Let's Fix This Country

Looks Like Healthcare Reform Is As Good As Dead

The media were bemused by the Rose Garden festival that took place after the House in early May passed the American Health Care Act by the slimmest of margins — 217 to 213 — referred to variously by its acronym AHCA as well as
President Trump and House Speaker Ryan
celebrate partial
passage of healthcare bill
in the White House Rose Garden
Trumpcare. The media could not remember there ever being a celebration of a bill after it had cleared only one of the houses of Congress.

It’s a fair guess that President Trump wanted to make a big show to his following that he was keeping his promise to repeal and replace Obamacare because he might not get another chance. No one expects the Senate to pass the bill.

Trump nevertheless exulted, “It’s going to be an incredible victory when we get it through the Senate”. Longtime Tennessee Republican Senator Lamar Alexander, chairman of the Senate health committee, said they would review the House bill, but only after its costs are assayed by the Congressional Budget Office — the House had skipped that step — and “Then we’ll go work on the Senate bill”, said Alexander. Senate aides let it be known that a Republican committee of 13 have been quietly working on a Senate bill of its own for months.

what were they thinking?

Lacking votes, Paul Ryan withdrew the first attempt. In order to get the votes of the parsimonious Freedom Caucus, the second version took away still more benefits. Twenty Republicans voted against it, but the question is why so many Republicans voted for it. They know from fellow members who dared conduct town meetings during the Easter break how deeply unpopular the first take on “replace” was with voters; only 17% approved. The new House version can only raise the public ire higher.

One conjecture says they fear being “primaried” in the 2018 election campaign by someone further to the right saying that “you had both houses of Congress but you couldn’t get it done”. Other than the ideological zealous, few come out to vote in the primaries, so the House Republicans had to show their ideological purity by cutting healthcare way back, and only then worry about changing their spots for the broader public as November 2018 approaches.

Senators don’t have their problem. Their constituency is statewide; they don’t have to worry about tightly gerrymandered pockets of voters. And they enjoy six-year terms, staggered so that only a third of them are up for re-election next year. They aren’t driven by extremist demands so they are more likely to relax some of the austerity.

The media has been full of details about the Republican plan. We’ll highlight below the most conspicuous stumbling blocks that seem sure to scuttle healthcare reform altogether. And, we’ll ask, then what?

#1: the waivers

The Affordable Care Act’s (ACA, Obamacare) bans insurers from excluding benefits or charging sick people more for coverage. An amendment to the AHCA allows both, and that was enough to win over the Freedom Caucus, some three dozen House members who want healthcare stripped to the minimum. The provision allows any state to apply for waivers that permit them to opt out of several of mandates. The amendment became the flashpoint sparking the most outrage against the AHCA.

To make for lower cost plans, the amendment would allow a peel away its choice of coverage items from the Affordable Care Act’s 10 “essential health benefits”. [2] That could include contraceptives, say, or maternity care or even cancer treatment. States might be free to reinstate the lifetime coverage limits that were banned by the Affordable Care Act.

You don’t have to worry about that if you are in an employer-paid plan, right? Sorry to ruin your day, but the Affordable Care Act says that any insurer in any state has the right to adopt any coverage plan that has been approved in any other state. [1] So if a plan in Mississippi restores lifetime limits, employee insurers and their corporate clients in New York might be eager to copy that plan as a way to save considerable money. If that loophole is widely exploited, it could affect an unpredictable number of the 159 million Americans enjoying employer-sponsored coverage.

The President complained that the media is “so unfair” because “they say we don’t cover pre-existing conditions — we cover it [sic] beautifully”. Perhaps unknown to him (neither had many Congress members read the bill) , the AHCA permits states to obtain waivers that allow them to charge higher premiums — potentially unaffordable premiums — based on the “health status” of a person with a gap in coverage who now applies for insurance. The list of pre-existing conditions is long; before Obamacare, some insurers counted as disqualifying conditions maladies as slight as acne in their quest to find as customers the least likely to cost them.

To qualify for a waiver to charge more for persons with pre-existing conditions and to keep premiums low for others, the bill says a state must create some accommodation such as a “pool” into which to assign the costlier patients. The ultimate Act would then help fund the pool. It allocates $138 billion across 10 years. The Kaiser foundation says that’s not enough by far. It estimates that $250 billion would be needed. Effectively, the AHCA would be dangling extra funds to entice states to offer their people worse healthcare.

It is the conservatives’ obsession with states’ rights that led to the waivers, but it is a provision that could lead to a disordered country with 50 different levels of healthcare, a country in which those with serious illness will find themselves having to move from one state to another to obtain lower cost coverage.

#2: age discrimination

One serious defect in the Republican plan is sure to cause trouble. The rule that insurers may charge older people five times what they charge the youngest (vs. three times in Obamacare), but give them only twice as much dollars as the young to pay for it (and very little at that — $4,000 maximum), will lead to millions of persons unable to pay for insurance at precisely the ages when they begin to need healthcare the most.

#3: medicaid cuts

The senators will also be hearing from governors in states that have taken advantage of the ACA’s expansion of Medicaid. It has been paying 100% of new enrollee costs, about to decline to a permanent 90%. The new House
The Congressional Budget Office estimate of increasing
Medicaid cuts totaling $880 billion by 10 years out.
bill, in sharp contrast, would have states paying for 50% of the expansion rolls by 2020, and would then entirely change what has been an open-ended entitlement in which the federal government has for its decades provided matching funds to states for medical assistance to however many residents meet eligibility requirements.

In 2020, Medicaid will begin paying a fixed amount per capita for those enrolled. No new applicant — new adults or families who fall below the poverty level — would be admitted to the federal rolls. Persons or families who lose Medicaid eligibility owing to rising incomes, but who then drop again below the poverty line, would not be allowed back in.

Alternatively, a state will have the option of a lump sum payment — a “block grant” — to administer as they choose (with probably little oversight, inasmuch as there has been no mention of oversight provisions).

Either way, it will be left to the states to pick up the tab for the rest, no matter the costs that regions and states are experiencing, no matter health care cost inflation. Hospitals that serve low-income patients “will just be drowning”, warns Michael Dowling, who heads a large health system in New York and calls the plan “a debacle”.

The Center on Budget and Policy Priorities estimates that $370 billion in cost would be handed to the states over 10 years. The states won’t have the money. It’s a formula for the gradual extinction of federal involvement in Medicaid, as Republicans intend.

that persnickety senate

The bill does not truly repeal or replace. Key to Republican strategy is a bill that that follows Senate rules for “reconciliation”, which blocks Democratic filibustering and allows passage with a simple 51 vote majority. The catch? For reconciliation passage, a bill must deal only with fiscal matters — taxes and spending and the like — and not with changes to the policies and structure of a law already on the books. So repeal under reconciliation leaves Obamacare’s structure in place.

Further, the bill’s first hurdle will be the Parliamentarian of the Senate who will doubtless rule that the House has violated reconciliation’s rules. Several provisions of the bill the House passed are outside the chalk lines of reconciliation rules — those waivers allowing states to change other than financial matters — for example, the minimum insurance coverage standards that are baked into the Affordable Care Act.

That means that, barring Republicans voting to change their own reconciliation rules (as they did to approve Gorsuch for the Supreme Court), the Parliamentarian must insist that waivers be removed from the Senate version.

If the Senate is able to pass a bill, it will likely be substantially different from the House offering. The next step is for both bills to be handed to a joint Senate/House committee to work out differences. If they cannot come to agreement, the Republican reform of healthcare dies right there.

If the committee succeeds, the homogenized result must then be passed by both chambers of Congress without so much as a comma changed.

Did we mention that the waivers will have been removed? We are back to where the Freedom Caucus withheld its votes. Their ideological purity will mean that Trumpcare dies at least in the House. Obamacare will remain the law of the land. As it will continue to be

It is difficult to see how a bill cobbled together with these stumbling blocks will surmount Democratic filibuster in the Senate — 60% will be needed to fully repeal or revamp anything structural in Obamacare — nor how a revised bill will win Freedom Caucus votes or if the obstacles are flattened removed and benefits are made more generous.

Meanwhile, the Affordable Care Act continues for the several months that this process plays out. That is, if it can. The Trump administration has been back and forth about whether to cut off the funding that helps those with low income reduce their deductibles and co-payments, which would affect some seven million people. An appeals court has held off on a House of Representatives lawsuit that could ban all subsidies that help people buy insurance because Congress never authorized the money that both the Obama and Trump administrations have been paying out. Whether in reaction to the uncertainty caused by the political process, or whether from financial losses, the risk is that more insurers will drop out. Five states (Alabama, Alaska, Oklahoma, South Carolina, and Wyoming) are down to one insurer in their health exchanges, and twelve are down to two, with additional insurers threatening to join the Obamacare exodus.

The President is eager to the see the ACA “explode” (or “implode”, depending on the tweet). Obamacare premiums are too high caused by a healthcare law that locks in (a) inflexibly high minimum coverage standards not tailored to age groups( those 45 to 65 don’t need maternity care) and (b) penalties for not buying insurance that are a bargain compared to those high premiums, and (c) the Republican-controlled Congress that for six years in the hopes that Obamacare would collapse has refused to consider fixing what isn’t working. The odds are strong that the Act will wither for lack of attention and its replacement will be stillborn. American healthcare will be a shambles.

backlash

This outcome will not redound to the benefit of Republicans. An ABC News/Washington Post poll in April found that 7 in 10 Americans believe that all 50 states should be prohibited from charging higher rates to people with pe-existing conditions. A Kaiser Family Foundation poll, also in April, found that a significant majority of Americans believe that “President Trump and Republicans in Congress…are now responsible for any problems with the ACA going forward”. As for the 2018 elections, “You have every provision of this bill tattooed on your forehead”, warned Minority Leader Nancy Pelosi on the floor of the House just before the vote. “You will glow in the dark on this one”.

May 27 2017 | Posted in Healthcare | Read More »

Flynn Opts for Deep Cover, Will Invoke the Fifth

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Lawyers for President Trump’s former National Security Adviser, Gen. Michael Flynn, say that the “escalating public frenzy against him” and the appointment of a special counsel “have created a legally dangerous environment for him to cooperate with a Senate investigation”, the Associated Press reported. He will therefore invoke the Fifth Amendment against self-incrimination and will not comply with a subpoena seeking documents issued by the Senate Intelligence committee.

New layers of the Mike Flynn story had been peeled back in recent days. Since the end of last year it’s been known that Flynn was paid $45,000 to join Russian President Vladimir Putin at a December 2015 dinner for the Kremlin’s media arm, RT. It then came to light that his business, the Flynn Intel Group, was paid over $500,000 by a company owned by a Turkish-American businessman close to top Turkish officials, but not until this March when Flynn belatedly followed the law requiring him to register as a paid foreign agent.

That discovery reminded Susan Rice, President Obama’s National Security Adviser (NSA), that 10 days before inauguration, her team had thought it proper to ask Trump’s incoming team to agree to a plan for Kurdish forces retake Raqqa, the ISIS capital in Syria, because the assault would carry over into the new presidency. Flynn was Trump’s NSA designee and he “didn’t hesitate” with his answer. He told Rice to “hold off”, don’t use the Kurds, even though they’re the most effective fighters. Why “hold off”? The last thing Turkey’s President Recep Tayyip Erdogan wants to see are his arch-enemy Kurds empowered. Unknown to Rice and the Obama administration, Flynn was acting in Turkey’s interest. The derailment of Obama’s strategy “would delay the military operation for months”.

The New York Times then exposed that the Trump administration knew weeks before the inauguration not only that Flynn was working for Turkey, but that he was under federal investigation for secretly working as a paid lobbyist for Turkey during the campaign. That was revealed to the transition team’s chief lawyer, Donald McGahn. President Obama, who had fired Flynn from his job as head of the Defense Intelligence Agency in 2014, had warned Trump about him. Mr. Trump made Mr. Flynn his NSA nevertheless, a post that gives access to the full complement of secrets known to America’s intelligence agencies.

On January 12th, Washington Post columnist David Ignatius revealed that on December 28th Gen. Flynn had called the Russian Ambassador to the U.S., Sergey Kislyak. Reuters followed a day later to say there had been five phone calls between the two. Those calls occurred the day before President Obama was about to impose new sanctions on Russia and expel 35 of its diplomats in retaliation for Russia’s tampering with the American elections. Both Vice President Mike Pence and Press Secretary Sean Spicer assured the public that Flynn had not discussed the sanctions with Kislyak. He was merely making arrangements for a phone call after the inauguration between Trump and Putin.

On February 10th, the Post broke the story that on January 26th, Acting Attorney General Sally Yates had called McGahn, now White House counsel, to tell him that at least one of those phone calls had been intercepted, that Flynn and Kislyak had indeed discussed the sanctions, and Flynn’s lie to the contrary made him susceptible to Russian blackmail.

Even so, the Trump White House kept Flynn on as national security adviser for 18 days after Yates’ phone call, with full access to classified and secret intelligence, and then only fired him ostensibly because Flynn had lied to the vice president who, along with Spicer, passed the no sanctions discussed lie on to the public.

The Pentagon is investigating whether Flynn broke the law that prohibits the military accepting money from a foreign source after retiring from the service. A grand jury in Alexandria, Va., has subpoenaed the records of the Flynn Intel Group. And now comes confirmation of Sally Yate’s concern for blackmail. CNN reports that Russian officials bragged during the campaign last year that they had “cultivated a strong relationship with former Trump adviser retired Gen. Michael Flynn” and believed they could use him to influence Donald Trump and his team. Conversation intercepts had indicated to U.S. intelligence officials that the Russians “regarded Flynn as an ally”, said CNN. “The way the Russians were talking about him, this was a five-alarm fire from early on”, a former Obama administration official told the channel.

To this newest revelation, the Trump
White House responded, “We are confident that…there will be no evidence to support any collusion between the campaign and Russia…This matter is not going to distract the President or this administration from its work to bring back jobs and keep America safe”.

Perhaps they already knew that Flynn would be taking cover behind the Fifth. Keeping Flynn quiet must suit the White House just fine.

May 23 2017 | Posted in Governance | Read More »

Closing In: White House Official a “Person of Interest”

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The Post tilts toward the son-in-law
No sooner had President Trump embarked on his nine-day swing through the Middle East than the Washington Post broke the story that “a person of interest” had emerged in the investigation into possibleMay 27: The Russian ambassador told Moscow that Jared Kushner wanted a secret communications channel with the Kremlin and from inside the Russian embassy, explaining why the FBI considers him a “person of interest”.
    
collusion between the Trump campaign and Russia, a person not identified by name but called “a current White House official” and “someone close to the president”. That’s few enough to be counted on the fingers of one hand.

Much as “Follow the money” was the advice of the mysterious figure called “Deep Throat” by Bob Woodward and Carl Bernstein in the Post‘s Watergate investigative reporting in 1973, that seems to have become the emphasis in the current probe into the Russia connection. (That mysterious figure turned out 33 years later to be William Felt, deputy director of the FBI those years before).

Despite having isolated someone in the White House as the person of interest, the Post article considers all in the Trump entourage who have had contacts with the Russians other than Trump himself — which includes Jeff Sessions, Rex Tillerson, Paul Manafort, Carter Page, Mike Flynn and Jared Kushner. Only the last of them, Donald Trump’s son in law and a favorite adviser, qualifies as a “current White House official”.

The Post piece gives a quick rundown on a few of these but, without singling him out, mentions that Kushner met with Russian ambassador Sergey Kislyak at Trump Tower in New York in early November and says Kushner admits to having met with the head of a Russian bank that has been under sanctions since 2014, a New York-based employee of which was in 2015 arrested as a spy, pleaded guilty and was ultimately deported. On a security questionnaire Kushner had also originally failed to list contacts with foreign leaders. We are left to speculate.

May 23 2017 | Posted in Governance | Read More »

Firing Comey: The Gang That Couldn’t Shoot Straight

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NBC’s Lester Holt interviews President
It already seems long ago, with so much happening. House Intelligence Committee Chairman Devin Nunes was scripted to “discover” documents proving Obama “wiretapped” Trump Tower during the transition. He was then to run them over to the White House (but stop on the way to tell the press) to alert the president that he had been surveilled. It fell apart when Nunes revealed he had got the documents from none other than White House staff the night before, and it turned comical when Trump blew up the timing planned for his story, telling reporters from Time of the documents before he was supposed to know about them.

It happened again. Supposedly developing on his own the case against FBI Director James Comey since he took office, Deputy Attorney General Rod Rosenstein sent a memorandum to the White House so damning that it left the President no choice. It was Comey’s improper handling of the investigation into Hillary Clinton’s e-mail last year that did him in. How unfortunate that it hurt her chances of being elected, but that could not be allowed to influence the decision. Trump took immediate and decisive action, firing the director. It of course had nothing to do with the Russia investigation.

Then came reports that Trump had ordered up the report from Rosenstein, and on a rush basis, so that the president could make the firing a Justice Department recommendation. Vice President Pence was sent out to say repeatedly, “President Trump made the right decision at the right time to accept the recommendation of the deputy attorney general”, with Spicer stand-in Sarah Huckabee Sanders saying the same.

Then Trump again blew up the cover story. In an interview with NBC’s Lester Holt two days after firing Comey, he admitted he had intended to do so for some time, undercutting what he had told Sanders and the vice president to put forth. The contradiction was his staff’s fault for their lacking in “accuracy”. Rosenstein, too, knew about Trump’s prior intention to fire Comey, he would tell senators a week later in a closed session, so another sterling reputation was damaged for playing along with a Trump sham.

Moreover, he undercut his Hillary e-mail fable when he told Holt, “When I decided to just do it, I said to myself, I said, you know, this Russia thing with Trump and Russia is a made-up story”.

The day after firing Comey and the day before the interview was when he met with Russian Foreign Minister Sergey Lavrov and their U.S. ambassador Sergey Kislyak. A week later, the Times would report that Trump said to the Russians, “I just fired the head of the FBI. He was crazy, a real nut job”. Trump told them, “I faced great pressure because of Russia. That’s taken off.” The quotes were in a document summarizing the meeting that was read to the Times by an American official. Perhaps exhausted by having to create alternate truths only to be undercut by Trump, Sean Spicer did not deny what the Times reported. The media was filled with analyses of what constitutes obstruction of justice.

May 23 2017 | Posted in Governance | Read More »

After Railing Against Leaks, Trump Tops Them All

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Lavrov and Kislyak in the Oval Office
The classified information that President Trump divulged to the Russian officials he had invited into the Oval Office has been characterized as the most valuable source from which to learn of external plots by ISIS, chief among them their intent to bring down commercial airliners using explosive devices. The Washington Post broke the story, saying that what Trump leaked was “code-word information”, meaning information so sensitive that code words are used to speak of it. This particular channel is an intelligence-sharing arrangement about which “details have been withheld from allies and tightly restricted even within the U.S. government”, officials told the Post. Endangering the source itself, Trump even identified the city in the Islamic State’s sprawl from which the report of the threat came.

The president, who repeatedly excoriated the intelligence agencies for concluding that Russia was behind the hacks into our election, now bragged to the Russians that “I get great intel. I have people brief me on great intel every day”, according to someone who was in the room.

It was disappointing to see Gen. H. R. McMaster, a top U. S. combat commander and now national security adviser replacing the cashiered Flynn, succumb to the same dissimulation that has so marred Trump White House messaging. He evaded the Post story, denying and calling “false” what the paper had not reported. “It didn’t happen”, he said only to then have to walk it back the next day, undercut by Trump admitting he’d shared information, tweeting that he had an “absolute right” to do so. McMaster was now left to say repeatedly that what Trump had told the Russians was “wholly appropriate”.

Trump’s tweet of “absolute right” was quickly echoed by his defenders, as if judgment and wisdom should play no part. Of course he had no right to blurt out the intelligence product of another country without its permission. That country was Israel, reported a New York Times follow up.

It was feared that intelligence agencies around the world that share information with the United States would become reluctant to cooperate, a loss that would diminish our own security. That proved instantly to be the case when former heads of Israel’s spy agency called for cutting off the flow of Mossad’s intel to the U.S.

There was a concern that Trump risked security by allowing Russian media (U.S. media had no access) into the Oval Office where they might have brought in electronics to Bluetooth the hum of activity in the White House. Instead, rarified intelligence was simply handed to to Russians by Mr. Trump. One commentator said, “If you look at Russian media today, they were gloating. The report from Washington on the main newscast said, ‘What Russian hackers? We don’t need hackers. Trump is just giving us secrets by himself'”.

Hillary Clinton’s e-mail transgression were a constant theme of his campaign. Trump said last August, “In my administration, I’m going to enforce all laws concerning the protection of classified information. No one will be above the law” and in September he said, “We can’t have someone in the Oval Office who doesn’t understand the meaning of confidential or classified”.

May 23 2017 | Posted in Governance | Read More »

Didn’t He Know Comey Was a Cop?

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The tug that made it a hug
It was a meeting in the Oval Office on February 14th, the day after events had forced President Trump to fire Mike Flynn, claiming it was only for his lying to the vice president that there was no mention of sanctions in Flynn’s conversation with the Russian ambassador in December. The meeting was about a terrorism threat, but once concluded, Trump asked the attendees to leave — Mike Pence and Jeff Sessions included — but asked FBI Director Jim Comey to stay.

In a memo he wrote shortly after leaving — “very rich in detail” said a Comey friend to Politico — Mr. Comey recorded that the president had asked if Comey would shut down the investigation into Flynn. Reported first by the New York Times, the memo quoted Mr. Trump as saying,

“I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy. I hope you can let this go.”

FBI associates were given the memo to read at the time, but it has not been made public. Colleagues at the FBI past and present say that Comey is in the habit of writing aides memoires — also known as memos to the file — to record as accurately as possible who said what in an encounter as a corrective to faulty memory or dishonesty. Contemporaneous records of the sort by FBI agents have been accepted into evidence in criminal trials.

This was not the first such memo. His associates say that Mr. Comey had been ill at ease at Mr. Trump’s seeming desire to establish a friendly relationship. Comey’s friend Benjamin Wittes, a senior fellow at the Brookings Institution and editor-in-chief of the Lawfare blog, recounted in an interview by the PBS NewsHour that Comey had told him of his “disgust” at Trump’s summoning him across the White House Blue Room at a gathering honoring law enforcement officials just two days after inauguration and using a handshake to pull him into a hug, as if to compromise him. It was a scene shown repeatedly on television. Five days later Comey would be asked to dinner at the White House (see “
We’ve Heard Trump’s Version. Over to You, Mr. Comey“) when the President would try to extract from Comey a pledge of loyalty. Another time, as Comey was about to board a helicopter, Trump had called simply to chat.

Asked at a press conference, with the president of Colombia alongside, whether he had asked Comey to end the probe, Trump responded “No. No. Next Question”. He had already tweeted:

It was a rather pointless bluff, suggesting that when Comey repeats his allegations under oath he will be lying. It brought a flurry of speculation of whether Trump has all White House meetings recorded. Sen. Mark Warner (D-Va) on the Senate intelligence committee, said he will “absolutely” subpoena any recordings. Sen. Jeff Flake (R-Az) on the House intelligence committee will use subpoenas if necessary to “compel” release of any “tapes” or other evidence.

James Comey has agreed to testify before the Senate Intelligence Committee in open session sometime after Memorial Day. But in the meantime, Rod Rosenstein, apparently anxious to rid himself of the messy business, has appointed Robert Mueller, FBI director from 2001 to 2013 and the picture of rectitude, as special counsel to investigate whether any crimes have been committed — collusion with Russians or otherwise. The President tweeted:

The question is, will Mueller let Comey’s appearance go forward? If Mueller intends to probe whether there was obstruction, he may not want witnesses testifying before Congress. That would reveal to Trump or whomever Comey’s story before he’s had a chance to interview other witnesses in the case.

Mueller would risk triggering a firestorm and instantly lose credibility. Mueller is a Republican and silencing Comey — once his boss as deputy attorney general when Mueller was running the FBI — will appear to be protecting Donald Trump. And the public would be irate, derived of the biggest televised political spectacle since the Watergate hearings.

Wittes closed out that interview with this observation: “Trump fired Jim Comey because the most dangerous thing in the world, if you are Donald Trump, is a person who tells the truth, is dogged, you can’t control, and who is as committed as Comey is to the institutional independence of an organization that has the power to investigate you”.

May 23 2017 | Posted in Governance | Read More »

Trump Tries to Make It All Go Away

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Donald Trump’s attempt to get FBI Director James Comey to quash the investigation of Gen. Mike Flynn was not the first time the president had tried to silence the opposition. In February, his administration tried to get FBI officials to contact news organizations to tell them their reporting of Trump associates’ ties to Russia were inaccurate. When FBI contacts refused, the White House asked Republican lawmakers to do its bidding, even successfully enlisting no less than the heads of the Senate and House Intelligence Committees, Richard Burr of North Carolina and Devin Nunes of California, who admitted they had actually made such calls to the media and did not find it improper. White House Chief of Staff Reince Priebus then turned them — like Dick Cheney building the case to invade Iraq by quoting the New York Times as authority after planting the story in the paper. In television interviews he said, “the top levels of the intelligence community” had denounced as false reports of Trump campaign contacts with Russia.

The Washington Post has now uncovered that Trump’s attempts to put an end to investigations were more widespread still. March 20th had been a bad day for the president. Testifying before the House Intelligence Committee with the National Security Agency (NSA) chief Adm. Mike Rogers alongside, FBI Directory James Comey had confirmed that the Bureau was not only conducting an investigation into Russia’s assault on the American democratic process but that they were also looking into possible collusion with the Russians by the Trump campaign. The Post learned that Trump had then sought out Rogers and the Director of National Intelligence, Daniel Coats, to urge them to publicly deny there being any evidence of collusion with Russia during the 2016 election. They both refused to comply, they said. And following the same practice as that employed by Comey, an NSA official wrote an internal memo to memorialize Trump’s attempt.

May 23 2017 | Posted in Governance | Read More »

We’ve Heard Trump’s Version. Over to You, Mr. Comey

Inserted in President Trump’s short letter firing FBI Director James Comey was a sentence that sent the media into a flurry of parsing and speculation:

“While, I greatly appreciate you informing me, on three separate occasions, that I am not under investigation, I nevertheless concur with the judgment of the Department of Justice that you are not able to effectively lead the Bureau.”

Trump tried in one go to plant in the public mind both that he, personally, was not involved in any collusion with Russia, and that he fired Comey despite his attempt to curry favor by telling him so. Why would anyone think the FBI’s investigation was his reason for firing Director Comey if he is not an FBI target? People would read the sentence and think, oh, the firing wasn’t about that and move on. So Trump must have thought.

Yet two days later, interviewed by NBC News anchor Lester Holt at the White House, Trump blew up his own story, as has become his habit (the Nunes ploy; the Rosenstein ruse). He blurted out about the firing, “In fact, when I decided to just do it, I said to myself, I said, you know, this Russia thing with Trump and Russia is a made up story…”. This has legal experts exploring issues of obstruction of justice.

Sally Yates had just testified in open session before the Senate Intelligence Committee about what she had told the White House counsel about Mike Flynn and Comey had just requested additional personnel from the Justice department for the Bureau’s investigation. The heat was becoming uncomfortable. Time to throw some tire spikes in the road.

Q and A

About the sentence, Holt asked, “Why did you put that in there?”. Trump answered, “Because he told me that”. Comey had come to the White House where, “We had a very nice dinner and at that time he told me ‘you are not under investigation’, which I knew anyway…and he said it twice during phone calls”, Trump recounted.

Mr. Trump then spelled out the occasions in which “he told me” suggesting that Comey volunteered this information, but Holt then asked, “And did you ask ‘am I under investigation'”? Trump answered, “I actually asked him, yes. I said ‘if it’s possible will you let me know am I under investigation’. He said ‘you are not under investigation'”.

polar opposites

Fox commentators focused on Comey’s alleged misconduct. The day after the firing, analyst Catherine Kittredge said,

“This is so important because it is most improper for the FBI director to ever discuss who the subject of an investigation is even with the president of the United States, and my contacts say that if that did exactly happen, it is more evidence that Comey had become highly political and it was an effort to curry favor in order to save his position as director”.

After all, didn’t Comey ask for the dinner? In the Holt interview the president said:

“He wanted to have dinner because he wanted to stay on. That dinner was arranged. I think he asked for the dinner. He wanted to stay on as the FBI head and I said I’ll consider, we’ll see what happens.”

MSNBC commentators focused on Trump’s alleged misconduct throughout the day. Their point was expressed by a White House reporter asking, “Isn’t it inappropriate for the President of the United States to ask the FBI director directly if he is under investigation”? Standing in for Sean Spicer that day, Sarah Huckabee Sanders answered, “No, I don’t believe it is”.

What to believe, if anything.

One doesn’t just call the White House and ask can I come for dinner. Former Director of National Intelligence James Clapper had just retired when he was honored at a farewell lunch given by the FBI on the same day Comey was to have dinner with Trump, Clapper related to Andrea Mitchell on her midday news program three days after the firing. Mr. Comey told Clapper about the impending dinner that evening, saying that Comey “was uneasy with that” because of even the appearance of compromising the independence of the FBI. But, said Clapper,

“Anyone who is a serving officer in the government and you’re asked by the president for dinner, I thinks it’s a professional courtesy — you’re in a difficult position to refuse to go”

Asked about the president claiming that Comey “wanted to have dinner because he wanted to stay on” as FBI director, Clapper continued,

“I don’t know what was said at the dinner — I wasn’t there — but I would find that very inconsistent with what I know of Jim Comey…it would really be inappropriate and certainly in Jim’s case out of character for him to ask to stay on. I couldn’t imagine doing that myself nor can I imagine him doing that either.”

Comey’s associates at the FBI said Comey never gave Trump any such assurance that he was not under investigation, which would violate longstanding policies. “That is literally farcical,” said one associate.

Of course, no one other than Trump and Comey know whether the director answered the president nor whether the conversation even took place. Trump has earned himself a reputation for fabricating whatever false narratives suit his needs of the moment. Comey did relate to fellow FBI staffers that Trump had twice tried to extract from him a pledge of personal loyalty, which Comey said he had refused, pledging only that he would be “honest”.

m.i.a.

Mr. Comey has not been heard from. He has apparently declined to appear before the Senate Intelligence Committee’s meeting to take place exactly a week after his firing. If everything Trump has said is fake — that nothing of the kind was said at that dinner — the committee hearing would have been the ideal venue for Comey — under oath — to tell the world. It is to be a closed hearing, but that statement would not be classified and committee members would be free to report that out.

That Mr. Comey has not taken advantage of that setting may be encouraging Trump supporters that he has something to hide and may not be heard from al all.

trump in question

Trump is clearly worried where the investigation is going. Why would the president want to know whether he is a target — and three times over? Why, if he knows there is nothing to be found? Why would he have uttered the following unseemly tweet other than to try to make any Comey denial appear to be a lie:


The incivility of Trump’s firing a longtime public servant was stunning — a letter sent by a minion to FBI headquarters when Comey was in Los Angeles at an FBI function, left to discover his termination when an aide interrupted to tell him of breaking news on television. Not to dismiss someone face to face, or at the very least with a phone call, is rank cowardice. He has now recklessly made enemies of the FBI, adding to his attacks on the entire intelligence community.

the question of comey

Comey is viewed with distrust by Democrats, who believe he directly affected the outcome of the election by announcing ten days before Election Day that the FBI had come upon an additional batch of emails in the private accounts of Anthony Weiner and Huma Abedin and then, damage done, announcing only the day before the election that nothing incriminating was found. How then can one have confidence that Comey did not try to ingratiate himself before the president at that dinner?

We bet otherwise, that Comey’s rectitude was severely dinged by his improper moves so close to the election and his mission now is self-redemption. MSNBC’s Chris Hayes, a guest on Bill Maher’s show a couple of months ago, nailed it. “It was the hospital bed moment that got him…that was the whole brand he built for himself”.

(Quick background: Comey, as deputy attorney general when his boss John Ashcroft was ill in hospital, rushed, sirens keening, to his bedside to head off George W. Bush’s White House Counsel Alberto Gonzales and Chief of Staff James Card when he heard they were on their way to get Ashcroft to sign in his probably sedated state the re-authorization of Bush’s domestic surveillance program which the Justice Department had just determined was illegal.)

Hayes continued,

“The thing that everybody says about James Comey. They say he’s very talented, he inspires tremendous loyalty. They also say he has an absolute towering conception of himself and a certain kind of moral narcissism. He is very into James Comey being the guy, the only straight shooter in a crooked town.”

May 13 2017 | Posted in Governance | Read More »

Have Trump’s Reversals Begun to Alienate His Base?

His campaign succeeded by identifying the anger in the country which he played to by lashing out at everyone and everything, painting a dark picture of “poverty and violence at home, war and destruction abroad”. Against a backdrop of dystopia he could present himself as a savior — “I alone can fix it” — who would “Make America Great Again”.

But in the process Donald Trump made extravagant claims of what he could accomplish and they became promises in the expectations of the base that
President Trump at Harrisburg, Pa., rally on his 100th-day.
elected him. Those claims could be attributed to his doing so little to educate himself about our government and the world, which he did not do even after he entered the race. Awareness might have kept him from saying “it’s going to be so easy” about all he intended to do. He seemed to treat the job so off-handedly that there was at one point a flurry of commentary about whether he was only in it to show he could win and would quit once elected, that he had run only to develop the Trump brand. The one-time real estate and casino operator had become a showman, taken with campaigning and playing to an adoring audience, leading “lock her up” and “drain the swamp” chants and playing petty tyrant commanding his followers to “get him out of here” to remove protesters. Learning the world’s most important job would have to wait. All the way to inauguration, it turned out, after which it would be on-the-job training.

When Mr. Trump announced his candidacy in June of 2015, it quickly became apparent that he had only the most cursory one-sentence-each knowledge of most of what he would be dealing with were he to become president. A wall would solve the immigration problem. He would round up and deport the 11.5 million Mexicans already here. A 45% tariff against all imports from China would bring back manufacturing jobs. He had no awareness of the intertwined economies that had developed between the U.S. and Mexico over the 30 years of NAFTA, nor the retaliation against American companies operating in China that would result, nor the cost to American companies here that import materials from both countries that they build into U.S. made products.

In these early days of his presidency, we have already seen a number of reversals from those strident populist boasts. This review of them brings up the question of whether his followers are also reviewing and are wondering whether he may be letting them down. Talk radio hosts are asking the same. The quote in the headline is from Trump’s friend Christopher Ruddy, head of conservative Newsmax Media.

jobs

Trump made a theatrical show of saving 1,100 jobs (which proved to be more like 800) from moving from a Carrier plant in Indiana to Mexico, but we heard nothing from the administration when a different Indiana Carrier plant began laying off workers preparatory to a December transfer of 700 jobs to Monterey, Mexico. His jawboning has, though, made a number of companies reticent about transferring jobs for fear of a Trump-induced public relations backlash.

He reversed an Obama executive order that had prohibited coal companies from dumping toxic wastes into stream beds, but has not followed up on his campaign promise to try to restore jobs. Perhaps he recognizes that market forces are closing in on the coal industry and there are no jobs to bring back, but he also did nothing to champion government payment of healthcare for miners stranded by out-of-business coal companies. He left that to Democrats on the Hill, who carved out $2 billion in the bi-partisan spending deal.

isolation

Taken in by the nationalistic fervor of aide Steve Bannon, Trump resurrected “America First” as a campaign slogan. Trump’s America would close its borders and stay home from wars, calling NATO “obsolete”, and placing emphasis on making America strong through Bannon’s “economic nationalism”.

“I said it was obsolete; it’s no longer obsolete”, Trump now says about NATO. “If you look at the President’s position”, Sean Spicer explained, “where he wanted to see NATO…evolve to, …it’s moving exactly in the direction he said”. The presumption that Trump is causing changes in NATO is fanciful. NATO hasn’t changed at all; it is Trump who evolved. Three of the 28 countries have committed to spend more on defense, but that’s not until next year.

Despite the full plate Trump has in dealing with the threat of North Korea, he is going out of his way to pick a fight with Iran, threatening to tear up the nuclear non-proliferation agreement, which would lead to Iran’s immediate development of a nuclear weapon.

When Obama was considering taking action in Syria in 2013, Trump had sent half a dozen tweets arguing “Syria is NOT our problem”. Yet eleven weeks into his presidency, Donald Trump launched 59 cruise missiles against Syria’s Assad’s regime. That was met with general enthusiasm after five years of Obama’s passivity, but this and his other involvements are viewed by the media as reversals of Trump’s original position of avoiding international engagement. But it is probable that, other than trade, his voters don’t place much emphasis on isolation.

miles from the swamp

“Drain the swamp” was a campaign mantra, although never defined. Did he mean honesty? In October he tweeted, “I will Make Our Government Honest Again — believe me. But first, I’m going to have to #DrainTheSwamp.” Or corruption? In Cleveland he had said, “We are going to drain the swamp of corruption in Washington, DC”. What corruption he had in mind he never said. And in his 100-day rally in Harrisburg, Pennsylvania, there it was again: “I could not possibly be more thrilled to be more than 100 miles away from the Washington swamp”.

But the origin of the phrase dates from 1903 and relates to control of the government by business interests. His followers have watched him surround himself with billionaires and a roster of advisers dominated by Goldman Sachs alumni/a — Steven Mnuchin, Gary Cohn, Steve Bannon, Dina Powell — a swamp that fits the definition far more than whatever it was that Trump believes he’s drained. Why aren’t his followers outraged by the deception?

In January, the President declared a five-year ban on administration officials becoming lobbyists after leaving government. That’s a good swamp defoliant. But Trump has already waived the rule for one official who left to take a job at the Business Roundtable. Once he begins to fill posts in a government in which hundreds of positions — 200 in the State Department alone — are vacant, he will probably have to promise future waivers to attract talent that counts on the revolving door between government and lobbying as a means to make considerable incomes. Such is today’s Washington.

obamacare

Trump at first accepted the failed House vote of repeal and replace of “the very, very failed and failing” Obamacare “disaster”, then realized first that the failure reflected badly on him and second that he needed Obamacare’s money to pay for his tax cuts, so he returned to push for a healthcare bill. Did his base hear that? Did they pick up on his saying — as he did to the Wall Street Journal — that eliminating Medicaid expansion and the subsidies that help people pay for health insurance would be for the benefit of corporations, the “hundreds of millions of dollars in savings” that would pay for slashing corporate profit taxes from 35% to his desired 15%.

Mr. Trump has been back and forth on whether the government will continue to pay “cost-sharing subsidies”. This supplement reduces the insurance deductible — the amount below which the insured must pay for medical costs — and discounts co-pays for some 7 million with low incomes. Doctors, hospitals, insurance companies, the United States Chamber of Commerce (the largest pro-business lobby) all signed a letter pressing Trump and Congress to continue the subsidies.

But the President has been using the threat to terminate these payments to try to force Democrats to sign on to the Republican repeal and replace plan. It is absolute anathema for Democrats to do anything that would help do away with Obamacare. That Trump would nevertheless use those 7 million as hostages to get his plan enacted — so many of them assumed to be members of his own base — betrays a stunning disregard of the loyal voters he had pledged to help.

None of this factors in what will be the backlash should healthcare repeal and replace be passed. Only then will the abstraction of legislation settle into the reality of the lives of those affected. They will first discover the meager amount of subsidy they will receive. Ranging from $2,000 for the young to a maximum of $4,000 for the old (curiously paid to all, irrespective of need), it is a fraction of what Obamacare paid and will cause millions to lose the insurance they finally attained under the Affordable Care Act because they will be unable to make up the dollar difference. Only then will they hear that a neighbor was denied coverage because of a preexisting condition, because that has become an option for states to adopt. The question will then be whether the anger that will arise against Trump for taking away the much more generous Affordable Care Act will turn even his base of voters against him.

china

Throughout his campaign he vowed that in addition to the 45% tariff he would brand China a currency manipulator, reducing the value of the renminbi against the dollar to make its goods cheaper. But now Trump needs China’s support against North Korea, so he has backed away from that charge. Besides, “as soon as I got elected, they stopped”, he boasted falsely on “Face the Nation”. In fact, China stopped in 2014 and has spent heavily to prop up the renminbi since. The problem, Trump now says, is that the dollar has grown too strong “because people have confidence in me”.

And the tariff? Seeking help against North Korea, Trump offered China’s President Xi Jinping a still better trading deal than the $350 billion imbalance they already enjoy.

spending priorities

Nothing has come of Trump’s budget, but it serves to show where his priorities lie. To pay for an additional $54 billion for the Pentagon, he took the ax to almost all other discretionary spending, even his own government — a 28% cut of the State Department’s budget, 31% of the Environmental Protection Agency, $1.2 billion taken from the National Institutes of Health — but most tellingly, cuts in programs that directly affect those who likely voted for him expecting his help. Various anti-poverty programs were slashed, such as those that provide free meals to schoolchildren and the elderly and help people pay for heat. Trump would cut regional development programs that benefit the states that voted for him, notably the Appalachian Regional Commission spanning 13 states and the Delta Regional Authority, serving eight southern and Midwestern states, seven with Republican governors.

tax breaks

The breathtaking tax cut package that Trump and advisers Mnuchin and Cohn rushed out so as to show some action before the first 100 days elapsed was equally revealing. Trump wants the corporate tax cut to 15% (see “Our Tax Code Is a Mess. So Will Be the Battle to Change It“). With the U.S. tax on business the highest of the Group of 20 Nations, a cut of some degree has broad support. But Trump wants his rock bottom rate to apply also to the millions of businesses that pass profits through to their owners’ personal tax returs — businesses like Trump’s own. In this whopping gift to himself, he would pay not the 35% individual rate he proposes but the 15% business rate.

There’s more. He would get rid of the inheritance tax altogether so that all his assets would pass scott-free to his sons and daughters, and he’d do away with the alternative minimum tax, a second way of computing one’s tax bill required of high earners that limits how much in deductions they may declare. This, too, would hugely benefit none other than Donald Trump as we saw when a leaked copy of his 2005 tax return (the 2-page form 1040 only) surfaced. It shows him having to pay according to the alternative schedule roughly $31 million on $150 million of income, whereas had there been no alternative minimum tax, as he now proposes, his tax bill would have only been around $5 million.

To keep his supporters from complaining about these self-serving measures that would so enrich the already rich, he has thrown them a bone by suddenly proposing that the standard deduction be doubled. Singles would deduct $12,700 and married couples $25,400 from their income tax free. But wait! Unmentioned is an earlier Republican proposal that some think may be behind this unexpected largess: doing away with the personal exemption of $4,050. Under Trump’s plan a family of four would get a $25,400 standard deduction but lose $16,200 in exemptions. That’s $3,500 less than the standard deduction and exemptions they have now. Those who voted for Trump hoping for a leg up probably aren’t aware of that. They’re just waving their signs and hollering adulation at the Harrisburg farm center.

nafta

To combat loss of jobs, President Trump promised to withdraw from the North American Free Trade Agreement (NAFTA), calling it “the worst trade deal maybe ever signed anywhere”. But as in all such pronouncements, he has never uttered any specifics to spell out just what makes it the worst trade deal ever.

With funding for the wall blocked in Congress, Mr. Trump saw the need to show some progress to his base, so he planned announcing at the Pennsylvania rally that he would set in motion the process for withdrawing from NAFTA. But Mexico’s President Nieto and Canada’s Prime Minister Trudeau headed that off with phone calls to the White House, and Trump instantly agreed to negotiate instead, to the relief of American business interests. But tinkering to reduce the trade deficit is not what his loyal following thought they were promised.

A number of other campaign pledges have been reversed of a sort that his voters may care less about. He has not appointed a special prosecutor to investigate Hillary Clinton, has not reversed Obama’s Cuba outreach, says the children of illegal immigrants who would have been covered by the DREAM Act had it been passed can “rest easy” because they can stay, now approves of the Export-Import Bank that he was “very much opposed to” once made aware of its importance to companies big and small, and has backed away from urging Israel to move the American Embassy in Israel to Jerusalem after the frantic king of Jordan made him realize the violent backlash that would ensue.

apostates?

The coastal media organizations have adopted new catechisms whereby they roam the country to learn what other Americans think. So far as we’ve seen, those in the heartland who always disliked Trump continue to find him loathsome. Those who were always with him no matter what he said or did on the campaign trail continue to be solidly with him. Nothing that we have described seems to have made a dent. It is difficult to imagine why that will remain so if Trump doesn’t turn away from his New York City financial crowd deciding policy, his picking fights that could lead to war, his spending so much of their tax dollars taking Air Force One and his entourage to Mar-a-Lago every weekend — $3.6 million each such weekend by one estimate. And now Congress has allocated $120 million of taxpayer money to to protect the peregrinations of the wealthy Trump family.

Meanwhile, the ground has shifted underneath him. A late April NBC/Wall Street Journal poll found that by a 2-to-1 margin 60% of Americans think positively of immigration, oppose the Mexico wall, and favor a path to legal status rather than deportation, the highest level of support since 12 years ago. Almost the same percentage support free trade. And more now favor Obamacare than oppose it.

Conservative radio host Laura Ingraham says that, judging from those who call in to her show, none of Trump’s drift away from his pledges of anti-globalism, a smaller military footprint in the world, a less combative stance against disadvantageous trade — among his followers none of this slippage seems to be changing their minds. For Democrats wondering what to do next, the acceptance by his followers of Trump’s deviations from what he promised, assuming they are aware of them at all, is just baffling.

Acceptance was evident at his 100th day rally where his supporters were as avid as ever as he tore into the media (after a week of granting interviews to that same media) — the “failing New York Times”, “dishonest CNN”, etc. The media has refused to give him credit and “deserves a very, very big fat failing grade.” Their fake news doesn’t realize that, “We are keeping one promise after another and, frankly, the people are really happy about it.”

Trump launched into his usual themes of “lawless immigrants, unfair trade deals and a corrupt Washington establishment”. The scene could have been last July. He was again bragging about the size of the crowd, that “we have a lot of people standing outside”, that he “broke the all-time record for this arena”. Like the gaps along the Washington Mall at his inauguration, the rows of empty seats said otherwise. Maybe that was a silent indicator of people drifting away.

May 9 2017 | Posted in Politics | Read More »

What Happened to Trump’s 45% China Tariff? North Korea Happened


Donald Trump began his campaign for the presidency by promising a physical wall to shut out Mexicans, they being rapists and thieves, and a tariff wall to shut out imports, particularly a 45% impost against China. Together the barriers would return “massive numbers of jobs” to America.

But much as he thought “Nobody knew that healthcare could be so complicated”, he has since discovered how complicated the world is. In a desperate attempt to enlist China’s help against North Korea, he told the Wall Street Journal that in his very first meeting with China’s President Xi Jinping, he offered better trade terms. He had told Mr. Xi that his administration could not go on allowing America’s huge trade deficit with China. “But you want to make a great deal?”, Trump says he told Xi. “Solve the problem in North Korea”. He went on to tell the Journal, “That’s worth having deficits. And that’s worth having not as good a trade deal as I would normally be able to make.”

His billionaire Commerce Secretary, Wilbur Ross, would have none of that. He wants “tangible results” from the talks with President Xi, and soon. The objectives are “to reduce the trade deficit quite noticeably” and “increase total trade”, a combination that can only be accomplished by China importing a great deal more from the U.S.

Xi agreed to a 100-day plan on trade, which would be unusually rapid, but perhaps his intent was to forestall the topic while still in the U.S. With Xi gone, Trump resumed his conduct of foreign policy by Twitter:


In Trump’s own 100-days, he has been dealt a far more important problem than trade: North Korea’s advances in missiles, its nuclear tests, and deranged threats from its President Kim Jong-un to turn Seoul into a “sea of fire”. But he is having difficulty living up to the promises that won him the office, so the imbalance of trade with China should not be neglected. Maybe a little less golf and television?

bad start

Trump has already dropped his campaign promise to brand China as a currency manipulator, perhaps after being made aware that for some time now China has intervened in the currency markets to bolster the value of the yuan. It was Obama who failed to wield that weapon when China was clobbering us, driving down its currency’s value to make its products artificially cheap. The problem, Trump now says, is that the dollar has grown too strong “because people have confidence in me”.

Trump had rattled China by taking a call some two months before he took office from Taiwan’s president, Tsai Ing-wen, the first contact between the leaders of the two countries since 1979. Two weeks later on a talk show Trump asked “why we have to be bound by a One China policy unless we make a deal with China having to do with other things”. China views Taiwan as a part of China. To keep the peace, when the U.S. established relations with Taiwan in 1979, we agreed not to view it as its own country, going along instead with the mainland’s insistence on “one China, two systems”. There was some agreement with Trump — why do we go along with this Chinese charade without at least getting something in return — if not trade adjustments, our need for China to pressure North Korea? That was certainly true for perennial cold warrior John Bolton, an ambassador to the U.N. under George W. Bush, who was all for ramping up sales of military gear to Taiwan in a Wall Street Journal op-ed and “stationing military personnel and assets there”. So it was disappointing for some that the President backed down in his first phone conversation with Xi Jinping after taking office. The sober and thoughtful who fear making any move that might upset our adversaries were relieved — adversaries who have no such timidity when dealing with us.

Trump, though, did get something in return. The Chinese government gifted Trump at unheard of speed with the emolument of preliminary approval of 38 trademarks of his name. Daughter Ivanka got three of her own.

the art of their deal

China joined the World Trade Organization (WTO) at the end of 2001 after lengthy negotiations reduced its tariffs, but as a “developing” nation, it was allowed to retain those tariffs with the assumption that they would be diminished as the country grew stronger economically. But they haven’t. China piles multiple charges on imports. Import duties range from 0% to 100%, averaging over 12%. They are tacked onto the full cost of the goods, even including shipping and insurance. Then comes a consumption tax on imports of alcohol, gasoline, jewelry and autos ranging from 1% to 45% applied to that full cost plus the duties. And then, on top of that combined total — full cost, duties, and consumption tax — comes a 17% (in some cases 13%) value added tax (VAT). The Chinese are not a trading nation, they are a mercantilist nation set on making foreign produced goods so expensive as to keep imports to a minimum.

This is what the United states has put up with for the 16 years since China was admitted to the WTO, all the while passively watching China become the world’s new super power, building its military with our dollars, a military aimed at us. We have put up with quotas and restrictions on agricultural products. We have tolerated the Chinese subsidizing businesses, so many of which are state-owned, to enable them to sell at lower prices that have often driven U.S. counterparts out of business. Photovoltaic solar panels were an American invention but China now has a 90% market share, for example.

In 2015, U.S. exports to China totaled $116 billion. Imports totaled $482 billion. That’s a deficit with China of $366 billion. That so low-cost a product as soybeans are our largest export to China says volumes about what the $116 billion would have become had we demanded fair-cost entry of automobiles and other high ticket manufactures into their market.

More damaging still has been the lust for momentary profits by U.S. corporations that have surrendered what trade secrets have not already been stolen by cybertheft by agreeing to technology transfers to Chinese entities as the price of admission into the Chinese market. China requires that our companies enter into joint ventures and hand over our industrial know-how to our so-called local “partners”. After all the years of making that mistake, giving away our future, we are still doing it. Ford has just announced it will bring proprietary electric car technology to China, despite industry misgivings, handing it over to Changan Ford Automobile, the joint venture partner forced upon it by the China regime bent on technology appropriation.

Once it has sucked knowledge and technology from U.S. companies, China throws up new hurdles to their continued presence in China, a subject these pages covered in “Mission Accomplished, China Putting Squeeze on U.S. Companies” back in 2014.

This is part of its “Made in China 2025” plan that the U.S. has evidently been unaware of until very recently. China’s secret goal is to become nearly self-sufficient, producing on its own everything the nation now imports in these technological categories, and then exporting them to the world. It is moving past the last century’s raw materials industries and aiming at industries such as 3-D printing, computer chips, robots, aircraft and electric autos. Germany’s Mercator Institute for China Studies unearthed some of the objectives of the plan in semiofficial documents: China is aiming to produce 80% of the world’s renewable energy equipment, 70% of industrial robots, 40% of mobile phone chips, etc.

It’s a $300 billion plan funded by the government, with a substantial kitty for buying U.S. companies to take over their technology. The United States has no industrial plan, no energy plan. In our democracy, one president tries to press industry to move toward new sources of energy; the next president rips up the plan and promotes a return to coal. With the Trump administration’s abandonment of renewable energy and its threat to, if not withdraw from the Paris accords, at least do nothing to honor its pledges, China sees the opportunity to completely take over the green revolution and create products to dominate world markets, leaving the U.S. as customer only.

sounding retreat

In contrast, the U.S. retrenches, Trump having adopted the fortress America doctrine of Steve Bannon. On his first day in office, he buried the Trans Pacific Partnership, or TPP, which would have created a trade pact between 12 of the nations other than China that border on the Pacific ocean. These pages have railed against the TPP, but for the excessive powers it gave to multinational companies over governments (see our “Corporations Press for Power Grab in Pacific Trade Pact” from over three years ago) but not against Obama’s hopes to create a trading bulwark to ward off Chinese dominance in the region. Trump’s action immediately caused the orphaned nations to reassess their futures and look to China’s rival alliance, the Regional Comprehensive Economic Partnership (RCEP) that welcomes all but the U.S. and will now set the rules for the region, including favoring its state-owned companies. Undermining the pact — it collapses without the U.S. as a member — was a prime tenet of the America First nationalist movement that could make us America Only.

Trump has undoubtedly backed away from his 45% tariff against China, but Paul Ryan is advancing an equivalent across-the-board plan to tax all imports 20% (see “Our Tax Code Is a Mess. So Will Be the Battle to Change It“). Far more sensible is to deal with China reciprocally. It closes off some two dozen sectors — insurance, for example — to American entry altogether. The United States should erect equivalent tariffs on, or block entry to, sectors important to us strategically. Exports from firms that receive state funding under the “Made in China 2025” plan should be blocked or charged stiff countervailing duties. We should blacklist Chinese companies that have stolen U.S. industrial know-how and intellectual property.

When China declares certain industries off-limits to American investors, we should counter by blocking Chinese companies from buying American firms in industries that suit our purposes. And China should not expect to export cars to the U.S. without being hit by the matching tariffs that now make U.S.-made cars prohibitively costly for Chinese citizens.

Objections by the WTO would be a welcome invitation for the U.S. to make it noisily apparent how the organization continues to do nothing to end China’s anti-competitive practices of one-sided tariffs and subsidies to state owned businesses, and to force the WTO to clean up its rules and speed up its glacial processing of complaints which can take years. We shouldn’t wait for rulings. By then our companies are already out of business. Better to take immediate action and if ruled against, pay the fines.

A test case for Trump: Obama filed a case with the WTO accusing China of subsidizing aluminum, causing U.S. companies to teeter toward bankruptcy. A Washington trade practices lawyer named Alan Price says it is apparently (and unbelievably)

“the first time there is a systemic challenge to China’s financing and building out of its massive industrial capacity from highly subsidized state-directed financing. They have a lot to lose beyond the aluminum industry”

because aluminum isn’t the only industry China subsidizes. So, President Trump, let China go through the WTO process and run that risk. But in the meantime, it is past time that we slap targeted tariffs on aluminum and other metals we believe are subsidized and declare an end to playing the fool so that China can become the world’s largest economy.

May 6 2017 | Posted in World | Read More »