Day: June 25, 2018

Politics Trumps Economics

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❝ With each passing day, it becomes increasingly evident that US President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power. This is obviously a source of enormous frustration for those of us who practice the art and science of economics. But by now, the verdict is self-evident: Trump and his team continue to flaunt virtually every principle of conventional economics.

❝ Trade policy is an obvious and essential case in point. Showing no appreciation of the time-honored linkage between trade deficits and macroeconomic saving-investment imbalances, the president continues to fixate on bilateral solutions to a multilateral problem – in effect, blaming China for America’s merchandise trade deficits with 102 countries. Similarly, his refusal to sign the recent G7 communiqué was couched in the claim that the US is like a “piggy bank that everybody is robbing” through unfair trading practices. But piggy banks are for saving, and in the first quarter of this year, America’s net domestic saving rate was just 1.5% of national income. Not much to rob there!

❝…What Trump is doing is not about economics – or at least not about economics as most academics, political leaders, and citizens know it…But why single out economics? The same complaint could be made about Trump’s views on climate change, immigration, foreign policy, or even gun control. It’s power politics over fact-based policymaking.

RTFA. Please. You don’t have to agree with Stephen Roach 100% of the time. His experience and knowledge-based analysis is a helluva place to start, though!

Trump’s Trade War Prompts Harley-Davidson to Close Missouri Plant – Move That Production to Thailand

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❝ In early 2017, President Donald Trump met with executives from Harley-Davidson who he thanked for “building things in America”…

❝ Last week, the EU imposed retaliatory tariffs on US goods, including bourbon, orange juice and motorcycles. The measures are a response to new US duties on steel and aluminium imports…

❝ While Harley-Davidson had been struggling financially well before the EU’s retaliatory tariffs went into effect, the import duties of 25% certainly didn’t help matters.

❝ “To address the substantial cost of this tariff burden long-term, Harley-Davidson will be implementing a plan to shift production of motorcycles for EU destinations from the US to its international facilities to avoid the tariff burden…”

❝ The move is one of the most visible consequences of the trade disputes triggered by US President Donald Trump’s decision to levy tariffs on steel and aluminium imports.

Give our Fake President time. He’ll figure out how to make this even worse!

Republicans vote to cut food stamps and school lunches. Family values, eh?

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❝ Passage of the House farm bill — which would re-authorize programs ranging from nutrition assistance and crop subsidies to rural development and agricultural research — moves Congress one step closer to sending a bill to President Donald Trump before the current legislation expires at the end of September…

House GOP leadership had to rely solely on Republican lawmakers to carry the measure — the first farm bill to pass either chamber with only one-party support — after Democrats revolted over its proposed changes to the Supplemental Nutrition Assistance Program, more commonly known as food stamps. SNAP, which helps more than 40 million Americans buy groceries, accounts for more than three-quarters of the farm bill’s price tag…

❝ The House farm bill would also tighten eligibility criteria under SNAP — changes that would result in some 400,000 households losing SNAP benefits. Thousands of children would also risk losing their enrollment in free and reduced-price school meal programs.

But, hey, Congressional Republicans are proving they’re capable of passing something without permission from the Fake President. Of course, they only try if the legislation screws more working folks and their children.