Making sense of trends and data

Economic factors

Assessing the Trump effect

Published 6.8.2017
The actions and policies of the president of the US have an oversized effect on world political and economic conditions, which merely states the obvious. Unlike his recent predecessors, Trump entered office with few concrete positions and plans. He’d made campaign promises, but the specifics of and how those promises were to be implemented was unknown. A sharp break from Obama’s policies was certain, and to the extent that anything has been accomplished, that is the case.
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Prior to the main assessment, the events of today (June 8, 2017) must be acknowledged. Former Director of the Federal Bureau of Investigation (FBI) James Comey testified in a Congressional hearing about his firing and his interactions with Trump. Comey called Trump a liar no less than five times. It is unusual for so stark a term to be used in political discourse, but in the age of Trump, both political correctness and civility are passé.

The Comey hearing, despite Trump’s personal lawyers assertions, is the beginning not the end. Some think that even if Trump wasn’t being investigated when Comey was fired, which Comey repeatedly affirmed, he still can be, Here is a live blog of the hearing written by lawyers. Although most analysis of the hearing simply reflects the writer’s bias (including this one), it is clear this story has legs and will continue to distract Trump and his administration. The other takeaway from the hearing is that General Michael Flynn is in real legal jeopardy.

Congressional Republicans, who have the votes to pass whatever legislation they desire, have passed very little. Please note, a bill must pass both houses of Congress before it becomes a law, therefore celebrating passage of a House Bill, as Trump did with his healthcare law, is meaningless. The Senate promptly announced that it wanted no part of the House bill, which means there will be two bills that have to be reconciled, then voted upon in both the House and the Senate. Rather than “repealing it on Day One,” it looks less and less likely that any healthcare bill will emerge. As Republicans refuse to fully fund the existing law in hopes that it will collapse, the healthcare status of many Americans will worsen.
There have been Trump successes. Neil Gorsuch was confirmed as the replacement for Antonin Scalia on the Supreme Court. Some number of regulations have been rescinded, particularly in the energy sector, but this is weak tea in light of the campaign promises made. Thousands of executive branch positions remain unfilled. Trump would like to blame Senate Democrats, but you can’t obstruct nominees who have yet to be chosen.

Trump’s first foray abroad began with pageantry in the Middle East and ended with rudeness in Europe. Middle eastern countries wanted Trump’s favor to gain US arms and money and so pandered to his ego. Europeans, on the other hand, wanted Trump to acknowledge the that the US will continue to honor its commitments to the North Atlantic Treaty Organization (NATO).

Afterward Merkel claimed that Europeans need to stand on their own, but without the US, Russia rules. The US military is the only one in NATO with the means to confront and contain the Russians.

Ms Merkel said that as the traditional western alliance is threatened by the new US presidency and Brexit, “the times in which we can fully count on others are somewhat over, as I have experienced in the past few days.”

Merkel’s comments are likely intended for her German constituents as she faces an upcoming re-election.

Trump announced that he wants to revamp the North American Free Trade Agreement (NAFTA). Based on the timing, this announcement can be seen as a response to the appointment of the special counsel. The US trade representative Robert Lighthizer was only just confirmed.

The Trump administration informed U.S. lawmakers that it intends to launch formal negotiations on overhauling the North American Free Trade Agreement, a big bet by President Donald Trump that he can win concessions from Canada and Mexico, and push a deal through Congress.

Overhaul does not mean cancel, and after 25 years, a reasonable argument for updating the pact can be made. However, the notion that US manufacturing will return to its halcyon era are delusional.

Despite the pleadings of his Secretary of State and other industry leaders, Trump announced the US will leave the Paris Agreement (PA), improbably ceding environmental leadership role to China or India, if either decides to take it up. Granted, the industry leaders favoring remaining in the PA head multinational companies. Smaller businesses faced with regulations but with a domestic clientele tend to approve of the decision.

Trump’s love of fossil fuels has been one of his consistent positions, but this does not change the fact that coal is not going to generate more electricity in the US. There has been an increase in US coal jobs, but that coal is being mined for use in steel making. The upsurge may be short lived however when the Australian producers currently suffering the aftermath of several natural disaster recover and start production again. Australia is much closer to China, and both countries remain in Paris. Trump suggested after his announcement that he would be able to renegotiate a better deal, but that seems unlikely.

Trump also announced that he wants to partially privatize the federal Aviation Administration (FAA), which is not a new idea but will require sustained effort to make it happen. Trump’s travel ban is still stuck in the courts, and he may have injured his administration's case with a Tweetstorm on Monday morning.

The next message, missed by most commentators, was an even more hazardous IET (improvised explosive tweet). “We are EXTREME VETTING people coming into the U.S.,” the president wrote.

But wait! The second executive order says its rationale for suspending visas for 90 days was that conditions in the six nations “present heightened threats.” The Department of Homeland Security was given 20 days to “conduct a worldwide review” and determine what “additional information will be needed” to vet visitors properly. Those countries would then have 50 days to “begin providing” the requested information. If any refused, no visas would be issued for their citizens to enter the U.S.

If the US is already doing this, why is it necessary to have the ban?

On the whole, an unimpressive beginning to the Trump era, with most of the wounds being self-inflicted. Rather than spend the period prior to inauguration planning for his administration, Trump took a victory lap. His lack of preparation and attention to detail are being to manifest in an administration that can accomplish little. Yes, Trump faces fierce opposition. Democrats to date feel no pressure from their base to cooperate with Trump on any level. As Trump can't seem to stop gratuitously insulting them, this seems unlikely to change.

Democrats do not appear to have any alternative plan to offer, so for them, simply saying, "No"— as Republicans did to Obama— is their best (and only) option. However, Democratic recalcitrance does not excuse the Congressional inaction because Republicans have enough seats in both houses to enact Trump's policies if they chose. The Senate filibuster rule (as demonstrated in the confirmation of Neil Gorsuch, which most Trump fans would tout as his best accomplishment) can be eliminated at any time. The reality is that Congressional Republicans, especially in the Senate, are not on board with Trump's plans. To date, Majority Leader Mitch McConnell has indicated zero interest in getting rid of the filibuster.
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