Economy

Quote of the Day

“It’s the Congress. That’s where the flaw comes. You can do whatever you want in the administration. Congress is much more about process than about results. That will be tragic for the American economy.”

— Commerce Secretary Wilbur Ross, interviewed by Newsmax.

Trump’s Tough Talk Suggests NAFTA’s Demise Is Imminent

“The North American Free Trade Agreement, long disparaged by President Trump as bad for the United States, was edging closer toward collapse as negotiators gathered for a fourth round of contentious talks here this week,” the New York Times reports.

“In recent weeks, the Trump administration has sparred with American businesses that support Nafta and has pushed for significant changes that negotiators from Mexico and Canada say are nonstarters. All the while, the president has continued threatening to withdraw the United States from the trade agreement, which he has maligned as the worst in history.”

Dispelling the GOP Tax Myth

Bruce Bartlett: “Four decades ago, while working for Rep. Jack Kemp (R-NY), I had a hand in creating the Republican tax myth. Of course, it didn’t seem like a myth at that time — taxes were rising rapidly because of inflation and bracket creep, the top tax rate was 70 percent and the economy seemed trapped in stagflation with no way out. Tax cuts, at that time, were an appropriate remedy for the economy’s ills.”

“Tax cuts became the GOP’s go-to solution for nearly every economic problem. Extravagant claims are made for any proposed tax cut…”

“That’s wishful thinking. So is most Republican rhetoric around tax cutting. In reality, there’s no evidence that a tax cut now would spur growth.

Middle Class Incomes Hit New High In 2016

“The incomes of middle-class Americans rose last year to the highest level ever recorded by the Census Bureau, as poverty declined and the scars of the past decade’s Great Recession seemed to finally fade,” the Washington Post reports.

“Median household income rose to $59,039 in 2016, a 3.2 percent increase from the previous year and the second consecutive year of healthy gains, the Census Bureau reported Tuesday. The nation’s poverty rate fell to 12.7 percent, returning nearly to what it was in 2007 before a financial crisis and deep recession walloped workers in ways that were still felt years later.”

Trump Mulls Ending South Korea Trade Pact

President Trump is considering withdrawing from the U.S.-Korea Free Trade Agreement, sources tell Axios.

“Administration sources have cautioned that no decision has been made, but the leaking of these deliberations has startled many in the U.S. business and pro-trade communities, who were under the impression that KORUS withdrawal was not in the cards for 2017.”

“More than $100 billion of annual trade between U.S. and Korea in goods — and billions more in services — hangs in the balance as Trump weighs this decision. Withdrawing from the trade deal would also damage relations between the U.S. and a key ally in Asia at the same moment the North Korean threat is escalating to historic proportions.”

Most Unhappy with Direction of Country

A new Fox News poll finds just 36% of voters are happy with how things are going in the country — down 10 points since April — while 64% are dissatisfied.

Most interesting is that the shift “is not, as is often the case, tied to the economy. Positive views on the economy are higher than in more than a decade: 36% say it is in either “excellent” (6%) or “good” (30%) shape. The last time conditions were rated this positively was August 2004.”

Trump Twice Rejected China Steel Offer

Financial Times: “Donald Trump last month rejected a Chinese proposal to cut steel overcapacity despite it being endorsed by some of his top advisers, as he urged them instead to find ways to impose tariffs on imports from China. One week after the July G20 summit in Hamburg — where Mr. Trump criticised China for flooding the world market with cheap steel — Beijing proposed cutting steel overcapacity by 150m tonnes by 2022. But Mr. Trump twice rejected the deal, according to several people familiar with the internal debate.”

“Wilbur Ross, U.S. commerce secretary, endorsed the deal and brought it to Mr. Trump, but the president rejected the proposal. Mr. Ross, a long-time friend of the president, floated the deal again the following week during the two-day meetings with Chinese vice-premier Wang Yang, but Mr. Trump once again refused to accept it.”

Bonus Quote of the Day

“I know there are some people in the room right now that are upset. I know there are some globalists in the room right now. And they don’t want them, John, they don’t want the tariffs. But I’m telling you, I want tariffs.”

— President Trump, quoted by Axios, in an Oval Office discussion with chief of staff John Kelly and others.

Trump May Not Get the Win He Seeks in NAFTA Talks

Politico: “As a candidate, Donald Trump constantly called NAFTA the worst trade deal in history and promised ‘to get a better deal for our workers.’ Now that he is president, Trump is about to find out how hard it is to get an agreement that satisfies not only those workers who feel ‘shafted by NAFTA’ but also the powerful business interests currently benefiting from billions of dollars in cross-border sales.”

“Top trade officials from the United States, Canada and Mexico sit down on Wednesday to begin thrashing over hundreds of issues as distinct as Canadian dairy barriers and digital trade issues affecting both countries.”

Our Broken Economy, In One Chart

David Leonhardt: “The message is straightforward. Only a few decades ago, the middle class and the poor weren’t just receiving healthy raises. Their take-home pay was rising even more rapidly, in percentage terms, than the pay of the rich.”

“In recent decades, by contrast, only very affluent families — those in roughly the top 1/40th of the income distribution — have received such large raises. Yes, the upper-middle class has done better than the middle class or the poor, but the huge gaps are between the super-rich and everyone else.”

Trump’s Low Numbers Come Despite Good Economy

First Read: “What’s especially striking about Trump’s low approval numbers (in the CNN, CBS, Quinnipiac, and Gallup polls) is that they’re coming during relatively good economic times.”

“Indeed, in the same CNN poll showing Trump’s approval rating at 38 percent, 53 percent of Americans say things are going very well/fairly well in the country. And that raises the question: What happens to Trump’s numbers if/when the unemployment rate creeps up? Because right now, most Americans aren’t judging Trump on his stewardship of the economy.”

Exchange of the Day

President Trump spoke to Maggie Haberman of the New York Times:

HABERMAN: “Am I wrong in thinking — I’ve talked to you a bunch of times about this over the last couple years, but you are generally of the view that people should have health care, right? I mean, I think that you come at it from the view of …”

TRUMP: “Yes, yes. [garbled]”…

TRUMP: “It’s been a long time. Nothing changes. Wait till you see what we’re going to do on trade.”

HABERMAN: “Sounds like it’s going to be very interesting.”

TRUMP: “Much more interesting than anybody would understand.”