On trade policy, Trump is turning GOP orthodoxy on its head
By KEVIN FREKING
Sunday, July 29
WASHINGTON (AP) — President Donald Trump’s trade policies are turning long-established Republican orthodoxy on its head, marked by tariff fights and now $12 billion in farm aid that represents the type of government intervention GOP voters railed against a decade ago.
President George W. Bush increased the number of countries partnering with the United States on free trade agreements from three to 16. President Ronald Reagan signed a landmark trade deal with Canada that was later transformed into the North American Free Trade Agreement (NAFTA) and expanded to include Mexico. Both those Republican presidents also enacted tariffs, but their comments on trade were overwhelmingly positive.
“We should beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security and the entire free world, all while cynically waiving the American flag,” Reagan said in a 1988 radio address.
Trump, by comparison, has called NAFTA “the worst trade deal maybe ever signed anywhere,” and his administration has opted to use tariffs as a tool intended to leverage more favorable agreements with virtually every major U.S. trading partner. He shredded the trade agreement the Obama administration tried to work out with Pacific Rim nations that had strong backing from farm groups and chief executives from major U.S. corporations.
Republicans also have altered the priority of tackling the national debt, an issue the GOP hammered President Barack Obama on as the country struggled to recover from the 2008 economic crisis. “Our nation is approaching a tipping point,” GOP Rep. Paul Ryan of Wisconsin, now the House speaker, said in January 2011 when the national debt hit $14 trillion.
Today, the Congressional Budget Office projects the $21 trillion debt will rise to more than $33 trillion in 10 years. That estimate notes that the tax cut lawmakers passed in December would increase economic output but add $1.8 trillion to the deficit over the coming decade.
The GOP’s evolving priorities are not lost on some in the party. Rep. Mark Sanford, R-S.C., who lost a close primary election this year after butting heads with Trump on some issues, said he finds it “perplexingly destructive” for the GOP brand.
“It takes a long while to build a brand, but brands can be diminished or destroyed in relatively short order, and I think the administration is destroying bedrock cornerstones to what the party has historically stood for,” Sanford said. “There is no conversation on the debt, deficit and government spending these days. That has been a cornerstone.”
Sanford made headlines as South Carolina governor when he said he would reject stimulus money approved during the financial crisis because he did not think the country should go into debt to fund recovery efforts.
“Here we are now with a hypothetical $12 billion bailout package and you don’t hear a word,” Sanford said. “That is quite a transition in not so many years from decrying what the Obama administration had done with bailouts to now endorsing the idea of bailouts.”
Trump, in a Friday interview on Fox News’ Sean Hannity’s radio show, said the strong economy would help the U.S. reduce the deficit. “The economy, we can go a lot higher. … We have $21 trillion in debt. When this really kicks in we’ll start paying off that debt like water. We’ll start paying that debt down.”
The administration’s plan on the bailout announced last week would borrow money from the Treasury to pay producers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs. Many farmers have criticized Trump’s tariffs and the damage done to commodity prices and markets.
Some GOP lawmakers are expressing concerns. “I didn’t come up here to start new government programs,” said Sen. John Kennedy, R-La.
But it’s unlikely that the Republican-controlled Congress will try to block the administration’s agricultural aid plan.
“I’m looking at this and saying, ‘You’re going to single out one sector?’ What about the manufacturing sector? What about the energy sector?” said Sen. Lisa Murkowski, R-Alaska. “Where do you draw the line? I’ve got some real concerns.”
But others praised the move. GOP Rep. Mike Conaway of Texas, chairman of the House Agriculture Committee, called it “welcome relief.”
“This is the right fight to have, but in the meantime, our producers have got to live as this fight is going on,” Conaway said of a trade dispute with China that has prompted the imposition of tariffs by both nations.
Conaway said the president has reshaped the way Republicans think about trade.
“He’s kind of changed the narrative of the conversation that it’s really not OK to let other people take advantage of America,” Conaway said.
Rep. Dan Kildee, D-Mich., said it’s clear the GOP has changed over the past two years with Trump in office.
“This is the party of Trump. He calls the plays and they line up and they execute the play,” Kildee said.
But Kildee also opposed the Trans-Pacific Partnership deal that the Obama administration was trying to work out with Japan, Vietnam, Singapore and others. He and many other Democrats described past trade deals such as NAFTA as hurting workers in their home districts. So why the criticism of Trump and the efforts he has undertaken on trade?
Kildee said he would prefer a more deliberative approach and a multilateral approach that doesn’t fray longstanding alliances.
“Simply engaging on the issue of trade doesn’t mean he’s doing it right,” Kildee said.
The president’s meetings with lawmakers in the past week and his trade advisers’ visits to Capitol Hill are acknowledgements that many GOP lawmakers are worried about where Trump is headed — and what it could mean in the November election as farmers, bourbon makers and manufacturers who use imported steel and aluminum deal with the fallout.
A possible breakthrough with the European Union announced Wednesday at the White House appears to have eased their concerns and given the president more time to work out new deals.
“The fact the EU was here today and good talks happened, I think that points to there’s proof it’s working,” said Rep. Dan Newhouse, R-Wash. “That’s not just wishful thinking. I think we can see that.”
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Opinion: China’s Exchange Rate Dilemma
By Desmond Lachman
One has to pity the People’s Bank of China. At a most difficult time for the Chinese economy and at a time that Chinese-U.S. trade relations appear to be in a downward spiral, the Bank of China does not have good exchange rate policy options. This does not bode well for the Chinese economic outlook. It also could spell real trouble for the global economy.
The major economic policy challenge facing the Bank of China is that of engineering a soft landing for the Chinese economy following an extraordinarily large credit and housing market bubble. A good indication of the size of that credit bubble is the fact that, over the past decade, credit to China’s non-financial non-government sector has increased by almost 100 percent of GDP. That credit expansion is larger than those that preceded the 2007 U.S. housing bust and Japan’s lost decade in the 1990s.
With signs that the Chinese economy is now starting to slow as credit standards are being tightened, the Bank of China would want to ease monetary policy and allow the currency to depreciate. It would want to do so in order to provide a policy offset to the contraction effect on the economy coming from the deflating of the credit and housing market bubbles. By so doing, it would in effect be doing what the Federal Reserve did in 2008 in the wake of the Lehman bankruptcy crisis when it substantially eased U.S. monetary policy and facilitated a dollar depreciation to soften the fallout from Lehman.
Yet another reason the Bank of China might now want to have the Chinese currency depreciate against the U.S. dollar is that the dollar is now appreciating strongly against most other currencies. The dollar is doing so, and it must be expected to continue doing so, in the context of the U.S. economy growing strongly partly as the result of a major U.S. fiscal stimulus at this late stage in the U.S. economic cycle.
Should the Bank of China now not have the Chinese currency depreciate against the dollar, its currency would appreciate along with the dollar against all other currencies. At a time of a weakening in its economy, letting the Chinese currency move up with the dollar against other countries’ currencies is the last thing that the Bank of China would want to do.
Compelling as these reasons might be as to why the Bank of China might wish to engineer a Chinese currency weakening, there are strong counter arguments as to why this could be a problematic course of action for it to adopt.
Among those is the fact that even before he came to office, President Trump has consistently accused China of manipulating its currency for competitive advantage. If China were now to allow its currency to keep sliding against the U.S. dollar, it would court incurring President Trump’s righteous anger no matter how justified China might be in doing so. That in turn would provide yet more fuel to the United States and China spiraling down to a highly destructive full-scale trade war.
Another reason that the Bank of China needs to be cautious about letting its currency depreciate is that it could easily lose control of the process. It could do so as the Chinese public lost confidence in the value of their currency and rushed to ship their money to safer havens abroad. That was the lesson in 2015 when an earlier Chinese currency appreciation led to massive capital flight from China of $1 trillion.
All of this leaves the Bank of China with the most difficult of policy choices. It can choose to desist from depreciating its currency at a time that it is deflating its credit bubble but then risk a sharper than desired economic slowdown. Alternately, it can support its economy with a currency depreciation but risk further worsening U.S.-China trade relations and risk fueling a renewed round of capital flight.
All of this also casts a pall over the global economic outlook. After all, China is the world’s second largest economy and it has for long been the world economy’s primary engine of economic growth. It also has been the main consumer of international commodities. As a result, as Napoleon might have put it, we might soon find out that when the Chinese economy slows down the rest of the global economy will shudder.
ABOUT THE WRITER
Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund’s Policy Development and Review Department and the Chief Emerging Market Economic Strategist at Salomon Smith Barney. He wrote this for InsideSources.com.
Supreme Court nominee Kavanaugh’s gun views are clear
By MICHAEL KUNZELMAN and LARRY NEUMEISTER
Monday, July 30
SILVER SPRING, Md. (AP) — Supreme Court nominee Brett Kavanaugh says he recognizes that gun, drug and gang violence “has plagued all of us.” Still, he believes the Constitution limits how far government can go to restrict gun use to prevent crime.
As a federal appeals court judge, Kavanaugh made it clear in a 2011 dissent that he thinks Americans can keep most guns, even the AR-15 rifles used in some of the deadliest mass shootings.
Kavanaugh’s nomination by President Donald Trump has delighted Second Amendment advocates. Gun law supporters worry that his ascendancy to America’s highest court would make it harder to curb the proliferation of guns. Kavanaugh has the support of the National Rifle Association, which posted a photograph of Kavanaugh and Trump across the top of its website.
The Supreme Court has basically stayed away from major guns cases since its rulings in 2008 and 2010 declared a right to have a gun, at least in the home for the purpose of self-defense.
Gun rights advocates believe Kavanaugh interprets the Second Amendment right to bear arms more broadly than does Anthony Kennedy, the justice he would replace. As a first step, some legal experts expect Kavanaugh would be more likely to vote for the court to hear a case that could expand the right to gun ownership or curtail a gun control law.
Kavanaugh would be a “big improvement” over Kennedy, said Erich Pratt, executive director of Gun Owners of America. Kennedy sided with the majority in rulings in 2008 and 2010 overturning bans on handgun possession in the District of Columbia and Chicago, respectively, but some gun rights proponents believe he was a moderating influence.
“Kennedy tended to be all over the map” on the Second Amendment, Pratt said.
Former U.S. Rep. Gabby Giffords, the Arizona Democrat who was gravely wounded in a 2011 shooting at a constituent gathering, said in a written statement that Kavanaugh’s “dangerous views on the Second Amendment are far outside the mainstream of even conservative thought.”
She predicted that Kavanaugh would back the gun lobby’s agenda, “putting corporate interests before public safety.”
In his 2011 dissent in a case before the U.S. Court of Appeals for the District of Columbia Circuit, Kavanaugh argued that the district’s ban on semi-automatic rifles and its gun registration requirement were unconstitutional.
That case is known as “Heller II” because it followed the Supreme Court’s 2008 decision in District of Columbia v. Heller striking down the city’s ban on handguns in the home.
Kavanaugh said the Supreme Court held that handguns are constitutionally protected “because they have not traditionally been banned and are in common use by law-abiding citizens.”
“Gun bans and gun regulations that are not longstanding or sufficiently rooted in text, history, and tradition are not consistent with the Second Amendment individual right,” he wrote in a point rejected by the majority.
Critics contend Kavanaugh’s analysis is flawed because AR-15s were not around during the early days of the republic.
In his dissent, Kavanaugh wrote that he had lived and worked in Washington for most of his life and was “acutely aware of the gun, drug, and gang violence that has plagued all of us.”
He said few government responsibilities are more significant than fighting violent crime. “That said, the Supreme Court has long made clear that the Constitution disables the government from employing certain means to prevent, deter, or detect violent crime,” he wrote.
He said it was unconstitutional to ban the most popular semi-automatic rifle, the AR-15, since it accounted for 5.5 percent of firearms by 2007 and over 14 percent of rifles produced in the U.S. for the domestic market.
He said semi-automatic rifles had been commercially available since at least 1903, “are quite common in the United States” and the Supreme Court said in a 1994 ruling that they “traditionally have been widely accepted as lawful possessions.”
Semi-automatic rifles were used in several mass shootings in recent years, including the February killing of 17 people at a Florida high school.
Kavanaugh rejected the majority’s reasoning that semi-automatic handguns were sufficient for self-defense, saying: “That’s a bit like saying books can be banned because people can always read newspapers.”
He belittled the description of the guns as “assault weapons,” saying that handguns could be called the “quintessential ‘assault weapons’ because they are used much more than other guns in violent crimes.
He was equally dismissive of Washington’s gun registration protocol, saying it had not been traditionally required in the nation and “remains highly unusual today.”
Still, Kavanaugh supported the ban on full automatics or machine guns, reasoning that they “were developed for the battlefield and were never in widespread civilian use.”
In 2016, Kavanaugh dissented when two of his colleagues lifted an order blocking the city from enforcing a limit on issuing licenses to carry concealed firearms.
The Giffords Law Center to Prevent Gun Violence said the dissent shows Kavanaugh believes the district’s “good reason” requirement for concealed-carry permit applicants is unconstitutional. His views on that subject drew more scrutiny after the 9th U.S. Circuit Court of Appeals ruled 2-1 days ago in a Hawaii case that people have the right to openly carry guns in public for self-defense.
Phil Mendelson, a Democrat and chairman of the D.C. Council, said Kavanaugh’s dissent made clear that “his views on gun control are on the extreme side.” Councilmember Mary M. Cheh, a Democrat and professor of constitutional law at George Washington University, said she’s “worried about the shift to the right, for sure.”
Some legal experts believe Kavanaugh’s confirmation would make it more likely the court would hear another potentially groundbreaking Second Amendment case. Only four of nine justices need to vote in favor of reviewing a case.
UCLA law school professor Adam Winkler, author of “Gunfight: The Battle Over the Right to Bear Arms in America,” said Kavanaugh could become that crucial fourth vote because three justices — Neil Gorsuch, Clarence Thomas and Samuel Alito Jr. — all have voiced support for the court to take on Second Amendment cases.
Still, it takes five justices to win a case and Chief Justice John Roberts may turn out to be as reluctant as Kennedy to further define the law.
Georgia State University law professor Eric Segall said the court’s recent silence on gun laws has fueled speculation that neither the conservative justices nor their liberal colleagues knew how Kennedy would vote. Segall suspects the Supreme Court would be more likely to review a Second Amendment case if Kavanaugh is confirmed because there is less uncertainty about where he stands compared to Kennedy.
“The lower courts are just all over the place, reaching different results on different gun laws. The court has to provide guidance at some point, and it will,” Segall said.
Neumeister reported from New York.
More reporting on the Supreme Court and Kavanaugh can be found at: http://apne.ws/IHcZXad
Opinion: ‘Dark Money’ Democrats Spend Millions to Stop Kavanaugh
By Michael Graham
When a political action group called “Demand Justice” launches its $5 million attack on Judge Brett Kavanaugh’s nomination to the Supreme Court, you’ll know who’s leading the charge: former staffers from the Obama administration and Hillary Clinton’s campaign, like Demand Justice’s executive director Brian Fallon.
You’ll know their strategy: TV ads in Maine, Alaska, West Virginia, Indiana and North Dakota, to reach swing votes in the U.S. Senate.
What you won’t know — and probably never will — is who put up the $5 million to pay for the attack ads. Who’s writing the checks to keep a Supreme Court nominee off the bench?
Welcome to the world of “Dark Money” politics — which Democrats simultaneously decry and embrace.
Take Sen. Elizabeth Warren, for example. She’s often complained that “right-wing billionaires are pouring buckets of dark money” into political campaigns. “One of the principal tools rich and powerful people use is dark money,” Warren said in April. “They have created an evasive enemy that slithers out of sight, with only a glimpse here or there.”
Yet she’s one of the senators working with Demand Justice to try to block Kavanaugh’s confirmation. In fact, Warren has met with — and taken money from— “dark money” organizations like Democracy Alliance, who use millions from anonymous donors to promote Democratic causes.
And hours before President Trump announced he was nominating Kavanaugh for the Supreme Court, Sen. Chuck Schumer was already bemoaning “the influence of dark money in our politics.”
Liberals love attacking the Supreme Court’s Citizens United ruling that rolled back restrictions on campaign funding and made the current system possible. The media love the “campaign finance” issue, too. In fact, you’ve probably seen a story on CNN or MSNBC about the Judicial Crisis Network, a conservative organization advocating Kavanaugh’s confirmation.
But chances are you’ve seen or heard little about their liberal counterpart, Demand Justice, or the complex, layered funding system it is using to keep its donors secret.
Not that they’re breaking the law. Demand Justice has set itself up as a so-called “social welfare organization,” or 501(c)(4), and it is allowed to advocate for causes under certain limits. For example, politics has to be less than half of what the organization does. As long as it obeys the rules, it can raise money, run ads and never reveal its donors.
The irony is that progressive groups are using Kavanaugh’s jurisprudence — because money can be used to pay for political speech (TV ads, websites, etc.) it should be given First Amendment protections similar to speech — to raise these off-the-record millions to attack him.
Not only that, but Demand Justice in particular has a complicated pedigree. Demand Justice is essentially a front for another “dark money” organization — a tax-exempt social welfare organization called the Sixteen Thirty Fund that is acting as Demand Justice’s fiscal sponsor.
“Donors who steer money to Demand Justice would report donations to the fiscal sponsor rather than Demand Justice itself, adding an extra layer of secrecy that further obscures the source of funds,” says the Center for Responsive Politics.
This system allows Demand Justice to avoid filing a nonprofit 990 tax return, so there will be virtually no formal record of its activities opposing Kavanaugh.
So liberal millionaires and far-left activists give money to the Sixteen Thirty Fund, which in turn uses that money to fund Demand Justice, which uses that money to buy TV ads to influence swing votes in the U.S. Senate in an attempt to stop a democratically elected president from filling a vacancy on the Supreme Court — all with money from undisclosed sources.
And all the while, Schumer and Warren are attacking Kavanaugh for his defense of free speech that makes this “dark money” funding possible.
Once again, both sides use the current campaign finance system to advance their cause. Beth Kanter, a representative for the Sixteen Thirty Fund umbrella group, insisted to the Associated Press that it “strictly follows all laws.”
In a less-than-forthcoming op-ed for USA Today, Fallon defended Demand Justice’s “dark money” by saying “thousands of grassroots donors have invested in our fight to save our courts from Trump. The average online donation is just $30.”
What the former Hillary Clinton adviser fails to mention is that its “fiscal sponsor,” the Sixteen Thirty Fund, listed 60 donors on its most recent tax return who, according to the AP, donated $21 million in contributions of up to $7.3 million.
“We have a diverse set of donors that share our commitment to social justice,” Kanter said.
Maybe. Maybe not. We’ll never know. What we do know is that they’re millionaires and billionaires who want to make an impact on the political process.
ABOUT THE WRITER
Michael Graham is political editor of NH Journal. He’s also a CBS News contributor. You can reach him at firstname.lastname@example.org. He wrote this for InsideSources.com.