March 11, 2020 marked the official end of the longest bull market in history. The Dow Jones went down 20.3% from the record high of 29,568 points it had reached exactly a month ago. Panic and uncertainty engulfed the markets as the coronavirus pandemic continued to wreak havoc in Europe and begin its rapid approach to America’s coasts. Governments across most continents moved at varying paces to intervene in terms of public health and the economy.

The US Economic Situation

One month ago there was an unemployment rate of only 3.5% in the United States and comparatively good economic growth of 2.3% according to the US Bureau of Economic Analysis. The stock market was at record highs. Currently, full employment has ended, with predictions of the unemployment rate more than doubling in the coming weeks and reaching up to 30% in the coming months. Just last week, there was a record number of 3 million new jobless claims. As the Federal Reserve and the US government tried to calm things down with their announcements of economic measures, the stock market appeared to somewhat settle and managed to stop its declining streak, thus ending the shortest bear market in history.

The Federal Reserve moved aggressively and — perhaps in its haste to do good — proceeded incautiously with its announcement of a 50-basis point rate cut on March 3. One week later it dropped it effectively to zero. The message to the markets was that the worst is yet to come.

Congress’ Massive Stimulus Package

Nevertheless, after the stimulus package from Congress began to take shape, markets slowed down their downwards trend. The bill that made its way from Congress to the US President’s desk was worth $2 trillion, the largest ever in the world. And if the word of the Senate minority leader Chuck Schumer is any indication, another, even larger package is to follow. The President himself recently announced his intention to put forward a $2-trillion infrastructure bill.

According to the stimulus bill, individuals earning less than $75,000 per year are expected to receive $1,200 in cash payments, for a total of $300 billion. Families will also receive $500 per child. For those filing for unemployment, the government will provide $600 per week on top of whatever these individuals receive from the states. This is expected to last for four months. Moreover, 13 weeks of unemployment insurance are foreseen under the bill, with the possibility to request extensions. Freelancers, who normally cannot apply for unemployment, now can, thanks to a new government program.

Covid-19 Expenses Will Now All Be Covered

The legislation also makes all Covid-19 related medical expenses covered under private insurance. Furthermore, $10 million is the total sum of grants for small businesses, which can request up to $10,000. The small business administration can provide up to $10 million in forgivable loans per business, for a total of $350 billion. There are loans for big corporations as well, valued at $500 billion. $58 billion are reserved for airlines, whereas $100 billion for hospitals, $98 billion for drugs and vaccines and $1.32 billion for community centers. Worth 10% of GDP, there is no doubt that it is a comprehensive package. As the Senate Majority Leader Mitch McConnell pointed out though, it is actually a relief package, not a stimulus package. This is a very important difference.

In addition to the fiscal, demand-side policies, the Fed has restarted its quantitative easing (QE) program and promised unlimited monetary stimulus. As the Spanish economist Daniel Lacalle explains, it is obvious that this stimulus is not unlimited. It is, in fact, limited by the $13 trillion dollar shortage that exists currently in the world. It has increased due to other countries, especially emerging ones, having dollar-denominated debt, and soon these countries will need dollars to pay those debts. This has been a long advantage of the US dollar’s status as the world currency reserve and a safe haven.

The Economic Situation in Europe

On March 18, the European Central Bank announced an $820 billion (EUR 750 billion) asset purchase program, named the Pandemic Emergency Purchase Program, that will last until the end of the year. This came after the new ECB Chief Christine Lagarde caused the biggest fall in the Italian stock market history with her declarations that it was not the ECB’s job to close the spread between bonds’ rates. Having realized her gaffe’s devastating consequences — not only on the stock market and bond yields but also on the ECB’s credibility — she apologized. Market participants reacted positively to the new program announced, maybe because it was the only concrete package from the EU. The member states of the Union still today, as April begins, have not reached an agreement as to how best proceed. The debates on establishing the so-called corona-bonds or finding other ways to help European individuals and companies still continue without any success. Chaos is the message that comes from Brussels. The threat of incompetence from the ECB‘s current leader is what makes market participants anxious.

Europe’s Lose-Lose Economic Dilemma

To make matters worse, in addition to a lack of a proper response, the economic situation in Europe is far worse than in the US. Whereas, the American labor market was strong and the economy growing steadily when the pandemic hit, the Eurozone has been plagued with high unemployment, weak economic growth and high debt levels. This has to do not only with the lack of a common response, but also with the actual implementation of the wrong type of measures to the crisis of 2012. And that is an important lesson to learn for the current situation. If we do not identify the problem correctly, it will be impossible to implement the right solution. This is precisely what is happening around the world.

While it is true that the United States has been much quicker than Europe in preparing for a coming recession, their measures are also not enough. The US is stronger than the Eurozone, there is no doubt about it. The economic measures implemented by Donald Trump, like cutting taxes and deregulation, have helped strengthen the economy further. Consumer confidence and business sentiment have been in their highest points. Nevertheless, this does not mean the US will not be hit by a recession. The way it behaves now will be crucial to how it weathers the storm. Even in its weak state, the EU has the possibility to reverse the course it is currently in by adopting measures that work. There is no doubt that it will be hit much harder than the United States.

If the US can afford to provide helicopter money and trillion-dollar relief bills, Europe does not have the same luxury. It is highly indebted, badly managed with inefficient markets. Its labor market is highly inflexible compared to the American one. Government interventionism is high and frequent. This has done more harm than good to the economies of the Eurozone. Decades of Keynesian economics have failed in bringing more prosperity, leaving Europe with deep economic scars. In 2019, many of the major economies in Europe were already close to a recession.  What the US and especially Europe need is to produce. This cannot be achieved through demand-side policies, especially when the blow is not from the demand side.

The Coming Storm Isn’t About Demand-Side Shock

Currently, the crisis that is about to hit most countries has been misidentified as being caused by demand side shock. In reality, however, it is a supply-side shock that is hitting economies everywhere. Companies are being forced to close due to government mandates. It isn’t generally because they are in bad financial health, nor is it primarily due to consumers fearing to spend. This is the starting point of the crisis. Obviously, shutting whole sectors of the economy down will inevitably lead to a recession. Supply chains will also probably shift, because both emerging and developed countries are shutting down. Fiscal packages passed by governments are not effective and cannot serve as a stimulus. Why a company that is being forced to shut down, but is in good financial health, should take loans and inflate its debt?

On the other hand, can companies with high leverage ratios afford to increase their debt? How will they repay this debt when they do not know when they will resume normal activity? These companies do not suffer because they lack access to credit, which has been accessible at very low cost for some time now. They suffer due to forcibly closing their activity. So, the problem in its origin is not on the demand side. Nevertheless, due to consumers being forced to stay at home, and because of bars, restaurants, hotels, some shops etc. being closed, this may turn also into a demand side problem.

Printing More Money Isn’t Going to Fix This

Only once the problem is appropriately assessed, can the right solutions be implemented. Printing money and giving it to people will not stimulate the economy, while the relief will be only temporary. Nor will it ensure that the private sector is ready to start the engines of the economy once the pandemic is over. In the current situation, finding ways to increase consumer spending is not going to be enough to push the GDP up. Sure enough, government spending can. However, with the condition that Europe is currently in, it cannot afford to increase its debt by incredibly high values, because the consequences after the pandemic will be catastrophic. Many companies and banks in Europe are in the same boat as the governments when it comes to debt. In Europe there are banks with high NPLs that cannot afford to risk increasing it any further.

Governments have overspent during expansionary times, and central banks have dropped rates to negative levels, limiting the effectiveness of these tools immensely. So, what should be done? First, the governments should eliminate all unnecessary spending. They should revise their budgets and drop all expenses for the year that are not essential. Secondly, they should immediately open companies that produce in the industry sector. In many countries, most firms in the services sector can do smart working. A suggestion that economists like Lacalle have made is that governments can provide lines of credit to companies that need to finance their working capital. If the governments are going to spend money at low costs, they can do so in a way that produces results. It must be paramount that economic activity be steadily reawakened.

Thirdly, governments should decrease taxes at least by half for all companies. For those companies that are not working, corporate taxes should be zero for the whole FY 2020. Moreover, payroll taxes should also be eliminated, as well as local taxes. It is paramount that the cost of hiring is reduced so that the recovery can start.

Follow the South Korean Model

Many people may argue that health is more important and being locked in our houses is necessary even at the risk of burning down our economies. The reply to that is the South Korean model should be followed not the Italian one. They performed massive tests to most of the population and it worked. If the government wants to spend money, let them spend it on tests for the virus. Then they can isolate the infected without risking the whole world economy. People need to go back to work, because they cannot live otherwise. Death by recession is as awful as death by corona. We are still in time to stop a health crisis from turning into a recession of Biblical proportions.

As the US President said, we cannot risk the cure being worse than the virus itself.

L'articolo Erroneous Response to Economic Crisis Could be Devastating proviene da InsideOver.

The coronavirus crisis has had a severe impact on the health and economy of the United States and also politically on the Trump administration. Not long ago, an extremely strong economy had made President Trump almost invincible. He was able to overcome various incidents that arguably would have cost many other presidents their job.

The situation has now changed drastically, however. People are dying across the United States, and the stock market has been erratic and has already devastated some people’s savings. It is feared that the nation’s economy could be in even worse trouble than during the 2008 financial crisis.

Trump’s Other Priorities

The current scenario has always been a primary point of concern for many observers: what if the United States suddenly found itself in a major crisis but the Commander-in-Chief proved to be impervious to advise and more concerned about trivialities and his own delusions than saving the nation?

The US — and indeed the world — has gotten its answer, as Trump goes on about his fight against the “lamestream media” in the midst of one of the worst crises since World War Two. The only difference is that everything seems even worse than one could have imagined. When his own intelligence agencies warned of the coronavirus in January, the President downplayed the threat entirely. A few weeks later, when the virus spread unchecked in part due to a lack of tests, Trump spoke of having everything under control. He lied.

On February 24, he tweeted again that the virus was under control. Early warnings about the gravity of the situation were denounced as lies and fake news, propaganda by the Democrats in an attempt to win the presidency in November. For weeks Trump and his henchmen called the coronavirus the next “hoax” and argued that the virus would miraculously disappear. The experts had always had a different opinion and made that clear. The director of the National Institute of Allergy and Infectious Diseases Dr. Anthony Fauci — who is also a member of the White House Coronavirus Task Force — has openly admitted that the US has been failing to adequately fight COVID-19. The latest figures confirm Fauci’s assessment.

Trump’s Failure of Leadership

When Trump finally realized that the crisis could no longer be ignored, he tried to demonstrate leadership with an address to the nation. It failed miserably. Breathing loudly and visibly nervous, Trump blamed others for the crisis. It was a “foreign virus,” Trump emphasized. He then announced a 30-day ban on entry to the United States for Europeans – which has since been extended.

However, the speech was not just that of a man who radiates security and knows what he is doing. Instead — as is so often the case — the speech was riddled with inaccuracies and bizarre statements. In fact, the White House had to withdraw three Trump claims. For example, Trump had claimed that “a massive amount of trade goods” from Europe would no longer reach the United States which, of course, caused the already struggling financial markets to fall further.

Since that time, Congress has agreed upon a significant stimulus package, and the stock market has at least stabilized itself again somewhat. However, great leadership is still sorely lacking. This was clearly seen when Trump first announced he would reopen the country again on Easter. Of course, he later backtracked, stating that April 30 would be the earliest potential day to relax measures, likely after being warned by Fauci and others of the enormous likely death toll if he opened by Easter.

The President Often Spreads Misleading Half-truths

Now, the President conducts almost daily press conferences which are intended to demonstrate confidence and decision-making power. He often spreads half-truths or even pure lies and attacks the press when asked simple and fair questions. His messages are frequently contradictory, and his poor crisis management could cost the lives of many Americans.

In fact, it has cost many lives already.

No one outside the far-left is claiming that the President is responsible for the virus. He is clearly not, and arguing the opposite is either being dishonest or intellectually challenged. However, there is no doubt he should have reacted sooner and stuck to the facts.

South Korea has shown how crisis management can work effectively. They immediately initiated countermeasures and shortly afterward carried out up to 18,000 tests a day. The number of new cases has dropped significantly.

In the United States, extensive testing has only been in place for two weeks. There is no longer a single state in the US in which the coronavirus has not yet occurred. Yesterday the government announced it was and anticipating up to 240,000 deaths. So far, more than 4,000 people have died.

The Weakness of the US Healthcare System

COVID-19 has also revealed the weaknesses of the American healthcare system, which is not prepared for a pandemic. This is precisely why real leadership and early transparency about the severity of the situation could have made a genuine difference. Oriented towards the economy and maximum occupancy, the USA only currently has 2.8 beds per 1,000 inhabitants.

Experts are also raising the alarm in the US because there are only 160,000 ventilators available nationwide once emergency supplies are tapped. These ventilators can be vital for lung diseases and treating COVID-19. It is estimated that with a rapid increase in cases, up to 740,000 of these machines will be needed. Thus, the White House has been cranking up the rapid expansion of ventilation equipment production, with major companies manufacturing masks and ventilators every hour of the day.

Unfortunately, however, and partly due to Trump’s delayed actions, it seems the push to accumulate enough ventilators may be too little too late. A week ago, New York Governor Andrew Cuomo stated that his state requires 30,000 ventilators but so far was provided with 400 from the federal government. The ongoing refusal to face reality indicates the lack of leadership in the Oval Office and the incompetence of Trump and his administration during one of America’s darkest hours.

L'articolo Ratings Over Empathy, Economy Over Lives: Trump’s Coronavirus Debacle proviene da InsideOver.

The World Health Organization (WHO) has warned the United States may soon find itself as the epicenter of the Covid-19 global outbreak. Spokesperson Margaret Harris issued the warning alongside troubling statistics regarding the virus’ spread on Tuesday. Together, the US and Europe accounted for 85% of new cases worldwide on Monday, Reuters reported.

US Can’t Control The Spread

“We are now seeing a very large acceleration in cases in the US. So it does have [the potential to become the new epicenter],” Harris said.

Both the size and intensity of the outbreak are increasing in the US with the infection count at nearly 55,000 as of Tuesday, according to BBC News. New York has been considerably blindsided by the disease and makes up nearly half of all American cases. The White House said the Covid-19 spread within New York City itself accounts for 60% of all new cases in the nation. 

“The [infection] forecaster said to me, ‘We were looking at a freight train coming across the country. We’re now looking at a bullet train,’” said New York Governor Andrew Cuomo.

An outbreak in New York City — the nation’s most populous city — threatens the entirety of the country. Travelers to and from New York state as a whole have already been advised to self-quarantine for two weeks after returning from it. Those left within the state face dire circumstances unless it can get a grip on the virus spread.

Cuomo is desperately seeking more medical supplies from the US Federal Emergency Management Agency (FEMA), but it risks running out of equipment soon. New York state has 7,000 ventilators on-hand currently, but it anticipates it will need 30,000 as the infection rate continues to climb.

Trump: We Must Be Open for Business By Easter

Meanwhile, President Donald Trump has begun promoting the idea of reopening the US for business, possibly as early as Easter on April 12. 

“Out country wasn’t built to be shut down. This is not a country that was built for this,” Trump declared at a Monday evening briefing. “America will again and soon be open for business. Very soon. A lot sooner than three for four months that somebody was suggesting.”

The Trump administration promoted a “15 Days to Slow the Spread” plan, in which America recently passed the halfway point. It was designed to slow the spread of Covid-19, but the numbers show it is not working. Trump, however, prefers to ease the guidelines after the 15 days to restart the economy regardless.

Reopening Before Virus has Peaked Could Be Dangerous and Useless

What would a reopened US economy look like if the virus persists and follows its current trajectory? Likely it would be far different than what Trump desires. The US economy is built on consumerism, but a disease spreading around does little to encourage a shopping spree. The aerospace industry — manufacturing and airlines — has been one of the hardest hit by the virus outbreak, but would it restart by April 12 if Trump gives the all clear? While domestic flights could conceivably resume, other nations across the globe will likely still be under lockdown, thus eliminating the possibility of international travel.

Furthermore, Trump’s idea of reopening the economy in two weeks — medical concerns aside — ignores the possibility of local governments and individual businesses refusing to reopen. Part of the reason why the virus is hitting the US so hard is because Trump refused to spearhead a shutdown from Washington. He did not call in the National Guard to enforce a curfew or run off beach-goers. He did not impose strict penalties for violating the shelter-in-place order like Saudi Arabia.

The Trump administration largely left it up to states and businesses to decide how to best handle the crisis. Consequently, they may decide to keep handling it even when Trump proclaims victory.

‘We Haven’t Even Reached the Peak of This Pandemic Yet’

If the economy were to gear up again by April 12, and business forced employees to return to work, the virus rate would undoubtedly skyrocket even further and risk overloading an already-crippled healthcare system. Doctors are understandably warning against the idea. 

“We’re going to completely overwhelm the hospital system” unless the administration increases restrictions, said Dr. Tina Tan, board member of the Infectious Diseases Society of America. “Loosening restrictions makes absolutely no sense if you look at it from a health perspective. I really think now that people are worth more than actually trying to save the economy right now.”

Dr. Greg Poland, vaccine researcher at the Mayo Clinic in Minnesota, said he expects infections to continue to rise, even with current restrictions in place. 

“We haven’t even reached the peak of this pandemic yet,” Poland said.

Targeting At-Risk Demographics

Still, there are voices who agree with the president that the US must start to focus on how to resume the economy.

“You turned off the engine quickly,” Cuomo said. “How do you now start or begin to restart or plan the restart of that economic engine? Separate task, but something that we have to focus on.”

Lloyd Blankfein, former CEO of Goldman Sachs, proposed letting lower risk demographics — such as younger  people — return to work. Could the US economy slowly come back to life by targeting at-risk demographics and allowing others to resume life as usual? Potentially, but there is the possibility of asymptomatic carriers returning to work then transporting the disease back to their older family members at home. Thus the disease would not die out, only slow down.

If the US is to beat coronavirus, it must do what the rest of the world is doing: remain shut down until new cases taper off. The strategy worked in China, which is reopening its economy. It’s a strategy Italy and the UK are also employing, and it’s what Trump should do as the leader of the nation that currently has the second-highest case count in the world. 

L'articolo Trump Wants to Reopen US As WHO Warns US is Next Covid Epicenter proviene da InsideOver.

As the US approaches the brink of an unprecedented recession caused by the novel coronavirus and an ongoing oil price war, blue collar workers and those in the service industry are struggling especially hard. Fully 18% of working Americans have now been laid off or had their hours significantly cut as a result of the coronavirus. Millions of people in the United States are at risk of losing their jobs and wondering how they will pay rent — not to mention the millions more around the world who will be directly impacted by a major economic recession in America.

Coronavirus Class Warfare

Coronavirus is exposing many fault-lines in American society that have already been flaring up in recent years. Private healthcare that favors those with more money or high-paying careers versus those relying on Medicaid or no coverage; those working for minimum wage in grocery stores and those for whom spending $8,000 for deluxe cuisine and hors d’ouevres for coronavirus hot tub parties is no big deal. Wealth inequality in the United States has reached levels that are hard to fathom and coronavirus is intensifying and revealing the very real and very large gap between rich and poor for everyone to see: and it’s not a pretty sight.

America’s wealth gap is absolutely massive. Already by 2018 America’s wealthiest 10% had 70% of all the country’s household wealth — a staggering 60% rise from 1989. Income inequality in the US is the highest out of any G7 nation according to the Organization for Economic Cooperation and Development (OECD). Huey Long must be turning over in his grave, to say the least.

‘We Should Blow Up the Bridges’

In one potent example, local residents of the Hamptons where many Manhattanites own summer properties have reported being shocked and disgusted by wealthy urbanites who have swooped in to clear grocery shelves, frequented public places with no precautions despite having coronavirus symptoms and generally indicated their complete disdain for the local working class who keeps the holiday haven up and running.

In one particularly compelling anecdote, a local nurse reported that a rich woman from Manhattan called her small hospital in the Hamptons and said she had coronavirus. Doctors told her to stay put but the woman ignored the order to stay in the city and subsequently showed up at the hospital demanding to be let in; another Manhattanite coronavirus carrier took a private jet to East Hampton without notifying anyone. As the article details, local residents are not overly thrilled at the vain virus-carrying VIPs coming in, with Montauk resident James Katsipis decrying the “waves of people bringing this s–t in” and saying “we should blow up the bridges” and “not let them in.”

While class war certainly is not the solution to the coronavirus — if anything more solidarity is needed — the above example shows just how raw tensions have become in cases where the wealthy insist on flaunting the advantages they have always taken for granted.

An Economic Punch in the Gut

America’s working class hasn’t had an easy ride, especially in the past several decades as technological change and outsourcing has accelerated job loss. Now coronavirus is making things even worse — much worse, in fact. As Eric Morath and Rachel Feintzeig reported for the Wall Street Journal, many low-wage American workers in industries that require close personal contact like cafes, restaurants, malls, the hospitality industry, security guards, public events jobs and employment across the service industry are being laid off or having their hours massively cut down. Around one quarter of America’s active workforce is considered “vulnerable,” meaning that they are in unstable and perform low-paid work. From taxi drivers to baristas and hotel receptionists, the lack of white collar workers traveling around and availing their services is an economic punch in the gut.

Recent recoveries that had been helping out economically downtrodden demographics of the US economy with the lowest unemployment in fifty years are now right back down where they started. Service and hospitality work has grown around 30 percent since the comeback from the 2008 recession, but much of that work was still only a start, leaving many still one or two paychecks away from financial ruin and complete poverty. And now? The majority of those working for an hourly wage have no access to sick leave and minimal cushion for a financial disaster. It is also worth noting that of the millions who filed for unemployment this week, millions more are not technically unemployed but have left the rosters where they are counted or are still technically “working” but with very minimal shifts per week. The economic crisis that is likely coming is a daunting iceberg that will be very hard to bypass without disaster.

The Populist Left and the Populist Right

The populist left headed by Senator Bernie Sanders and the populist right represented by President Donald Trump both signify different forms of revolt against politics — and business — as usual. Even if Trump’s first term has thus far mainly been defined by tax cuts to the rich and massive weapons deals to Saudi Arabia his recent decision to invoke the Defense Production Act and send checks to struggling American families shows the kind of nationalist and populist tendencies that got him elected.

The current crisis also highlights the popularity of the President’s initially tough stance on China. As Senator Josh Hawley of Missouri said March 19 on Tucker Carlson Tonight, the coronavirus is a strong reminder that the political class should reassess America’s dependence on China economically. According to Hawley, today’s situation demonstrates the very real danger of selling out the United States to China and having an overly close trade relationship with them. The de-industrialization of the United States in favor of outsourcing those jobs to China also means that many remaining low-paid jobs are in the service sector: exactly what is being hit hardest in the current crisis as mentioned above.

While it is clear that sending checks to everyone, boosting food stamp amounts and Medicaid funding, increasing unemployment insurance, suspending foreclosures and getting corporations to help out in the virus response is not going to pull the US economy back from the brink, it is still a step in the right direction, as even Trump opponent and frequent target of Trump’s verbal abuse Congresswoman Ilhan Omar agreed. This crisis could also see the American left and right begin to reach a greater consensus on healthcare and workers rights: after all, the suffering and solidarity of the London Blitz is what led to post-war Britain adopting universal healthcare. At this point there is unlikely to be any sudden economic miracle unless very clear and time-specific answers on coronavirus start coming out, however, and so far that is nowhere to be seen.

Nonetheless, the truth is that the horror and chaos of the coronavirus has proven the instincts — if not the specific and varying policy proposals — of the populist left and populist right to be largely correct:

A nation which does not look out for the majority of its citizens’ interests and which puts profits and international trade deals above people is weak and unprepared for hard times.

L'articolo America’s Working Class is Being Crushed by Coronavirus proviene da InsideOver.

“I think we have done more than anybody in 3 years,” said US President Donald Trump earlier this week in an interview with Fox News. On Martin Luther King Jr. Day, 20 January also marked 3 years of Trump’s presidency.

Trump’s battle horse is how he rebuilt the military. With $2.5 trillion spent on defense, the President has often said America has never had a military like this before. Between the end of 2019 and the beginning of 2020, Trump has ordered the killings of Abu Bakr al-Baghdadi, the Iraqi-born leader of the Islamic State of Iraq and the Levant, and Iran’s Quds Force commander, Qasem Soleimani. Both events increased tensions in the Middle East and had a big impact on the US Government’s relationships with Iraq and Iran.

But another constant with the President is that he usually changes his mind: “I’ll be Iran’s ‘best friend’ if it acquires no nuclear weapons,” Trump said in June 2019. Only one year before the statement, the President announced the US Government was withdrawing from the Iran nuclear agreement. It marked one of the biggest foreign policy decisions Trump has made since entering the White House. The situation between the US and Iran has worsened since Soleimani’s death: a few days after the strike, Iran announced it would no longer comply with the Joint Comprehensive Plan of Action (JCPOA), abandoning the nuclear deal.

2020 has also started with another turn of events: after almost two years of hostilities, in mid-January the US and China signed ‘phase one’ of their trade deal, which removed many trade tariffs and helped ease their relationship.

A strong economy has been a crucial factor during Trump’s presidency: the President often refers, both online and offline, to the economy as the strongest indicator of his success throughout his time in the White House, calling it “terrific” and “the greatest in the history of this country.” He has signed the biggest tax reform in 30 years and he will announce a tax cut for the middle class in the next 90 days. 

At the World Economic Forum in Davos, Switzerland, on Tuesday, Trump credited his presidency with an unprecedented “comeback” for an economy that was in “a dismal state” when he first took office: “The United States is in the midst of an economic boom, the likes of which the world has never seen before,” Trump said.

According to the Hudson Institute, the Obama administration suffered from the worst economic crisis since the Great Depression.

However, GDP grew during George W. Bush’s administration, averaging out to 2.1 percent per year. The US economy contracted by 2.5 percent in 2009, and after Obama’s presidency, Trump took office as the economy continued its recovery – and as it underwent a decade-long expansion, the longest in American history.

In this scenario, 55 percent of Americans approve of the job Trump is doing on the economy, while 40 percent disapprove. The economy seems to be at the center of how voters make up their minds, and the key to winning a second term. 

“When America is united, America is unstoppable,” reads a video shared by Trump on Twitter to celebrate his third year in office. This year he has to face an impeachment trial. Before knowing whether the House will say the President obstructed Congress’s investigation into his dealings with Ukraine, Trump continues his campaign.

To do so, Trump spoke at the March for Life in Washington DC on Friday, making him the first president to attend the anti-abortion march in person in the event’s history. “I am truly proud to stand with you,” said Trump addressing the event. He also added that the generation which attended the march is making America a pro-life nation, attacking Democrats and their proposal to defend abortion rights.

L'articolo The Trump Presidency, Three Years In: What Has Happened In The US? proviene da InsideOver.

President Trump will divert another $7.2 billion of Pentagon funds for border wall construction this year, five times what Congress authorized for the project in the 2020 budget.

This is the second consecutive time that the President has diverted funds from military construction projects and counternarcotics funding. In 2019, Trump extracted $2.5 billion from military counterdrug programs to fund the Mexico-US border wall. This year, he plans to extract $3.5 billion.

Correspondingly, the president diverted $3.7 billion in military construction funding, more than the $3.6 billion he took in 2019. With the added funds, Trump’s administration would have diverted $18.4 billion of Pentagon funding toward completion of the barrier.

This is not the first time that the president has defied Congress. Last year, it was reported that Trump had deployed American troops to 53 out of 54 African countries without Congress’ knowledge or approval.

The administration originally planned to build a 509 mile-long border wall. According to internal planning figures, the diverted funds would enable the government to complete about 885 miles of new fencing by spring 2020. Yet, despite promises to complete 450 miles of barrier at the end of the year, only 101 miles have been completed.

Trump constantly promised voters a US-Mexico border wall during his campaign for presidency in 2016. Last year, the Trump administration asked Congress for $5 billion for the border wall construction. This led to the 35-day shutdown, the longest in US history, until Democrats agreed to provide $1.4 billion in taxpayer funding.

“’Mexicans are rapists’ is the first thing Trump said when he came down Trump towers to announce his campaign for president,” Dr Christopher Phelps at the University of Nottingham’s Department of American and Canadian Studies said.

“The wall is extremely expensive to build. Half of Congress is currently controlled by Democrats who declined Trump money to build the wall. By diverting money from other areas, Trump doesn’t have to worry about Congress’ approval. That is his endgame.

“There might be some weakening of defense and other government priorities, but the Republican base does not care. They are excited about the wall. It is their anti-immigrant fervour that allowed Trump into power.

“It is classic scapegoating,” Dr Phelps continued. “Ordinary American families are facing a lot of difficulty in making ends meet. These economic problems arose after the 2008 financial crisis. People could have blamed Wall Street and capitalism, but they chose to blame immigrants.

Bernie Sanders’ campaign, for example, is focused on a more just financial system and economic order. The Republican base’s anger is displaced on immigrants, and they have no problem with Trump taking away money from anywhere to build the wall.”

“The US military is a hegemon on earth,” explained Dr Phelps. “It has such a gigantic budget that diverting some of those funds may not harm the American populace per se.

Congress approved nearly $700 billion for US’ defense spending this year. In 2019, the United States’ defense budget was more than the next nine countries combined.

“The wall is a symbolic thing, more than a practical thing,” Dr Phelps said. “Republican voters are not concerned with practical objections as to whether the wall would function. People could always find ways to scale it no matter how tall it is; they could find ways under it. There are also places along the border where the wall can’t be built e.g. rivers and lofts. It cannot be made 100% impenetrable.”

Construction of the barrier wall has faced numerous challenges in federal court. Last month, a federal district court in El Paso, Texas, ruled that Trump diverting funds meant for other purposes to the border wall was illegal. The court froze the $3.6 billion that the Republican administration had diverted.

Last week, the 5th Circuit Court of Appeals in New Orleans lifted the injunction after an appeal by Trump’s government. The court, presided by a significant amount of judges nominated by infamous Republican presidents, Ronald Reagan and George Bush, claimed that work on the barrier could continue while legal challenges to the Trump government are pending. The $3.6 billion was previously Pentagon-allocated to road repairs, school construction projects on military bases, and a waste treatment plant.

“This is a victory for the rule of law,” Stephanie Grisham, the White House press secretary, expressed in a statement celebrating the court’s ruling. “We are committed to keeping our borders secure, and we will finish the wall.”

“This would not have been possible without the President’s steadfast determination and leadership,” Acting Homeland Security Secretary, Chad Wolf, said last week at an event marking the completion of the 100th mile of the barrier in Arizona,

“The new border wall system is an undeniable impediment to human smugglers, drug traffickers and other criminals who have exploited our lack of effective border infrastructure to smuggle drugs, people and illegal contraband into our country.”

For Dr Phelps, however, the physical barrier will not soothe America’s deep psychoanalytical and symbolic fears.

“Whiteness in America is at a tipping point,” summarised Dr Phelps. “This wall is not going to stop the problem.

“The US was, for a long time, a white republic. For the first time, demographics such as Asians, Blacks and Latinos will take over the White-majority population. The US is set to be a colour-majority country.

“The fact of the matter is that the Obama presidency was very uncomfortable for white Americans. For generation after generation, they schooled themselves on white superiority. One way to stop a colour-majority and superiority from overtaking white America is to build a wall. This is factual, not qualitative. If we look at exit poll data from the 2016 election, the number one variable that united those who voted for Trump was whiteness. The wall is all about whiteness. That’s why they’ve built this narrative of brown ‘others’ taking their jobs, raping their women and pillaging their country.”

L'articolo Trump Will Divert Additional $7.2 billion in Pentagon funds to Border Wall proviene da InsideOver.

Since he became US President, Donald Trump has used the World Economic Forum at Davos to his advantage. In 2018, he attended the event to boast about America’s economic growth only to miss it a year later.

In 2019, Trump decided that the US ‘does not need this quasi-public forum to communicate its thoughts’, according to Steven Blitz, chief US economist at TS Lombard. However, his decision was probably determined by his frustration with NATO and NAFTA at the time, as suggested by Cailin Birch, global economist at the Economist Intelligence Unit, when interviewed by CNBC. 

This year, the US President decided to attend the meeting, and there can only be two reasons for that: his possible impeachment and an upcoming election.

Trump said during a Tuesday morning speech at the 50th annual gathering in Davos that he has ‘never been more confident in America’s future.’ He focused on steady job growth, low unemployment and phase one of his new trade deal with China.

Although the President normally loathes these events as they are packed with establishment figures, this is an excellent election opportunity for him. Despite stagnant wage growth, the US economy is performing. An average of 205,000 jobs per month were added to America’s economy from September to November. China agreed to buy $200 billion worth of US products once phase one of the US-China trade deal was concluded. It is no wonder he has so far spent his time dining with business leaders and discussing with them the benefits of 5G innovation, as opposed to impeachment hearings.

Trump made the economy his central focus during his 2016 campaign with a promise to make America ‘great again.’ As long as the economy continues to boom and trade deals are signed, the US President needs to do all he can to drag the American public’s focus back onto this issue, even if it means using platforms like Davos as an opportunity to do so.

Furthermore, many of the business leaders he has met so far might be interested in investing in the US, so this is also his chance to say that his visit to the World Economic Forum sparked interest in the American economy among some of the world’s wealthiest entrepreneurs.

It would also be a double victory for the President if he managed to persuade French President Emmanuel Macron to reach a deal on the digital tax being proposed by his government that impacts US technology firms.

Trump is also bragging about successful trade talks with his EU counterparts, which is one positive achievement for him.

If he manages to secure any of these outcomes, then his progress at Davos would make an outstanding election pitch to voters before the 2020 election has officially begun.

The more chances the President has to talk about the economy, the more he can concentrate on depicting the Democrats as hellbent on impeachment.

Politico reports that Trump’s aides have established a war room to argue their case to voters that Trump is being railroaded by his opponents. One senior administration official described the Trump administration’s goal as ensuring the Democrats are held to account in the public arena.

The White House is confident that Senate Republicans will acquit the President, which is why there is more focus on winning the public’s support.

Trump has managed to deflect Davos’s attention away from impeachment proceedings by asking White House Press Secretary Stephanie Grisham to respond to the Democrats’ accusations.

Overall, the Trump administration has been successful in deploying the timing of the World Economic Forum to its advantage, as the meeting is happening at the same time as Trump’s impeachment trial. The President can claim that he was busy focusing on the economy whilst the Democrats concentrated on exaggerating Trump’s constitutional authority abroad. Either way, this can be depicted as a win for him.

L'articolo Why Davos Matters to Trump Now More Than Ever Before proviene da InsideOver.