For starters, Trump’s Middle East policy is chaotic, to put it mildly. While he tries to provide cover to his Saudi friends, events are outpacing and revealing his duplicity. The Saudi story has gone from “left the consulate” to “fistfight” to “premeditated murder.” (“Saudi Arabia’s public prosecutor said on Thursday that Jamal Khashoggi was killed in a planned operation,” reports The Post.) Given that CIA director Gina Haspel reportedly has listened to the audio recording of Khashoggi’s horrific murder, Trump’s suspension of disbelief increasingly looks daft. Is he really that gullible — or something worse? Congress surely will move forward with severe sanctions, perhaps cutting off support for the Saudis’ Yemen war, leaving Trump scrambling to repair a relationship that he excessively relied upon. Meanwhile, having taken the United States out of the Iran deal, it’s not clear how — if at all — he is going to repair the breach with our European allies, who are busy devising a workaround to avoid new U.S. sanctions. Judging from Trump’s handling of the Khashoggi murder, we have little to no confidence he could manage an even bigger Middle East crisis.
Then there’s the potential disaster for Trump and the GOP of an economic downturn. He inherited a growing economy, rising stock market, groundwork for new trade deals (e.g. the Trans-Pacific Partnership) and solid corporate profits. While there is no immediate cause for alarm, there are a number of warning signs Trump tries to ignore.
Trump tries to deny that he has put in place tariffs, but those tariffs, essentially a tax on consumers, are already taking a toll on agriculture and some manufacturers, which pass on higher prices to business and individual customers. And there is no relief in sight. The Wall Street Journal reports:
The U.S. is refusing to resume trade negotiations with China until Beijing comes up with a concrete proposal to address Washington’s complaints about forced technology transfers and other economic issues, said officials on both sides of the Pacific.The impasse threatens to undermine a meeting between Presidents Trump and Xi Jinping scheduled for the end of November at the Group of 20 leaders summit in Buenos Aires. Both sides had hoped the gathering would ease the trade tensions. U.S. businesses have been counting on sufficient progress at the meeting for the Trump administration to suspend its plan to increase tariffs on $200 billion of Chinese imports to 25% on Jan. 1, from the current 10%. Such a move would be a blow to U.S. importers and consumers.
And there’s a bigger worry than China. Trump is squawking about interest rates for a reason: As the Fed begins to raise rates and the housing market softens, the recovery is endangered. He’s wrong to blame the Fed, though, which is doing its job to return to semi-normal interest rates and keep inflation at bay. The fault lies elsewhere. Inflationary trade policies and an unnecessary, massive tax cut have backfired. Right now the housing market looks rocky. “New home sales plunged in September, falling 5.5 percent to an almost two-year low amid pressures from rising interest rates that have hammered the real estate market,” CNBC reports. “The Commerce Department reported that sales for the month came in at 553,000 on seasonally adjusted basis. That’s 5.5 percent below the downward revised August rate of 585,000 and a 13.2 percent tumble from the 637,000 reported for the same period a year ago. September represented the worst month since December 2016. The number also was well below the estimate from economists polled by Reuters who were looking for a 1.4 percent drop to 625,000.”
Presidents claim far too much credit for economic good times (although in the case of the recovery from the 2008 financial crisis, kudos go to Presidents George W. Bush and Barack Obama for bailing out the banks and rescuing the auto industry, measures that many conservatives bitterly opposed). That said, Trump has made himself the hero of the economy, exaggerating its improvement since Obama left office and taking sole credit for trends underway when he got to office. Right now, the strong economy is arguably Trump’s only political lifeline. If that frays, Trump and the GOP are likely to sink in 2020.