It’s all about the power — and the cronyism.
Almost exactly one year has passed since Donald Trump declared, “I am a Tariff Man.” Uncharacteristically, he was telling the truth.
At this point I’ve lost count of how many times markets have rallied in the belief that Trump was winding down his trade war, only to face announcements that a much-anticipated deal wasn’t happening or that tariffs were being slapped on a new set of products or countries. Over the past week it happened again: Markets bet on an outbreak of trade peace between the U.S. and China, only to get body slammed by Trump’s declaration that there might be no deal before the election and by his new tariffs on Brazil and Argentina.
So Trump really is a Tariff Man. But why? After all, the results of his trade war have been consistently bad, both economically and politically.
I’ll offer an answer shortly. First, however, let’s talk about what the Trump trade war has actually accomplished.
A peculiar aspect of the Trump economy is that while overall growth has been solid, the areas of weakness have come precisely in those things Trump tried to stimulate.
Remember, Trump’s only major legislative accomplishment was a huge tax cut for corporations that was supposed to lead to a surge in investment. Instead, corporations pocketed the money, and business investment has been falling.
At the same time, his trade war was supposed to shrink the trade deficit and revive U.S. manufacturing. But the trade deficit has widened, and manufacturing output is shrinking.
The truth is that even economists who opposed Trump’s tax cuts and tariffs are surprised by how badly they’re working out. The most commonly given explanation for these bad results is that Trumpian tariff policy is creating a lot of uncertainty, which is giving businesses a strong incentive to postpone any plans they might have for building new factories and adding jobs.
It’s important to realize that Trumpian protectionism wasn’t a response to a groundswell of public opinion. As best as I can tell from the endless series of interviews with white guys in diners — who are, we all know, the only Americans who matter — these voters are driven more by animosity toward immigrants and the sense that snooty liberals look down on them than by trade policy.
And public opinion seems to have become far less protectionist even as Trump has raised tariffs, with the percentage of Americans saying that free trade agreements are a good thing as high as it’s ever been.
So Trump’s trade war is losing, not gaining, support. And one recent analysis finds that it was a factor hurting Republicans in the 2018 midterm elections, accounting for a significant number of lost congressional seats.
Nevertheless, Trump persists. Why?
One answer is that Trump has long had a fixation on the idea that tariffs are the answer to America’s problems, and he’s not the kind of man who reconsiders his prejudices in the light of evidence. But there’s also something else: U.S. trade law offers Trump more freedom of action — more ability to do whatever he wants — than any other policy area.
The basic story is that long ago — in fact, in the aftermath of the disastrous Smoot-Hawley tariff of 1930 — Congress deliberately limited its own role in trade policy. Instead, it gave the president the power to negotiate trade deals with other countries, which would then face up-or-down votes without amendments.
It was always clear, however, that this system needed some flexibility to respond to events. So the executive branch was given the power to impose temporary tariffs under certain conditions: import surges, threats to national security, unfair practices by foreign governments. The idea was that nonpartisan experts would determine whether and when these conditions existed, and the president would then decide whether to act.
This system worked well for many years. It turned out, however, to be extremely vulnerable to someone like Trump, for whom everything is partisan and expertise is a four-letter word. Trump’s tariff justifications have often been self-evidently absurd — seriously, who imagines that imports of Canadian steel threaten U.S. national security? But there’s no obvious way to stop him from imposing tariffs whenever he feels like it.
And there’s also no obvious way to stop his officials from granting individual businesses tariff exemptions, supposedly based on economic criteria but in fact as a reward for political support. Tariff policy isn’t the only arena in which Trump can practice crony capitalism — federal contracting is looking increasingly scandalous — but tariffs are especially ripe for exploitation.
So that’s why Trump is a Tariff Man: Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies. Anyone imagining that he’s going to change his ways and start behaving responsibly is living in a fantasy world.
Trump Hates Those who Serve with Honor
Maybe seven or eight years ago I had a memorable conversation with a former Marine who had served in both Iraq and Afghanistan, and was honorably discharged after being severely wounded by an I.E.D. (He made a full recovery.) Like other military officers I’ve spoken with, he was thoughtful and well-informed, almost a bit of an intellectual — very much someone I could talk to, despite his having had experiences I can’t imagine.
But he was, he said, finding his post-military experience somewhat unsatisfying, because “there’s no honor in civilian life.”
Strange to say, I felt that I understood him. I’ve had a wonderful professional life, getting well paid to do work that I enjoy and even amounts to a vocation. Yet I sometimes feel the hankering for something more — a sense of serving a larger purpose, including being willing to make big sacrifices if necessary. And I don’t think I’m alone in having those feelings, or in having special admiration for those public servants, not just in the military, who do live by an honor code.
But if you’re both powerful and corrupt, you don’t admire women and men who serve with honor. On the contrary, you hate and fear them, because their sense of duty may stand in the way of your schemes. And you especially hate the admiration most of us feel for honorable public servants, which makes it hard to brush them aside.
This hatred of honor, I believe, is the link between two big Trump-related stories of the past few days.
One story involved Marie Yovanovitch, the former ambassador to Ukraine whom Trump fired. Ambassadors serve at the pleasure of the president, so this firing wasn’t in itself illegal. What became clear over several days of testimony, however, was that Trump wanted Yovanovitch gone precisely because she insisted on doing her job and serving the nation rather than Trump’s personal interests.
And the reason Trump tried to smear Yovanovitch even as she was testifying was his fury at how she was coming across: as an official who tries to serve with honor. One can only imagine his rage at the standing ovation she received at the end.
The other honor-related story was Trump’s decision — against the wishes of military leaders — to pardon three servicemen accused or convicted of war crimes.
Why did he pardon them? When he first tweeted that he was reviewing their cases, Trump declared, “We train our boys to be killing machines, then prosecute them when they kill.” But it’s precisely because soldiers have the terrible power and responsibility to kill people in the nation’s service that they’re expected to do everything they can to avoid killing indiscriminately. Honorable behavior isn’t an annoying impediment to the use of force, it’s an essential part of what makes our military more than a gang of thugs.
But Trump hates those who serve with honor, and prefers thugs.
That’s the thing about Trumpism. It’s not just an ideology I disagree with; it’s not even merely a cult of personality that celebrates a leader nobody should admire. At its core is a rejection of the values that we used to think defined us as a nation. You might say that Trump is at war with truth, justice, and the American way. And that is, terrifyingly, a war he might win.
Quick Hits
Paul Ryan — remember him? — claims that he didn’t realize that Trump was insulting him by calling him Boy Scout. But of course Boy Scouts are supposed to be honorable.
Some years back, new members of the Foreign Service were told about how professional diplomats have often been unsung heroes. No wonder Trump hates them.
The Founding Fathers passed a resolution honoring whistle-blowers who revealed official misconduct — in 1778!
Why we have rules of war.
Doing the Health Care Two-Step
Medium-size reform creates the conditions for bigger things.
Recent state elections — the Democratic landslide in Virginia, followed by Democratic gubernatorial victories in Kentucky and Louisiana — have been bad news for Donald Trump.
Among other things, the election results vindicate polls indicating that Trump is historically unpopular. All of these races were in part referendums on Trump, who put a lot of effort into backing his preferred candidates. And in each case voters gave him a clear thumbs down.
Beyond offering a verdict on Trump, however, I’d argue that the state elections offered some guidance on an issue that has divided Democrats, namely health care. What the results suggested to me was the virtue of medium-size reform: incremental enough to have a good chance of being enacted, big enough to provide tangible benefits that voters don’t want taken away.
Remember, there was a third governor’s race, in Mississippi, in which the G.O.P. held on. True, Mississippi is a very red state, which Trump won by 18 points in 2016. But Louisiana and Kentucky are or were, if anything, even redder, with Trump margins of 20 and 30 points respectively. So what made the difference?
Personalities surely mattered. Louisiana’s re-elected John Bel Edwards was widely liked, Kentucky’s defeated Matt Bevin widely disliked. Demography probably also mattered. Urban and especially suburban voters have turned hard against Trump, but rural voters haven’t, at least so far — and Mississippi is one of the few states left with a majority-rural population.
But there’s another difference among the three states. Kentucky and Louisiana took advantage of the Affordable Care Act to expand Medicaid, leading to steep drops in the number of uninsured residents; Mississippi hasn’t. This meant that voting Democratic in Kentucky and Louisiana meant voting to preserve past policy success, while the same vote in Mississippi was at best about hope for future reform — a much less powerful motivator.
Back in 2010, as Obamacare was about to squeak through Congress, Nancy Pelosi famously declared, “We have to pass the bill so that you can find out what is in it.” This line was willfully misrepresented by Republicans (and some reporters who should have known better) as an admission that there was something underhanded about the way the legislation was enacted. What she meant, however, was that voters wouldn’t fully appreciate the A.C.A. until they experienced its benefits in real life.
It took years to get there, but in the end Pelosi was proved right, as health care became a winning issue for Democrats. In the 2018 midterms and in subsequent state elections, voters punished politicians whom they suspected of wanting to undermine key achievements like protection for pre-existing conditions and, yes, Medicaid expansion.
And this political reality has arguably set the stage for further action. At this point, as far as I can tell, all of the contenders for the Democratic presidential nomination are calling for a significant expansion of the government’s role in health care, although they differ about how far and how fast to go.
Which brings me to the latest development in intra-Democratic policy disputes: Elizabeth Warren’s proposal for a two-step approach to health reform. Her idea is to start with actions — some requiring no legislation at all, others requiring only a simple Senate majority — that would greatly expand health insurance coverage. These actions would, if successful, deliver tangible benefits to millions.
They would not, however, amount to the full Bernie, eliminating private insurance and going full single-payer. Warren still says that this is her eventual intention, and has laid out a plan to pay for such a system. But any legislative push would wait three years, giving time for voters to see the benefits of the initial changes.
Sanders supporters are, predictably, crying betrayal. For them it’s all or nothing: a commitment to single-payer has to be in the legislation from Day 1.
The trouble with such demands, aside from the strong probability that proposing elimination of private insurance would be a liability in the general election, is that such legislation would almost certainly fail to pass even a Democratic Senate. So all or nothing would, in practice, mean nothing.
But is Warren giving up on Medicare for All? After all, what she’s offering isn’t really a transition plan in the usual sense, since there’s no guarantee that Step 2 would ever happen.
The lesson I take from the politics of Obamacare, however, is that successful health reform, even if incomplete, creates the preconditions for further reform. What looks impossible now might look very different once tens of millions of additional people have actual experience with expanded Medicare, and can compare it with private insurance.
Although I’ve long argued against making Medicare for All a purity test, there is a good case for eventually going single-payer. But the only way that’s going to happen is via something like Warren’s approach: initial reforms that deliver concrete benefits, and maybe provide a steppingstone to something even bigger.
Did Warren Pass the Medicare Test? I Think So
Her plan is serious, even if it probably won’t happen.
Last week I worried that Elizabeth Warren had painted herself into a corner by endorsing the Sanders Medicare-for-all plan. It was becoming obvious that she couldn’t stay vague about the details, especially how to pay for it; and some studies, even by center-left think tanks, suggested that any plan along these lines would require large tax hikes on the middle class. So what would she come up with?
Well, the Warren plan is now out. And I’d say that she passed the test. Experts will argue for months whether she’s being too optimistic — whether her cost estimates are too low and her revenue estimates too high, whether we can really do this without middle-class tax hikes. You might say that time will tell, but it probably won’t: Even if Warren becomes president, and Dems take the Senate too, it’s very unlikely that Medicare for all will happen any time soon.
Nonetheless, Warren needed to show that she was working the problem. And she did. She brought in real experts like Donald Berwick, who ran Medicare during the Obama years, and Betsey Stevenson, former chief economist at the Labor Department. And they have produced a serious plan. As I said, experts will argue with the numbers, but this is the real thing — not some left-leaning version of voodoo economics.
How does the Warren plan expand Medicare to cover everyone without raising taxes on the middle class? There are four main components.
First, the Warren team argues that a single-payer system would provide significant savings in overall medical costs — more than other studies are assuming. Some of these would come from bargaining down prices, especially on drugs. Others would come from a reduction in administrative costs.
Are these savings plausible? Well, America does pay incredibly high prices for drugs compared with other countries, and the complexity of our system imposes a huge administrative burden — not just the overhead of insurance companies, but the sheer number of people doctors and hospitals have to employ to deal with multiple insurers. I’ve been puzzled at the reluctance of other studies to credit Medicare for all with big savings on these fronts.
And we should note that even with these assumed cost savings, U.S. health spending per capita would remain far above that of other advanced countries. So there’s a case — not an open-and-shut case, but a reasonable one — for optimism here.
Second — and the cleverest item in the plan — the Warren team would basically require employers who are now offering health insurance to their employees to pay the cost of that insurance to the government instead. Bear in mind that large employers are already required by law (specifically, the Affordable Care Act) to provide insurance. So this would just redirect those funds.
Third, state and local governments currently spend a lot on health care, mainly but not only through their share of Medicaid spending. The Warren plan would require “maintenance of effort,” basically requiring that states continue to spend that money, but on supporting a national plan.
Finally, even with all this there’s a significant budget hole. Warren’s team argues that this can be closed in two ways: some further taxes on corporations and large fortunes, and — an important point — strengthening the I.R.S., which we know fails to collect large amounts of legally owed taxes, principally from people with high incomes, because Republicans have starved the agency of resources.
Am I enthusiastically endorsing this plan? No. I still think that a public-option-type plan, which lets people buy into Medicare, would have a better chance of actually becoming reality — and may well be where a President Warren actually ends up if she gets to the White House. And the plan’s optimism on costs and revenues could be wrong.
But this is a serious plan that reflects hard thinking. In particular, it’s nothing like the snake oil that passes for policy analysis on the right, whether it’s the continual insistence that tax cuts pay for themselves or Paul Ryan budgets that assumed that discretionary spending could be cut to Calvin Coolidge levels.
So what has Warren achieved here? Realistically, her health care plan is more aspirational than her other plans. Enhanced financial regulation and universal child care are things she might well be able to accomplish if she not only wins, but wins big, next year. Medicare for All, not so much. And may I say, it would serve the public well if these topics — plus climate change! — got more attention in future debates, and health care a bit less.
Warren’s task was, instead, to counter criticism that she was being evasive on a big issue. I think she has met that challenge.