The Good, the Bad, and the Ugly News

The economic news has been undeniably good lately, with the unemployment rate lower than it’s been since the height of the Vietnam War and the gross domestic product growing incrementally faster than it has in more recent history, but the rest of the stories in the papers look bad for President Donald Trump.

Although Trump has been doing a celebratory end zone dance ever since the special counsel investigation into the “Russia thing” ended without any indictments against him, the problem still lingers. Attorney General William Barr had a hard time answering the Senate judiciary committee’s questions about his rather rosy four-page assessment of the report’s 400-plus pages, then declined the House judiciary committee’s request to go through a more thorough grilling about the matter, and now there’s talk of a contempt of Congress citation. Barr had testified to the Senate that he had no problem with special counsel Robert Mueller’s own bad self giving his account of the report to Congress, but Trump has since declared that he won’t allow any further questions from anyone about the report that he claims completely exonerates him, and that doesn’t look good.

The damned Democrats in Congress are asking all sorts of other pesky questions, and Treasury Secretary Stephen Mnuchin is contesting a law which seemingly requires him to turn over the presidential tax records that might yield answers, which also doesn’t look good. The courts will eventually settle all of it in one way or another, but the state and federal judicial system is also pursuing 16 criminal cases that were referred to other Justice Department jurisdictions and therefore redacted from the special counsel’s report, and we expect all of those to look bad. There’s also ongoing news about the illegal immigrants Trump seems to have hired and exploited at his still wholly-owned businesses, the security clearances he granted for family and friends despite the objections of intelligence officials, a few lawsuits filed by state attorneys general alleging that Trump’s still wholly-owned businesses impeachable violate the Constitution’s emoluments clause, and a few other problems too numerous to recap here.

So far America isn’t entering any new wars, but the old low-level ones in Syria and other hotspots continue, and Trump is leaving a military option open for Venezuela’s disastrous but purely domestic problems, and he sending a carrier fleet to counter the recent bellicosity of Iran, which Trump promised would never dare challenge America so long as he was president. Trump also promised the American public it could sleep soundly at night without worrying about a North Korean nuclear threat, and although it was obviously premature he was able for a time to note that at least North Korea wasn’t doing any missile tests, but lately they’ve been once again testing missiles.

While the economy continues to chug along, Trump can only claim so much credit. Despite two years of Republican control of both chambers of Congress the only significant legislation affecting the economy that was passed and signed into law was a big tax cut, which so far resulted in the kind of budget deficits that the hated President Barack Obama sanctioned in the darkest days of the Great Recession, and at a time when Republican orthodoxy would be paying down the national debt. Trump has used his executive powers to roll back a lot of ridiculous federal regulations, but a lot of airline travelers and other consumers are likely to note he’s also reversed some reasonable ones that saved them some serious money. As orthodox Republicans we still blame Obama for the late and initially sluggish recovery that followed the Great Recession, which we still insist was caused by the Democrat’s crazy Clinton era subprime mortgage lending policies, but as objective observers we have to admit the economy has lately been more or less on the same upward trajectory that it had been during the final days of the Obama administration. Fairness compels us to admit that at least Trump hasn’t screwed that up.

Being no fans of either Obama or Trump, we give all the credit to the remarkable resilience of America’s free market economic system and the steady hand of those quasi-governmental know-it-all bards at the Federal Reserve Board. Despite our amateur advice they kept the economy going through the dark days by printing up dollars and distributing them at near-zero interest rates, which eventually started something of a boom, so we humbly admit it didn’t result in the hyperinflation we’d worried about and was possibly a good ideal. Now that Trump is bragging about the greatest economy ever, which according to both Republican orthodoxy and the left wing’s Keynesian economics is a time for higher interest rates and quantitative easing of the money supply and paying down debt, Trump is trying to get the Fed to keep the monetary pedal to the metaphorical peddle. Alas, his own chosen Fed chairman disagrees, and Trump’s two latest nominees to the Fed board have been obliged to withdraw their names from considerations because they’re both so ridiculous that even some congressional Republicans wouldn’t go along.

During his surprisingly successful presidential campaign Trump promised to make America great again by bullying the country’s trading partners into more favorable trade deals. “Trade wars are good and easily won,” Trump tweeted to the nation, with the same cocksureness as when he assured us we could sleep soundly without fear of North Korea’s nukes, but so far that’s also not turning out well.

Trump got some billion-dollar concessions for America’s dairy industry when the renegoiated the North American Free Trade Agreement, which he claimed was the difference between the worst trade deal ever and the best trade deal ever, but his rebranded US-Canada-Mexico Treaty is having a hard time getting ratified by the Senate, where the Republicans still hold a slight majority. Republicans in agricultural states, which as always are crucial to the party, are reeling from from the declining commodity prices that have resulted from the rest of the world’s inevitable retaliation against Trump’s tariffs, and other Republicans from states where their export-driven economies don’t need Trump’s protections are also restive.

Meanwhile,Trump’s trade war with the far more formidable opponent of China doesn’t seem either good nor easily won. Trump continues to play hardball with the Chinese, threatening to up the tariffs on Friday if they don’t accede to his demands, but the congressional Republicans from states and districts that used to do a lot more export business with China are balking, and of course even the Democrats from the states and districts that might benefit from Trump’s protection from China’s imports are disinclined to side with the president, and anyone paying higher prices on the Chinese-made goods at at Wax-Mart is likely to be irked.

The good news for Trump is that for now the economy seems to be chugging along well enough, and that so long as it does and nobody gets nuked a sufficient number of voters spread around the electoral map won’t care much about the rest of the news. The bad news for Trump is that the economy tends to go up and down no matter who’s in the White House, and unnecessary trade wars and military interventions in Latin America never seem to help, and if the economic news sours the rest of the stories in the papers in 2020 will suddenly be outrageous.

— Bud Norman

Casualties of the Trade War

Trade wars are good and easy to win, according to one of President Donald Trump’s most famous “tweets,” but the smart money on Wall Street seems to disagree. The Dow Jones Industrial average plummeted a scary 799 points on Tuesday, the other major stock market indices dropped a similar 3-plus percent, and the clear cause was Trump’s apparently ongoing trade war with China.

After a dinner meeting with Chinese President Xi Jiping at the G-20 gathering Argentina on Saturday Trump announced that he’d won such majors concessions from China as huge agricultural buys from American farmers and eliminating any tariffs on American-made automobiles, and was therefore prepared to pause a trade war that has thus far proved disastrous for both countries, which led to big stock market gains on Monday. By Tuesday the Chinese were denying they’d made anything like the extraordinary concessions that Trump had bragged about, Trump’s economic policy advisors were walking most of it back, and Trump himself was “tweeting” that “President Xi and I both want this deal to happen, and it probably will. But if not remember, I am a Tariff Man.” A later “tweet” shouted that “We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major tariffs against Chinese product being shipped into the United States.” Despite the poor grammar, the “tweets” clearly communicated that the trade war continues, and won’t be easily won, so the smart money on Wall Street responded accordingly.

On our way home from an evening chore we heard one of the right-wing talk radio talkers say that Trump had nothing to do with the stock market drop, and he somehow blamed it on the Apple and Boeing companies instead, but Trump and his apologists always find someone else to blame. We’re more inclined to believe the smart money opinion of the JPMorgan financial juggernaut, which told its investors in a trading note that “It doesn’t seem that anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump’s tweets (which seem if not completely fabricated then grossly exaggerated) with reality.” We’re not impressed much by JPMorgan’s prose style, either, but it does clearly communicate the truth of the matter.

Trump’s apologists would do better to argue that China’s trade policies well deserve an aggressive response, as they do indeed charge unfair tariffs and make the theft of American intellectual property a condition of doing business with American companies and benefit from the slave wages paid to many of China’s workers, but it’s harder to argue that Trump is winning. As bad as China’s trading policies might be, Trump was claiming full credit for a booming stock market and rising commodity prices when he declared the trade wars with China and most of the rest of the industrialized world, so he can’t dodge blame for things going downhill ever since. Trump’s bad habit of doing his end zone dance before he reaches the goal line make him look the more ridiculous to the American public and on the world stage every time, and harder for him to make that great deal he’s always promising. China’s dictator Xi doesn’t doesn’t have to worry about public opinion, and although world opinion doesn’t favor him it does take him seriously, and China’s economy is either the biggest or second-biggest in the world, depending on how you figure it, and prematurely boasting about the concessions you won from him probably isn’t the best negotiating strategy with a wily Chinese leader and his traditional Chinese obsession with saving face.

The sort of low-key and culturally-sensitive and behind-the-scenes negotiations that might have yielded improved trade relations between China and a formidable American economy and steadfastly principled  and experienced American president aren’t Trump’s style, however, and for now we expect more tariffs and “tweets” and stock market downturns. In the long run Trump might yet get the greatest deal ever with his bull-in-a-china-shop approach, if you’ll forgive the culturally insensitive cliche, but on Tuesday the smart money wasn’t betting on it.

— Bud Norman