Thursday, March 14, 2019

When Their Homes & Farms Are Foreclosed Will Trump's Zombies Still Stick With Him?

"Doh! Trade wars are great!  Ya can always win!"  

That question must be asked after hearing a South Carolina political commentator tell Joy Reid (AM Joy) Sunday morning that as far as Trump's base is concerned - "Yes he could stand on Fifth Avenue and fire point blank at somebody's head, and they'd stick with him".  As Joy's mouth began to drop open, he quickly added: "They'd just say that he had it coming!"

Wow! So following that logic, and turning it around, it also means these imps and misfits (otherwise called deplorables or "the lower half of the IQ curve"  e.g.
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Would also accept any amount of economic pain and sacrifice, say emanating from Trump's tariff and other policies, to stay behind the Dotard?  Inquiring minds must ask given all the ways things are going south for the Trump base and those associated with it. This includes farmers in 'flyover country', and the many millions of ordinary Donnie boosters now realizing they've been had by the Con man- in- chief .  This is after seeing their expected tax refunds morph into huge tax hits, like one elderly couple reported in the WSJ  10 days ago who expected a $2,000 refund but instead ended up paying that amount to the IRS.

In the meantime we've seen headlines (in the WSJ) like the following: 

'Trade Deficit In Goods Hits Record'  (March 5, p. A1)

'Federal Budget Deficit Jumps 77 %'  (March 6,  p. A2)

 And we're not even including  the dozens of local papers across flyover country that are replete with tales of woe regarding value destruction and lost income from Trump's trade wars.  We can debate from now until doomsday the definition of "trade war" but the fact is that Trump's tariffs are already costing millions millions. And hurting tens of thousands of his devotees.   

How bad is it really? According to a WSJ piece last Wednesday:

U.S. Posts Record Annual Trade Deficit - WSJ

"The U.S. trade deficit hit a record in 2018 defying President Trump's efforts to narrow that gap as imports jumped and some exports - including soybeans and other farm products - got hammered by retaliation against U.S. trade policies."

Showing again that despite Dotard's delusions,  trade wars and tariffs have no winners.   Recall Trump imposed tariffs on some $300 billion worth of goods the U.S. imports from other countries (especially China) in the hopes of giving U.S. producers an edge.  It was a dumb cluck move bound to fail and bigly - given it supposed the tariff or boycott backlash would be acceptable.

It wasn't. Ask the farmers in flyover land. Trump's "genius" move didn't do squat to the Chinese who simply started buying loads of soybeans from Brazil.  The move "forced U.S. farmers who had been holding on to their soybeans in hopes of better prices to sell at a loss." (WSJ, ibid.)

One Minnesota soybean farmer interviewed in the piece, who plants arojnd 2,000 acres, said:

"It's really tough. There's a lot of farms going bankrupt now."

Then why did you midwestern farm guys hitch your wagons to a loser and con man like Trump?

As for the exploding trade deficit, you could bet on the Wall Street Journal's editors glossing over the issues and spinning like there's no tomorrow ('Trade Deficit Freak Out', March 7, p. A16) snarkily asking "Where's the valium?" and then claiming for the benefit of the FOX zombots:     

  "The rising gap is the result of faster growth, there's no need to panic."

A pity these editors never read the material from their own stable of contributors - the very small stable, to be sure  - of actually competent writers, columnists. Such as Greg Ip who admirably explained the basis of huge trade deficits last June.  Indeed, Mr. Ip  answered the question of why the US. itself consistently runs large trade deficits:

"Because it consumes more than it produces while its trading partners collectively do the opposite.. Another way of saying this is that the U.S. invests more than it saves while other countries save more than they invest."

 In other words it has nada to do with growth - fast or slow.  Growth implies expansion of GDP, more than 70 percent of which is dependent on consumption - i.e. blowing money not saving it. (To be fair, as blogger Dean Baker notes - see link at bottom  -it is conceivable some element of "growth" factored into the trade deficits.  I.e. Trump's tax cuts put more $ into worker's pockets and they promptly went out to spend it on cheap foreign -made crap, like Chinese umbrellas. Or the ever popular 'Kung Fu fighting robots'.)

The trick, by Ip's account, is for Americans to invest less, and save more.  (Note: investing, i.e. in the stock market,  isn't saving, which ought not need explaining!) If then average people-  even Trumpies - saved more, they'd be able to afford higher end U.S. goods if they wanted them, as opposed to buying cheaper Chinese, or Japanese electronics or cars.  The trade gap is being generated because the cheaper foreign goods are more popular because of the economics.    This is not rocket science or Mensa admission test criteria. 

Let's break it down so even a Trumpie could grasp it:

More cheap goods =  more items bought, i.e. from the Chinese, so the Chinese run up a trade surplus.   

Trump, senseless buffoon that he is, can't seem to appreciate that lower income Americans (i.e. mainly the Trump base) benefit from competitively priced Chinese electronics, or cheaper Mexican produce, or cheaper Japanese cars and Canadian steel.

So why are tariffs bad then? Because they are a tax on imports which ultimately turn out to be a tax on citizens, especially dinging those with low incomes.  By way of example, say an American retailer purchases 100 umbrellas from China for $5 each.   The U.S. tariff rate is 6.5 % on each one.  Then the retailer would have to pay a total of:

(100) x (0.065) x $5   =   $32.50 

Or the tariff the retailer would then have to pay on the shipment.   This raises the total price for the retailer to:   (100) x $5   +   $32.50  =   $532.50,

Some of which will be passed on to customers since the higher tariff amount would be unsustainable for the retailer to 'eat' over time. The same sort of calculations apply to electronics good, cars, or other import goods.

 It seems kind of dumb to enact a tax cut, then to clobber your people with a tax increase, no? (Mind you,the tax cut for most of Trump's base was incrementally adjusted to show up in each pay check, perhaps $10 every two weeks. Then time came to complete taxes they were clobbered by getting no refunds because they didn't adjust withholding!)  

As if all this trade and tariff  deficit insanity wasn't enough, Donnie Dotard now believes he can sneak through a $4.7 trillion budget which includes a mammoth $845 m cut to Medicare- something the Liar -in- Chief promised never to touch in his 2016 campaign.  Many worry-  and they are correct- this fungal, humanoid  rat will try another federal shutdown if he doesn't get his way.  All I can say is, given what we've seen earlier from this 72 year old toddler, folks better get ready for it.    

See also:
by Robert Reich | March 13, 2019 - 6:23am | permalink


"The biggest reason America has the highest deficit relative to our total economy among all 35 advanced economies is because of a shortage of tax revenue. Of all these countries, we’re bringing in the fifth-lowest total revenue as a share of GDP. And why is that? Mainly because of Republican tax cuts on corporations and the wealthy. The big Trump Republican tax cut is already breaking the bank. It will cost us 1.9 trillion dollars over the next decade. Let me repeat that: 1.9 trillion dollars.

Remember, Trump and Republicans in Congress claimed that their tax cuts for the wealthy and corporations would pay for themselves by boosting economic growth. It’s the same trickle-down fairy tale they’ve been telling for decades."


by Dean Baker | March 12, 2019 - 5:45am | permalink


"The sharp rise in the trade deficit in the last decade had a devastating impact on manufacturing workers and whole communities in large parts of the Northeast and the Midwest. We can’t hope to reverse this damage, as those jobs will not come back.

However, we could design a trade policy that would move us toward more balanced trade and create millions of relatively good-paying manufacturing jobs. Unfortunately, Trump’s policy seems to be going in the opposite direction."


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