201611

November 11, 2016 12:49PM

Trump’s Real Immigration Policy

All of my political predictions about Donald Trump were wrong.  I predicted that he wouldn’t get the Republican Party nomination despite all of the polls to the contrary.  I followed the polls closely during the election and thought Trump would lose.  I was wrong again.  While certainly no mandate, Trump won the election.  Now the policies his administration will implement and push for are what matters.  We have very little to go on when it comes to predicting his actions.  Trump has no voting record on this and other issues.  His statements, actions, a policy paper, and his staff picks are the best indicators of this actions.

My prediction is that Trump will increase the scale and scope of immigration enforcement, rescind President Obama’s executive actions or at a minimum not allow Dreamers renew their status, massively curtail or end the refugee program, and try to convince Congress to cut legal immigration.  I’ve been wrong about Trump in the past and I hope I’m wrong here too.  Let me lay out evidence that I think supports my pessimism and evidence that supports a more optimistic interpretation.

Optimistic Take: Why Trump Could Not be THAT Bad

Trump is not ideologically grounded except that he is a nationalist and a populist.  Those political instincts usually manifest an anti-foreign bias in trade and immigration but they don’t have to.  Trump has portrayed himself as a deal maker so it’s possible he’s staked out a harsh immigration position as a bargaining tactic to get concessions elsewhere.

Trump’s personal experiences with his wives and businesses hiring illegal immigrants and guest workers may soften him.

He’s also made some statements in favor of immigration liberalization.  In 2011 and 2013, Trump supported legalization for some illegal immigrants.  He said Republicans have to do “the right thing” during the 2013 debate over comprehensive immigration reform but refused to elaborate on what he meant by that. 

Trump flip-flopped on H-1B visas numerous times during his 2016 campaign, sometimes saying skilled migrants were great and that the United States needs more of them.  In every case I’ve found, he then backtracked from the pro-H-1B position, repudiated his earlier statements, or repeated that they are taking American jobs.  He’s also said that foreigners who attend U.S. universities should stay.  Some lobbyists think Trump will not support broad immigration reform but that he might be persuaded to support liberalizing high-skilled immigration.  Lobbyists should know those things but that could also be a public projection of confidence in order to maintain morale.

In his major immigration speech on August 31, 2016, in Phoenix, he said:

“And the establishment of our new lawful immigration system then and only then will we be in a position to consider the appropriate disposition of those individuals [illegal immigrants] who remain.

That discussion can take place only in an atmosphere in which illegal immigration is a memory of the past, no longer with us, allowing us to weigh the different options available based on the new circumstances at the time.”

That’s an improvement over a “they have to go” policy.  In the third presidential debate he said:

“As far as moving these people out and moving, we either have a country or we don't. We're a country of laws. We either have a border or we don't.  Now, you can come back in and you can become a citizen. But it’s very unfair. We have millions of people that did it the right way. They're in line. They're waiting. We're going to speed up the process bigly, because it’s very inefficient.  But they're on line and they’re waiting to become citizens.”

That sounds like he wants to deport them or force them to leave but then they can come back through the legal system.  He’s made statements in support of letting the “good ones” come back a few times during the campaign, especially in the later stages.  Allowing them to come back, especially after deportation, would require significant legal changes.  His call to “speed up the process bigly” is encouraging though.  Trump could soften his deportation plan much sooner than he let on here if he’s confronted with the logistical and humanitarian nightmare of deporting more than 11 million people. 

Pessimistic Interpretation: Why Trump Will Probably be That Bad

Trump is a national populist with a zero-sum worldview.  His long opposition to trade with Japan and now China and Mexico shows that he doesn’t understand how voluntary exchanges are mutually beneficial.  Opinions on trade and immigration are tightly correlated.  His 2013 statements on immigration reform could mean that he thought the Senate’s 2013 bill would destroy the Republican Party.   

Trump’s immigration position paper is detailed, specific, and terrible.  It supports drastic cuts in legal immigration and refugees as well as harsh new enforcement measures like a border wall, mandatory E-Verify, and a greatly expanded deportation force.  Many think this plan was inspired by Ann Coulter’s recent book on the subject and some of his statements support that theory.  In return, Coulter called Trump’s immigration position paper, “the greatest political document since the Magna Carta.”   

When Trump looked like he was wavering from his immigration position in the final week of August 2016, Coulter mocked him.  In her recent book In Trump We Trust, she wrote, "There's nothing Trump can do that won't be forgiven . . . Except change his immigration policies."   Trump’s response was a blistering speech in Phoenix on August 31, 2016, where he doubled-down on his immigration stance and even read out portions of his position paper.  Coulter gave the speech her seal of approval, declaring it “better than Lincoln's Gettysburg address.”  

Virtually every time Trump looked like he was wavering in his opposition to legal immigration or stepped up enforcement, he quickly reversed course.  When he has spoken off the cuff about immigration, it has almost always been negative and supportive of deportations, cutting legal immigration, and linking immigrants to crime.  If speaking off the cuff reveals Trump’s real opinions then they are largely consistent with his policy positions.

Trump’s presumptive picks for positions in his administration are opposed to immigration reform, support more enforcement, and generally favor cutting legal immigration.  Steve Bannon, the former executive chairman of the nativist Breitbart News and chief executive office of Trump’s 2016 campaign, looks to be on the shortlist for Chief of Staff.  Breitbart’s immigration position is well known.

Trump’s picks for his immigration transition team are uniformly supportive of increased immigration enforcement and, as far as I can tell, large cuts in legal immigration.  Kris Kobach is the first member of the transition team.  He is the Kansas secretary of state and architect of many of the immigration enforcement laws around the country in the last decade.  Just yesterday he said, “the wall is going to get built.”  The second member of the transition team is Danielle Cutrona, the chief counsel in Senator Jeff Sessions (R-AL) judiciary committee. 

The connection with Senator Sessions is important and it runs throughout Trump’s other appointments – the Senator himself could even be appointed to an important position.  He is the most outspoken Republican Senator who opposes immigration reform, supports enforcement-first policies, and favors slashing legal immigration.  Trump is reportedly also considering Stephen Miller, former communications aide to Senator Sessions, for one of many potential positions.  Rick Dearborn, Sessions’ chief of staff, is also being considered for leading the office of legislative affairs. 

There are also a few leaked lists circulating around DC that say Trump is supposedly considering Cindy Hayden as head of the Department of Homeland Security.  There isn’t much information available on Ms. Hayden except that she was Sessions’ former chief counsel on the Senate Judiciary Committee. 

Sessions’ praise for Ms. Hayden is deep and effusive.  Upon her departure from the Senate in 2008, he said, “Cindy was just fabulous, and I depended on her.  Day after day, her work and the respect she engendered throughout the country played a big role in the final result, in which the [immigration reform] bill was pulled down without passage in that form.”  Senator Sessions himself wasn’t alone in his praise.  He quoted his former chief counsel William Smith and executive director of the Americans for Limited Government Research Foundation at the time, “The only group I know that will truly celebrate her departure will be illegal aliens.”  Brian Darling, then director of Senate Relations for the Heritage Foundation, was quoted as saying, “Without Cindy and ‘Team Sessions’’ tireless efforts to educate the American public on the contents of the secretly drafted amnesty bill, the bill may have become law.”  Joe Matal, then-counsel for Senator Kyl was also quoted by Sessions as saying that, “If you look closely at the corpse of last year's immigration bill, you will find a series of small squares holes in its back. Those holes were produced by Cindy's heels, stomping that bill to death.”

Trump has frequently cited the Center for Immigration Studies, a think-tank that produces near-uniformly shoddy research and supports cutting legal immigration.  It’s safe to assume that Trump facts, specific enforcement ideas, and message on immigration during his administration will be more influenced by them than any other group outside of the government.  Ending or severely curtailing refugee resettlement will be an early move.    

None of Trump’s actions since his election, from his statements to the people on his immigration transition team to those he’s considering for important positions, indicate that he is changing his position on immigration.  Trump looks like he partially wavered occasionally on the campaign when it came to high-skilled immigrants and some form of amnesty.  His instincts over the last several years show that his instincts aren’t uniformly nativist.  However, those few bits of optimism are overwhelmed by his other statements and actions to the contrary. 

Although I’m looking for reasons to be optimistic and I’m hoping my predictions about Trump continue to be as wrong going forward as they have been up to this point, the weight of evidence convinces me that his immigration policies will likely be just as bad as many of us feared.  I hope he changes and will gladly eat many humbles pies if he does but I’m not going to skip any meals in anticipation.      

November 11, 2016 11:36AM

Litigation Policy In the Trump Administration

For a quarter century Republicans in American politics have broadly campaigned on a promise of reducing the volume and cost of litigation. At first glance, it might seem that the rise of President-elect Donald Trump might signal a discarding or even a reversal of this position. As a businessman, Trump has been an intensive, sometimes zealous litigant; unlike earlier GOP candidates he has said little about lawsuit reform on the campaign trail; and some of what he has said, especially his instantly famous remarks about "opening up" libel law to allow more damage suits against the press, is in tension with the goal of a less costly and more predictable legal system. 

At the same time, there are reasons to believe that a Trump administration will maintain considerable continuity with the positions of earlier GOP administrations as well as of Congressional Republicans. Here are some of those reasons. 

* Both sides of the "v." Trump has been in court frequently as plaintiff and defendant alike. While he may be nobody's idea of a critic of litigiousness, there is little reason to believe that his instincts about the legal system are systematically pro-plaintiff or pro-trial-lawyer in the manner of some Capitol Hill Democrats.  

* Much of the national litigation reform agenda is now negative. Some of the biggest priorities in the short term are simply to block or pull back destructive federal initiatives that the Obama administration pushed hard, including proposals to ban pre-dispute arbitration in consumer and labor settings in favor of litigation; proposals to extend overtime rules deep into the white-collar workforce, with wage-and-hour class actions inevitably to follow, and the idea of interpreting the Americans with Disabilities Act to require websites and online services to be made accessible to disabled users, on pain of freelance lawsuits. Trump has signaled that his administration will be skeptical of grandiose regulation, and by knocking out rules of this sort he would also knock out much prospective litigation. 

To be sure, some litigation issues narrowly related to trade and immigrant employment might see a reset. And because Trump may be more open than most GOP presidents to cutting deals with organized labor, it is possible he will seek new solutions on issues like compensation for occupational illness arising from asbestos and other long-term exposures.  

Social reform litigation. A Hillary Clinton administration would have been likely to cheer on big cities like Miami in "disparate impact" litigation seeking massive damages from banks for lending too freely (or too stingily; the theories vary) on mortgages and construction in urban neighborhoods. Whatever else is uncertain about a Trump administration, it seems unlikely that its instincts are to put real estate development at the mercy of redistributive social justice campaigns. And while Clinton campaigned on a promise to reopen the gun-control-through-lawsuits campaign by repealing the Protection of Lawful Commerce in Arms Act (PLCAA), that idea is now gone. 

On libel law. As I and others have pointed out, our system doesn't give the President much of a say in libel law, which consists mostly of state tort law bounded by constitutional law as interpreted by the Supreme Court in cases like New York Times v. Sullivan. Some earlier presidents (as well as some noted Republican-appointed jurists) have favored broader rights for plaintiffs to recover, but there is little evidence that the Supreme Court is on the cusp of any major reconsiderations here. One may also doubt that Trump in office will really make this a make-or-break litmus test for appointees knowing that it would limit his choice of politically appealing nominees and that a chipping away of Times v. Sullivan would in any case probably take many years. 

 * Progress on litigation reform does not depend on White House leadership. Most positive change in this area has come from a combination of state legislatures and the courts themselves through judicially driven improvements in doctrine and procedure, especially via the U.S. Supreme Court (DaubertIqbal/TwomblyDukes, etc.)  With occasional exceptions, as with securities litigation and class action reform, the U.S. Congress has not achieved much in this area, in part because our system of federalism places real limits on wholesale displacement of state court authority by federal. 

All of these predictions depend greatly on appointments; Trump is known above all for his capacity to surprise. But on an issue as important to the nation's economic climate as this, don't bet on President Trump to break with the near-uniform sentiment of the business community. 

November 11, 2016 11:34AM

Reality Will Curb Trump’s Protectionist Fantasies

I said there was no way Trump would last through the early primaries.  I belittled the prospect of Trump even attending the convention, much less accepting the Republican nomination.  And I was cavalier in my certainty that Trump would be making a concession speech early Tuesday night.  In other words, by Washington’s standards, I have established credibility on the subject. 

So you should feel reassured that I am less bearish about the direction of President Trump’s trade policy than I probably should be given candidate Trump’s bellicose campaign rhetoric.

The trade policies Trump outlined in broad strokes on the campaign trail would – to put it mildly – devastate the economy.  For example, Trump has said he would:

  • impose duties on 35 percent on imports from Mexico and 45 percent on imports from China;
  • impose special taxes on U.S. companies that incorporate foreign components or labor into their production or assembly operations;
  • tear up the North American Free Trade Agreement – or at least renegotiate what he calls “the worst trade deal ever negotiated,” and abandon the Trans-Pacific Partnership, which he calls a “rape of our country”; 
  • declare China a currency manipulator and impose countervailing duties to mitigate the export price advantages that practice allegedly bestows;
  • use tax policy, protectionism, and the threat of more protectionism to compel China, Mexico, and all of the other countries with whom the United States runs bilateral trade deficits to buy more from U.S. producers and sell less to U.S. consumers in order to achieve a state of balanced trade;
  • tax manufacturing companies that lay off workers.

The list of angry, knee-jerk, foolish ideas goes on and on. If you take candidate Trump at his word, U.S. trade policy is going to be an unmitigated disaster.

That kind of hot-headed hyperventilation arguably has a place on the campaign trail. It is a coveted perquisite of the opposition candidate – the outsider – to spew venom about the status quo. But those kinds of populist fantasies rarely translate into prudent policy. 

Two things constrain Trump.  The first is Congress, which really does have constitutional authority to regulate foreign commerce.  Yes, the Peterson Institute issued a paper a few months ago documenting all of the laws under which the president has been given authority to raise trade barriers. But in almost every case there are statutory thresholds that must be surpassed or judicial review to restrain autocratic impulses. (Here's a response from a legal scholar.) The president does have more discretion – and thus greater liberty (to co-opt a good word) to act unilaterally – if he invokes his authority on national security grounds under specific national security statutes. 

Prompted in part by the specter of a Trump presidency, there is a debate emerging over whether, where, and to what extent the president has been given statutory authority to act unilaterally on trade matters. Cato colleagues Scott Lincicome and Simon Lester (both lawyers) have noted some troubling ambiguities in the language of various, relevant statutes. Of growing concern is the question of treaty withdrawal.

Without the consent of Congress, the president is authorized to withdraw the United States from NAFTA – that is not really in doubt.  The question, however, is whether congressional authorization is required to raise tariffs on Mexico and Canada back up to their non-preferential rates – and to undo the other liberalizing provisions.  If so, a withdrawal from NAFTA would have no real impact unless Congress was also on board. 

But, as Scott and Simon have noted, there are clauses in the implementing legislation for U.S. trade agreements that might be interpreted as meaning that withdrawal from a treaty nullifies it terms as articulated and effectuated in U.S. law. (Expect more from one or both of them soon.) Different interpretations of the meaning of those clauses could provoke a constitutional crisis if Trump, for example, instructed U.S. Customs officials to assess duties at the higher rates without Congress first changing the relevant laws. If this happens, Congress could file suit against the president, and that is a potential tinderbox.

If the separation of powers doctrine strikes Trump as too quaint, and he wished to push to expand his authority in the trade realm, there is a second constraint that should work: Reality.

Frankly, asserting presidential authority to impose, say, a 45 percent duty on all imports from China would be laborious and resource-consuming. The president would have little bandwidth for much else. And more to the point: Does Trump really want to destroy the U.S. and global economies?  If he’s the Manchurian Candidate, perhaps.  Otherwise, I imagine he wants his policies to succeed.  He wants to be beloved – actually, worshipped.  For that to be within the realm of possibilities, his economic policies cannot fail. They must spur real economic growth.

But it wouldn’t take very long – days, weeks – for the policies bellowed on the campaign trail and populating the first draft of the “First 100 Days” documents to spawn a mass exodus of capital and the ditching of plans to send more foreign direct investment to the U.S.  The negative economic results would begin to show up in the statistics within one quarter.

I suspect Trump will continue to talk tough, but we can bank on his hubris and vainglory being better fortified by economic policies that history will judge kindly.  Implementation of any of his protectionist ideas, I believe, will be more cosmetic than functional.

There may be a rocky first year beset by rising trade tensions, especially with China, but also the possibility of course correction before too much damage is done.  Regardless, we all have our work cut out for us.

November 11, 2016 10:20AM

The American Promise

We hold these truths to be self-evident, 

that all men are created equal, 

that they are endowed by their Creator with certain unalienable Rights, 

that among these are Life, Liberty and the pursuit of Happiness.--

That to secure these rights, Governments are instituted among Men.

November 11, 2016 9:29AM

Trump and NATO – Redefining the U.S. Role

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Throughout the 2016 presidential election, Donald Trump’s attitude toward NATO has engendered significant consternation throughout both Europe and the U.S. foreign policy establishment. Although the president-elect has not explicitly advocated pulling out of the NATO, he has suggested that the United States should rethink its involvement since the United States continues to bear a disproportionate share of the defense burden within the alliance. The incoming administration could thus be poised to conduct the sort of “agonizing reappraisal” that John Foster Dulles threatened 63 years ago. Although a complete withdrawal from NATO would be unwise, the time to redefine the United States’ role in the alliance may have arrived.

Critics have attempted to undermine Trump’s intimation that he might refrain from defending NATO allies such as Estonia by suggesting that the United States is treaty-bound to do so. The day after Trump’s election, Jens Stoltenberg, NATO’s Secretary General, insisted that “NATO’s security guarantee is a treaty commitment…All allies have made a solemn commitment to defend each other. This is something absolutely unconditioned.” But that is only true to a certain extent. Article V of the North Atlantic Treaty stipulates that in the event of an attack against a NATO member state, each ally “will assist the Party or Parties so attacked by taking forthwith, individually and in concert with the other Parties, such action as it deems necessary, including the use of armed force, to restore and maintain the security of the North Atlantic area.” The key phrase “as it deems necessary” gives the United States a great deal of latitude.

Were the North Atlantic Council to invoke Article V in response to a Russian incursion into Estonia, for instance, the United States could fulfill its treaty obligations in any number of ways. The Pentagon could certainly deploy the U.S. military to combat Russian forces directly. On the other hand, the United States could restrict its role to the provision of military equipment and logistical support to its European allies. To borrow a phrase from Franklin D. Roosevelt, the United States could serve as the great arsenal of NATO.

Some would argue, however, that although Article V does not legally obligate the United States to deploy military forces in defense of its NATO allies, such a response would be essential to preserve American credibility. In other words, if the United States failed to defend its NATO allies against Russian aggression, all of the United States’ other allies around the globe would begin to doubt whether they could really depend upon the United States. Yet U.S. credibility would only suffer if Washington were to maintain an expectation of U.S. intervention and subsequently failed to fulfill that expectation.

If the incoming Trump administration is serious about reducing its commitment to NATO, its first priority should therefore be to eliminate the expectation that the United States would automatically intervene militarily in defense of its NATO allies. For that expectation is the root of the inequitable distribution of the defense burden within NATO. Why should the European allies invest significantly in defense if they can count on the United States to guarantee their security? Rather than maintaining an implicit commitment to spearhead any defense of NATO territory (particularly in Eastern Europe), the Trump administration could make it clear to the allies that the United States will serve as a balancer of last resort in Europe. In other words, the European allies will bear primary responsibility for the defense of Europe; the United States will only intervene in dire circumstances if they are unable to defend themselves (much like during the two world wars).

Redefining the United States’ commitment to its NATO allies in such a manner would need to be accomplished gradually, however. After years of underinvestment, European militaries suffer from significant deficiencies. Heavy land forces, in particular, have atrophied substantially since the end of the Cold War. Germany’s fleet of Leopard 2 main battle tanks has declined from 2,020 in 1990 to only 306 in 2015. Over that same period, the British and French tank fleets have each also shrunk from over 1,300 to about 200.

In the long run, however, Europe certainly has the wherewithal to ensure its own defense. In 2015, the combined GDP of Britain, France, and Germany totaled nearly $8.6 trillion—seven times that of Russia. With 210 million people, those three allies command a population 1.5 times that of Russia—and significantly healthier. Since the economies of Western Europe are also much more technologically advanced than that of Russia, the European allies are capable of constructing robust, technologically-advanced military forces capable of defending against Russian aggression.

To give the European allies time to construct such military forces, the Trump administration could delineate a timetable for the phased withdrawal of U.S. forces from Europe. The first phase could focus on the withdrawal of the U.S. forces that the Obama administration has deployed to Eastern Europe as part of the European Reassurance Initiative, essentially in violation of the NATO-Russia Founding Act. While encouraging European allies to step up and shoulder more of the defense burden in Europe, such an action would constitute an important first step in alleviating Moscow’s concerns that the United States is intent upon isolating and encircling Russia. After pulling back from NATO’s frontier in Eastern Europe, the United States could gradually reduce its military presence in Western Europe over the next decade.

One problem with a phased withdrawal would be its reversibility. Since the timeline for such retrenchment would extend beyond a single presidential term, a potential Trump successor could easily halt of reverse such a policy. Yet that possibility should not encourage the new administration to undertake a risky, immediate withdrawal from Europe. A phased U.S. military withdrawal from Europe would be a more prudent choice. 

November 11, 2016 9:19AM

100 Days of Trump Trade Policy

Donald Trump is well known for his vociferous complaints about foreign trade.  Trump has also gained notoriety for offering very vague policy proposals, and trade is no exception.  This has left observers knowing that Trump wants to do something big on trade but without much sense of what, specifically, that will be.  Now that Trump is president-elect of the United States, that uncertainty is bound to vanish as Trump’s plans and intentions necessarily become more concrete.

For the moment, however, we are left to speculate based on Trump’s vague and bellicose announcements.  The most reliable indicator of Trump’s plans is probably Trump’s “100-day action plan to Make America Great Again” he produced in the closing weeks of his campaign.  That plan has reportedly been fleshed out a bit by his transition team.  The plan includes numerous executive actions and a list of legislative proposals. 

In one section, Trump lists “Seven actions to protect American workers,” four of which directly involve trade.  Let’s go through them one by one.

Renegotiate of Withdraw from NAFTA

It’s no secret Donald Trump really doesn’t like NAFTA.  He has said that NAFTA “destroyed our country.”  It’s safe to assume Trump means to act on this.  According to Politico, the longer version of Trump’s 100-day plan specifies that Trump will start renegotiating NAFTA on day one and withdraw from NAFTA “by day 200” if he hasn’t gotten what he wants yet.

Claims that NAFTA should be renegotiated are not unique to Trump.  Both Barack Obama and Hillary Clinton promised to renegotiate NAFTA.  Their concern, however, was that NAFTA doesn’t have strong enough provisions on labor and environment regulation.  Obama even claimed that the TPP—which does have stronger labor and environment provisions and includes all three NAFTA countries—is the embodiment of his promise to renegotiate NAFTA.

But for all the complaining Trump does about NAFTA, we don’t really know specifically what he doesn’t like about the agreement.  He has misguided concerns about bilateral trade deficits, so he probably wants to raise U.S. tariffs while keeping Mexican tariffs low.  Mexico, of course, will not want to do that.

The only leverage he seems to have to get Mexico to agree to those terms is the threat to withdraw from NAFTA.  And withdrawing from NAFTA is something Trump has the power to do.  Under the terms of the treaty, any member can withdraw after giving six months’ notice.  This sort of thing has never happened before and it’s not clear exactly what legal authority Trump will use to raise U.S. tariffs after withdrawing or what he will raise them to. 

What we do know is that ending NAFTA would be disastrous.  Americans conduct more than $3 billion per day worth of trade with Canada and Mexico.  Withdrawing from NAFTA would severely disrupt integrated North American supply chains that depend on zero tariffs and predictable trade laws.  Ironically, the only way Trump can “fix” NAFTA is by threatening to eliminate its many benefits.

So we need to seriously consider the possibility that Trump has no real intention of withdrawing from NAFTA.  It would make a lot of sense for him to secure some minor concession from Mexico and play it up like a big achievement.  That may be the best possible outcome for everyone.

Withdraw from TPP

This is action is pretty simple and straightforward.  Trump referred to the TPP as “a rape of our country” and shows no sign of letting up on his opposition. 

The TPP has already been signed by the United States but has not been ratified or entered into force.  President Trump could simply refuse to submit it to Congress and the agreement would die.  He’s bound to make an official announcement though, probably in the first few days of his presidency.  What the rest of the members of the TPP do afterwards will be interesting to watch, but it will happen without the United States.

Neither Trump nor his surrogates have said what he will do about the ongoing free trade negotiations with the European Union or various agreements in the works at the WTO.  That will be something to watch over the coming months.  As we learn who will fill key positions in Trump's administration, we will learn more about the probable fate of these projects. 

Label China a Currency Manipulator

Thankfully, labeling China a currency manipulator has little to no meaning for actual trade policy.  It won’t raise tariffs or impact in any way the right of Americans to trade with people in China.

Unlike ripping up trade agreements, it’s also not an especially radical thing to do.  Mitt Romney made the same promise during the 2012 campaign and Hillary Clinton promised this year to crack down on foreign currency manipulation.

It will certainly be worth watching how the Trump administration deals with the issue of currency manipulation in the future, but labeling China a currency manipulator simply scores domestic political points and antagonizes the Chinese government.

“Use every tool under American and international law” to “end foreign trading abuses”

On one level, this is just a plan to maintain the status quo.  We have trade laws in the United States and agencies that exist to protect rent-seeking U.S. industries from foreign “abuses.”  Contrary to Trump’s campaign rhetoric, those agencies are not incompetent or failing to do their job.  Trump’s plan to support the use of trade remedies and bring challenges at the World Trade Organization simply continues a longstanding policy of previous administrations.

But there’s also a more alarming possibility.  There are a number of dormant U.S. trade laws that grant the President the power to raise trade barriers under various circumstances, and some of these laws are worded broadly enough to be used beyond their original purposes.  Gary Huffbauer at the Peterson Institute has provided a thorough explanation of how Trump might use these laws to impose high tariffs on goods from China or Mexico.  There’s a lot of uncertainty as to how this would all play out because, thankfully, past presidents have not been belligerent mercantilists. 

Considering the sort of promises Trump made during the campaign to keep Carrier and Ford from moving manufacturing operations to Mexico, it’s not unreasonable to fear Trump will use whatever powers he has available to punish U.S. companies that invest in foreign manufacturing.  There’s no indication that Trump already plans to do anything like that in his first hundred days, however.

The most ambitious and defining part of Trump’s trade plans will be his effort to renegotiate NAFTA.  If he succeeds, U.S. tariffs may go up and we will all be a little worse off.  If he fails and follows through on his promise to withdraw from NAFTA, we will all be even more worse off. 

It’s going to be an interesting year.

November 10, 2016 3:18PM

Trump Spending Cut Ideas

President-elect Donald Trump said on the campaign trail that he will balance the federal budget and cut wasteful spending. Here are some of Trump’s views on budget reforms:

  • “We are going to ask every department head in government to provide a list of wasteful spending projects that we can eliminate in my first 100 days.” Source.
  • “We can also stop funding programs that are not authorized in law. Congress spent $320 billion last year on 256 expired laws … Removing just 5 percent of that will reduce spending by almost $200 billion over a ten-year period.” Source.
  • “I may cut Department of Education. I believe Common Core is a very bad thing,” Trump said. “I believe that we should be — you know, educating our children from Iowa, from New Hampshire, from South Carolina, from California, from New York. I think that it should be local education.” Source.
  • “If we save just one penny of each federal dollar spent on non-defense, and non-entitlement programs, we can save almost $1 trillion over the next decade.” Source.
  • “We’re going local. Have to go local. Environmental protection—we waste all of this money. We’re going to bring that back to the states … We are going to cut many of the agencies, we will balance our budget, and we will be dynamic again.” Source.
  • “Waste, fraud and abuse all over the place. Waste, fraud and abuse. You look at what's happening with Social Security, you look—look at what’s happening with every agency—waste, fraud and abuse. We will cut so much, your head will spin.” Source.

I hope my head does spin from cuts, although most of Trump’s proposals are vague and quite timid. Still, I’m hoping that the more the incoming president finds out about the federal budget, the more he will appreciate the need for major terminations.

So let me suggest some wasteful spending that the new administration should tackle, and the annual savings from terminating each:

President Trump will face major budget pressures in coming years as deficits and entitlement spending soar. Today’s $600 billion deficits are headed toward $1 trillion, and deficits will be even higher if a recession comes along.

Federal spending cuts would help avert a fiscal crisis and boost growth by reducing economic distortions. The incoming Trump team should start with some of the cuts here, and there are plenty more proposals at DownsizingGovernment.org.