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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.

Latest Economic and Trade Policy Posts

Investigating Trump’s Economy

Brief # 14 This past week, the United States Department of Labor reported the unemployment rate fell to 3.9% - a 17-year low. This makes the 3.8% target by the end of 2018 well within reach for the Trump administration and the Federal Reserve. Furthermore, nonfarm...

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A Review of Trump’s 2018 State of the Union Speech

There were a plethora of talking points President Trump had during his State of the Union, including lowering the cost of prescription drugs and revitalizing our nuclear weapons program to deter rogue actors such as North Korea. Although these two issues may seem very important the Trump administration prioritized two other…

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Budget Process Gets Politicized and Government Shuts Down

A 69-hour US government shutdown ended early this week with passage of a short-term spending bill that funds federal operations through February 8. This is the fourth temporary funding measure Congress has passed since it failed to meet an October 1 deadline last year for the FY2018 budget. On January 20…

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MoneyGram, AT&T Deals Blocked as US Talks Tough on Chinese Investment

Citing potential “malicious actors” and national security risks, early in the new year the Committee on Foreign Investments in the United States (CFIUS) rejected Alibaba Group Holding affiliate Ant Financial’s $1.2b bid to purchase MoneyGram International, a Dallas-based money transfer company. With the deal derailed after a year…

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US and China Concludes Second Round of Trade Talks Despite Internal Divisions and Confusion

Brief  #15 Economic Policy

Summary

On the weekend May 18-21, a team of Chinese delegates lead by the CCP’s Vice Premier and economist Liu He met with representatives from the Trump administration to discuss trade policies and advert a potential trade war.  This comes at the backdrop of tough rhetoric and escalating tensions between the two superpowers. Last month, President Trump threatened to slap tariffs on 150 billion USD worth of Chinese product and in response, China threatened to implement tariffs upwards to 25% on a wide range of US products equaling to 50 billion USD.

Since the campaign, President Trump has accused the Chinese as conducting unfair trade practices. Some of the President claims against China includes: devaluing their currency to make Chinese markets cheaper, not respecting intellectual property rights affecting the competitiveness of American firms in Chinese markets and flooding American markets with cheap Chinese products resulting in almost a 380 billion USD trade deficit in 2017.

After the negotiations concluded, little progress on either side appear to be made. Vague gestures and ambiguous language characterized the post-negotiations press conference. China pledged to purchase more US products while both countries pledge to continue to meet and have more discussions in the future. However, Trump’s negotiation camp appears to be bitterly divided over the focus of the talks, the potential outcomes and the means of achieving different goals.

Throughout the three days, there appeared to be much confusion on the US’ side. While the Chinese were able to present a united front during the talks, the same can not be said for the Americans. The disorganization was evident when Trump’s official released contradictory statements. Some in the camp wanted statements to focus on China’s bullying and forcing American firms to share technology and intellectual property while others wanted statements and tactics to focus more on reducing the trade deficit.

On Sunday, Secretary of Treasury Steve Mnuchin said the Trump administration would “put the trade war on hold” while talks continued while that same day US Trade Representative Robert Lighthizer released a statement that said that may still resort to tariff and other measures unless China makes “real structural change.” On Friday, Trump chief economic advisor Larry Kudlow prematurely said China offered to reduce its trade surplus by 200 billion USD although such an agreement was never made.

According to Derek Scissor – a Chinese scholar at the American Enterprise Institute claims that the Trump negotiations team is divided into two camps. Secretary Mnuchin and Economic advisor Larry Kudlow represents the neoliberal faction who seek further global integration and worry about the market’s reaction to a potential trade war – a testament to their banking background. This side is seeking to make a deal as quickly as possible. The other faction includes Peter Navarro leader of the White House National Trade Council and Robert Lighthizer who are demanding China change its practices and help reduce the deficit by 200 billion USD. This faction is willing to resort to extreme trade disruptions to accomplish their goals. The rivalries between both camps is evident as they jockey for influence over the president during the trade talks.

These talks also come days after President Xi Jinping of China asked Trump for a “personal favor” by providing sanction relief for Chinese telecommunications giant ZTE which has had its operations severely crippled under the Obama administration. After bipartisan backlash in Congress, in a tweet Trump claimed “that nothing happened with ZTE except as it pertains to a larger trade deal.” Both Republicans and Democrats are steadfast in maintaining sanctions on ZTE for illegally selling products to both Iran and North Korea. Both parties feel as if Trump is placing Chinese economic need over America’s national security imperative. On Tuesday, May 23 2018, the Senate Banking Committee passed an amendment that would make it illegal for Trump to reduce penalties on ZTE unless it provides proof that the company is compiling with US laws.

Next month, in June 2018, both sides are preparing for round three of the talks with hopes that a deal can be made. However, it is unclear exactly if the potential for a trade war still exist before or while negotiations talks take place. Those in the Mnuchin camp would rather make a deal and if that isn’t possible would rather wait before implementing tough tariffs until after the North Korea summit at the very least. While those in the Navarro camp would rather use any tools at their disposal to force China to acquiesce to America’s demands.

Analysis

There is a great possibility that the disorganization and the in-fighting within President  Trump’s negotiation team  gave the Chinese the upper hand in these talks and future talks. It was very noticeable to see the divisions within the camp and China’s skilled negotiations could easily take advantage of the situation by playing both sides off one another and pandering to one side over another at advantageous times. Already, some might argue China achieved a great victory by getting the US to delay tariffs with China only vaguely agreeing to purchase “massive amounts of farm and agricultural products” according to the President’s tweet.

This chaos and confusion seems to be commonplace in the Trump administration. One might even begin to think that confusion and chaos is a part of the President’s elaborate grand strategy pertaining to trade and almost any other policy issues for that matter.  If one gives off the appearance they are confused and disoriented the other side may begin to overestimate their own abilities. However, it is difficult to see an underlying strategy in the midst of all the confusion. After the trade talks, Chinese official felt a sense of bewilderment saying that they would place any “concession” made during the talks on “hold” until president Trump gave final confirmation. Still, it is very likely China did use and will use this confusion to buttress their demands in the next round of talks.

The foundation of President Trump’s thinking as it pertains to trade and China is the belief that China is more dependent on America than America is on China. China makes hundreds of billions per year off of selling its products to American consumers. The United States is China’s largest single country trading partner accounting for about 20% of all of China’s exports. China is still an economy more heavily dependent on exports than it is on domestic consumption even though the Communist Party is desperately trying to change this. It can’t be said one way or another if the president’s line of rationale is correct or incorrect. Existing literature supports both arguments. China, on the other hand, feels like it would have the upper hand in a trade war. Although, the US market does make up a significant cross section of Chinese exports, the US is also a democracy. The US is often times constrained by the capricious desire of the citizenry. A trade war will have an inflationary impact. America’s thirst for cheap Chinese products may to be so great  as to weather a long term trade war. No one wants to walk into a Wal-Mart or Target and spend almost 35% more on clothes, electronics and other items- two stores many in Trump’s base are very fond of. Ironically, existing literature both supports and goes against this view as well. Although it can’t be concluded one way or another, most certainly  both economies are very dependent on each other and both side stands to lose significantly in a trade war. A trade war would not only hurt both  China and the US, but it would harm global supply chains across the world.

President Trump’s demand for China to reduce the trade deficit is unrealistic. The only way the deficit can be reduced is if US ships more goods and services to China, limit the number of imports or a combination of both. The US has little control over demands for its products in China just as China has little control over demands for its products in America. President Trump’s lack of understanding of basic supply and demand principles shows up in the various infeasible demands he made this weekend.

Finally, Trump’s  ZTE controversy shows his willingness to often times easily abandon his own agenda. The President has consistently abandoned beliefs that he presented himself resolute on.  This might be very problematic going forward with negotiations with Chinese officials. The Chinese are expert negotiators and have more than likely studied the President’s weakness. The President was elected to represent the American people and its problematic if the president forgets his own underlying platform. The people who will be hurt the most are those who support him and believe in him the most.\

Take Action

  1. The US-China Business council is an NGO consisting of over 200 companies that do business in China and its mission is to expand the US commercial relationship to its members.
  2. The US-China Policy Foundation is an NGO that seeks to enhance mutual understanding and positive relations between the two countries via awareness
  3. The US-China Strong Foundation is an NGO that seeks to develop relations by investing in a new generation of knowledgeable leaders.

This Brief was submitted by KAF, a USRESIST NEWS Analyst. For more information contact: kaf@usresistnews.org

 

 

 

Investigating Trump’s Economy

Brief # 14

This past week, the United States Department of Labor reported the unemployment rate fell to 3.9% – a 17-year low. This makes the 3.8% target by the end of 2018 well within reach for the Trump administration and the Federal Reserve. Furthermore, nonfarm payroll jobs increased by 164,000 in April and 135,000 in March.  African-American and Latino unemployment rate also hit records lows as the unemployment rate fell to 6.6% and 4.8%, respectively; this is the lowest jobless rate for these ethnic groups since the 1970s. Naturally, President Donald Trump and his economic advisor Gary Cohn attribute strong economic growth to the Trump tax cuts Congress passed in December.

On other metrics, the economy appears to be as strong. The “Broader Unemployment Rate” – a metric that includes dissatisfied workers or  part-time workers in 2009 was over 17%. By April 2018, this number also feel to 7.8% showing signs of continued economic growth. The Labor department also announced that the US has a record of 6.6 million job posting.

Despite strong jobs growth, wages haven’t fared as well. Wage growth has occurred but not near the 4,000 USD annual figure the Trump administration predicted. From January to April, average hourly earnings only increased by 13% (multiplied by 12 months to average around 260 USD). Economist predicted for a 3.9% unemployment rate, wages should theoretically increase by a far greater margin than the 2.6% when compared to last year. Wages would have to hit a margin of 3% for the average consumer to feel the benefit.

Analysis

President Trump was quick to declare the tax cut a victory for job creation and economic growth. In economics, it is always important to refer to raw data to determine the veracity of presidential claims- especially this President. President Trump may say one thing while data shows the full picture.

The Trump Administration’s New Tariff’s

Brief # 12

April 12, 2018

Since the beginning of 2018, the Trump administration has been enacting a series of tariffs, on a variety of foreign products, intellectual property rights, and technology services. The tariffs reflect Trump’s efforts to follow through on a campaign promise to not let other countries take advantage of the US. He is seeking to appease his base of supporters, many of whom perceive that current trading agreements with other countries is the major reason for their unemployment. The tariff’s that Trump has enacted include the following:

On January 22 the President imposed tariffs on imports of solar panels and washing machines; A tariff of 30 percent will be applied to imported solar panels, most of which originate in China. Tariffs will begin at 20% on large residential washing machines.

On March 22, he imposed a 25 percent tariff on selected Chinese products that could total $60 billion dollars. The products included aeronautics, modern rail, new energy vehicles, and high tech products.

On March 25 he imposed 25 percent tariff on imported steel and 10 percent tariff on aluminum. The administration stated that tariffs on such goods from Argentina, Australia, Brazil, the European Union and South Korea were delayed until May 1. Canada and Mexico are exempt from the tariff as the US reviews its national security relationships and the North America Free Trade Agreement (NAFTA)

On April 6th, after China retaliated with its own tariffs on US products, Trump announced he was considering $100 billion dollars of additional tariffs on Chinese goods.

The Chinese government, according to a CNN Report,  then responded by reiterating that it doesn’t want “to fight a trade war, but we are not afraid of fighting it.” “If the United States disregards the opposition of China and the international community, and insists on unilateralist and protectionist trade practices, the Chinese side will follow through to

Analysis

By instituting these new tariff’s President Trump is threatening to overturn a decades long bi-partisan policy of free trade. This policy is predicated on the fact that national economies have become increasingly inter-dependent, and that many businesses operate by buying and selling products and services across the planet. Trump’s tariffs also threaten to unleash a trade war, as the Chinese have observed. Trade wars, usually escalate conflict between countries rather than cooperation. They result in higher prices for consumers, shrinking demand for business services and products, and increased unemployment. The last large-scale global trade war occurred in the nineteen thirties and was a factor that contributed to the Great depression and World War II.

Fortunately, the U.S. and the world learned a lesson from this experience. With the Reciprocal Trade Act of 1934 and its successors, which granted the President authority to reach tariff reduction agreements with foreign governments, U.S. trade policy came to be global and strategic.

This new approach was institutionalized at the international level with the creation of the General Agreement on Tariffs and Trade in 1948 and its successor, the World Trade Organization (WTO), in 1995.

The basic principle of these agreements is reciprocity — that each country will agree to liberalize its trade to the extent that other countries liberalize theirs. The approach uses international negotiations to overcome protectionist political pressures 

President Trump claims that certain countries have weakened American industries by exporting cheap products to the United States. He believes this has been going on for decades and has caused significant job losses. He takes this position because a large part of his political base are unemployed blue-collar workers.

However, international trade is one of many factors contributing to US unemployment; the larger ones being the onset of automation, the lack of an adequate unemployment safety net, and the lack of effective job education and retraining programs.

There are better ways for addressing international trade issues that don’t publically embarrass nations and force them into an escalating trade war. These include behind the scenes country-to-country diplomatic negotiations or working through the WTO that was established to deal with trade disputes between countries.

It is true that there remain many injustices in the world trading system. Until recently most free trade agreements failed to take into account workers’ rights and labor and environmental standards. It is also true that the WTO is still a young organization that needs strengthening. However, these are problems that skilled diplomats and trade negotiators can address.

There is increasing concern that President Trump’s tariffs will likely impose a heavier burden on lower income households as these households generally spend more on traded goods as a share of expenditure/income.

Engagement Resources

VoxEU.org – CEPR’s policy portal was set up in June 2007 to promote research-based policy analysis and commentary by leading economists.

https://voxeu.org/columns/archive

The Council on Foreign Relations (CFR)-The CFR is an independent, nonpartisan membership organization, think tank, and publisher dedicated to being a resource for its members, government officials, business executives, journalists, educators and students, civic and religious leaders, and other interested citizens to understand foreign policy

https://www.cfr.org/blog/trump-steel-tariffs-could-kill-40000-auto-jobs-equal-nearly-one-third-steel-workforce

The Center for Economic and Policy Research (CEPR) – The CEPR was established to promote democratic debate on the most important economic and social issues that affect working people’s lives.

http://cepr.net/

ThinkProgress is a news site dedicated to providing their readers with rigorous reporting and analysis from a progressive perspective.

https://thinkprogress.org/

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created to include the needs of low- and middle-income workers in economic policy discussions.

https://www.epi.org/

This Brief was compiled by Ron Israel, USRESIST NEEWS Managing Editor and Bruce Boccardy

 

 

 

 

Merkel and Macron Make Last Ditch Effort to Prevent US Steel Tariffs

Brief # 13 Economic Policy

April 30, 2018

 Summary

On May 1st, 2018, the US tariffs on aluminum and steel imports from the EU are set to take affect. The above-mentioned tariffs are an appeasement to the US Steel industry, which has been affected by increased globalization throughout the second half of the 20th century.  For example, in 1948 after World War II, the American steel industry produced over half of the world steel output while employing 700,000 people. Now, that figured has dropped to only 11% and employs only 78,000 people. The proposed tariffs will impose a 25% tax on steel products and a 10% tax on aluminum products. Countries most affected by these tariffs are scrambling to prevent President Trump from implementation, amid fears of a global trade war. LEARN MORE

In an effort to prevent the US from imposing these tariffs, President Emmanuel Macron of France and Chancellor Angela Merkel of Germany assembled a united front to convince President Trump. President Macron, displayed his  budding “bromance” and savy emotional rhetoric played the “good cop” during his two-day official visit with President Trump, while Chancellor Merkel, armed with an arsenal of facts, figures, and threats of retaliation played the “bad cop” , both pleaded the EU’s case last week for permanent exemption status. Steel and aluminum are especially important to the 28-member states of the EU as they account for 10% of global steel trade or 172.3 metric tonnes of production. In response, the EU has proposed tariffs on selected US products amounting to 7.8 billion USD (the same amount worth of steel EU exports to the US). Interestingly enough, many of these products are produced in state Trump won by double-digit points. It is unlikely if President Macron and Chancellor Merkel’s Pathos-Logos offensive had its intended affect as it appears the May 1 deadline will pass eliminating the temporary waiver tariff exemption granted to EU countries in March.

EU countries are not the only ones in the line of fire of President Trump protectionist nationalism policies. China, who always served as President Trump’s campaign punching bag, will also be affected by the tariff on steel and aluminum. Firmly sitting at the top of the steel world, China is the world’s largest producer of steel accounting for around half of all global trade or 1.68 billion metric tonnes. Steel and Aluminum are some of the few goods in China where surplus outstrip demand providing an opportunity for profit as excess is sent to the world export market. To prevent tariff implementation, on April 10th,  China has filed a complaint to the World Trade Organization requesting 60 day consultation with the US arguing the tariffs are in violation of the WTO rules. In response, on March 23 China implemented retaliatory trade measures on beef, pork, apples and other perishable food items – many of these items are also produced in states President Trump carried by double-digits as well.

Argentina, Brazil, South Korea, Canada and Mexico were offered exemption status while countries like Russia, India, Brazil, Taiwan and India were not. These countries are among the world’s largest steel and aluminum producers. A majority of the US steel supply comes from groups that were exempted from the tariff.

Analysis

If one were to watch the news and listen to president Trump, he/she would think Chinese steel and EU steel account for a lion share of US steel imports. As it the case with most issues, once you set aside politics from fact you will see the fissures between what is widely discussed and the reality on the ground. The reality is China and the EU make up 2% and 4%  of US steel imports respectively in 2017 – a small cross-section proportion of aggregate US steel and aluminum imports. Canada, Brazil , South Korea, Mexico and Russia round off the top 5 exporters accounting for 17%, 14%, 10%, 9% and 8%, respectively.  US allies would have lost the most if Trump’s initial tariff plans were implemented without second thought or revision.

Like many other policies with this administration, politics is the end and these “sweeping” aluminum and steel tariffs are just the means – less than 25% of US steel imports will actually have any kind tariffs. Fully cognizant of this fact, Chancellor Merkel and President Macron are taking a stand to President in an attempt to set boundaries on potential future tariffs in other industries Trump may want to implement.  Although, the US is the world’s largest steel importer accounting for 77% of all global steel imports, the EU make up less than 4% of that total. Europe’s preeminent leaders understand the personality and ego of president Trump. Consider this, what would occur if Trump randomly wanted to institute tariffs on the EU’s three largest export categories, machinery (64. 6 billion USD), pharmaceuticals (55.2 billion USD) or vehicles (54.6 billion USD)? This would represent a significant blow to some of Europe’s largest and most important industries. Certainly, a global trade war would ensue as retaliatory measure would definitely target America’s largest exports to the EU.

The possibility also exist these tariffs were implemented as an affront to China as they received no exemption status. Conventional thinking suggests 2% is not a large amount, but many in the steel industry claim this number is higher. American steel makers claim China engages in a practice called transshipment, where other countries by Chinese steel at lower prices than ship those steel to the US for profit. However, the Department of Commerce investigated and found no evidence of this occurrence. This still has not stopped China from attempting to drive a wedge between the US and the EU by standing together against US protectionism. As of now, there is little chance the EU would unite with China against the US, but should President Trump continue destructive trade policies, a Chinese-EU partnership against the US could foment.

Steel and aluminum tariff are not new. In 2003, president Bush attempted to implement 25-30% tariffs on steel and aluminum imports – which ultimately was a failure. Steel and aluminum are heavily dispersed through the automotive and construction industries; those tariffs would have increased prices on their products. The National Association of Manufactures came out against the tariffs, eventually leading to the WTO ruling the tariffs went out US trade obligations. In less than a year, the tariffs were reversed. It has been proven these tariffs don’t work so what does President Trump have to gain? Once again, it is about politics.

President Trump has a tendency to govern toward his base specially to gain some kind of political expediency. Whether it’s when personal scandals gain traction or to keep his supporters in a perpetual state of anger, these tariffs appear to be another measure to provide his die-hard supporters lip service and quite possibly to distract from other non-economic issues.

Engagement Resources

  • Volunteers for Economic Growth Alliance (VEGA) is a consortium of 24 members NGOs that promoting prosperity by bringing highly skilled workers together across the global. VEGA is also instrumental in advocating for global partnerships as it pertains to trade and economics.
  • The Progressive Policy Institute (PPI) was known as Bill Clinton’s personal think tank. They offer progressive policy recommendations that are practical and pragmatic. Their policy expertise is in the field of economics, trade, foreign policy, healthcare, etc.
  • The American Liberal Review attempts to “advance a project of resurgent American liberalism of bold reform and visionary politics for the 21st” It accomplishes this by offering a list of many NGOs and Think Tanks that promote liberal economic values.
  • How to Enrich a Country: Free Trade or Protectionism” , the YouTube channel, the School of Life offers an objective view on many topics ranging from philosophy, to history, to relationships, etc. This video provides people with an objective view on the history of the protectionism vs free trade debate.

Lean more and leave comments by contacting fas@usresistnews.org

Congress Kicks the FY2018 Budget Can Down the Road As Trump Releases FY2019 Goals

February 15, 2018

Summary

The US government shut down, again, for only a few hours last Friday while Congress worked overtime hashing out another Continuing Resolution that funds federal operations through March 23, along with a 2-year spending bill, both signed into law by Trump on the morning of February 9. The shutdown had little effect during pre-dawn hours as Congress “kicked the can” of FY2018 closer to a probable resolution, to occur nearly five months after the Oct. 1 start of the fiscal year.

The new agreements were followed on Monday, February 12 by the release of Trump’s FY2019 efficient, effective, and accountable American budget of major savings and reform, which calls for unprecedented cuts in non-defense domestic and foreign programs and the abolishment of several federal agencies. The 2-year Bipartisan Budget Act of 2018, however, negates much of the savings called for by Trump, allocating nearly half of its $300 billion spending cap to support non-defense government programs. As an addendum to the FY2019 budget proposal, the White House noted, “The administration does not believe these non-defense spending levels comport with its vision for the proper role and size of the federal government.”

While passage of the 2-year spending deal provides Republicans with a long sought-after, hefty increase for the Pentagon and appeases Democrats’ demands for support of non-defense domestic agencies, a combination of this new spending and last year’s tax cuts will bloat the deficit to nearly $1 trillion in 2019. The deal also raises the debt cap, preventing a first-ever default on government loans and putting off another vote on debt until March of 2019, though analysts predict the deal itself will increase federal debt to record levels.

Also included in the bill is nearly $90 billion in disaster relief for last year’s devastating hurricanes and wildfires. This allocates only $11 billion for Puerto Rico, far short of the estimated $94 billion needed for its recovery from Hurricane Maria. Other provisions include a ten-year extension of CHIP and a $6 billion injection of funds to combat the opioid epidemic.

As the government continues to operate under 2017 spending levels, Congress now has just under six weeks — including a Congressional recess for all of next week — to finalize appropriations for 2018 and to haggle over unresolved issues such as infrastructure spending and dozens of riders. In an unusual break from tradition, the GOP-led Congress has made no attempt to include a ten-year plan to balance the budget.

Analysis

Welcome to election year 2018. Although House Minority Leader Nancy Pelosi did try to make a last stand for DACA during budget talks, while Libertarian-turned-Republican Rand Paul stood stubbornly alone to see the government shut down on Friday, most of Congress appears ready to move the budget along and to polish up their respective parties’ reputations.. Contentious immigration debate has been separated from the budget process. Republicans have for the time being set aside overt attempts to repeal Obamacare which, in an election year, can only mean their constituency is not entirely on board. The lauded boosts in military and domestic spending offer a win-win compromise for both parties — if voters ignore the increased debt and deficit that come with it. As lawmakers become more sheepish about forcing shutdowns to meet partisan ultimatums, the Republican-led Congress has hidden away many of its most controversial proposals in the form of budget riders, or provisions that have nothing to do with the fiscal year budget but would never pass as laws on their own merits.

One of the most obvious bait-and-switch election year tactics in the spending bill is the revival of more than thirty special-interest tax breaks that were left to expire at the end of 2016. These “extenders” are supposed to encourage individuals and business to change behavior, but these breaks only apply to last year’s economic activity, and only to those who have not already filed their tax returns. Tax breaks related to energy-efficient home improvements, residential renewable energy and electric vehicles, higher education and mortgage debt, among others, might benefit some voters this year, but rely on some $15 billion the government does not have and must now borrow. They may, at least, serve to partly obscure the effects of the new tax law on individual returns while giving constituents a nod in areas Republicans are attacking on other fronts, like renewable energy and higher education.

Progressive non-governmental advocacy groups are bracing themselves for a tough battle in the weeks ahead, to educate lawmakers and voters on the hidden costs of “poison pill” riders attached to FY2018 appropriations and to advance the progressive agenda before the March 23 deadline. While voters may see hope for domestic programs, raising the non-defense spending cap does not mean Congress will actually appropriate all those funds. What’s more, with a GOP-controlled House, Senate, and White House, Republican policy preferences may more easily advance via executive orders and use of the Congressional Review Act. Riders are yet another duplicitous way to bypass the legislative process and slip unsavory policy into must-pass appropriation bills. Transparency on these issues is even more crucial as midterm elections approach.

Scores of riders tacked onto appropriations for FY2018 include: an effort to repeal the Johnson Amendment, which would enable religious groups to make campaign contributions; a long-standing rider to block a rule requiring publicly-traded companies to disclose campaign contributions to stockholders; an effort to stop the Consumer Financial Protection Bureau’s watch-dog activities over banks;  a renewed attack on the fiduciary rule, restrictions on stem cell research and radical reduction of access to abortion and other reproductive health care services; repeal of safe drinking water protections; reversal of an Obama-era rule to reduce methane gas emissions; numerous other anti-environmental riders; and more.

Given the dysfunction of the 115th Congress thus far, the March deadline may come and go with more short-term Continuing Resolutions and perhaps, more government shutdowns. Meanwhile, in a Farm Bill year and with the new FY2019 budget goals already on the table, voters and advocates will be scrambling to keep track of even more pitfalls and hidden, poison pill riders.

Engagement Resources

  • The Committee for a Responsible Federal Budget is a nonpartisan, nonprofit organization committed to educating the public on issues with significant fiscal policy impact.
  • Clean Budget Coalition is made up of nearly 200 groups that have joined together to oppose riders.
  • The Federal Budget Group is dedicated to providing policymakers, the media, and the general public timely and reliable information that is strictly nonpartisan, rigorously factual, and explained in plain English.

This brief was compiled by Jennifer Chesworth. If you have comments or want to add the name of your organization to this brief please contact jennifer@usresistnews.org.


 

Tariffs on Solar Components, Washing Machines Part of Trump’s Protectionist Agenda

February 5, 2018

Summary

New tariffs on imported solar panels and modules and on washing machines, announced by the Trump administration on January 22, will come into effect on February 7.  The tariffs are among the first unilateral trade restrictions imposed by the administration as part of a broader protectionist strategy that treats “unfair trade practices” as a threat to national security. LEARN MORE.

Trump imposed a 30% tariff on crystalline silicon photovoltaic (CSPV) solar panels and modules, which will step down incrementally over four years to 15%. For finished washing machines, a tariff beginning at 20% on the first 1.2 million imported units and raised on subsequent imports to 50% — the maximum allowed by law — will step down incrementally to a maximum of 40% over three years. Both of these import safeguards include options to continue beyond their specified timeframes. The tariffs will affect all but General System of Preference (GSP) nations as per World Trade Organization (WTO) obligations, allowing GPS nations up to 3% of imports or a combined total of 9%.

Action against solar imports began when two financially-embattled US-based solar equipment manufacturers, Suniva and SolarWorld, petitioned the US International Trade Commission (ITC) in May of last year for protection against imports using Section 201 of the 1974 Trade Act. This action was followed by a Section 201 petition from Whirlpool seeking import relief for washers, specifically targeting two Korean companies, Samsung and LG.

Under Section 201, the ITC is charged with investigating whether domestic industries are “seriously injured or threatened with serious injury” that is substantially caused by import competition. If the ITC concludes no such injury exists, the case is thrown out, as recently occurred in a dispute between Boeing and Canadian aircraft manufacturer Bombardier over jets imported by Delta Air Lines. If the ITC concurs that serious injury does in fact exist, that gives the president authority to implement a policy response. Section 201 is rarely employed: the last affirmative investigation occurred in 2001, resulting in a disastrous, short-lived steel tariff imposed by the Bush administration. Since the Trade Law came into effect, previous presidents have erected trade barriers in only 19 of the 40 cases given an affirmative or tie vote by the ITC, as import safeguards may negatively impact US industrial development and jobs, raise consumer prices, result in trade diversion, and/or bring about retaliation in the form of trade barriers and restrictions or formal WTO complaints against the US. LEARN MORE.

Within thirty days of the new tariff proclamations (by February 22), the US Trade Representative (USTR) is required to publish procedures in the Federal Register for companies wishing to request exclusion. For now, it is unclear what the terms of exclusion will be or how quickly exclusion requests will be reviewed. This leaves some companies, like California-based SunPower Corp., which has already said it will request exclusion and has put plans to invest and expand on hold after the tariffs were announced, with a great level of uncertainty as to what the future will bring.

Analysis

The unusual employment of Section 201 under the Trump administration is highly politicized, if somewhat misaimed. The US Trade Representative (USTR) makes it clear that these actions prove Trump will “defend American workers, farmers, ranchers, and businesses.”  Farmers and ranchers? Clearly, the intention is to set the stage for imposition of more trade barriers in unrelated, hoped-for future cases. The USTR also ruminates on how these actions will curb Chinese imports, though in the relevant cases here the ITC found “serious injury” — in both the solar and washer petitions — from imports out of South Korea and Mexico. One cannot miss the irony in the fact that two of the petitioning companies — Suniva and Whirlpool — are Chinese-owned, while SolarWorld is also foreign-owned as the US subsidiary of a German company, SolarWorld AG.

The obvious intent of these “safeguards” against solar and washer imports is clear: rattle a saber at China; cripple the solar industry; and serve crony capitalism.

It’s no secret that Trump thinks climate change is a Chinese conspiracy. That combined with a mandate to cut 72% of the budget for DOE renewable energy research makes his move to provide “relief” for the domestic solar industry seem dubious at best. Given the negative consequences of Bush’s steel tariff, Trump the deal-maker had to have gauged what the outcome of solar tariffs would likely be. It seems no coincidence that a week after announcing the tariffs, Trump proclaimed in his State of the Union address that he has ended “the war on beautiful, clean coal.”

As for the tariff on washers, it seems little more than crony capitalism that supports a pattern of anti-competitive behavior by Whirlpool. Samsung and LG, the targets of Whirlpool’s complaints, are both currently investing hundreds of millions of dollars in plants on US soil which would provide some 1,600 accompanying American jobs. Samsung is converting a Caterpillar Inc. factory in South Carolina, while LG is building a new plant in Tennessee: Foreign-owned, yes, but so is Whirlpool. When Whirlpool merged with Maytag ten years ago, it argued that imports from Samsung and LG would provide sufficient competition to protect consumers in the market for washers. Now it’s using those same imports to claim unfair competition. The new tariff seems more a windfall for Whirlpool than it is relief to the domestic industry at large. Perhaps Whirlpool gained Trump’s favor over two other foreign-owned American manufacturers when Jeff Fettig, Chairman and former CEO at Whirlpool, served on Trump’s business advisory council, which disbanded after many executives quit in response to Trump’s comments on a Neo-Nazi rally in Charlottesville, where counter-protester Heather Heyer was killed.

Response to the tariffs has been for the most part uncertain and disapproving. China, the world’s largest solar panel producer, called it an “overreaction” and “an abuse of trade remedy measures,” while Korea has already filed a dispute with the WTO. This is not the first time Korea has appealed to the WTO in trade disputes with the US over washing machines. Morgan Stanley suggests that these protectionist moves leave investors unsure that the US will adhere to free trade agreements and may chill investment in US business generally. Goldman Sachs has estimated a 3% increase in solar utility costs and a 7% rise in residential costs. While residential installations tend to serve clients deliberately choosing renewable energy even if it costs a bit more, the biggest impact is expected in utility-scale solar, which could lose half its projected installations in a worst-case scenario. Many fear that in addition to increased consumer prices, Trump’s move could trigger massive layoffs in an industry that employs roughly 260,000 American workers.

We can expect more protectionist moves from the Trump administration in the weeks and months ahead — along with more uncertainty and retaliation against the United States.

Engagement Resources

  • The Peterson Institute for International Economics (PIIE) is a private, nonpartisan nonprofit institution for rigorous, intellectually open, and in depth study and discussion of international economic policy.
  • The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI has helped change the nature of public debates over international trade agreements by underscoring their effects on workers and the importance of putting enforceable labor standards in trade agreements.
  • The Solar Energy Industry Association (SEIA) works with member companies to promote pro-solar policies and advocate for the growth of solar nationwide.

This brief was compiled by Jennifer Chesworth. If you have comments or want to add the name of your organization to this brief please contact jennifer@usresistnews.org.


 

A Review of Trump’s 2018 State of the Union Speech

February 2, 2018

President Trump recently delivered his first State of the Union to the American people. During this speech, he made a plethora of future plans and boasted about his administration’s accomplishments.

List 1 – Trumps’ Plans

There were a plethora of talking points President Trump had during his State of the Union, including lowering the cost of prescription drugs and revitalizing our nuclear weapons program to deter rogue actors such as North Korea. Although these two issues may seem very important the Trump administration prioritized two other plans: immigration and infrastructure.

One of the largest themes of the State of the Union was the number of illegal immigrants entering the United States and the devastating impact of illegal immigration to our people. His plan had four pillars. First, it would offer a pathway to citizenship for nearly 1.8 million illegal immigrants brought to the United States by their parents at a young age. Second, it would completely secure the border via a border wall. Third, it would end the visa lottery (a program that randomly hands out green cards which according to the Trump administration is handed out without any regard for skill, merit, or safety of America’s people. Finally, it would bring an end to chain migration. According to the Trump administration, a single immigrant can essentially bring an unlimited number of distant relatives.

There are many issues with this bill. First, the Trump administration claims that the visa lottery program blindly gives out visa lotteries but that is not true. Immigrants do not automatically get a visa but have to be eligible to even apply for it. According to the U.S. State Department and U.S. Citizenship and Immigration Services, the individual must have at least a high school education or two years of work experience. In addition, the visa lottery is not randomly chosen. Applicants must pass a vetting process which includes passport, police/medical records, and photographs. The agency claims that “National security is our top priority when adjudicating visa applications.”

Secondly, the Trump administration claimed that once an immigrant enters this country they can bring an endless amount of relatives to this country. According to The Hill “The administration’s claims are demonstrably false.” Current law does not allow for you to bring an infinite amount of family members but only the closest family members (spouse, children, parents, and siblings). The Trump proposal would only spouses and children leaving parents and siblings out. There are currently no reunification paths for more distant family members.

In addition to the immigration plan, Trump promised a plethora of other things. One other one is updating and renewing our crumbling infrastructure. As with immigration, this plan lacks a clear plan on how the infrastructure will be built or even funded. The recent tax reform may also add to more problems as many companies may struggle to find new revenue sources. According to Patrick Sisson, “There also weren’t any specific calls to create new funding sources for the plan.”

List 2 – Accomplishments

There was a countless amount of accomplishments the Trump administration was boasting about. The biggest accomplishment that Trump spoke about was the economy. He claimed that black unemployment is the lowest it ever has been, he has added a total of 2.4 million jobs (200,000 of them in manufacturing), and claimed that the tax overhaul that passed Congress gave 3 million workers a tax bonus and was the largest tax cut in history.

It is true that black unemployment is the lowest it ever has been true but the Trump administration is conveniently leaving out other necessary facts. When Trump took office in January 2017, the black unemployment was already at 7.8% (the lowest it had been in nearly 10 years according to the Bureau of Labor Statistics). Under Trump, that number has fallen to 6.8% continuing its downward trajectory. Although Trump takes credit for accomplishing this, it is important to know that black unemployment was going down long before he took office (started falling from 16% in 2010 under the Obama Administration).

The Trump administration has also claimed that they have added nearly 2.4 million jobs and 200,00 manufacturing jobs. Although these numbers may be true, the pace of job growth has slowed twelve percent during Trump’s first eleven months in office. Even though there are jobs being added to the market it is at a slower rate than other past presidents. Finally, the Trump administration has claimed that they have given 3 million workers a tax bonus. While this may be true, according to the Labor Department the workers that got a tax bonus were only 3 million workers out of 154 million (only about 2%). Furthermore, Trump claimed that it was the largest tax cut in American history which is a false statement. Trump gave a tax cut of around 1.7% while Obama had a 1.8% cut in 2013 and Reagan had a 2.9% cut in 1981.

This brief was compiled by Vaibhav Kumar. If you have comments or want to add the name of your organization to this brief please contact vaibhav@usresistnews.org.


 

Budget Process Gets Politicized and Government Shuts Down

January 25, 2018

Summary

A 69-hour US government shutdown ended early this week with passage of a short-term spending bill that funds federal operations through February 8. This is the fourth temporary funding measure Congress has passed since it failed to meet an October 1 deadline last year for the FY2018 budget.

On January 20, the one year anniversary of Donald Trump’s inauguration, the shutdown began when Republicans failed to garner the 60 votes needed to approve a stopgap bill that would have kept the government funded through February 16. With few exceptions, all but essential government service agencies came to a halt at midnight, January 19, putting hundreds of thousands of federal employees on furlough without pay. It’s the first time in modern history that the federal government has shut down with the House of Representatives, Senate, and the White House all controlled by the same party.

Called by many “The Schumer Shutdown” and dubbed “The Trump Shutdown” by others, the Senate’s deadlock resulted over Democrats’ demands to find a permanent fix for the DACA program. A majority of Americans would like to see the DACA program continued, but disapprove of government shutdown as a political tactic.

Trump first introduced his “America First” budget blueprint on March 16 of last year. The proposal covers only discretionary spending, not “entitlements” or mandatory spending. To pay for increased funding for defense and a proposed border wall Trump famously promised to build during his campaign, the document calls for broad cuts in programs related to science and research, climate change, the environment, professional training, community development, international aid and peacekeeping, arts and humanities, and more. It also proposes eliminating 66 federal programs altogether, cutting funding entirely for Public Broadcasting, the Interagency Council on Homelessness, Legal Services, NEA, NEH, US Trade and Development, African Development Foundation, and a dozen other agencies.

By law, Congress has until April 15 each year for final adoption of the full budget resolution — or, it can write itself deadline extensions in the form of short-term spending bills, also called Continuing Resolutions or CRs. The Trump Administration operated on one stopgap measure after another until well into October, when the budget narrowly passed. LEARN MORE.

Since then, more stop-gap bills are keeping the federal government running as Congress battles over appropriations. Republicans pushed a massive spending package through in September, the only legally required budget deadline Congress managed to meet, and then used “reconciliation,” a tactic meant to resolve partisan gridlock but used now to force the party line, to pass sweeping tax reform in December. Republicans also attempted to use reconciliation in repeated attempts to repeal Obamacare, another issue which has bogged down the FY2018 budget process.

Though not common, government shutdowns in the US are nothing new. Since passage of the Congressional Budget Act in 1974, the US federal government has shut down nineteen times over disagreements tying fiscal year budgetary votes to ultimatums on a wide range of issues, from abortion to education to defense spending and more. This time, budget talks for FY2018 have stumbled over immigration and border security issues, forcing the January 20 shutdown. Congress now has until February 8 before the threat of another shutdown looms.

Analysis

If the above summary of the FY2018 budget process sounds too complicated and dysfunctional for words, you’re right. American political ideology has become increasingly divided along party lines over the past two decades, especially during the Obama administration, when Republicans were instructed to work against anything the administration tried to accomplish, explicitly to guarantee the failure of American government.

Under the Trump administration, Democrats and Republicans are even more sharply divided on just about everything, including immigration and racial issues, aid to the poor and human rights, climate change, taxation and the role of government, defense spending, foreign policy, religion, and education. In fact, while the Democratic party attracts more Americans with higher education degrees, Republicans are working to abolish the Department of Education, while during his campaign Trump declared, “I love the poorly educated” because they are “more loyal.”

Now, as Republicans manipulate and bend legislative rules to their own partisan ends, they blame Democrats for failures of the past which were for the most part caused by Republican obstructionism. Although Democrats are not entirely spotless, the GOP has truly become the “party of dirty tricks.” The recent shutdown is a case in point; Republicans managed to make Democrats look bad for disrupting process and taking a strong partisan stand, while Republicans themselves have done nothing but obstruct process and draw partisan lines in the sand for years.

Speaking of doing nothing, even Trump’s “America First” budget plan has been called “a ruse” in Washington. Frustrated with months of haggling, Senator Bob Corker (R-TN) said the budget “has no impact on anything whatsoever affecting the American people,” calling the entire budget process “the biggest hoax passed upon the American people ever.” Trump’s budget manifesto was a required gesture to initiate a strategy using the budget process to fast-track tax reform. The budget process was put in place near the end of Republican president Nixon’s ill-fated term to keep the president from blocking appropriations without any input from Congress. But Republicans like Corker want this to change — not to make the system more fair, but to allow Congress to make sweeping changes to mandatory spending; those entitlements that Democrats tend to hold dear. Mandatory spending, which makes up roughly 70% of government spending, is not addressed in the fiscal year budget but rather, is determined by individual pieces of legislation for each entitlement program.

Dependence on stopgap measures means the threat of government shutdown is conjured again and again, lending a sense of urgency and crisis to issues that Congress should be addressing by judicious, rational, and timely legislative process. While a government shutdown can have short-term effects on the economy, especially inside the beltway, Congressional dysfunction is far more damaging to the US economy and by extension, to the US dollar and its role in the global economy. Economists have long operated on the maxim that “business doesn’t like uncertainty.” But in the face of an increasingly dysfunctional Congress, many are starting to ask, is uncertainty the new normal?

Engagement Resources

  • The Center on Budget and Policy Priorities is a nonpartisan research and policy institute. We pursue federal and state policies designed both to reduce poverty and inequality and to restore fiscal responsibility in equitable and effective ways.
  • Convergence Center for Policy Reform is a non-profit, non-partisan organization dedicated to helping promote dialogue and solve problems across the political divide on issues of national consequence.

This brief was compiled by Jennifer Chesworth. If you have comments or want to add the name of your organization to this brief please contact jennifer@usresistnews.org.


 

MoneyGram, AT&T Deals Blocked as US Talks Tough on Chinese Investment

January 19, 2018

Summary

Citing potential “malicious actors” and national security risks, early in the new year the Committee on Foreign Investments in the United States (CFIUS) rejected Alibaba Group Holding affiliate Ant Financial’s $1.2b bid to purchase MoneyGram International, a Dallas-based money transfer company. With the deal derailed after a year of negotiations, Ant must now pay a $30m termination fee.

One week later, on January 9, Chinese telecom company Huawei announced that plans to sell its smartphones with AT&T in the United States had also collapsed. After lobbying the CFIUS to scrap the deal, US lawmakers urged AT&T, the second largest wireless carrier, to cut all ties with Huawei, warning that if they or other American firms do business with Huawei, they might find US government contracts awarded elsewhere.

In a signal of cooperation with American regulators, the Chinese Ministry of Industry and Information Technology reprimanded Alibaba and two other top Chinese tech firms for “inadequate” policies relating to personal information protection, calling for an investigation and vowing that any violations would be “severely punished.”  Alibaba’s Alipay was singled out by Chinese cyber regulators over user complaints of automatic enrollment in the company’s credit rating program, which gives Alipay access to a wide array of user data.

It remains to be seen how this chilling effect on Chinese investment will impact the long-anticipated sale of Virginia-based insurer Genworth Financial. The $2.7b acquisition deal with privately held conglomerate China Oceanwide Holdings Group — which acquired the American tech publishing pioneer, data analysis and venture capital firm International Data Group last year— has been stalled repeatedly, by lawsuits and by CFIUS concerns over protection of customers’ personal medical and financial data. The sale, now postponed until April 1, would help Genworth cope with $600 million in debt maturing in May of this year.

Analysis

Acquisitions of U.S.companies by Chinese investors face greater suspicion and scrutiny under the Trump administration, in an atmosphere of increased tensions between the two nations, especially over North Korea’s nuclear program.

But concerns over Chinese policy of requiring firms to hand over key technologies in order to gain access to Chinese markets, corporate espionage, and the Chinese government’s failure to crack down on intellectual property theft, are nothing new.

What’s new is an unprecedented global buying spree on the part of Chinese investors. As a condition of acceptance into the World Trade Organizaition (WTO) in 2001, China agreed to a number of economic reforms that would open its markets to outside competition. Its economy progressed at an impressive pace, as American companies bought up cheap wholesale Chinese products and raced for market position in what has become the 2nd largest economy in the world. China invested roughly $64 billion in the US between 1990 and 2015. But with the release of its Made in China 2025 plan in 2015 — a blueprint for upgrading the country’s manufacturing sector which is seen by many as a “return to old-school top-down mercantilist practices and import-substitution policies” — China’s US-investments surged to $45.6 billion in 2016 alone, with California tech, entertainment, real estate and logistics being the largest recipients at a combined total of $16b.

In spite of Washington’s concerns over technology transfer that may have military applications, such as AI and robotics, and dismay over personal data protections, censorship laws, and a burgeoning surveillance state, Silicon Valley has continued to court China for market growth and partnerships. Chinese investors are giving start-ups more favorable terms, while tech firms argue that engagement is better than withdrawal if America is to stay competitive in emerging markets and innovation.

Signaling a new hard-line approach during Trump’s state visit to Beijing last November, Washington lawmakers introduced a bill to revamp the CFIUS to close gaps in its review process against  “weaponizing” investment by “potential adversaries, such as China.” Although reform of the committee is long overdue, backlog and delays are in part a result of Trump’s inability to fill mid-level political positions in key agencies comprising the CFIUS.

While national security and the notion of reciprocity deserve our attention, Washington’s bellicose tone, punctuated by Trump’s incendiary rhetoric and erratic tweets about both China and North Korea, sabotage diplomatic efforts in an already complicated and sensitive relationship with China. As Trump blusters to gratify a xenophobic and intolerant segment of his “base” and to push his America First agenda forward, the rest of the world seems poised to look elsewhere for leadership.

Engagement Resources

  • US-China Policy Foundation provides opportunities for students, researchers, and practitioners of foreign policy to interact in diverse and substantial ways to promote greater understanding and awareness of issues in US-China relations.
  • The Paul Tsai China Center is dedicated to helping advance China’s legal reform, improving US-China relations, and increasing understanding of China in the United States.

This brief was compiled by Jennifer Chesworth. If you have comments or want to add the name of your organization to this brief please contact jennifer@usresistnews.org.


 

Trump Administration New Tax Bill

December 20, 2017

Summary

The Republican-led Congress passed a sweeping overhaul of the US tax code on December 20th just days before their holiday recess.  The bill totals an estimated $1.5 trillion in tax cuts. Its main focus is on cutting taxes on businesses of all kinds and on reducing taxes for wealthy individuals.

Highlights of the new tax bill include: a permanent reduction in the corporate tax rate from 34 to 21 percent; businesses also will be able to write off their investments in capital expenditures right away instead of waiting several years; and small businesses will get a reduction in their business taxes. Businesses also will get a 25% deduction for income from partnerships, S Corporations, and sole proprietorships (providing incentives for business to set up such pass-through entities. Businesses that have depreciable property that wears out over time will get an additional 20% deduction even if they don’t have many employees.

The wealthiest Americans would have their tax rate slashed from 39.6% to 35% and benefit from reductions in the estate tax, a levy on inheritance paid only by the wealthiest Americans. Middle class and poor families would get some modest reduction in taxes, but these are temporary and will begin to expire in 2019. The maximum amount deductible under the Child Tax Credit (CTC) will increase to $2,000 with no limit on the incomes of those who can utilize it. ( Wealthier people will be able to make greater use of the CTC than middle class and poor people.) The ability to make a standard deduction for every taxpayer and dependent on a return will be eliminated until 2025.

There also are several politically loaded components to the bill including: a limitation on the ability to deduct (beyond the 1st $10,000 in value) the cost of state and local taxes on federal income tax returns (a clause that will especially penalize traditionally democratic states such as California and New York with high state and local tax rates.)The tax bill also ends the Obamacare mandate that all Americans must have health insurance. And it will add at least $ 1 trillion dollars to America’s budget deficit.

https://www.politico.com/interactives/2017/whats-in-the-new-tax-bill/

https://www.nytimes.com/interactive/2017/12/15/us/politics/final-republican-tax-bill-cuts.html

Analysis

The new Republican tax bill will mainly benefit corporations and wealthy individuals. Middle class and lower income individuals and families will receive a few benefits, but most of these are temporary and scheduled to end in a few years. The theory behind the new bill is that providing tax breaks to the wealthy will free up income that will be invested and help the economy grow, create jobs, and narrow the income gap.  However, this approach has failed to work many times before, going back to the tax cuts made by Ronald Reagan under what was known as “trickle-down” economics. Instead of leading to greater investments jobs, tax cuts for the rich usually result in just more profits for those at the top.

The Congressional Budget Office estimates that 13 million Americans may lose access to health care as a result of the tax bill’s repeal of the Obamacare individual mandate, a move that is likely to drive up the cost of health insurance. Taxpayers can deduct medical expenses that exceed 7.5 percent of AGI in 2017 and 2018, but the new deduction level ends Jan. 1, 2019.

The fact that the new bill will add at least $1.5 trillion to the current budget deficit, already at$ 20 trillion, is cause for concern. The government will need to find new sources of revenue to reduce the deficit, something that many think the Republicans will try to do by reducing entitlement programs such as Medicare, Medicaid, and social security.

This new bill was rushed through Congress with no hearings and no bipartisan support. In the House and Senate, no Democrats voted in favor of the bill. The reason for this is President Trump and Republican desire to have some legislative victory during Trump’s first year in office. But the victory is sure to come at the expanse of voter anger at the polls in 2018. Almost all public opinion surveys show that the new tax bill has the least amount of popular support in the history of tax bill legislation.

It also is worth noting that President Trump and his family, along with other members of his administration stand to gain significant reductions in their taxes from the new bill, for example through changes in the estate tax, and the special exemptions for the type of businesses that they own.

Engagement Resources

  • Tax Policy Center: (www.taxpolicycenter.org) – The Urban-Brookings Tax Policy Center aims to provide independent analyses of current and longer-term tax issues and to communicate its analyses to the public and to policymakers in a timely and accessible manner. The Center combines top national experts in tax, expenditure, budget policy, and microsimulation modeling to concentrate on four overarching areas of tax policy that are critical to future debate.
  • Institute on Taxation and Economic Policy (www.itep.org) – The Institute on Taxation and Economic Policy (ITEP) is a non-profit, non-partisan research organization that provides timely, in-depth analyses on the effects of federal, state, and local tax policies. ITEP’s mission is to ensure the nation has a fair and sustainable tax system that raises enough revenue to fund our common priorities, including education, healthcare, infrastructure and public safety.

This brief was compiled by Ron Israel. If you have comments or want to add the name of your organization to this brief please contact emily@usresistnews.org.


 

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