Category: Policy Novice

Trump’s latest boast about the economy isn’t even close to accurate

President Donald Trump spent the morning bragging about the economy. At least one of his claims didn’t come close to being true.

“The GDP Rate (4.2%) is higher than the Unemployment Rate (3.9%) for the first time in over 100 years!” the president said in a tweet.

The first two numbers are correct, although they measure completely different things, and in different ways.
The overall US economy grew at a 4.2% annual rate in the second quarter. Unemployment was between 3.8% and 4% during the quarter, and it came in at 3.9% in August.

That’s all good news.
“It’s definitely better when it’s true than when it’s not,” said Justin Wolfers, professor of economics at University of Michigan. “I like high GDP growth and low unemployment.”

But Trump got it wrong — way wrong — when he said it hasn’t happened in a century.

In the last 70 years, it’s happened in at least 62 quarters, most recently in 2006.

“He wasn’t even in the neighborhood of right,” Wolfers said in an interview.

Wolfers tweeted a response to Trump’s claim. In fact, it took him two tweets to list all the quarters in which economic growth was higher than the unemployment rate. He added a chart.

“It certainly not a natural comparison,” Wolfers said. “I’ve never seen it made before. It’s not one that a macroeconomist would make. They’re not comparable.”

That’s not just because lower unemployment is better, while higher GDP is preferable.

The unemployment rate is a monthly reading on the percentage of people in the labor force who are looking for work. It is a snapshot of a current condition.

GDP is a reading of the output of the overall economy. When economists talk about GDP growth, they’re not talking about a snapshot of a current condition. They are measuring the change compared with a year earlier. Quarterly GDP growth is also adjusted to come up with the annual rate.

The White House did not immediately respond to a request for comment.

[CNN]

Reality

This happened in 1941, 42, 43, 44, 48, 50, 51, 52, 53, 55, 59, 62, 64, 65, 66, 68, 72, 73, 98, 99, and 2000.

Trump: Now Ford can build Focus in U.S.; Ford: That makes no sense

Auto analysts groaned on Sunday in response to tweets sent by President Trump that touted his tariffs on Chinese imports and his claim that the trade war would inspire Ford Motor Co. to build its Ford Active crossover in the U.S. rather than overseas.

Wrong, Ford said.

The Dearborn-based company issued a statement in response to the president’s tweet:

“It would not be profitable to build the Focus Active in the U.S. given an expected annual sales volume of fewer than 50,000 units and its competitive segment. Ford is proud to employ more U.S. hourly workers and build more vehicles in the U.S. than any other automaker.”

Jon Gabrielsen, a market economist who advises automakers and auto suppliers, said, “This is further evidence that neither the president nor his trade representatives have any clue of the complexities of global supply chains.”

A trade war actually hurts one of America’s most iconic companies, Gabrielsen said. “This forces Ford to forfeit the sales they would have had if they could continue to import that low-volume niche vehicle.”

Ford on Aug. 31 canceled plans to import the Focus Active crossover from China to the United States because of costs from the escalating trade war.

“Given the negative financial impact of the new tariffs, we’ve decided to not import this vehicle from China,” Kumar Galhotra, president of Ford North America, told reporters.

The Focus Active was meant to take the place of the Ford Focus in the U.S. because Ford is phasing out the entry-level car as it shifts its production to pickups and SUVs. Focus Active was scheduled to go on sale in the late summer of 2019.

“Basically, this boils down to how we deploy our resources. Any program that we’re working on requires resources — engineering resources, capital resources,” Galhotra said. “Our resources could be better deployed at this stage.”

Tariffs imposed by President Donald Trump on Chinese products and the threat of more had a direct impact on the Aug. 31 decision, according to Ford officials. The United States already has imposed tariffs on steel and aluminum from China and, as of July, put a 25 percent tax on autos imported from China.

“Ford was pretty clear in its statement: Focus production will not shift in part or in whole back to the U.S.,” said Stephanie Brinley, a senior analyst at London-based IHS Markit.

Trump didn’t tweet about the Ford announcement at the time. On Sunday, he quoted the CNBC TV network and tweeted, “‘Ford has abruptly killed a plan to sell a Chinese-made small vehicle in the U.S. because of the prospect of higher U.S. Tariffs.'” CNBC. This is just the beginning. This car can now be BUILT IN THE U.S.A. and Ford will pay no tariffs.”

“Ford is one of the companies that has the highest U.S. content and the most U.S. autoworkers of any company,” said Kristin Dziczek, vice president of the Industry, Labor & Economics Group at the Center for Automotive Research in Ann Arbor.

“You know, their statement was very clear. It’s too costly to build that car here and they weren’t planning to. They don’t make business decisions based on tweets. They make decisions based on whether there’s a demand here for the vehicle and if it can be done profitably. Demand for small cars is waning, so they thought they would build some for the rest of the world and bring a few for folks here who want one,” Dziczek said.

Building the car may still be the plan, but not in the U.S., she emphasized, along with other analysts. At issue is finding low-wage production sites to maintain profit margins, and that doesn’t include the U.S. or Canada.

“This trade thing turns into Whac-A-Mole,” Dziczek said. “You can shut off China and things will come from India, Thailand, Taiwan, Poland, Slovenia. There are loads of low-cost countries for parts and vehicles.”

After touting his tariff plan, the president also cited tariff data that alarmed analysts.

“If the U.S. sells a car into China, there is a tax of 25%. If China sells a car into the U.S., there is a tax of 2%. Does anybody think that is FAIR? The days of the U.S. being ripped-off by other nations is OVER!”

Wrong again, Dziczek said. “China lowered the tariff rate from 25 percent to 15 percent for most-favored nation status — which is offered to World Trade Organization members — but raised it to 40 percent for the U.S. in retaliation to the tariffs we put on Chinese goods.”

She continued, “And the tariffs we charge for goods coming into the U.S. is 2.5 percent, not 2 percent. And then we put an additional 25 percent on cars coming from China into the U.S. So now they’re paying 27.5 percent. This is why Ford had to re-evaluate.”

American automakers ship about 250,000 vehicles a year from the U.S. to China, while China ships about 50,000 vehicles to the U.S. annually, Dziczek noted.

For example, every Buick Envision sold in the U.S. is made in China. General Motors has petitioned that the car be excluded from tariffs on Chinese-built products.

Ford spokesman Mark Truby emphasized Sunday that the company plans to build many new vehicles in America. “For example, we are starting production soon of the Ford Ranger in the factory just outside of Detroit where the Focus was previously built. We’re not defensive about building in America. Nobody does more than us. We also have to make a business case that works.”

[Detroit Free Press]

Aides regularly tell Trump not to call foreign leaders at odd hours due to time zones

White House aides must regularly tell President Trump not to call foreign leaders at odd hours due to time zone differences, according to a new Politico report about Trump’s multiple “diplomatic faux-pas.”

Sources close to Trump told Politico the president often proposes phone calls with world leaders, including Japanese Prime Minister Shinzo Abe, at times when they would likely be asleep.

“When he wants to call someone, he wants to call someone,” one source told Politico. “He’s more impulsive that way. He doesn’t think about what time it is or who it is.”

White House press secretary Sarah Huckabee Sanders told Politico that “foreign leaders appreciate that the president is willing to take their calls day and night.”

“The president has made clear that when leaders reach out for calls, [aides should] set them up right away,” Sanders said. “He has had foreign leaders calls very late at night and never wants another leader to wait before their call is returned.”

Former National Security Council staffers and White House sources told Politico that the president’s foreign affairs knowledge is lacking. At one meeting, Trump allegedly mispronounced Nepal as “nipple” and Bhutan as “button,” two sources  told Politico.

A White House official denied that element of the report, saying others who attended the meeting did not remember the president saying that.

One former National Security Council official told Politico that the president avoids saying certain words and names for fear he will mispronounce them when speaking to other world leaders.

[The Hill]

Trump Insists Tariffs Will Make Our Country ‘Much Richer’: ‘Only Fools Would Disagree’

On Saturday, President Donald Trump praised his tariff plan and insisted, “steelworkers are working again, and big dollars are flowing into our Treasury.”

“Tariffs are working far better than anyone ever anticipated,” Trump tweeted out. “China market has dropped 27% in last 4 months, and they are talking to us. Our market is stronger than ever, and will go up dramatically when these horrible Trade Deals are successfully renegotiated. America First.”

Then in the first follow-up tweet, he added: “Tariffs have had a tremendous positive impact on our Steel Industry. Plants are opening all over the U.S., Steelworkers are working again, and big dollars are flowing into our Treasury. Other countries use Tariffs against, but when we use them, foolish people scream!”

He was not done yet.

A few minutes later, he tweeted again, writing, ” Tariffs will make our country much richer than it is today. Only fools would disagree. We are using them to negotiate fair trade deals and, if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs. We win either way.”

Trump then concluded: “China, which is for the first time doing poorly against us, is spending a fortune on ads and P.R. trying to convince and scare our politicians to fight me on Tariffs- because they are really hurting their economy. Likewise other countries. We are Winning, but must be strong!”

[Mediaite]

The EU reportedly used colorful flash cards to explain trade policy to Trump

European Commission President Jean-Claude Juncker reportedly used colorful cue cards to explain issues of global-trade policy to President Donald Trump during their meeting earlier this week.

According to a report from the Wall Street Journal on Thursday evening, Juncker and his team used the cards to simplify complex issues for the president as a means of getting their points across as effectively as possible.

The Journal’s report says Juncker “flipped through” more than a dozen cards, which had minimal information on them, and all focused on a single issue. These included the automotive trade, and regulatory standards for medicines, the report added, saying that there were a maximum of three figures per card.

“We knew this wasn’t an academic seminar,” a senior EU official who was at the meeting told the Wall Street Journal. “It had to be very simple.”

Trump and Juncker on Wednesday agreed to the beginnings of a deal that would end the previously growing trade tensions between the US and the EU.

During the meeting, the EU agreed to import more American soybeans and liquefied natural gas. Both sides agreed to work to decrease industrial tariffs and adjust regulations to allow US medical devices to be traded more easily in European markets.

“This was a very big day for free and fair trade,” Trump said at a press conference after the pair’s meeting.

The EU’s use of flash cards is not without precedent. Trump is well-known for his distaste for lengthy documents, and is said to prefer single-page memos when deciding on policy.

In May 2017, a report from Reuters said that Trump likes “single-page memos and visual aids like maps, charts, graphs and photos.” A source quoted by Reuters said aides also strategically put Trump’s name into “as many paragraphs as we can because he keeps reading if he’s mentioned.”

[Business Insider]

Trump somehow still doesn’t understand NATO

Just a week after rattling NATO countriesin Europe, President Donald Trump once again put America’s commitment to the alliance in doubt on Tuesday night.

In an interview with Fox News’s Tucker Carlson, Trump equivocated on whether the US would come to a NATO ally’s defense if attacked, called the people from Montenegro “very aggressive,” and worried aloud that protecting Montenegro might unleash a third world war.

There were two key parts of the exchange. Here’s the first:

CARLSON: NATO was created chiefly to prevent the Russians from invading Western Europe. I don’t think you believe Western Europe’s at risk of being invaded by Russia right now, so what is the purpose of NATO right now?

TRUMP: Well, that was the purpose, and it’s okay. It’s fine, but they have to pay.

And here’s the second:

CARLSON: Membership in NATO obligates the members to defend any other member who has been attacked. So let’s say Montenegro, which joined last year, is attacked: Why should my son go to Montenegro to defend it from attack? Why is that?

TRUMP: I understand what you’re saying. I’ve asked the same question. Montenegro is a tiny country with very strong people.

CARLSON: Yeah, I’m not against it — or Albania.

TRUMP: No, by the way, they have very strong people — they have very aggressive people. They may get aggressive, and congratulations, you’re in World War III. Now I understand that — but that’s the way it was set up. Don’t forget, I just got here a little more than a year and a half ago. But I took over the conversation three or four days ago and said, “You have to pay.”

Carlson’s questions were entirely fair ones to ask (more on that in a minute). But Trump’s responses were deeply disturbing. Here’s why.

Trump didn’t steadfastly commit to NATO’s collective defense — again

At the heart of the NATO military alliance is a provision known as Article 5. That says that an attack on one NATO country is to be considered an attack on all the countries — and therefore that all the member countries are obligated to come to the defense of whoever is attacked.

This is why NATO allies — yes, including Montenegro — are fighting alongside the US in Afghanistan to this day. The US invoked Article 5 after 9/11, and NATO countries kept their promise and came to America’s aid.

And, to use Tucker Carlson’s example, if a country were to attack Montenegro — which became a NATO ally in June 2017under Trump’s watch — the US would be treaty-bound to defend it.

But Trump made it pretty clear that he’s not wild about that fact, and only begrudgingly said he’d go along with it as long as they pay their fair share of defense spending — an issue he brought up over and over again at the NATO summit in Brussels last week.

This isn’t the first time Trump has done this, either. In May 2017, he refused to commit the US to Article 5 during a meeting with NATO allies. But two weeks later, he reversed course, saying in impromptu remarks that the US would abide by the provision.

Trump did seem to endorse NATO as a whole during Carlson’s interview when he said the alliance’s original purpose is still “okay.” Still, Trump’s outward skepticism about NATO worries many.

“His rhetoric has unsettled allies, empowered Russia, and undermined Alliance solidarity,” Amanda Sloat, a European security expert at the Brookings Institution in Washington, told me.

Trump still doesn’t get how NATO works

Trump said that if Montenegro got aggressive with another country, presumably Russia, then World War III would break out because the US would be obligated to defend it, thus dragging the US into a major war with Russia.

What Trump misses is that the US doesn’t have to defend Montenegro if that country starts a fight, only if it’s attacked. NATO is a defensive treaty. If you start an unprovoked war, that’s your decision, and no one in NATO has to help you at all.

So even if Montenegrins were, as Trump said, “very aggressive people” — whatever the hell that means — the US wouldn’t have to lift a finger to help them.

The fact that Trump doesn’t seem to understand that is beyond disturbing. If this were his first day in office, maybe it would be understandable. But it’s not. Trump has been in office for a year and a half. He’s met with NATO allies as a group not once but twice — including spending two days straight talking to them just a week ago.

There is no reason why he shouldn’t have that down pat at this point.

Carlson’s line of questioning was totally fair. It’s Trump’s responses that are the problem.

Debates about NATO’s usefulness have raged for decades, especially since the fall of the Soviet Union, as have concerns about NATO’s expansion over the years to include more and more countries. (Here’s a really smart Twitter thread on that if you’re interested.)

It’s certainly reasonable to ask the sitting US president to explain why America’s sons and daughters should be obligated to fight to protect Montenegro, or why the US should risk a potential nuclear war with Russia to defend Estonia.

It’s Trump’s responses to this question that are concerning here. Instead of laying out the case for NATO being in America’s national security interest (and there is a case to be made on that), Trump makes it clear that he doesn’t actually get why the hell NATO matters at all.

If you’re a NATO ally wondering whether the US president will have your back if shit goes down, that’s not the most reassuring thing to hear.

[Vox]

Trump on Whether He’ll Ask Putin to Extradite Indicted Russians: ‘I Might, I Hadn’t Thought of That’

President Donald Trump sat down for an interview with CBS Evening News anchor Jeff Glor and previewed his big summit with Vladimir Putin.

And given the indictments handed down Friday against 12 Russian officers for hacking the Clinton campaign and the DNC, there have been many calls for Trump to call off the summit. Senator John McCain said it shouldn’t happen if Trump’s “not prepared to hold Putin accountable.”

Trump told Glor he believes in meetings, saying having meetings with Putin, Kim Jong Un, and Xi Jinping are good.

Of the Putin summit in particular, the President said, “Nothing bad’s going to come out of it, and maybe some good will come out. But I go in with low expectations, I’m not going in with high expectations. I don’t really––I don’t know what’s going to happen, but I can tell you what I’ll be asking for and we’ll see if something comes of it.”

[Mediaite]

Media

Trump Kicks Off NATO Summit With Breakfast Rant: ‘Germany Is A Captive Of Russia’

President Donald Trump on Wednesday kicked off what is shaping up to be a contentious NATO summit by lashing out at Germany, saying the country is “captive to Russia” because of a gas pipeline deal.

In a bilateral breakfast meeting with NATO Secretary General Jens Stoltenberg, in front of reporters, Trump immediately launched into a tirade about the pipeline.

“It’s very sad when Germany makes a massive oil and gas deal with Russia where we’re supposed to be guarding against Russia and Germany goes out and pays billions and billions of dollars a year to Russia,” he said.

“If you look at it, Germany is a captive of Russia, because they supply ― they got rid of their coal plants, got rid of their nuclear, they’re getting so much of the oil and gas from Russia,” he added. “I think it’s something NATO has to look at.”

“Germany is totally controlled by Russia, cause they are getting 60 to 70 percent of their energy from Russia and a new pipeline,” he said.

Trump’s comments referred to Berlin’s support for the construction of the $12 billion Nord Stream 2 pipeline to bring gas across the Baltic Sea into the European continent. German Chancellor Angela Merkel has said that the project is merely commercial, but the U.S. and other European Union members believe the pipeline could be a geopolitical incursion by Russia.

Stoltenberg responded by emphasizing NATO’s unity.

“NATO is an an alliance of 29 nations and sometimes there are differences and different views and also some disagreements, and the gas pipeline from Russia to Germany is one issue where allies disagree,” said Stoltenberg.

Trump is in Brussels for the NATO summit on Wednesday and Thursday, then will spend Friday and the weekend on a working visit to the UK, then will meet with Russian President Vladimir Putin in Helsinki on Monday.

There are concerns that Trump will alienate NATO members ― traditional allies of the U.S. ― while cozying up to Putin.

Ahead of the NATO summit, Trump sent letters to allies Merkel, Canadian Prime Minister Justin Trudeau and Prime Minister Charles Michel of Belgium blasting them for not spending enough on defense ― an oft-repeated criticism of the alliance. Meanwhile, he told reporters on Tuesday that his meeting with Putin “may be the easiest of them all.”

Trump’s continued downplaying of Russian election interference has also deviated from broader international attitudes.

“Russia continues to say they had nothing to do with Meddling in our Election!,” he tweeted last month before tearing into the FBI and its former director James Comey. The U.S. intelligence community, backed by a Republican-led Senate panel, has definitively concluded that Kremlin meddled in the 2016 election to help Trump win.

Trump also called Putin “fine” in a fiery speech last week in which he also attacked European allies.

Back in the U.S., the Senate on Tuesday voted 97-2 on a motion of support for NATO.

“Unfortunately, this motion has become necessary because some of our closest allies have come to question the US commitment to collective self-defense. President Trump has at times called the alliance ‘obsolete.’ Our allies are starting to wonder whether they can rely on the United States to come to their defense in a crisis,” said Sen. Jack Reed (D-R.I.), who authored the nonbinding motion.

[Huffington Post]

Media

Dutch Prime Minister Tells Trump “No!” and That He Is Wrong on Trade

Dutch Prime Minister Mark Rutte has dispensed with diplomatic niceties during a joint press conference with U.S. President Donald Trump.

The routine White House discussion with reporters took a slightly passive-aggressive turn as Trump extolled the virtues of his plan to slap tariffs on steel and aluminum coming into the U.S. from the European Union.

Trump said he would discuss the dispute with EU officials before saying: “If we do work it out, that’ll be positive, and if we don’t, it’ll be positive also because…” before Rutte interjected by saying “No!”

“Well, just think about those cars that pour in here, and we’ll do something, right?” Trump replied.

But Rutte was not having it and said through gritted teeth: “It’s not positive,” adding, “We have to work something out.”

Trump then moved to shake the prime minister’s hand and the awkward interaction was over.

It showed the level of discontent among European leaders at Trump’s trade move,which he is threatening to apply to cars.The EU has threatened to retaliate  with tariffs worth $294 billion on a number of U.S. exports.

In a paper released this week, the European Commission said Trump’s tariffs would be “self-defeating and would weaken the U.S. economy.

“The European Union would therefore caution the United States against pursuing a process which could result in yet another disregard of international law, which would damage further the reputation of the United States and which the international community cannot and will not accept,” the EU report said.

There is domestic concern, too, with the U.S. Chamber of Commerce criticizing how Trump handled global disputes. It said that the tariffs he wants to impose could hurt the American economy. Trump is also threatening to impose tariffs on vehicles.

[Newsweek]

Trump threatens Harley-Davidson: If it moves operations overseas, ‘they will be taxed like never before!’

President Donald Trump threatened on Tuesday that Harley-Davidsonwill be “taxed like never before” if the motorcycle maker moves production overseas. He claimed that the iconic U.S. company was using increased trade tensions as an excuse to justify planned changes in manufacturing.

“A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end – they surrendered, they quit! The Aura will be gone and they will be taxed like never before!” Trump said in a tweet.

Harley said Monday it was moving some production overseas due to increased costs from the EU’s retaliatory tariffs against the Trump administration’s duties on steel and aluminum. No production will be moving to Europe as a result of the tariffs, according to the company. Harley’s overseas manufacturing plants are in Brazil, India, Australia and Thailand.

[CNBC]

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