on this score (in terms of the importance attached in Washington to decoupling): Even as a high level Chinese delegation was jetting to Washington, the President approved actions against Chinese tech companies and Chinese officials that were justified by human rights concerns, but that in the first case clearly advanced decoupling. Just as revealing (in terms of possible Chinese acceptance of a more skeptical new bipartisan U.S. consensus on China policy): Despite the provocative timing, the Chinese didn’t turn around and head back home once they heard the announcement.

Reinforcing the new American consensus on decoupling has unmistakably been the growing realization by the U.S. corporate sector that its heavy bets on China have dangerously increased its vulnerability not only to the whims of American politics, but to a Chinese regime that’s turned out to be much less hospitable than expected. As a result, “Phase One” is not only a suspiciously convenient-looking term being used by the President to describe his new deal. It also looks suitable for describing where his administration’s overall China policy stands right now.     

Im-Politic: New Article Shreds Trump-as-Fake-Populist Claims

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election 2016, Im-Politic, middle class, Populism, The American Conservative, Trump, working class

I’m pleased to announce the publication of my newest freelance article.  Posted last night by The American Conservative, it uses recent, and usually overlooked, U.S. government data to debunk the claim that President Trump’s working- and middle-class voters were duped by the promises of a fake populist who proceeded to shaft them once he entered the Oval Office.  Here’s the link.

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

Im-Politic: Times Pundit Krugman Grows Ever More Truth-Challenged

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class warfare, Fox News, Im-Politic, Immigration, non-college whites, Paul Krugman, polls, Populism, pundits, tariffs, The New York Times, Trade, Trump

Oops, he (almost) did it again. That’s not only (almost) a gender-specific version of a Britney Spears song. It’s also an apt description of Paul Krugman’s latest column for The New York Times. As I wrote on RealityChek two weeks ago, Krugman’s June 3 essay on tariffs cited information on the U.S. agriculture sector fallout from 1920s duties that the source material simply didn’t contain. Yesterday, his piece on President Trump’s allegedly phony populism were partly based on a blatantly cherry-picked poll result.

According to Krugman, Mr. Trump’s talk of helping his core white working class voters economically is in fact so transparently phony that even these voters no longer believe it. His evidence? A June 16 Fox News poll finding “that only 5 percent of whites without a college degree believe that Trump’s economic policies benefit ‘people like me,’ compared with 45 percent who believe that the benefits go to ‘people with more money.’”

Regardless of whether these views reflect economic reality, the results certainly sound damning. But here’s the rub. First, Krugman didn’t get the question exactly right. Pollsters asked respondents whether the Trump programs “benefit everyone” or “mostly benefit people like you….” In other words, the benefits distribution was not presented solely as an either-or choice.

Second, and more important, the percentage of whites without college degrees believing that the Trump program “benefit everyone” (i.e., including them, and not qualified with “mostly”) was 32 percent. That’s not stratospheric, by any means, but it’s a lot higher than five percent. (See question 24.) 

(Adding another complication missed by Krugman, that five percent wasn’t five percent of the entire non-college white sample. It was five percent of the respondents who didn’t view the Trump policies as benefiting “everyone.”)

And some other notable poll results Krugman conveniently passes over:

The percentage of total Trump voters answering that his economic policies “benefit everyone” was 67 percent. That finding suggests an inclusive, rather than an us-versus-them view of how the economy should work – which in turn interestingly indicates that this part of the electorate isn’t terribly receptive to the kinds of so-called class warfare memes pushed by so many Democratic politicians.

In addition, the share of non-college whites who say they’re “strongly” or “somewhat optimistic about the U.S. economy right now” was 55 percent. That’s only a bit less than the 58 percent of the total sample that turned in such answers.  (See question 23.)  

These Fox poll results hardly demonstrate that the President is home free with his base on the economy. Moreover, they show that he’s far from having persuaded this big share of his staunchest supporters – much less the rest of the electorate – that he’s on the right track when it comes to his signature issues of immigration and trade (although as is often the case, in my opinion, the questions on these subjects – see 16-20, and 25-26 – leave much to be desired).

But Krugman’s selective report on the survey, following his off-base portrayal of an analysis of past tariffs, does demonstrate that his writings should now be accompanied by the warning, “Let the reader beware.”

Im-Politic: Claims that Trump Has Betrayed His Voters Economically Look Weaker than Ever

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Commerce Department, election 2016, Hillary Clinton, Im-Politics, Populism, real personal income, Trump

President Trump has betrayed all the (tens of millions) of working class and/or rural voters who supported him in 2016 – that’s been one of the most popular claims by his opponents politics and journalism alike. (See, e.g., this post.)  Even so, the evidence to the contrary being either ignored or unknown continues to impress.

At the end of last month, I presented some data showing that lower- and middle-income Americans have seen their economic lots improve faster relative to those of upper-income Americans under the first two years of Mr. Trump’s presidency than under the last two years of Barack Obama’s.  The gap hasn’t been enormous, but it sure seems to belie the idea that Trump voters were duped by a phony populist. 

This morning, the Commerce Department supplied some more in the form of its annual report on how inflation-adjusted personal income rose or shrank in each of the 50 states and the District of Columbia over the latest data year (in this case, 2016-2017).

A casual reading of the report doesn’t provide much encouragement for Trump supporters. For example, of the ten states that saw real personal income rise the fastest, six gave their electoral votes to Democratic presidential candidate Hillary Clinton in 2016, and only four to Mr. Trump. Moreover, of the ten states that performed the worst when it comes to personal income improvement, seven were in the Trump column and only three in Clinton’s.

Further, on average, the Clinton states enjoyed price-adjusted personal income advances of 2.60 percent in 2017. The comparable Trump state figure was only 2.05 percent.

So why do I argue that the Trump betrayal contentions get the story largely wrong? Because I’ve compared these 2016-2017 results with those of the year before – which was of course the last year of the Obama presidency. And what it shows is what surely matters to voters more the single year results – whether their personal incomes fared better or worse in 2017 than in 2016. And when these numbers are presented, the economic case for Trump votes looks awfully strong.

To be fair, after-inflation personal income nation-wide was much faster in Mr. Trump’s first year in office than in Mr. Obama’s last – and by a whopping 2.6 percent to 1.1 percent! Even so, the Trump states saw the best rates of improvement. Indeed, of the thirty states whose electoral votes were won by the President (and adding in Maine, which split its electoral votes), price-adjusted personal income grew faster in 2017 in fully 25 (or 80.65 percent). Income growth slowed year-on-year in only four 12.90 percent), and the rate stayed the same in two.

For most of the 21 Clinton states (including Maine), real personal incomes grew faster in 2017 than in 2016, too. But the percentage was lower (71.43 percent). In five of those 21 states (23.81 percent), inflation-adjusted personal income increases slowed, and Maine remained flat.

All together, inflation-adjusted personal income growth accelerated from 0.63 percent between 2015-2016 to 2.05 percent in 2016-17 for the Trump states – a much faster rate than the 1.58 percent to 2.60 percent speed-up for the Clinton states.

Especially interesting – between the two time periods, no fewer than seven Trump states saw their personal incomes grow in real terms in 2017 after shrinking in 2016. Only one Trump state (South Dakota) experienced the reverse. By contrast, none of the Clinton states suffered after-inflation personal income drops in 2016 – but none has experienced such dramatic improvement, either.

These state-wide numbers aren’t perfect measures of personal incomes developments, and they’re even more problematic as clues to political behavior. After all, most states are big enough to be highly diverse economically, and wide gaps between rich and poor can be found inside many. It’s also important to note that the Trump states generally keep lagging the Clinton states when real personal income growth is looked at in absolute terms.

But trends almost always deserve to count more than snapshots. And although the new real personal income numbers hardly show that the Trump states have entered economic nirvana, they make the betrayal claims look flimsier than ever.

Im-Politic: After Mueller/Barr, Can Trump Be Trump?

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America First, Attorney General, Betsy de, budgets, conservatism, conservatives, establishment Republicans, foreign policy, globalism, healthcare, Im-Politic, Immigration, impeachment, Kevin McCarthy, Obamacare, Populism, Republicans, Robert Mueller, Ross Douthat, seasonal workers, Special Counsel, Special Olympics, tax cuts, The New York Times, Trade, Trump, Trump-Russia, visas, William P. Barr

A week ago, I posted on the likely political impact of the end of Special Counsel Robert Mueller’s investigation of what have become known as the Trump-Russia scandals and of the release of Attorney General William P. Barr’s summary of its principal conclusions – which appear to put these charges and the threat of presidential impeachment they created behind Mr. Trump.

Now it’s time to think about a related and at least equally important subject: the policy effects. They could be profound enough to redefine the Trump presidency and the chief executive’s chances for reelection – even though the early indications seem to be saying exactly the opposite in ways that are sure to disappoint much of Mr. Trump’s political base. Here’s what I mean.

Ever since his administration’s opening months, I’ve believed that Mr. Trump’s policy choices have been strongly influenced by impeachment fears. Specifically, (and I have zero first-hand knowledge here) because President Trump feared that the Democrats and many mainstream Republicans were after his scalp, he concluded that he needed to appease his remaining allies in the latter’s ranks with policy initiatives they’ve long supported even though they broke with his own much less conventional and more populist campaign promises. 

In other words, it was the Russia and related scandal charges that were preventing “Trump from being Trump.”  

Moreover, this reasoning makes sense even if the President was certain that he faced no legal jeopardy. For impeachment ultimately is a political process, and although establishing criminal guilt is clearly helpful, it’s not essential.

The main evidence for my proposition has been the early Trump decision to prioritize Obamacare repeal over trade policy overhaul and infrastructure building; his almost libertarian-like initial budget proposal (at least when it comes to non-defense discretionary federal pending); his business-heavy tax cut; and numerous foreign policy moves that more closely resembled the globalist approaches he decried while running for the White House than the America First strategy his promised.

But although President Trump now seems certain to finish out his first term in office, he still seems to be currying favor with the Republican establishment. Just look at his latest budget proposal, and decision to go after Obamacare again – the healthcare move reportedly made despite the pleas of establishment Republicans like House GOP Leader Kevin McCarthy to move on from an issue now stamped as a major loser politically and threat to the party’s 2020 election prospects across the board.

It’s true that many of Mr. Trump’s trade and immigration policies still clash with the donor-driven agenda of the Republican establishment, and especially the party’s Congressional leaders. But even on these signature issues, the President arguably could be breaking even more sharply with the longstanding Republican and conservative traditions.

For example, Mr. Trump continues to keep suspended his threat of higher tariffs on many imports from China in apparent hopes of reaching a successful trade deal even though Beijing still seems determined to avoid significant concessions on “structural issues” (like intellectual property theft and technology extortion) and on enforcement.

On immigration, the President has just raised the 2019 cap on visas for unskilled largely seasonal foreign guest workers to levels never reached even during the Obama years. His administration also has permitted visas for farm workers to hit record levels and done little to stem the growth of work permits for foreign graduates of U.S. college and universities that critics charge suppress wages for high skill native-born workers.

One intriguing explanation for this continuing policy schizophrenia comes from New York Times columnist Ross Douthat. In a piece this past weekend, Douthat made the case that, although President Trump’s actual record has been largely heretical in mainstream conservative terms, when it comes to staffing (and especially key staff positions)

“there are effectively two Trump presidencies. One offers something like what the president promised on the campaign trail — a break with Paul Ryan’s green-eyeshade approach to entitlement reform, a more moderate tack on health care, an indifference to Obama-era conservative orthodoxies on fiscal and monetary policy.

“The other offers a continuation of the Tea Party’s insistence on spending cuts and Obamacare repeal, and appropriately its present leader is a former Tea Party congressman — Mick Mulvaney, the Zelig of the administration, whose zeal is apparently the main reason that the Obamacare lawsuit now has administration support.”

And the main reason for this confusing mix? The President has relied “on personnel who are associated with 2010-era G.O.P. orthodoxy, rather than elevating the kind of conservatives who have actively theorized for a more populist right.”

It’s so hard to argue with Douthat’s facts that I won’t. But they still leave the main puzzle unexplained – why so many of the President’s personnel picks have been so un-Trumpian. And much of the answer points to a problem that was clear to me ever since Mr. Trump’s presidential candidacy achieved critical mass and momentum, and that doesn’t seem solvable for the foreseeable future.

Specifically, as I’ve previously noted, conservative populists (I’m never been thrilled with this description of “Trumpism,” but for the time being it’s convenient) have never created the institutions and therefore cohorts of first-rate policy specialists remotely capable of staffing a conservative populist administration. Even if you want to identify immigration as an exception – where organizations like the Center for Immigration Studies put out top-flight studies – it’s clear that nothing of the kind has ever existed on the trade and foreign policy fronts.

And even worse, because of the long lead-times needed to achieve these goals, Mr. Trump appears doomed to dealing with shortages of competent true-believers as far as the eye can see. In fact, he’ll face a special challenge in the next few months, as the second halves of first presidential terms tend to see the departures of many early, often burned out appointees. And of course, the Trump presidency has already experienced much more than its share of turnover.

So I’m expecting an indefinite continuation of the eye-popping sequence of events of the previous week – in which Trump Education Secretary Betsy deVos announced an end to federal funding of the popular Special Olympics program, a public outcry ensued, and the President abruptly reversed her decision.

It’s hard to imagine that this kind of zigging and zagging can win President Trump reelection. But it’s also conceivable that the post-impeachment situation will “Let Trump be Trump” just enough – especially if the Democrats err in picking an overall strategy for opposing him.  After all, nothing has been more common in recent American political history than completely off-base predictions of Mr. Trump’s demise.

Im-Politic: Shutdown Lessons – So Far

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border security, border wall, China, Congress, Democrats, E-Verify, election 2020, establishment Republicans, government shutdown, illegal alien crime, illegal aliens, Im-Politic, Immigration, Mitch McConnell, Nancy Pelosi, North Korea, Paul Ryan, Populism, Russia-Gate, shutdown, Swamp, Trade, Trump

Since the fight isn’t over by a long shot, it’s chancy at best to try to figure out many of the biggest implications of President Trump’s decision to reopen the shut down parts of the federal government despite getting no new funding for a Border Wall or any new physical barriers aimed at strengthening border security. Still, here’s what looks reasonably clear at this stage of the struggle:

>First and foremost, the shutdown situation, context, and therefore even the verdict were set in stone more than two years ago by the Russia collusion/election cheating charges, by the opposition (mainly passive) to President Trump’s immigration agenda of the establishment Republicans still so prominent in Congress (and not just in its leadership) during the Trump administration’s first two years, and the resulting politics of impeachment.

That is, as I’ve written previously, from his first day in office, Mr. Trump needed to secure the protection of Congressional Republicans – including their establishment ranks. Therefore, he needed to prioritize their top issues, like Obamacare repeal and a tax cut heavily weighted toward business, rather than his top – populist – issues, like fixing America’s broken trade and immigration policies.

It’s true that in his second year, the President has ramped up the pressure on leading trade predator China and on other mercantile economies (with his steel and aluminum tariffs). But unlike the Border Wall, those measures didn’t require Congressional funding, or any form of approval from Capitol Hill. (The new trade deal with Mexico and Canada to replace the North American Free Trade Agreement seems to be moderate enough to at least have attracted mild endorsements from the Big Business-run Offshoring Lobby.)

And if establishment Congressional Republican leaders like former House Speaker Paul Ryan and current Senate Majority Leader Mitch McConnell weren’t going to go the mat for the Wall (which of course would also have required helping to persuade some moderate Democrats to come along as well) when the GOP controlled both houses of Congress, there was absolutely no way Mr. Trump could have generated Wall funding once the Democrats gained control of the House.

Incidentally, it’s being reported by at least one non-anonymous source with first-hand knowledge that the President himself provided some confirmation for this argument – by blaming Ryan for “having ‘screwed him’ by not securing border wall money when Republicans had the majority….”

>If you’re going to shut down the government, and especially if you’re planning to dig in your heels for the duration, shut down the right agencies. For example, if the issues are illegal immigration and law enforcement, don’t shut down the Department of Homeland Security – which is chiefly responsible for protecting the nation’s security in these areas. If you’re a Republican, don’t shut down the Agriculture Department, whose rural constituency is overwhelmingly Republican and conservative, and which was already unhappy enough with the President about China trade policies that had pretty much shut down America’s immense soybean exports to the People’s Republic. Also if you’re a Republican don’t shutdown the Federal Aviation Administration – because victims are especially likely to be businessmen and women and other relatively affluent voters – who provide lots of actual and gettable Republican votes.

>Consequently, the politics of shutdowns, and of some aspects of political populism, are becoming clearer than ever – especially if they’re long ones. And many of these should have been obvious from the start.

Most obvious, voters of all kinds – populists and non-populists alike – who are receptive to anti-government arguments get a lot less anti-government when the affected services affect them directly.

Less obvious, populist voters themselves say and act happy to see populist politicians act like disrupters when it comes to the mutually supportive networks of corruption and propaganda set up by establishment politicians, lobbyists, consultants, think tank hacks, and mainstream media journalists in the Washington, D.C. Swamp The same goes for establishment policies they believe have brought them nothing but trouble, like mass immigration, offshoring-friendly trade deals, and pipe dream foreign wars and similar ventures.

What they don’t want disrupted is the steady stream of government services that make their lives easier – and even viable in the first place.

>For reasons like the above, it’s unimaginable that Mr. Trump will follow through with his threat to shut down the government again if he can’t persuade Democrats to compromise acceptably on Wall funding. His best hope for some kind of partial win is to portray himself as the reasonable party, and the Democrats as the arrogant, rigid extremists.

>In that vein, expect continued, and even more frequent administration activity spotlighting crimes by illegal aliens – especially in the districts and states of key lawmakers. But success is also likely to require claims (which are entirely credible, in my opinion) that illegal aliens steal jobs from native-born Americans and/or drive down their wages, and that the leading victims include minority Americans.

>One particularly effective tactic would be for the administration to push for mandating that businesses use the E-Verify system to prevent illegal aliens out of the national job market. E-Verify is currently being used on a voluntary basis by many companies (not including most Trump-owned companies), and by all accounts is extremely accurate. (That is, it snares virtually no innocents in its electronic net.) But its use so far has been voluntary, meaning that companies that blow it off get legs up on their competition by virtue of easy access to bargain-basement illegal employees.

>Another potentially effective talking point that the administration has strangely ignored: focusing on the sheer numbers of foreigners who’d be likely to swamp U.S. borders – and the country’s asylum system – without more effective physical barriers. The administration and all of its spokespeople and media supporters should keep asking the question of Democrats: How many tens of millions of these would-be immigrants and asylum-seekers can the United States afford to admit?

>If these Trump efforts fail, declaring a national emergency looks like the President’s best bet to reestablish credibility with his base and perhaps with fence-sitting voters and Members of Congress, and even some legislative opponents.

Such a move could also go far toward putting the most politically damaging aspects of this issue behind him. After all, there’s little that opponents can do about such a national emergency declaration other than try to tie it up in the courts. And Mr. Trump could – credibly, in my opinion – respond by using information about illegal aliens crime to accuse them of endangering their countrymen and women’s security. So even if rulings by friendly judges hold up actual Wall construction, Mr. Trump’s political position could benefit.

>The President also could well be tempted to score political points by pressing harder to win some foreign policy victories. A China trade deal and significant progress in limiting the nuclear weapons threat posed by North Korea are the two most obvious candidates, but presidential over-eagerness could seriously undermine major American interests.

I’m most worried about the administration’s dealings with Beijing, given the talk out of China of ending the current trade conflict for the foreseeable future by buying lots more American goods and services. More Chinese imports from the United States would be welcome – no mistake about that. But not if the price is letting Beijing off the hook for its ambitions literally to steal and subsidize its way to global supremacy in key technologies that not so coincidentally have big defense implications.

>Finally, re shutdowns themselves, the policy of requiring furloughed workers to do their jobs without getting paid strikes me as completely unacceptable. In other circumstances like this, at home or abroad, these practices are called “forced labor” or “wage theft.” And they’re rightly condemned. Nearly as bad, these furlough practices help pro-shutdown politicians curry favor with their supporters while mitigating or at least postponing the harm to the public – including those supporters.

In other words, if you’re for a shutdown, make it a real shutdown. For any agency whose funding is cut off, the workers stay home – and the jobs they do don’t get done. If that means chaos ensues and public safety is put at risk, too bad for shutdown-ers. They’ll own it.

>Speaking of owning it, that’s the situation that House Speaker Nancy Pelosi now finds herself in not only regarding border security but every issue that comes up in national affairs. In particular, when you show you’ve gained enough power to win political battles, you also show that you’ve gained enough power to frustrate initiatives that may be unpopular among your caucus in Congress, or some of your caucus, but that may be popular with everyone else. So forget about the the idea that Pelosi is now free to conduct a campaign of all-encompassing resistance to the Trump agenda, and to dictate terms of those proposals that she is willing to consider.

>And finally, that’s one of the many reasons it’s way too early to predict how the shutdown fight will impact the next presidential election. The main additional reasons: There’s still a long ways to go before that campaign achieves critical mass, and any number of events could turn the political calculus upside down. And similarly, it’s glaringly obvious that the Trump era news cycle – along with the national attention span – is already the shortest in recent memory – and could well keep getting shorter.

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

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

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

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

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

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

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

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

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

In other words, “deplorables,” anyone?

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

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

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

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

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

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

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

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

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

Im-Politic: Will Trump Let Trump be Trump on Issues?

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Congress, conservatism, conservatives, Democrats, deregulation, establishment, Im-Politic, infrastructure, John McCain, Marco Rubio, midterm elections, Nancy Pelosi, Obamacare, Populism, regulation, Republicans, tax cuts, Trade, Trump

Ever since Donald Trump made clear his staying power in presidential politics, his more populist supporters have tried to beat back efforts of more establishment-oriented backers to “normalize” him by insisting that they “Let Trump be Trump.” The results of Tuesday’s midterm elections tell me that the populists’ arguments on substance (as opposed to the President’s penchant for inflammatory and/or vulgar rhetoric) are stronger than ever, but that the obstacles that they’ve faced remain formidable.

The “Let Trump” argument contends that the President’s best hope to attract the most voters has always been his willingness to reject positions that for decades have been conservative and Republican hallmarks, but that have become increasingly unpopular outside the realms of most national GOP office-holders, other Washington, D.C.-based professional Republicans and conservatives, and the donors so largely responsible for their power, influence, and affluence. These maverick Trump positions have included not only trade and immigration; but the role of government and the related issues of entitlements, healthcare, and infrastructure spending; and Wall Street reform.

But since his election, as I’ve argued, Mr. Trump’s willingness to embrace the full maverick agenda has been blunted by his vulnerability on the scandals front. Specifically, he’s seemed so worried about impeachment threats from Democrats that he’s been forced to shore up his support with the conventional Republicans that dominate the party’s ranks in Congress. Why else, I’ve written, would his first two years in office have so prominently featured strong support for right-of-center standbys like major tax and federal discretionary spending cuts; curbs on regulation; repeal of Obamacare; and bigger military budgets, rather than, say a massive push to repair and retool America’s aging or simply outdated transportation, communications, energy, and other networks?

It’s true that Trump remained firmly in (bipartisan) populist mode on trade (notably, withdrawing from the Trans-Pacific Partnership agreement and slapping tariffs on metals imports and many Chinese-made products), and just as firmly in (conservative) populist mode with various administrative measures and proposals to limit and/or transform the makeup of legal immigration – though many of his most ardent backers accuse him of punting on his campaign promise to build a Border Wall.

Yet this Trump populism strongly reflected the views of the Republican base – a development now not lost on conventional conservatives when it comes to immigration, even though they’ve been slow to recognize the big shift among Republican voters against standard free trade policies. By contrast, the President has apparently feared that Congressional Republicans would draw the line on the rest of their traditional agenda – or at least that he could curry favor with them by pushing it.

The midterm results, however, might have brought these political calculations to a turning point. On the one hand, there’s no doubt that most House and Senate Republicans, along with the donors and most of the party’s D.C.-based establishment, are still all-in on their tax, spending, regulatory, and Obamacare positions.

On the other hand, according to the exit polls and other surveys, the tax cuts didn’t even greatly impress Republican voters (let alone independents). And most Americans aren’t willing to risk losing Obamacare benefits they already enjoy (especially coverage for pre-existing medical conditions) by supporting Republican replacement ideas that may be less generous.

The message being sent by all of the above trends and situations is that President Trump may have even more latitude than he’s recognized to cut deals with Democrats. At the same time, the Democrats’ capture of the House of Representatives on Tuesday and signs that they’ll ramp up the scandal investigations could keep preventing him from “being Trump” on such issues and possibly antagonize most Republican lawmakers.

Of course, my political neck isn’t on the line here. But I’d advise Mr. Trump to follow his more unconventional instincts. The Congressional Republicans still uncomfortable with him ideologically must be aware that his personal popularity with GOP supporters has grown significantly since mid-2017, and that this surge owes almost nothing to their own priorities. So if they don’t help staunchly resist any intensified Democratic probes, their political futures could look pretty dicey, too.

One big sign that ever more establishment Republicans are getting “woke” on the obsolescence of much establishment conservatism: the efforts by long-time mainstream conservative/Republican favorites like Senator Marco Rubio of Florida to develop a Trump-ian agenda that can survive Mr. Trump’s presidency. Further, resistance in Washington to their efforts is likely to continue weakening, since so many of the President’s ideological opponents on the Republican side are leaving the House and Senate. (And of course, their spiritual leader, veteran Arizona Senator and 2008 Republican presidential nominee John McCain recently passed away.)

To be sure, Mr. Trump yesterday (rhetorically, anyway) erected his own obstacle to deal-cutting – his declaration that he won’t be receptive if investigations persist and broaden. House Democratic leader (and still favorite to become Speaker again) Nancy Pelosi has pretty clearly, however, signaled that she herself is not impeachment-obsessed, even if those exit polls say most of the Democratic base is.

As a result, I can’t entirely blame the President for still feeling spooked by the Democrats – at least this week. But what an irony if the most important opponent “letting Trump be Trump-ism” – whose broad popularity could well combine with the advantages of incumbency to outflank the Democrats, win the President a second term, and pave the way for a truly earth-shaking, lasting realignment of American politics – turned out to be President Trump himself.

(What’s Left of) Our Economy: A New China Bill – & Trade Policy Realist? – Worth Watching

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China, currency manipulation, economic nationalism, Fair Trade with China Enforcement Act, foreign direct investment, Gang of Eight, Immigration, Made in China 2025, Marco Rubio, national security, Populism, Republicans, subsidies, tech transfer, Trade, trade law, Trump, {What's Left of) Our Economy

One of the biggest questions surrounding the future of the Republican Party, and in turn of American politics, is how many leading GOP politicians learn the main lessons of the Trump victory in 2016. In my view, these include the political appeal and real-world imperative of a nationalist approach to American economic policy, especially in the realms of international trade and immigration.

President Trump’s capture of even most of his party’s establishment on the latter could not be clearer. But signs of populism’s growing appeal are also emerging in the former, and one of the biggest has just come courtesy of Marco Rubio. In fact, legislation recently introduced by the Florida Republican and Trump rival for the 2016 GOP presidential nomination strongly indicates that, when it comes to the crucial issue of China, Rubio is out-Trumping Mr. Trump.

Rubio’s journey has been a far as it has been high-speed. His voting record on trade policy overall has been awful – at least from an economic nationalist/populist standpoint. In fact, according to the libertarian Cato Institute, the only blemishes on his record so far have come from his support for federal subsidies for sugar – a crop grown in his home state. As a result, in the fall of 2015, I dismissed him as a typical Republican pseudo-hawk on China.

That is, he talked tough about the need to confront China’s expansionism in the East Asia/Pacific region. But he seemed oblivious to how decades of American trade policy had showered the People’s Republic with literally trillions of dollars worth of hard currency, along with cutting-edge technology voluntarily transferred by, and extorted with impunity from, American companies. In other words, he did and said nothing about U.S. decisions that unmistakably had helped China become a formidable military as well as economic power.

Fast forward to this year, and what a change – at least on China. In addition to criticizing President Trump for backing away from his own Commerce Department’s initial decision to all-but shut down the Chinese telecoms firm ZTE for (repeat) sanctions busting, he’s just introduced legislation that represents the most comprehensive effort I’ve yet seen to deal holistically with the intertwined Chinese threats to America’s economy and national security.

Rubio’s “Fair Trade with China Enforcement Act” contains numerous important measures to staunch the flow of money and defense-related tech to China. (Here’s a summary from his office.) Provisions that represent major and needed advancements in America’s strategy are:

> a prohibition on the the voluntary corporate transfer of technology to a wide range of explicitly named technologies subsidized by the Chinese government, including in the Made in China 2025 program aiming to achieve Chinese predominance in numerous economically and militarily critical technologies. That is, Rubio recognizes that tech extortion (conditioning access to the Chinese market on a company’s willingness to share knowhow with Chinese partners) isn’t the only way that Beijing has been closing the tech gap with the United States. American companies seeking to curry favor with China on their own, or simply recognizing the importance of locating R&D and related activities in close proximity to their manufacturing, have also fueled China’s power.

> a requirement that U.S. trade law recognize that any Chinese product headed for the American market that’s from an industry mentioned in any Chinese document even related to the Made in China 2025 plan is ipso facto receiving subsidies the kinds of subsidies that these statutes consider illegal; and that this same body of trade law just as automatically assume that such goods are actually injuring or threatening to injure U.S.-based competitors when they enter the American market. Translation into plain English: Rubio’s bill would dramatically lower the bar for imposing tariffs on imports from China deemed to be unfairly traded. Which would be one heckuva lot of imports from China.

> a ban on investors from China owning more than fifty percent of any American company producing goods targeted by Made in China 2025 – which would restrict another major channel of tech transfer to China;

> and a new tax on Chinese investments in the United States – including levies on Chinese purchases of American Treasury debt. The latter measure, in particular, would discourage China from buying excessive levels of U.S. government debt, which keeps China’s yuan weak versus the American dollar and therefore helps to put U.S.-made goods at price disadvantages versus their Chinese made counterparts wherever they compete.

Incidentally, a proposal along these lines was first made, to my knowledge, by Raymond, Howard, and Jesse Richman in their 2008 book Trading Away our Future. So they deserve a big shout-out.

Rubio’s bill isn’t perfect. For example, it should be clear by now that any Chinese entity permitted to bid for American assets is tightly controlled by the Chinese government. Therefore, I would favor banning all such takeovers. Even if existing acquisitions were permitted, Washington would at least be freezing the Chinese state’s economic footprint in the United States, and thereby preventing ever more American businesses from having to compete with rivals whose operations have nothing to do with the free market values the nation rightly values.

In addition, Rubio’s bill says nothing about American tech companies’ growing predilection for investing in Chinese tech “start-ups” and similar entities. Some of these investments are surely extorted, but others seem to be voluntary. But since all of them can help strengthen China’s tech capabilities, they should be banned as well if the recipients have any connection with Made in China 2025.

Finally, Rubio still seems pretty comfortable with the rest of America’s longstanding trade liberalization policies except for the impact of the North American Free Trade Agreement (NAFTA) on Florida produce growers. 

At the same time, China policy inevitably shapes so much of trade policy that Rubio’s single-minded focus to date can’t reasonably be criticized. Further, he seems to understand that it’s not enough simply to introduce a bill. Rubio’s been taking it the next step by lobbying for it, and for related China policy changes, actively in the media – both broadcast and print. He still needs to show a willingness to buttonhole his colleagues actively – the most important form of Capitol Hill lobbying. But (paradoxically) his leadership on 2013’s decidedly non-nationalist or populist Gang of Eight immigration bill at least indicates he recognizes the importance of this test. 

I’ve often wondered whether American politics can produce a leader with both the populist leanings of an outsider and the insider-type institutional expertise and contacts needed to turn these impulses into actual change. Rubio’s China bill and the policy migration it represents looks like major grounds for optimism.       

Im-Politic: Why Roseanne is Right About Trump Voters

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2016 election, Democrats, exit polls, Im-Politic, middle class, polls, Populism, Republicans, Roseanne Barr, The New York Times, Thomas Edsall, Trump, working class

So is Roseanne right about Trump and his victory in the 2016 presidential elections? Normally I wouldn’t attach any special importance to what an entertainer thinks about politics (or anything else outside entertainment). But Roseanne Barr’s claim in the wake of her sitcom’s revival and reboot that “it was working-class people who elected Trump” has intensified an already heated debate among many American politicians and political analysts and consultant types about the real lessons that Democrats should be learning from that shocking White House loss. And coincidentally, new evidence has just appeared awarding the win to Roseanne.

By way of background, this debate is really two closely related debates, and they could not be more politically charged. The first, as indicated above, entails whether the Trump triumph mainly stemmed from a genuine populist revolt fueled by both the economic and social/cultural anxieties of Main Street Americans, or whether it principally represented a victory for the kinds of relatively affluent voters who tend strongly to vote Republican.

The second has to do with the size and continuing importance of the white middle and working class vote. Is it rapidly becoming a minor portion of the electorate, or despite demographic shrinkage, will its preferences remain decisive for many years?

The implications? If the 2016 elections were a standard Republican victory, then Democrats’ pitch to working- and middle-class doesn’t have to change much because they’re still generally voting for the party. So maybe Democrats simply need a better candidate than Hillary Clinton (who did, after all, win the popular vote). And if the those aforementioned white voters are quickly losing their historic dominance over presidential politics (because their shares of the total population and electorate are falling quickly), then Democrats can feel freer than they already do to focus more on the issues – like greatly loosening American immigration policies – that supposedly animate increasingly significant racial and ethnic groups even if this strategy might turn off working- and middle-class whites.

Roseanne’s comments generated considerable and vigorous pushback. (See here, here, and here for examples.) But it seems that her critics’ case is based on exit poll data from the 2016 race that public opinion experts now believe was seriously off-base. According to an article by the New York Times‘ Thomas Edsall, more recent studies have concluded that the exit polls seriously overestimated Trump’s support “among well-educated white voters” – and therefore seriously underestimated the President’s backing by less well-educated (and generally less affluent) whites. Moreover, those exit polls

“substantially underestimated the number of Democratic white working-class voters — many of whom are culturally conservative — and overestimated the white college-educated Democratic electorate, a far more culturally liberal constituency.”

“33 percent of Democratic voters and Democratic leaners are whites without college degrees. That’s substantially larger than the 26 percent of Democrats who are whites with college degrees — the group that many analysts had come to believe was the dominant constituency in the party.

“According to [the Pew Research Center], this noncollege white 33 percent makes up a larger bloc of the party’s voters than the 28 percent made up of racial and ethnic minorities without degrees. It is also larger than the 12 percent of Democratic voters made up of racial and ethnic minorities with college degrees.”

Further, Edsall cites reports from Pew finding that whites without college degrees also continued to comprise a pretty big share of Americans who voted in the last presidential race: 44 percent, to be precise. That’s fully ten percentage points higher than their share reported in the exit polls.

As the author makes clear, such polling is still far from an exact science, and many of the pollsters he quotes seem to agree. But unless the latest studies – and the consensus they appear to represent – are whoppingly wrong, they make clear that the Democrats’ leftward, “resistance”-oriented tilt since the 2016 elections reveals a learning curve that has not only been unusually shallow, but that appears to be growing ever flatter.