The National  Memo Logo

Smart. Sharp. Funny. Fearless.

Monday, December 09, 2019 {{ new Date().getDay() }}

What sort of machine is the economy? The common conception is that it’s a fragile and sensitive device, highly responsive to both good and bad government policies. Pessimists worry that one or two wrong moves from Washington will cause it to seize up. Optimists think the right change in tax or regulatory policy can supercharge it.
The administration shares this general outlook.

Early in Donald Trump’s presidency, he and his economic advisers hailed what was coming. With Trump’s policies, declared Stephen Moore, “four percent growth can and should be the new normal in America.” After the president signed his big tax cut, Lawrence Kudlow said, “We’re on the front end of an investment boom.”

It was a nice fantasy. In 2017, real GDP grew by 2.2 percent; in 2018, it increased by 2.9 percent. In 2014 and 2015, under Barack Obama, the figures were 2.5 percent and 2.9 percent.

The investment boom hasn’t happened. “A slim five percent rise in 2019 capital spending is in store, down from last year’s six percent gain,” reported Kiplinger last month. “That is a small annual gain compared with past decades, when double-digit increases in capital spending were relatively common.”

The administration didn’t have any magic dust. Economic growth appears to be settling down around the level that Trump disparaged when Obama was president. The new normal is not much different from the old normal.
The latest Wall Street Journal survey of 60 economists found that they expect real GDP growth to total less than 2 percent in the second, third and fourth quarters of 2019. In 2016, the term Stephen Moore used for that rate of growth was “sluggish.”

“It’s no surprise,” Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, told WBUR. “Nearly everyone who looked at this, other than the Trump administration itself, felt that this would have very little effect on the economy.”

Trump’s critics, however, have also exaggerated his importance to the economy. Immediately after the election, Princeton economist and New York Times columnist Paul Krugman predicted a global downturn — though he quickly retracted that forecast. A year ago, Bank of America Merrill Lynch economist Ethan Harris warned that Trump’s trade war could cause a recession.

So far, however, the U.S. economy has kept chugging on along. Some sectors, particularly agriculture and autos, have suffered, but their troubles haven’t spread too far. The looming prospect of a bigger trade war with China and Europe has yet to throw much sand in the gears.

If anyone has shown presidents don’t matter for the economy, it’s Trump,” George Mason University economist Tyler Cowen told me. “All the uncertainty simply has not stalled the recovery.”

Other economists think Trump has had some effect on the economy. Says John Cochrane of Stanford University and the Hoover Institution, “The recent boost in growth does have something to do with deregulation.” Northwestern’s Robert Gordon says the tax cut boosted GDP growth, but only temporarily. He also says, “The uncertainties around tariffs and trade have contributed to caution on the part of businesses.”

But Trump has made less difference, for good or ill, than most people expected. The evidence suggests that for the most part, the economy is not fragile and flighty but sturdy and resilient. It’s not a lightweight canoe that requires endless adjustments and can be knocked off course by every ripple or breeze. It’s an aircraft carrier, moving forward in fair weather or foul and not easily stopped.

The tax cut that Trump said would be “rocket fuel” for the economy looks more like regular unleaded. The administration, however, is not about to admit that its policies are mistaken or ineffectual; it has to be that some powerful, sinister force is impeding them.

That would be the Federal Reserve, which the president and his allies blame for not cutting interest rates. But if his policies were as potent as we’ve been told, they would not wilt because our low interest rates are not a quarter-point or a half-point lower.

Back in 2016, Moore wrote: “The lesson of the Fed under Ben Bernanke and now Yellen is that easy money is no economic solution to this decade-long malaise. As economist Larry Kudlow puts it: ‘The Fed can print money, but it can’t create jobs.'” Now, they see easy money as the only hope.

Everyone knows how to take care of the economy, and often they’re wrong. Fortunately, it can usually take care of itself.


Start your day with National Memo Newsletter

Know first.

The opinions that matter. Delivered to your inbox every morning

Former President Donald Trump, left, and former White House counsel Pat Cipollone

On Wednesday evening the House Select Committee investigating the Trump coup plot issued a subpoena to former White House counsel Pat Cipollone, following blockbuster testimony from former White House aide Cassidy Hutchinson, who said the lawyer had warned of potential criminal activity by former President Donald Trump and his aides.

The committee summons to Cipollone followed long negotiations over his possible appearance and increasing pressure on him to come forward as Hutchinson did. Committee members expect the former counsel’s testimony to advance their investigation, owing to his knowledge of the former president's actions before, during and after the January 6, 2021 attack on the U.S. Capitol.

Keep reading... Show less

Mark Meadows

Donald Trump’s White House Chief of Staff Mark Meadows wanted a presidential pardon. He had facilitated key stages of Trump’s attempted 2020 coup, linking the insurrectionists to the highest reaches of the White House and Congress.

But ultimately, Meadows failed to deliver what Trump most wanted, which was convincing others in government to overturn the 2020 election. And then his subordinates, White House security staff, thwarted Trump’s plan to march with a mob into the Capitol.

Meadows’ role has become clearer with each January 6 hearing. Earlier hearings traced how his attempted Justice Department takeover failed. The fake Electoral College slates that Meadows had pushed were not accepted by Congress. The calls by Trump to state officials that he had orchestrated to “find votes” did not work. Nor could Meadows convince Vice-President Mike Pence to ignore the official Electoral College results and count pro-Trump forgeries.

And as January 6 approached and the insurrection began, new and riveting details emerged about Meadow’s pivotal role at the eye of this storm, according to testimony on Tuesday by his top White House aide, Cassidy Hutchinson.

Meadows had been repeatedly told that threats of violence were real. Yet he repeatedly ignored calls from the Secret Service, Capitol police, White House lawyers and military chiefs to protect the Capitol, Hutchinson told the committee under oath. And then Meadows, or, at least White House staff under him, failed Trump a final time – although in a surprising way.

After Trump told supporters at a January 6 rally that he would walk with them to the Capitol, Meadows’ staff, which oversaw Trump’s transportation, refused to drive him there. Trump was furious. He grabbed at the limousine’s steering wheel. He assaulted the Secret Service deputy, who was in the car, and had told Trump that it was not safe to go, Hutchinson testified.

“He said, ‘I’m the f-ing president. Take me up to the Capitol now,’” she said, describing what was told to her a short while later by those in the limousine. And Trump blamed Meadows.

“Later in the day, it had been relayed to me via Mark that the president wasn’t happy that Bobby [Engel, the driver] didn’t pull it off for him, and that Mark didn’t work hard enough to get the movement on the books [Trump’s schedule].”

Hutchinson’s testimony was the latest revelations to emerge from hearings that have traced in great detail how Trump and his allies plotted and intended to overturn the election. Her eye-witness account provided an unprecedented view of a raging president.

Hutchinson’s testimony was compared to John Dean, the star witness of the Watergate hearings a half-century ago that led to the resignation of President Richard Nixon for his aides’ efforts to spy on and smear Democrats during the 1972 presidential campaign.

“She IS the John Dean of the hearings,” tweeted the Brooking Institution’s Norman Eisen, who has written legal analyses on prosecuting Trump. “Trump fighting with his security, throwing plates at the wall, but above all the WH knowing that violence was coming on 1/6. The plates & the fighting are not crimes, but they will color the prosecution devastatingly.”

Meadows’ presence has hovered over the coup plot and insurrection. Though he has refused to testify before the January 6 committee, his pivotal role increasingly has come into view.

Under oath, Hutchinson described links between Meadows and communication channels to the armed mob that had assembled. She was backstage at the Trump’s midday January 6 rally and described Trump’s anger that the crowd was not big enough. The Secret Service told him that many people were armed and did not want to go through security and give up their weapons.

Trump, she recounted, said “something to the effect of, ‘I don’t f-ing care that they have weapons. They’re not here to hurt me. Take the mags [metal detectors] away. Let the people in. They can march to the Capitol from here.

As the day progressed and the Capitol was breached, Hutchison described the scene at the White House from her cubicle outside the Oval Office. She repeatedly went into Meadows’ office, where he had isolated himself. When Secret Service officials urged her to get Meadows to urge Trump to tell his supporters to stand down and leave, he sat listless.

“He [Meadows] needs to snap out of it,” she said that she told others who pressed her to get Meadows to act. Later, she heard Meadows repeatedly tell other White House officials that Trump “doesn’t think they [insurrectionists] are doing anything wrong.” Trump said Pence deserved to be hung as a traitor, she said.

Immediately after January 6, Hutchinson said that Trump’s cabinet discussed invoking the 25th Amendment to remove a sitting president but did not do so. She also said that Meadows sought a pardon for his January 6-related actions.

Today, Meadows is championing many of the same election falsehoods that he pushed for Trump as a senior partner at the Conservative Partnership Institute (CPI), a right-wing think tank whose 2021 annual report boasts of “changing the way conservatives fight.”

His colleagues include Cleta Mitchell, a lawyer who pushed for Trump to use every means to overturn the election and leads CPI’s “election integrity network,” and other Republicans who have been attacking elections as illegitimate where their candidates lose.

Hutchinson’s testimony may impede Meadows’ future political role, as it exposes him to possible criminal prosecution. But the election-denying movement that he nurtured has not gone away. CPI said it is targeting elections in national battleground states for 2022’s midterms, including Arizona, Georgia, Florida, Michigan, and Pennsylvania.

Trump did not give Meadows a pardon. But in July 2021, Trump’s “Save America” PAC gave CPI $1 million.

Steven Rosenfeld is the editor and chief correspondent of Voting Booth, a project of the Independent Media Institute. He has reported for National Public Radio, Marketplace, and Christian Science Monitor Radio, as well as a wide range of progressive publications including Salon, AlterNet, The American Prospect, and many others.

{{ }}