Spieckerman Speaks

Tuesday, June 12, 2018

President Trump's "Alarming" Behavior Towards Our Allies


President Trump’s comment at last week's G7 press conference, that the United States is like “the piggy bank that everybody is robbing,” epitomized what some of his critics call "alarming" behavior towards our allies.

Thank God this president is sounding the alarm! As the saying goes, “With friends like this, who needs enemies?”

Our aggregate goods trade deficit with the EU, Canada and Japan is $240 billion – the equivalent of over one million well-paying American jobs sucked out of our country.

The failure of other NATO nations to live-up to their commitment to spend 2% of GDP on national defense (they spend less than 1.5%) requires the U.S. to lay out an additional $110 billion annually to make up the shortfall. Japan only spends 1% of its GDP on defense. Using the 2% of GDP metric, this is forcing America to pony-up an additional $50 billion per year for Japanese military protection.

That’s a total of $160 billion U.S. taxpayers are incurring in unfair defense outlays for NATO and Japan. That’s almost enough to pay for a private group health insurance policy for all 25 million uninsured U.S. citizens.

Keep in mind, the U.S. spends almost 3.5% of our GDP on defense.

Perhaps this provides a bit of perspective when one hears Bernie Sanders rhapsodize about the wonderful, government-funded universal health insurance in other western nations. He neglects to note that all of them are protected by the bounteous U.S. defense shield. 

And, speaking of healthcare, why do those nations pay far less than Americans for prescription drugs? Because they impose draconian drug price controls - and that's only possible because the U.S., which doesn't have prescription price controls – is the cash cow (or should I say, piggy bank?) for the international pharma industry. Were the U.S. not so stupidly generous, biotech and drug R&D would dry-up overnight.

Let’s focus-in on Canada and Germany, the two G7 countries who’ve been the most visible in feigning apoplexy about President Trump’s demand for a change in the United States-sapping status quo.

The U.S. has an $18 billion goods trade deficit with Canada. And, because of its shortfall against the NATO defense spending obligation, we incur about $11 billion in additional defense expenditures to protect our neighbor to the north. That’s a total of $29 billion per year.

We have a $66 billion goods trade deficit with Germany. And making up for that country’s underspending on defense is costing us $27 billion annually. A total of $93 billion.

So, these two beloved allies are costing our country over $120 billion per year. No wonder Merkel and Trudeau are terrified at the prospect of President Trump bringing things into balance!

Meanwhile, Merkel and other G7 leaders knocked President Trump for supporting re-admission of Russia into the group - at the very time Merkel is pushing a strategically dangerous gas pipeline deal with Russia opposed by the Trump Administration! Perhaps the G7 should be re-christened as the "H7" - for hypocrisy. 

Our $820 billion total annual goods trade deficit almost equals our budget for national defense (including President Trump’s buildup and Overseas Contingency Operations) and the VA, combined. Even after accounting for the U.S. surplus with the world in services (which, as noted in my recent piece on trade and tariffs, provide far fewer well-paying middle class jobs than do goods exports), our country still has a nearly $600 billion trade deficit. 

Where do we get the half-a-trillion-plus to pay for that gargantuan trade gap? Through a noxious combination of borrowing, foregone U.S. domestic investment and selling our valuable assets to other countries. This is the ghastly “balance sheet” to which President Trump alluded in his G7 summit press conference. In addition, our colossal goods trade deficit is having a dreadful impact on jobs, incomes and the health of our citizens.

That’s one hell of an “international order.” To those who continue to minimize this fleecing of America by our "friends," what happened to “believing in data”?

Sunday, April 29, 2018

Deliverance from the Devastating Free Trade Hoax

My piece on trade is below this screenshot link to "Nine Minutes that Negate the Free Trade Nonsense," a rapid-fire montage of recent TV appearances . As you'll see, I frequently have sharp but fun debates with Fox Business/Fox News anchor Neil Cavuto, and call-out the elites, the establishment media, "mainstream" economists and misguided politicians.

Those who criticize President Trump’s tough trade policies and the whole idea of import tariffs are ignoring economic history and woefully out of touch with reality. 

This 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 President Trump received 55%+ of the voteApparently, average Americans “get” the tragic trade reality that eludes the elites.

The hysterical claims that our trading partners will retaliate with their own tariffs is laughable. The U.S. has an $800 billion annual goods deficit – so any import tariff construct will be decidedly to our advantage, irrespective of what other nations do.

This ridiculous “trade war” trope is fed by Wall Street and C-Suite fat cats and their economist, pundit and politician lackeys in both parties. And, sadly, their alarmist drivel is lapped-up by journalists too lazy to do their own research or question the establishment's conventional wisdom. Here’s the truth: the United States is already in a trade war, and we've been losing, disastrously.

Conveniently left out of the elite’s perfidious defense of our horrific trade policies is that only seven other countries in the G20 have a goods trade deficit and only three of those - the UK, India and Turkey - have one as large as ours relative to GDP. And our yawning trade gap has continued, uninterrupted, for an appalling 40 years.

It’s time that we obliterate the economic mythology surrounding free trade once and for all.

The United States has lost 5 million manufacturing jobs since China entered WTO in 2001. And our country has a stunning $400 billion annual goods trade deficit with China. 


Even accounting for our relatively small surplus with China in services - about $40 billion – the overall U.S. trade deficit with that trading tiger is $360 billion. So our trade deficit with China is more than twice its $175 billion defense budget. A terrifying fact, given that China is emerging as our nation's primary strategic threat.

Imports from Japan, South Korea, Germany and Mexico are also sucking vast numbers of well-paying manufacturing jobs out of the U.S. The frequently touted savings American consumers have realized from cheap imports are more than offset by job losses and wage declines, enormous increases in outlays for SNAP (food stamps), disability (off the charts, despite dramatic improvements in workplace safety), welfare programs and skyrocketing suicide and Opioid addiction rates. 

The "free trade" paradigm was constructed after World War II, when the U.S. was the only major nation whose manufacturing infrastructure wasn't in ruins. So tariffs weren't necessary to protect American manufacturing jobs.

In the 1970s and 1980s, the U.S. tolerated trade imbalances to shore-up the economies of key allies and emerging economies as the Soviet threat loomed. Our trade deficits with NATO nations and Japan (though minuscule compared to the present day) were tantamount to an investment in national defense.

Today, we’re in a totally different world. The Soviet communist threat no longer exists. Our country is 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 mercantilist policies pursued by our trading partners certainly don't seem to have impaired their standard of living, much less imploded their economies. It's the U.S. whose middle class has been hammered as its factory towns have been hollowed out.

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 manufactured goods imports?

Indeed, the one high-value imported consumer product that does have a significant tariff - 25% - pickup trucks, is a huge U.S. economic success story on every front. Pickups provide the lion’s share of profits for U.S. automakers. And they certainly aren’t too expensive for middle class Americans to afford, as pickups outsell every category of passenger car. The Ford F-Series, Chevrolet Silverado and Dodge Ram trucks are the three most popular vehicles in the country. In order to avoid this tariff, Toyota, Nissan and Honda, build their pickups here in the U.S., providing thousands of wonderfully recompensed jobs to American workers. This is a real-world example of tariffs on a hugely popular, major purchase item. 

What prevents this same import tariff paradigm from working across the board?

The incessant claim that import tariffs are "a tax on consumers" is mendacious. Any taxes a company and its employees pay is a cost of doing business that's embedded in the price of the products. Workers gauge their compensation based on net pay after taxes, so their wages must be grossed-up by the employer to account for those taxes - which is added compensation expense that's priced-in.  

Of course, companies can avoid the tariffs by doing what pickup manufacturers do - make it in the U.S.A. And unlike income taxes, consumers can avoid tariff costs by buying American!

President Reagan used to say that when you tax something, you get less of it. Tariffs (taxes) on imported goods will mean less of them over time - but more well-paying American manufacturing jobs and more domestic investment. As outlined later, even if all politically plausible spending cuts are enacted, the federal government will still need more revenue in coming years. Far better that it come from import tariffs than income taxes!

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 in human history.

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.

It’s amazing how many politicians and journalists embarrass themselves by promulgating the Smoot-Hawley myth. That tariff increase – from levels already dramatically higher than today’s – had little, if anything, to do with The Great Depression. The collapse in world trade in the 1930s was an effect of that international economic calamity, not a cause. Dartmouth economics professor, author and trade expert Douglas A. Irwin writes : "most economists, both liberal and conservative, doubt that Smoot Hawley played much of a role in the subsequent contraction."  An opinion also held by Nobel Prize in economics laureate – and conservative icon – Milton Friedman.

The Great Depression came in the wake of a financial crash which was triggered by an obscenely over-leveraged stock market rife with fraud, and the near-collapse of our frightfully unsound banking system. What might have been a short cyclical downturn was grossly amplified by the Federal Reserve's stunningly maladroit monetary policy. It was further exacerbated by President Herbert Hoover's huge hike in income tax rates in 1932, ill-conceived, statist economic programs and a crisis in American confidence due to his political incompetence.

When Franklin Roosevelt took office, he revived America's collective psyche and moved quickly to rationally restore the American economy. FDR suspended the gold standard - allowing for desperately needed monetary expansion - shored-up and rebuilt confidence in the American banking system through implementation of deposit insurance and other measures, and spent a sizable sum on needed infrastructure (a far higher amount, on a relative basis, than did President Obama's 2009 "stimulus"). Tellingly, FDR's program didn't include a massive reduction in import tariffs. FDR wasn’t even given the authority by congress to change tariff rates until 1934 - all of which had to be reciprocal. As late as 1946, the average U.S. import tariff was still 25.3% - more than 10 times what it is today.

Despite little change in import tariffs, from 1934-36, U.S. economic growth exploded to more than 10% annually (exceeding China’s growth during its recent halcyon years), retracing most of the 1930-33 GDP decline. Only when, in his second term, FDR further increased taxes on higher incomes, began the Social Security payroll tax (without concomitant benefits payouts, as they didn't kick-in until several years), and fully implemented unprecedented government intervention into business and agriculture, did we enter a second severe recession in 1937. That recession ended in 1939, as our economy was substantially boosted by FDR's massive re-armament program leading up to World War II.

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, ushered in a seven-year expansion of unprecedented magnitude, "The Roaring '20s."

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

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

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 the 20th 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.






The carnage wreaked by America’s catastrophic trade policies extends beyond the jobs lost directly to rampant importing and offshoring. Our nation’s middle class is trapped in a disastrous wage decline vortex.

Walmart has 1.2 million non-managerial employees, more than the total number of U.S. auto and auto parts manufacturing workers. The average wage for the Walmart workers? $14, with little or no benefits. The average American factory worker wage? $24, most with full benefits. That’s more than a $20,000 per year difference.

No wonder so many rich investors and corporate executives extol the free trade fantasy. It has vastly expanded corporate profits while American workers have been hosed. Meanwhile, a lot of the trade surplus lucre that piles up in foreign countries flows back to Wall Street banks to be invested - generating huge fee revenue while goosing stock prices. 

Our atrocious trade policies have hit African Americans particularly hard.

Henry Ford, the father of automobile mass production, was 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 in the early 20th Century. This did much to germinate the black middle class in America. 

But the import-driven decline of American manufacturing has left many of the descendants of those who were part of the great African American migration in despair. In 1975, 40 percent of young Midwestern black men were employed in manufacturing; by 1990, that proportion had dropped to just 10 percent. 

Now, the company founded by Henry Ford is moving most of its small car production to Mexico, in a new $1.6-billion-dollar plant that will employ thousands of workers in that country – instead of more African American workers in our country. This outrage exemplifies how disastrous Wall Street-designed trade policies, favoring China, Mexico and many other countries, have ravaged the African American community.

Incredibly, many elites claim that the American importing and offshoring orgy is no problem because “manufacturing jobs are yesterday’s jobs.” Somebody’s human hands are making all those cars, car parts, flat screen displays, computer chips, machine tools and iPhones that are flooding into our country. Why can’t a lot more of them be Americans, during the long transition towards a more automated, 3-D-printed manufacturing future? 

Even if new U.S. factories are laden with robots, there will still be many well paid U.S. workers to manufacture and maintain the robots and oversee them in plants. The free trade prevaricators fail to note that China’s population is almost five-times ours; we don’t need to create nearly as many additional manufacturing jobs to have a dramatically positive impact on our middle class and overall economy.

And speaking of robots, a lot more of those Fanuc robots should be made on our shores and many more U.S.-based robotics companies should be in a position to compete with that Japanese behemoth.

Yes, 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.

Our terrible trade policies have also imperiled American national security. Our military contractors are frighteningly reliant on other countries - including China, increasingly an adversary - for key components, largely because the deluge of cheap imports has forced so many U.S. suppliers out of business.

So, clearly, President Trump's aggressive trade stance is vital to both rebuild the American middle class and strengthen national defense. But a trade policy overhaul is also essential to avoiding an economic cataclysm. 

The Congressional Budget Office projects exploding government deficits – driving government debt to a Post-War high of 100% of GDP by 2028 – and a backsliding to sub-par GDP growth of below 2% beginning in 2020. Even if the Republicans’ rosiest scenarios come to pass over the next decade, hundreds of billions more in federal tax revenue will be required to rescue America from fiscal ruin. And we must ensure that our economy will attain or at least approach its post-1930 average growth rate of 3.3%.

To meet these daunting fiscal, economic and national security challenges, we should go a step further than the president already has by imposing a 15% a tariff on all imported goods.

This December 2016 Congressional Research Service analysis reinforces the President’s authority to impose such a tariff. Beginning with the Reciprocal Trade Agreements Act of 1934, a cascade of laws and federal court decisions have provided the President with almost unfettered authority to impose import tariffs. Indeed, simply by declaring our nation's dire, unsustainable trade situation a "threat to national security," President Trump would gain the authority to impose the comprehensive 15% additional goods import tariff under Section 232 of the Trade Expansion Act of 1962.

This case is further reinforced by the point outlined earlier: our gargantuan trade deficit with China is funding a significant portion of its defense budget. So we are foolishly financing the military of the nation emerging as the greatest strategic threat to our country and our Asian allies.

This 15% additional tariff would yield $3 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 fewer goods imports would cut social welfare costs while increasing income and payroll tax revenues.

And, if the tariff succeeded in reducing our grotesque and untenable $800 billion annual goods trade deficit by just 25%, it would add a full 1% to annual GDP growth, making it possible for us to achieve the imperative average rate of 3.3%.

Let’s keep it real; we have two choices: an import tariff regime that will generate substantial additional government revenue - which is consistent with the policy America has had for most of its history - or, a huge hike in income taxes that would have to extend far beyond the wealthy, plus excruciating cuts in Medicare, Social Security and discretionary spending.

So, those who lambaste import tariffs must be asked: do you have a better plan? 

My proposed 15% goods imports tariff represents just a fraction of the 35% - 40% rate that candidate Donald Trump said would be appropriate, given the decades of job theft that’s been perpetrated by many of our trading partners. And it’s also a much lower tariff than the average from our nation’s founding until after World War II.

And what a coincidence – almost all of our non-China goods trade deficit is with “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 15% 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%!

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 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.

Imposing the uniform tariff on all imported goods eliminates the need for our government to figure out and challenge the devious labyrinth of tariffs, imported goods regulations, currency manipulations, subsidies and other industrial policies our trading partners have put in place to stimulate their exports while stifling American imports.

My proposed uniform import tariff also takes our government out of the business of picking winners and losers among specific industries affected by imports.

The U.S. may have to demand an overhaul of the WTO rubric – or even unilaterally abandon provisions that preclude imposition of the goods import tariff. As President Trump has frequently said, no international body or agreement supersedes the interests of American workers or our national security.

The 15% imported goods tariff would be the greatest social program in at least a generation. It would catalyze creation of millions more well-paying American jobs - reducing welfare and Social Security disability outlays; stop the import- and offshoring-driven downward middle class wage vortex; foment an American manufacturing renaissance that would help rebuild our inner cities and bring hope to small towns in our rural areas; and supercharge domestic investment. 

This tariff would also be a fiscal savior, generating trillions in additional government revenue without raising income taxes.

America must finally stop kowtowing to the elites who have benefited so handsomely from the free trade hoax, and stop financing the increasingly menacing Chinese war machine.

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 with 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 – among the highest expenditures per pupil in the developed world.

  • 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 giving it to them.

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 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 remain entrapped in execrable schools, forced to play the lottery for even a small chance of escaping.

Meanwhile, 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.