US Economy

Column: Dems should put Russia, corruption and tax returns on agenda w/Trump

Today, US News and World Report published Simon's latest column,“Standing Firm.” In the column Simon recommends that in the coming negotiations with President Trump on a wide variety of issues – including the budget, debt ceiling, infrastructure, improving the Affordable Care Act and even matters of war and peace – Democrats should add three more important issues to the agenda:

1. Full presidential cooperation with the various probes into Russian interference in U.S. politics.
2. Commonplace financial transparency - release of tax returns, public audit of Trump's holdings.
3. Cessation of presidential use of his private businesses for matters of state.

To continue reading, please refer to the US News link. You can Simon's previous US News columns here.

Donald Trump and Paul Ryan's Plan to Put Foreign Investors First

The “Border Adjustment Tax” (BAT) endorsed recently by President Trump is his administration’s first foray into international economics. It is an inauspicious start.

BAT advocates like House Speaker Paul Ryan promise it will cut the trade deficit by making U.S. exports cheaper abroad and foreign imports more expensive here. The truth is, a BAT won’t much affect U.S. exports or imports, and it certainly won’t create jobs. It would produce a large stream of new federal revenues, and it could trigger retaliatory tariffs on some U.S. exports. A BAT also would enrich a great many foreign investors and companies, and leave a lot of American investors and large companies poorer. All told, it’s the kind of “bad deal” that Mr. Trump once railed against.

Mr. Trump and Speaker Ryan never mentioned a BAT until recently, and the reason they like it now is that it’s a cash cow to pay for their sharp cuts in corporate taxes. The Trump-Ryan BAT would give U.S. producers a 20 percent rebate on the wholesale price of any goods or services they export – 20 percent, because that’s the GOP’s preferred corporate tax rate – and impose a 20 percent tax on foreign goods and services imported here from abroad. It would raise trillions of dollars, because we import about $500 billion more per-year than we export.

For conservatives at least, all those revenues should be a red flag. In a populist period, a subsequent President and Congress may well decide to raise corporate taxes — and when they do, the BAT’s fat revenue stream could well go to fund progressive causes.

Mr. Trump still has no Council of Economic Advisers, so maybe he believes that a BAT will spur U.S. exports and create jobs. Even Peter Navarro should to be able to tell him why that won’t happen. At first, a BAT would strengthen demand for U.S. exports and weaken demand for foreign imports here. But those shifts in demand would quickly strengthen the dollar and weaken foreign currencies, perhaps enough to offset the BAT’s initial impact on import and export prices. In theory, the currency movements triggered by the changes in prices brought about by the BAT should restore pre-BAT prices for both imports and exports, so the only change would be a lot of new revenues from taxing net imports.

In practice, the BAT’s impact on the dollar and U.S. trade is a roll of the dice. As Federal Reserve chair Janet Yellen noted recently, no one knows how closely the currency changes will mirror the BAT’s direct effects on prices. If they overshoot, U.S. consumers will pay more for imports; if they undershoot, U.S. export prices won’t fall much. On top of that, no one knows how much of the BAT tax U.S. importers will pass along to American consumers, and how much of the BAT rebates U.S. exporters will pass along to their foreign customers. Finally, painful retaliation might follow, since China and others won’t take kindly to paying a 20 percent tariff on their exports to the United States, and China’s competitors won’t like the BAT’s substantial devaluation in the yuan-dollar exchange rate.

One effect is certain: The BAT will harm U.S. investors and reward foreign investors as the currency changes reduce the dollar value of U.S.-owned assets abroad and increase the foreign-currency value of foreign-owned assets here. The Bureau of Economic Analysis tells us that in the second quarter of 2016, Americans held foreign stocks, corporate and government bonds, and derivatives worth $12.9 trillion; and foreign-owned financial assets in the United States totaled $20.3 trillion.

If we assume the Trump-Ryan BAT leads to a 20 percent increase in the value of the dollar and a corresponding 20 percent decline in the trade-weighted value of foreign currencies, it would reduce the value of U.S.-held financial investments abroad by nearly $2.5 trillion and increase the value of foreign-owned financial investments here by more than $4 trillion. What kind of deal is that, Mr. President?

The trillion-dollar losers will include U.S. investors in European or Asian mutual funds; U.S. companies with profitable foreign subsidiaries, from Microsoft and Facebook to Coca Cola and Pfizer; and U.S. banks that lend to foreign companies. The trillion-dollar winners will include foreign investors with U.S. mutual funds; foreign companies with major American subsidiaries, from Toyota and Anheuser Busch to Unilever and Phillips; and foreign banks who lend to U.S. companies.

Perhaps the best motto for the Trump-Ryan BAT is “Put Foreign Investors First."

This post was originally published on Dr. Shapiro's blog and was a featured op-ed in The Hill.

Trump's Great Betrayal

A new statement from NDN’s Simon Rosenberg:

“Candidate Donald Trump promised every day Americans his Administration would fight for them. Two months into his Presidency it is clear he has no intention of following through on his promise. These early months of the Trump Presidency could become known as “The Great Betrayal.”

Fair? Let’s take three simple examples:

Health Care – Candidate Trump promised health reform that would cover everybody, lower costs and not cut programs like Medicare and Medicaid. The House GOP health care bill he has endorsed and promoted would dramatically increase the number of uninsured (25m, 7% of US population); would increase costs for everybody, particularly for older people; and would savagely cut Medicaid. His plan would make tens of millions of those people he pledged to fight for sicker and poorer, while giving hundreds of billions of new tax cuts to wealthy people like those he hangs out each weekend at Mar-a-Lago.

Few proposals in American history could do as much harm to working people as the health care plan championed by Donald Trump these past few weeks. It is literally the opposite of what he promised he would do.

His Budget – The partial budget document Trump released last week would make massive cuts in education and job training, transportation and infrastructure, simple environmental protections and many other programs critical for working people to live good and decent lives. Whether working people would get a tax break for all of this is unclear as he hasn’t released a complete budget. But if his budget follows the strategy of his health care plan expect the benefits to flow to those already wealthy with little left for those struggling to get by.

His Staff – Despite his campaign rhetoric, the Trump Administration led by the wealthiest collection of Americans to every lead an American Administration in the modern era of American politics, and perhaps ever. It is full of Wall Streeters, including 5 former executives of Goldman Sachs. Working class champions are as hard to find in the early Trump Administration as those immigration documents of Melania’s he promised back in August.

Based on what he has done in his first months in the White House, it is now clear that Donald Trump lied to the American people about his intentions as President. Rather than championing the working man, Donald Trump has backed proposals that would transfer hundreds of billions of dollars from every day Americans to those already wealthy and well off. It is an astonishing and historic betrayal of the people he promised to serve, leaving tens of millions sicker and poorer and even more with reduced life opportunities. Donald Trump hasn’t shown respect to those he pledged to fight for, he has shown them hostility and contempt. He is far more venal Robber Baron than virtuous populist, far more Calvin Coolidge than Andrew Jackson, far more an oligarch than a man of the people.

I am positing for others to debate that no President in American history as veered as far from the core promises and message of his campaign as Trump has in his first few months. It is Trumpian in its scale, something that I hope becomes known as “The Great Betrayal.”

Memo: In A New Global Age, Democrats Have Been Far Better for the US Economy, Deficits and Incomes (Updated)

Overview – With the debate in Washington soon to turn to budget and economic matters, we have updated and are releasing a memo we first produced in 2016. This short memo looks at the economic performance of the two American political parties when in the White House since the end of the Cold War.

We use 1989 as a starting point for comparison because when it comes to the American and global economies, the collapse of Communism and the non-aligned movement ushered in a new, truly global economic era, one very different from the one that came before. It is thus fair to see how the two parties have adapted to the enormous changes this new era has offered, and whether their policies have helped America prosper or struggle as we and the world changed.

As you will see from the following analysis, the contrast between the performance of the Democrats and Republicans in this new economic era is stark: 2 GOP Presidencies brought recessions, job loss, higher annual deficits, and struggle for workers; the 2 Democratic Presidencies brought recovery and growth, job and income gains, and lower annual deficits.

Based on these findings it is fair to assert that over the past generation the Democratic Party has been far more effective at crafting effective responses to a new economic era than the Republican Party. This case is bolstered, of course, when recalling the GOP’s spirited predictions of economic calamity when opposing both the 1993 Clinton economic plan and budget and the 2009/2010 Obama stimulus and “job-killing” Affordable Care Act. The Republicans have gotten it wrong now in four consecutive Presidencies.

While it will not be the subject of this short memo, our findings raise questions about whether the characterizations of the US economy as one not producing income and wage gains either over 40 years or over the past 15 years are accurate. It would appear that a more accurate description of the US economy in recent years is that with smart policies, Americans can prosper even in a more challenging and competitive global age.

We hope that commentators and policy makers keep the findings of this memo in mind as the Republicans roll out their budget and economic plans in the coming weeks. The Party’s track record on economic matters in this new age of globalization is not something that should inspire confidence in voters looking for plans that create jobs, raise wages and lower the annual deficit. It has been the other Party that has done that.

Column: "Chin up, Democrats"

US News and World Report has published Simon's tenth column, "Chin up, Democrats," in his weekly Op-Ed series that will every Thursday or Friday.

Be sure to also read his recent column, "An Independent Audit of Trump's Companies is Now Necessary" in which Simon argues that Trump's plan to keep all of his holdings establishes new far weaker norms, encourages public corruption, creates many new terror targets, and exposes the US to exploitation by foreign governments.

An Excerpt from "Chin Up, Democrats"

On Tuesday I tweeted out a link to a new CNN poll showing that 65 percent of Americans believe Obama's presidency was a success. Among the responses was one from a conservative friend who cited the now familiar litany of statistics showing how much power Republicans had gained during his eight years in office. He ended his tweet with "Thanks Obama."

This exchange captures the Democratic Party's current dilemma. For while the Republicans have more power, the Democrats have been by other measures a far more constructive and successful party. For the second straight administration, a young, talented Democratic outsider was elected to clean up messes left by Republicans who struggled to govern. Both times these young telegenic leaders, despite extraordinary Republican opposition and some missteps along the way, left the country far better than they found it. Both left office with some of the highest approval ratings and people saying their presidencies were a success of the entire post-WWII era of American politics. This is no small achievement.

And for all the GOP stats about decline, we have our own set that paint a more nuanced picture – more votes in six of past seven presidential elections, a feat only matched once in all of American history; a 14-point advantage (53/39) among under-45 voters who will be the dominant force in American political life for the next generation or two; a far more popular and admired party; gains in the Senate and House in 2016, not losses; a huge array of popular and well-regarded national figures.

As Trump ascends into the presidency, Democrats would be wise to give themselves far more credit for a job well done than we hear in the current discourse. Looking back over the past 80 years, there is an argument to be made that the modern Democratic Party has done more to improve the lives of people here and abroad than any organized political force in human history. In addition to leading a decades-long struggle to defeat totalitarianism in various forms, we imagined and built a global order that has ushered in an age of almost unimaginable human progress, peace and self-determination. Billions of people today across the world today have the education and opportunity to contribute to the lives of their countries; billions are living in some form of democracy where they can cast a ballot for their leaders; no great war has engulfed the planet; billions have access to life-saving medical care and modern technologies that are making the act of living itself far more fulfilling, and long.

To continue reading, please refer to the US News link. You can Simon's previous US News columns here.

Column: Rediscovering the Democrats' North Star

US News and World Report has published Simon's seventh column, "Rediscovering the Democrats' North Star," in his weekly Op-Ed series that will every Thursday or Friday through the end of the year.

Be sure to also read his recent column, "Trouble Ahead - 4 Scandals That Could Alter the Trump Presidency," in which Simon looks at four looming scandals that could alter the trajectory of the Trump Presidency – unprecedented levels of public corruption, collusion with Russia to alter the outcome of the election, the FBI’s late intervention and Melania’s immigration troubles.

An Excerpt from "Rediscovering the Democrats' North Star"

To successfully counter what will be a very aggressive Republican legislative agenda next year, Democrats will be have to be unusually focused and disciplined. At a strategic level we will not just have to make clear what we are against, but also what we are for, what we will do different if once again given the chance to govern. With all that in mind, I offer up an early sketch of a focused agenda that can help animate the Democrats' opposition in the coming years:

Prosperity and Security. While there are many issues we must tackle together in the coming years, there are two that matter more to the nation and the American people themselves than the others – getting ahead, and feeling safe from threats.

The good news for Democrats is that our track record on the economy and keeping us safe is strong, and gives us a lot to work with going forward. On the economy, Obama will leave office with the nation at near full employment, GDP at a robust 3.2 percent, incomes rising since 2013, 25 million more with health insurance, his "all of the above" energy strategy having made us more energy independent while accelerating the growth of renewables, the deficit is half of what it was and the stock market at all-time highs.

For Democrats, this is second consecutive stint in power that we have left the economy far better than we found it. We simply have to become more purposeful about telling this story – since the end of the Cold War there has been more jobs, rising incomes and lower deficits with the Democrats, and job loss, declining incomes and higher deficits with the Republicans. We enter the coming debates about the budget and the economy as the only party which has successfully produced sustained prosperity for America over the past generation of our political life, and we cannot let up in this fight.

On "security," as it has been discussed in this year's campaign, Democrats have simply ceded too much ground to the Republicans of late. By most measures Americans are far safer today. Violent crime, killings of police, Americans killed by terrorists, military causalities are all far lower than during the George W. Bush administration, and in some cases, at all-time lows. The net flow of unauthorized immigrants into the U.S. has dropped from 400,000 a year net under Bush to zero under Obama – a remarkable achievement. Immigrants commit crimes at rates lower than native born Americans, and the economic achievements of the two largest immigrant groups – Asians and Hispanics – are impressive by any measure. Despite historically high levels of immigration, the American "melting pot" has once again done its thing, leaving us a better, stronger and more diverse nation than before. These accomplishments are meaningful, and well worth defending.

On the Middle East and terrorism, Barack Obama will leave office not the first nor the last president disappointed about what was achieved. But on the rise of the Islamic State group, we have to recognize that it grew from the internal political failings of two sovereign nations, Syria and Iraq, caught in the middle of a broader regional struggle between Sunni Arabs and its proxies and Iranian supported Shia forces. Creative thinking is needed here from all sides, thinking that recognizes that there is no "bombing them into the stone age" military solution to the region's troubles. The path forward involves expanding the increasingly successful military and counter-terrorism already in place, vigorously pursuing a regional reconciliation between Sunni and Shia, vigilant efforts to counter the Islamic State group's online reach, and Marshall Plan like efforts to modernize and strengthen those nations in the region wanting to put this violent age behind them.

To continue reading, please refer to the US News link. You can Simon's previous US News columns here.

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