Trump’s economic record is one big con

President Trump came into office promising some fabulous yet unspecified health-care plan to replace the Affordable Care Act. No plan existed; every plan Republicans came up with managed to reduce the number of insured. Trump promised never to cut entitlements; his fiscal 2020 budget proposal would have done just that.

Trump said he’d bring back manufacturing. In fact, it slowed and now has slumped. (“Manufacturing has slowed amid global uncertainty,” NPR reported earlier this month. “That’s one of the reasons the Federal Reserve gave for cutting interest rates this week.”)

Trump said he’d

  1. get tough on drug companies. He hasn’t. He said his
  2. tax cut would be aimed at the middle class,
  3.  deliver $4,000 a year to the average American family and
  4. permanently boost business investment, pushing growth above 3 percent. Nope, nope and nope.

The tax cut greatly favored the rich and corporationsno $4,000 raise materialized, business investment tapered offgrowth is below 3 percent, and the deficit ballooned. Trump is incapable of being embarrassed, but you’d think all those conservative think tanks, saner White House advisers (e.g. former adviser Gary Cohn) and supply-side theorists who pushed all this would be just a little sheepish.

John Harwood of CNBC writes, “Benefits from what President Donald Trump called ‘the biggest reform of all time’ to the tax code have dwindled to a faint breeze just 20 months after its enactment. Half of corporate chief financial officers surveyed by Duke University expect the economy to shrink by the second quarter of 2020. Two-thirds expect a recession by the end of next year.” Harwood found:

After an uptick in the second quarter of 2018, growth declined in the next two quarters to end up at 2.9% for the year.

Goldman Sachs economist Jan Hatzius says that second-quarter surge – initially measured at 4.2% but later revised down to 3.5% – represented the tax law’s peak impact. He expects it to vanish altogether by late this year or early 2020, as the economy returns to the same 2% growth levels Trump inherited from President Barack Obama.

As for workers’ pay, real wages increased by 1.2 percent in 2018. (“Ordinary workers had very little growth in wage rates,” Harwood quotes from the Congressional Research Service.)

The biggest economic lie was Trump’s declaration that trade wars are quickly and easily won, American consumers and farmers wouldn’t be hurt and we somehow would get richer by making Americans pay more at stores. Actually, they are paying a lot.

The conservative American Action Forum’s recent study found, “Altogether, the president’s tariffs could increase nationwide consumer costs by nearly $100 billion annually.” Moreover, other countries have not taken the tariffs lying down. “In addition to raising costs for American consumers, tariffs have also resulted in significant retaliation by other countries against U.S. exports. … To date, eight nations have levied retaliatory tariffs of 5 percent to 50 percent on approximately $131 billion of U.S. exports.”

To cushion the blow to farmers who are losing markets, the Trump administration has now put them on welfare, otherwise known as farm subsidies. Another low point in “conservative” economics.

Why this is all not front and center in the Democratic candidates’ campaigns is a bit of a mystery. Certainly, events such as the Dayton, Ohio, and El Paso shootings shift attention. But so far the Democrats are mostly arguing about what new things they are going to do (green energy, improvements to or a do-over on the ACA). They need to remember that a president’s reelection effort is a referendum on his performance. The Democrats would do well to point out that Trump has not fulfilled the promise of his economic populist message — hence the need to distract everyone with outrageous conduct, racism and xenophobia.

U.S.-China Trade Standoff May Be Initial Skirmish in Broader Economic War

The United States is increasingly wary of China’s emerging role in the global economy and the tactics it uses to get ahead, including state-sponsored hacking, acquisitions of high-tech companies in the United States and Europe, subsidies to crucial industries and discrimination against foreign companies.

The Trump administration has begun trying to limit China’s economic influence in the United States and abroad, warning about China’s ambitions in increasingly stark terms. Mike Pompeo, the secretary of state, compared China’s ambitions to Russia and Iran in a speech in London last Wednesday, saying Beijing poses “a new kind of challenge; an authoritarian regime that’s integrated economically into the West in ways that the Soviet Union never was.”

China, whose ambition is to dominate industries of the future, is pushing back. A column on Saturday in the Communist Party’s People’s Daily newspaper stated, “The United States is again waving the club of tariffs after misjudging China’s strength, capacity and will, further escalating trade friction between our two countries.”

The piece was written under the pen name Zhong Sheng — the “voice of China” — a name used when the paper publishes comments on foreign affairs that are authoritative.

Restraining China’s ambitions and methods is a tricky task — and there is concern that the Trump administration’s effort is creating a new red scare, fueling discrimination against China and its citizens that could ultimately hurt the United States. As many as 30 Chinese professors have had their visas to the United States canceled in the past year, or been put on administrative review, according to Chinese academics and their American counterparts.

“We’ve got decades of painful negotiating with China ahead,” said David Lampton, a China scholar at Stanford University. Mr. Lampton said a trade deal, if reached, would do little to resolve the bigger conflict. “It’s just a skirmish in an ongoing battle.”

.. While a trade deal could calm some tensions and establish more good will between the two nations, it is unlikely to achieve many of the ambitious goals that the administration has set for itself. Mr. Trump’s advisers, in particular the United States trade representative, Robert Lighthizer, have been focused on what the administration calls China’s practices of “economic aggression.”

But the administration has struggled to address the immensity of the problems in the text of a trade deal. People close to the talks say that the negotiators appear powerless to force any changes that aren’t in China’s interest.

Mr. Liu, who is leading China’s team in the trade negotiations, hinted at that uphill battle in a video statement released by the official Xinhua news agency.

Instead, a trade deal between the two countries seems more likely to bring change around the margins — tens of billions of dollars of soybean purchases, some tariffs lifted and changes to the text of Chinese laws or regulations that the country might ultimately disregard, particularly once another administration occupies the White House.

This is a decades-long endeavor,” said Robert Daly, the director of the Wilson Center’s Kissinger Institute on China and the United States. “This can’t be waved away over cake at Mar-a-Lago.”

The notion that the United States has one last shot to change China’s behavior is held by an array of people on both sides of the political spectrum. But it is an aggressive notion of American power to upend a rival system that has delivered prosperity for its people and put China on course to be the world’s largest economy.

Many in China see the United States as a declining power bent on enforcing its will on a world that no longer cowers before its hegemonic might. The troubles in American democracy and the long economic slump after 2008 persuaded many in China that its instincts to chart its own course were correct. In the eyes of many Chinese, their country is simply reclaiming its historic status as a dominant regional power in Asia.

It has also projected power across Asia, Africa and elsewhere while the United States has, on many fronts, retreated from its post-World War II commitment to the global order. But it has done so with little application of military force, in sharp contrast to what many in China see as American militarism.

Many in China have sought to avoid a trade conflict, which could have a larger impact on their economy than the United States’. But they have long thought the United States would have a difficult time accepting a true peer in economic, technology and military power, so consider the management of conflict with the United States to be an inevitable result of their own rise.

While the Trump administration accused China of breaking a trade deal, China’s resistance to the emerging terms stemmed from its belief that the United States was asking too much and offering too little in return. Many of the changes the United States seeks would limit what Chinese officials regard as a tried-and-true approach of using tens of billions of dollars from state-owned banks and government investment funds to turn previously small industries like car production or solar panel manufacturing into the largest industries of their kind in the world.

And the Chinese view some of the Trump administration’s demands as infringing on their sovereignty and giving America too much power over their economy — including requiring the country to codify changes through legislation in the National People’s Congress. To the increasingly nationalistic public in China, the American requests are reminiscent of 19th century history of unequal treaties forced on the country by foreign powers.

Mr. Trump on Saturday suggested China was simply delaying a deal in the hopes that a Democrat would win election in 2020 and continued his pugilistic approach, saying “the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!”

In the United States, China’s unwillingness to bow to America’s demands is uniting lawmakers like the Democratic Senate leader, Chuck Schumer of New York, and Senator Marco Rubio, Republican of Florida.

That is a significant shift from the prevailing view in the United States since the death of Mao Zedong in 1976 that close economic engagement with China would produce an increasingly democratic country that would be closely tied to an international economic order founded mainly on Western liberal ideals.

That has not happened.

China has indeed grown in prosperity, leaping into the ranks of what the World Bank defines as upper-middle income countries. Its economy is now bigger than any other country except the United States. Its manufacturing sector is now bigger than those of the United States, Germany and South Korea combined.

But in the last five years, China has veered toward increasingly repressive authoritarianism at home and a rapid military buildup. The State Department estimates that Beijing has put 800,000 to two million Muslims in hastily built internment camps ringed with barbed wire in northwestern China. The Chinese government has built an archipelago of air bases on artificial islands in the South China Sea in between Vietnam, Malaysia, Indonesia and the Philippines. And China now has the world’s largest navy and has conducted

China has indeed grown in prosperity, leaping into the ranks of what the World Bank defines as upper-middle income countries. Its economy is now bigger than any other country except the United States. Its manufacturing sector is now bigger than those of the United States, Germany and South Korea combined.

But in the last five years, China has veered toward increasingly repressive authoritarianism at home and a rapid military buildup. The State Department estimates that Beijing has put 800,000 to two million Muslims in hastily built internment camps ringed with barbed wire in northwestern China. The Chinese government has built an archipelago of air bases on artificial islands in the South China Sea in between Vietnam, Malaysia, Indonesia and the Philippines. And China now has the world’s largest navy and has conducted military exercises as far away as East Africa and the Baltic Sea.

On the economic front, the competition is even fiercer. Trump administration officials warn that China is trying to dominate the global 5G infrastructure that will be the basis for future mobile communications and is competing to set other technological standards that will determine which global companies win.

China is extending low-cost loans and building infrastructure around the globe through its One Belt, One Road program, which critics warn is making poorer countries beholden to China. It is out-investing the United States in some high-tech industries, and is gaining dominance in certain segments, like mobile payment, new energy vehicles and areas of artificial intelligence.

While American companies have long hankered for access to China’s growing market, their position has begun to shift as they see China’s practices and treatment of foreign companies. A survey released by the American Chamber of Commerce in China in February showed that the majority of its members favored retaining tariffs on Chinese goods while trade negotiations continued.

China’s own experts say that the Beijing leadership has been caught off guard by the pace of change in American perceptions of Sino-American relations.

“Even if there is some kind of agreement between Xi and Trump, in the long run the strategic bilateral relationship is already in trouble,” said Zhang Jian, a professor in the School of Government at Peking University. “There is no coming back, even if there is a deal.”

Foxconn Deal… Or No Deal?

Early in his presidency, Donald Trump said the Foxconn plant in Wisconsin would be “the eighth wonder of the world” because it would spectacularly revitalize American manufacturing. After billions of dollars in tax incentives, the Taiwanese tech company now seems to be reneging on some of what it promised. Sruthi Pinnamaneni is a reporter at the Reply All podcast who made an episode about the deal called  ‘Negative Mount Pleasant’. She talks about how the residents of the Wisconsin village of Mount Pleasant see the deal, and what they’ve been through in the spotlight.

Under Trump, the jobs boom has finally reached blue-collar workers. Will it last?

Growth in this sector is occurring at the fastest rate since 1984.

Blue-collar jobs, long a small and shrinking part of the U.S. economy, are now growing at a faster clip than those in the nation’s much larger service economy. Many factors collided to produce the blue-collar boom. Some are linked to short-term boom-and-bust cycles, but others may endure.

The rapid hiring in blue-collar sectors is delivering benefits to areas that turned out heavily for Trump in the 2016 election, according to the Brookings Institution, a shift from earlier in this expansion, when large and midsize cities experienced most of the gains.

The biggest drivers of the blue-collar hiring surge are the rebound in oil prices, the need to rebuild after disasters such as Hurricanes Irma and Harvey, and rising demand generated by a growing economy.

.. The economy has added fewer jobs per month, on average, than it did during President Barack Obama’s second term.

.. Coal mining added about a thousand jobs in the year ending in July, according to the Labor Department. Steel and aluminum production have gained only a couple thousand, while businesses that use these metals are warning of heavy layoffs if Trump’s tariffs stay in place.

.. The real drivers of the blue-collar boom are construction and manufacturing, which have added hundreds of thousands of jobs in the Trump era. These industries benefit most from a strong global economy.

.. Only 13.9 percent of workers are employed in blue-collar professions, vs, 15 percent in government and 71.1 percent in the service sector. But “muscle jobs” still play an outsize role in some communities.

.. “In places like Ohio and Wisconsin, manufacturing is part of the DNA. Voters there know what was lost and they see who is hiring now,”

.. “There are manufacturing jobs available right now, but young people have moved on. An entire generation of Americans has forgotten about manufacturing as a career path,” Paul said.