Ditching TPP

President Trump wasted no time in ditching the Trans-Pacific Partnership trade deal. Trump’s move brought rare praise from Bernie Sanders and labor leaders. Anger about the impact of trade deals on workers in rust belt states likely played a role in Trump’s electoral college victory.

The TPP was no doubt flawed. It should have been more inclusive (including China and India), less intrusive (focusing on lower trade barriers rather than forcing states to harmonize regulatory standards on matters such as intellectual property), more transparent (less secrecy and more public input during negotiations) and less tilted in favor of corporate interests (the infamous investor-state dispute mechanism that bypassed national courts). Still, the TPP agreement would have brought modest gains from trade for participating countries and did include labor and environmental provisions that improved upon past trade deals.

By acting unilaterally without consulting other parties to the negotiations, Trump has undercut America’s standing as a good-faith negotiating partner. Moreover, without any attempt to renegotiate the agreement or to envision alternatives, many of the countries that signed the TPP will instead gravitate to the Chinese-led Regional Comprehensive Economic Partnership, which offers a no-frills trade deal that excludes requirements for improving labor or environmental standards.

The TPP stood at the center of the Obama Administration’s Asian pivot as an answer to China’s rise and more assertive behavior in the region. Without the trade deal, America’s rebalancing efforts will rely more heavily upon military means – assuming, of course, that the US continues to seek a major role in Asia under President Trump. Missing an economic leg, America’s leadership in Asia will be imbalanced and its tools for managing China less effective. Beijing has already begun to position itself as a champion of globalization and a rallying point for those states that fear a protectionist tide (but see Elizabeth Economy’s counterpoint).

The Obama Administration was perhaps mistaken in their approach to a trade deal that would further economic integration across the Pacific Rim. A different type of agreement would have been less divisive within Asia and at home. But to negotiate and subsequently abandon the TPP agreement was certainly the worst outcome. The deal itself antagonized China and may have swung the presidential election to Trump while its’ final rejection has now undermined American leadership throughout Asia and beyond.


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Branstad to China: Iowa Nice Only Goes So Far

You’re hired! Even as he celebrates his selection for the world’s most important diplomatic apprenticeship, Terry Branstad should also steel himself for plenty of headaches ahead. Iowa’s long-serving Governor earned selection as U.S. Ambassador to China by virtue of his long-standing personal ties to Chinese President Xi Jinping, which stretch back three decades. But how far does friendship go in managing relations between the world’s two most powerful countries? Branstad will soon find out in his new role.

Whatever warm feelings Xi Jinping may hold toward Terry Branstad are secondary to his assessment of Branstad’s soon-to-be boss. During the presidential election campaign, many Chinese commentators expressed a preference for Donald Trump. Partly, this stemmed from perceptions of Hillary Clinton as a hawk who, as Secretary of State, championed the Obama Administration’s Asian Pivot strategy and aligned the U.S. against China on the South China Sea issue. Trump’s harsh rhetoric toward China, on the other hand, was dismissed as campaign bombast.

Chinese leaders also welcomed Trump’s rejection of the Trans-Pacific Partnership (TPP). Instead of Asian economies oriented toward an American-centered trade order that excludes China, those same countries will now sign on to the China-centered Regional Comprehensive Economic Partnership agreement, which excludes the United States. If Trump holds to his pledge to do away with TPP, Beijing will consider this a welcome gift from the new administration.

Weary of American leaders who insist that China abide by Western principles of democracy, human rights and international law to which Chinese leaders do not subscribe, Chinese leaders see Trump, by contrast, as a tough but pragmatic deal-maker who will avoid challenging the legitimacy of China’s one party political system.

Trump’s recent phone conversation with Taiwan’s President Tsai Ing-wen – a breach of understandings that have prevailed since diplomatic relations were restored between the U.S. and China in 1979 – has upset this hopeful attitude to a degree. Yet Beijing responded with restraint, blaming Taiwan for taking advantage of Trump’s supposed naiveté about the sensitivities surrounding the U.S., China and cross-strait relations.

The Chinese leadership will view Branstad’s appointment as reassuring. Given Branstad’s early support for Trump and his son’s involvement with the Trump campaign, Beijing likely assumes that Branstad will have access to the Trump White House. The choice of a political appointee who enjoys such close ties with Chinese leaders will be interpreted as an indication that Trump seeks to cultivate a direct and personal relationship with Xi, mediated by someone trusted on both sides.

Branstad’s long advocacy for strong U.S.-China economic ties will give Beijing hope that Trump will renege on his campaign promises to declare China a currency manipulator and to slap high tariffs on imports from China.

Yet Branstad will also face some difficult headwinds. Although Ambassadors do not, by and large, make policy, they do help implement policy on the ground and serve as sometimes-crucial intermediaries. While Branstad knows a great deal about agricultural trade with China, he has no experience with the broad range of issues that make up the most complex great power relationship in the world.

Trump, himself a novice at international affairs, has so far shown little interest in tapping the deep well of expertise that presidents have at their disposal through the State Department, the intelligence agencies and other bureaucratic arms of the U.S. government.

Operating without knowledge of history, precedent or prior commitments, is a recipe for confusion, error and misunderstanding. Much will depend upon whether Trump’s choice for Secretary of State is someone who will respect the value of formal policy-making channels and seek the guidance of professional diplomats.

Trump’s unusual and erratic communication style also presents a challenge. If diplomacy by tweet continues once Trump enters the White House, then Branstad will have his hands full putting out fires caused by his own boss.

The policy questions that confront the leaderships of both sides are certainly difficult enough. The U.S. interest in freedom of navigation bumps up against China’s desire to control nearby seas and the rich resources they contain. America’s need to deter North Korea’s nuclear threat potentially conflicts with China’s fear that the collapse of China’s exasperating ally could lead to chaos and uncontrollable refugee flows along its border. Trump’s skepticism about climate change threatens to undo the joint initiatives that the U.S. and China have launched to tackle that problem. The list of complex issues is daunting: cyber security, intellectual property rights, military transparency, imbalances in trade and many others.

Having spent his entire career in Iowa, Terry Branstad faces a steep learning curve in preparing for a high profile diplomatic posting in the capitol city of an emerging superpower while reporting to a new and inexperienced president. With personal friendships as his calling card, the Governor will soon find out how well “Iowa nice” travels under such circumstances.

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Explaining Trump’s Victory: It’s All About Trade, Stupid

David Skidmore, Professor of Political Science, Drake University

Michael Moore called it: this election was a referendum on neo-liberal trade policies, which were rejected by working class voters in the industrial Midwest. In his pre-election film “Michael Moore in Trumpland,” set in Wilmington, Ohio, Moore adopts the voice and perspective of a typical white male worker to explain their anger and why Trump’s message hit home with this group. Although he later castigates Donald Trump as a charlatan who offers no answers to the problems of the white working class while praising Hillary Clinton, Moore’s extended recitation of white working class grievances was so convincingly rendered that some interpreted it (erroneously) as an endorsement of Trump.

In an election decided by razor-thin margins in a handful of swing states, any number of factors could be cited as crucial to the outcome. Yet as Moore anticipated, international trade policy must certainly rank at or near the top of the list. While some manufacturing jobs have returned to the U.S. in recent years, overall manufacturing job losses since 2000 have totaled around 5 million. The outsourcing of jobs to China since that country gained World Trade Organization membership in 2001 accounts for roughly half of this total. On top of the effects of international outsourcing and import competition, productivity gains since the mid-seventies have benefited capital and top executives rather than workers. As a result of these painful economic realities, white males with only a high school diploma have experienced a 20% drop in real income on average over the past quarter century.


The institutions that white male workers in the past relied upon to serve their interests have shrunken or turned their attention elsewhere. Primate sector unions are a shadow of their former selves. The Democratic Party, traditionally allied with blue collar workers, has become dominated by higher income, white collar professionals and corporate interests tied to Wall St. and high tech sectors.

The sense of abandonment by the Democratic Party grew in the nineties during Bill Clinton’s presidency. Having run for office in 1992 as a critic of NAFTA, Clinton turned around and pushed that agreement through Congress after attaching some weak side agreements as a sop to labor. He then negotiated, signed and guided the World Trade Organization treaty through Congress. The next Democratic President behaved in a similar manner, as Barack Obama concluded negotiations on the TransPacific Partnership (TPP) agreement – one chockfull of goodies for corporate interests – and sought a similar deal with the European Union.

These deals – past and future – were especially threatening to blue collar workers of the industrial Midwest who had built middle class lifestyles around well paying factory jobs. Still, the Democratic Party could take the electoral support of these workers for granted as long as the Republican Party remained even more enamored of free trade agreements.

Donald Trump, however, turned Republican orthodoxy on its ears by calling for the rejection of TPP, threatening to raise tariffs on Chinese goods and denouncing corporate outsourcing. Trump’s rejection of the neo-liberal, free trade dogma of corporate elites and their Washington friends won him decisive support among the white working class voters of the Midwest.

Meanwhile, Hillary Clinton’s own criticisms of TPP proved unconvincing. As mentioned, her own husband had, as president, shifted to support NAFTA after running against it and Clinton herself praised TPP as it was being negotiated during her stint as Secretary of State. In any case, no Democratic presidential candidate could credibly present themselves as a critic of liberal trade deals while a Democratic president continued to seek Congressional passage of the same.

The evidence for this interpretation of Trump’s victory is strong. Exit polls revealed that whites without a college degree swung strongly in the Republican direction in the 2016 presidential vote as compared with the three previous elections. The same was true of all voters with incomes below $30,000 (though the swing was still not enough to give Trump a majority among the latter group). Trump won around half the votes of union households, a much better showing than previous Republican presidential candidates.

In 2016 as compared with the 2012 election, five states flipped from the Democratic column to the Republican column. Four of those states – Pennsylvania, Ohio, Wisconsin and Iowa – belong to the industrial Midwest (the remaining state to flip was Florida). As of this writing, Michigan appears likely to join the same list, though absentee ballots could change that result. Majorities in Pennsylvania, Wisconsin and Michigan voted for Democratic presidential candidates in each of the five elections from 1996 through 2012. Iowa voted blue in four of these five elections while Ohio sided with Democratic candidates in three of these five elections.

What changed in 2016? The most obvious factor was a Republican candidate running on an unabashedly protectionist platform combined with a Democratic candidate whose criticisms of free trade policies were unconvincing, to say the least.

Clinton’s troubles were foreshadowed during the primaries when Bernie Sanders, a lifetime critic of trade deals, won a majority of pledged delegates in the upper Midwest states of Michigan, Wisconsin, Minnesota, Indian, Illinois, Ohio and Pennsylvania.

Exit polls taken on November 8 confirm the centrality of trade to many voters. Those who believed that international trade created more jobs in the United States, Clinton was favored over Trump by a margin of 59% to 35%. Those who thought that trade cost jobs, on the other hand, favored Trump by 65% to 31% for Clinton.

Note that in those states that flipped, the Democratic majorities prior to 2016 were never large and Trump’s margins of victory were small. So any significant shift in the white working class male vote that can be attributed to trade policy might have made a decisive difference at the margin.

Trade, as economists love to remind us, produces net benefits to the society as a whole even as the costs are concentrated with those who lose jobs or businesses to imports. In theory, the winners from trade could compensate the losers to ensure greater fairness and to buy off potential opposition to freer trade. In practice, the winners seldom feel a need or desire to share their gains and so the losers from trade and the communities in which they live have little choice but to make do with a few miserably inadequate and ineffective job retraining programs.

Of course, trade is not responsible for the entirety of the problems facing the white working class. Inequality has grown and social mobility has declined for other reasons as well, including technological change and demographic shifts. The devastating effects of the 2008 financial crisis linger, with housing prices still depressed in many parts of the rustbelt. In the minds of working class voters, trade serves as a proxy for the myriad of social, political and economic changes that have hollowed out the middle class in much of the former industrial heartland.

Protectionism is not a real solution for the groups that swung this election to Donald Trump. Neither are policies that encourage more corporate outsourcing. More effective would be investments in human capital (skill-based education) and infrastructure that could attract investment to those regions that have borne the brunt of negative economic trends over the past quarter century.

Still, from a political standpoint, the Democratic Party can no longer afford to ignore the white working class, despite the latter’s declining demographic weight. When Obama pursued corporate-friendly trade deals abroad against the objections of the Democratic Party’s traditional labor allies, he effectively placed a heavy anchor around Hillary Clinton’s candidacy and handed Donald Trump a winning issue. As the Democrats go about recovering and rebuilding from an historic and gut-wrenching loss, a rethinking of how to deal with the distributional effects of globalization and economic change must take center stage.

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Trump and the Crisis of the Republican Party

In a previous post, I outlined the ways in which Donald Trump’s policy positions deviate from those of central Republican Party stakeholders. An important question, then, is how a figure such as Trump managed to take over a major American political party? Adding to the puzzle is that he did so while raising and spending little money, without significant organization, with no experience in public office and without a serious team of policy advisors.

One set of factors concerns the rules of the Republican nomination contest. Traditionally, candidates who do poorly in the early nominating contests lose the ability to raise the money necessary to continue. This serves to narrow the field. The Supreme Court’s Citizens United ruling, however, made it possible for less viable candidates to remain in the race by finding one or more deep-pocketed sugardaddies. In the recent nominating contest, the establishment candidates – Jeb Bush, Marco Rubio, John Kasich – had the money to stay in the race despite poor performance. This divided the moderate Republican vote, allowing Trump to squeak out victories in a number of close contests.

Also, the GOP adopted winner-take-all rules in hopes of advantaging frontrunners. A candidate who won only a plurality of the primary vote in a state – perhaps only one third in a crowded field – was awarded 100% of the convention delegates.

The establishment candidates focused their fire on one another rather than Trump, in hopes of eliminating rivals for the position of Trump’s last remaining opponent. This allowed Trump to remain relatively unscathed in the early contests while his competitors weakened one another. Yet the field failed to narrow until deep into the spring. Trump also did especially well in states with open primaries, where he racked up votes by independents. These factors allowed Trump to pile up victories and delegates despite seldom winning an outright majority of votes in any given state.

While Trump was able to take advantage of these rules of the game in unexpected ways, the problems for establishment Republicans go much deeper. Americans are increasingly choosing to live in areas where neighbors share their partisan and ideological inclinations. Moreover, Republican-dominated state legislatures have gerrymandered congressional districts to advantage Republican candidates. They have also used voter suppression laws to disenfranchise Democratic-leaning groups. There are, as a result, fewer states and congressional districts featuring competitive general election contests. In heavily Republican areas, moderate GOP incumbents face a much stronger challenge from more conservative candidates in the primary than from the Democratic candidate in the general election. A number of mainstream Republican Senators and Representatives – including House Majority Leader Eric Cantor – were swept from office in 2014 by Tea Party challengers within their own party.

While establishment Republicans retain the ability to raise money from business supporters, they have increasingly lost control of the party’s base, which has allowed insurgent forces – whether Tea Partiers or Trump’s populist-nationalist supporters – to challenge the establishment.

Three factions have jockeyed for power within the modern Republican Party in recent decades: neo-conservatives, social conservatives and business conservatives. All three have been weakened or discredited. Neo-conservatives (e.g., George W. Bush, John McCain, etc.) led the country into two costly and unwinnable wars (Afghanistan and Iraq) that have proven unpopular even among many Republicans. Social conservatives (Mike Huckabee, Ben Carson, Rick Santorum, etc.) have lost clout as increasingly fewer young American identify as fundamentalist/evangelical Christians or align with social conservatives on lifestyle issues. Meanwhile, the anti-regulatory, pro-Wall St. stance of business conservatives (Jeb Bush, Marco Rubio, John Kasich) has been discredited by the financial crisis and its lingering effects.

In short, a hollowed-out Republican Party is a shell of its former self. At the national level, the GOP has no ideological center. It has instead become a regional party focused on the South and the interior West. Demographically, the party rests upon a shrinking base of white males. It continues to enjoy built-in advantages in many states and localities due to years of gerrymandering and voter suppression laws. It also does relatively well during mid-term elections when turnout is lower. But changing demographics, ideological incoherence and successful court challenges to voter ID laws suggest that the Republican Party is no longer viable in presidential campaigns and will, over time, weaken at the congressional and state levels.

The ease with which Trump brushed aside the Republican establishment is evidence of the party’s underlying weakness. Trump’s candidacy itself has further divided and undermined the party. Some party leaders have withheld support from Trump, even exploring the possibility of cohering around an independent candidate for president or backing Libertarian candidate Gary Johnson. Others have endorsed Trump in a reluctant and pro-forma manner, while beging forced to disavow his inflammatory language on a weekly and sometimes daily basis. A few – mostly marginal figures (e.g., Newt Gingrich) – have jumped on the Trump bandwagon.

To be sure, some aspects of Trump’s success arise from idiosyncratic factors, such as Trump’s celebrity, his financial independence, his skill at attracting media attention and his instinct for tapping popular sentiments – especially anti-elite and nationalist feelings – that establishment candidates have been slow to exploit.

Nevertheless, Trump’s nomination signals a grave crisis for the Republican Party. His undisciplined campaign itself and the prospect of a crushing defeat to a weak and unpopular Democratic candidate in November will only add to the GOP’s woes.

Given that the structure of the American political and electoral systems strongly favor two dominant parties, it seems likely that the Republican Party will survive in some form, but only after a period of bruising internal combat among competing factions. Trump himself is unlikely to remain a major player after November, but the populist, nationalist constituency to whom he appealed will remain available to future candidates.

As the Republican Party seeks to redefine itself through this sorting-out process, two factors are worth considering. First, Ronald Reagan, who led Republicans out of the wilderness and into the center of American politics offered a sunny, optimistic charisma. The contrast with the dark, angry emotions represented by Trump and the Tea Partiers could not be greater. There is no question that anger can be a powerful motivator. But it cannot provide the basis for a sustainable governing majority. The tone and image of the party must change if is to broaden its appeal.

Second, the Reagan coalition was built upon a coherent intellectual foundation focused upon deregulation, supply side economics, free trade and a strong military. This core program emerged from a two decade process of conceptual work among policy intellectuals who debated ideas within a constellation of think tanks, magazines and academic programs. With the Reagan consensus now shattered, a similar process of updating the intellectual foundations of the Republican brand must now take place before the party can hope to rise again.

Once a coherent and broadly appealing intellectual message is available, a charismatic and skilled presidential candidate must emerge who can articulate these ideas and provide a rallying point for the various constituencies to whom the message is directed.

This process of reconstructing the basis for a nationally competitive Republican Party is likely to unfold over several election cycles. During the interim, the Democratic Party will have the opportunity to consolidate its national-level dominance for a generation or more. Much will depend, however, upon whether the Democrats can manage their own internal rifts. Under Bill Clinton, the Democrats became a party of interest groups held together by transactional politics. The emergence of a much more ideological left-wing of the party as represented by Bernie Sanders and Elizabeth Warren serves as a challenge to the Clinton formula. If the Democrats manage to win both the House and the Senate in November, along with the presidency, then the most significant political cleavages that shape the coming four years could center around the struggle not between conservatives and liberals or Republicans and Democrats, but between ideological and transactional elements of the Democratic Party.

Political parties are constellations of interests and ideas. At some moments in history, these constellations cohere and consolidate. At others, they splinter and break apart. After a period of relative coherence beginning with the Reagan presidency, the Republican Party has entered an era of internal division and redefinition. Trump is but a symptom of the GOP’s deeper maladies.


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The American Working Class and Donald Trump

In the 1960s, American workers constituted a labor aristocracy on a global scale. The United States led all other countries in global manufacturing. Productivity levels and thus wages were higher in the US than in other leading economies. Even without a high school degree, male workers could make a middle-class income in an auto or steel plant. Income inequality was at an historic low after half a century of decline and social mobility was high. Roughly one in three workers was a union member.

How things have changed. Consider, for instance, the automobile industry. As the chart below illustrates, US auto production dwarfed that of any other country in the 1950s and 1960s. Today, however, US-based auto production remains about where it was six decades ago while production elsewhere around the globe has skyrocketed. China now produces twice as many vehicles as the United States. It is similar in other industries.

Once lucrative manufacturing jobs have disappeared not only due to the shift of production overseas but also due to automation and rising worker productivity.

Yet since the 1970s, productivity gains have been captured not by American workers, but by the owners of capital.

Real wages and income have therefore stagnated for most workers.

This is especially true for men. While female income has continued to rise – thus gradually reducing the gender pay gap – average male earnings have actually declined over the past half century.

Changes in the fortunes of men and women are also evident in trends in labor force participation. Fewer men are entering the workforce while the opposite is true for women.

Meanwhile, virtually all of the income gains of recent decades have gone to those at the top of the income distribution, thus widening the inequality gap and reducing social mobility.

The chart below shows that the income of males without college degrees has fallen sharply over the past quarter century while the biggest winners have been women with a bachelor’s degree or higher.

The current level of income inequality rivals that of the 1920s and far exceeds the relatively equitable distribution of the middle of the 20th century.

The declining share of income that goes to the middle class has been closely correlated with a declining union membership rate.

In a sign of growing social distress, the death rate among middle-aged white males in the US has risen over the past decade, in contrast with the usual pattern of falling death rates (see red line in chart below).

All of these trends help us understand the success of Donald Trump. Trump draws his strongest support among middle-aged white males who are less affluent and less educated – precisely those Americans who have suffered a loss of relative economic and social status over the past half century. This same demographic group was, relatively speaking, prospering in the 1950s and 1960s. But the manufacturing jobs that supported this prosperity have either moved overseas (Chinese imports alone may have cost 2.4 million American jobs between 1999 and 2011) or been eliminated through productivity-enhancing technological change. The latter trend might have led to rising incomes for those who managed to maintain jobs in the manufacturing sector, except that the returns to capital have risen sharply relative to the returns to labor. At the bottom of the income distribution, an influx of low-skilled immigrants over the past several decades combined with the failure of minimum wage rates to keep up with inflation have depressed wages for the least educated. What few gains workers have been able to eek out have gone mostly to women, who have joined the workforce in higher numbers while also managing modest improvements in compensation (though the gender wage gap nonetheless persists). Globalization has also allowed capital to seek out cheaper labor and higher returns in developing regions, thus undermining the bargaining position of North American and European workers. As a result, private sector unions have practically disappeared in the US. Without unions to provide some direction for working class discontent, a populist figure such as Donald Trump can harness this anger by bashing immigrants and imports.

On a global scale, the following chart situates the American working class within the global income distribution. The income of those at the top – the owners of capital – has grown rapidly as globalization has provided capital with access to cheap labor outside of Europe and North America. Incomes have also grown rapidly in emerging economies – such as China – where previously impoverished workers have gained access to the kind of factory jobs that Americans enjoyed in decades past. The group that has experienced no gains are the workers of North America and Europe. While this group remains well off in both absolute and relative terms, it has fallen behind, over time, in comparison with the highly educated global elite and the rising working class of the developing world.

The brand of populism and nativism that Trump offers working class American males provides no real solutions to the downward mobility that this group has experienced. But until mainstream politicians and parties address the real grievances of American workers, one can expect more disruptive politics.

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The Political Economy of Trump

An unprecedented number of GOP establishment figures have either renounced (e.g., Jeb Bush, Mitt Romney) their party’s presumptive nominee, offered painfully reluctant endorsements (e.g., Mitch McConnell, Paul Ryan, Marco Rubio) or remained on the sidelines (e.g., John Kasich). Criticism of Donald Trump by Republic stalwarts has often focused on his racist and intolerant statements about Muslims, Hispanics and blacks.

But it is not Trump’s racism that rankles the Republican establishment. After all, congressional Republicans opposed George W. Bush’s plan for immigration reform and rejected extension of the Voting Rights Act while at the state level Republican-controlled legislatures have passed voter identification laws that represent transparent efforts to suppress the minority vote.

So while it is politically expedient to distance themselves from Trump’s crude rants, it is not racial sensitivity that is driving the discomfort that Republican insiders feel about Donald Trump. Instead, the problem lies with Trump’s preferred policies toward trade, taxes and spending and debt. In short, Trump is out of sync with the corporate and investor interests that lie at the center of the Republican coalition.

The GOP brand is associated with lower taxes for the wealthy, smaller government, freer trade and tight money. These policies fit the preferences of corporate political backers such as the Koch brothers.

Trump, of course, is a businessman himself. But as a real estate developer, Trump’s interests differ from those of Wall St. or big manufacturers. Unlike bankers or hedge fund managers, developers are borrowers, not creditors. In contrast with manufacturing firms that export goods, real estate lies in the non-tradable sector of the economy. While many businesses and wealthy individuals prefer low taxes, developers of office buildings, hotels and casinos benefit from the public goods created through government spending. Trump’s business interests and his worldview are thus distinct from the business groups that have long held sway within the Republican Party.

Consider money. On Federal Reserve policy, bankers and creditors prefer tight monetary policies that push up interest rates, keep inflation low and strengthen the dollar. Debtors, on the other hand, prefer easy money, low interest rates and moderate inflation, which allows borrowers to pay back loans with cheaper money.

Trump has declared that “I am the king of debt. I love debt.” In contrast with Paul Ryan, Ted Cruz and John Kasich, all of whom have castigated Fed Chair Janet Yellen for keeping interest rates low, Trump has mostly offered praise for Yellen and indicated sympathy for a loose monetary policy.

Indeed, Trump has suggested that this would be a good time for the Federal government to borrow money to fund infrastructure spending because interest rates are so low. More controversially, he indicated that, as President, he would be prepared to cut the Federal debt by negotiating reduced payments to holders of Treasury bills. This is, of course, how Trump himself escaped debt obligations numerous times under the cover of bankruptcy proceedings. Even the suggestion that the United States government might renege on some of its obligations to creditors set off alarm bells among investors who have large holdings of Federal bonds.

Trump’s views on taxes and the size of government are also worrying to Republican leaders and their business friends. While Trump proposes reduced income tax rates – a perennial Republican mantra – he has waffled on whether the wealthy might have to pay more in taxes. In sharp contrast with Paul Ryan, Trump rejects cuts to social security and Medicare. He also calls for increased military spending and, as mentioned above, growing public infrastructure investment. All of Trump’s proposed spending cuts would focus, implausibly, on the relatively small portion of the Federal budget devoted to discretionary spending. Combining Trump’s various tax and spending pledges, the Tax Policy Center estimates that his proposals would produce falling revenues and ballooning budget deficits. In short, Trump is a fiscal Keynesian.

Perhaps the most glaring area where Trump defies Republican orthodoxy is international trade. Calling NAFTA a “disaster,” Trump has promised: “We will either renegotiate it, or we will break it.” Similarly, Trump has called the TransPacific Partnership agreement “insanity.”

Trump’s own business investments lie mostly in the domestic, non-tradable sector of the economy. Trade and foreign investment are tangential to Trump’s principal businesses. This frees Trump to make a protectionist pitch appealing to working class Americans who feel threatened by imports (and immigration). This places him closer to the interests of a significant, but otherwise poorly represented, segment of the Republican base whose economic interests are misaligned with those of the party’s globalized business elite funders.

Among Republicans, a voter’s position on trade is a powerful indicator of their attitude toward Trump’s presidential bid. The force of Trump’s anti-trade appeal is evident in the finding that 89 of the 100 US counties most exposed to Chinese imports voted for Trump in the Republican primaries, while Trump won only 28 of the 100 countries least exposed to Chinese imports.

A recent PEW survey found that while 51% of Americans overall view trade deals as good for the United States, two thirds of registered Republicans who support Donald Trump consider trade deals bad for the country. Democrats are now more supportive of free trade than Republicans, a reversal of patterns dating back to the 1970s. Republican pro-free trade politicians and business must now confront the possibility that Trump has shifted the party’s center of gravity toward a protectionist stance among the base.

Trump voters vary from traditional Republicans in significant ways, as is evident from recent PEW polling.

Trump supporters differ from other GOP voters on immigration, other issues

Donald Trump’s fusion of nationalism, protectionism and right-wing populism has tapped a politically rich vein that will be available for others to mine long after Trump’s own presidential ambitions have been squashed. The political economy of Trump represents a potent challenge to long-standing political alignments, especially, though not exclusively, within the Republican Party.



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Current Echoes of Jimmy Carter’s Diplomatic Legacy

(appeared in US News and World Report, October 5, 2015: http://www.usnews.com/opinion/blogs/world-report/2015/10/05/obamas-jimmy-carter-like-foreign-policies-are-his-most-successful)

Barack Obama’s critics have often invoked unflattering comparisons between his foreign policy record and former President Jimmy Carter’s perceived failures. In reality, however, Carter’s diplomatic achievements while in office stand among the most impressive of any American president. As the sad news of Carter’s cancer diagnosis prompts reflection upon his life’s work, the recent nuclear agreement with Iran should remind us of the most important legacy of Carter’s presidency: the lesson that diplomacy works. After all, Obama’s foreign policies have met with the greatest success precisely where he has most closely emulated Carter.

Both presidents rode the White House on a wave of popular revulsion at the costs and failures associated with recent or ongoing wars—Vietnam in Carter’s case; Iraq and Afghanistan in Obama’s case. Both understood that any exit from America’s debilitating and seemingly unending record of military quagmires required a foreign policy that dispensed with threat-mongering and placed diplomacy—even with adversaries—at its center.

Carter and Obama each faced the challenge of developing proportional responses to what had previously been treated as Manichean struggles; against communism in Carter’s era and against terrorism during Obama’s era. Each president sought to make room on the foreign policy agenda for a broader range of issues that engaged American values and interests, including, in both cases, human rights, arms proliferation, energy and relations with emerging powers.

Both stressed diplomacy as an alternative to military intervention and unending conflict. Neither relied upon negotiation alone and both encountered problems that could not ultimately be resolved at the bargaining table. Yet each found success in tackling conflicts long considered irresolvable.

Carter’s record is the more impressive. The SALT II agreement with the Soviet Union capped a dangerous and costly nuclear arms race (while never ratified by the United States Senate, both countries independently abided by the terms of the accord). The Panama Canal Treaty removed potential threats to the Canal’s security, while eliminating a constant irritant in U.S. relations with Latin America. The full normalization of relations with China set the stage for China’s growing integration with the existing global political and economic order over the past 35 years. The Camp David Accords removed Egypt and Jordan as military threats to Israel’s security and the transition to majority black-rule in Zimbabwe, brokered by the United States and Great Britain, brought to an end to a bloody civil war there. The successful conclusion of the Tokyo Round trade negotiations sustained progress toward a more open global economy. It is difficult to think of another president who used diplomacy to better effect in serving major American interests.

In Obama’s case, diplomacy has enabled destruction of Syria’s stockpile of chemical weapons while blocking Iran’s path to a nuclear weapon for at least 15 years. The opening to Cuba creates new opportunities for the Cuban people while enhancing America’s image across Latin America. A successful conclusion of the upcoming global climate change negotiations appears more likely in the wake of the recent joint U.S.-China declaration setting national goals for reducing greenhouse gas emissions. The recently completed Trans-Pacific Partnership trade agreement caps an already solid record of diplomatic accomplishments during the Obama years.

For both Carter and Obama, the bigger obstacles to diplomacy often arose at home rather than abroad. Carter faced massive, well organized and heavily funded campaigns against both the Panama Canal and SALT II treaties, as well as a drum-beat of right-wing accusations that his policies left America unprepared to meet a (mostly mythical) Soviet military buildup. The Iranian revolution and the ensuring hostage crisis sullied Carter’s reputation and may have cost him his presidency, despite the fact that the hostages were safely returned.

Obama has likewise faced heavy domestic constraints, including the Senate’s rejection of his proposed cap-and-trade energy legislation and opposition to the Iranian nuclear accord.

Diplomacy, of course, cannot solve all problems. But it served American interests remarkably well during Jimmy Carter’s brief presidency. All the more puzzling then that our memories of the Carter years are so distorted and his diplomatic achievements have gone so undervalued.

It is to Obama’s credit that he has in important ways drawn upon the positive lessons of Carter’s foreign policy legacy. And as the clock ticks down on Carter’s own remarkable life, it is well that we set aside the unkind myths that have obscured his accomplishments in office and give credit to a diplomatic groundbreaker.

David Skidmore is a Professor of Political Science at Drake University in Des Moines, Iowa and author of Reversing Course: Carter’s Foreign Policy, Domestic Politics and the Failure of Reform, Vanderbilt University Press, 1996.

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