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Economy

President Trump, this is what happens when you meddle in the economy

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President Trump proved me both wrong and right simultaneously this week: right because the consequences of his actions are precisely what I predicted they would be if he decided to go there, and wrong because for some reason I haven’t fully accepted that if you don’t think Trump will do something, he almost inevitably will.

Earlier this week, I was discussing the highs and lows of a Trump presidency with my co-workers. Some of the major highlights of his rookie year in office were the massive rollbacks in business regulations and record-breaking stock values. I argued that the market’s rise can be attributed not necessarily to anything Trump has done, but specifically to what he hasn’t done. Where investors are confident that they will not be burdened by regulations, penalized for expanding their wealth, and sideswiped by unpredictable and unstable economic policy, they feel confident investing in the economy, and the national market booms.

Any time the government gets overly involved in business, business declines — especially to the detriment of middle-class workers. This has been established time and time again through the Smoot-Hawley Tariff Act of 1930, mandatory wage and price controls under Hoover, the Wagner Act of 1935, the Bush tariffs of 2002, subsidized subprime mortgages leading up to the 2008 housing crisis, and the Fight for 15, which is estimated to cost around 400,000 low-wage jobs by 2022 in California alone.

My co-workers agreed. Not only is it logical, but it’s observably true. The 1987 crash could’ve had far more dire results, after all, if Reagan hadn’t kept his distance from corrective measures.

But leave it to Trump to ruin one of the approximately four good things he had going for him.

When the president announced on Thursday that he would be imposing steel and aluminum tariffs, the Dow Jones nosedived 600 points, recovering about 150 of those by the end of the day. This just one week after his announcement of the imposition of solar panel and washing machine tariffs.

All told, the Dow has fallen 1,200 points since Monday, and it will be far worse once these tariffs are officially imposed. Investors are uneasy, but they can at least hold onto a semblance of hope that the president can be talked out of his suicide mission.

Not only is Trump’s claim that a country without steel isn’t really a country patently ludicrous, but so is his assertion that we can have free, fair, and smart trade together. “Fair” means “controlled;” “smart” means controlled;” “controlled” means “not free.”

As for his claims that the steel industry is in bad shape, he apparently hasn’t cracked open a single study on the matter. As amassed by Daily Wire, steel production rose last year, the U.S. handily controls the market on steel, the nation’s leading steel manufacturers have seen exponential growth in stock, earnings, and wages, and by and large any loss of steel jobs can be attributed to technological advancements (which lead to job growth in other fields) rather than trade deficits.

Speaking of supposed trade deficits, President Trump claims that spending more on a country’s goods than they spend on ours is “not fair or smart.” This is a fundamentally flawed approach to business. I’ve given far more money to Costco than it’s given to me, but presumably, I chose to spend that money because I valued the product higher than the purchase price. In a voluntary transaction, assuming no fraud, both sides are better off.

Trump’s insistence on “America First” to the detriment of America reminds me of one of my local city council members, who campaigned (and won) on the promise that she would only shop within our city limits, even cutting up her Costco card (the nearest Costco is two cities away, a roughly fifteen-minute drive) to emphasize the point.

Here’s the problem: there are hardly any shops or restaurants in my city, due to exorbitant taxes and a hostile business environment. We boast a half-dozen chain restaurants and a Wal-Mart next to our freeway exits, but everything else is an absurdly priced mom and pop shop, and I don’t have the money for that kind of constant virtue. As such, my wife and I almost exclusively drive two cities up on date nights to where we can find virtually every kind of restaurant and store we could hope for.

Capitalism thrives on providing the greatest service for the lowest price, incentivizing innovation and public accommodation. Trade wars excuse local stagnation, allowing businesses to become complacent and cease to progress. That is not good for any economy.

Moreover, foreign imports affect domestic jobs far more than Trump gives them credit for. Tariffs incur higher costs on manufacturers, making production more expensive. This will lead to either price hikes, wage cuts, layoffs, or a combination of the three. Steel tariffs will cost thousands of American auto jobs, and aluminum tariffs will force significant layoffs in the beer industry.

This is rudimentary economic awareness, of which it appears Trump has none.

Finally, this proposal has major international implications. Jean-Claude Juncker, president of the European Commission and leader of the E.U., has declared that if Trump wants a trade war, he’ll get one, according to a New York Times report. Juncker has announced tariffs on Harley-Davidsons, bourbon, and blue jeans, with an intention to match trade penalties tit for tat with the United States.

Still, Trump insists that “trade wars are good and easy to win.” Perhaps he could name one if he’d ever read a book.

One of the great lies of modern America is that free markets led to the Great Depression. In reality, a crash that could have ended after only a moderate recession resulted in a massive, decade-long depression thanks to government intervention by way of a trade war, job stimulus, and the New Deal, and it only ended thanks to World War II’s global devastation and its reallocation of twelve million workers into the military. Trump is on the verge of creating his trade war, and with his proposed $1 trillion infrastructure package, look for the sequel to the Hoover Dam.

If Trump continues down this path, things will get much worse before they get better. Hopefully, if dissenting voices are loud enough, the president will be dissuaded from this disastrous course.

Those who don’t know history are doomed to repeat it, and those who claim to not read books because they already arrive at correct decisions “with very little knowledge other than the knowledge I [already] had, plus the words ‘common sense,’ because I have a lot of common sense and I have a lot of business ability,” don’t know history and clearly don’t know economics.

Richie Angel is a Co-Editor in Chief of The New Guards. Follow him and The New Guards on Twitter, and check out The New Guards on Facebook.

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Democrats

Veronique de Rugy: Green New Deal would be hundreds of TRILLIONS of dollars in federal commitment

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Veronique de Rugy Green New Deal would be hundreds of TRILLIONS of dollars in federal commitment

If there’s a word that’s not necessarily negative one could use to describe the Green New Deal, it would be “ambitious.” The deal has so much wrapped into it that it’s hard to tell which components are designed to save the environment and which ones are intended to destroy the economy.

Estimates put costs for the “green side” of the resolution at somewhere between $12-$20 trillion. Then, there’s the Medicare-for-All component that is estimated at $32 trillion over a decade.

And that’s just the start.

This isn’t just a “green” deal. It’s a hodgepodge of policy proposals that include massively growing the welfare state, inserting government even more into the job markets, and a universal basic income that they refuse to actually call a universal basic income. The much-maligned FAQ that was posted and quickly removed from the website of sponsor Alexandria Ocasio-Cortez (D-NY) mentioned paying people who were unable or even “unwilling” to work.

“Even in the best case scenario where you substitute a UBI for all the other forms of welfare, it’s insane,” said Veronique de Rugy, Senior Research Fellow at the Mercatus Center at George Mason University, on ReasonTV.

But here’s the problem. The Green New Deal doesn’t substitute a universal basic income for other welfare programs. In the Green New Deal, the programs recommended are supposed to be additions, not substitutions.

“It’s a really hard system to support even in its ideal form,” de Rugy continued. “Then there’s this Green New Deal version which doesn’t even seem to entertain this notion of actually substituting for all the rest, so it’s on top of what we have now.”

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The real question we need to ask is whether or not the Democratic Party is actually going to support this. In its current form, the Green New Deal is a fantasy, and perhaps that’s what the more-sane Democrats are shooting for by supporting it. By giving it their attention now, they can work their way down to more reasonable proposals for everything from environmental protection to job creation programs to different versions of socialism.

In other words, they may be using the hyper-leftism of the Green New Deal as a gateway to get to the palatable leftism of what’s quickly becoming mainstream socialism.

The Green New Deal shouldn’t scare conservatives because it can’t happen. What should concern us is the end result negotiated down from this starting point. Given the GOP’s negotiating track record lately, we don’t know what we’re going to get when the Green New Deal is trimmed down to reality.

 


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Democrats

Even Drudge can’t deny the insane spending by Washington DC today

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Even Drudge cant deny the insane spending by Washington DC today

What did GOP control of the House, Senate, and White House do to spending and the national debt? Did Republicans demonstrate the fiscal responsibility that has been one of their alleged traits for decades? Did they match the spending under Presidents Bush and Obama, maintaining the status quo? No, and no. They looked at the spending and debt accumulation of the past and said, “Hold my beer.”

It’s not just the Republicans’ fault, but asking Democrats to stop them when they’re on a spending spree is like asking a bartender to stop serving alcohol. It just doesn’t feel right to them and the results of bipartisanship have been quite apparent, as my friend Daniel Horowitz noted on Conservative Review:

The bipartisan spending binge is now worse than under Bush and Obama

https://www.conservativereview.com/news/bipartisan-spending-binge-now-worse-bush-obama/It feels like it was yesterday when I was watching the news as a kid with my parents in 1995, listening to Newt Gingrich, during the infamous shutdown fight, warn about the dire consequences of crossing the $5 trillion debt milestone. It feels like it was yesterday when I was writing press releases for candidates in “the year of the Tea Party” on how Obama and the Pelosi Congress took the debt to $14 trillion in such a short period of time. Now, over eight years into varying degrees of GOP control of Congress and the White House, we have crossed the $22 trillion mark, expanding the debt more rapidly than at any time in our history. Whereas the debt exploded by $5 trillion during Bush’s eight-year tenure, a shocking figure at the time, it has now increased $8 trillion just since Republicans controlled the House in 2011 and by $4 trillion over the past four years, since they controlled at least two of the three political organs of government.

It has become so bad that even Matt Drudge, whose conservative news aggregator Drudge Report has been consistently defending President Trump since well before the 2016 election, is starting to ask questions.

Drudge Spending Binge

Washington DC has had a spending problem for a century. Republicans run on solving this problem during election time, but they’re acting like Democrats between elections. It’s time to let them know we’re watching and we’re not happy about it.

 


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Economy

Trump administration is optimistic about failing economic policies

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Trump administration is optimistic about failing economic policies

In an article I wrote last week following Trump’s campaign rally disguised as a State of the Union Address, I documented how his claim that his trade war and tax cuts had produced “the hottest economy in the world” were merely the rhetorical ramblings of a failed “Republican” running for re-election.

Trump’s trade war has created an economic hell that will take years to recover from, and his tax cuts have failed to provide tax relief for the middle class. In addition, when you throw Trump’s big-government spending into the mix, the federal deficit now exceeds $22 trillion.

The stock market fell late in 2018 and all gains made in the year were wiped out, a crash the administration blamed on Democrats and Fed Chairman Jerome Powell.

While the slide on Wall Street was dismissed as a market correction, recently released economic data from the Commerce Department shows that the overall economy ended the year much worse than the White House would have you believe.

U.S. retail sales recorded their biggest drop in more than nine years in December of 2018 as receipts fell 1.2 percent across the board. This is the largest decline in retail sales since Sept. 2009 when the economy was in a recession.

Trump brags about low unemployment numbers, but according to a Department of Labor report released yesterday, unemployment claims increased by 4,000 to a seasonally adjusted 239,000 for the week ending Feb. 9th.

While it’s tempting for some to dismiss yesterday’s report as an anomaly, let’s take a look at the data from another angle.

The four-week moving average of claims — considered a better measure of labor market trends because it irons out week-to-week volatility — was 231,750, an increase of 6,750 from the previous week’s revised average. This is the highest level for this average since January 27, 2018 when it was 234,000. The previous week’s average was revised up by 250 from 224,750 to 225,000.

Of course, the administration famous for identifying unfavorable news as “fake” went right to work trying to spin these economic failures into policy victories.

Saying that he was still “optimistic” about the economy, White House Economic Advisor Larry Kudlow called the retail sales number a “glitch,” and he invited the feds to “step aside” while praising the president for “ending the war on business.” He then parroted SOTU talking points about how the overall economy was “very strong” despite these recent reports.

There are those who label me a pessimist because I refuse to whitewash the political graffiti of optimism Trump and the GOP spray paint on their crumbling wall of lies and broken promises, but in the words of C. Joybell C.: “Some people are optimists. Some people are pessimists. I’m just a realist who believes that some things are worth fighting for.”

Originally posted on StridentConservative.com.

 


David Leach is the owner of The Strident Conservative. His daily radio commentary is distributed by the Salem Radio Network and is heard on stations across America.

Follow the Strident Conservative on Twitter and Facebook.

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