Spieckerman Speaks

Thursday, March 01, 2018

The truth about tariffs - what Wall Street doesn't want you to know and the media & politicians are too clueless to tell you

The punitive tariffs President Trump just imposed on steel and aluminum imports – and the previously imposed tariffs on washing machine and solar panel imports – are laudable and long-overdue first steps. But only first steps. President Trump should impose at least a 10% tariff on all imported goods. And announce that he will impose a much higher, 35%-50% import tariff on Chinese goods if China doesn’t immediately take much more draconian steps against North Korea. 

The latest GDP report, while a vast improvement over President Obama’s final year in office, was severely dampened by a surge in importsAccording to Reuters“Imports, which subtract from GDP growth, increased at their fastest rate in more than seven years.”

This is inexcusable and economically unsustainable. Our country has lost 5 million manufacturing jobs since China entered WTO in 2001, including the millions of jobs sucked out of our country due to imports from Japan, South Korea, Germany and Mexico.

That some Republicans in congress are criticizing President Trump’s tariffs shows they’re ignorant of economic reality and/or kowtowing to Wall Street fat cats. Wall Street loves “free trade” because it can expand corporate profits by displacing American workers with cheap foreign labor while cratering U.S. wages, because they're severely undercut by imports and offshoring. Meanwhile, a lot of the trade surplus lucre that piles up in foreign countries flows back to Wall Street banks and investment firms to be invested.

The "free trade" myth was constructed after World War II, when the U.S. was the only major nation in the Western World whose manufacturing infrastructure wasn't in ruins. Tariffs weren't necessary to protect American manufacturing jobs and infrastructure. Now we're in a brutal economic battle with Asian and European export titans bent on maintaining trade surpluses, guarding their industrial bases and nurturing their factory workers. The myriad tariff and non-tariff barriers those countries have erected to ensure positive U.S. goods trade balances don't seem to have impaired their standard of living much less imploded their economies. Indeed, it's the U.S. whose middle class has been hammered as its factory towns have been hollowed out.

As I wrote a few months before the 2016 electionan American economic horror story commenced in the late 1970s – when the United States began running trade deficits for the first time in nearly a century:

The contraction in labor force participation, the collapse of salaries and wages as a percentage of GDP and the historically high level of profits, the dramatic distension of American income inequality – so often treated as a perfect storm of mysterious origin by economists and politicians – are, in fact, concomitant with our monstrous trade deficits. 

Despite the alarming evidence, most Republican politicians, journalists and pundits lazily lap up the establishment’s free trade drivel, aiding and abetting the corrosion of America’s middle class and the collapse of American jobs and incomes. Our atrocious trade policies have hit African Americans particularly hard, especially descendants of those who were part of the 20th Century Great Migration from the Jim Crow south to northern industrial cities.

It’s crucial that we obliterate the economic mythology surrounding free trade.

Import tariffs were the federal government’s primary source of revenue for the first 125 years America’s existence – during which we built the mightiest economy and highest standard of living on the planet.

As President Trump pointed out during the campaign, tariffs were the keystone of the “American System” initiated by George Washington and Alexander Hamilton and bedrock Republican philosophy, beginning with President Abraham Lincoln.

In all of American history, there is not one example of trade tariffs catalyzing an economic contraction - quite the contrary.

The hyperbolically named "Tariff of Abominations" in 1828 was followed by a multi-year U.S. economic boom, which was a major factor in President Andrew Jackson’s re-election in 1832.

The high import tariff regime championed by President William McKinley was instrumental in ending the crippling recession which followed the Economic Panic of 1893 and it catalyzed a sustained period of robust economic growth.

The Fordney-McCumber Tariff of 1922, conceived by the greatest secretary of the treasury after Hamilton, Andrew Mellon (also the richest cabinet member in U.S. history), ushered in a seven year expansion of unprecedented magnitude, "The Roaring '20s."

Mellon combined the tariff increase with significant income tax rate reductions. A great model for us to emulate today.

In addition to bringing tremendous prosperity, the Mellon regime slashed the enormous federal government debt from WWI by a whopping 40%.

And contrary to oft-repeated fallacy, The Smoot-Hawley tariff didn't exacerbate The Great Depression – the collapse in world trade in the 1930s was an effect of that international economic calamity, not a cause. Following a financial crash triggered by an appallingly over-leveraged stock market rife with fraud, and the near-collapse of our catastrophically unsound banking system, the Depression was a cyclical downturn grossly amplified by maladroit monetary policy. It was further exacerbated by Herbert Hoover's huge hike in income tax rates in 1932 and statist economic "solutions." 

A tariff on all  imported goods would also do much to solve the federal government’s massive fiscal dilemma. Just a 10% tariff would yield $2 trillion in incremental revenue over 10 years, allowing congress to make the newly enacted Trump tax cuts for the middle class permanent. There would be sufficient remaining revenue to fund a real Obamacare repeal and replace, seed a massive public-private infrastructure bank and avoid the trillion-dollar-plus annual deficits currently projected.

In addition, over the long term, the upsurge in American jobs resulting from reduced goods imports would reduce social welfare costs while increasing income and payroll tax revenues.

And the goods import tariff could add an additional 1% to GDP growth with just a 25% reduction in our goods trade deficit.

This December 2016 Congressional Research Service analysis reinforces the President’s authority to impose such a tariff in the event of a national emergency and in time of war. A perpetual $800 billion goods deficit, collapse of good jobs and middle class incomes, excessive reliance on foreign suppliers for critical U.S. weapons and aircraft components, certainly constitute a national emergency! Furthermore, we are at “a time of war,” as U.S. forces are involved in hostilities in multiple countries as part of our and our allies’ war on ISIS. 

This 10% goods imports tariff represents just a fraction of the 35% - 40% that candidate Trump said would be appropriate, given the decades of job theft that’s been perpetrated by many of our trading partners. 

And this recent poll from top Republican pollster Ed Goeas shows enormous public support for tariffs, even if they result in higher consumer prices! This support for tariffs is particularly pronounced in states where PDT received 55%+ of the vote.

What a coincidence – almost all of our goods trade deficit is with nefarious China and “friends and allies” who’ve been taking advantage of the U.S. for decades by not paying their fair share for defense.

For Japan, South Korea and NATO countries, the new goods trade tariff will be far less financially onerous for them than if we push for those countries to spend as high a percentage of their GDP on defense as we do – which is not the 2% NATO obligation but 3½%!

The U.S. has surpluses with many countries on services. While that’s nice, it’s important to note that the services sector entails a much smaller proportion of well-compensated middle income jobs than does manufacturingServices include Wall Street banks and financial firms, where an inordinate percentage of the compensation flows to a tiny cohort of traders and executives that are among the top 5% in earnings and wealth (many in the top 1%). So, while services are important, they’re not America’s ticket to mass job and income expansion.

And we couldn’t ask for a better macroeconomic environment in which to introduce these tariffs.

We’re in the midst of global disinflation. Near deflation (U.S. grocery prices are now actually declining). This, and our cutthroat international economy, will induce companies abroad and at home to slash costs and compress margins in order to minimize tariff-related price hikes.

One of the more ridiculous arguments against import tariffs is that they would raise costs to American manufacturers because so many components are made in other countries. That’s one of our biggest trade problems! The massive offshoring of component manufacturing – from auto and wind turbine parts to computer chips to flat screen displays – has had a devastating impact on American workers. As White House trade advisor Peter Navarro aptly stated, we must “Repatriate the American supply chain.” The Trump tariff will jumpstart that effort faster than anything else we can do.

Japanese, Korean and German companies build high quality cars and myriad other products in the U.S. This begs the question: why is there any need for large scale foreign manufacturing imports?

The U.S. may have to demand an overhaul of the WTO rubric – or even unilaterally abandon provisions that preclude imposition of the 10% trade tariff. As PDT has frequently said, no international body or agreement supersedes the interests of American workers!

Finally, the alarmism about tariffs triggering a trade war is laughably disingenuous. The U.S. is approaching a $1 trillion annual goods deficit – so any tariff construct will be decidedly to our advantage, irrespective of what other nations do.

The screenshot below is a link to my call for a goods import tariff and my calling-out Speaker Ryan and other Republican establishmentarians on Fox Business Network’s “Cavuto.”

Thursday, May 18, 2017

My Requiem to Roger Ailes

Roger Ailes was, like the first president he helped elect in 1968, Richard Nixon, both brilliant and bedeviled. I'd known Roger since we both worked on the ill-fated 1980 presidential campaign of former Texas Gov. John Connally (the one shot alongside JFK) who later served as Nixon's treasury secretary. I was a kid; Ailes, an icon. Roger and I kept in touch and I visited him at Fox News Channel over the years; he was directly responsible for my being added to the commentator mix at FNC and Fox Business Network.
Roger reshaped politics as Nixon's and then many other Republican candidates' media guru; he recast business news as founding head of CNBC (then toppled it with his FBN); he revolutionized journalism by creating Fox News and leading it to dominance. Something inconceivable to all but perhaps Roger and Rupert Murdoch when the fledgling network premiered in '96.
What hit me this morning is that Roger's network made Donald Trump's election possible - long before providing Trump with one of his most important television platforms. It was Fox News that awakened "middle America," so long forced to consume most of their news from left-leaning outlets. FNC showed conservative and center-right voters that they not only had legions of cohorts but - as shown by the stratospheric ascent of FNC – could be a transformative force. That this network, which had been lampooned from launch, became a media colossus while reflecting their values and capturing their sensibilities demonstrated that outsiders really could “trump” the establishment and entrenched incumbents.
What Roger is alleged to have done to numerous women is evil. It's tragic that this revolting truth coexisted with the commendable. Roger advanced a multitude of great careers. His Ailes Apprentice program at Fox News enabled many young people of color to jump-start their journalistic vocation at an entity at the apex of the industry. Roger was a true American success story, a hemophiliac who rose from humble beginnings; a patriot, a visionary and inspiring leader, often a man of generosity.
Many might say it's sad Ailes didn't pass before his egregious transgressions were revealed; I believe the opposite. Roger's public shaming and career collapse left an indelible mark on American business and culture which will inure to the benefit of countless women to come. Ironically, that legacy will be as - or perhaps even more - consequential than Fox News.

Monday, February 06, 2017

A vote against DeVos is a vote for ruining the lives of children of color

The nearly $700 billion government K-12 superstructure of unions, administrators, school board politicians and bureaucrats, jealously guard their failed construct. They love to divert from the alarming facts:

  • The U.S. spends, in inflation-adjusted dollars, more than three-times per pupil what we spent on public education in the early 1960s – the highest in the developed world by at least a factor of two.
  • Yet our country ranks in the high teens and 20s among developed countries in academic performance.
  • Pupil-to-teacher ratios are the lowest in our history.
  • In most school systems, there is a 1:1 ratio of non-teaching to teaching personnel, an inexcusable level of bloat not present at any reputable private, charter or parochial school.

Nowhere is the egregious performance of government-controlled schools more harmful than to the POC pupils. African Americans are already suffering from the vestiges of the synchronized post-WWII conspiracies to suburbanize whites and ghettoize African Americans – which created today’s inner city cauldrons of privation and dysfunction – and Wall Street-designed trade policies that deindustrialized big cities, disproportionately destroying African American jobs, incomes and dreams.

As if that wasn’t sufficiently impairing, inner city minority children are tethered to the worst schools in the developed world. Those schools’ drop-out rates, graduation rates, performance on standardized tests and college readiness metrics aren’t even close to acceptable. Much less world-class. With very few exceptions, the government-run inner city schools America’s children of color attend are a disaster.

To attain the American dream,  every African American child must finally have a strong start. Right now, we’re not even close to achieving that.

In the New York City public school system, which does an atrocious job for African American pupils, teachers awaiting disciplinary hearings are paid full salary – $70,000 a year and more – to use their iPhones and iPads to Facebook and surf the Web.

And in just the past two years:

  • A crippling teacher’s strike shut down Seattle schools.
  • Atlanta public schools are still reeling from a pervasive fraudulent testing scandal.
  • And in Detroit, a teacher sickout by their union kept thousands of kids out of the classroom. Then a multi-million-dollar kickback scheme was uncovered, involving multiple school principals, that further sapped precious dollars from this already cash-strapped district.

And this is just a sampling of the outrageous scandals and educational malpractice at large government-run school systems across the country.

Let’s face it. "Reform" of large public school systems is impossible. Some of the smartest people in the country, from Joel Klein in New York City to Michelle Rhee in DC to Roy Romer in Los Angeles to Arne Duncan in Chicago, have tried to fix the bloated, union-dominated, corrupt school systems in our biggest cities. None have succeeded. It’s akin to Soviet premier Gorbachev’s attempt to fix communism through Perestroika in the 1980s. You just can't get there from here.

But the situation isn’t hopeless. And the solution to our American education catastrophe isn’t a mystery. Research proves charter schools are much better for minority pupils and consistently outperform government-run schools, in some of the poorest areas and the toughest neighborhoods in our country.

Here are just a few examples: 

  • Harlem Children's Zone’s Promise Academies, New York City. Geoffrey Canada, founder and former CEO has said, “If we can’t fire (bad teachers), we should send them to the upper middle class neighborhoods.  Because those kids can afford a year of a bad teacher.  Poor kids can’t afford it.” Harlem Children's Zone also offers a comprehensive range of before and after school programs.
  • At Washington, DC’s Thurgood Marshall Academy, 100 percent of the school’s graduates are accepted into college. And two-thirds of those students finish college, a rate that is higher than the national average—and about eight times the rate for D.C. students in general. A third of TMA’s entering ninth-graders start off at or below a fifth-grade level of proficiency in math and reading.
  • Success Academy, New York City. Though it serves primarily poor, mostly black and Hispanic students, Success is a testing dynamo, outscoring schools in many wealthy suburbs, let alone their urban counterparts. In New York City last year, a pathetic 29 percent of public school students passed the state reading tests, and 35 percent passed the math tests. At Success schools, the corresponding percentages were 64 and 94 percent.
  • Democracy Prep schools, in New York and New Jersey, operate the highest performing school in Central Harlem and are ranked the number one public middle school in New York City.
  • Urban Prep, in Chicago. For a remarkable fourth consecutive year, every single graduating senior at Chicago’s majority black Urban Prep Academy high school have been accepted at four-year colleges or universities this fall.
  • KIPP Academies throughout the country. In addition to stellar academic results, the KIPP Through College program supports students after they complete KIPP, through college.
  • St. Philip’s in Dallas, Texas. Operated by the Dallas Episcopal Diocese, St. Philip’s, in low income, predominantly minority South Dallas, works to lift the whole neighborhood. All pupils graduate high school; many go to college.
Two documentaries, “Waiting for Superman” and “The Lottery,” captured the desperation of parents trying to get their children into charter schools through annual lotteries. Success Academies, for instance, receives more than 22,000 applications for less than 3,000 seats.

And in the District of Columbia, where so many of the politicians and lobbyists send their kids to expensive private schools, more than 8,000 students are on a waiting list for spots in the top D.C. charter schools which achieve vastly superior results to DC’s government-run schools.

And this travesty is happening all over the country. It’s “The Hunger Games” brought to K-12 education! A national disgrace!

Those who advocate charter schools and tying K-12 education funding to the pupil, rather than defaulting the dollars to failed government school systems, are met with the Orwellian mantra that this “takes money from public schools.” That’s like saying that when someone elects to use T-Mobile or Sprint, he or she is “taking money” from AT&T and Verizon!

But at least AT&T and Verizon provide solid service!

Nevada Gov. Brian Sandoval and, while governor of Indiana, vice president Mike Pence, signed America’s most far-reaching school choice laws. They should be models for our country. Every state should be able to offer its least advantaged kids the kind of school choice Nevada and Indiana provide their children.

But the teacher’s unions hate charter, private and parochial schools. Because those schools are wonderful for great teachers – but not for the teachers unions. And make no mistake, the teachers unions are the most noxious force in education today. A few years ago, a top official of the NEA teachers union, actually said in a speech – listen to this – that the NEA is successful,

…not because we care about children,

not because we have a vision of a great public school for every child

but because we have power

and we have power

because there are more than 3.2 million people who are willing to pay us

hundreds of millions of dollars in dues each year.

Can you believe that? Disgusting! And there’s zero indication the NEA’s power- and money-hungry paradigm has shifted.

So, since the NEA teachers union donates enormous amounts of money to Democratic politicians, millions of poor African American and Latino children are being forced to keep playing the lottery. To remain entrapped in execrable schools!

Meanwhile, again, almost all the children of the elites and the politicians attend exclusive, expensive private schools.

If that isn’t a rigged system, I don’t know what is!

Betsy DeVos is a formidable crusader for children, passionate about unwinding that rigged system.  It’s crucial that she be quickly confirmed so she can commence the vital mission of unchaining children of color from wretched government-run schools.

Saturday, June 25, 2016

Wall Street Santa Paulson Endorses Wall Street Tool Crooked Hillary

If a cabal of financiers were to have designed a strategy in '07 to prolong the Wall Street party, when they could clearly see that a huge financial and housing bubble had formed (to wit, Goldman Sachs secretly bet against the housing market as it concurrently pitched toxic mortgage securities), the "financial crisis" would have been an exquisite scheme. And who better to marshal its execution than former Goldman Sachs CEO, Secretary of the Treasury Hank Paulson?

Two major competitors - Bear Stearns & Lehman Bros. - were eliminated and the hated Lehman CEO Dick Fuld dispatched. A massive infusion of government funds poured into banks with no strings attached (something Franklin Roosevelt, a former Wall St. lawyer, didn't do during the far more profound and already advanced banking crisis in '33). Warren Buffett, not exactly a cowboy when it comes to investing, swooped in before the government bail-out had been enacted and scooped up Goldman Sachs preferred stock, yielding $500 million a year in dividends, and warrants to buy common stock at a big discount (which ended up yielding Berkshire Hathaway prodigious profits). A pretty wild move if there's any real chance of a financial implosion. Quite a soothsayer, that Warren.

The bail-out set a horrific precedent for our country but a wonderful one for Wall Street. The next time there's a crisis, it's actually more likely there will be another government bail-out ("It worked beautifully in '08...surely the politicians wouldn't be so reckless as to stand by as our economy collapses when we have a proven solution!" - good grief I can hear it now).

It was subsequently reported that Paulson lied about his reasoning for not bailing out Lehman Bros. - which catalyzed the "crisis." His lame and shifting rationalizations don't stand up to even cursory scrutiny. And Paulson and his minions unilaterally morphed what was disingenuously named the "Troubled Asset Relief Program" (TARP), sold as an appropriation to buy "toxic assets" from the big banks, into a pure transfer of over $400 billion in government cash to his former firm Goldman and his Wall Street buds' banking behemoths. Paulson, aided by well meaning but financial crisis phobic Fed chairman Ben Bernanke, alarmed and cajoled clueless and big bank-beholden Democratic politicians and the in-over-his-head George W. Bush with predictions of economic Armageddon - if they didn't enact what Paulson & Co. hatched. Right quick. Without any bothersome analysis of the plan or burdensome quid pro quos from the bailed out firms.

Not one Wall Street executive. Not. One. Was even seriously investigated much less indicted by the Obama Administration. What a coincidence, they were his and the Democrat Party's biggest contributors - and PBO's DOJ was also stocked with Wall Street lawyers on-leave and in-waiting. These rapacious Wall Street players continue to be to Crooked Hillary's most lavish campaign donors, after larding lucre on her and (The Other Famous Sexual Predator Named) Bill.

Dodd-Frank was crafted by Wall Street lobbyists and perfectly tailored to accommodate their clients' armies of lawyers - while choking community banks and smaller financial firms. This dug the competitive moat around big banks and investment firms even deeper. Deposits and financial power are more concentrated among the big Wall Street institutions than before the "crisis" - Too Big To Fail has become Too Bigger To Fail.

And the Fed under Bernanke and Janet Yellen has been even more financier-friendly than under Greenspan, commencing a Zero Interest Rate Policy (ZIP) that is both unprecedented and appears interminable. The sclerotic growth resulting from atrocious Fed and federal government policies has become the rationale for guaranteeing virtually no cost funds to the big banks, hedge funds and PE firms. This has bloated the prices of stocks - which, of course, are disproportionately held by the wealthiest Americans. Icing on the cake: since bank deposits and low risk financial instruments offer virtually no returns in a ZIP environment, Wall St. firms are flooded with an ocean of commissions and fees as investors flock to stocks.

Big Wall Street firm profits and executive and trader bonuses are through the roof. As the above-linked The Atlantic article aptly states, it's a "golden age" for the big banks.

Meanwhile hordes of average working people's jobs have evaporated as most families' incomes have imploded. They, small business owners who can't get loans and retirees who save are being crushed by the Paulson-Clinton paradigm. My earlier piece, Trump Threatens Clintons' Odious Economic Order lays out this sordid economic story. If you're grasping for a reason to vote for Donald Trump, Pernicious Paulson's endorsement of Crooked Hillary just gave you a "huge" one.

Wednesday, May 25, 2016

A Facebook commentator asked, "So why is Crooked Hillary worse than Trumpissimo?" My answer.

Lee Spieckerman While many who've been blessed enough to inherit millions have either blown the fortune or sat back and lived comfortably off of it, Trump multiplied his many times by making audacious, against conventional wisdom investments and building landmark projects. He believed in New York City at a time when most of America had given up on it and his own beloved father feared venturing outside the family's comfort zone into the brutal Manhattan market. 

Do you have any idea what it takes to build *anything* in New York City - much less trophy projects? The details that must be mastered? The teams that must be assembled and adroitly led? The political constituencies which must be aligned? And Trump went on do build and turn around massive projects across the globe.

Do you know how many talented producers and stars have failed to get their projects on a major TV network in prime time - never mind getting into the top tier in ratings? Trump (with his brilliant partner Mark Burnett) has done it 14 seasons in a row - making "The Apprentice" franchise one of the most enduring prime time series of any genre in the history of television. 

How many CEOs have written books that not only became best sellers but icons of the publishing realm (former GE CEO Jack Welch is the only other who comes to mind)

Trump is among the most accomplished people ever to run for President and, for those who actually take time to watch him do a rally or an extended TV interview - versus relying on snippets and Web excerpts - it's readily apparent that DT is a natural politician and communicator. Brilliant. 

Trump is the first nominee of a major party since Dwight Eisenhower who's stayed at the top of his party's opinion polls from almost the time he entered the race while getting on-the-job training as a candidate for public office (and Ike had spent decades in the political realm, rubbing elbows with world leaders). 

Is Trump flawless? No. Is he ready? Especially at this time in our history when the political class associated with both parties has run amok? Hell. Yes.
LikeReply37 minsEdited
Lee Spieckerman Hillary Clinton is brilliant at massive self-dealing while in the White House and political office; 

She's the czar of Bill Clinton's secretly and egregiously ill-conceived government single payer health insurance program (much like the one Bernie Sanders supports and she disingenuously defames) - which resulted in one of the worst midterm election shellackings of a party in history; 

The mastermind of scorched-earth campaigns to destroy the reputations of (The Other Famous Sexual Predator Named) Bill's innocent sexual abuse victims; 

The senator who, in eight years, never sponsored or championed a single piece of significant legislation; 

The visionary Secretary of State who conceived the "Russian Reset," pushed the toppling of Libya's Gaddafi resulting in the ensuing bloody chaos, failed to craft, articulate or persuade PBO to implement viable strategies in Iraq and Syria, causing Iraq to become a failed state dominated by Iran while enabling ISIS to create a ghastly and growing caliphate, championed the cataclysmic Iran nuclear deal, did nothing to impair NK's going nuclear, and oversaw a disinformation campaign about the just-before-the-'12 election Benghazi attack (including making Susan Rice the patsy); 

The mendacious perpetrator of the criminally negligent scheme to keep emails belonging to the American people outside their and the media's reach and, when it was brought to the fore, who summarily deleted at least 33,000 of those emails and refused to cooperate with the investigation of the matter by the agency SHE USED TO RUN; 

The Wall Street tool and recipient of prodigious Chinese government largess who was instrumental in conceiving and implementing the pernicious paradigm of an unleashed financial sector (which became the Democratic Party's biggest donors) and unfettered free trade - which contributed mightily to the '08 crash and continuing U.S. economic corrosion. 

Crooked Hillary's one and only achievement - beyond hoodwinking Democratic luminaries and most of the media into believing she qualified to be President - is becoming the Greatest Frequent Flier of any SOS in history.

Tuesday, April 26, 2016

Trump Threatens The Clintons’ Odious Economic Order

Free trade is the economic issue Donald Trump has rightly made the centerpiece of his campaign – and on which he’s been consistent for many years. No issue better illustrates how the elites’ and most voters’ interests collide. 

President Bill Clinton and Hillary brought the pernicious paradigm of free trade and an unleashed financial sector to denouement in the 1990s. Robert Rubin, who had been co-chair of Goldman Sachs before becoming Clinton’s Secretary of the Treasury, brazenly instructed members of the incoming administration that the rich “are running the economy and make the decisions about the economy” (though not recorded, Rubin undoubtedly added, “And if we help Wall Street, they have a ton of dough with which to help us”).

An aside for context: the oft-exalted Rubin would go on to become a key member of Citigroup’s leadership team, heaping up huge bonuses as the bank gorged on sub-prime mortgage instruments. Rubin rode Citi all the way down through the ’08 crash and, conveniently, helped the institution – which should have been dismembered and dissolved – amass billions in capital from taxpayers. This further insulated him and other Citi bigwigs from the consequences of their ruinous decisions and deplorable dereliction.

With hearty encouragement from Rubin and his cadre of Wall Street cronies, President Clinton enacted the Financial Services Modernization Act of 1999, which repealed a number of Depression-era financial regulations. Clinton also forcefully pushed Senate ratification of the North American Free Trade Agreement (NAFTA) and was a huge booster of opening trade with China - moves also celebrated by Wall Street and big corporations. He signed the bill normalizing trade relations with China and laid the foundation for its entry into the World Trade Organization (WTO) the year he left office. China showed its gratitude by illegally funneling hundreds of thousands of dollars (and those are just the amounts government investigators were able to uncover) to the Clinton campaign coffers. Once Bill left office, the Bill and Hillary Clinton foundation became the new vessel for Chinese largess. 

Meanwhile, Wall Street fat cats, greatly enriched by Clinton's policies and the Clinton-reappointed Alan Greenspan's financier-friendly Fed, upheld their end of the bargain, becoming (and remaining) the Democratic Party's most prodigious contributors. The candidate Trump has aptly dubbed “Crooked Hillary” has continued the family tradition of Wall Street enabling and groveling, as exemplified by her lavishly compensated speeches to Goldman Sachs and other financial behemoths. Despite Bernie Sanders' attempts during the primary campaign to shame HRC into releasing the transcripts of those speeches, they remain cloistered – far better protected than were our state secrets on Hillary’s private email server.

The elites and Team Hillary are rightly terrified of Trump because he’s a real rebel candidate who can actually win.

Hillary and the financial and political patricians to whom she’s beholden are savoring the fruits of the status quo while American workers are being hosed. That’s why, despite decades of free trade disinformation from the establishment in both parties, voters are backing Trump’s long-held anti-free trade views. According to a March Bloomberg Poll, almost two-thirds of Americans now favor more restrictions on imported goods instead of fewer. And the facts are on their side.

The charts below depict an American economic horror story that commences in the late 1970s – when the United States began running trade deficits for the first time in nearly a century. 

The contraction in labor force participation, the collapse of salaries and wages as a percentage of GDP and the historically high level of profits, the dramatic distension of American income inequality – so often treated as a perfect storm of mysterious origin by economists and politicians – are, in fact, concomitant with our monstrous trade deficits.

Establishment leaders frequently ascribe most of these catastrophic metrics to rapid advances in technology. That’s an odd theory, as there was quite an impressive array of technology introduced in the trade deficit-free 25 years from 1948 through 1973, when worker incomes were far higher – and corporate profits far lower – as a percentage of GDP. And economic growth was, on average, much more robust than the barely above two percent we’ve endured over the past decade – an unprecedented duration of such weak GDP growth.

But despite this plethora of deeply disquieting data, the malevolent mirage that was Clintonomics continues to be touted by Hillary and extolled by the elites. Meanwhile, establishment-employed “economic luminaries” are attempting to discredit Trump’s ideas by emanating grandiloquent garbage masquerading as policy analysis.

Early in Trump’s campaign, Republican economists Larry Kudlow and Steve Moore penned an alarmist attack on Trump’s trade and immigration platform in National Review. For an article crafted by two of the party’s smartest folks, it was an astoundingly lame piece of work which I readily debunked. Moore has since attenuated his enthusiasm for free trade and become a key Trump economic advisor.

Then, in late March, The New York Times – a clarion of anti-Trump trumpery from the left – published, “What Candidates Are Saying by Harping on Trade Deficits,” by Senior Economics Correspondent Neil Irwin. This appallingly pretentious, fallacious tome epitomizes the American establishment’s free trade mendacity. It was undoubtedly an enjoyable read for The Times’ Wall Street friends and the struggling newspaper’s financial rescuer and largest shareholder, Mexican billionaire Carlos Slim. Slim profited handsomely from NAFTA, and the huge run-up in U.S. stock prices fed by foreign investors flooded with U.S. trade deficit dollars. Slim also has deep ties to Hillary and her family “foundation.”

Irwin’s archetype of pro-free trade propaganda starts with two Orwellian propositions, “Trade deficits are not inherently good or bad; they can be either, depending on circumstances. The trade deficit is not a scorecard.” And, “What’s more, eliminating the trade deficit would not, on its own, make America great again.”

Based on the charts, that’s akin to claiming, “Cigarette smoking isn’t inherently good or bad; it can be either.” After all, smoking relieves stress and promotes weight loss! The huge numbers of premature smoking-related deaths save us a fortune in Social Security and Medicare outlays! And quitting smoking “on its own” won’t make you healthy again, so why bother?

Contrary to Irwin’s idiocy, given its deleterious impact on American jobs and wages, our country must consider the trade deficit a scorecard. I challenge him to name another large, prosperous nation which has maintained a massive trade deficit for nearly half a century.

Our overall 2015 real dollar non-petroleum trade deficit ($663.9 billion) was the highest on record. As was our deficit with Germany ($74.2 billion), South Korea ($28.3 billion) and the European Union ($153.3 billion). And we still run a $68 billion trade deficit with Japan.

But China accounts for more than half of our yawning trade gap – $365.7 billion in 2015 – also a record. That’s a billion dollars a day – to put it in perspective, this is considerably more than half our annual defense budget.

Trump has basked in China’s attacks on him for calling out that nation’s devious trade practices. “I’m so happy China is upset with me,” he's crowed. “They have waged economic war against us…it’s been the biggest theft.” The frightful data below affirm that Trump wasn’t engaging in hyperbole. 

 The U.S. has suffered net job losses of over two million stemming from the rise in import competition from and offshoring to China since it was admitted to the World Trade Organization in 2001. Even longtime free trade champion The Economist recently concluded that the data, “provide convincing evidence that workers in the rich world suffered much more from the rise of China than economists thought was possible.”

While America’s free trade sellout has been dreadfully destructive to our country as a whole, it’s been cataclysmic for cities and towns that were the industrial centers of our country. Once as vibrant as is Silicon Valley today, these former manufacturing hotbeds in the Midwest and Northeast are now decrepit and dysfunctional. And no group in America has been more adversely impacted than African Americans living in those inner cities.

Henry Ford, the father of automobile mass production, was also one of the first large employers to hire African American workers. The rest of the automobile industry followed, which contributed mightily to the massive migration of African Americans from the Jim Crow south to Detroit and other northern industrial cities. This did much to germinate the black middle class in America. But the decline of American manufacturing – caused by our idiotic and immoral free trade policies – hit the black community especially hard. In 1975, 40 percent of young Midwestern black men were employed in manufacturing; by 1990, that proportion had dropped to just 10 percent.

And the Clintons’ disastrous Wall Street-designed trade policies, favoring China, Mexico and many other countries, further ravaged the African American community. African-American family incomes, already considerably lower than their white cohorts, are down by about $2,200. The wealth gap between African Americans and whites has widened tremendously, and African-Americans have regained far fewer of the jobs lost in the Great Recession than other Americans.

So, while China, Mexico and South Korea have gained millions of jobs since the Clinton era commenced in the ‘90s, African American workers have been devastated and opportunities for their children destroyed.

The elites and establishment news media constantly talk about “White Working Class Voters.” When was the last time you heard the term, “Black Working Class Voters”? That speaks volumes about how insensitive and out of touch America’s establishment media really is. Hillary and her elite patrons don’t want voters to know this, but black working class workers and white working class voters have a lot in common: both are being racked by a rigged system.

China, like longtime export titan Japan, systematically devalues its currency – in effect, discounting the cost of wages and products in that country relative to the U.S. dollar. It has a labyrinth of written and unwritten policies to minimize U.S. imports. Though its economy is as large as ours, incredibly, we export far less to China than we do to Mexico and Canada, each a fraction of China’s size. American companies wanting to sell autos, aircraft, machinery and other high value goods in China must manufacture there. And, inevitably, that involves making our valuable intellectual property available to our Chinese competitors.

How long will America’s now world-leading aviation industry, America’s new industrial hubs in the south – indeed, how long will Silicon Valley itself – be safe from the depredations of unchecked, unethical competition from China and other nations?

Now Democrat and Republican establishmentarians are pushing The Trans-Pacific Partnership (TPP), crafted while Hillary Clinton was secretary of state. This trade agreement with Pacific Rim nations, not including China, is another U.S. trade disaster in the making. It would result in wage losses for the vast majority of U.S. workers. To highlight the perfidy of the claims that TPP would strengthen America vis-à-vis China, according to the agreement, an auto with 55% Chinese content could be considered to be Made in America or Made in the TPP. This allowable non-TPP content is considerably higher than the 37% permitted in NAFTA, which itself has hardly been a boon for U.S. manufacturers. China is already using this Trojan Horse technique with steel, which its largely state-owned mills continue to turn out in abundance, despite an international glut, sapping domestic steel industries in the U.S. and across the globe.

While Secretary of State, Hillary effusively described TPP as “The gold standard” of trade agreements. But, near the end of the primary season, following withering assaults on her free trade position from Bernie and Trump, Hillary cravenly withdrew her support for TPP. Soon thereafter, longtime Clinton courtier, Virginia governor Terry McAuliffe, candidly but damningly asserted that Clinton would again support TPP if elected.

In defending our country’s indefensible trade policies, Irwin’s Times piece employs the model of "BananaLand" and "CarNation.”

Imagine a world where there are only two countries, and only two products. One country makes cars; the other grows bananas.

People in CarNation want bananas, so they buy $1 million worth from people in BananaLand. Residents of BananaLand want cars, so they buy $2 million of them from CarNation.

That difference is the trade deficit: BananaLand has a $1 million trade deficit; CarNation has a $1 million trade surplus.

But this does not mean that BananaLand is “losing” to CarNation. Cars are really useful, and BananaLandites got a lot of them in exchange for their money.

This puerile rendition of economist David Ricardo’s theory of “comparative advantage” (“competitive advantage” in modern parlance) is often invoked by other free trade propagandists – but betrays the absurdity of the entire free trade case.

First, where does "BananaLand" obtain the $1 million each year to cover its trade deficits with "CarNation"? It must forgo $1 million in other expenditures and investments and/or borrow the money - perhaps from "CarNation" itself. That "BananaLand" debt to cover the "CarNation" trade deficits will either require reducing future investments and consumption or force "BananaLand" to print more of its money to pay off the debt - which leads to "BananaLand" inflation and eroded purchasing power. And what country wouldn't prefer to have an economy built on auto production instead of banana production? And why would any nation consciously morph from car-based to banana-based? In effect, America is doing exactly that, becoming "BananaLand" – de-industrializing and incurring enormous trade deficit debt due to ruinous Clintonian trade and economic policies. Policies which were also championed by most Republicans and continue to be lauded by Irwin and his elite patrons.

And, as China, Japan and other export powerhouses demonstrate, Irwin’s cute little model becomes even more specious when competing nations engage in rampant currency manipulation, import suppression and export-driven industrial policies. And to make matters worse, as we'll see, how our trading partners spend the stockpiles of dollars they amass in trade surpluses can have huge – and often very negative – consequences for the United States.

A lower cost labor force is not a “competitive advantage” for a country any more than it is for a company. Nordstrom’s, Google, Starbuck’s and Apple are famous for expending more for employee pay and benefits than their cohorts. It seems to be working for them.

Despite an overweening government and onerous labor laws, Germany is the economic dynamo of Europe and one of the most formidable exporters in the world, with a huge trade surplus. This certainly hasn’t been brought about by low wages – German factory compensation is nearly one third higher than in the U.S. Germany has encouraged its industries to aggressively export while training and nurturing workers. In addition, Germany effected an artful currency manipulation of its own by driving adoption of the Euro. This enabled the country to effectively devalue its currency – which would have been unthinkable with the Deutsche Mark – making its exports cheaper and, simultaneously, solidifying German hegemony over the European economy.

Clearly, while the U.S. continues its economy-imploding iteration of globalism, China and Germany – along with Japan, South Korea and many other countries – are ascending by practicing mercantilism. As Trump has repeatedly and vociferously stated, it’s time for the U.S. to get smart.

As I outlined in my rebuttal to Kudlow’s and Moore’s op-ed, I submit that the United States’ unique combination of rule of law (once it resumes), capacity for innovation, infrastructure, natural resources, diversity of people and culture gives us a competitive advantage in virtually every area of economic endeavor. That’s not jingoism, it’s demonstrable. For instance, given the huge technological leaps in 3-D printing and advanced robotics germinated at American universities and research labs, there’s no reason iPhones can’t, in the foreseeable future, be fabricated here instead of assembled by thousands of Chinese workers at Foxconn. All our “stuff” – from cars to computer chips to kitchen appliances – have to be manufactured somewhere. Why isn’t our government doing everything possible to collaborate with our companies and internationally-envied educational and research institutions to make it here?

When U.S. jobs disappear or aren’t created due to hordes of low cost workers accessed overseas, enormous economic and social problems arise in our country that overwhelm what American consumers gain through lower priced imported goods. 

As the chart shows, means tested welfare spending began mushrooming in tandem with our trade deficits, despite the much-ballyhooed “Welfare Reform” passed under Bill Clinton. And Social Security Disability spending is rocketing, despite dramatic improvements in workplace safety.

What Trump intuitively gets – and our elites have long only paid lip service to – is that America needs to start treating its people as our greatest competitive advantage. They're devoted to our country, share our values, support our religious institutions and charities, raise our children. Keeping American workers working is a sound investment in a valuable economic asset – and social stability. A job isn’t just a production input. It isn’t just a livelihood. For most people, a job is life.  

And, except for those fortunate few who come from well-heeled families or have ready access to capital, having a sufficiently paying job is the crucial financial foundation for starting a business. The dwindling of robust middle income jobs and the stagnation in worker incomes in our era of trade deficits have eroded American entrepreneurship. Start-up density (new employer businesses divided by the total population) is far lower than it was in the late 1970s and well below typical historical rates. As new small businesses are the driving force in our economy, this paucity of startups is undoubtedly a big reason for America's protracted period of anemic growth.

It costs nearly four times as much to produce a barrel of oil in the U.S. as it does in Saudi Arabia; 50% more than it does in Venezuela. Those and several other nations would seem to have a “competitive advantage” when it comes to oil. But there’s a huge global demand for oil, the U.S. has a lot of it and we have an unmatched ability to develop cutting-edge technologies to recover it. Plus there are advantages to producing oil closer to where it’s refined. Why don’t we focus as much investment on making our workers internationally competitive, and appreciate the inherent value of their location within our borders, as we do that dark subterranean liquid?

It’s time that we reprise a simple, central theory that used to be Republican – not just Trumpian: America has to work for our workers, not just our executives, investors and political class.

A U.S. market with fairer foreign competition hardly gives our businesses a free ride. Unlike the state-dominated economy in China, the American domestic marketplace is brutally competitive. Our consumers will still assiduously price shop. Walmart will still grind down suppliers. But, without the easy availability of dirt-cheap foreign labor, it will be more financially advantageous for U.S. manufacturers to enhance worker training while developing ingenious ways to achieve efficiencies. And, unlike China, we don’t have teems of people pouring into our cities from rural areas looking for jobs, so rationalizing our trade policy can make an impact in a few years, not decades.

Irwin’s piece in The Times, after insulting his readers’ intelligence with economic sophistry, lapses into diplomatic lunacy. He ominously warns that staunching the bleeding of U.S. trade deficit dollars to other countries would threaten the dollar’s global primacy as a currency, impairing our ability to conduct foreign policy and impose economic sanctions. This canard would be laughable if it wasn’t so deceitful.

As Irwin must know, the U.S. dollar became globally preeminent shortly after World War I and dominant after the Bretton Woods Agreement near the end of World War II – more than 30 years before America began running trade deficits. Somehow, during those trade deficit-free decades, the U.S. managed to achieve the highest standard of living in human history while serving as the unquestioned leader of the free world.

The sheer size of the U.S. economy, its liquidity and relative transparency make the dollar an indispensable safe haven for foreigners. This, along with the enormous scale of our financial infrastructure and our military supremacy – not our trade deficit – are why the U.S. dollar continues to be in a commanding position among currencies.

In fact, far from bolstering the dollar’s global standing, our trade deficits are dangerously destabilizing. According to a Georgetown University study, our gargantuan global trade imbalance may have been a key cause of the 2008 financial crash and the subsequent Great Recession. The paper quotes former Federal Reserve chairman Ben Bernanke as stating, “It is impossible to understand this (financial) crisis without reference to the global imbalances in trade and capital flows that began in the latter half of the 1990s.” Bernanke goes on to say, “the global imbalances did not cause the leverage and housing bubbles, but they were a critically important co-determinant.”

In addition to inflating financial bubbles, that surfeit of U.S. trade deficit cash from overseas is the source of other serious economic distortions that do long term damage to our country. Much of that money pours into U.S. treasury debt, which keeps the federal government’s borrowing costs artificially low – camouflaging the true cost of our government and obscuring the calamitous consequences of its burgeoning debt. And the proceeds from our monstrous trade deficits are used to acquire valuable U.S. assets, including manufacturing plants that can be shut down or hollowed out to accommodate the desires of the foreign owners (many of which are controlled by their governments), high tech firms possessing processes and patents that can be transferred to the host country – eliminating a U.S. competitive advantage and putting our national security at risk – and residential real estate in New York, Los Angeles, the San Francisco Bay area and other alluring locales, which further increases the already prohibitive cost of housing for our citizens in big cities.

So, the truth is the exact opposite of Irwin’s ludicrous construct. Substantially reducing or eliminating our trade deficit would enhance the dollar’s standing by giving the U.S. a more robust, sustainable economy, fewer financial bubbles and probably help motivate politicians to start lowering federal government debt.

Finally, it's fascinating that The Times, so supportive of the radical environmentalist agenda, ignores the reality that by sending industrial production outside the U.S. through free trade, we're offshoring our environmental enforcement to China and other nations which have egregiously lax and routinely evaded emissions laws. 

So Trump’s trade policies would not only energize our economy but help protect our planet.

It’s disheartening that the vast majority of politicians, journalists and pundits lazily lap up the establishment’s free trade drivel, aiding and abetting the corrosion of America’s middle class and the collapse of African American jobs and incomes. And even worse that so many who know better cynically advance it to achieve their own selfish ends.

The only Americans who’ve benefited from our obtuse trade policies and the outsized financial sector they have fueled are the shareholders and executives of corporations that offshore jobs and import cheap products, the Wall Street players who luxuriate in U.S. trade deficit lucre, and the members of the political class - who are richly rewarded with money and power to preserve the odious economic order Bill and Hillary fostered, the elites fervently favor, and Trump has vowed to overhaul.

If Hillary Clinton is elected President, women will have a very bad #EqualPayDay (the hashtag devised to drive equal pay for women). Because an intolerable number of men and women are jobless or underemployed due to the Clintons, their elite cronies and countless Republican enablers. And how can a higher minimum wage possibly increase incomes when all but America’s best educated and most advantageously situated workers are continually undercut by unbridled importing and offshoring?

Trump can defeat “Crooked Hillary” in November – for the very same reason that the elites are relentlessly scheming to stop him. As my friend Newt Gingrich stated well on Fox News Channel, “Donald Trump is the greatest threat to the establishment in my lifetime. If you’re a part of the establishment, he’s a horrifying figure. They’re going, ‘Oh my God, if he won, he’d actually change things!’” 

Not a moment too soon.  

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