American executives are betting that the president is good for business. Not in the long run
MOST American elites believe that the Trump presidency is hurting their country. Foreign-policy mandarins are terrified that security alliances are being wrecked. Fiscal experts warn that borrowing is spiralling out of control. Scientists deplore the rejection of climate change. And some legal experts warn of a looming constitutional crisis.
.. Bosses reckon that the value of tax cuts, deregulation and potential trade concessions from China outweighs the hazy costs of weaker institutions and trade wars.
.. the investment surge is unlike any before—it is skewed towards tech giants, not firms with factories. When it comes to gauging the full costs of Mr Trump, America Inc is being short-sighted and sloppy.
.. The benefits for business of Mr Trump are clear, then: less tax and red tape, potential trade gains and a 6-8% uplift in earnings.
.. During the Obama years corporate America was convinced it was under siege when in fact, judged by the numbers, it was in a golden era, with average profits 31% above long-term levels.
Now bosses think they have entered a nirvana, when the reality is that the country’s system of commerce is lurching away from rules, openness and multilateral treaties towards arbitrariness, insularity and transient deals.
.. so far this month 200-odd listed American firms have discussed the financial impact of tariffs on their calls with investors. Over time, a mesh of distortions will build up.
.. American firms have $8trn of capital sunk abroad; foreign firms have $7trn in America; and there have been 15,000 inbound deals since 2008. The cost involved in monitoring all this activity could ultimately be vast. As America eschews global co-operation, its firms will also face more duplicative regulation abroad. Europe has already introduced new regimes this year for financial instruments and data.
.. The expense of re-regulating trade could even exceed the benefits of deregulation at home. That might be tolerable, were it not for the other big cost of the Trump era: unpredictability. At home the corporate-tax cuts will partly expire after 2022.
.. Bosses hope that the belligerence on trade is a ploy borrowed from “The Apprentice”, and that stable agreements will emerge. But imagine that America stitches up a deal with China and the bilateral trade deficit then fails to shrink, or Chinese firms cease buying American high-tech components as they become self-sufficient
.. Another reason for the growing unpredictability is Mr Trump’s urge to show off his power with acts of pure political discretion.
- He has just asked the postal service to raise delivery prices for Amazon, his bête noire and the world’s second-most valuable listed firm.
- He could easily strike out in anger at other Silicon Valley firms—after all, they increasingly control the flow of political information.
- He wants the fate of ZTE, a Chinese telecoms firm banned in America for sanctions violations, to turn on his personal whim.
.. When policy becomes a rolling negotiation, lobbying explodes. The less predictable business environment that results will raise the cost of capital.
.. Mr Trump expects wages to rise, but 85% of firms in the S&P 500 are forecast to expand margins by 2019
.. Either shareholders, or workers and Mr Trump, are going to be disappointed.
.. In a downturn, American business may find that its fabled flexibility has been compromised because the politics of firing workers and slashing costs has become toxic.
.. American business may one day conclude that this was the moment when it booked all the benefits of the Trump era, while failing to account properly for the costs.
On Monday, House Intelligence Committee Chairman Devin Nunes (R-Calif.) moved to release a memo written by his staff that cherry-picks facts, ignores others and smears the FBI and the Justice Department — all while potentially revealing intelligence sources and methods. He did so even though he had not read the classified documents that the memo characterizes and refused to allow the FBI to brief the committee on the risks of publication and what it has described as “material omissions of fact that fundamentally impact the memo’s accuracy.” The party-line vote to release the Republican memo but not a Democratic response was a violent break from the committee’s nonpartisan tradition and the latest troubling sign that House Republicans are willing to put the president’s political dictates ahead of the national interest.
Up until this point, Republicans had given Trump the benefit of the doubt that he wouldn’t launch a constitutional crisis. From their perspective, why take action and cause a confrontation with the president (and jeopardize their agenda) if they don’t absolutely have to?
Now they may have to.
.. He even hinted in a July interview with the New York Times that he’d fire Mueller if the independent investigation started looking into his finances.
.. Firing Sessions is one of the clearest paths for the president to get rid of the special counsel, who technically answers to the Justice Department. And that got some Republicans’ attention.
“There will be holy hell to pay,” Sen. Lindsey O. Graham (R-S.C.) warned Trump via reporters in July of what would happen if the president fired Sessions. A few weeks later, two pairs of bipartisan senators unveiled legislation to protect Mueller
.. “I can’t imagine any administration taking a move like that,” Sen. Bob Corker (R-Tenn.) told reporters in October.
.. But this revelation is more concrete than news over the summer. Trump didn’t just think about firing Mueller, he moved to do it. According to The Post’s Rosalind Helderman and Josh Dawsey, discussions were had and meetings were held by his aides to try to get him to back off.
.. Or, they just might not be interested in a confrontation with the president.
.. There is no serious bipartisan bill to protect Mueller in the House of Representatives either, where some vocal Republican lawmakers are instead saying Mueller should step down because of what they allege are various levels of bias.
.. Democrats involved in Congress’s Russia investigation were so worried by Republicans’ shrugs about protecting Mueller that in December Sen. Mark R. Warner (D-Va.), the top Democrat on the Senate Intelligence Committee, gave a speech warning a “constitutional crisis” would happen if Trump fired Mueller while Congress was gone.
.. But either way, the confrontation with the president that Republicans were trying to avoid has just landed on their doorstep.
Friday on his nationally syndicated radio show, conservative talker Rush Limbaugh warned of a coming constitutional crisis should the certain federal judges continue to deny President Donald Trump the ability to institute his policies.