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We Are Losing Badly to China, and Trade Is Only a Part of It

When Donald Trump announced his candidacy, closing the southern border against “rapists and thieves” and closing the trade gap with China who have “taken advantage of us like no one in history” was uppermost in the pledges he made to his supporters.

China poses threats to the United States far greater than trade — see later — but the President and his administration are now in the thick of trade negotiations
and Mr. Trump is finding that the obverse of “Trade wars are easy to win”, as he has said, is proving true.

His original plan was simplistic. He would slap a 45% tariff on all Chinese imports as if China would have no recourse but to meekly accept punishment for years of exploiting us. But in his first year as president, the subject of trade could hardly be broached with China. We needed their help dealing with Kim Kong-un. Not until this January did the president make a move, imposing tariffs on washing machines and solar panels in response to the pleas of Whirlpool and two U.S.-based but foreign-owned and already bankrupt panel producers. Solar panel manufacturing was long lost to China through inaction of the Bush and Obama administrations. The impact of the 30% more costly solar panels will be the cancelled contracts in the follow-on installation industry, which supports some 260,000 jobs in the U.S.

China countered with an anti-dumping, anti-subsidy investigation aimed at imposing a tariff on America’s sorghum, a cereal crop fed to livestock of which 75% of our export goes to China. For the president it should be a signal that China has every intention of keeping trade unbalanced in their favor. Every tat met with a tit.

Ready, fire…

In March, Mr. Trump announced an across-the-board 25% tariff on steel and 10% on aluminum, apparently taking his advisers, and far more the world, by surprise. “People have no idea how badly our country has been treated by other countries”, he said. He wanted the impost to apply to all countries, because if one country was made exempt, the rest would line up to ask for the same waiver.

Which they did, with threats of retaliation otherwise. Trump would discover that most imported steel comes from allies and neighbors — Canada and Mexico being #1 and #3 — whereas only 3.5% comes directly from China. Trump is faced with granting waivers to just about every country affected. American companies that use metals in automobiles, aluminum cans, etc. have filed 8,200 exemption requests. Instead of specifically targeted actions, Trump’s intemperate blunderbuss approach is wounding everything in sight.

…aim

To get back at years of China’s exploitation of the U.S., President Trump, whose mission it is to go hard against China’s predatory trade policies, had his team draw up a list of $150 billion in tariffs, this time specifically targeting China in a list of imports such as flat-screen televisions, medical devices, and so on — more than 1,300 items. Early in May our trade delegation went to Beijing with a list of demands that, if agreed to, would forestall the tariffs. They included China ceasing to subsidize advanced manufacturing industries and cutting tariffs to the same level as those imposed by the U.S.

That approach guarantees failure: a threat following by tariffs followed by retaliation. Our course should instead be to match their market barricades with reciprocity — where China blocks U.S. companies and imports, block theirs in equal measure; where they offer to open only some of their financial markets to U.S. companies, shut down their access to all but a matching sliver of ours. China would have no justification to retaliate.

lockdown

The Trump administration is commendably taking action against Chinese electronics companies from selling products in the U.S. and from buying into U.S. companies. Trusting China not to spy from devices embedded in their products is folly, yet only recently have government agencies and the military been told to stop buying from long-suspected electronics giant Huawei Technologies.

Then came the ZTE affair. In mid-April, as enforcement for violating sanctions against Iran and North Korea and then lying about penalizing those responsible, the U.S. barred American companies from selling to ZTE, a Chinese company reliant on U.S.-made parts that make up 60% of the smart phones it sells worldwide. Its supply line cut off, ZTE was forced to shut down operations. On hearing that, Trump completely reversed field, tweeted “Too many jobs in China lost” and ordered the Commerce Department to find for ZTE “a way get back in business, fast”. He wants to keep in business a company that, along with Huawei, is in a race with American companies such as Qualcomm to develop 5G, the next generation of mobile communications, a company that broke our sanctions rules and is additionally viewed as a cyber security threat. That caused an uproar in Congress. The House Appropriations Committee tacked an amendment onto a funding bill forbidding ZTE’s rescue.

Trump’s stunning capitulation caused immediate suspicion about $500 million in loans that a Chinese state-owned company had just three days earlier paid into an Indonesian company’s resort project in which the Trump Organization has a sizable investment. The funding boosts part of China’s Belt and Road project that will link all of Eurasia economically, whereas Trump cancelled out of the Trans Pacific Partnership, an alliance of a dozen Pacific Rim countries that would have acted as a counterweight. And now, as this is written, The Wall Street Journal reports that President Trump‘s move to help ZTE came just days after China approved more trademarks for his daughter’s business. Is our national security for sale?

tunnel vision

Trump is fixated on reducing the “Massive Trade Deficit” we run up each year with China — $375 billion in 2017. Instead of ending its abusive trade practices, the president would be content for China to simply buy more U.S. output to narrow the deficit. A couple of hundred billion a year has been bandied about in return for our letting ZTE off the hook with only a fine. Mnuchin, who might better be thought of as Wall Street’s ambassador to the Trump administration, is all for the buy-American idea, even to the point of blocking fellow trade delegates Peter Navarro and Robert Lighthizer from meetings with the Chinese, resulting in a profanity-rich shouting match between our own negotiators. To the Pentagon’s horror, Mnuchin is even receptive to the Chinese request that we relax our export controls that prevent the Chinese from buying sensitive military gear.

In contrast, Navarro and Lighthizer are focused on attacking the greatest Chinese abuses, the mercantilist practices of the Chinese that really matter:

Theft of intellectual property: The Obama administration accepted vague promises by the Chinese to clamp down on theft which the Chinese never kept and nothing was done in retaliation for the Chinese stealing millions of copies of American software, films, and for cyber theft of industrial secrets.

Access to China’s markets: In current talks the Chinese have proposed only limited access to their financial services fields such as banking. Doormat America allows Chinese companies unfettered access. Xi has offered a reduction of tariffs on American autos from 25% to 15% — an insulting gesture of no value (American tariffs are 2.5% for cars). In return, now that China has become the world’s biggest producers of autos and has an eye on the U.S. market, we should erect a reciprocal tariff — or the full 25% for as many years as China penalized our auto exports.

Mandatory transfer of propriety industrial knowledge: To operate in China, American companies have for decades been required to partner with Chinese companies for no reason other than to hand over our proprietary technology so that China can learn how to take over an industry, then compete internationally with lower costs, then drive out the Americans. It is a marvel to behold that this country has been so ineffectual as not to ban American companies from entering into such joint ventures in their craving for momentary profits at the expense of America’s future. (We wrote of this repeatedly, beginning 5 1/2 years ago with “China Tells Us to Deposit Our Technology at Their Door“). Why haven’t western nations joined together in a coalition to refuse to comply; the practice is illegal under the World Trade Organization rules that China regularly flouts? But Trump, with no experience beyond the unilateral deals of real estate, can’t seem to see the greater strength of multilateral alliances. He goes it alone with a much weaker hand.

The trade delegation came home from round one of the talks with nothing. The long tariff list has been placed on hold during talks. Even the notion of China buying more from the U.S. was in doubt as the Chinese denied that any number had been agreed to. According to Lawrence Kudlow, a fourth member of the negotiating team, the $200 billion was simply “something the president likes”.

Just selling more soybeans, doing nothing to break up the technology theft of forced joint ventures, timidly accepting token market access openings instead of demanding total access, failing to threaten retaliatory tariffs and blocked access against their companies if our demands are denied — all play into China’s master plan: “Made in China 2025”. That quest is to achieve full self-sufficiency and world domination in selected key industries of the future, shutting out America altogether and needing nothing from other countries as well. Trump’s myopia of just selling more to China solves nothing. Accepting buy-American would be utter surrender.

meanwhile

As we spend attention, treasure, and lives in the dustbin of the Middle East, China uses is trade surplus with America to build its military might to fulfill its other master plan: to drive the U.S. out of the Pacific. It’s a threat we have covered since 2015 in the series We covered this is in our 2015 series “War With China: Is It Already Here?“, “China’s Master Plan: Drive Us Out of ‘Their’ Pacific“, and “China’s Military Build-up — It’s Aimed at Us“.

China’s conversion of small outcroppings in the South China Sea into island outposts has gone unchallenged, an unabashed takeover of international waters. With President Obama at his side at the White House in September 2015, President Xi Jinping stated that “China does not intend to pursue militarization” of the artificial islands. It was an outright lie. They installed barracks, then anti-aircraft batteries, then airstrips of a length suspiciously capable of handling the largest aircraft. Sure enough, in mid-May, a Chinese bomber landed on Woody Island in the Paracel chain.
An H-6K Chinese bomber

They have placed gear for jamming communications on two islands. Earlier, China had deployed anti-ship cruise missiles and surface-to-air missiles on three converted reefs and the disputed Spratly Islands that are nearer the Philippines and Indonesia than China.

In April China staged an unprecedented show of force, sending some 50 ships including an aircraft carrier and nuclear submarines through the South China Sea with 75 fighters, bombers and helicopters overhead. American warships thas rules and is additionally viewed as a cyber security threat. That caused an uproar in Congress. The House Appropriations Committee tacked an amendment onto a funding bill forbidding ZTE’s rescue.

Trump’s stunning capitulation caused immediate suspicion about $500 million in loans that a Chinese state-owned company had just three days earlier paid into an Indonesian company’s resort project in which the Trump Organization has a sizable investment. The funding boosts part of China’s Belt and Road project that will link all of Eurasia economically, whereas Trump cancelled out of the Trans Pacific Partnership, an alliance of a dozen Pacific Rim countries that would have acted as a counterweight. And now, as this is written, The Wall Street Journal reports that President Trump‘s move to help ZTE came just days after China approved more trademarks for his daughter’s business. Is our national security for sale?

tunnel vision

Trump is fixated on reducing the “Massive Trade Deficit” we run up each year with China — $375 billion in 2017. Instead of ending its abusive trade practices, the president would be content for China to simply buy more U.S. output to narrow the deficit. A couple of hundred billion a year has been bandied about in return for our letting ZTE off the hook with only a fine. Mnuchin, who might better be thought of as Wall Street’s ambassador to the Trump administration, is all for the buy-American idea, even to the point of blocking fellow trade delegates Peter Navarro and Robert Lighthizer from meetings with the Chinese, resulting in a profanity-rich shouting match between our own negotiators. To the Pentagon’s horror, Mnuchin is even receptive to the Chinese request that we relax our export controls that prevent the Chinese from buying sensitive military gear.

In contrast, Navarro and Lighthizer are focused on attacking the greatest Chinese abuses, the mercantilist practices of the Chinese that really matter:

Theft of intellectual property: The Obama administration accepted vague promises by the Chinese to clamp down on theft which the Chinese never kept and nothing was done in retaliation for the Chinese stealing millions of copies of American software, films, and for cyber theft of industrial secrets.

Access to China’s markets: In current talks the Chinese have proposed only limited access to their financial services fields such as banking. Doormat America allows Chinese companies unfettered access. Xi has offered a reduction of tariffs on American autos from 25% to 15% — an insulting gesture of no value (American tariffs are 2.5% for cars). In return, now that China has become the world’s biggest producers of autos and has an eye on the U.S. market, we should erect a reciprocal tariff — or the full 25% for as many years as China penalized our auto exports.

Mandatory transfer of propriety industrial knowledge: To operate in China, American companies have for decades been required to partner with Chinese companies for no reason other than to hand over our proprietary technology so that China can learn how to take over an industry, then compete internationally with lower costs, then drive out the Americans. It is a marvel to behold that this country has been so ineffectual as not to ban American companies from entering into such joint ventures in their craving for momentary profits at the expense of America’s future. (We wrote of this repeatedly, beginning 5 1/2 years ago with “ May 30 2018 | Posted in World | Read More »

Same Story, Opposite Reactions, in America vs. America

This is about a story that three New York Times reporters broke on May 16th and the very different interpretations that greeted their findings, an exhibit of how impossibly and irrationally divided we have become in the age of Trump.

They reported that immediately after the FBI launched an investigation into the Trump campaign almost two years ago on July 31, the Bureau sent two agents to
London on a mission that has been kept secret until now. The assignment was to interview Australia’s ambassador to the U.K., Alexander Downer. The FBI had learned of his encounter with a Trump campaign aide named George Papadopoulos who, during a night of drinking, had told Downer that he knew — and this was before the Wikileaks release of the Clinton emails — that Russia had a trove of damaging material on her.

The Clinton investigation had just ended, and explosively, with FBI Director James Comey announcing in a press conference the highly controversial conclusion that, while her email use outside the State Department on her own server was “extremely careless”, it did not rise to a level justifying prosecution. That would lead to months of Republican-led hearings in Congress, with Comey defending the reasons for his actions, and Trump followers shouting “lock her up” ever since.

In contrast, the explorations into the Trump campaign reverted to the Bureau’s standard modus operandi of silence. What they might find looked to FBI agent Peter Strzok be too “tasty” and thus susceptible to leaks, so the early steps taken by the agency were kept close, known by only five people in the Justice Department, far below the count of personnel usually “read in” to a case. (Strzok was the one exposed this year for exchanging anti-Trump e-mail with his paramour at the agency during the campaign.) With so little time left before the election, the agency even postponed interviewing key people, wary that, were it to become known that the agency was now investigating the Trump campaign after exonerating Clinton, the FBI would be accused of doubly tipping the scales of the election. Wouldn’t that only feed into Trump’s claims at the time that the election was “rigged”? That the Bureau gave their probe the codename Crossfire Hurricane suggests that they knew that they could be heading into rough weather and had best batten the hatches.

In those early months, the FBI was investigating Gen. Michael Flynn, who would become Trump’s first national security adviser; Paul Manafort, his campaign manager; Carter Page, whom the FBI suspected in 2013 of being a possible Russian agent — Russian spies had tried to recruit him 2013 in New York City and here he was now headed for Russia; and a fourth, Papadopoulos, who evidently had Russian contacts according to what he told the Australian ambassador in London. If this activity had been revealed or leaked, it could have been devastating to Trump’s chances for election, and the FBI would be irremediably scarred as politically corrupted. Hence the lock down.

different strokes

How was this disclosure received? We’ll take a couple of examples. In the 9:00 pm time slot, Sean Hannity gets the most viewers at Fox News. For him,

“This is an amazing story…The New York Times is inadvertently confirming everything that we have been telling you about all of this, the massive abuse of power and corruption… the biggest abuse scandal in the history of the country”.

Hannity is a strident backer of President Trump. The “scandal” is what Trump calls the “witch hunt” of Special Counsel Robert Mueller’s investigation into possible collusion between the Trump campaign and transition and Russia. In the Times piece, Hannity finds the genesis story. “Only days after they rigged the investigation into Hillary”, giving her a free pass while “knowing she committed felonies and obstruction of justice”, the FBI had gone on the attack after Donald Trump in a “completely unconventional operation”. There was no justification for the FBI to undertake the inquiry because of

“some guy, and I thought I knew everybody in the Trump campaign, George Papadopoulos, never heard of him. the Trump adviser nobody heard of and during that night out while they’re drinking they apparently gossip like, I guess, mean girls about so-called dirt of Hillary Clinton. Downer then alerted the Australian intelligence agency who then told their U.S. counterparts: 1, 2, 3, 4-way hearsay. This is massive. The Times is confirming that the FBI used 4-way hearsay to launch an investigation”.

The Times has all along been “trying to cover up for their deep state friends and making excuses”, says Mr. Hannity, but in this story, “they’re actually exposing them”. Hannity assures his viewers that

“the facts, the truth, the evidence is finally coming out and we have been promising you this and so far what we’ve uncovered is only the beginning. This is going to get a lot worse for all of these deep state actors. This deep state is one huge, giant, incestuous, corrupt swamp.”

counterpoint

The next morning, “Morning Joe” on MSNBC brought up the Times story and had one of its reporters, Matt Apuzzo, on the show. Their reaction was quite different. “This flies in the face of the Trump accusations that the FBI has always been out to get him”, said co-host Mika Brzezinski. But in those early months, so as not to affect the election, the FBI kept a tight seal on its activities. Apuzzo said it was…

“just days after the FBI had closed down the Clinton case, and if agents were really eager to be investigating another presidential candidate and his campaign, we didn’t see evidence of it. Our reporting shows that this was a real anxious moment at the FBI. The code name Crossfire Hurricane kind of speaks to the storm they were going into”.

The very same FBI agents who were evincing their dislike of Trump in internal e-mail were going to great lengths to clamp down on the number of people informed of the new investigation, even going slow so as not to alert anyone of what they were up to before the election. The FBI expected Trump to lose and didn’t want to be accused of having a hand in that loss by anyone leaking about its scrutiny of Trump campaign figures.

The panel on “Morning Joe”, no friends of Trump, were rather stunned to realize that the FBI, by returning to its standard level of professional silence after the harm of its very public treatment of Clinton, had effectively helped Trump by going to great lengths to not expose the shady characters of the Trump campaign and their strange and unexplained dealings with Russians. The “Morning Joe” participants that morning lamented that, far from Hannity’s deep state plot to destroy Trump, the Bureau might have made the difference in the narrowly decided three states that put Trump over the top in the electoral college had it at least said something. They took note that the Times article had even faulted the Times itself for downplaying the investigation in an October 2016 story, evidently cowed by an FBI that had “cautioned against drawing any conclusions”.

Far from a plot, the FBI had found just cause to investigate four members of the Trump campaign. Proof lies in that eventually Papadopoulos would enter a guilty plea and cooperate with the Mueller investigation, Flynn would admit guilt in lying to the FBI and agree to cooperate, Manafort and partner Rick Gates would be indicted for bank fraud, money laundering, tax violations — a combined total for the pair of 32 counts in all.

With the Justice Department’s inspector general’s report on the Clinton investigation about to be released, one question sure to be asked is, why the FBI publicly announced that they had found further emails on Anthony Weiner’s computer when they could have just examined them covertly to find they amounted to nothing, while saying nothing about their simultaneously investigating suspect parties in the Trump campaign?

May 22 2018 | Posted in Politics | Read More »

Trump Announces a Third Withdrawal from the World

On his first day in office, President Trump ended United States participation in the Trans Pacific Partnership (TPP) — the 12-nation alliance of countries around the Pacific Rim that would have stood as a bulwark against China. He soon thereafter ended America’s commitment to the Paris Accord — the pledge by every country
in the world to reduce carbon emissions — which left the United States as the only outlier. And now, because it was a campaign pledge made when he provably knew little about it, he has single-mindedly, ignoring universal outcry from all but the war lovers who now make up his inner circle, withdrawn America from the seven-nation deal that prevents Iran from developing nuclear weapons.

Stringent sanctions held back by the deal will go into effect and Iran hard-liners have already said that that makes them free to set their centrifuges spinning once again. Trump has freed Iran to go nuclear just before he will seek the opposite from North Korea, and in the process has made that negotiation more difficult. What added price will Kim Jong-un exact now that Trump has proven that the United States cannot be trusted?

He has aligned American foreign policy with Israel and Saudi Arabia while turning America’s back on our European allies — Britain, France and Germany — who are party to the Iran deal. Israel, the country that has occupied another people’s land for half a century and has blockaded Gaza in what is called “an open-air prison” for almost four years. Saudi Arabia, the country that provided 15 of the 19 9/11 attackers and is now killing civilians indiscriminately in Yemen bombings.

In announcing the breach, Trump made one of his most bewildered statements: “The United States no longer makes empty threats. When I make promises, I keep them”, simultaneously making himself the United States (l’état, c’est moi) while breaking our promises to our allies. Both French President Emmanuel Macron and German Chancellor Angela Merkel had made pilgrimages to Washington to try to persuade Trump not to throw away a deal that is working. Their message: why not try to work with Iran to eliminate some of the peripheral problems that could not be made part of the original deal? Why not add to what we already have rather than discard it? Steeped in his belief in himself, Trump has brushed them aside.

how wrong can wrong get

Trump has repeatedly called the JCPOA (Joint Comprehensive Plan of Action) “one of the worst negotiated deals of any kind that I have ever seen”. Just recently he labeled it “insane” and “ridiculous” and an “embarrassment”.

“The Iran deal is defective at its core”, says the president. This from someone who has a great aversion to reading and has gone nowhere near its core. He has never been specific about what he doesn’t like. He has of course not read it. In contrast, his scholarly Defense Secretary Gen. James Mattis says he has read it three times and is impressed by the detail and the verification regime that it contains. Said Trump, announcing withdrawal:

“If we do nothing, we know exactly what will happen. In just a short period of time, the world’s leading sponsor of terror will be on the cusp of acquiring the world’s most dangerous weapons”.

Stop right there. That’s what’s expected to happen in a short period of time by canceling, Mr. President. On hearing Trump’s decision, Iranian President Hassan Rouhani said the U.S. has broken the agreement and he may soon restart his country’s uranium enrichment program.

We said earlier that Trump provably does not know what’s in the deal. His statement says he clearly does not know that both the JCPOA and the Nuclear Non-Proliferation Treaty forbid Iran from ever developing nuclear weapons, that he clearly does not know that the only sunsets are to allow nuclear development for other purposes — power, medicine, e.g. — with restrictions loosened in increments 10, 15, 20 and 25 years out. Instead, Trump claims he has proof that Iran is violating the agreement, but like Obama’s foreign birth and his wire-tapping Trump tower, these are claims for which we’ll see no evidence, there being none. The IAEA, the International Atomic Energy Agency that inspects Iranian sites, has ever since the pact’s inception confirmed that Iran is in compliance. So a president who thinks Iran can’t be trusted has just made the United States the country that cannot be trusted by breaking the agreement.

“This disastrous deal gave this regime — and it’s a regime of great terror — many billions of dollars, some of it in actual cash — a great embarrassment to me as a citizen and to all citizens of the United States.”

This compounds his ignorance. We didn’t “give” Iran anything. The money was theirs. We had frozen their assets held in foreign banks as part of sanctions of their nuclear program; $400 million in cash had to do with money seized long ago when Iran took Americans hostage at the dawn of their revolution.

Wrong as well was the gambit of justifying canceling because the deal was premised on Iran lying. Sarah Huckabee-Sanders filled us in on that. She seems now to be deciding policy on her own, judging from her first person declarations:

“I think the biggest mistake is the fact that the United States ever entered into the Iran deal in the first place. That to me seems to be the biggest mistake in this process…The problem is that the deal was made on a completely false pretense. Iran lied on the front end, they were dishonest actors, and so the deal that was made was made on things that were not accurate”.

Should we never mind that it is her understanding of how that went in 2015 that is not accurate? The United States entered the deal in the belief that Iran was right on the edge of developing a nuclear weapon. Iran’s denials were paid no attention. The West knew they were lying. That’s why the U.S. and partners pursued the deal with some urgency; halting bomb development was paramount. The reason the deal did not include all that was desired was that Iran was unyielding. The other problems — missile development, adventuring in other Middle East countries — would have to be dealt with separately.

It is easy to cite what’s missing from the JCPOA .
  It doesn’t prevent Iran from nuclear weapons forever.
 
Inspectors may not go on Iran military bases (where they could be cheating).
 Iran is allowed to continue developing high-tech centrifuges for that nuclear future.
 
Nothing stops them from missile development.
 
Nothing forbids their adventuring throughout the Middle East, where Iran has inserted itself as a power in Iraq, in Syria, and funds Hezbollah in Lebanon.

As said, that was easy to list, but it was hard to prevent. Let’s remember why:

the way it was

The JCPOA was signed only three years ago yet it is remarkable how those days have already been forgotten, but then early onset amnesia is an American trait.

This publication followed the negotiations closely. The moment the accord with Iran was announced, it was denounced. Even-handed circumspection was not the tenor of the day. What was most bewildering was to listen to those who found the deal disastrous but who were unperturbed by what would result were there no deal.

The defects emphasized by the detractors were and are real and increasingly problematic, but a better deal was a fantasy. Negotiations had taken 20 months, with repeated deadline extensions as negotiators grappled with final terms and language. At a press conference President Obama said “the issue of Iran obtaining a nuclear weapon is resolved diplomatically through negotiation or it’s resolved through force, through war”.

In an astonishing breach of protocol, Israel’s Prime Minister Benjamin Netanyahu had bypassed President Obama and spoken directly to a joint session of Congress against the deal. He just did it again, from Israel, in a talk in English meant for an audience of one, Donald Trump. Netanyahu had said in 2015, “I think a better deal is possible”. Tougher sanctions would force “Iran to choose between lifting the sanctions and rolling back, truly rolling back, their nuclear capability” was his argument.

Here, the opposite was assumed. With no carrot of relief from sanctions already in force, Iran would build its bomb. Lindsey Graham offered magical thinking: “I’d enforce the U.N. resolutions, saying remove all the highly enriched uranium”. Enforced by what army? Ours?

There was a hurry to get the deal done because there were indications that the existing sanctions would fall apart. Britain’s ambassador to the U.S. said the sanctions had already reached the high water mark and would probably erode if the pact were rejected. Germany’s ambassador said, “If diplomacy fails, the sanctions regime might unravel”. There were nations such as Japan, South Korea, and India that had honored the sanctions, out of deference to the six nations arrayed against Iran. They were not in Iran’s crosshairs yet were paying a price by foregoing trade with Iran. Former CIA director James Woolsey thought “the sanctions regime is slipping; the world is tired of these sanctions”.

BREAKOUT NOW OR LATER

The deal’s restrictions were designed to extend the “breakout” time — the time Iran would need to create enough enriched uranium for a single bomb should they cheat or should the deal fall apart anywhere along the line — to a year. At the time, 19,000 centrifuges were spinning and an enriched stockpile was already on hand. The breakout time then was estimated at a mere 2-3 months. Yet those opposed were outraged at a deal that would allow Iran to emerge a decade from then with the full capacity to create a nuclear bomb that they could produce right now in three months. How to explain their alarm for the future greater than alarm for the immediate present?

“They were months away from it in 2013”, said Sen. Tim Kaine (D-Va), referring to bomb development as assessed by the intelligence agencies. “Could you imagine a point at year 15 or 25 where they might do something bad? Yes, you could…but remember that we were at that point two years ago”, before the interim accord froze Iran’s activities so that talks could proceed.

obama revenge

Of course, what’s really driving Trump is the malevolence at his core: The JCPOA must be destroyed because every accomplishment of the first black president of the United States must be destroyed. Trump’s entire presidency has been defined by this perverted revenge. So he has chosen to poison relations with key European allies, lifting a middle finger to those we persuaded to join us against Iran’s nuclear ambitions. He has taken another step to withdraw behind our borders to make the U.S. increasingly irrelevant in the world.

May 12 2018 | Posted in World | Read More »

House Intelligence Committee Says Nothing to See Here. Move On.

The yearlong investigation by the House Intelligence Committee into Russian interference in the 2016 election came to a close with a 250-page report issued at the end of April, authored solely by Republicans, that Democrats on the committee know to be a sham designed to protect President Trump. The report says the committee found no collusion with Russians, claims Russian interference was not slanted to help Trump win the election, faults the FBI, the intelligence agencies, the Clinton campaign for opposition research based on Russian sources — but not itself for an investigation that left so much unexplored.

oops

On the same day the report was released saying no collusion found, the Russian lawyer who enticed Donald Trump Jr. and others to the July 2016 meeting in Trump Tower with the offer of dirt on Hillary Clinton admitted she was directly connected to the Kremlin. Natalia Veselnitskaya admitted to NBC’s Richard Engel, “I am a lawyer and I am an informant. Since 2013, I have been actively communicating with the office of the Russian prosecutor general”, Yuri Chaika.

That differed markedly from what she told the Senate Judiciary Committee in November…

“I operate independently of any government bodies. I have no relationship with Mr. Chaika, his representatives and his institutions other than those related to my professional function as a lawyer”.

That attempt to disassociate the Russian government from the July meeting collapsed when Engel showed Ms Veselnitskaya email between herself and Chaika’s office. The mail was obtained by an organization set up by Mikhail Khodorkovsky, the Russian oil magnate who was stripped of his assets and jailed by Vladimir Putin, and is now a dissident living in exile.

Donald Trump Jr. had responded enthusiastically to the prospect of obtaining from Veselnitskaya information that might damage the Clinton campaign. “I love it,” he wrote in an e-mail agreeing to meet with her, and gathered Jared Kushner, Paul Manafort and others for the occasion, only to then claim that her offer came to nothing but “puffery”, a denial of intense interest to the Mueller probe, but apparently case closed for House committee Republicans.

The report acknowledges Russian interference but the Republicans rejected the intelligence agencies’ findings that the Russian meddling was slanted in favor of Trump. That position ignores obvious evidence: at the very least the Clinton and Podesta e-mails provided to Wikileaks meant to damaged her campaign.

Asked on the PBS NewsHour if the denial of a tilt toward Trump was true, former FBI Director James Comey said about the intelligence, “We read it very, very differently, as did the analysts from the FBI, CIA, NSA, and the director of national intelligence”. And this finding was arrived at with “high confidence, which is very unusual in a joint intelligence community assessment”, Comey added. The tilt was not vague. Intelligence officials could see that the Russian efforts at first sought to “denigrate” Hillary Clinton but then pivoted to bolstering Donald Trump.

dereliction

California Democrat Eric Swalwell is a reliably outspoken committee member, clearly outraged by the Republican whitewash.

“We saw so many witnesses who told us about approaches that Russians were making to Trump family members, Trump business individuals, Trump campaign officials…either to give them dirt that existed on Hillary Clinton or to set up a meeting between Donald Trump and Vladimir Putin.”

Members of both the House and Senate intelligence committees have occasionally said they disagreed with claims of no collusion but could say no more, the probes being classified. James Comey said recently that, though he knows nothing later than his firing almost year ago, even by then “to say there was no evidence just wasn’t the case”.

Insider Swalwell makes clear that the committee leaving untied so many loose ends is dereliction of its mandate. There’s the number of key witnesses that had yet to be called to testify, among them former national security adviser Michael Flynn, one-time campaign manager Paul Manafort, his deputy Rick Gates, and George Papadopoulos, who first let slip that Moscow had thousands of Clinton’s e-mails. Only three witnesses had been called before the committee this year. Others who did come before the committee were permitted to refuse to answer questions of their choosing — Steve Bannon and Corey Lewandowski among them — with the question of contempt of Congress never raised. Mike Pence said he would not testify about what he knows about contacts between Russia and members of President Trump’s transition team, which Pence headed, because he saw no precedence for such an appearance. Republicans would not compel him to appear, leaving moot Pence’s absurdity: how could a precedent for anything ever be established if a precedent is a prerequisite?

where it went off the rails

It was at the hands of its chairman, California Republican Devin Nunes, that the House Intelligence Committee’s investigation of Russian meddling in the 2016 election became highly politicized. In March a year ago Nunes was caught out pretending he had come upon documents proving — although they did nothing of the sort — that former President Obama “wiretapped” Trump Tower during the transition. It turned into farce when aides admitted that the documents were from the White House itself, slipped to Nunes to sound the alarm for them. For his transgression, he had to recuse himself from the Russia investigation.

But he didn’t keep to that. In January, he released a memo accusing the FBI of using unverified material — the “dossier” compiled by Christopher Steele, an alumnus of Britain’s MI6 intelligence service — to obtain a FISA warrant for surveillance of one-time Trump campaign aide Carter Page. (see “The Nunes Memo Is Out — Now What?“)The application certainly would have included that Page had shown up in 2013 New York FBI wiretaps of a pair of Russian spies and a Russian banker who were trying to recruit Page; that the FBI held the suspicion that Page might have become a foreign agent; and that Page was on a trip to Moscow in 2016 where he had unusually prominent contacts. Which is to say that there would have been material other than the dossier in the application to persuade the FISA court to issue the warrant for surveillance of Carter Page — which they did four times over. But Nunes’ memo mentioned none of that, his objective being to leave the impression that the FBI had obtained its warrant and launched the whole Russian investigation on the basis of the unverified dossier alone.

report findings

“While the Committee found no evidence that the Trump campaign colluded, coordinated, or conspired with the Russian government, the investigation did find poor judgment and ill-considered actions by the Trump and Clinton campaigns”. For Donald Trump, that inconclusive remark by a committee that aborted its investigation into that very question was somehow conclusive exoneration. He tweeted:


Not only did the committee fail to go far enough, but they state they hardly went far at all:

“The Committee collected facts related to the FBI’s investigation through May 2017, until the appointment of Special Counsel Robert Mueller. The Committee dld not examine events that occurred thereafter in order to avoid interfering with Special Counsel Mueller’s ongoing investigation” [emphasis added].

Several contacts with Russians — Donald Jr. with the Russian lawyer, his meeting with with a Russian official at at the 2016 National Rifle Association annual meeting, Eric Prince traveling all the way to the Seychelle Islands in the Indian Ocean to meet with a Russian oligarch, numerous “ill-advised” contacts with Wikileaks — all are swept away by the report saying nothing came of them. Jared Kushner’s attempt to set up back-channel communications with the Russians at their embassy is awarded this baffling logic:

“Finding .#35: Possible Russian efforts to set up a ‘back channel’ with Trump associates after the election suggest the absence of collusion during the campaign, since the communication associated with collusion would have rendered such a ‘back channel’ unnecessary.”

And where was Felix Sater in the report, a convicted felon with links to Russian organized crime whom the committee did interview, who had e-mailed Trump lawyer Michael Cohen, “Buddy, our boy can become president of the U.S.A. and we can engineer it. I will get all of Putin’s team to buy in on this”.

The Democrats’ response was that “The pattern of deception surrounding these meetings — first denying they took place; then, when discovered, denying their content; and then denying their significance — suggests a consciousness of wrongfulness if not illegality”.

The report contains chapters on Russian meddling in Europe, its attacks on the U.S., the U.S. countermeasures — much of all three heavily redacted — and fairly balanced narratives of the Trump and Clinton campaigns, reciting the contacts with Russians in the former and the funding of the Steele dossier in the latter. It ends with conclusions and recommendations, much of it concerning prevention of leaks.

Then come the appendices, which take up almost half the report. Despite the committee’s mission to be a “Bi-partisan Inquiry Into Russian Active Measures”, that mandate is dropped. Instead, the report is given over to Christopher Steele’s dossier. Devin Nunes’ memorandum of January reappears (see earlier) in which he faults the FBI for using the dossier in its FISA warrant. The Democrats’ rebuttal follows.

Then, surprisingly in a House investigation’s report, comes a nine-page Senate petition to the Justice Department by senators Charles Grassley of Ohio and Lindsey Graham of South Carolina, both Republicans, to investigate Steele for lying to the FBI: he had revealed his findings to media outlets other than those he told the FBI. Following that, 18-pages of proceedings before British courts on the same matter. In other words, the report finds Christopher Steele’s alleged transgressions more important than pursuit of Russian interference or collusion.

When the New York Times published the list of the Mueller teams 49 questions for Trump, Swalwell could only say,

“The Special Counsel is asking all the questions that all the Republicans on the Intelligence Committee were not willing to ask, and hopefully, using their subpoena power, to get the documents, the bank records, the phone logs, the travel records, to test the answers they receive.”

Instead, Republicans have chosen to destroy all credibility of the House Intelligence Committee going forward by terminating their investigation well before the job was done in order not to find anything further that could damage Donald Trump.

May 8 2018 | Posted in Politics | Read More »

Pay Everyone a Basic Income? Why Is This Now a Hot Topic?

It’s a seemingly nutty idea that only bleeding heart liberals could have come up with, right? Except Milton Friedman once proposed it. C’mon, it must come from all those Marxists at universities. Except so did Richard Nixon advance the idea. Nixon saw a guaranteed income as a cure for welfare. Friedman, the late libertarian economist, favored it to end the intrusiveness of the welfare state, although preferring diminished amounts at higher income levels.

And half a century later, there’s Mark Zuckerberg proposing a
universal basic income in his commencement address at Harvard. Elon Musk thinks it will become a necessity.

The idea of paying everyone a basic income — which we wrote about briefly a couple of years ago — seems to have sprouted from a number of sources lately. There isn’t a chance of such a scheme happening any time soon, but the idea attracts for different reasons.

two schools

Conservatives are drawn to it as a way to get rid of the tangle of overlapping social programs. Those on the right have often thought an unconditional basic income paid to every American, rich or poor, would be better than the minimum wage. What’s odd is they would prefer to draw from the public till to pay supplemental wages rather than require corporations to pay a decent minimum to their own workers. Dislike of any mandated wage seemingly leads conservatives to extremes. Besides, a basic income would not be that much of a departure from the earned income tax credit, which rewards effort by paying, rather than taxing, people who work but earn little. The EITC was Ronald Reagan’s favorite social program.

Conservatives claim (though without ever providing a list) that there are some 80 federal programs that provide assistance to low-income Americans. Wouldn’t it make sense, they say, to do away with the lot of them — the nanny state of the bloated bureaucracies who decide who should get food stamps, housing assistance, even repeal minimum wage laws . “Poor people are poor because they don’t have money, but almost none of these programs give people money”, says Michael Tanner, senior fellow of the Cato Institute. “We treat people like they are 10 years old. We pay their landlord, their doctor, their grocery store” for them. Just give people money. If they spend it unwisely, well, that’s their look out.

The other sizable group drawn to the idea are those who see a future in which robots and artificial intelligence (AI) eliminate jobs for humans in the hundreds of millions. Zuckerberg said his generation in America “will have to deal with tens of millions of jobs replaced by automation like self-driving cars and trucks.” Donald Trump blames China for job loss, but a growing consensus is that technology is the culprit. A Brookings Institution study found that whereas it took 25 jobs to generate $1 million in manufacturing output in 1980, already automation has reduced the need to only 6.5 jobs today. The Boston Consulting Group says that robots now perform about 10% of the work on manufacturing floors around the world, but that will rise to 25% by 2025. Two Oxford academics caused a media stir when in 2015 they presented a paper saying that 47% of American jobs are at high risk of being automated computers “over some unspecified number of years, perhaps a decade or two”. They had looked at 702 of the jobs listed by the U.S. Department of Labor and judged the vulnerability of each based on nine variables. Consulting firm PwC and the McKinsey Global Institute say much the same; that tens of millions of Americans will see their jobs taken by automation within the next decade. These losses would be in addition to the 7 million manufacturing jobs the U.S. has shed since 1980.

doing the math

Which is to say that, rather than dismiss outright the idea of a universal basic income as impractical or sociologically undesirable, it is far more prudent to think how it might be made to work. Many, going back in this country to Tom Paine, have tossed out reasons for why a guaranteed income could be beneficial, but few have tried to puzzle out the mechanics. Here are a couple who have. Their proposals make for interesting thought exercises.

The most recent entrant to the field is Chris Hughes, Zuckerberg’s roommate at Harvard who became enormously wealthy on his small piece of Facebook founder stock, went on to run Barack Obama’s online campaign in 2008, and has now written a book on the basic income question. He is concerned for the over 40 million Americans who already live below the poverty line. Of them, 1 of every 5 is a child under age 6.

Hughes cites case histories showing that cash grants work. People are given mobility to find work and earn a better income. The young in recipient families perform better in school and college. Adults use less tobacco and alcohol, and suffer fewer hospitalizations, illnesses and untimely deaths.

Hughes proposal isn’t universal. It would pay $500 a month to only those adults in the 42 million households that earn less than $50,000 a year. He calculates that this stipend would lift some 20 million people above the poverty line immediately. To pay for it, he would raise the tax rate on both income and capital gains to 50% for those earning more than $250,000 a year.

But there’s a hitch. Only those who work would be eligible. That forgets that the need for universal basic income will be the disappearance of jobs. The disabled or those who can find employment would be cast adrift in Hughes’ plan. Further, hard edge cutoffs — the $50,000 in his case — are blunt instruments. They can cause people crossing the cutoff to actually lose income. Others suffer a marriage penalty when a couple’s combined income crosses $50,000 and both lose their $6,000 dole. Still others would game the system, hiding income to stay under the $50,000 line.

British economist Sir Tony Atkinson would smooth the rough edges of the work requirement. He advocated a “participation income”, paid only to those who contribute in some way to society, whether by working, looking for work or volunteering.

Charles Murray, a libertarian political scientist and a fellow at the American Enterprise Institute, also wrote a book that proposed a basic income. Every American citizen age 21 or older would receive $13,000 a year from the federal government. Of that, $3,000 must be used for health insurance. Persons earning under $30,000 a year keep the rest, free of taxes. For those earning over $30,000, a graduated payback to the government sets in — ending at a maximum return of no more than half the original payout, reached when someone earns $60,000 a year. But everyone would be left with a minimum of the other half — $6,500 — no matter how high their income.

What pays for this? The numbers would work, Murray estimates, if the government were to eliminate all $2.2 trillion worth of annual benefits— and he does mean all: Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare. He estimates his replacement plan would cost about $3 trillion a year.

Purists would disagree with both these structures. The fundamental premise of universal basic income is that everyone receives the same amount. That the rich get the same payment as the poor does away with the resentments engendered when some must work for their income and the rest are paid to sit idle.

Andy Stern, former president of the country’s largest labor union, Service Employees International, comes closest to that. Saying “Murray seems to want to teach poor people a lesson”, Stern would instead pay $12,000 a year to everyone aged 18 to 64. At that point Social Security would take over. His estimate is that his plan would cost $2.5 trillion a year — twice what is now spent on entitlements today. He would pay for it by a number of taxes and elimination of many antipoverty programs.
“I shall now proceed to the plan I have to propose, which is, To create a national fund, out of which there shall be paid to every person, when arrived at the age of 21 years, the sum of £15 sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property…It is proposed that the payments…be made to every person, rich or poor. It is best to make it so, to avoid invidious distinctions."
Thomas Paine, 1795/span>

Thinkers on the left in universities and elsewhere see a basic income as a return to fairness that would somewhat offset economic inequality alreadyout of control and continuing to widen.To others, any basic income concept is a big-government redistribution scheme, a step toward the socialism of taking money from the successful to give to “able-bodied young males sitting in front of video boxes stoned and unemployed”, in Murray’s words.

In any case, a basic income program would have to be just that, “basic”. Apart from there not being enough wealthy people to support a full living wage for any or all of society (and why should the wealthy be expected to foot the bill?), an overly-generous basic income funded by very high taxes would be self-defeating. That would likely create a society like Saudi Arabia’s, a population made deeply resistant to work by its oil windfall. Why work if the government will pay you enough to not work?

Any practical program should be designed only to provide a leg up, enough to get the rent paid or put some food on the table, but not enough to obviate the need to scratch the ground for further income somewhere, despite a changed landscape where robots and AI have pushed humans aside.

There are hidden benefits in a basic subsidy paid to low-income people. That is money immediately spent, which would produce a boost in economic activity that wouldn’t happen without it — an uptick in GDP. Musk makes an interesting point: “With automation comes abundance. Almost everything will get very cheap”.

trial runs

Other countries have been experimenting. The Swiss voted on whether to institute a universal basic income in a 2016 referendum. It lost by a huge margin — 77% against, to 23% in favor — but how much of that might have been the whopping amount proposed? It was to have been absurdly expensive, with the equivalent of $2,500 a month to be paid to every citizen at a cost of about $210 billion, 30% of the country’s GDP.

The Finns just completed an experiment whereby, beginning in January 2017, 2,000 randomly ch
British economist Sir Tony Atkinson would smooth the rough edges of the work requirement. He advocated a “participation income”, paid only to those who contribute in some way to society, whether by working, looking for work or volunteering.

Charles Murray, a libertarian political scientist and a fellow at the American Enterprise Institute, also wrote a book that proposed a basic income. Every American citizen age 21 or older would receive $13,000 a year from the federal government. Of that, $3,000 must be used for health insurance. Persons earning under $30,000 a year keep the rest, free of taxes. For those earning over $30,000, a graduated payback to the government sets in — ending at a maximum return of no more than half the original payout, reached when someone earns $60,000 a year. But everyone would be left with a minimum of the other half — $6,500 — no matter how high their income.

What pays for this? The numbers would work, Murray estimates, if the government were to eliminate all $2.2 trillion worth of annual benefits— and he does mean all: Social Security, Medicare, Medicaid, food stamps, Supplemental Security Income, housing subsidies, welfare for single women and every other kind of welfare and social-services program, as well as agricultural subsidies and corporate welfare. He estimates his replacement plan would cost about $3 trillion a year.

Purists would disagree with both these structures. The fundamental premise of universal basic income is that everyone receives the same amount. That the rich get the same payment as the poor does away with the resentments engendered when some must work for their income and the rest are paid to sit idle.

Andy Stern, former president of the country’s largest labor union, Service Employees International, comes closest to that. Saying “Murray seems to want to teach poor people a lesson”, Stern would instead pay $12,000 a year to everyone aged 18 to 64. At that point Social Security would take over. His estimate is that his plan would cost $2.5 trillion a year — twice what is now spent on entitlements today. He would pay for it by a number of taxes and elimination of many antipoverty programs.
“I shall now proceed to the plan I have to propose, which is, To create a national fund, out of which there shall be paid to every person, when arrived at the age of 21 years, the sum of £15 sterling, as a compensation in part, for the loss of his or her natural inheritance, by the introduction of the system of landed property…It is proposed that the payments…be made to every person, rich or poor. It is best to make it so, to avoid invidious distinctions."
Thomas Paine, 1795/span>

Thinkers on the left in universities and elsewhere see a basic income as a return to fairness that would somewhat offset economic inequality alreadyout of control and continuing to widen.To others, any basic income concept is a big-government redistribution scheme, a step toward the socialism of taking money from the successful to give to “able-bodied young males sitting in front of video boxes stoned and unemployed”, in Murray’s words.

In any case, a basic income program would have to be just that, “basic”. Apart from there not being enough wealthy people to support a full living wage for any or all of society (and why should the wealthy be expected to foot the bill?), an overly-generous basic income funded by very high taxes would be self-defeating. That would likely create a society like Saudi Arabia’s, a population made deeply resistant to work by its oil windfall. Why work if the government will pay you enough to not work?

Any practical program should be designed only to provide a leg up, enough to get the rent paid or put some food on the table, but not enough to obviate the need to scratch the ground for further income somewhere, despite a changed landscape where robots and AI have pushed humans aside.

There are hidden benefits in a basic subsidy paid to low-income people. That is money immediately spent, which would produce a boost in economic activity that wouldn’t happen without it — an uptick in GDP. Musk makes an interesting point: “With automation comes abundance. Almost everything will get very cheap”.

trial runs

Other countries have been experimenting. The Swiss voted on whether to institute a universal basic income in a 2016 referendum. It lost by a huge margin — 77% against, to 23% in favor — but how much of that might have been the whopping amount proposed? It was to have been absurdly expensive, with the equivalent of $2,500 a month to be paid to every citizen at a cost of about $210 billion, 30% of the country’s GDP.

The Finns just completed an experiment whereby, beginning in January 2017, 2,000 randomly cho0D
British economist Sir Tony Atkinson would smooth the rough edges of the work requirement. He advocated a “participation income”,

May 3 2018 | Posted in Economy | Read More »