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.
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COVID-19, Corona virus, recession, economic stimulus, recovery The Two Trillion Dollar Economic Relief Plan
By Rosalind Gottfried
When the partisan bickering resolved, the country was left with a relief package that reflected some of the Democrats’ modifications on an earlier Republican-backed proposal. The bill, passed on Friday March 27th, includes help for taxpayers, small businesses, industry, student loan payments and a few other contingencies. Basically, single taxpayers making up to $75K will get a one-time payment of $1200 while married couples will get relief if they earn less than $150K.
By Rosalind Gottfried
In the past week a potential economic slowdown has escalated to predictions of a recession with one article describing the economy as “all gone to hell.” With many people adopting a social distancing approach and public events being canceled, repercussions have been felt across many industries and activities whereas previously it was hoped that these would be limited to industries directly impacted by the public health contagion.
By Will a Pandemic Lead to a Recession?
COVID-19, Corona virus, recession, economic stimulus, recovery The Two Trillion Dollar Economic Relief Plan
When the partisan bickering resolved, the country was left with a relief package that reflected some of the Democrats’ modifications on an earlier Republican-backed proposal. The bill, passed on Friday March 27th, includes help for taxpayers, small businesses, industry, student loan payments and a few other contingencies. Basically, single taxpayers making up to $75K will get a one-time payment of $1200 while married couples will get relief if they earn less than $150K. Parents will receive $500 for children under the age of 16. People who exceed these levels by a small margin will be eligible for a pro-rated amount. Details on payments can be found here: https://www.nytimes.com/article/coronavirus-stimulus-package-questions-answers.html.
Payments should take about three weeks. College students who are dependents will not receive any benefits.
Unemployment benefits have been boosted in various ways and the one week waiting period has been suspended. Unemployment benefits are determined by states and maximum payments vary with Alabama providing $275 PER WEEK , CA $450, and NJ $713, indicating state differentials. Benefits can last 26 weeks. The federal relief program incoudes additional payments of $600 per week and extends the state and federal payments for 13 extra weeks. As of this bill, the additional $600 is available through July 31st. Part-time and self-employed people, normally ineligible for unemployment benefits, will now receive aid based on previous income and pro-rated accordingly. People unemployed due to illness self-quarantine or caring for the ill (rather than job loss) will also become eligible. Additionally, those who stay home to care for children or the elderly will also be eligible.
Relief for payments on student loans also is included in the bill. Payments have been waived for two months, including payments, interests, and fees and no penalties will be accrued. This pertains to federal government loan programs. People can borrow two times the usual amount from 401(k) and retirement accounts, for 180 days, without penalties if these are necessary for coronavirus related emergencies. Large cash donations to public charitable organizations can be deducted from 2020 taxes at 100%. There are no protections for utilities and internet service in the federal program though some localities and companies have made emergency provisions. The bill provides for a national eviction moratorium for 120 days for renters in buildings secured with federal loan programs.
The bill includes $377 billion for payments to cover worker layoffs and to help businesses stay open. Small businesses are eligible for eight weeks of cash flow assistance through 100% federal guaranteed loans for wages. If payroll payments are maintained, then the portion of the loan used for those and for mortgage, rent, and utilities will be forgiven. This is retroactive from February 15, 2020. Other moneys are available for institutions supporting small businesses. Summary of details: https://www.rubio.senate.gov/public/_cache/files/28e8263e-e7d4-4da7-a67b-077c54ba4220/9F7B494B2E355791B24536DC2162CF16.final-one-pager-keeping-american-workers-paid-and-employed-act-.pdf.
The relief package also includes $500 billion for aid to US industries such as airlines and to cities and states. Hospitals will receive $100 billion to support their needs. The oil industry and the cruise industries were not included in the bill.
Additional details regarding what’s it he bill may be found here: https://www.politico.com/news/2020/03/25/whats-in-stimulus-package-coronavirus-149282
In spite of being the largest federal relief program in history, the current program likely will be insufficient to the need. Three million people filed for unemployment nationwide last week and one million in CA alone in the past few weeks. Some states experienced multiple crashes of their unemployment websites. Average unemployment payments will be around $936 and some conservatives have complained that the sum in in excess of some low paid workers actual income. Pelosi has reportedly suggested that there will be more programs in the future. The Democrats sacrificed a request for a 15% increase in food supplements, through the SNAP program, to arrive at bipartisan support for the bill. Pelosi also seeks free testing and medical treatment for everyone affected by the virus. There will likely be a need to extend family and medical leave and protections for workers’ safety and health. Many experts suggest that more direct payments will be needed and that the current ones will be too late to help some people already evicted or in default. Additionally, the most vulnerable are excluded from the program including domestic workers, other cash workers, undocumented workers, and the homeless.
The program, with its aid to workers, small businesses, and unemployment is a step in the right direction but many feel it needs to go further.
In the past week a potential economic slowdown has escalated to predictions of a recession with one article describing the economy as “all gone to hell.” With many people adopting a social distancing approach and public events being canceled, repercussions have been felt across many industries and activities whereas previously it was hoped that these would be limited to industries directly impacted by the public health contagion. Many employees have been asked to work from home and these employees’ isolation has caused a drop in restaurant business, coffee and alcohol purchases at bars, and transportation cuts. Canceled events from theater, to sports, to graduations, to parades to Disneyland have correlative losses in areas of food travel, lodging, and transportation. The limiting of the effects of the virus to delayed shipments from China has proven to be an optimistic call that did not pan out.
The government has responded with a bill, obtained by negotiations between the Congress and the administration, providing for emergency measures to keep workers solvent but the final agreement has been criticized as a tepid attempt to provide aid which won’t reach the most needy. The agreement is centered on helping workers to get paid sick leave but in actuality it will help only 20% of workers affected and largely leaves the most vulnerable excluded from the aid. It is limited to coverage only for the coronavirus and no other potential future pandemics. The bill does not pertain to large companies with 500 or more employees though these account for 50% of workers; some large companies like Wal-Mart, Target, Gap, and Wawa have implemented voluntary programs to help employees by offering two weeks of paid leave for the virus or for quarantine. The bill also provides exemptions for companies with less than 50 employees which account for an additional 26% of workers. The bill does provide for some assistance for longer leave, under the Family and Medical Leave Act, but this also excludes large companies. In arriving at this agreement, the Trump administration has prioritized corporate profit by denying workers’ benefit and further jeopardized the public health since workers will be reluctant to stay home. Many people do not relate directly to market shifts since they have no stake in the market but the prospect of losing wages and being unable to pay for essential bills looms ominously.
A recession is predicted if the economy contracts for two consecutive quarters. So far economic indicators have not indicated downturns in such areas as unemployment claims but job postings have taken a significant cut in areas such as restaurants, catering, and aviation. There is generally a lag in real changes and the reporting of related data. Steven Mnuchin, the Treasury Secretary, suggests that the market’s ups and downs are not a concern and that no recession will occur since the economy will pick up when the response to the virus stabilizes. He also suggests that some areas of the economy are thriving such as medical supplies, groceries, health aids, and other household items are experiencing a surge in purchases.
Opinion columnists suggest that the Democrats have failed to help the most vulnerable workers and should have stuck to their original proposal providing for seven days of sick leave and a temporary ten days in a public emergency. They suggest that the Democrats folded when they should have proceeded leaving the Republicans to publicly justify blocking this broader program.
Some economists suggest that the economy is headed for big troubles unless the government steps in with quick and comprehensive support for households. Home buying, which was earlier seen as maintaining a strong trajectory in sales has plummeted due to loss of funds in the market and the belief that the prices will go down. In areas highly impacted by the virus, such as Seattle, there are widespread repercussions from workers remaining at home. One owner of a dozen Seattle restaurants has closed his stores for 2-3 months and is laying off almost all of his 800 employees.
Liberal and conservative economists diverge on how the government should respond to the crisis. Jason Furman, formerly chief of economic advisors to President Obama, supports an immediate infusion of cash of one thousand dollars to adults and 500 to minors. This is the most expedient measure to protect spending and stop expanding job losses while allowing households to cover necessities. Helping the broader economy with such a measure would be part of a stimulus and would help states defray costs by expanding Medicaid. More conservative economists suggest that these measures are unnecessary. The Congress is currently poised to provide 1000 dollars to all adults which some Senators are pressing for a two thousand dollar payment now and another 2500 dollars before the end of the year. Glen Hubbard, formerly an economic advisor to President Bush, suggests investing in long term infrastructure projects paid for with cheap government loans, an approach which that has been supported by both parties in the past. Trump has been considering a decreased payroll tax but such measures have been shown to be ineffective in stimulating the economy while lump sum payments have proven to be beneficial. What tepid responses have been made to address the expanding crisis so far have clearly not been sufficient to the most recent movements in the economy and threaten to disproportionately affect the most vulnerable segments of the population.
https://www.house.gov/representatives Provides addresses and contact information for House members so that they can be contacted with concerns regarding the impact of the coronavirus.
There will inevitably be an economic downturn as a consequence of global responses to the Corona virus but whether or not it will lead to a full blown recession in the US is unclear. Some US experts believe a recession to be inevitable, due to potential downturns in consumption; worker layoffs; the already low federal loan rate; and the lack of essential parts from overseas where factories have closed. Other economists believe that the strong economy, especially with regard to employment and the housing market, will act as a cushion against the most dramatic impact of the disease’s spread.
On Tuesday (March 3, 2020) the Federal Reserve made an “emergency” decrease in the federal loan rate of .5% after 3 drops last year. However this seems to have made little impact on markets which continue to react in extreme ways.
The fallout from declining stocks, initially down by 10.5%, is debated by economics. The stock market is reflective of the interests of multinational corporations and its impact on the average consumer is not readily correlated with market activity. Major corporations such as Apple, United Airlines, Mastercard, Microsoft, Pfizer have already issued warnings regarding reduced profits. The global economy is predicted to be slowed by anywhere from one half to one and a half percent for 2020. It currently has a growth rate of 2%. Baby boomers (currently in their 50s and 60s) own over half of the stock and can have concerns over their retirement savings but there is mixed evidence regarding the impact on other demographics because so far consumption is solid and employment is steady though it may be that the relevant data is not yet available.
A recession can be avoided if the cycle leading to one is avoided. Typically, the cycle results from worker layoff which leads to decreases in income, less spending, which spills over to more layoffs. Maintenance of the economy depends on a thriving consumer class as consumption is 70% of the economy. If that remains intact the recession can be avoided though there are signals that it will not be completely avoided. Trump’s trade war with China already established downturns in some areas such as manufacturing, agriculture, and transportation. Shutdowns in China, and other sectors globally have caused an interruption in the supply of parts and goods exported by those countries. One fear is that if Trump is re-elected he would resume a more aggressive trade war, which would have a negative impact on the US economy.
To create a full blown US recession some economists believe that the impact of a pandemic on the economy will need to move beyond affecting the industries directly involved, such as tourism, air travel, and transportation and they do not believe this will be the case. At least they are somewhat optimistic that it won’t spill over. Economists think the housing market will be unaffected, or potentially positively impacted, due to the lower interest rates and the availability of more modest homes.
Since the federal reserve has little flexibility in controlling the markets, due to its already low interest rate, an alternative to bolster the economy would be for the president to create a temporary deficit financed tax cut paired with increased government spending such as Obama pushed through the Senate to address the great recession of the last decade but there is little chance that this president would move in that direction. The economists, while agreeing that there is severe global fallout from the virus, disagree as to the extent of its impact on the American economy. The “truth” seems to lie in the presence of some worrisome trends regarding reactions to the threat of the virus, the extent of which is really unknown at this time.
- https://www.who.int/emergencies/diseases/novel-coronavirus-2019 The World Health Organization is a global agency responsible for providing up to date information on world health.
Mr. Trump’s proposed budget for fiscal year 2021 makes cuts to Medicare, Medicaid, Social Security and other safety nets which initially he had pledged to leave intact. His proposals must be passed by Congress and that action is doubtful but his actions speak to his lack of commitment to support any segment of the population needing aid. His proposed Medicaid cuts amount to 1 trillion dollars over ten years and jeopardize insurance eligibility to an estimated 13 million and otherwise compromising care. He would cut the subsidies to the states, initiated in the ACA, to expand Medicaid to those making somewhat more than the poverty level. Currently the federal government pays 90% of these costs. Since the federal government supports the states with the ACA, imposing a work requirement would reduce the number of people receiving Medicaid and allow the Trump administration to justify cutting the budget. Medicaid work requirements, mandates made by states, would also save the federal government an estimated 152 million though that figure has been contested by experts who say it would be nowhere that amount. Several states initiated a work requirement and others suspended them pending a court decision on their legality. Ten states initiated work requirements. On February 13th a US Court of Appeals upheld a lower court ruling against an Arkansas and Kentucky mandate requiring 80 hours of work for 30-49 year olds. Kentucky’s newly elected Democratic governor had withdrawn its work requirement pending the court ruling. Twenty states have pending or proposed work requirements. Other states, such as Indiana, have anticipated instituting work requirements and likely will not pursue them given the recent decision. Trump supports a pending Texas law which would eliminate the ACA altogether leaving many uncovered, priced out, or ineligible due to pre-existing conditions.
Trump’s proposals for the Medicare program would have hospitals receiving the same pay rate for services that doctors’ offices receive, which is a reduced price. This leads to the fear that Medicare recipients will be denied treatment. Other proposed cuts have targeted the food assistance program known as SNAP; opioid and mental health services; protection for student loan forgiveness, cuts for disabilities; and the children’s health program known as CHIPS.
Trump’s 4.8 trillion dollar proposed budget eats away at multiple programs constituting the federal safety net putting more pressure on the states to finance programs and jeopardizing the health and healthcare of multiple millions of vulnerable individuals and families. Trump’s justification for supporting work requirements depends on his belief that work contributes to a healthier life thus denying the reality that some people who cannot work will be cast off the Medicaid rolls. Low reimbursement will exacerbate an already lean set of provider choices for those who need federal aid in seeking health care. Additionally, should a state be successful in ending the ACA countless people will return to an uninsured status. Trump’s proposed cuts of 844 billion dollars in health care are “necessary’ to compensate for his cuts in taxes by the wealthy. He couches some of his cuts in healthcare as an effort “modernize,” while calling additional cuts to federal employee benefits and health care an effort to “modify” the system. His cuts to help student loan forgiveness programs and disability eligibilities he has called “reforms”. The Democratics will not pass the bill, as is, seeing it for the cruel effort it represents to save money of the backs of the neediest. The federal budget deficit has grown under Trump, as a result of this economic and tax policies, and represents the largest figure since the last year of the recession recovery year. Tax cuts have disproportionately accrued to the top 5% of households who gained 36.5% of the tax benefits.
- https://indivisible.org/ An organization listing grass roots groups across the country seeking to defeat Trump in 2020.
During the February 7, 2020 Democratic Presidential Candidate debate multiple allusions were made to the wealth gap between African American and White households, though such a gap also applies to Latino and Indigenous populations. Between 1983 and 2013 Black median household wealth went down by 75%; Latino wealth by 50%; and Native American wealth decreased by an even greater percent though it was no longer assessed after the year 2000. White household wealth increased by 14% in the same time period. Twenty five percent of Black households had no wealth or negative wealth while the corresponding figure for White households is 10%. Educated African American families have a net worth of 200,000 dollars less than comparable White families. On the average, a two parent Black household has less wealth than a single parent White household. Asian American households maintain greater wealth than White households but it must be noted that some Asian groups tend to be highly educated and live in high income regions while many, especially the more newly immigrated, are very poor. The wealthiest Asian households reveal 168 times the wealth of the lowest Asian households while the comparable figures for white rich and poor households show a differential of 121. Economists estimate that the net worth of African American households will be zero by 2053 and Hispanic households will suffer the same decline twenty years later.
Wealth inequality is a major factor in standard of living and quality of life and it has been steadily increasing for decades. The topic is incendiary because it is based on centuries of legal and de facto discrimination. The institutionalization of race inequality, aside from the obvious repercussions of slavery, depends on discriminatory practices in employment; wages; housing markets; the banking industry; the tax structure; government programs; as well as the long term consequences of slavery. Inequality of wealth is even more significant than annual income inequality which also has been sustained at all educational and income levels and actually significantly increased between 2000 and 2018. Wealth, defined as all assets minus all debts, is a marker of intergenerational well-being and has a major impact on the ability to buy a home. Home ownership determines neighborhood which is an essential indicator of home values, education resources, recreation, and other quality of life measures. African Americans have more pressure to save due to the relative unlikelihood that their youth will inherit money to gain early homeownership. They buy homes later and in less valuable neighborhoods. African American homeowners average $12,000 in equity while the comparable white home owner averages $189,000 in equity. At the same time, they have a harder time saving due to the income inequality, the cost of loans, and systemic discrimination. It has been suggested that if the home ownership gap narrowed the income race gap would decrease by 31%.
The issues becomes essential to forming policy for all the presidential candidates; although anti-discrimination laws have been forged in real estate; employment; wages; banking; taxation; education; and government programs systemic discrimination pervades these areas. The affluent middle class of the post-World War II era was made possible by inexpensive, accessible higher education; well-paid manufacturing jobs; and government programs such as the GI Bill and the Veterans Administration which disproportionately accrued to white households. The issue of reparations, and the form and nature of these, is one that will be increasingly present in the political sphere. Some proponents of these suggest that special funds be set up to bolster community well-being through low cost housing, student, and business loans and other projects which would benefit the nonwhite communities.
- https://www.ncobraonline.org/ A national coalition of organizations devoted to gaining reparations for the descendants of slavery.
The Gross Domestic Product (GDP) has been considered an overall barometer of a nation’s economic health since World War II. The concept for the GDP originated during the Great Depression in the work of a Russian born economist Simon Kuznets to estimate the total output of goods and services in a nation in a defined period of time. It was thought to be a measure of economic growth. As originally construed, it did not account for government spending, just the totality of goods and services in a society. Its current format is a modification initiated by John Maynard Keynes to include the vast government spending during WWII. He felt omitting government expenditures could make the economy appear to be stagnant or weak when in fact it was thriving, as it does in war time. His adaptation is still the formula in use today. Initial criticism of the measure dates to Robert Kennedy’s 1968 assertion that the GDP discounts “priceless” elements such as health, wellbeing, and education. Criticisms suggesting the obsolescence of the measure concern its lack of representation of unpaid labor as largely done in the home by women and other caretakers; its discounting of elements referring to the quality of life; and the advent of free knowledge and exchange on the internet.
Much unpaid labor is done in preparing food; caring for young and old; caring for the sick and others needing help; and generally maintaining the household by obtaining necessities and maintaining the home environment. Quality of life addresses issues of sustainability and environmental degradation; overall health and wellbeing; education; and income distribution. In a global economy, the impact of the Internet also impacts the wellbeing of its members in access to knowledge and markets.
The Bureau of Economic Affairs is working on an alternative measure which will include consideration of personal income; global trade; and the skills and education of workers. Other countries have been utilizing additional measures. Notable among these is India’s “Ease of Living Index”, which contains quality of life measures; economic ability; and sustainability. These things are important insomuch as they can have an impact on setting societal policies. New Zealand has developed a “wellbeing budget” to look at quality of life across the society. For example, they have added substantially to the mental health budget to address one of the highest recorded rates of youth suicide and gained apparent success. New Zealand has reduced suicides and incidents of family and sexual violence. One difficulty in their program, according to commentators, is the lack of concrete targets/goals for the factors they are measuring except in the area of child poverty but their program exhibits a “clear step away from purely growth-driven views of success (Goldsmith).
With the prevalence of a service economy where quality of service is essential, the GDP can be seen to have a limited scope when measuring economic stability in a society. The GDP no longer can be viewed as equaling national success and it is questionable whether it ever really did. It may have served as a gross measure of production in a manufacturing economy, a system which has been progressively eroding.
- https://www.doctorswithoutborders.org/ An organization treating people with no access to health care; victims of natural disasters; epidemics; and conflicts in 80 countries.
- https://www.conservation.org/ An organization protecting the environment, biodiversity, and human communities.
Photo by Fabian Blank
On January 15th Trump signed a Phase One trade agreement with China which would ease some of the tension between the two countries resulting largely from his earlier severe stance with regard to tariffs and regulations. The initial program reflects the intention to open more China markets to US companies; increase farm and energy exports; and protect American technology and trade secrets. China also agreed to bolster its protections for intellectual property. The agreement is the culmination of two years of negotiation and the administration is hoping that it can avoid an escalation in the hostilities between the nations from his earlier position.
Per the agreement, China will buy an additional $200 billion of American goods and services by 2021, an increase of more than 50% from 2017 levels. The $360 billion dollars of earlier US tariffs on Chinese good remain though in December the administration passed reductions, from 15% to 7.5% of tariffs on consumer goods. The 25% tariff imposed on components US factories import to assemble finished products remains at that level. Trump asserts that these costs are born by China but analysts suggest the cost really accrues to American importers.
Trump claims a major victory with this Phase 1 calling it a “major sea change in international trade.” Though it does portend a shift in trade policy its benefits are questionable and have been criticized by multiple analysts. Instead of lowering tariffs, Phase 1 maintains record high tariffs and comes at the trade issue by forcing China to purchase a fixed amount of goods. Some experts do not feel that China can achieve the level of purchase in the agreement and suggest that enforcement is tricky.
It also is suggested that the manner of the agreement increases state control of the Chinese economy, a position counter to past administrations’ approaches to trade. Critics fear that the global trade dynamic will be compromised as a consequence of increased Chinese purchases from the US resulting in decreases elsewhere. It is projected that this will reduce outsourcing and lost jobs and loss of industries. China will gain economic stability and a boosted market by being guaranteed a certain level of trade from the agreement and the hope that future tariff reductions will be included in Phase Two.
Critics question this assertion that Phase 2 will include tariff reductions and suggest that the timing of the signing of the Phase 1 agreement was calculated to offset the negative press regarding the impeachment issue. The future of Phase 2 is in question. It is probable that it will not be completed till after the 2020 presidential election as it is like to target the more complex problem of China’s subsidies to its companies. In the meantime, Trump can tout the initial agreement as a boost to the American economy and as a reversal of reduced purchases of US goods and job losses wrought by his escalated trade policies in his first two years in office.
http://americansforfreetrade.com/ A broad coalition of business, trade unions, and workers against tariffs.
Photo by chuttersnap
In a rare alliance, the Democrats worked to support revisions to Trump’s United States Mexico Canada Trade Agreement. The current bill, passed by the House in mid-December and expected to succeed in the Senate early in the New Year, represents significant changes to the original 2017 bill. This bill essentially replaces the highly unpopular NAFTA (the 1994 Clinton era North American Free Trade Agreement). Trump, as well as many other political and labor entities, belives that NAFTA has had dire consequences on American manufacturing. The new agreement, hailed by the Democrats as a win, provides for more worker right, environmental protections, and eliminating a ten year mandate extending patents for drugs. The bill also addresses intellectual property rights, protects US manufacturing by providing for zero tariffs for parts made in the US, and establishes significant oversight for the Mexican authorities should they fail to institute the terms of the agreement. The agreement affects 1.2 trillion dollars in North American merchandise trade. The Mexican government passed the agreement in June and is expected to do so for the amendments in the New Year. Canada is also expected to pass the agreement though Trudeau’s party requires the support of one other party to obtain the needed votes.
The Democrats are embracing this revised agreement as a win, particularly for gaining ten years of de-regulation of prescription drug patents allowing for the sale of generics; workers’ benefits, right to establish independent unions, and government accountability for these; intellectual property protection; and the opening of the Canadian milk market to US farmers. Presidential candidate Bernie Sanders says he will not vote for the bill. He suggested that is it was only a moderate improvement over NAFTA, which he also did not vote for, and that it did not address climate control or prevent companies from opening factories overseas. Although the Democrats failed to stop the legal protection for companies’ internet content, a win for big tech, all in all they are climbing success with the revised agreement. The section in question provides a legal shield which protects companies from liability for their internet content. The general sentiment among Republicans is dismay with the concessions Trump made. Generally, labor is supportive with the AFL-CIO endorsing the agreement even as a subsidiary, the International Association of Machinists and Aerospace Workers dissented claiming a failure to stem the flow of jobs to Mexico. Although the USMCA is widely seen as a significant improvement over the original proposal, the Democrats fear this will align Trump with more support from workers. The overall impact on trade and jobs will be revealed in the future but it is bound to be an improvement over the 1994 NAFTA, which proved almost universally unpopular once it was implemented.
- https://aflcio.org/about-us/our-unions-and-allies A labor union website that describes union positions on international trade agreements.
Photo by chuttersnap
In spite of generally positive economic indicators there are worrisome trends emanating from the Midwest, particularly in five essential swing states. Manufacturing and agriculture have been impacted by the tariff wars and there is every indication that even if the tariffs are rolled back the affected regions will not bounce back until after the election.
More specifically, job growth has decelerated almost to stagnation in Michigan, Wisconsin, Minnesota, Ohio, and Pennsylvania. There is evidence that the repercussions of the decrease in trade has extended to the movement and shipping of goods. Trump’s reduction in tariffs, announced December 13, was touted as a new beginning for the regionb but such declarations often have given was to false hopes of real continuity and relief. These trends to not bode well for working people in these areas.
Trump has boasted of the excellent economic indicators which he attributes to his administration. Attitudes towards the effectiveness of economic policies are good indicators of the electorate’s sentiments. Moody’s Analytics economists are predicting a Trump re-election, as are other entities using different models. Most draw on unemployment data, gas prices, basic economic indicators, approval ratings, and voter turnout in various combinations. Unemployment is at an all-time 50 year low and predicted to improve in 2020 along with the easing of the trade war. Major metropolitan areas are booming but the “rust belt” is suffering job losses.
Currently, there is a significant chasm between the macro indicators signifying a strong economy and the subjective feeling of “everyday” Americans. Democrats suggest that though 401Ks are doing well they are offset by increases in cost of living particularly in education, healthcare, daycare, and retirement. Pew surveys indicate that 49% percent of Americans are worried about their immediate finances with another 25% worried about the future.
These fears pre-date Trump but are exacerbated by fears surrounding the corrosion of the Affordable Care Act. Satisfaction with the economic situation has fallen 8% between May and October though 52% of poll respondents still approve of Trump’s handling of the economy. Pew surveys shows that 58% feel the economy is hurting the middle class and 64% say it hurts the poor while 69% suggest it is helping the wealthy. There is a general feeling, shown by Democratic PACs, that the candidates really need to focus very strongly on the day-to-day help they can offer to working Americans. Highlighting broken promises made by Trump can support this effort. For example, Trump’s claim that an Ohio auto plant would “come back,” actually was in contradiction to the eventual closing of the plant.
A person’s view of the economy is strongly tied to their partisan identification. Republican views of the economy rose with Trump’s election. Seventy five percent of Republicans assess the economy as excellent or good while 41% of Democrats do the same. Notable is the fact that Trump’s approval rating remains consistent at about 41.7%. The Democrats must be targeted when they criticize the overall indicators and their impact on “average” Americans.
- https://www.wsj.com/articles/small-donors-get-creative-to-give-over-and-over-to-2020-candidates-11572001202 An article on how to make multiple small donations to campaigns.
Photo by Markus Spiske
President Trump has threatened to impose tariffs on steel and aluminum coming from Brazil and Argentina. In March of 2018 he exempted these countries from a new tariff and, despite a negotiated settlement in May, in which Brazil and Argentina agreed to cap shipments to the US to avoid the imposition of putative actions by Trump, he has chosen to void that May 2018 agreement.
President Trump stated that Brazil and Argentina deliberately manipulated their economies to weaken their currencies. He claimed that the depressed currencies pose a threat to US farmers. Economists suggest that the weakened currencies were not deliberate but a result of economic slowdowns and government policies in these countries. Trump likely was reacting to the contraction of US manufacturing, in the last four months, especially in the output of real estate, industrial, and technological companies.
As a result of US tariffs imposed against China, that country has shifted much of its purchases to Argentina and Brazil. These South American countries have been experiencing severe economic and political instability. Argentina has experienced rampant inflation, increased indebtedness, and severe poverty under President Mauricio Macri who was voted out of office in October. Trump’s threats also indicate a shift in relations with President Jair Bolsonaro who had tried to strengthen his ties to the US and President Trump.
Trump’s new tariffs have precipitated the largest drop in American stocks since early October. A trade group of Brazil’s steel manufacturers warns that the tariffs would damage the industry in the US as well as in Brazil. So far Trump’s threats have not been implemented and experts suggest there are legal limits to how much he can increase the tariffs (see Section 232 of the US Tariff Expansion Act) They suggest that, if implemented, the tariffs will be legally challenged, e.g. y the World Trade Organization). In the meantime, Trump’s threats have resulted in instability in relations with Brazil and Argentina.
- http://americansforfreetrade.com/ Source of a broad coalition of organizations against tariffs.
Photo by Rafaela Biazi