Category: Federal Budget

Trump tweets that tariffs are making the US “richer than ever before.” They’re not.

Either President Donald Trump isn’t sure how tariffs work or he’s being deliberately misleading about them.

The president fired off an early-morning tweet on Thursday declaring that billions of dollars are “pouring into the coffers of the United States” because of the tariffs his administration has put on some $250 billion in Chinese imports.

“If companies don’t want to pay Tariffs, build in the U.S.A.,” Trump wrote. “Otherwise, lets just make our Country richer than ever before!”

But that’s not really how tariffs work: The US may be generating some revenue from tariffs, but billions of dollars aren’t pouring in. Moreover, a lot of the money that is made off of tariffs comes from US consumers — not Chinese companies.

“If you think about who’s actually paying the tax, it’s like a sales tax. It’s like saying, ‘I put a sales tax on producers, isn’t this great we’re getting all this money?’ And then consumers say, ‘Wait, that’s from my wallet,’” said Michael Klein, a professor of international economic affairs at the Fletcher School at Tufts University and founder of the nonpartisan economics publication Econofact. “It’s just another example of taking where there’s a tiny germ of truth and blowing it up to the point where it’s absurd, for his own political purposes.”

On Thursday, Trump will travel to Buenos Aires for the G20 summit, where, among other agenda items, he’s expected to meet with Chinese President Xi Jinping for a working dinner to discuss the countries’ relations, including trade. The sit-down is seen as high-stakes, given that the US has placed nearly $250 billion in tariffs on Chinese goods and China has levied retaliatory tariffs of its own. The escalating trade war poses a threat to both nations’ economies.

Tariffs don’t really work this way

The Trump administration has shown itself to be pretty into the idea of tariffs. It’s put tariffs on steel and aluminum imports from multiple countries as well as on several billion dollars of Chinese goods. The way tariffs work is that the goods marked for tariffs face a border tax when they’re imported into the US.

As Vox’s Matt Yglesias recently explained, the US government with its initial rounds of China tariffs was careful to make sure the products it targeted had foreign-made alternatives:

When that happens, US purchasers switch to non-Chinese alternatives, and then consumers from outside the US tend to switch around and start buying the Chinese products. The overall impact is slightly less efficient global supply chains, some real pain to Chinese firms that need to find new customers, and a limited impact on American prices.

In other words, thus far, things have been relatively tame. A recent study from EconPol Europe found that Trump’s first round of tariffs have increased the prices US buyers pay for Chinese-made goods by 4.5 percent and decreased the prices received by Chinese sellers of US-bound goods by 20.5 percent.

That means that thus far, the tariffs have been mostly, but not entirely, paid for by China, but it’s not going great for anyone. And if Trump’s meeting with Xi doesn’t go well and the trade war escalates, the economic effects of tensions could worsen.

And it’s not going to be making the US significantly richer, because the more tariffs, the less incentive to import the goods affected, and therefore the less money being collected.

“If the point of tariffs is to reduce what you’re buying, that means you’re not going to make that much money,” Klein said.

And much of the money that does come in will be from Americans themselves. Tariffs are often passed on to consumers, therefore driving up prices and, ultimately, inflation.

Trump, who is personally very wealthy, has been rather cavalier about the potential for prices going up. In an interview with the Wall Street Journal this week in which he appeared to float the idea of putting tariffs on iPhones and laptops, he said, “I mean, I can make it 10 percent, and people could stand that very easily.”

“Made in the USA” isn’t as easy as Trump makes it out to be

President Trump often makes the case that many of the United States’ trade and economic problems could be solved if companies would just do all of their manufacturing here. He’s attacked General Motors, Apple, and Harley-Davidson, among others, for having operations outside the US.

But “build in America” (which, by the way, many of Trump’s companies didn’t) isn’t as easy as it sounds. Supply chains are global, so even when Trump thinks he’s hitting back at China over, say, the iPhone, he’s missing the fact that the product is sourced from a lot of places, and its supply chain spans many countries.

In an Econofact analysis last year, Klein and Harvard political economist Marc Melitz estimated that each iPhone 7 imported to the US was recorded as a $225 import from China, but of that amount, only $5 represents work performed in China, largely assembly. The remaining $220 corresponds to other parts of Asia, Europe, and the Americas.

“It always sounds good when a president sounds tough on trade and issues protectionist policies,” Wayne Lam, a principal analyst at the information and analytics firm IHS Markit, told me when discussing the iPhone earlier this year. “We just don’t have the sheer workforce size nor skill set to be good at consumer electronics manufacturing.”

[Vox]

Trump on border wall funding: ‘This would be a very good time to do a shutdown’

President Trump on Saturday kept the door open to a potential government shutdown if an upcoming deal to fund parts of the government does not include funding for a border wall.

“We’re talking about border wall, we’re talking about quite a big sum of money, about $5 billion,” the president told reporters Saturday before leaving the White House for a trip to California.

“This would be a very good time to do a shutdown. I don’t think it’s going to be necessary, because I think the Democrats will come to their senses, and if they don’t come to their senses, we will continue to win elections,” he added.

Trump has previously flirted with shutting down the government over funding for his proposed border wall, but Republicans convinced him not to do so before the midterms, saying it would hurt them at the polls.

The president’s latest comments come as he is negotiating with the Senate on a deal to partially fund the government.

Congress has until Dec. 7 to fund the rest of the government after lawmakers failed to approve seven of the 12 individual funding bills before the end of the fiscal year deadline.

“I would always tell anybody, including the president, it’s not a good idea to shut down the government, period,” Sen. Richard Shelby (R-Ala.), the chairman of the Senate Appropriations Committee, said earlier this week.

“I can’t tell you,” he added when asked if $5 billion is “doable.”

[The Hill]

 

Trump administration took nearly $10 million from FEMA’s budget to support ICE

The Trump administration took nearly $10 million from the Federal Emergency Management Agency’s budget this summer to help boost U.S. Immigration and Customs Enforcement, according to budget documents shared with USA TODAY.

The revelation, just ahead of Hurricane Florence’s expected landfall in North and South Carolina, was found by Sen. Jeff Merkley, D-Ore., who first shared the documents live on MSNBC late Tuesday.

He told USA TODAY that after the devastation of last year’s storms, including hurricanes Maria, Harvey and Irma, FEMA should have the funds it needs to be prepared for another disastrous hurricane season.

“It’s almost guaranteed to happen again, so this is just incredibly irresponsible,” Merkley said.

The budgeting document, titled “Department of Homeland Security FY 2018 transfer and reprogramming notifications,” lists $9,755,303 taken from FEMA’s budget, about .9 percent of the agency’s listed overall budget, and given to support ICE.

Money was also taken from other agencies, including millions from the Transportation Security Administration and the U.S. Coast Guard, to help ICE, the document states.

The document lists the additional money was taken to help ICE detain immigrants along the southern border, fund beds in detention centers and remove undocumented immigrants from the country.

“ICE must have sufficient detention bed capacity to detain illegal aliens when necessary as it enforces the Nation’s immigration laws as fairly and effectively as possible,” the budget document states. “Ensuring adequate funding for the detention beds requires projecting an Average Daily Population (ADP) for adult detainees as well as the daily costs incurred in keeping a detainee in custody.”

The nearly $10 million was taken from various places within FEMA, including training, preparedness and protection, and response and recovery operations.

Tylet Houlton, a spokesman for the Department of Homeland Security, which oversees both agencies, dismissed criticism of the document as a “sorry attempt to push a false agenda” and said none of the money transferred came from disaster relief funding.

“Under no circumstances was any disaster relief funding transferred from @fema to immigration enforcement efforts. This is a sorry attempt to push a false agenda at a time when the administration is focused on assisting millions on the East Coast facing a catastrophic disaster,” he said in a tweet. “The money in question — transferred to ICE from FEMA’s routine operating expenses — could not have been used for hurricane response due to appropriation limitations.”

While it’s not uncommon for agencies to move money around, FEMA’s budget was decimated last year due to the barrage of storms and fires that affected the nation and the agency was criticized heavily for its handling of the disaster in Puerto Rico.

Merkely said he was made aware of FEMA’s budget cuts while looking into a solution for family separation and the detention centers set up along the border. He said the document makes it clear ICE is using money from FEMA “to build more detention centers.”

Merkely said he believes the budgeting reallocation happened in response to the Trump administration’s zero-tolerance policy, which was rolled out earlier this year.

The policy led to thousands of families being separated and housed in detention centers, which he says may have increased the need for more money in ICE’s budget.

Both FEMA and the Department of Homeland Security did not immediately respond to requests from USA TODAY.

[USA Today]

 

Trump told Gary Cohn to ‘print money’ to lower the national debt

As a candidate, Donald Trump pledged to balance the federal budget and lower the national debt, promises that are proving difficult to keep.

Once he won, Trump considered an unusual approach that was quickly slapped down by his chief economic advisor, according to veteran journalist Bob Woodward’s new book, “Fear: Trump in the White House,” which went on sale Tuesday.

“Just run the presses — print money,” Trump said, according to Woodward, during a discussion on the national debt with Gary Cohn, former director of the White House National Economic Council.

“You don’t get to do it that way,” Cohn said, according to Woodward. “We have huge deficits and they matter. The government doesn’t keep a balance sheet like that.”

Cohn was “astounded at Trump’s lack of basic understanding,” Woodward writes.

The vignette is one of many in the acclaimed investigative reporter’s book that describes a chaotic White House and a president being handled by top aides concerned by his behavior and decision-making.

Several people in Trump’s orbit have called the book’s accuracy into question, while Woodward has maintained several times that he stands by his reporting. In a note at the beginning of “Fear,” the author notes that the work “is drawn from hundreds of hours of interviews with first-hand participants and witnesses to these events.”

Cohn on Tuesday pushed back on the Woodward book. The former Goldman Sachs banker told Axios: “This book does not accurately portray my experience at the White House. I am proud of my service in the Trump Administration, and I continue to support the President and his economic agenda.”

Trump, meanwhile, has dismissed the book as a “scam” filled with “made up” quotes.

The president also floated an idea for making money from the recent rise in interest rates, according to Woodward.

“We should just go borrow a lot of money, hold it, and then sell it to make money,” Trump reportedly said.

The president also made clear that he was not pleased by the Federal Reserve’s current policy toward moving interest rates back to historical levels after suppressing them during the decade that followed the 2008 financial crisis. Cohn said he supported the Fed’s move to raise rates.

Trump then told Cohn that he wouldn’t pick him to be Fed chair, according to the book.

“That’s fine,” Cohn said, Woodward reports. “It’s the worst job in America.”

Trump chose Jerome Powell to succeed Janet Yellen as Fed chair. However, the president has criticized the Fed for raising rates while the economy surges.

“I’m not thrilled,” he told CNBC’s Joe Kernen in a July interview. “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.”

[CNBC]

Trump nixes federal pay raise

President Trump on Thursday announced that he would cancel a scheduled 2.1 percent across-the-board pay increase for federal workers, as well as locality pay increases.

“In light of our Nation’s fiscal situation, Federal employee pay must be performance-based, and aligned strategically toward recruiting, retaining, and rewarding high-performing Federal employees and those with critical skill sets,” Trump wrote in a letter to the Speaker of the House and the president of the Senate.

The proposal sets up a fight with Congress, which could effectively overturn the action in upcoming spending legislation. Without such intervention, the move would affect most of the 2.1 million federal employees around the nation, about 1.7 million of which live in areas outside of the Washington, D.C., metro area.

Members of the military, on the other hand, are on schedule to receive a 2.6 percent pay increase.

Last year, the Trump administration approved a 1.4 percent increase in federal pay and a 2.4 percent increase in military pay.

In the letter, Trump said he had the authority to propose an alternative pay schedule based on Title V of the U.S. Code, which allows the president to alter scheduled pay changes he deems inappropriate in light of “national emergency or serious economic conditions affecting the general welfare.”

Trump’s 2019 budget proposal sought to freeze federal pay, but the Senate Appropriations Committee included a 1.9 percent pay bump in its spending plans for 2019. The House version of the bill did not include such an increase, and sought reductions to spending on federal pension plans.

The two chambers are scheduled to meet in the coming weeks to work out the differences between their bills, negotiations which could effectively override Trump’s move to cut pay. Trump has not indicated if he would veto such a measure if it included a pay increase.

Democrats, and some Republicans, blasted the move.

“For someone who claims to be a leadership maven, President Trump certainly gives the impression through his actions that he has no idea how to run an effective organization,” said Rep. Steny Hoyer (D-Md.), the No. 2 Democrat in the House.

[The Hill]

Reality

Trump’s Space Force: Billions.

Pentagon budget increase: $94 billion.

Trump farm bailout: $6 billion.

Trump golf outings: $77 million.

Mnuchin flights: $1 million+

Price flights: $1 million+

Pruitt flights & phone booth: $211k

Zinke door: $139k

Carson dining set: $31k

Trump was involved in scuttling FBI building across from Trump’s DC Hotel: Inspector General report

The Inspector General of the General Services Administration on Monday released an in-depth report showing President Donald Trump was involved in scuttling plans by the Federal Bureau of Investigation to build a new headquarters.

The president was mentioned over three dozen times in the report.

The Inspector General report found that GSA Administrator Emily Murphy’s testimony before Congress on the scandal, “was incomplete and may have left the misleading impression that she had no discussions with the President or senior White House officials in the decision-making process about the project.”

The Trump administration invoked executive privilege to prevent the inspector general from learning exactly what was said when President Trump allegedly intervened in the rebuilding process.

The FBI plan would have created a large construction zone across the street from Trump’s luxury DC hotel.

The investigation was initiated by Rep. Gerry Connolly (D-VA), the Vice Ranking Member of the House Oversight and Government Reform Committee.

“This IG report demonstrates that Administration officials obscured the White House’s involvement in the FBI headquarters project,” Connolly concluded.

“When we began this investigation, the prospect that President Trump was personally involved in the government-led redevelopment of a property in close proximity to the Trump Hotel was dismissed as a conspiracy theory,” he added. “Now, the president’s involvement in this multi-billion-dollar government procurement which will directly impact his bottom line has been confirmed by the White House Press Secretary and government photographs.”

Connolly also urged further investigation.

“This IG report is only the beginning. We must develop a comprehensive understanding of the President’s involvement in this procurement and what it has cost the United States in terms of both national security and taxpayer dollars. I am calling on the Oversight and Government Reform Committee to convene immediate hearings on this matter and to subpoena any GSA officials who are suspected of misleading Congress,” he demanded.

[Raw Story]

Taxpayers charged $34 million to make Trump’s backup jets more ‘presidential’

With the announcement of a new Boeing contract to “update” Air Force Two, the Pentagon is slated to spend $34 million taxpayer dollars to make Donald Trump’s presidential jets fancier.

Defense One reported that over the past 14 months, the Defense Department has spent tens of millions of dollars contracting aircraft monolith Boeing to “refurbish” the interiors of two backup Air Force One planes that are frequently used by the vice president and cabinet officials.

The most recent contract, as first reported by the Washington Examiner, is for more than $16 million to create an “appearance more commensurate with [the] presidential section” of Air Force One on the twin-engine 757. According to the Pentagon, the latest Boeing contract will include “upgraded interior elements,” “refurbished interior elements” and “painting and cleaning.”

This isn’t the first of such contracts the DOD has taken out with Boeing. Defense One noted that on June 30, 2017, the Pentagon awarded the corporation nearly $18 million for “engineering support services for refurbishment of the interior” of the other backup Air Force One.

[Raw Story]

President Trump takes credit for canceling costly military parade he proposed

President Trump claimed Friday that sticker shock led to the scrapping of his much maligned military parade.

Trump accused local Washington politicians of price gouging, despite the fact that the jaw-dropping projected $92 million cost was largely due to Pentagon figures for aircraft, equipment and personnel.

“Maybe we will do something next year when the cost comes WAY DOWN,” the President tweeted.

The claim came hours after the Defense Department had already said the parade wouldn’t happen this year.

Col. Rob Manning, a Pentagon spokesman, said Thursday that the military and the White House “have now agreed to explore opportunities in 2019.”

The Associated Press and CNBC reported on Thursday the parade would cost about $92 million — $80 million more than the price first suggested by the Trump administration.

A majority of the taxpayer funds, roughly $50 million, would cover costs for aircraft, tanks, transportation and personnel for the Nov. 11 spectacle.

Washington, D.C. Mayor Muriel Bowser knocked Trump and his finger-pointing tweets.
“Yup, I’m Muriel Bowser, mayor of Washington DC, the local politician who finally got thru to the reality star in the White House with the realities ($21.6M) of parades/events/demonstrations in Trump America (sad),” she tweeted.

The President announced that he’ll be skipping town the weekend of Veterans Day, when the parade was planned to take place.

Trump said he “will instead attend the big parade already scheduled at Andrews Air Force Base on a different date, & go to the Paris parade, celebrating the end of the War, on November 11th.”

France hosts an annual parade to commemorate the end of hostilities during World War I on Armistice Day, which coincides with Veterans Day in the U.S.

But Trump’s initial plans for a celebration of military might appeared more in line with authoritarian-style displays seen in China and North Korea.

Some critics speculated that there were other reasons beside the price tag for the sudden cancellation.

Several veterans’ groups were expected to launch protests in D.C. to counter Trump’s parade.

Activist and Vietnam era vet John Penley said he received approval to stage an anti-war rally in a park near the route.

“We have no doubt that the rapidly growing number of requests for protest permits in DC and the intel they have on the possible number of protests and people planning to protest Trump’s Military Parade caused the President and the Pentagon to… announce that the date of the parade had been changed to next year,” Penley said in a statement. “Well, as far as I know at this point nobody is cancelling their Veterans Day weekend protests and we definitely are not.”

Common Defense, a progressive group of vets and military families, also planned a counter-demonstration.

“Trump’s arrogant attempt to use our brothers and sisters in uniform as his unwilling political props suffered a major defeat, and that defeat could not have happened without the organizing of veterans and military families,” said Common Defense executive director Pam Campos, a former Air Force military intelligence analyst.

[New York Daily News]

Trump Claims Power to Bypass Limits Set by Congress in Defense Bill

When President Trump signed a $716 billion military spending bill on Monday, he claimed the authority to override dozens of provisions that he deemed improper constraints on his executive powers.

In a signing statement that the White House quietly issued after 9 p.m. on Monday — about six hours after Mr. Trump signed the bill in a televised ceremony at Fort Drum in New York — Mr. Trump deemed about 50 of its statutes to be unconstitutional intrusions on his presidential powers, meaning that the executive branch need not enforce or obey them as written.

Among them was a ban on spending military funds on “any activity that recognizes the sovereignty of the Russian Federation over Crimea,” the Ukrainian region annexed by Moscow in 2014 in an incursion considered illegal by the United States. He said he would treat the provision and similar ones as “consistent with the president’s exclusive constitutional authorities as commander in chief and as the sole representative of the nation in foreign affairs.”

The statement was the latest example of Mr. Trump’s emerging broad vision of executive power. His personal lawyers, for example, have claimed that his constitutional authority to supervise the Justice Department means that he can lawfully impede the investigation into Russia’s interference in the 2016 election no matter his motive, despite obstruction-of-justice statutes.

Signing statements, which are generally ghostwritten for presidents by Justice Department and White House lawyers, are official documents in which a president lays out his interpretation of new laws and instructs the executive branch to view them the same way.

Once obscure, the practice became controversial under President George W. Bush, who challenged more provisions of new laws than all previous presidents combined — most famously a 2005 ban on torture championed by Senator John McCain, Republican of Arizona. (Democrats are pressing for access to any White House papers of Mr. Trump’s Supreme Court nominee, Brett M. Kavanaugh, related to that statement.)

Mr. McCain is now fighting brain cancer, and Congress named the new military law in his honor. But Mr. Trump pointedly did not mention his name when signing the bill, the latest slight in the long-running acrimony between the two men. Mr. Trump’s signing statement also quoted only part of the bill’s title, evading any acknowledgment of the senator.

Last month, Mr. McCain issued a statement calling Mr. Trump’s Helsinki summit meeting with President Vladimir V. Putin of Russia “one of the most disgraceful performances by an American president in memory.”

The American Bar Association in 2006 took the position that presidents should not use signing statements, but should instead veto legislation if it has constitutional defects so that Congress has an opportunity to override that veto if lawmakers disagree. But presidents of both parties, including Barack Obama, have continued to use them, with current and former executive branch lawyers arguing that the focus should be on the credibility of the legal theories that presidents invoke when they make their objections.

Mr. Trump’s new statement relied upon a mix of theories, some of which had greater support in Supreme Court precedent than others. For example, in 2015, the court upheld presidents’ constitutional authority to disregard a statute requiring American passports to say that Jerusalem is part of Israel, which could support Mr. Trump’s claim that he could recognize Crimea as part of Russia if he wanted.

But many of Mr. Trump’s challenges invoked his purported powers as commander in chief, a type of objection that the Bush administration frequently made but that the Obama administration generally shied away from.

For example, Mr. Trump also declared that he could bypass a provision in the bill that extended restrictions on certain bilateral military-to-military cooperation between the United States and Russia.

He also challenged a provision requiring the Pentagon to create a senior civilian position charged with coming up with uniform standards for counting — and reducing — civilian bystander deaths as a result of American military operations, and a provision that would halt certain in-flight refueling of Saudi and Emirati aircraft over Yemen unless those countries took more steps to bring an end to the civil war there and to reduce civilian suffering and collateral damage from their airstrikes.

And the president said he could disregard a restriction against reducing the number of active-duty troops stationed in South Korea below 22,000, unless Secretary of Defense Jim Mattis were to certify that doing so would be in the national-security interest of the United States and would not undermine the security of regional allies like South Korea and Japan.

In May, Mr. Trump had ordered the Pentagon to prepare options for drawing down troop levels in South Korea ahead of his Singapore summit meeting with North Korea’s dictator, Kim Jong-un. But later in June, Mr. Mattis said that current troop levels of about 28,500 would remain in place.

[The New York Times]

Trump blasts Robert Mueller’s spending on Russia probe

President Donald Trump is reacting to a report on special counsel Robert Mueller’s spending, slightly overstating the figure for the Russia probe he has dismissed as a ‘witch hunt.’

Trump tweets Friday: “A.P. has just reported that the Russian Hoax Investigation has now cost our government over $17 million, and going up fast.”

He adds: “No Collusion, except by the Democrats!”

A Thursday report by the Justice Department revealed that Mueller’s probe of Russian interference in the 2016 campaign cost $10 million between October and March. That’s on top of the $6.7 million spent on the probe the previous four months.

The Justice Department says a large portion of the costs, about $9 million, would have been spent regardless of the special counsel’s appointment.

[PBS]

Reality

Government waste? That’s quaint. Trump has spent $67 million dollars alone on his weekly golf trips to resorts he still owns, operates, promotes, and receives profits from.

The Special Council investigation into Bill Clinton cost $80 million in 1999 dollars.

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