Governing is hard enough when we use facts

Governing is hard enough when our elected leaders use facts. What frustrates me is when decisions are supported by purposeful misinformation. As noted in a recent The Charlotte Observer article on the Trade War, the US President consistently repeats that China is paying the tariffs we establish.

Each time, his claim is refuted by economists who note US importers are paying the tariffs and pass most of the added cost to consumers. In the article it is noted by economists for the Federal Reserve the typical US household will pay $831 more each year with the next round of tariffs.

Tariffs are an unwieldy tool to deploy, but continually lying about their impact is poor stewardship. We deserve the truth from our leaders, regardless of what party they claim. Sadly, the US President feels that being loose with the facts or outright lying is a suitable modus operandi. It further frustrates when his staff facilitate these untruthful statements.

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Note: A variation of the above was sent into the Letters to the Editor for The Charlotte Observer.

A little bird and a big crow

While at a stop light, I saw a flying metaphor. A little bird (about three inches in height) chased off a big crow who is closer to a foot in height. The little bird chased the bigger one for well over 100 feet, most likely a mother defending her nest from an egg stealer.

I feel the big crow is analgous to the America First mindset, where we are devaluing our relationships and bullying people into action. Now, some might say we have always thrown our weight around. Yet, our allies are reacting to being treated worse with tariffs and talk of more, our pulling out of multilateral or global agreements, our denigrating respected multinational groups, and telling countries who they can and cannot do business with.

The little bird represents individual countries, businesses and farmers who are doing what they must to perpetuate commerce. When certain avenues are closed or made difficult or costly to use, they have to find new suppliers or customers. They are chasing away the impact of the crow. It is a simple equation – the more difficult an entity becomes to deal with, others will seek other options. Plus, the more difficult we make it for all transactions, then fewer transactions will be made and global trade will suffer.

It is reported the President reached out to former President Jimmy Carter. The reason is Trump’s having concern over an ascendant China. This was happening any way, facilitated by actual long term planning by China. Yet, what Trump fails to realize is his role in greasing the skids. By retrenching from our position of strength, pulling out of a Trans-Pacific trade deal meant to even the playing field with China, he has allowed China to fill the void. By telling countries they will face tariffs if they deal with Cuba and Iran, we are greasing the skids for China to fill the void.

These little birds have to eat. They will look out for their best interests. If they must acquiesesce to the big crow, those actions will be remembered, if they are needed in the future by the crow. It should be noted,  a foreign diplomat said two years ago, the strength of the US is its allied relationships – failing to nurture them comes at a cost.

And, that Chinese bird is getting even bigger and faster than this old crow.

It is time to govern

Now that the elections are over, it is time to put away the rhetoric and focus on governance. This used to be how it was done, until we segmented the news into various markets. The past twenty years or so, we seem to govern off the campaign rhetoric rather than facts and collaboration has become a dirty word.

As an Independent voter, who has been a member of both parties, the governing off rhetoric and lack of collaboration need to stop. Neither side owns all the good ideas and both sides have some bad ones. And, we need to focus on the underlying truths and facts rather than tweets and who wins a public relations battle over an issue. Process matters – when politicians deviate from process, it is for political reasons.

In this spirit, here are the issues that this voter thinks we should focus on. Many voters have voiced agreement on some of these, but some issues just don’t get due attention.

– we should stabilize and shore up the ACA which most Americans favor: funding commitments to insurers will stabilize premiums, as will expanding Medicaid and considering the expansion of Medicare down to age 55, 60 or 62.

– we should ditch the harmful tariffs and work with our allies and the WTO to pressure China to stop the intellectual capital theft. Tariffs hurt consumers and producers, especially our farmers.

– we should address infrastructure needs which are many, doing so as we have done in the past with a blend of business, venture capital and federal, state and local government funding.

– we should recognize that the two biggest threats to our planet per the World Economic Forum are our water crisis and climate change, which exacerbates the first issue: strides have been made, but we need to reassume our global leadership role on climate change and focus on measures to address both.

– we should add more governance around gun control issues: Gun-owners and non-gun owners have voiced agreement on measures that would help. It should be noted most gun-owners do not belong to the NRA, so the NRA’s political activism against reasonable change should be noted, but not over-emphasized.

– The deficit and debt are building to a point of huge reckoning. It has been eight years since the Simpson-Bowles Deficit Resuction Committee report was shelved. It was shelved because it recommended $2 in expense cuts to every $1 in revenue increases. It was shelved because neither party had the political courage to roll up their sleeves and make tough decisions – we cannot get there with only expense cuts or revenue increases, needing both.

– We should stop the lack of civil discourse and beating up on the media. The media’s role is vital to our democracy. Pay attention to where your news comes from. Be wary of opinion disguised as news. Tweets are not long enough to show context or subtlety and are an easy way to misinform, as a result. To this end, it is vital for our democracy to return to appropriate Congressional oversight. We are not a kingdom.

If anything, we must have our politicians work together. The crime bill the President is pushing and that passed the House is not perfect, but is a bipartisan effort. It makes steps forward. Let’s make needed improvements and get something done. And, that is what Americans want most from our politicians – stop the grandstanding and get stuff done.

 

 

The sugar high is beginning to wane

The volatile and recent downward trend in the stock market is an indicator.The slowing of global growth, uncertainty over trade, increasing business costs due to tariffs and increasing interest rates are causing a dampening effect.

While the US economy had 3.5% annualized growth in the 3Q2018 following 4.2% in 2Q2018 (it was 2.2% in 1Q2018), imbedded therein are two numbers that should give pause. Business investment was much higher in 2Q2018 at 8.7%, partly due to getting stuff in the hopper before the tariffs started. Yet, business investment fell to 0.8% in 3Q2018. That is an ominous sign. This concern is also apparent in several third quarter earnings announcements by major corporations.

While we should finish 2018 with annual growth north of 3%, economists have predicted that 2019 will have 2.4% annual growth, falling to 2.0% growth in 2020. I should add they feel the impact of the tax cut for corporations is waning (which is sad because it is an imbedded profit margin increase). In other words, the companies view this tax reduction as a “sugar high” that won’t last.

When the tax bill was passed, the White House and Congress touted that it would take GDP growth to 4% and pay for itself. Tax cuts have never paid for themselves and the best they have done is abet the economy enough to save maybe 20% to 30% of the foregone tax revenue. But, the tax bill was estimated by the Congressional Budget Office to increase the already $21 trillion in debt by $1.5 trillion over ten years. And, the tax bill did nothing to address the projection the debt would increase by $10 trillion by 2027. Absent any change, we are looking at debt of $33 trillion by 2027.

It should be noted the annual deficit increased in the government fiscal year just ended to $779 billion from $665 billion, partly due to foregone $166 billion in tax revenue. The deficit is budgeted to be $985 billion in the 2018-19 fiscal year, on projected expenses of $4.407 trillion and revenue of $3.422 trillion. The deficit is expected to grow past $1 trillion in fiscal year 2019-20.

The US President has tended to be a short-term thinker. He is too focused on doing things that look good now. This is one reason he has had six bankruptcies. The problem is the sugar high is going to end. And, we spent $1.5 trillion to add more sugar to a pretty good economy. We are now beyond 9 years in economic growth (the second longest in US history) and 8 years in job growth, with a bull stock market dating back to March, 2009. Plus, we took one of our levers off the table with an unneeded tax cut. I was all for lower corporate tax rates, but we went well beyond deficit neutral.

This is not a new concern of mine, as I have been actively writing about our debt and deficit for several years, well before the current President took his oath. One of my concerns over Obama was his not doing anything with the Simpson-Bowles Deficit Reduction plan. Both he and Congress just put a very good working draft on the shelf. Our building debt is a ticking time bomb that will cause a huge day of reckoning. And, one things politicians don’t talk about it, is it will take tax increases and spending cuts to get there. The math will not otherwise work. That is the conclusion of the Committee for a Responsible Federal Budget and the Simpson-Bowles effort.

Friday follies

Happy Friday everyone. With a scattergun US leader, it has been another rollercoaster week. Wouldn’t it be nice if our leaders did their jobs to serve people and not their egos?

On the good news side, the Prime Minister of New Zealand became the second modern leader to give birth while leading a country. Jacinda Ardern and her partner Clarke Gayford had a healthy girl weighing in at 7 lbs., 3 oz., their first child. Well done down under.

Turkey’s President Recep Erdogan is out campaigning vigorously expecting a close race. Taking a page from Vladimir Putin, his opponent is vying for the spot from jail. At least he gets to run, as in Russia he could not. I have high expectations Erdogan will win, since he will be controlling the vote count.

The US President did something unusual and backpedaled on his absolutely awful and inhumane decision to separate children from parents who are seeking to enter the country. Of course, he is not being accountable that he set this fire, but at least he was convinced on this occasion he screwed up.

In spite of all of the hubbub with the separated children, the US President did find the time to insult Canadians, Mexicans and Germans. He accused Canadians of widespread smuggling of US goods, he doubled down on Mexican gang members rampantly using these kids to gain entry to our country and he said crime is up in Germany due to immigration, when in fact it has declined. The truth rarely gets in the way of a chance for Trump to demean some one or some group. By the way, I did see a news report that interviewed Canadians who are buying more Canadian goods as a result of Trump’s denigration of their country. He is good at galvanizing opposition.

The stock market continues to show concern over the tariff wars that have already started. The EU has accelerated their tariffs on select US products starting today There was an eight consecutive day drop in the Dow when Trump first raised the tariffs in March. The Dow just completed another eight consecutive day drop on Thursday. If it has another decline on Friday, that would be the longest decline since 1978. Even if it rebounds on Friday, don’t let anyone tell you the tariffs won’t have a negative impact on the global economy and capital markets. And, it was truly an unforced error on the part of the US President.

That is all folks. There was so much more that happened. Have a great weekend. May it be eventful and fun.

Two experts raise concern over US treatment of allies and tariffs

I watched two separate interviews, one last week on PBS Newshour with a representative of the Council on Foreign Relations and one this morning on CBS Morning News with Ian Bremmer, the head of The Eurasia Group. I felt they both framed the issues and concerns very neatly.

The former noted while Trump has accurately raised concern over China and their pilfering of intellectual capital and trade deficits, he does not have a coherent strategy. It was noted that his tactics are less than effective, especially since this issue affects our G7 allies. It would be far better to work in tandem with our allies to put pressure on China, rather than place tariffs on them as well. He also noted the World Trade Organization has several levers that could be deployed to help with this effort.

As for the lack of coherence, Trump rightfully noted the intellectual capital is the greater concern, but said if China bought more goods from the US, that would be enough. If your biggest issue is theft of intellectual capital, buying more goods does not address that issue.

As for Bremmer, he has interviewed representatives of the G7 who attended the less than fruitful summit in Canada. He said the other members outside of the US all noted the relationship with the US is very far from the “10” that Trump assigned to it. He noted that between Merkel and Trump, it is about as dysfunctional as it gets. He added that other G7 countries worry that Trump has fewer reasonable voices advising him, so there is no one to reach out to that will get in the President’s ear.

What will come out as the Starburst Outburst, after the famous picture with leaders imploring Trump, he stood and agreed to sign a cooperation agreement that staff worked on until 3 am, including Larry Kudlow of the US. Then he reached into his pocket and grabbed two Starburst candies and threw them on the table saying “Angela, don’t say I never gave you anything.” This is about as demeaning as it gets, rivaling his refusal to shake her hand in the oval office.

The picture will be in future history books as a milepost of when the US turned its back on its allies. It will be in the section entitled “When the US ceded its global leadership position.” It is compilation of things that make me say this, not just the ill-advised tariffs.

They include: pulling out of an Asia-Pacific trade deal that went through without the US, announcing the pull out of the Paris Climate Change Accord, ignoring the pleas of allies to pull out of the Iran nuclear deal, pulling out of the United Nations Human Rights council, separating children from parents at the border and adding more demands after a NAFTA deal was crafted. Then, there is the bullying, lying to and lying about our allies. Shoving the Macedonia President out of the way is as good a metaphor as any.

The United States is becoming a pariah under Trump. Until the so-called Republican leaders acknowledge this, we will continue to be such. How low must we go?

 

Sometimes a quote says it all

Quotes can sometimes be painfully pertinent. Yesterday, I read the following quote from a Chinese source as the country develops a response to US tariffs. China’s official Xinhua news agency added: “The wise man builds bridges, the fool builds walls. With economic globalisation there are no secluded and isolated islands.” I think their point is about more than tariffs.

Politicians unfortunately have a hard time with the truth, some moreso than others. One of my favorite quotes is from former Senator John Kyl of Arizona when caught in a lie. “You mistook what I was saying as the truth.” In other words, it is your fault I am lying,

This is an excellent segue to a current politician who is on record as lying more than he does not. Congressman Trey Gowdy said the following about such man. “If the President is innocent, it would help if he started acting that way.”

On a more humorous note, actor Abe Vigoda from the movie “The Godfather” and television show “Barney Miller,” was reported to have passed away. Upon reading of his death in the newspaper, Vigoda sent a press release that said “The reports of my demise have been overly exaggerated.” This was in keeping with his deadpan comic delivery.

Getting back to politics, a famous quote used often by President Richard Nixon was “I am not a crook.” The fact that he felt the need to use it again and again begged the question, who are you trying to convince? After over twenty convictions of his co-conspirators, Nixon only escaped  criminal judgment because of President Gerald Ford’s pardon. Mr. Nixon, you were a crook.

Let me close with one of the finest quotes in American history. It was so crucial it helped lead to the eventual downfall of Senator Joe McCarthy, of Communist witchhunt infamy. After John Welch, General Counsel of the US Army had given testimony over several hours, he said to McCarthy, “Do you have no sense of decency, sir?”

I close with these two examples as they remind me of our current fearmongering President. “Decency” is not a word I would use to define the man.