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“The Commerce Department said on Wednesday that a 12.4 percent jump in the goods deficit in December had contributed to the record $891.3 billion goods trade shortfall last year. The overall trade deficit surged 12.5 percent to $621.0 billion in 2018, the largest since 2008.” Reuters
Many on both sides agree that the increased trade deficit is not a sign of economic malaise, and, combined with other trends, is in fact an indicator that the economy is generally doing well:
“Imports grew faster than exports as the U.S. economy accelerated and much of the world slowed. The dollar grew stronger as capital flowed into the U.S., and the trade deficit grew to offset the larger capital inflows as it must by definition under the national income accounts… a larger trade deficit is a benign byproduct of a healthier American economy.”
Editorial Board, Wall Street Journal
“True, at times of high unemployment deficits can cost us jobs. But in normal times they don’t reduce overall employment, nor do they make us poorer. On the contrary, other countries are sending us valuable goods and services, which we’re paying for with pieces of paper — paper that pays very low interest rates.”
Paul Krugman, New York Times
The left criticizes Trump for focusing on reducing trade deficits, and his overall approach to trade.
“Not only did the trade deficit increase, it increased exactly where Trump said it wouldn’t… [But] the problem here is not really with Trump’s administration. The president can have some effect on international trade, but most of it is driven by the massive U.S. economy: Who buys what, from where. The problem was really that Trump made campaign trail promises he would always have had a challenge in fulfilling.”
Philip Bump, Washington Post
“[Trump] has picked trade wars the world over, with friends and foes alike… These actions and threats have led to some predictable consequences. One is that U.S. companies have stocked up on some imported goods to beat the tariffs, which increases imports in the short run. Higher imports = bigger trade deficit. Another is that other countries have levied their own retaliatory tariffs on our own products — most famously, red-state goods such as soybeans and bourbon. So there has been less demand for U.S. exports. Lower exports also = bigger trade deficit.”
Catherine Rampell, Washington Post
“The administration hoped that threatening our trade partners with tariffs would force them to negotiate new pacts that gave the U.S. a leg up in global commerce. But the results have been underwhelming. The new-and-sort-of-improved NAFTA makes some important changes around the edges of the agreement, including key ones to international dispute settlement, but is widely regarded as little more than a rebranding effort…
“The agreement shaping up between China and the U.S. is looking like even more of a disappointment. In return for lowering tariffs, China would buy more U.S. agricultural goods and lower some barriers that keep U.S. companies from operating there. It would do nothing regarding issues like intellectual property theft that are of much greater concern to U.S. corporations. Trump started an unprecedented trade war, and all we’re gonna get are some lousy soybean sales.”
Jordan Weissmann, Slate
Some note that, “Had the United States taken a different approach to industrial (and antitrust) policy over the past four decades, the dollar might be weaker; our manufacturing base stronger; the financial industry smaller; investment less concentrated in large urban centers; and many ordinary Americans better off. And a sufficiently committed ruling party — which is to say, one willing to embrace aggressive state intervention, and to run roughshod over entrenched interests — could conceivably bend our economy back in that direction… [But Trump’s] populist producerism was never a serious economic doctrine. It was a PR strategy.”
Eric Levitz, New York Magazine
“The political calendar and Trump's approach could give grounds for optimism. Kim, who has presided over a limited form of economic development inside North Korea, is under pressure to deliver improvements in the lives of his people… So he has an incentive to try to seek economic benefits or aid from the United States and wants punishing economic sanctions lifted — a potential opening for US negotiators… Kim must realize that his chances of basking in this kind of legitimacy with a US President other than Trump are slim. So if he fears Trump could lose in 2020, he may reason the time may be ripe for a deal. And Trump wants nothing more than a big diplomatic breakthrough months before the election.”
Stephen Collinson, CNN
Regarding the Cadillac tax, “high-premium employer-based plans raise the cost of health care for everyone by encouraging the overconsumption of expensive services. This means that even Medicare and Medicaid face higher prices. Quite aside from its benefits for the health-care market, the Cadillac tax would also have the effect of expanding the tax base and making the tax code more efficient. It would raise revenues by about $15 billion a year… Rather than killing or delaying the Cadillac tax, Democrats should be trying to make it operational. The tax would raise revenue, lower costs, increase the efficiency of the tax code and give the Obamacare individual market its best chance at success.”
Karl W. Smith, Bloomberg
“The two issues with which he is most often associated, support for a balanced budget and opposition to free trade, put him at odds with both of our major political parties. An old-fashioned, soft-spoken Southerner, he nevertheless held views on so-called ‘social issues’ that would be to the left of the mainstream of the Republican Party, both then and now. He was a fervent supporter of the Vietnam POW/MIA movement in the late '80s and early '90s, but he was not in any sense a hawk. Never mind 2003. Perot opposed the first war in Iraq in 1990… Perot's death should be mourned by all Americans who regret the fact that it is no longer possible to make reasoned, non-ideological arguments about questions of public import, and by the devolution of our political life into mindless partisan squabbling.”
Matthew Walther, The Week
The right praises Trump’s policies for creating a strong economy.
The right praises Trump’s policies for creating a strong economy.
“In 2018, the US imported about $2.6 billion in goods produced in other countries and we exported only about $1.7 billion of US goods produced here… That ‘unfavorable trade imbalance’ as the media frequently describes it, was actually a ‘favorable trade balance’ for the US viewed differently, since we benefited from a ‘net inflow of goods’ of nearly $1 trillion.”
Mark Perry, American Enterprise Institute
“The current growth in the U.S. trade deficit is simply due to Americans buying and selling more… [Moreover] America actually has a capital surplus, meaning companies and individuals around the world invest more money in the U.S. than we do abroad… When individuals have the freedom to buy and sell with the world—free of government intervention—businesses are forced to compete and innovate more, resulting in more choices in the marketplace…
“Rather than focusing on the trade deficit, Congress, the Trump administration, and even the media should focus more on the barriers imposed by governments (including the U.S.’) to limit trade freedom, what the real-life effects of those barriers are, and how we can fix them.”
Tori Whiting, Daily Signal
“President Trump promised to bring down the trade deficit, but it hit a 10-year high last year. But, given that we don't subscribe to the president's zero-sum approach to trade, our reaction to the news is to raise a glass to the Trump economy…
“Trump is right to care about the manufacturing industry. Manufacturing jobs from World War II until recent decades were excellent sources of wealth and stability for the middle class and working class… But manufacturing isn’t going away. As a share of the economy, manufacturing is stable. Last year saw a big uptick in our manufacturing and exports. The Federal Reserve reported Wednesday ‘slight-to-moderate’ manufacturing growth in almost all of the country… America’s $2.5 trillion in exports represents a 6.3 percent increase from 2017… We hope President Trump does not get tired of this winning.”
Editorial Board, Washington Examiner
Some argue that “a trade deficit reducing tariff would have to be much higher, perhaps even exceeding the 25 percent that was supposed to apply two months ago… The 10 percent [tariff] was not a tariff designed to reduce the trade deficit. It was the tariff designed to get China’s attention. Which it did, forcing China to cease its threats of retaliation in favor of negotiating with the U.S… Wednesday’s trade deficit figures strengthen the Trump administration’s hand because they demonstrate that China has much more at stake than the U.S. in keeping tariffs from escalating.”
John Carney, Breitbart
“Not only did [Trump] attack the ‘squad,’ he managed to do it in a way in which no other prominent Democrat can continue to criticize them publicly, lest they be perceived as echoing the president’s contention that they should go back where they came from. At the exact moment the accusations and counter-accusations were set to do lasting damage, Trump just had to jump in and give them an attack that would unify them all. It often seems like Trump would rather have a bad news cycle that focuses on him than a beneficial news cycle that focuses on someone else… Everyone around the president can read a poll and knows that his rage-tweeting is a liability; it is perhaps the biggest liability in a presidency that, with prosperity and a perception of peace, ought to be comfortably cruising to reelection.”
Jim Geraghty, National Review
“If Joe Biden can win his way through the primaries, he’s almost lab-engineered to beat Trump. He doesn’t cause Republican panic, he has the potential to connect with white working-class voters in a way that Hillary couldn’t in 2016, and he has a potential to connect better with black voters than Hillary did… if Biden emerges from [this] crucible, Trump will face a very different challenge than he faced in 2016.”
David French, National Review
“NBC and MSNBC embraced Sen. Elizabeth Warren of Massachusetts in the first debate of Democratic presidential candidates Wednesday night, treating her like the star of the show. The debate led off with Warren, who had a huge popularity advantage from the start… NBC anchor Savannah Guthrie started it off sounding more like Warren’s press secretary. ‘You have many plans – free college, free child care, government health care, cancelation of student debt, new taxes, new regulations, the breakup of major corporations,’ Guthrie said, before teeing up an economy question. Guthrie even used Warren’s plan to break up tech companies as the foundation for a question for Sen. Cory Booker of New Jersey… the round-robin final comments also ended with Warren, as Maddow asked her for the ‘final, final statement.’ That let NBC bookend the entire debate with Warren and Warren.”
Dan Gainor, Fox News
“President Trump should be happy. As much as Warren is articulate, obviously intelligent, and energetically supported by Democrats, she would also be far easier to defeat than Joe Biden… Considering Trump's economy, the president is well placed to defeat Warren.”
Tom Rogan, Washington Examiner
A libertarian's take
“The fans who avidly followed the men’s tournament certainly weren’t doing anything wrong. And it’s hard to argue that each of them had a moral obligation to be exactly as interested in women’s soccer. Even if we could stop them from watching the men more than the women, should we?…
“It’s tempting to answer that the fan choices aren’t innocent, they’re sexist. But since we can’t peek into their hearts, to say that definitively, we’d have to assume that men’s greater speed, strength and endurance definitely make nodifference to the sport’s quality. Fair enough, but then why do fans prefer to watch Megan Rapinoe play instead of the sedentary elderly who could presumably use some exercise? Alternatively, maybe pay should be equalized precisely because biology is unfair. But that seems to be an argument for curbing the pay of all top-level athletes, who have to hit the genetic lottery just to get on the field. It might be easier to focus on the distributions across society at large, rather than every individual industry, especially when fundamental biology is in play.”
Megan McArdle, Washington Post
Mooove over, LTE: 'Me+Moo' uses 5G to connect you to real-life cow.
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