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ECONOMIC POLICIES, ANALYSIS, AND RESOURCES

The Economic and Trade Policy Domain tracks and reports on policies that deal with budget, taxation, and finance issues. The domain tracks policies emanating from the White House, Congress, the Department of Commerce and the Department of Treasury. Our Principal Analyst is Ivy Perez who can be reached at ivy@usresistnews.org.

House Democrats Ride the $15/hr Wave into 2020

House Democrats Ride the $15/hr Wave into 2020

Policy Summary
Last month, Democrats in the House passed a bill that would raise the minimum wage to $15 an hour by 2025. The so-called ‘Raise the Wage Act faces opposition in the GOP-controlled Senate floor, where as of yet Majority Leader McConnell has refused to raise the issue. 2009 was the last year that the federal government updated its minimum wage. As of this past June, this decade-long stretch broke the previous record for the longest period without minimum wage increases. Coming off this long wage freeze, the ‘Raise the Wage Act’ would more than double the pay of lowest-earning workers in any states and cities that remain pegged to the federal minimum. While a GOP-controlled Senate continues to render the ‘Raise the Wage Act’ implausible in the short-term, the bill’s passing in the house signals a commitment by national Democrats to pursue the $15/hour target rate as we move into the next decade.

The $15/hour benchmark has its origins in the resurgent grassroots labor campaigns of the last decade. Workers and progressive labor activists in the fast food industry, especially, have done the work to mount political pressure behind this goal. The “Fight for $15” slogan was coined at a one-day strike by fast food workers in New York City in 2012. Energized by that campaign, “Fight for $15” grew into a militant movement with global presence. The organization’s official website claims footholds in over 300 cities, including many outside the U.S. Back in 2014, a local campaign spearheaded by the city’s Socialist Alternative chapter made Seattle the first municipal government in the U.S. to sign the target $15/hour minimum wage into law.

Since then, the $15/hour rate has been adopted by cities across the country. Los Angeles is set to reach its $15/hour benchmark by the end of 2020, and New York City and San Francisco reached that rate at the end of 2018. Seven states have passed measures that will raise their wage floor to $15/hour in the coming years — California, Massachussetts, New York, DC, Illinois, New Jersey, Maryland, and Connecticut, in order of their bill’s passing. As a result, there are several areas in the country where the minimum wage is set to reach $15/hour in cities and surrounding areas before eventually reaching a state-wide $15/hour minimum wage. In New York, for instance, the downstate area, Westchester and other counties surrounding New York City, will reach $15/hour in 2021, whereas upstate workers will receive more gradual inflation-adjusted wage increases up to an eventual $15/hour at an undetermined date. As with healthcare and other major issues that have come up at the Democratic primary debates so far, vast differences in the actual impacts of policies are often disguised by similar rhetoric or messaging. It will be important throughout the coming year to pay attention to the details when candidates for national office mention changes to minimum wage policies.

Analysis
When political work behind the $15/hour target began in 2012, the policy was still seen by many as a fringe proposal. Even for most Democratic politicians, the policy was only conceivable in high-wage urban environments with strong progressive political organizations. As such, the initial victory in Seattle met equal fanfare and skepticism. Progressive activists declared the Seattle bill the first victory in a long-awaited reversal in the balance of power between capital and labor in the U.S. Conservative skeptics expressed the fear that minimum wage laws are untenable without raising unemployment. So far, studies that have looked at the effects of Seattle’s policy have produced mixed results. One notable 2017 study suggested that although most workers benefited from the bill, inexperienced workers newly entering the workforce faced stiffer competition and fewer opportunities. The same authors, however, published a revised study the following year where these losses had largely disappeared, recuperated as the city’s economy adjusted to the wage increase. Even among supporters of wage increases, Seattle seemed like an exceptional case for the policy’s horizon of possibility. Not every city in the United States has a composition of voters and progressive organizations capable of electing committed progressives, let alone socialists, to city council positions.

Yet today, nineteen of the Democratic candidates for President, including centrist frontrunner Joe Biden, have stated support for some version of the $15/hour increase at the federal level. The growing normalcy of the policy proposal is a high-water mark for a Democratic party that has been continuously pushed to the left during the Trump years, at least in rhetoric. Yet, as many analysts have pointed out, “Fight for $15” is not what it once was. In the intervening seven years, the inflation-adjusted value of the slogan has already depreciated significantly. According to Bloomberg, a $15/hour minimum wage in 2025, the year after the date set by the House Democrats’ bill, is comparable to a $12/hour wage in 2012, when the movement began. The current life of the policy, once considered extremely ambitious, is caught between political and economic timelines. As Democratic Party elites become more sympathetic to the $15/hour policy, the actual value it represents depreciates. It is an open question whether the coalitional power necessary to implement the policy at the federal level will keep pace with inflation, passing it before it becomes a watered-down, historically sub-standard increase. The 2020 Senate elections will be a crucial turning point either way, and progressive activists may find it necessary to raise their expectations to maintain adequate pressure on the electoral system.

Across the board, the potential benefits of a minimum wage increase often come down to the details of the laws that have passed. As in the case with New York state, there are exemptions built into their new minimum wage bills, most notably slower rollouts and lower caps for rural areas and smaller companies. Yet, elsewhere, these minimum wage increases have come with wider, structural reforms to the way that wage minimums are regulated. San Francisco’s $15/hour minimum wage law impressively included the very progressive stipulation that the wage be adjusted on a yearly basis to keep pace with increases in inflation, as measured by the Consumer Price Index. The ‘Raise the Wage Act’ also includes such a stipulation, which, if passed by a future Democratic Senate, would be the first federal minimum wage policy in U.S. history to include automated adjustments to wages at pace with inflation. Such a policy would create a permanent safeguard for labor’s share of corporate profits. Optimistically, an inflation-adjusted minimum wage would allow progressive political forces to divert their valuable time and effort away from merely keeping up with increases in the cost of living, and towards more substantial structural and political changes. Pending such an outcome, low wage workers in the U.S. will have to continue year after year with “belt-tightening” adjustments as we march further into the longest stall in the federal minimum wage we have ever seen.

Resistance Resources

  • The Economic Policy Institute’s Minimum Wage Hub is a resource on minimum wage policies for the uninitiated and the expert alike. The page offers primers on the basics of minimum wage policy and history, newsletters on the issue, and a searchable database of in-depth research housed at the institute. The Economic Policy Institute is a think tank devoted to, as articulated on its website, “the needs of low- and middle-income workers in policy discussions.” Beyond its credentials as a serious, hard-nosed research institute, the EPI also offers resources to laymen seeking to navigate the complicated debate around problems facing poor and working people in the United States.
  • Fight for 15 is a multinational movement of workers and activists demanding a minimum wage of $15/hour. Fast food workers in New York City kicked off the movement in 2012, calling for a $15/hour wage and a union. Today, Fight for 15 is proud to report affiliated actions “in over 300 cities on six continents.” Their website hosts accessible information for workers interested in learning about strikes and unionization, as well as frequent newsletter updates on their movement and labor news around the country.
  • MIT’s Living Wage Calculator provides an easy way to estimate the “living wage,” or the wage needed to meet a basic standard of living, in your area. The website breaks down the hourly wage-equivalent in income necessary for a given household to live comfortably in any given county in the U.S. The Calculator breaks the numbers down according to the number of children and number of adults employed full-time in a household. For those interested in the math behind these calculations, the Calculator offers a technical version of its spreadsheet, that cites the data used in any given result.

Photo by NeONBRAND

From Walls to Ceilings – Our Nation’s Budget Deficit Under Trump

From Walls to Ceilings – Our Nation’s Budget Deficit Under Trump

Summary
In a recent op-ed in the New York Times, economist Paul Krugman labeled President Donald Trump the “deficit man.” It’s an interesting title and it is certainly appropriate. Even within the area of economic policy, our nation’s budget deficit doesn’t typically receive as much coverage as matters such as the trade war or the stock market. That said, this seems like an opportune time to examine it in detail.

It is important to be mindful of the difference between a nation’s budget deficit and its national debt. The former refers to the difference between the funds a country takes in from revenue streams or receipts such as taxes and what it spends. The latter is the debt that stems from a government borrowing further funds in an attempt to cover all such deficits. While the two are different, they are connected in ways that are important in a report such as this. For example, the ability to borrow money can be used to help the government finance the deficit.

August is here and with it, recess for Congress. The deadline for raising our debt ceiling is fast approaching. It was recently announced, though, that Trump’s administration has reached an agreement with Congress to address our deficit by implementing a budget deal while at the same ti e increasing the debt limit. The deal also includes a two-year budget that stands to significantly increase the federal deficit. The budget deficits it will create are estimated to be well over $1 trillion within a decade. This is the largest that deficits accumulated by the federal government during one presidential term have been expanded in the history of the U.S. economy.

In August 2018, I reviewed the increasing budget deficit under Trump and discussed its concerning elements that could pose threats to our economy. The Tax Cuts and Jobs Act had  sent the budget deficit shooting up close to $1 trillion. We were also in the throws of the trade war sparked by Trump’s tariff policies. One year later, all such matters have only gotten worse. The deficit has increased by over 23%, according to CNN, and none of the factors that have caused this spike have been eliminated

Analysis
During his 2016 campaign, Donald Trump boasted that if he were elected, the national debt would be eliminated. This was a highly unrealistic promise, as it would have required completely balancing the budget deficit but under Trump, we have drifted even further from such a goal than we were during Obama’s second term.. While our economy is far from the “strongest it has ever been” , as Trump claims, our budget deficit is indeed poised to become the largest in history and it is  due to things Trump has done, namely tax cuts and increased military defense spending.

We have a debt ceiling for a reason but Congress seems to be completely disregarding it. Historically, it is a concept that was engineered to allow Congress to make sure the federal government did not borrow more money than made fiscal sense. It was created with the idea in mind that any Presidential administration could easily lose control of their spending and attempt to fix any potential damage by borrowing the necessary funds.

When someone has accumulated more credit card debt than they can handle, borrowing more money to start paying it back is not a long term solution. College students and first time home buyers are advised by experts not to borrow more money than is reasonable for them to pay back but Congress doesn’t seem concerned with doing the same for the Trump administration. Both branches should be striving to balance the budget but the new deal is poised to do exactly the opposite, setting us back even further than we already were. Our economy is certainly not immune to downturns or market fluctuations and if we experience another one within the next few years, as we are likely to, a historically overblown deficit is the last thing we’re going to want. Despite Trump’s claims, our economy is far from stable. Adding to the budget deficit instead of balancing it will only serve to make all matters worse.

Resistance Resources:

  • The Center on Budget and Policy Priorities is progressive think tank that conducts research and analysis on budget related matters.The Concord Coalition is a grassroot organization that provides information on the risk and consequences on the growing federal debt and unsustainable fiscal policies.
  • The Center for Economic and Policy Research is a nonprofit research organization that conducts research and public education to promote democratic debate on economic matters including the federal budget and national debt.

Photo by Fabian Blank

Democratic Candidates Stance on Breaking Up Big Tech Garners Both Support and Opposition

Democratic Candidates Stance on Breaking Up Big Tech Garners Both Support and Opposition

Policy Summary
Much of the discussion among the 2020 Democratic presidential candidates regarding economic policy has centered around one particular-the question of breaking up big tech. This is due in no small part to Senator Elizabeth Warren (D-Massachusetts) who made the subject a cornerstone of her campaign. On March 8th 2019, she published a detailed layout of why the technology sector needed to be broken up and how she would do it. Her plan centered on disrupting the ways that the giants of the industry, specifically Google, Facebook and Amazon, have limited competition within their industries by way of both mergers and proprietary marketplaces. The legislation she proposed to break up these companies’ market power and influence would see the biggest tech companies designated as platform utilities

In the months that followed, several other prominent Democratic candidates also weighed in on the issue. In an interview with the Associated Press, frontrunner Joe Biden praised Warren’s stance on breaking up big tech, stating she had made a “very strong case.” Biden added that he didn’t think that the U.S. government had dedicated enough time to investigating antitrust measures and that he felt it was something that they “should take a really hard look” at. Kamala Harris expressed a similar statement regarding Facebook, stating that to her, there was no question that “serious regulation.” would be necessary for the social networking platform. “I think we have to seriously take a look at that” she responded when asked if she thought Facebook should be broken up. A few days later, Senator Bernie Sanders stated that should antitrust action be taken against Facebook, he would support it. “We have a monopolistic— an increasingly monopolistic society where you have a handful of very large corporations having much too much power over consumers” he added.

Senator Cory Booker (D-New Jersey), however, displayed a different stance toward the idea of breaking up big tech. When asked where he stood on the subject, he responded “I don’t think that a president should be running around pointing at companies and saying break them up without any kind of process here.” Booker even went as far as to compare Warren’s techniques to those displayed by Trump. It’s not me and my own personal opinion about going after folks” he added. “That sounds more like a Donald Trump thing to say, ‘I’m going to break up you guys.’”

It is worth noting that during the first Democratic Debate of the 2020 primary, Amazon was the only member of big tech’s elite to be called out by name.

Analysis

Is pushing for further antitrust legislature aimed at breaking up big tech a winning issue for the 2020 democratic presidential candidates? There is plenty of reason to think so. America’s trust in social media has been steadily decreasing for as long as Donald Trump has been in office. Just over a year ago, leading public relations firm Edelman released a survey on the subject, consisting of data gathered from nine large countries including the U.S. and Canada as well as the U.K. According to this survey, only 30 percent of U.S. respondents still trust social media while over 60 percent felt that their government needed to do more to regulate social media. This should provide an excellent opportunity for the 2020 Democratic candidates to offer the American people something they clearly want.

As Warren laid out in her March 2019 policy rollout, though, the reasons from which her focus on breaking up big tech has stemmed have as much, if not more to do with economics than social justice. These companies have what economist Robert Reich has described as a “stronghold on  our economy” in the sense that they have monopolized entire markets. Facebook and Amazon haven’t hesitated to acquire any companies that could rival them even minimally, a noteworthy example being Facebook’s acquisitions of Instagram and Whatsapp. Business practices of this sort are harmful to the economy as a whole, as they serve not only to stifle competition and innovation but ultimately to hinder job growth. If they cannot acquire a company, the giants of tech have been known to resort to other tactics, such as the price war that Amazon launched against their competitors. Companies that reach this market monopoly status typically have the means to get what they want, which often means political influence. This is particularly dangerous concerning a company like Google that controls so much of what American voters see when they search the internet for news or anything else.

The Open Markets Institute, a liberal Washington D.C. based think tank, has spent years crusading against the market monopolies that have grown to dominate the technology sector. Their influence in the increasing Capitol Hill scrutiny of big tech’s giants is starting to gain traction. It certainly makes sense that Sen. Elizabeth Warren, the first candidate to come out against big tech, would have a longstanding relationship with the organization that called for the sectors monopolies to be broken up before anyone else.

Sen. Warren has long understood that breaking up big tech is fundamentally important for the health of our economy. While other candidates have expressed similar sentiments since her policy rollout, she has made it a cornerstone of her campaign and that should not be forgotten when we evaluate which candidate has presented the most effective economic policies.

Resistance Resources:

  • The Open Markets Institute is a progressive think tank that uses journalism to promote greater awareness of the political and economic dangers of monopolization, identifies the changes in policy and law that cleared the way for such consolidation, and fosters discussions with policymakers
  • Color Of Change is the nation’s largest online racial justice organization. As a national online force driven by more than 1.4 million members, they move decision-makers in corporations and government to create a more human and less hostile world for Black people in America.
  • Majority Action is a community of everyday people who believe that shareholders play a critical role in holding corporations accountable to high standards of corporate governance and social responsibility. They have advocated for Facebook to held accountable for its actions.

Photo by unsplash-logoAles Nesetril

Trump’s Puerto Rican Attitude Problem

Trump’s Puerto Rican Attitude Problem

Policy Summary

On May 6th, President Trump tweeted, “Puerto Rico has been given more money by Congress for Hurricane Disaster Relief, 91 Billion Dollars, than any State in the history of the U.S.” This became one of numerous claims the President made in regard to the aid Puerto Rico was receiving. This shocked many onlookers as thus far there has only been a recorded $11.2 billion spent on aid for the island since devastation arrived with Hurricane Maria and Irma in 2017. In addition, $40.8 billion has been allotted to the issue, although it has been estimated $91 billion is needed for possible liabilities over the next two decades.

In early June, President Trump signed a $19.1 billion disaster relief bill and directly commandeered credit for the aid received by Puerto Rico. On June 6th, the president wrote, “Just signed Disaster Aid Bill to help Americans who have been hit by recent catastrophic storms. So important for our GREAT American farmers and ranchers. Help for GA, FL, IA, NE, NC, and CA. Puerto Rico should love President Trump. Without me, they would have been shut out!” Many critics pointed out the president’s consistent opposition for months to the Disaster Aid Bill, resulting in lengthy delays in getting help to states in need.

Analysis 

So how did the $91 billion estimate originate? Officials claim that the President was referring to an internal Office of Management and Budget figure of possible liabilities over the life of the disaster, as it falls under the 1988 Robert T. Stafford Disaster Relief and Emergency Assistance Act. The number was a high-end estimate subject to alteration yearly. In other words, the Stafford liability figure is projected at $50 billion in addition to the $41 billion allotted in funding, which equates to a total of $91 billion.

Therefore, it was simply false when the President asserted that Puerto Rico had already received $91 billion. In fact, to date, the island has been appropriated less than half of that, as previously mentioned at $41 billion. Of the total amount, only $11 billion has been used to assist in the Puerto Rico’s recovery since 2017.

However, this issue goes deeper than just figures and projections. Since the initial recovery, just days after the natural disasters that devasted the island territory, President Trump labeled criticisms focusing on the lacking federal recovery effort as “fake news”. He publicly declared Carmen Yulín Cruz, San Juan’s mayor, of being “totally incompetent”, while accusing the Puerto Rican government of trying to swindle hardworking, mainland Americans into paying off the island’s increasing debt. At times it has been unclear if the President and his administration understand that Puerto Rico is a U.S. territory and that Puerto Ricans are indeed U.S. citizens. Hogan Gidley, a White House spokesman, confirmed this misunderstanding as he described Puerto Rico as “that country.”

Engagement Resources:

  • Project HOPE’s medical team remains on the ground to help those suffering in hard-to-reach communities throughout Puerto Rico. They are accepting donations to assist in their vital work.
  • Puerto Rico & Caribbean Hurricane Relief Fund initially provided relief to survivors in the form of emergency supplies like food, water, and medicine, and is now supporting longer-term assistance to help residents recover and rebuild.
  • All Hands and Hearts arrives early, when a natural disaster strikes, and stay late to address the immediate and long-term needs of affected-communities. They work alongside the local residents and deploy our unique volunteer model to enable direct impact — helping families and communities recover by building safe, resilient schools, homes and other community infrastructure.
  • Direct Relief is a nonprofit, nonpartisan organization with a stated mission to “improve the health and lives of people affected by poverty or emergency situations by mobilizing and providing essential medical resources needed for their care.”
  • Foundation for Puerto Rico (FPR) is a public charity that promotes opportunities for social and economic development in Puerto Rico mostly focused on promoting the visitor economy and transforming Puerto Rico as a destination for the world.

Photo by unsplash-logoTatiana Rodriguez

Trump Crosses Policy Lines as He Attempts to Weaponize Tariffs Aimed at Mexico

Trump Crosses Policy Lines as He Attempts to Weaponize Tariffs Aimed at Mexico

Policy Summary

President Donald Trump has had a clear obsession with curbing migration from across the Mexican border since before he took office. Recently, though  he has tried unsuccessfully to propose a new tariff policy, linked to Mexican immigration, of sorts that makes almost as little sense as the border wall he has tried so hard to build.

For some time, Trump has made threatens regarding placing tariffs on the many products and goods that the U.S. imports from Mexico on an annual basis. Employing the negotiation by bullying technique that he has displayed a continuous fondness for, he recently announced that he would not be levying the 5% tariff on goods imported from Mexico, provided America’s trade partner took significant steps to curb the flow of immigrants crossing the U.S. Mexican border. This applied not just to Mexican immigrants but those from  Central American neighboring countries such as Guatemala and Honduras. In his typical fashion , Trump felt compelled to warn Mexico that the tariffs he is planning to implement could quickly rise to 25% if Mexico declined any of his conditions.

The economies of Mexico and the United States are deeply intertwined and Trump’s proposed Mexican tariff would have large-scale repercussions on businesses and consumers in the US. There was a huge outcry against the tariff  from both Democratic and Republican members of Congress which forced the President to withdraw his ill thought out policy

Trump tried to spin the withdrawal of his Mexican tariff as a victory, that Mexico had agreed to collaborate with the US on immigration. However,. the New York Times reported that Mexico had agreed to the terms of Trump’s “deal” months prior to his recent statements in a negotiation with  former Secretary of Homeland Security Kirstjen Nielson with Trump having little to do with the initial agreement. Trump was quick to resume his threatens regarding implementing tariffs against Mexico, leaving citizens of both nations to wonder if any actual progress had been made.

As of June 20th, Bloomberg reports that no specific plan regarding tariffs has been set or proposed by Trump. He hasn’t mentioned redacting the threat of tariffs that formed the basis of his initial plan but he also hasn’t said otherwise. Mexico seems willing to negotiate if a new deal is presented, but as it stands, Trump appears to have no clear plan for moving any deal forward.

Analysis

Throughout Trump’s presidency, most news coverage regarding U.S. Mexico relations has focused on immigration policy. Throughout the fiscal year, though, many imported goods that play a pivotal role in U.S. markets also cross the border. Automobiles, including tractors and other farming equipment and the parts on which U.S. auto manufacturers depend are the most common commodities for the U.S. to import from Mexico but the list includes other products. The list includes telephones, television sets and data processors, popular goods for the U.S. to import, as are certain beers, including Corona and Pacifico and of course avocados.

As has proven a common theme through the course of Trump’s trade war, Trump was quick to claim that the inevitable cost that such tariffs would have on his nation’s economy was justified by the gains it would reap. His logic was, as he tweeted, that if the tariffs increased manufacturing costs too steeply than the companies would simply move their operations to the U.S. From an economic standpoint, though, that seems highly unlikely. The trade war hasn’t steered companies that manufactured outside the U.S. to shift operations to our soil. Rather, it has done exactly the opposite, with companies such as Harley Davidson shifting  operations overseas to avoid the increased manufacturing costs imposed by Trump’s aluminum and steel tariffs of 2018. The automotive industry would be the most affected were such tariffs to be levied against Mexican imports

Trump had initially claimed that he would begin by implementing a 5 percent tariff in June and increase it each month until the tariff reached 25 percent. In such a system, businesses would see a steep increase in production costs and would be forced to increase their prices. This, in turn, would likely cause a decline in sales for vehicles manufactured in Mexico and built in the U.S.  Such a reality would lead to both nation’s becoming less competitive within the global economy.

Vox recently reported that the costs of Trump’s proposed tariffs against Mexican imports could easily lead to catastrophic costs for the typical American household. The Peterson Institute for International Economics’ senior fellow Gary Hufbauer spoke with Vox’s Dylan Scott, stating that

“A 5 percent tariff on $360 billion worth of imports, spread across 100 million households, equals $180 for every American family in a year. If the tariffs gradually increase to 25 percent, as Trump has threatened to do, that is $900 for each household in a year.”

It is clear that Trump’s proposal of levying tariffs against Mexico is based on the same faulty logic that led to his earlier trade policies. The past few years have seen Mexico surpass Canada as one of the U.S.’s primary trading partners, second only to China. From a purely economic standpoint, there is no reason to implement such tariffs.

It is hardly surprising that Trump would seek to use tariffs as a weapon to curb immigration. His obsession with immigration has proven boundless and he has made no moves to hide the fact that he considers tariffs to be an effective weapon, despite the overwhelming evidence pointing to the contrary. The ultimate conclusion we can draw them all of this is that Trump knows he has failed at multiple attempts to curb immigration across his nation’s southern border. He knows that implementing tariffs would prove detrimental to the Mexican economy as the U.S. is one of their primary trading partners and the threat of such a reality might be force the Mexican government to play ball on his terms. Trump has also displayed a willingness to make threats then quickly retract them. Whether he will actually move forward with these tariffs against Mexico remains to be seen but it is clear that to do so would cause significant problems for both economies.

Resistance Resources:

  • The Council on Foreign Relations is a nonpartisan think tank and research organization that specializes in matters involving foreign policy and international relations
  • The Peterson Institute for International Economics is a nonpartisan think tank that produces research and analysis on international economic policy related matters.
  • The Economic Policy Institute is a nonpartisan think tank that provides in depth research on economic policy related matters, analyzing the economic impact of policies and proposals

Photo by Jorge Aguilar

The 2016 Election was Tainted – Why Are We More Vulnerable Now?

The 2016 Election was Tainted – Why Are We More Vulnerable Now?

Policy Summary
On May 2, 2019 President Trump issued Executive Order 13800 – “Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure” to improve the US cyber posture and capabilities in the face of intensifying cybersecurity threats. The Executive Order is an attempt to focus Federal efforts on modernizing infrastructure, working with state and local government and private sector partners to more fully secure critical infrastructure, and collaborating with foreign allies.  It defines critical infrastructure as security, national economic security, national public health or safety, The security of our democratic electoral institutions is not mentioned.

Analysis
The Mueller Report made it abundantly clear that Russian interference was a factor in the 2016 Presidential election. The failure of the current administration to acknowledge this lesson promises an even more chaotic and unreliable 2020 election cycle.

The attacks on the 2016 elections were multi-pronged – email system intrusions, manipulation of social media, planting of false or misleading news stories, and breaches of state and local government election databases. For the most part tech companies, election officials and political organizations have been left to fix these problems on their own with little guidance or regulation from the Department of Homeland Security or the White House. As the executive order demonstrates, there will be little or no emphasis on election security. With greater reliance on social media since the last Presidential election and the further decline of traditional media outlets, there is little reason to think that 2020 will see a different outcome. Gerrymandering and voter suppression efforts have taken precedence over a serious look at voting technology.

Congress has tried its hand at guidance including Election Security Act of 2019 but Senate Majority Leader Mitch McConnel has indicated that this measure will never come to a vote as a similar measure in 2018 never reached the Senate floor.

In addition, local authorities are increasingly reliant on electronic voting machines that have proved unreliable and prone to unpatched security vulnerabilities. Security experts are near unanimous that fair and auditable elections are only possible by a system that includes a paper ballot and the pressure to allow voting by email or smartphone is fraught with opportunities for fraud and hacking. This consensus has not made its way to federal guidelines or policies.

Resistance Resources

  • Electronic Frontier Foundation Founded in 1990, the EFF is the leading not-for-profit exploring issues and defending civil liberties in the digital world.
  • SANS Institute Established in 1989 as a cooperative research and education organization, SANS is a go-to place for security industry professionals for education and analysis of security threats.
  • The National Institute of Standards and Technology (NIST) Sets national standards for security of computers, computer networks, and computer data storage used in voting systems.
  • US Elections Assistance Commission Established by the Help America Vote Act of 2002 (HAVA). It is an independent, bipartisan commission charged with developing guidance to meet HAVA requirements, adopting voluntary voting system guidelines, and serving as a national clearinghouse of information on election administration.

Photo by unsplash-logoJason Zeis

More than U.S. China Relations are Threatened as the Trade War Continues

More than U.S. China Relations are Threatened as the Trade War Continues

Policy Summary
Last year at this time, when I first joined U.S. Resist News, many of the political and economic headlines featured two popular terms-’tariffs’ and ‘trade war’.  As Trump tariffs were levied on all matters of imported goods, the negative effects that they were quickly spurring became apparent and the outcry on the part of the  industries rose up. These policies quickly spanned to affect the global economy and U.S. farmers were locked out of international trade markets and manufacturers were rendered unable to import the supplies they needed. Given all this, it stands to reason that most of the nation hoped the trade war would quickly be resolved.

Almost a year later, one of the most important aspects of the trade war  has yet to be resolved-the matter of trade relations between the U.S. and China. While trade talks between Donald Trump and Chinese President Xi Jinping were initially scheduled for some time ago, they were halted when the Trump administration accused China’s negotiators of going back on earlier promises they had made regarding legislative changes to their nation’s trade policy. China, on their part, accused Trump of not being realistic in his demands. Both leaders are scheduled to meet in June 2019 at the G-20 Summit but even if they agree to restart the stalled trade talks it will take even more time to reach any sort of resolution.

Trump recently increased the current tariffs on $200 billion worth of Chinese imported goods and has made clear threats to impose the same on an additional $300 billion dollars worth.  In addition, he went so far as to try and stop American companies from selling components to Huawei, one of China’s most prominent telecommunications corporations. Placing a company like Huawei on a blacklist like this will cause problems for the economies of both U.S and China. The latter was quick to retaliate with some tariff increases of their own on popular American imported goods. In an interview with CNBC, a Chinese Government official stated that China wanted to see the U.S. take action on their part before they would consider resuming trade negotiations.

Analysis
When he addressed the matter of further tariffs being levied against China, Trump insisted that the additional costs would be covered by the Chinese. That seems to be working out about as well as his promise that Mexico would pay for his proposed wall on the American border. According to a recent study by the International Monetary Fund (IMF) based on data from the U.S. Bureau of Labor Statistics, the opposite is true and that tariff costs have been thrust directly onto the shoulders of the U.S. companies who import the most goods from China.

This pattern is not new to U.S. economists. We saw it during the early days of the trade war when U.S. importers were forced to raise the prices of the products they produced. That caused sales to decline and workers to be laid off. The effects were particularly severe for America’s farmers and agriculture workers who were locked out of the global trade markets on which they depend to maintain healthy profits. The way it looks from here, rural America is once again poised to feel the worst of the trade war’s effects. Many manufacturers who employ large numbers of midwestern workers are being forced to close down plants and lay off employees. Two well known examples are General Motors and The Mid Continental Nail Corporation.

The negative effects for these regions likely won’t stop with job losses, though. Midwestern citizens are likely to see the costs of the consumer goods they also depend on go up. Both Walmart and Macy’s, two of the most popular retailers in the midwest have indicated that that they will likely be raising their prices on everyday products if Trump proceeds with the tariffs he has mentioned. These cost hikes, though, will probably not be confined to items like clothing and household supplies. Rural areas are also home to telecom companies that will likely find themselves unable to import the necessary supplies from Chinese providers.  The transmitters and receivers that allow telecom providers to deliver their service to rural areas are primarily manufactured by Huawei. While large carriers such as Verizon and AT&T do not use Huawei equipment, many smaller carriers depend on it. If they are unable to import the products they need, they could be left with infrastructure that is already aging and degrading. Poor weather conditions could compel them to malfunction, causing significant problems for the entire region that could go as far as preventing people from calling 911 in the event of an emergency.

Since the trade war began, Trump has claimed that his administration’s tariff policies are beneficial to the U.S. economy. “Trade wars are easy to win” he proudly tweeted. As previously stated, though, overwhelming evidence points to the contrary. Making it hard for U.S. manufacturers to import the supplies they need and for farmers to sell their crops in international markets is causing significant economic problems. Continuing Trump’s tariff war will only make things worse, particularly for those who were already struggling.

The midwestern farmers who are still suffering from the effects of the trade war were, for the most part, proud members of Trump’s base during his 2016 campaign and they are not alone. Last year saw the Mid Continental Nail Corporation of Poplar Buffs Missouri lay off vast numbers of its workers and Trump’s aluminum and steel tariffs drove their costs through the roof. In Butler County where the factory is located, Trump received 80% of the votes. Perhaps these voters will reconsider who they vote for in 2020.

Resistance Resources:

  • The Peterson Institute for International Economics is a nonpartisan think tank that produces research and analysis on international economic policy related matters.
  • The Rural Wireless Association is a trade association that advocates for wireless carriers in rural areas and works to make sure their voices are heard on Capitol Hill.
  • The Council on Foreign Relations is a nonpartisan think tank and research organization that specializes in matters involving foreign policy and international relations.
Important Takeaways from the 2020 Democrats Tax Return Releases

Important Takeaways from the 2020 Democrats Tax Return Releases

Policy Summary

Since before he was elected, President Donald Trump’s tax returns have been a source of considerable controversy and speculation from voices on both sides of the aisle. Despite building his campaign on his reputation as a successful businessman and skilled “dealmaker,” Trump went  to considerable lengths to hide the documents that would prove his statements true. No other president in U.S. history has refused to  release his tax returns when asked raising the one question that Trump avoided answering but always seems to come back to haunt him-what is our president hiding?

As it turns out, all those with suspicions regarding Trump’s motives were right to be so. A few days ago, an expose published in the New York Times revealed that the decade of 1985-1994 saw Trump lose over $1 billion in business deals that failed for various reasons. The tax return documents obtained by the New York Times did not just reveal many of Trump’s claims about his wealth and success in business as being false. They gave rise to a concern that Trump may be guilty of violating federal tax laws by failing to report the significant losses he suffered.. Trump has claimed that all his “relevant” documents are currently in the hands of the I.R.S. for auditing but it remains unclear what “relevant” means to him.

No President has so much speculation regarding crooked motives regarding personal financial documents since Nixon’s dealings with wealthy campaign backers drew unwanted attention. In 1973 Nixon released four years worth of tax returns. The Congressional Committee that reviewed them determined that Nixon owed nearly $500,000 in back taxes. In the decades that followed, this scandal was overshadowed by the events of Watergate but when House Ways and Means Committee Chairman Richard Neal (D-Massachusetts) brought forth a subpoena in an attempt to drive the process of Trump releasing his tax returns forward, the events of Nixon’s presidency again caught the attention of lawmakers.

State legislatures across the nation are taking action to ensure that their president is held to the same standards of transparency as other citizens when it comes to personal financial documents. Last month, bills were introduced in 18 states that if passed would require every presidential candidate as well as their running mate to release their individual tax returns before they could qualify for the 2020 election ballot, typically for at least the previous five years. The list of states to introduce such bills includes New York, Illinois and Washington with the recent addition of California. A strong advocate for politicians releasing their tax returns, California Governor Gavin Newsome has released his own and promised to continue doing so on an annual basis during his time in office.

Analysis

Plenty of Trump’s Democratic challengers did not hesitate to release their tax returns despite the looming possibility that doing so could compromise certain cornerstones of their campaigns. When Sen. Bernie Sanders (D-Vermont) released his, it revealed the candidate who had built a movement preaching against America’s wealthiest class was himself a millionaire. The economic elite also now includes Sen. Elizabeth Warren (D-Massachusetts) who’s income combined with that of her husband, was over $846,000 in 2018. Both Sanders and Warren can chalk up much of their wealth to the sales of the books they have published since the 2016 election. Like Sanders, Warren has also built a campaign on policies that rely heavily on levying increased estate taxes on America’s wealthiest classes. Added to the list is California Democrat Kamala Harris whose tax returns revealed that her income in 2018 was roughly $1.89 million, though most of it was earned by her attorney husband. Though it may seem somewhat hypocritical for the Democrats running on platforms built on levying estate taxes and reducing economic inequality to be counted among the 1%, all such candidates have clearly recognized the bigger picture-that the complete transparency that they obtain by releasing their tax returns helps draw important contrast between themselves and the President they are trying to unseat.

There are several primary reasons why candidates such the 2020 Democrats should release their tax returns without pressure from Congress or the House of Representatives. The first is that doing so eliminates any conflicts of interests regarding who they are taking donations from. Plenty of Democrats, including Sanders and Harris have taken a stand against Super PACs funded by billionaires whose business interests could easily be linked to their generous donations. Suspected conflicts of interests regarding campaign donations are exactly what led to the secret that Nixon was trying to hide being discovered. Since Trump took office, the question of who truly helped win  the election and who is influencing his administration’s policies has received almost more scrutiny than any other with voters suspecting everyone from Russian political figureheads to his billionaire backers.

By releasing their tax returns, the 2020 candidates who have done so have helped erase the notion that they are “working” for anyone besides the American people. Chris Kelly, director of Tax Policy at the notoriously right-learning Cato Institute went on record telling ABC News that none of the candidates who had released their tax returns as of April 17th 2019 were “ seemingly cheating or getting away with anything.”

The second significant benefit to releasing tax returns while on the campaign trail is that it clearly indicates how much each candidates has given to charity. For Democratic contenders to not be charitable would likely prove problematic for their campaign as many of their campaign primary policies center around levying taxes on the wealthy that are intended to fund social programs. Given what the public now knows about the personal finances of the candidates who are pushing for these policies, though, it would seem more important than ever for the 2020 Democrats to keep pace with giving generously. As of now, Warren has given the most of any candidates to charity, as she and her husband reportedly donated roughly 6% of their household income in 2018. Sanders, on the other hand, donated less than 4% of his household income although according to his campaign, the proceeds for his 2014 book The Speech were all donated to charity but the donation did not appear on his tax returns.

On the whole, it is clear that Trump’s consistent refusal to release his tax returns did nothing but present his opponents with an opportunity to distinguish themselves from him and prove to voters that they had no conflicts of interest. Those who have nothing to hide clearly have nothing to fear by disclosing their financial information as the candidates who were quick to disclose theirs have demonstrated. Some of Trump’s tax returns are supposedly  still under audit and more details are likely to emerge as the election nears. That can’t be said for any of his Democratic opponents. The future is still uncertain but I can’t imagine any scenario in which the further scrutiny of Trump’s personal finances helps his chances of being reelected in 2020.

  • Resistances Resources:
    The Roosevelt Institute is a nonpartisan think-tank that produces research on matters involving economic policy and democracy.
  • The Tax History Project is a research organization established by Tax Analysts in 1995 to provide scholars, policymakers, students, the media, and citizens with information about the history of American taxation.
  • The Center for Economic and Policy Research is an nonpartisan think-tank dedicated to promoting democratic debate on the most important economic and social issues including economic and tax policy.

Photo by unsplash-logoKelly Sikkema

Proposals of the 2020 Democrats-What They Are and What They Mean

Proposals of the 2020 Democrats-What They Are and What They Mean

Policy Summary

As the 2020 race to White House progresses and the first presidential debates draw nearer, the candidates comprising the overcrowded democratic field continue to lay out more policies. Many of the economic policies presented by Democratic hopefuls have centered around an issue that, thanks to President Trump’s policies,  democrats feel is ripe for reform-taxation. Many of the proposals involving taxes are directly linked to other policies that have formed the cornerstones of candidate campaigns.

Sen. Elizabeth Warren (D-MA) made many headlines when she rolled out a plan centered around making higher education more affordable. Under her plan, all tuition costs would be eliminated at every two and four year public college and university with additional  $50 billion on aid provided to historically black colleges and universities. Warren also proposed a policy that, if implemented, would allow America’s buried in student loan debt with annual incomes below $100,000 to have $50,000 of their debt forgiven. Warren proposed paying for this plan, which would cost an estimated $1.25 trillion over a decade by implementing what she has referred to as an “ultra millionaire tax.” The tax would affect households with annual incomes of over $50 million and would involve a 2% tax on every dollar earned by each household over the  $50 million threshold. For every dollar earned over $1 billion, the tax would be raised to 3%.

California Democrat Kamala Harris has proposed giving America’s teachers a 23% base pay increase, which would amount to roughly $13,500 per year. For teachers at underfunded schools with disproportionate student of color ratios, the raises would be higher. Harris has estimated that the ten year cost of this plan would be roughly $315 billion, a cost she intends to help cover by levying a further estate tax on America’s economic elite. According to Politico, her campaign is currently deciding how best to implement the necessary estate tax reform, considering options such as eliminating the current legal loopholes that have allowed Americans to altogether avoid paying any estate tax.

Other candidates seem more focused on workplace related matters Sen. Kristen Gillibrand (D-NY) has proposed the FAMILY Act, a plan that would guarantee paid leave from work of up to 12 weeks for both new parents and those caring for either ill or critically injured family members. The costs of such a policy would be covered by a payroll tax of 0.2 percent on the wages of each worker which would be divided between them and their employer.

Cory Booker (D-NJ) meanwhile, has focused on another problematic element-the racial wealth gap. His plan centers around providing savings bonds for all newborn babies worth $1,000 at the start. For babies born to low-income households, additional funds of up $2,000 would be provided. All such money would be kept in a low-risk savings accounts managed strictly by the U.S. Treasury Department. It has been estimated by Booker’s team that bonds given to children of low-income households could be worth roughly $45,000 by the time the children turn eighteen.  Booker would  cover the costs of this plan, estimated at roughly $82 billion per year, by  curbing the estate tax exemption. His plan would  include surcharges on all estates worth over $10 million, and prevent people reducing their capital gains on inherited assets, such as property and stocks.

Analysis
Examining the policy proposals involving tax reform laid out by many 2020 democratic contenders, one theme immediately stands out-estate tax reform.

“Tax the rich” has long been a war cry among  democratic politicians and voters but it certainly seems an opportune time for such legislation. The estate tax exemption system still has plenty of loopholes that allow America’s wealthiest and their decedents to avoid paying taxes on inherited wealth while the middle and lower classes struggle to pay theirs. Without these loopholes, the federal government would see an increase in tax dollars that would allow it to make significant strides toward repairing the loss in revenue and increased deficits inflicted by the tax policy of the Trump administration.

One of Senator Warren’s central arguments regarding her student loan forgiveness plan was that forgiving the majority of student loan debt would help spur economic growth. The evidence to support this claim is substantial. More than  44 million Americans are currently affected by student loan debt and when consumers are spending significant amounts of each paycheck on student loan payments, they aren’t spending as much as they could be on consumer goods and services. The Brookings Institute projected that more than 40% more borrowers were likely to fall dangerously behind on their payments by the year 2023. The looming crisis is likely to continue hindering economic growth if it is allowed to continue. Thinkers on the far right have argued that Senator Warren’s plan is unfair to those who have already repaid their loans but given how small that number is in comparison with those who are still buried in debt, it seems that the clear economic benefit of forgiving student loan debt outweigh the cost of doing nothing.

We cannot afford to ignore the economic benefits of Sen. Gillibrand’s FAMILY Act and Harris’ plan to increase teachers’ pay by way of implementing slight tax reform policies. Gillibrand’s plan would prove especially helpful for low-income parents, particularly mothers, who are forced to accept the financial burden of taking time off from their jobs for the birth of their children. Some women in such a situation risk losing their jobs altogether but are often faced with no alternative.  It should also be noted that new parents are often faced with large bills so the loss of a second income can prove extremely problematic.

Harris’ proposal, meanwhile,  highlights another important aspect of the American economy’s problems-that teachers are increasingly underpaid, particularly in low-income areas where public schools are underfunded.

We have some concerns about the economic implications of Senator Booker’s baby bonds plan. While the bonds that he wants to start awarding would likely prove an economic boon to the next generation, they do little  to help our economy in the short term. The concept behind Senator Booker’s plan could almost be described as a double edged sword. While the positive attributes are quite clear, it will literally take eighteen years from the time the policy is implemented for them to materialize. In the time leading up to it, the U.S. will still be paying the price and unlike the plans laid forth by other candidates, they will do nothing to increase consumer spending and thereby spur economic growth for almost two decades. That will leave everyone else, including the parents of the baby bond recipients to continue struggling through an uncertain economy. While Sen. Booker’s plan is not without its positive aspects, it ultimately falls short of considering the economic growth factors that other candidates seem to have taken into account.

Resistance Resources

  • The Tax Policy Center is a joint venture of the D.C. based think tanks the Urban Institute and Brookings Institution that provides expert research and analysis on tax, budget and social policy related matters.
  • The Center for Economic and Policy Research is a nonprofit research organization that provides research on economic and social policy
  • Bloomberg BNA is an online source for tax, accounting and legal information, research and analysis.

Photo by unsplash-logoVanveenJF

President Trump Tries to Control the Federal Reserve

President Trump Tries to Control the Federal Reserve

Policy Summary
President Donald Trump has spent his time in office in a twisted relationship with the Federal Reserve Bank, The Federal Reserve was established to be the guardian of our baking system, and to operate independent of political influence. However, President Trump likes to   shape government institutions in ways that will serve his interests. This is hardly surprising, given his dislike of institutions in general, particularly those that do not immediately bend to his will without question

As of now, the Federal Reserve has two vacant seats on its board of governors who play an important role in how America’ s central bank conducts its business. Recently, Trump announced that he would be appointing two highly controversial figures to fill these vacancies. Failed Republican presidential candidate and pizza chain executive Herman Cain was his first pick, followed by economic commentator and far right talking host Stephen Moore.

There are significant reasons why these selections could raise eyebrows for those concerned about the traditionally independent Fed being swayed in a political direction. We will examine that in more detail in the analysis section of this report but as one might glean, the strong political affiliations of men such as Cain and Moore does not bode well for an institution that needs to remain independent and nonpartisan in order to properly do its job. Trump’s decision to nominate them was quick to garner opposition from both sides of the aisle.

Another aspect of Trump’s battle with the Fed  is his feud over interest rates with its leader, Chairman  Jerome Powell. Powell was appointed by Trump but unlike many of our  President’s appointees in other government institutions, Powell hasn’t jumped at the chance to comply with his president. Recently, Trump  called upon the Fed to cut interest rates, claiming that doing so would allow the economy to “take off” as he put it.

Adjusting interest rates  remains within the power of the Federal Reserve , an institution that was created to operate without influence from the U.S.’ political system. President Trump has made it clear that he blames the Fed for hindering economic growth within both the U.S. and ultimately the global economy. If Trump’s history in the White House has taught us anything, though, it is that he is all too quick to blame just about anyone else for problems that can also be traced back to his own policies.

Analysis
Despite Trump’s constant criticisms, Powell has insisted that the Fed is setting its monetary policy without any type of political influence and he has no intentions of resigning. While that may be true, we are still facing the prospect of our nation’s central bank being controlled, even in part, by figures who have strong ties to one political party. While neither Cain nor Moore are economists or bankers by trade, they are both talking heads for the GOP and supporters of Trump’s economic policies. Moore first made headlines in September 2018 when he published an article titled Give Trump the Nobel Prize for Economics. It certainly isn’t hard to see why Trump would want to put the man who believes so strongly in his economic policies in such a position of power when it comes to financial system regulation.

To do their jobs properly, the Fed’s board of governors need to be able to remain completely apolitical in their decisions. Can someone like Moore be expected to do that? He currently serves as the Distinguished Visiting Fellow, Project for Economic Growth, at The Heritage Foundation, an institution constantly hailed as one of the nation’s most influential conservative  think tanks.

Trump’s selection of Herman Cain seems questionable for similar reasons. The former pizza chain executive ran for President in 2012 on the Republican Party ticket but he’s almost as well known for his attacks on the IRS, going so far as to call the American tax code the “modern version of slavery.” In Cain’s proposed “9-9-9” tax plan, the majority of our tax code would have been replaced with a 9% income and corporation flat tax. Both he and Moore have clearly demonstrated that they strongly favor the economic policies of the conservative parties and have never demonstrated the nonpartisan approach necessary for making regulatory decisions. Their appointment could easily serve to undermine Powell and help further President Trump’s economic policy agenda.

All this also serves to undermine the credibility of the Fed, a concept that could have further negative consequences for both the U.S. and global economies were it to intensify. Trump is not the first president to comment on interest rates and policies set by the Fed but he has made his bias more explicitly known than anyone before him. Many presidents have been hesitant to say too much regarding monetary policy as it can sometimes come across as trying to influence those who set it. Trump, however, has made no secret that he wants to influence monetary policy and he seems intent on doing what is necessary to remove  obstacles that stand in his way. If Moore and Cain are allowed to take seats on the Fed’s board of governors, it will pose a serious threat to the system of nonpartisan decision making that gives the Federal Reserve its credibility. If it loses that, the Fed will not be able to properly regulate our financial system.

Resistance Resources:

Better Markets is a nonpartisan research organization that works to promote the reform of Wall Street and the support the public’s interest in financial markets.

Americans for Financial Reform is a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups.

The Committee for Better Banks is a coalition of bank workers, community and consumer advocacy groups, and labor organizations coming together to improve conditions in the bank industry.

Photo by Sharon McCutcheon

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