Trump creates damaging uncertainty

The biggest problem facing the U.S. is not immigration, health care or a trade war.

It is uncertainty.

The inability of business leaders, pension fund managers, foreign government heads, Congress and individuals to count on usual practices and policies has created deep worries.

The stock market is not a reliable measure of all these concerns, but its deep decline reflects that uncertainty.  Even its recovery might do little to restore more confidence about the future.

The source of the uncertainty is President Trump.  He makes the abrupt changes in policy and disregards others – leaders of Congress, heads of foreign governments, economic chiefs.  Decisions are suddenly announced, often via Twitter.

Nowhere is this more evident than in Trump’s approach to the economy.  In business, he is accustomed to borrowing money to finance his real estate purchases.  He favors low interest for his business interests and has naturally become an advocate of the Federal Reserve keeping interest rates low.

The Fed has gradually raised interest rates from near zero, where they were set during the recession.  They remain at historically low levels.  But Trump blames falling stock prices on the modest rate increases and wants to fire the Fed chair, his own choice, in the mistaken belief he can change Fed policy.

The law intentionally makes Fed governors independent of political leaders.  Until now, no president has ever threatened to fire the Fed chair.  Trump’s menace and not the one-quarter-of- one-percent rate increase is a cause of market uncertainty and deep decline.

The partial government shutdown probably has little direct effect.  But the president’s insistence that the Democrats help him keep his signature campaign promise to build the Wall on the Mexican border creates uncertainty.  He allowed the shutdown when they would not agree to $5 billion for the Wall.

Why the uncertainty?  He had previously rejected the Democrats’ proposal of a full $25 billion for the Wall in return for creating a long path to citizenship for the children of illegal immigrants who had been raised in the U.S.  The shutdown was caused by uncertainty about just what deal he would accept.

He suddenly announced he would withdraw American troops in Syria. That has thrown the Middle East into turmoil and uncertainty about the future in Syria, because those troops were a check on both ISIS and the Russians.  He claimed victory over ISIS, “my only reason for being there during the Trump presidency.”

While he had the right to make the decision, he saw it in personal terms – “my only reason” – and not as a matter of national concern. That decision drove Secretary of Defense Mattis to give notice.  More uncertainty.

Then, when the media interpreted Mattis’ resignation letter as a rebuke of Trump, the president abruptly fired him, eliminating the possibility of an orderly transition in this most sensitive position.  More uncertainty.

Mattis was the latest in a parade of top Trump appointees to either quit or be fired.  Several cabinet agencies now lack confirmed leaders.  Trump is looking for his third chief of staff.  More uncertainty.

In trade, Trump appropriately took on China, which abuses its economic relationship with the U.S.  But he targeted all major American trading partners on the unbelievable grounds that their exports threatened U.S. national security. 

His attacks on allies, his failure to consult with them and his support for extreme right wing groups in their countries all create considerable worries in world affairs.  He has belittled them, even tossing a couple of pieces of candy to the German Chancellor to show his low regard for her.  More uncertainty.

He induced North Korea to suspend nuclear tests and missile launches and declared victory. Meanwhile, the secretive country built more launch facilities and a major nuclear test center.  

Trump’s declarations of success allowed China and Russia to ignore many of the sanctions on North Korea.  In Asia, more danger and uncertainty.

American voters say they want the two parties to cooperate to produce results. The recent criminal justice reform bill proves they can.  But the president repeatedly attacks the Democrats in the apparently mistaken belief he can intimidate them into going along with his demands.  They won’t.  More uncertainty.

Why should the average American care?

Uncertainty threatens the economy.  It will discourage investment, resulting in fewer jobs.  The worldwide trade war will cause price increases.  Government will be increasingly deadlocked.  As the stock market falls, pensions will lose value.  Risks abroad will increase and the U.S. will have to go it alone.

The only certainty may be the uncertainty Trump creates.

‘Elections have consequences’ – more partisan warfare

“Elections have consequences, Mr. President.”

Senate Democratic Leader Chuck Schumer reminded President Trump of that fact when they met to discuss border security.  He warned the president that politics in Washington will change as control of the House passes to the Democrats and his party’s Senate minority can stop many bills there.

Trump had enjoyed almost automatic support in Congress when both houses were under GOP control.  If he now thought he could sweet talk Democrats, the target of his most heated campaigning, to support him, Schumer would educate him on divided government.

Many Americans like the idea of divided government, believing it will promote compromise and produce needed legislation.  But Mr. Trump’s own party promptly revealed that belief was a mere illusion.  Politics is not about public service.  It is about power.  Politicians today don’t readily yield power.

In Michigan and Wisconsin, Democrats took governorships from the GOP.  In both states, Republican legislatures hastily passed laws stripping governors of their powers.  Outgoing Republican governors signed the bills. 

In the U.S. House of Representatives, where Republicans had whitewashed an investigation of Russian meddling in the 2016 elections, they still took time as they went out the door to hold more hearings on Hillary Clinton’s home email server.

The two states and the House may see the situation flip under the Democratic control.

The parties can cooperate.  The only congressional review of Russia’s 2016 election interference is being carried out by the Senate Intelligence Committee, where the two party leaders work together.  They are more worried by the threat to the American democracy than to either party.

But the general rule is partisan warfare.  Senate GOP Majority Leader Mitch McConnell whips Trump’s nominees onto federal district courts at an amazing pace, faster than ever before.  He wants no debate on them.  He is surely making some mistakes in his haste, but it is impossible to know who’s unqualified.

Like the Michigan and Wisconsin moves, he wants to reduce the Democrats’ future power should they win the presidency and other offices in 2020.  He blocked an Obama Supreme Court appointment, leaving a vacancy for more than a year, to await Trump appointees.

If there is any state where the consequences of elections were clear, it’s Maine.  There may have been no “blue wave” in the country, but there was one in Maine.  The governor and both Houses of the Legislature plus an added congressional seat are now under Democratic control.

The effect is immediate.  Governor-elect Janet Mills has named an experienced human services chief who is focused on, well, human services.  The new department head replaces a commissioner who seemed dedicated to reducing help for those in need.

Maine’s lesson may be that elections have consequences only when there’s a change in political control.  If the result is divided control, compromise may be more a matter of luck than responsiveness to the voters’ desire for results.

The next elections, less than two years away, may be a major test of Schumer’s message and Trump’s appeal.

The Republican Party is now largely Trump’s party, and he is expected to lead it into the campaign, unless he is derailed by his own actions.  Congressional and state candidates are likely to be his loyal supporters.  From the GOP viewpoint, the desired consequences would be more and better Trump.

The Democrats have a bigger tent, but can only have one presidential candidate.  Will they go with a candidate of change, like Sen. Bernie Sanders, or a more centrist leader, like Minnesota Sen. Amy Klobuchar or Ohio Sen. Sherrod Brown?  Either way, Democrats want to end up fully in charge.

There was one sleeper in this year’s elections, and it could produce the greatest consequences.  Following the 2020 elections, all states with two or more House members must redraw their congressional district lines to ensure each has the same population.  Traditionally, that is done by the legislature and governor.

In recent years, the GOP in states including Texas, North Carolina and Wisconsin has designed districts to its liking.  To avoid partisanship, under recent Supreme Court decisions, more states will let independent bodies set district lines.

If Democrats control state governments after 2020, they will run redistricting, influencing the composition of the House of Representatives for a decade.  This year, seven Democratic governors replaced Republicans, and they may be key players in drawing the new lines.  State legislative elections in 2020 will matter. 

Yes, Mr. President, elections have consequences.  We are about to find out the many ways that works.

“It’s the economy, stupid”—good news turns bad

“It’s the economy, stupid.”

That’s the famous quote attributed to a top Bill Clinton aide in 1992, when he was trying to come up with slogan for the presidential campaign.

It is still true.  While the focus may be on immigration or President Trump’s problems, the issue facing the U.S. and underlying the next campaign is the economy.

Trump claims and gains credit for great economic success for two reasons. 

The recovery from the deep recession has peaked in the first two years of his term.  He gets credit for it, though the low interest rates set by the Federal Reserve and the Obama-era stimulus got the recovery under way well before Trump took office.

Trump also is hailed for the tax cut.  Devised by congressional Republicans, he signed it into law.  It stimulated corporate profits and the stock market.  It gave taxpayers more spending money, boosting sales and cutting unemployment to the bone.  It did not pay for itself.

Economic growth will now begin to slow.  Given its size, the American economy cannot be fine-tuned.  Sometimes it heats up too quickly, causing inflation.  Sometimes, it grows slowly or idles, causing unemployment.  The natural swings are called the “business cycle.”

It now appears that the business cycle will soon decline from its sustained growth.  Through tax policy and the Fed’s money policy, the swing could be limited.  Trump, who was a major business borrower, prefers low rates and may be pleased with the Fed as it keeps rates down to fight the slowdown.

Added to the business cycle is uncertainty, which worries businesses and markets.  When they cannot enjoy confidence in economic policy, they tend to hold back, reducing activity and investment. 

Uncertainty makes planning ahead far more difficult.  Because the stock market is supposed to forecast the future, it may slump or grasp at varying signs from day to day.

Where are we now?  Trade and immigration policies are sending signals that create uncertainty.  Tax cuts have boosted the annual federal deficit, leaving no room to deploy more of them without cutting Social Security and Medicare, which looks politically impossible.

The U.S. has real trade issues with China, so has good reason to be tough.  But Trump seems to think that any American negative balance in trade in goods must be ended, and against all countries, not only with China.  “I am a tariff man,” he says. 

Trump focuses on trade in goods, not services or investment.  He sees the value of imported goods as a sign the exporting country is winning an economic war.  He ignores any offsetting value of U.S. exports.  He likes tariffs, because they bring in federal revenues, helping to offset the deficits from tax cuts.

He overlooks the impact on American exporters who immediately face retaliation from countries whose exports must pay higher tariffs.  American farmers see their soybeans rot and manufacturers lose equipment exports when other countries retaliate against Trump’s moves.

When the president threatens even higher tariffs, he breeds uncertainty among as U.S. exporters wait to see what happens.  They worry about their losses. When they worry, investors worry, and the stock market flutters and falls.  Pensions are dependent on the market and suffer, making retirement more risky.

Add the immigration situation.  It is likely that a majority of Americans worries about excessive, illegal immigration.  Stemming all immigration is a central element of Trump’s political appeal.  To prove his seriousness, he expels long-term productive contributors to the economy as both workers and consumers.

Low unemployment is appealing, but the country is reaching the point where jobs go unfilled for a lack of workers.  Blueberries, a major Maine product, went unharvested this year without migrant workers.

Some may worry about China displacing the U.S. as the world’s largest economic power. Not only are there a lot more Chinese, but U.S. anti-immigration policy would result in a gradual decline in the American population, reducing the size of the domestic market and the ability to produce for the world market.

Dealing with this range of economic issues is complicated and difficult.  Like it or not, the U.S. is part of a world economy.  Easy political promises may have easy popular appeal, bringing cheers from the crowd, but may prove impossible to fulfill.  There is no silver bullet. 

Isaac Newton, the great British physicist, found that every action has an equal and opposite reaction.  The task is to understand effects of actions.

Trump’s policy is “America First,” even if it isolates the country.  The reaction to “America First” may be economic chaos and decline.

Congress, Maine need more, better term limits

Who needs term limits?  We got them this year without a law.

Term limits are supposed to ensure turnover among elected officials, breaking the power of a few bosses and bringing in new legislators attuned to the popular will.  They don’t exist at the federal level, and the Maine version needs a truth-in-labeling review.

This year, without any formal requirement to retire members of Congress, voters produced 100 new faces in the House of Representatives and 10 new senators, where the Republicans gained seats.

The Democrats picked up 40 House seats, resulting in a shift of party control.  President Trump’s waning popularity in suburban districts gets much of the credit.  To be fair, the president’s party historically loses some House seats, when candidates lack the presidential candidate’s coattails.  But this setback was bigger than usual.

Many senior GOP House members decided not to seek reelection.  Some were obviously unhappy about life with Trump.  Others, finished being committee chairs, opted to cash in on their experience. The political rise of women, as candidates and voters, led to House-cleaning.  

The model for term limits was George Washington who gave up the presidency after two terms, though he would surely have been able to be reelected.

Washington’s precedent was the unwritten term limit for the president until Franklin D. Roosevelt was elected four times.  That prompted a constitutional amendment limiting the president to two terms.  No other limits were adopted, even for the vice president.

The argument against term limits is that officials become experts on issues and on how government works, when they hold office longer.  Otherwise, short-termers might be open to influence by bureaucrats or lobbyists.

In practice, legislators leave the details of lawmaking to bureaucrats and are open to influence by lobbyists who contribute major funding to their campaigns.  The promised benefits of holding office for long terms appear to work better in theory than in reality. 

Political courage suffers when an official focuses on political survival.  Look at GOP Senators Bob Corker of Tennessee and Jeff Flake of Arizona, the two most outspoken critics of their party’s president.   They could only challenge President Trump, because they were not seeking reelection this year.

There is no chance the necessary constitutional amendment to make term limits the general rule would be adopted.  That would require the consent of the very members of Congress whose terms would be affected.

House Republicans provide a partial solution.  They limit members to six years serving as a committee leader.  Then, each must cede the seat to another Republican.  No law is required for a party to set such a rule for its own members.

One result is that, after a chair’s term ends, he or she may be reluctant to fall back into the ranks.  Instead, they often retire and take a job where they can use what they have learned in government.  Though turning government service into personal profit is less than ideal, it does ensure legislative change.

Concerns about Nancy Pelosi as House Democratic Leader or Mitch McConnell as Senate Republican Leader could be eliminated if they were subject to similar term limits.  However experienced they are, they would be forced to allow younger people to learn about leadership.

The effort to replace Pelosi this year has fallen short.  Some new Democratic members, who do not back her, are likely to be needed to put her over the top when the full House votes in January.  Second District Rep. Jared Golden and his anti-Pelosi allies could offer their support in return for a deal on leadership term limits.

Change would also result from bringing all congressional districts down to be as close as possible to equal population.  Seats can be added by Congress itself, something it has not done for a century.  There would be roughly 100 new faces in the House.  

Today’s leaders hold on thanks to the reliable support of their long-term colleagues.  An enlarged and redistricted House could eliminate many of today’s safe seats.  With more elected officials seeking top roles, leadership limits become possible.  So, even without formal term limits, the parties can make them happen.

In Maine, a person is limited to only eight years as a House or Senate member.  But they can then jump to the other house and back again endlessly and some do.  After two terms, a governor can take a term off and run again, as Gov. LePage now threatens.  

Maine law makes a mockery of state term limits.  The voters could fix this sham.