The Trouble With Tariffs

I try to read a variety of information sources, but I will be the first to admit that–if it weren’t for my architect husband–Engineering News Record would not be among them. It is a print publication that considers itself “the construction resource,” and focuses on matters like the reason for that Italian bridge collapse and the technology of road paving. These are subjects that fascinate my husband, but usually aren’t among my preoccupations.

However, there is a real virtue to reading such publications for a policy person, because they report on the practical implications of what might otherwise be abstract and ideological policy debates. That is exactly what the most recent issue did in its discussion of Trump’s misbegotten tariffs, in an article titled “Equipment Readies for Tariff Fight.”

As the article reported, “the reality of new surcharges on all sorts of imported materials and finished goods has begun to reverberate through the global supply chain for construction equipment.” And that global supply chain is complicated–something a ham-handed and ill-considered policy can disrupt in unexpected ways and with unanticipated consequences.

The (sobering) points made by the article can be summarized by a quote from a vice-president of the Association of Equipment Manufacturers: “Everyone loses in a global trade war. Tariffs are taxes on American consumers and businesses.”

Major manufacturers have already raised their prices in anticipation of the higher up-front costs of steel and other materials. According to Senator Chuck Grassley, tariffs the administration aimed at imports of automobile components have also hit heavy-duty trucks, buses, construction equipment, agricultural equipment and industrial engines. As those prices increase, they’ll be passed along, so prices paid by consumers will rise. (There has already been a 32% rise in the cost of hot-rolled, coiled steel.)

Some 30% of of the construction equipment manufactured in the U.S. is designated for export, and the imposition of tariffs has “upended” the industry, which had been anticipating a period of strong sales. As a consequence, according to industry spokespersons, manufacturers are likely to shift production to “places like China or Brazil.”

These tariffs and retaliatory tariffs will put U.S. manufacturing at a disadvantage, because dozens of OEM’s have facilities around the world. It will tip the balance and they’ll just move out of the U.S. to make the equipment somewhere else.

The decision whether to shift the locus of manufacturing is only one of the consequences that has yet to be felt; as the article quoted one construction industry representative,

The point about tariffs is the effect doesn’t come the day after, it comes the year after. The economic impact, the loss of jobs, the loss of business in the community–that is a very long-term effect.

There is a reason that opposition to tariffs bridges ideological divides. Both conservatives and liberals recognize the negative effects of these sorts of interventions into complex and interrelated markets. Unfortunately, we have a President whose policies (if they can be dignified by the term) do not rest on any theoretical or philosophical framework. Instead, he acts out of bile and petulance, complicated by utter ignorance of the matters he is disrupting.

The Engineering News Record says these tariffs pose a significant threat to the construction equipment industry’s prosperity. But the damage isn’t limited to the construction equipment industry. Tariffs pose a significant threat to job creation, consumption and general American prosperity–a threat that could have been avoided had we elected someone competent, or even someone who had–and heeded– competent advisors.

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All The “King’s” Men (And Women)

The Washington Post’s Dana Milbank has been on a roll since the election of Donald Trump. It’s understandable–Trump provides a target for anyone who takes policy seriously, and an even bigger target for people who are tempted to berate pompous ignoramuses and moral cowards.

Milbank detests both categories.

In the linked column, he points to the obvious: the moral rot that Trump has brought with him to the political process has spread throughout the Republican Party. As he notes, what the President is doing is reprehensible; what the GOP leadership is not doing is unforgivable.(“Unforgivable” is actually my “pet name” for Mitch McConnell. At least, it’s the “pet name” I can use in polite company.)

Majority Leader Mitch McConnell (Ky.) stood on the Senate floor Wednesday morning for his first public remarks since the seismic events of the day before: The president’s former personal lawyer pleaded guilty to fraud and breaking campaign finance laws, implicating the president in a crime; the president’s former campaign chairman was convicted on eight counts of financial crimes, making him one of five members of Trump’s team who have been convicted or have admitted guilt; and a Republican congressman was indicted, the second of Trump’s earliest congressional supporters to be charged this month.

It was time for leadership. McConnell ducked.

Instead, he hailed Trump’s campaign rally in West Virginia the night before. He disparaged President Barack Obama’s record. He spoke about low unemployment “under this united Republican government.” He went on about coal, taxes, apprenticeship programs, health research, prisoner rehabilitation and more — and not a peep about the corruption swirling around the president. When reporters pressed McConnell in the hallway for comment, he brushed them off.

Paul Ryan didn’t come off any better. Milbank quoted Ryan saying he “needed more information.”

What more do you need, Mr. Speaker? What more will it take, Republicans? It seems nothing can bring them to state what is manifestly true: The president is unfit to serve, surrounded by hooligans and doing incalculable harm.

Milbank recounted the equally shameful silence of others in the GOP hierarchy, then wrote what most rational Americans–including those who once called the Grand Old Party home– are thinking:

This intolerable silence of the Republicans — through “Access Hollywood,” racist outbursts, diplomatic mayhem and endless scandal — is what allows Trump and his Fox News-viewing supporters to dock their spaceship in a parallel universe where truth isn’t truth. At Tuesday night’s rally in West Virginia, Trump’s irony-challenged audience could be heard chanting “Drain the Swamp!” and “Lock her up!” (Hillary Clinton, that is), just a few hours after Paul Manafort’s conviction and Cohen’s guilty plea.

Milbank dismisses the common wisdom that excuses Republican officeholders because they fear the party’s base.

Republican lawmakers fear that with 87 percent of Republican voters backing Trump, crossing him is political suicide. But this is circular. Support among the Republican base remains high because Republican officeholders validate him.

Milbank quotes the “weasel words” of various Republican Senators–Cornyn, Grassley, Graham and Hatch–and references the criminal charges recently filed against two GOP Representatives (who just happened to be the first two to climb aboard the Trump Train). His recitation makes it impossible to disagree with his conclusion:

If Republicans don’t put some moral distance between themselves and Trump, there will soon be nothing left to salvage.

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About That “Witch Hunt”..

Well, well. Tuesday was certainly an interesting day.

Paul Manafort was convicted of tax fraud, and at almost the same time, Michael Cohen–aka Trump’s “fixer”–pled guilty to several counts of tax and bank fraud. Cohen’s plea implicated the President, as it included a confession that Cohen had made the hush money payments “at the direction of a federal candidate.”

The Manafort trial grew out of an investigation conducted by the Special Counsel, but the charges didn’t involve Trump. The conventional wisdom was that a conviction would give Mueller leverage to strike a deal–to get Manafort to flip. That remains to be seen, and of course, Manifort faces another trial, in another jurisdiction, in September.

At the very least, the conviction and guilty plea are evidence that–far from being a politically-motivated enterprise, as Trump has maintained, the investigation has focused on and uncovered significant and troubling illegal activities by the President’s close associates.

The media has been all over both stories, and the punditry is in overdrive. Vox had an explanation of “what it all means” in which it consulted several federal prosecutors and other legal experts; most of them said what anyone with a functioning brain already knew–this is more evidence that the Mueller investigation is anything but a “witch hunt,” these results aren’t good news for Trump, etc.

The one expert who genuinely added to my understanding of the various possibilities was Asha Rangappa, a former FBI agent who is now a senior lecturer at Yale, who raised some fascinating points I’d not previously considered.

A potentially bigger threat to President Trump is what Cohen could provide to the Southern District of New York about potential crimes committed by Trump or members of his family that are unrelated to the Russia probe. Michael Cohen, as Trump’s longtime “fixer” knows where the proverbial bodies are buried when it comes to the Trump Organization and particularly its finances going back many, many years.

If Cohen provided information on potentially criminal activities to the Southern District and it opened an investigation into them, it would place the President in a double bind: First, since it would be an investigation separate and apart from the Mueller probe, he wouldn’t be able to argue that the Special Counsel exceeded his mandate or crossed a “red line” — after all, any U.S. Attorney’s office is legally authorized (and duty-bound) to investigate any violations of federal law it learns about.

More importantly, such an investigation would be completely insulated from any steps Trump might take to fire Mueller, Deputy Attorney General Rod Rosenstein, or even Attorney General Jeff Sessions (especially since his interim pick to head the Southern District who recused himself from overseeing the Cohen investigation, would undoubtedly recuse himself from any other Trump-related investigation as well). So Trump has much more to fear from Cohen than just what he knows about Russia-related matters.

America’s system of federalism has often been an impediment to justice. For a long time, “state’s rights” was a euphemism for “the right of our state to discriminate.” But there is something so satisfying about the prospect of New York State pursuing Donald Trump, charging him with violations of state criminal laws in a process that he is powerless to obstruct–violations his pardon power could not reach if he and/or his family are found guilty of them.

And let’s get real. The odds are high that Trump–who has been accused of numerous nefarious activities and who has surrounded himself with gangsters and thugs throughout his career–is guilty of a variety of criminal activities.

Right now, of course, the action is all at the federal level. A sense of expectation has been triggered by these proceedings–a hint that perhaps, just perhaps, the noose is tightening and the investigation is coming to a conclusion.

I’d say “pass the popcorn” but who knows what our demented President will do as that noose tightens? After all, he still has the nuclear codes…..

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Corruption And The Piety Party

Over the past few years, surveys have documented the growth of the so-called “nones”–Americans who have abandoned religion. Some are atheists or agnostics, others simply see religion as irrelevant to their lives. For many, that irrelevancy is the result of distaste for the hypocrisy and amoral behaviors of many self-described “pious” people.

I thought about the distance between ostentatious religiosity and ethical behavior when I read a Dana Milbank column in the Washington Post, titled “The Unimpeachable Integrity of the Republicans.”The GOP, as we all know, has become the piety party–Vice-President Mike Pence is its perfect, smarmy embodiment.

Milbank wasn’t addressing Republican faux religiosity–he was just marveling at the efforts of deeply dishonest Representatives to impeach Deputy Attorney General Rosenstein. As he noted, tongue-in-cheek, the charges are serious: inappropriately redacting lines in documents turned over to Congress by the Justice Department, and explaining the legal basis upon which the department is declining to produce others. Horrific behavior! I may swoon…

Redacting the price of a conference table is clearly a far more serious offense than those committed by other members of the Trump Team: Commerce Secretary Wilbur Ross has been accused by former associates of stealing roughly $120 million; former EPA Chief Pruitt got a bargain condo rental from a lobbyist’s wife, used his job to find work for his wife and had taxpayers buy him everything from a soundproof phone booth to  moisturizing lotion.

Who else doesn’t merit impeachment?

Not the former national security adviser who admitted to lying to the FBI,not the former White House staff secretary accused of domestic violence, not the presidential son-in-law who had White House meetings with his family’s lenders, not the housing secretary accused of potentially helping his son’s business, not the many Cabinet secretaries who traveled for pleasure at taxpayer expense, not the former Centers for Disease Control and Prevention director who bought tobacco stock while in office.

And certainly not the president, whose most recent emolument bath was poured by Saudi Arabia’s crown prince: Bookings by his highness’s entourage spurred a spike in the quarterly revenue at the Trump International Hotel in Manhattan.

None of these “public servants” generated the indignation being focused on Rosenstein the Redactor.

Milbank helpfully described the pious paragons so determined to expel this scofflaw from governance–the same Republicans “so above reproach” that one of their first votes was an attempt to kill the House ethics office. He began by identifying some who are regretfully  no longer available:

Rep. Blake Farenthold (R-Tex.), an obvious candidate, resignedover his use of public funds to settle a sexual-harassment lawsuit.

Rep. Pat Meehan (R-Pa.), another ideal choice, resigned after word got out of a sexual-harassment settlement with a staffer the married congressman called his “soul mate.”

Rep. Tim Murphy (R-Pa.) also can’t be of use. He resignedover allegations that he urged his mistress to seek an abortion.

Rep. Trent Franks (R-Ariz.) likewise won’t be available. He quit when a former aide alleged that he offered her $5 millionto have his child as a surrogate.

But never fear–as Milbank demonstrates, the GOP has a truly impressive bench.

There’s Rep. Chris Collins (R-N.Y.), who remains “tentatively available” despite his arrest this week for insider trading, along with the five other House Republicans who invested in the same company but haven’t been charged yet. There’s also Rep. Jim Jordan (R-Ohio), “assuming he has free time”–he’s battling allegations that he covered up sexual misconduct when coaching at Ohio State.

Others who could judge Rosenstein: Rep. Greg Gianforte (R-Mont.), who pleaded guilty to assault after body-slamming a reporter; Rep. Joe Barton (R-Tex.), who is retiring after a naked photograph of him leaked online; and Rep. Duncan D. Hunter (R-Calif.), who is under investigation by the FBI over the alleged use of campaign funds for his children’s tuition, shopping trips and airfare for a pet rabbit.

Nunes himself is battling allegations that he got favorable terms on a winery investment and used political contributions to pay for basketball tickets and Las Vegas trips.

Eighty-one percent of white Evangelicals voted for Trump, and research suggests their support for him and his band of thugs and thieves remains strong. No wonder people who actually care about ethics and morality are repelled by “faith.”

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The Politics Of Resentment

It doesn’t take a genius–or even a person of above-average observational skill–to understand what motivates Donald Trump’s policy preferences. If Barack Obama was for it, he’s against it. His seething resentment of his predecessor is as painfully obvious as his disinterest in (and ignorance of) public policy, or his blatant cronyism.

Did Obama want to protect the environment? Well, then screw the environment.

This week, the Trump administration issued a Notice of Proposed Rulemaking (NPRM) which, if finalized, would cast aside the commitment made by President Bush and President Obama to increase fuel economy and reduce pollution. In doing so, the administration is on a path that could needlessly upend a settled regulatory framework that has brought together disparate interests, delivered predictability to automakers, improved cars, and reduced pollution. As such, the proposed new rules run counter to what Ford, General Motors, and others across the industry have consistently advocated. In fact, industry and the state of California appear largely aligned on how to proceed in resetting fuel-efficiency standards, and the only missing player is the Trump administration, despite the president’s prior direction to his team to negotiate.

Scholars with The Brookings Institution have called for a “dialogue” on the proposed rule making. They emphasize three “key points”: the proposed changes break with the bipartisan history of the program; the proposal will hurt the auto industry; and the administration has relied upon a range of very questionable assumptions that defy common sense (um..what else is new?), in order to justify its proposal.

They also point out that none of the stakeholders involved support the administration’s initiative.

The U.S. auto industry represents 3.5 percent of U.S. GDP and is responsible for 7 million direct and indirect American jobs. Freezing the standards will undermine investments by auto manufacturers and their suppliers, harming the competitiveness of the industry going forward. Research shows that when standards are set at aggressive but attainable levels, they immediately spur technological innovation, catalyze competitiveness, and support jobs. For example, a report published last year by Indiana University looking at the impact of fuel-efficiency standards estimated that investment in innovation could increase jobs by between 200,000 and 375,000 in the year 2025, and add between $138 billion to $240 billion in GDP between 2017 and 2025.

The Brookings scholars also point out that challenging California’s authority under the Clean Air Act would needlessly destabilize the consistency created by a streamlined national program.

Of course, none of this matters to an incompetent and needy President who is not only ignorant of policy (and science, and economics, and….) but who is motivated primarily by resentment of Obama, who once embarrassed him at a Correspondent’s dinner to devastating  effect.

What is undoubtedly even more galling to a man who wears his bigotry like a badge is that Obama has the effrontery to be an immensely popular black man whose personal, intellectual and cultural superiority to Donald Trump is glaringly obvious. The one and only consistent thread in Trump’s “policy agenda” is destruction of the hated black guy’s legacy.

If that destruction requires despoiling the planet, well, so be it.

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