As we noted earlier in the week, Americans are noticing that the country's economy is in strong shape, with consumer confidence spiking to the best level in 17 years. Now the government has announced another data point that reinforces the string of good news. These developments don't come in a vacuum; the economy has taken off because of the Republican and Trump administration policies of right-sizing regulation and cutting taxes. Are Americans tired of winning yet?
U.S. filings for unemployment benefits fell last week to the lowest level in almost five decades, indicating the job market remains tight, Labor Department figures showed Thursday...Overall, the employment picture remains solid, with payrolls continuing to increase and the unemployment rate at the lowest since late 2000. Job growth will help sustain consumer spending, the biggest part of the economy.
In another tax reform-related development, Wisconsinites are experiencing lower utility bills due to passage of the new law. Consumers can thank House Speaker Paul Ryan and Sen. Ron Johnson for these savings:
Customers of Wisconsin utilities are projected to save more than $275 million from the new lower rate for federal corporate taxes, based on estimates compiled by the Citizens Utility Board of Wisconsin and the Wisconsin Industrial Energy Group. The corporate tax rate was lowered to 21% from 35% as part of the recent tax reform and tax cut legislation. Projected taxes are included as an expense when setting utility rates and the cost is passed onto customers. The state's utilities were required to file their projected tax savings with the Public Service Commission last month. We Energies electric customers are projected to save $97 million a year from the lower corporate tax rate based on the estimates...Several utilities have proposed giving customers a credit on their bills.
Badger State voters should remember that Sen. Tammy Baldwin voted 'no' on tax reform, as did every single Democrat in Congress. Democrats have attempted to demonize the corporate tax cuts, but it's those very cuts that are allowing businesses all across the country to increase employee benefits, raise wages, pay bonuses, and pass down savings to customers (on top of the law's tax cuts for roughly 90 percent of taxpayers). Improving America's global competitiveness is smart economics and helps people. Public support for tax reform has jumped by 26 net points since December, according to New York Times polling, because reality is on the GOP's side. But is the president about to throw a wet blanket over the booming economy? The Wall Street Journal's editorial board is blasting Trump's announcement that he intends to impose steel tariffs, openly touting the alleged benefits of a trade war:
Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms. The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly. Mr. Trump has spent a year trying to lift the economy from its Obama doldrums, with considerable success. Annual GDP growth has averaged 3% in the past nine months if you adjust for temporary factors, and on Tuesday the ISM manufacturing index for February came in at a gaudy 60.8. American factories are humming, and consumer and business confidence are soaring.Apparently Mr. Trump can’t stand all this winning. His tariffs will benefit a handful of companies, at least for a while, but they will harm many more...The immediate impact will be to make the U.S. an island of high-priced steel and aluminum. The U.S. companies will raise their prices to nearly match the tariffs while snatching some market share.
The additional profits will flow to executives in higher bonuses and shareholders, at least until the higher prices hurt their steel- and aluminum-using customers. Then U.S. steel and aluminum makers will be hurt as well. Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S...The National Retail Federation called the tariffs a “tax on American families,” who will pay higher prices for canned goods and even beer in aluminum cans. Another name for this is the Trump voter tax. The economic damage will quickly compound because other countries can and will retaliate against U.S. exports. Not steel, but against farm goods, Harley-Davidson motorcycles, Cummins engines, John Deere tractors, and much more.
The Journal also warns about ill effects on trade and diplomacy: "Then there’s the diplomatic damage, made worse by Mr. Trump’s use of Section 232 to claim a threat to national security. In the process Mr. Trump is declaring a unilateral exception to U.S. trade agreements that other countries won’t forget and will surely emulate." This is all correct. Trump's apparent decision is a terrible one, and apparently came as a shock to many within his own team -- including Gen. Mattis, who strongly opposes the idea -- who are now scrambling to react. This is economic illiteracy:
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!— Donald J. Trump (@realDonaldTrump) March 2, 2018
It's not "easy." It's nonsense. A trade war would raise prices for consumers and provoke retaliation from other countries. Americans will lose. And the major progress Trump has made on the economy could be dampened or wiped out. I'll leave you with this column from Matthew Continetti, who argues that year one of the Trump presidency was largely about the (succeeding) Ryan agenda. What comes next could prove problematic. Be sure not to miss the very last sentence: