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Donald Trump

What on Earth Happened to the Republican Party?

by D.J. McGuire

I was away from home – at a science fiction convention in North Carolina, no less – when the President of the United States demanded four members of Congress leave America for “the totally broken and crime infested places from which they came” (CNN) – never mind that three of the members were born in the United States. It should surprise no one that all four of them are not white.

What did come as a surprise was the near complete silence of Republican elected officials on the matter. As far as I know, as of 4:30 PM on Monday (as I write this), one Congressman from Texas and a state legislative leader in Wisconsin make up the entire group of Republican “electeds” who have raised their voices in criticism. The rest are fully engaged in Operation Ostrich.

How on earth did it come to this?

Greg Weiner discusses cause and effect in The Bulwark. His thoughts are quite close to mine, especially here:

There should be lines that this or any president cannot cross without incurring criticism from his own side. That’s because the boundary between neutrality and tacit consent—between their failure to condemn and the suggestion that they condone—may be faint, but it exists. Enabling, like pornography, is difficult to define, but sensible observers generally know it when they see it. Among of its markers is the refusal to use one’s influence to improve a situation one purports, at least privately, to deplore.

How this can’t be a line for so many Republicans just utterly baffles me. These were people who spent no time at all howling rage at primary challengers, bloggers, and anyone else who critiqued their views on taxes … or spending … or even nomination methods. Yet the leader of the party engages in, as Weiner calls it, “bigotry—call it ‘racism,’ call it ‘xenophobia,’ or call it ‘the kind of behavior that forces conservatives into such distinctions,’ ” without nary a peep.

The closest thing we get – even on my other blog, Bearing Drift – is a pox on all houses post from my Bearing Drift colleague. Don’t get me wrong; he was at least willing to rule out voting for Trump in 2020 – a solid step above the deafening silence from Republicans as a group.

Still, the idea that “identity politics” was exclusively a Democratic invention simply does not stand up to historical review. No Democrat was behind the Alien and Sedition Acts of 1798. Democrats opposed the WASPish nativism of the Whigs and Know Nothings of the antebellum era. The fellow who ran for President in 1884 opposing “rum, Romanism, and rebellion” was Republican James G. Blaine. Identity politics has been part of America – and a tool used by both Democrats and by their opponents – since the First Party System itself.

More to the point, there is a serious difference between members of an ethnic group using their political power at the polls to address majoritarian-imposed inequality and the outright racism in which the president indulged on Sunday. Again, back to Weiner:

…there is nothing inherently unwise in choosing to stay on the sidelines rather than be sucked into the unrelenting conflict between Trump and his critics. If anything, one of the president’s uglier influences has been to draw everyone into perpetual combat, and the Reluctant Trumpers’ refusal to rush the field for every play is often prudent.

But there are moments when their voices are needed and when their silence is consequently indistinguishable from acquiescence. If this is not one, it is difficult to conjure what might be. Xenophobia of the kind Trump expressed is a particular offense against American values. Moreover, its normalization is especially dangerous amid the creeping spread of ethno-nationalism.

Republicans need to ask themselves if they would be rationalizing their silence if they were not in the same party as Donald Trump.

If not, they need to get to the real question here: Should they really stay in that party?

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.

The Purge of Freer Market Defenders from the Trumpist GOP, Part II

by D.J. McGuire

Last week I reviewed how the conservative movement has begun to redefine itself in a way that no longer includes supporters of freer markets. That continued yesterday morning when Henry Olsen – best known recently for his hilarious mislabeling of Justin Amash, see Charles Sykes in The Bulwark for more on that – took aim at those of us who oppose Trump’s tariffs and prefer freer trade.

Olsen, returning to the Washington Post for his latest debacle, insists that anyone who opposed protectionism has embraced the concept of “no moral standard.” He really said that.

Cato’s Scott Lincicome inadvertently let the cat out of the bag in his contribution to the National Review compilation. In attacking President Trump’s attempts to recast U.S. trade policy, he asks the key question: “Why should certain American industries and workers have a moral claim to government protection? Why should government prioritize those workers’ living standards above their fellow citizens?” If there is no moral standard against which we can measure market outcomes, then Lincicome is right to protest. But if there is such a standard, then market interventions are not only morally justified, they become morally mandatory. And that is simply unacceptable for the fundamentalists.

My guess is Olsen, upon reading Lincicome (which you, dear reader, should also do, by the way), fell upon the words “American industries and workers have a moral claim to government protection” and immediately decided to himself, “of course they do,” and…well, here we are.

My focus – and based upon Lincicome’s praise of Don Boudreaux’s Cafe Hayek post on the subject, his too – was on the word certain. In effect, Lincicome is asking: Are steel and aluminum workers more “moral” than automobile workers whose industry will be damaged by higher steel and aluminum costs? Conversely, are auto workers more “moral” than those working in fields impacted by the cost of cars and of trucks? Construction workers? Taxi drivers? Police officers?

Opposition to tariffs is based upon the concept that no American – whatever the field – is more “moral” and thus more worthy of market intervention on their behalf. This includes workers in firms that have yet to exist, but will when entrepreneurs can make use of funds saved by Americans who aren’t paying higher import prices.

As Boudreaux himself puts it…

Lincicome’s point begins with the reality that protectionism artificially helps some American industries and workers only by artificially damaging others. And so protectionism is unethical because it elevates the welfare of those who reap the benefits of protectionism over that of those who necessarily suffer – and protectionism performs this inequitable elevation for no reason other than the fact that its beneficiaries possess more political power or saliency than do its victims.

Lincicome’s, and all free-traders’, moral standard is one of equity: no one gets special favors. The fact that Olsen misses this core element of the case for free trade reveals the intellectual weakness of those who struggle to do the impossible, namely, to supply credible ethical and economic justification for Trump’s economic nationalism.

I agree that providing credible justifications for Trump’s protectionism is impossible, but Olsen’s effort is telling for another reason: it is more evidence that the Trump-led Republican Party is no longer interested in defending freer trade, or even in defending freer markets in general.

Those who, as I do, still defend them should take heed – and as I did, take their leave.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.

Free-Market Supporters Won’t Go Away Just Because Conservatives Don’t Want Us

by D.J. McGuire

One of the great arguments within the conservative movement revolves around how much it has changed since Donald Trump became a presidential candidate four years ago. This is the year we are finally beginning to see a sorting out – and for those of us who define ourselves as economic conservatives, the music has stopped without a chair.

It began with the heated reaction to Congressman Justin Amash, a founder of the House Freedom Caucus and one of the most articulate proponents of limited and frugal government (indeed, I’ve had my own disagreements with him on foreign policy). Amash lost nearly all of his friends in the conservative movement, to say nothing of the Republican Party, by his decision to support impeachment of President Trump based upon the information in the Mueller report. Aaron Pomerantz provides the details and the inconsistencies in the Bulwark.

The House Freedom Caucus seemed more than able to rally and condemn Amash, but were strangely absent from the conversation about the budget, allowing a series of financial decisions that contradict the very principles of their founding. And not for the first time.  House Freedom Caucus member Mick Mulvaney, for example, wrote in the Wall Street Journal in 2015 that the government couldn’t afford new deficits, and yet completely switched positions two years later when he’d become Trump’s budget director. It seems that “the party line” has become more important than the fundamental principles that are meant to underlie the party itself.

At first, this may have seemed to be a simple case of party tribalism over principle, which is hardly new or unique to Trump. That changed dramatically when Sohrab Amhari decided to redefine conservativism in First Things. Ostensibly an attempt to criticize the political modus operandi of National Review‘s David French, Amhari took the opportunity to redefine conservatism itself. Robert Tracinski has the details in the Bulwark.

In the first sentence of his missive against supposed “David French-ism”—is there anything more Trumpian that reducing big ideological questions to a personal grudge?—Ahmari links to a manifesto published in First Things last March which denounced the “Dead Consensus” of the right.

The First Things manifesto begins with sneering references to “individual autonomy” but then moves on to denouncing “the cult of competitiveness,” “free trade,” “economic libertarianism,” “the demands of capital,” “investors and ‘job creators’ “—note the gratuitous scare quotes—and “warmed-over Reaganism.”

I predicted a few days ago that we were only weeks away from conservatives trashing Ronald Reagan in order to bolster Trump. It turns out I was behind the curve. It was already happening.

The signatories of that manifesto don’t just want to eject the free-marketers. They want to welcome in the nationalists: “We embrace the new nationalism insofar as it stands against the utopian ideal of a borderless world.” They talk about “communal solidarity” and “the human need for a common life.” And who are the bad guys? Here we get a lot of familiar alt-light rhetoric about supposed “jet-setters,” “citizens of the world” who can “go anywhere” and “work anywhere” in a “borderless world.” I’m surprised they didn’t just go straight to “rootless cosmopolitans.”

In short, Amhari is doing more than just providing intellectual cover for obsequious to Trump (for that, seek out Henry Olsen’s recent Op-ed in the Washington Post, if you must). He’s using Trump to redefine conservatism as a new collectivist enterprise replacing freedom with blind faith and replacing persuasion with coercion.

For those of us who appreciate economic freedom – or even political freedom – there is no place, period.

Quite a few on the right have provided the equivalent of the Luke Skywalker response to Amhari (“This is not going to go the way you think”), but they’ve left out one crucial component: what economic conservatives will do once we’re read out of the conservative movement and out of the Republican Party.

People don’t just go away; they react. Thus it will be with economic conservatives, too. To be sure, some will stay where they are and fight an increasingly desperate rear-guard action within the movement and within the GOP. Many more will simply leave both and come to terms with the dizzying reality that they – we – are the new political center.

More than a few, however, will follow me into the Democratic Party on the assumption that partial collectivism – for all its many faults – remains superior to the full-throttle theocracy that Amhari and those like him will redefine as “conservatism.” That’s going to come as a slow-motion shock – and not just to Republicans or to conservatives (however they are defined). Democrats will start to find more robust internal arguments about economic issues.

One can already see it happening today. Contrary to the confused nostalgia of several presidential candidates, the overwhelming majority of Democrats now support free-trade agreements, while barely a third consider reducing trade deficits to be a priority (Pew Research). Democrats in 2019 are already more desirous of their party moving rightward than in 2016 (Pew Research). Here in Virginia, the last Governor to propose a tax increase was…Republican Bob McDonnell in 2013. Neither of his two Democratic successors followed suit (one of them – Terry McAuliffe – even proposed a corporate income tax reduction during his term in office). The leading Democrat for the presidential nomination – by far, albeit for now – was Vice President during the formation of the Trans-Pacific Partnership. Even those who support Universal Basic Income are now doing so not merely as a redistribution policy, but also as a way to dismantle the welfare state apparatus and end government regulation of the poor.

To be fair, the Democratic nominee (whoever he or she is) will almost certainly attempt to run to the president’s left on many economic issues, but not on all of them. In time, especially if the Republicans are as dismissive of us as First Things has become, economic conservatives will continue to move the Democrats toward freer markets and exchanges. That will change both parties, to say nothing of the body politics as a whole, in ways that are not anticipated…

…and shouldn’t be feared.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.

Robert Mueller Exits the Stage…For Now

by D.J. McGuire

Robert Mueller is no longer the Special Counsel to the Justice Department. That doesn’t mean it’s the last we’ve heard from him.

To be clear, Mueller himself would rather it be otherwise. In his statement this morning, he showed that he stood by his report on Russian interference in the 2016 election, possible cooperation between the Trump campaign and interfering Russians, and the obstruction of his investigation of both. He flatly said, “the report is my testimony,” while indicating, were he asked to testify, he would simply cite the report, in whole or in part, over and over again.

Having read the report, I can certainly understand Mueller’s assertion. Having seen the reaction to his statement, it’s pretty clear to me he won’t get his wish to avoid testifying.

Nothing in Mueller’s statement deviated from his report – no surprise, as Mueller cited it repeatedly – but outside of those few of us who have read it (and those whose distrust of Trump is such that they believe the worst of him), there is some surprise at what Mueller said today. When Mueller wrote in his report that Department of Justice policy against indicting a president closed off that door, while leaving Congress in the role of taking the information and moving under the constitutional instrument of the impeachment process, I read it and it had quite an impact. When he repeated that this morning, the rest of world took notice. My twitter feed is full of foreign journalists (mainly to follow their reporting on their home countries). The most knowledgeable about American politics (without directly covering it) is Dan Hodges of the UK. This was his response on Twitter:

Killer Mueller quote: “If we had confidence the President did not commit a crime we would have said so”.

For those of us who call ourselves political geeks, that quote hasn’t been “killer” since it survived William Barr’s creative interpretation of the Mueller report from two months ago. That it still packs a punch is a reminder of just how many people do not know what’s in the report.

So, if I were a Democrat in the House of Representatives, the conclusion is inevitable: Robert Mueller needs to talk about what’s in the report. As Eric Swalwell (who actually is such a Democrat) put it, “It’s the difference between seeing the movie and reading the book” (far more people would do the former than the latter).

In Mueller’s world (as a longtime political appointee of numerous Justice Departments) – and in mine (as a political geek) – the report would indeed speak for itself. In the – well, the real world – reports are always louder when their authors are talking about them. Whether Mueller wants to do that or not, Congressional Democrats will likely conclude – if they haven’t already – that he needs to do it.

They’re probably right.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.

The Acrimony Primary (Ep. 203)

 

This week’s podcast features comedian and Portland radio personality Carl Wolfson as the gang discusses Joe Biden entering the Democratic primary race and what that portends for the 2020 election.

Dispatch to Democrats: Let’s Impeach Like Mitch McConnell Would

I said something on last week’s podcast and upon further reflection, I was wrong.

I know. It’s a shocker for one of us to call ourselves wrong instead of waiting for Kevin to do it. But here we are.

Anyway, I said that impeachment is a matter for calendar 2019 and I’m pretty sure I’m wrong and I’m going to tell you why. Buckle up.

Every analyst with a functioning knowledge of Congressional procedures can give you the basic rundown of how a traditionally constituted impeachment process of Donald Trump would go. The House would file articles. There would be hearings, There would be a vote, with a likely outcome of referral to the Senate, passed along party lines. Then the Senate would hold further proceedings, presided over by Chief Justice Roberts, and they would vote to acquit, probably along party lines, with a few possible Dem defections.

The whole circus would take about 4 months and at the end, Trump would go on a victory tour for the entirely of 2020. He’d hold rallies and talk about how the Witchhunt 2.0 exonerated him even more bigly than the Mueller report did. In my opinion, Trump basically wins a traditional impeachment process and probably wins the election as well.

Traditional impeachment proceedings, while the morally correct thing to do, are a political minefield for Democrats and could turn into a giant PR victory for Republicans.

But what if we dispense with tradition? What is we take a page out of the Republican handbook and scrap tradition and decorum and political norms? What if we kick all of that in the teeth? What if we, the Democrats, pull a move as lowdown and dirty as the time Mitch McConnell denied a duly elected president his constitutional right to seat a Justice on the Supreme Court? Something as potentially damaging as Jim Comey dropping a letter about Hillary’s emails mere weeks before the election?

What if we impeach a president during an election year?

Here’s what I’m thinking we do. Let’s spend 2019 investigating Trump some more. We already have several committees subpoenaing documents, requesting testimony, and planning hearings about the Mueller report and about irregularities in the way the Trump organization does business. And the administration is already stonewalling like their freedom depends on it. Powerful House committee chairs like Jerry Nader, Adam Schiff and Gerry Connolly are already threatening contempt of congress Citations, fines, and possible referral to the DC US attorney for prosecution for individuals who defy subpoenas. And they’re not out of line: Princeton professor of history Kevin Kruse was on Twitter saying that the same threats were made during Watergate and they were potent enough (and legitimate enough) to compel reluctant witnesses to head to the Hill.


I say these threats, and more, are all good. Let’s turn the whole thing into a street fright. Lob subpoenas at the administration in a steady stream and start fining the hell out of anyone who refuses to appear. If the administration sues, so what? Let them take it to court. It doesn’t make them look any more innocent or any more cooperative if they’re willing to burn tax dollars defending their refusal to answer to Congress’s enumerated powers of oversight.

We can run the clock out on 2019 with these kinds of ugly little fights and at the same time, non-oversight committees can keep writing bills that deal with healthcare and education and stopping ICE from putting babies in cages. Show the country exactly how well Nancy Pelosi’s caucus can walk and chew gum. Meanwhile, the 2020 Dem candidates can all stay above the fray by saying “Speaker Pelosi is trying to do her job and I support her. Too bad the White House won’t cooperate. But have you seen my latest proposal on universal pre-k? It’s great, if I do say so myself!”

Then, on February 4, 2020, file articles of impeachment.

Why February 4? I’m so glad you asked! That’s the day after the Iowa Caucus. While Trump spends the morning on Twitter wanking to FoxNews’s slavering coverage of his victory, we slap with him impeachment.

Then we play as dirty as we can and schedule every hearing to coincide with a primary. Take every Trump primary win and steal the media attention by bringing in a major witness to testify against him.

Trump will be furious. He will investigate the investigators. He will spend hours on social media calling everyone with a D next to their name horrible things but you know what? He’ll be out of line. The Democrats in the House will just be doing their jobs. It won’t be their fault they had to wait so long to start this process. If the administration had cooperated in 2019, this all could have been over by Thanksgiving.

The key will be keeping it going until after the conventions in August. We do not want to refer to the Senate until after Trump has accepted the nomination because the optics of him accepting the nomination after being acquitting by Putin’s gang of bitches from the Senate will hurt the Dems. McConnell-ski and (Russian) company have to be forced to decide whether to take the vote in the early fall or not take a vote at all.

This would be the ugliest political campaign since Aaron Burr went door to door against Jefferson. But literally nothing I’m proposing is against the law or outside of the role of Congress. Pelosi has a right and a duty to do all of these things. Nothing in the Constitution says she can’t do them during an election year. And I think we all know traditions and norms don’t – can’t – matter in the era of Trumpian politics. 

Republicans have lied, cheated, and used stolen materials to rig the system in their favor. We can’t be afraid of paying them back in kind.

Joe and the Giant Impeachment Question

by Kevin Kelton

Among the first questions former Vice President Joe Biden will face on the campaign trail is whether he thinks congress should begin impeachment proceedings against President Donald Trump. Several candidates have already weighed in with qualified (and in the case of Elizabeth Warren, unqualified) answers of “yes.”

But Joe Biden is a different type of presidential candidate, whose candidacy should be based on character, decency and raising the standards of decorum back to where they once stood. So here’s the answer I hope Biden gives to the impeachment question:

I’m not going to answer that directly because I think it’s unseemly for a candidate to call for the removal of his or her political opponent, just as I thought it was unseemly when candidate Donald Trump was going around the country saying that his opponent should be ‘locked up.’ 

But I will say this: the House of Representatives and the Senate both have an important responsibility for oversight and to hold the executive branch accountable. Because no one, not even a president of the United States, is above the law.

And if you ask me if I think the president committed obstruction of justice? The answer is an unqualified, ‘yes.’

If Biden can nail the right answers on his first few campaign questions – such as Medicare expansion versus single payer Medicare For All, the Green New Deal, and issues of income inequality – he will go a long way toward assuring the 2020 electorate that he’s in step with today’s Democratic base and is not a throwback to the 1990s.

Joe Biden is a great American and great public servant who could make a great Commander in Chief. All he has to do is prove he can be a great candidate.

Kevin Kelton is the co-host of The More Perfect Union podcast and a founder of Open Fire Politics.

Trump’s Bad Trade ‘Deal’ With China Takes Shape

by D.J. McGuire

One of the more maddening defenses of Trump’s protectionism is the insistence that his tariffs and trade wars are “temporary.” Give him the chance, his defenders say, and he’ll get “better deals” that remove tariffs all around.

This week’s Bloombergrevelation about trade talks with the Chinese Communist Party completely destroyed that argument.

China is considering a U.S. request to shift some tariffs on key agricultural goods to other products so the Trump administration can sell any eventual trade deal as a win for farmers ahead of the 2020 election, people familiar with the situation said.

The step would involve China moving retaliatory duties it imposed startinglast July on $50 billion worth of U.S. goods to non-agricultural imports, said the people, who asked not to be identified because the discussions were private. The shift is because the U.S. doesn’t intend to lift its own duties on $50 billion of Chinese imports even if an agreement to resolve the trade war between the two nations is reached, one the people said.

Let’s examine the full implications of this nonsense. First, it’s abundantly clear that Trump has no interest in ever removing the tariffs he has imposed. This should surprise no one. Donald Trump was President of the United States for less than an hourwhen, in his own inaugural, he insisted, “Protection will lead to great prosperity and strength.” Within fifteen months, he had cleared out the bureaucratic resistance to his dangerous impulse and the tariff spree began. The idea that he would ever get rid of them was foolhardy.

The repercussions of this are now beginning to be seen, in geopolitics as much as economics. The Administration that touted itself as being able and willing to “stand up” to Beijing has been reduced to begging the CCP to switch its tariffs to less visible products.

Meanwhile, the regime gets a free pass on threatening Taiwan, strong-arming its neighbors in the South China Sea, using Kim Jong-un as a foil, and persecuting hundreds of thousands of Uighur Muslims in occupied East Turkestan.

The president who as a candidate railed against the rest of the world “laughing at us” is only spared hearing side-splitting gales from Zhongnanhai due to the distance of the Pacific Ocean.

The rest of the world is taking notice and will act accordingly. Those hoping for removal of tariffs now must accept the fact that they’re not going anywhere. The world will be a poorer place, with higher prices and lower production across countries and sectors worldwide.

Economically, America has been shielded by timing: we’re in the late stages of a long economic recovery temporarily buttressed by a Keynesian sugar high disguised as a “supply-side” tax cut. That can’t last forever. The economic reckoning will be painful. The geopolitical effects will as well.

The one silver lining is this: no one can credibly claim Trump’s endgame is about reducing or eliminating tariffs. Anyone who still tries peddling that nonsense is gaslighting everyone in the conversation, themselves included.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.

Our 200th Show! (Ep. 200)

 

This week, the MPU hosts celebrate their 200th broadcast by reflecting on the week in politics. They also talk about the history of the podcast, let us meet their families, and share some fun surprises along the way.

It May Very Well Be the Beginning of the End for Trump

by D.J. McGuire

On 22 March 2019, an event occurred that signaled the Trump Administration may not make it past January 2021.

For this was the day Special Counsel Robert Mueller delivered his reportThis post is not about any of that.

Early that morning, the bond markets witnessed an event not seen in twelve years, months before the Great Recession that some say it predicted – the inversion of the yield curve (Bloomberg).

The Treasury yield curve inverted for the first time since the last crisis Friday, triggering the first reliable market signal of an impending recession and rate-cutting cycle.

The gap between the three-month and 10-year yields vanished as a surge of buying pushed the latter to a 14-month low of 2.416 percent. Inversion is considered a reliable harbinger of recession in the U.S., within roughly the next 18 months.

In theory, and almost always in practice, the interest rate on a three-month bond (i.e., loaning money to the government for three months) is lower than the 10-year bond (loaning it to the government for a decade). The longer someone is locking away their money in an asset like a bond, the higher interest rate they would normally want.

The nuts and bolts go like this: bond interest payments are constant – in dollars. The bond interest rate is thus dependent on the bond price. If, say, a bond paying $50 a year in interest sells for $1000, the interest rate is 5 percent. If the interest rate (a.k.a., the yield) falls to 4 percent, it means the price of the bond has risen to $1250. So when, instead, investors are ready to accept lowerinterest rates for longer loans to the feds, it means they’re paying higher prices for the longer bonds than for the shorter ones.

Why would longer bonds, with less relatively liquidity, be in higher demand than short-term bonds? Because investors don’t have a lot of confidence in the short-term health of the American economy.

The last time this happened was in early 2007. The Great Recession started less than a year later.

Lest anyone think this is a recent correlation (USA Today, emphasis added) …

This warning signal has a fairly accurate track record. A rule of thumb is that when the 10-month Treasury yield falls below the three-month yield, a recession may hit in about a year. Such an inversion has preceded each of the last seven recessions, according to the Federal Reserve Bank of Cleveland.

Now, predicting the future is a mug’s game (especially for yours truly). Indeed, Michael Darda told CNNthat one day of inversion may not mean much.

Michael Darda, chief economist and market strategist at MKM Partners, said in a note that investors should wait for weekly and monthly averages to show an inversion before they read it as a “powerful recession signal.”

But here’s where Trump could be in serious trouble, according to Darda: “He noted that on average, recessions occur 12 months after an inversion — not immediately.”

In other words, if this inversion is signaling a recession, it could come smack in the middle of Trump’s re-election campaign.

The last time an incumbent president won an election with a recession in an election year was Harry Truman in 1948 – and as that recession began in November, it may not have begun until after the votes were cast.

If you’re looking for the last incumbent to win while a recession inarguably happened during the campaign, you have to go back to Calvin Coolidge – in 1924 (data: National Bureau of Economic Research– the folks who make the official declaration on when recessions begin and when they end).

There are arguments about how much credit Trump deserves for an economic recovery that began more than seven years before he took office. There are arguments about how his tax policies (including tax increases on imports) have affected the economy. However, a recession in 2019 or in 2020 would be one that he owns – and history shows voters do not re-elect presidents campaigning during recessions.

If a recession is indeed coming, it could be what keeps the president from winning a second term – and the first sign of it came with Friday’s yield inversion.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.

In Defense of Freer Trade

by D.J. McGuire

As we careen towards another presidential election, one of the issues that has been once again shunted to the side is international trade. This is a mistake, especially for Democrats looking to expand their coalition (or hold the expansions achieved in last year’s Congressional election). Before we get to that, however, we must revisit why protectionism is wrong, and freer trade is better for Americans and for everyone else.

America has had a conflicted history when it comes to trade. One would presume that protectionism had an advantage when tariffs were our primary source of revenue. In fact, protectionists in the nineteenth century preferred tariff rates so high that revenue would fallbecause imports would so low. Indeed, it was just such an economic platform that enabled the Republicans to win the election of 1888 (despite losing the popular vote) and enact the McKinley Tariff. It is the most common historical marker Donald Trump uses in his own speeches when he defends his protectionist outlook.

Here’s what he doesn’t mention: the tariff was so unpopular that the Republicans lost half their House seats in the election of 1890 (including McKinley’s) and the Democrats took back the White House in 1892. By the time McKinley returned to national politics (as the Republican nominee for President in 1896), he had remade himself as a defender of the gold standard.

A generation later, the Republicans once again forgot the economics of freer trade – and the rest of us suffered the consequences. The Smoot-Hawley tariff of 1929 is still mentioned in Economics classes today as an example of short-sighted policy. It either caused or exacerbated the Great Depression (depending upon which economist is talking). The political effects were also acute: the Republicans were denied a Congressional majority for the over a decade and a half, and after Hoover’s defeat in 1932 they would be out of the White House for twenty years. Congress became so mired in self-doubt that it handed the presidency de facto legislative authority to reduce tariffs (before taking it back under Trade Promotion Authority in the 1970s).

Thus was the “free trade” consensus established, a consensus that started fraying when the Democrats began flirting with protectionism in the late 20th century (before the Clinton era), and is now in serious trouble due to the populist takeover of the GOP. While I prefer to use the term “freer trade” (fully “free trade” is an impossible absolute), I am deeply concerned about the protectionist retaking control of the Republican Party, for reasons both economic and political.

Economically, freer trade means more options for Americans and more efficient markets for them. Please note, I did not limit those benefits to America “consumers” – and for good reason. The first tariffs Trump imposed in 2018 were on steel and aluminum, which hits firms across the country with higher production costs. Those costs led to jobs unfilled, products unmade, services not offered, and prices increased.

Those are the direct impacts of tariffs on inputs, but tariffs on goods and services also damage economies indirectly. Higher prices on these goods and services lowers both Americans’ standards of living and their savings balances. Less money saved means fewer funds available for business to invest in themselves. Once again, that leads to jobs unfilled, products unmade, and services not offered.

So why does protectionism still seem so popular among the populist right and the American left? Status quo bias is certainly a part of it. The opportunity cost of protectionism is the loss of jobs and growth not yet seen, compared to disruptions that are easily seen. Trump’s behavior on the “Carrier deal” before he took office is a class example. As I noted at the time, “saving” jobs in one area costs jobs in another (and worse), but those costs are less visible.

Or at least they wereless visible. In the social media era, with access to information much easier, we are seeing more discussion of the overall effects of tariffs. What once required the ability to follow several academic journals now requires little more than following Scott Lincicome. Meanwhile, Boeing’s recent problems have been another revelation on the advantages of freer trade: greater choice of products, services, and inputs – or, as Jane McManusput it: “Was never so relieved to see ‘Airbus’ on my upcoming booking.”

As for the politics of trade, that, too is changing. As Trump increasing rebrands the GOP as the protectionist party it once was in the 1880s and in the 1920s, supporters of freer trade are finding Democratic voters far more receptive to their ideas than certain Democratic elected officials (Pew Research). Even in 2016, a majority of Democratic voters approved of free trade agreements, despite neither of the two major contenders for their nomination openly supporting them. Indeed, the 45% of Americans who supported freer trade agreements only found one November candidate who agreed with them on that issue – and that was Gary Johnson. Democrats looking to be the nominee in 2020 should take note of what the party’s voters actually believe on trade – rather than what protectionists in the party are telling them.

First and foremost, though, those of us who know the damage protectionism can do must speak out against it and ensure the arguments for freer trade are heard – and that is why this post is here.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.

The Kim Summit: Is Trump Caving?

by D.J. McGuire

From The Art of the Dealapparently to the Art of the Cave (CNN):

As President Donald Trump prepares to meet face-to-face with North Korean leader Kim Jung Un for a second time, his administration is weighing backing off an earlier demand that North Korea agree during the upcoming summit to make a full accounting of its nuclear and missile programs as a prerequisite for US concessions, multiple administration officials tell CNN.

Keep in mind, without a full accounting, we will have no idea if the Kim regime will have stopped its nuclear weapons production, let alone whether it will have truly denuclearized — as every Administration has demanded since Reagan.

Then again, it’s quite possible the regime could get what it wants (an end to economic sanctions) without even pretendingpromising to denuclearize (same link):

On NBC News this week, Secretary of State Mike Pompeo said that some US sanctions would be removed when “We’re confident we’ve substantially reduced that risk” from North Korea’s nuclear weapons program. In June of last year, at the time of the first Trump-Kim summit, Secretary Pompeo tied sanctions relief to full denuclearization.
“We are going to get complete denuclearization; only then will there be relief from the sanctions,” Pompeo said in June.

Last summit, of course, Trump “shocked top advisers by agreeing to cancel joint U.S.-South Korea war exercises, which was seen as a major concession to Pyongyang.” This time, they clearly won’t be very surprised, as Pompeo et al are already preparing the ground for a cave … in particular Stephen Biegun, who already hinted that some sanctions could be dropped soon (Washington Post).

Add to that all of the whispers of Trump looking to pull American troops out of South Korea (although, to be fair they are only whispers), and it looks like Trump will be the most dovish American president in history regarding North Korea.

Given the regime’s close ties to Beijing and Moscow, appeasing it at the expense of our allies in South Korea and Japan would be a terrible mistake.

D.J. McGuire – a self-described progressive conservative – has been part of the More Perfect Union Podcast since 2015. He is also a contributor to Bearing Drift.