On the tariff question, the Wall Street Journal recently concluded, “Government can always help a politically connected few at the expense of the many. But on every other measure the steel tariffs have been a bust.” This concluded an analysis of the impact tariffs had on deficits, steel pricing in the US, and wages in the US steel industry.
AG organizations and the National Chamber of Commerce have embarked on an aggressive push to see the USMCA passed. Progressive Democrats in Congress have indicated they want changes to the deal before they will support it, while Republicans want steel and aluminum tariffs lifted. Mr. Trump appears to want quotas. It is unlikely that there are sufficient votes in Congress to pass the USMCA currently. Free Trade was once a Republican platform plank that has dwindled to a few splinters.
Manufacturing has seen a decline in jobs as we noted last week, and this week we find that manufacturing output has declined for two consecutive months in 2019. The dairy sector has had a particularly difficult time over the last several years, which may be having a direct effect on the manufacturing sector as declining income for farmers means fewer pieces of farm machinery are produced, and when you add in the interest rate increases and trade tensions, investment in equipment is certainly going to soften.
POTUS introduced his budget which has some interesting aspects to it. Military spending is going to be up 5%, but that just covers the monies POTUS is proposing to take to build the wall from military construction. Where are the funds to increase equipment purchases, technology and other expenditures that will enhance our military ability and protect our troops? Nondefense spending is down 9%, and the wall gets $8.6 billion. This budget also projects a $1.1 trillion deficit in 2020, with continuing deficits until 2029 when the deficit will be $202 billion. Now here is an old favorite, the budget proposes savings of $2.8 trillion over 10 years from “wasteful spending, fraud and abuse.” This has produced virtually nothing, although it has been espoused for years. There are lots of other interesting tidbits in the budget, but one more worthy of note, the debt is now $16.9 trillion but will grow to $24.8 trillion over the course of this budget projection. I thought that deficits and debt reduction were another plank of the Republican platform. This is not reduced to splinters, its not anywhere to be found.
New York farmers, both in the dairy and apple industries, are expressing the need for immigration reform to allow them to secure the necessary migrant labor that they need to harvest their crops and care for cows. The President has harnessed many in the country to support his agenda of curtailing immigration at any cost. It may well be the real cost will be fewer options at the grocery store, and certainly higher prices. This begins to sound about the same as the impact of steel tariffs.
Beto O’Rourke raised $6.1 million in the first twenty-four hours of his campaign, slightly edging out Senator Bernie Sanders. Also of note, was that Senator Gillibrand with her announcement of her candidacy, did not mention her fund raising, nor has she since her announcement.
The news of the college admissions scandal of last week, which in reality effects an infinitesimal number of people, managed to overshadow the real crisis facing colleges, students and parents, student debt. It is currently estimated that student debt is approximately $1.5 Trillion, which creates far more stress for far more people, than those who can pay hundreds of thousands of dollars or pay a substitute to take an admissions test. It probably would have been a good idea if the government focused on solving that problem.
It appears that recent polling in New York City found that ? of those polled blamed Congresswoman Ocasio-Cortez for the cancellation of the Amazon project in Long Island City. Other polling has also found that her unfavorables have risen significantly. Congresswoman Ocasio-Cortez has taken full advantage of the spotlight turned on her, and she may now have to consider reeling in her impulses and comments until she has a better understanding of the implications and impacts of her comments. We have many politicians including POTUS and the Congresswoman who play so heavily to their base, they run a substantial risk of drifting to the extremes, when, in fact, they need people closer to the middle for their reelections.
Recent disclosures indicate that Mr. Trump borrowed over $2 billion from Deutsche Bank, and that that institution itself is in merger talks. Mr. Trump before he was President had several major defaults on significant loans with Deutsche Bank, and yet, they continued to fund his projects as he skipped from one office of the institution to another. What will the ultimate disclosures be from the numerous Subpoenas that have been served on Deutsche Bank relative to Mr. Trump, who knows, but my inclination is to follow the money.
Also on the trade front. China is making noise about pulling back on some of its trade promises. Clearly that process is slow and appears to be moving in circles.
The efforts with our European allies to discourage use of Huawei products is faltering. Typically an effort of this magnitude would be done by sophisticated information sharing from credible sources. Instead we tweet.
On Thursday, March 25th, the EU announced a conditional extension for 90 days to the Brexit exit. Britain must have a plan by mid-April. We’ll see.
Mr. Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.
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