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Bill Owens: Confounding And Confusing Events 6/7/21

The lingering effects of Mr. Trump’s tariffs on US Manufacturers, who tend to be a conservative and pro-Republican group on balance, has them claiming that tariffs are one of the biggest causes for the onset of inflation or at least it’s potential on-set. This is an important economic issue first because it likely is one of the culprit’s leading to inflation since they increase prices and as we all should know by now, those prices are passed onto the American consumer, they are not paid by the manufacturer or the seller, and second, the fact that this is another attack by solid republicans against Mr. Trump’s policies.

The Israeli saga continues as we recently learned from news reports that a coalition government has been agreed to, nonetheless, there is concern that it might not be able to be brought to fruition as pressure is applied against the far-right members of that coalition. Mr. Netanyahu has a great deal at stake as his loss of his position as Prime Minister would open him up to any number of negative outcomes and reduce and eliminate the shield that he has in the fall of his various prosecutions. This entire process brings instability certainly to Israel but also to the Middle East in general. The intractable problems that Israel faces with regard to the Palestinians and conversely the intractable problems that Palestinians face with Israel, will not be solved by Mr. Netanyahu’s ouster.

Mr. Biden’s budget has any number of important issues which are either addressed or ignored that will have significant impact on the economy going forward and certainly on Mr. Biden’s presidency. The budget makes many assumptions about inflation, borrowing costs and like all budgets when we look back at what has been projected even in the last 15 years by Mr. Bush, Mr. Obama, and Mr. Trump, there aren’t really surprises in Mr. Biden’s budget but simply differences in approach. Obviously, a low level of borrowing costs is essential to allowing the American economy to grow and for funds to be used for constructive purposes rather than simply debt repayment. If interest rates rise, of course that could all change and we may be facing a different scenario. Mr. Biden’s budget also assumes that inflation will stay relatively low at around 2% a year which again, portends good things generally for the economy and obviously allows Mr. Biden to take steps to implement his overall plan.

Mr. Biden and Senator Capito of West Virginia have been meeting and apparently making some level of progress towards a compromise that would get us an infrastructure bill. You may recall that the infrastructure bill has been on the table since at least 2010 and neither Mr. Obama nor Mr. Trump was able to move it forward. This is important not only for America’s infrastructure which is in dire straits, but also if Mr. Biden can achieve a comprise with Republicans, this could be a huge step forward for all of us and may usher in a period when compromise may again return to Capitol Hill. This will anger the far-right and the far-left, but in my view so be it. Get it done.

Mr. Trump continues to assert that he will be reinstated as President in August of 2021 on the basis of the absurd audits that are going on in Arizona and in Georgia. I say absurd because the Republican officials who oversaw both of those elections are unwavering in their assertion that there were no irregularities nor fraud, yet the truly unhinged supporters of Mr. Trump believe otherwise. We also have general Flynn saying on tape that there should be a coup by the military in the United States to take over the government, and at a minimum remove Mr. Biden while a Capitol police officer is quoted in the news media who was viciously attacked on January 6th, that those kinds of comments by Mr. Flynn and the comments made my Mr. Trump pre-January 6th led to the January 6th insurrection and are likely to lead to more violence. This is obviously very problematic at virtually any level. The fact that supporters of Mr. Trump including our Congresswoman Ms. Stefanik, support these types of absolutely insane lies is very troubling.

The Canadian border as you likely know is closed through June 21st but Congresswoman Stefanik is calling for unilateral action by the United States to allow non-essential travel across the border. The major area that is not addressed in Ms. Stefanik’s approach is the fact that there is no methodology made available to address who has been vaccinated, who has not, who is sick, and who is not. In the absence of some evidence, that would leave states like New York with very little option other than to place a quarantine on people who come across and that would create an enormous burden on the Health Departments, particularly those along the US-Canadian border. As I indicated several weeks ago, it is not unreasonable to allow fully vaccinated individuals to come into the United States and if that was the proposal, I would support it, but that is not what Ms. Stefanik is offering – she is simply saying let people in based upon their relationships either to family or because they have land or boats in the United States but without concern for whether or not they are potential carriers of COVID-19. Another political stunt.

Several months ago now Reddit caused GameStop stock to move violently up and down as it urged people to purchase shares for the purpose, apparently, of negatively impacting those that had shorted the stock. It now appears that the same thing is happening with AMC, the entertainment company, as its stock is moving violently with apparently the same purpose in mind. The impact of this has been to clearly damage the short sellers but in an unanticipated consequence created by driving up the value of the stock it has allowed those companies to issue new shares at “the market” which is a more rapid way of having a public offering which directly raises funds for the Company and has been used to eliminate debt, in some cases almost completely, and to fund operations at unanticipated high levels. This is clearly an activity that the SEC needs to be looking at as it is very difficult to know exactly who is pulling the strings, and the why. This is dangerous and it needs to be regulated.

The United States has filed appropriate paperwork to request a panel to review Canada’s dairy support system. This has been an ongoing issue since the onset of NAFTA and during the recent USMCA negotiations. These supports directly impact dairy farmers in Northern New York as it inhibits the export of milk and milk products to Canada as the supports provided protect that particular Canadian market. Obviously, Canada is disturbed by that process while at the same time the US continues to pursue tariffs against Canadian softwood lumber asserting also in that supports are being offered in that area as well. The issue with softwood lumber however is substantially different as I’ve noted before because softwood lumber prices are skyrocketing in the United States and there would be downward pressure if the tariffs were removed and quotas were removed as supply would increase and costs should drop. Home builders, home buyers, and the lumber industry in general would benefit from the elimination of the softwood lumber restraints.

The G7 Nations agreed to a minimum corporate tax of 15%, however, many smaller nations have little reason to comply. Certainly, if all had the same rate of taxation, that would help larger countries retain multinational income for tax purposes.

The US created 559,000 jobs in May and unemployment fell to 5.8%, yet almost all employers need more help.

It appears that representative Margorie Taylor-Green was comparing the House mask mandate to the holocaust, and to no one’s surprise, only a few Republican lawmakers have voiced their disapproval of her activity, and most of them, if not all, were those who voted to impeach Mr. Trump at his second trial. It appears Ms. Green has no understanding of history, and her contrasting a public health crisis with a deliberate attempt to eliminate a population of individuals based upon their religion, demonstrates a clear lack of understanding of the world around her. Those who voted for her must be incredibly blind and limited in their intellectual capacity.

Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

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