Monthly Archives: May 2017

The parts of the U.S. economy that are still far too exciting

By Ana Swanson

(Photo by Scott Eells/Bloomberg)

Not many people say their goal in life is to be boring. But that’s the case for John Williams, the president of the Federal Reserve Bank of San Francisco, who is charged with overseeing the financial health of everything West of the Rockies.

Things in the economy have been far too exciting in the past decade, Williams says. And while he says the economy is generally on a strong track today, there are areas he’s watching closely — including the effect of government policies proposed by the Trump administration.

While many have emphasized the potential boost to growth from tax cuts and other measures the administration has discussed, Williams says other measures could pose a potential risk to growth, like trade restrictions or cuts to Medicaid.

This interview has been edited for length and clarity.

President Trump’s budget proposal released last week proposed pretty dramatic cuts to programs that help the poor, including Medicaid. What would that mean for the U.S. economy?

First, I don’t know what will happen in fiscal policy. There are a lot of proposals, but what really matters is what Congress enacts and the president signs. Second, some of these proposals would boost growth in the short run— like more spending on defense. But other changes that have been talked about, including trade restrictions, would have a negative effect in the short run.

Significant cuts in Medicaid or other programs affect money in people’s pockets that gets spent pretty much dollar for dollar. So cutbacks in spending that go to lower-income people have the biggest effect on the short-run of the economy. It’s different for tax cuts, especially for wealthier people, because a lot of that money is saved rather than spent. It doesn’t make it right or wrong, I’m just saying in the short run that doesn’t …read more

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Trump lashes out at Germany’s trade practices — and he may have a point

By Ana Swanson

President Trump, German Chancellor Angela Merkel and Canadian Prime Minister Justin Trudeau pose for a photo at the G-7 summit in Taormina, Italy, on May 26. (Jonathan Ernst/Reuters)

President Trump once again accused Germany of having an unfair advantage over the United States in trade, lashing out at the European ally for exporting more to the U.S. than it imports.

We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change

— Donald J. Trump (@realDonaldTrump) May 30, 2017

The tweet comes on the heels of Trump’s visit to Europe last week, where he met with German Chancellor Angela Merkel during a summit of the leaders of the world’s largest economies. It continues a long-running concern by the president about whether foreign countries are exploiting U.S. economic strength through unfair trade relationships. While Trump has often directed that concern at Mexico and China, he has previously focused on German trade as well, particularly its export of cars.

The meetings with the Europeans last week were largely seen as contentious, with Trump criticizing allies for failing to contribute enough financial resources to defense efforts and Europeans showing concern about his commitment to the Paris climate accords. After German media reported that Trump lashed out over German auto exports in private meetings, White House officials downplayed the exchange, though not entirely.

“He said they’re very bad on trade, but he doesn’t have a problem with Germany,” National Economic Council Director Gary Cohn told reporters.

On Sunday, following the meetings, Merkel announced that Europe “really must take our fate into our own hands,” showing new distance from its long-standing alliance with the United States.

Germany maintained a $69 billion trade surplus with the U.S. in 2016 — reflecting …read more

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The vulgar realism of Rex Tillerson’s State Department

By Daniel W. Drezner Unfortunately, my prediction from last week has come true, and the European leg of President Trump’s first overseas trip did not go well at all: Germany’s foreign minister launched a scathing criticism of Donald Trump on Monday, claiming the US President’s actions have “weakened” the West and accusing the US government of standing “against the […] …read more

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The line of presidential succession, for dummies

By Sarah Hutto With the recent reports on the ongoing FBI investigations into the Trump administration, concerned Americans have turned to Google with searches about what would happen in the event of a presidential impeachment. Fortunately our country’s founders took every measure to furnish us with a thorough backup plan that would maintain governmental continuity well beyond Vice President […] …read more

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