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December 2018

Trump's Half Term: An Assessment

    'Tis the season for looking back and looking forward; for assessing accomplishments and opportunities unfulfilled; for thinking what was, what might have been, and what might yet be. In Trump-world this exercise is best done in two year increments - since the last election and to the next. 

The easy part: What was and what might have been. 

    - Republicans controlled the House, the Senate, and the presidency - all was possible, but never in recent history has a president faced such constant, vitriolic opposition from the opposing party, most of the media, and a significant slice of his own party. In the House, the Freedom Caucus prevented compromise; in the Senate the 60 vote threshold for most matters and the few Never Trumpers among the 51 seat Republican majority proved too liberal for the more conservative House. And that's before Robert Mueller's relentless probes to find anything to bring the president down. 

    - With that setting, Donald Trump delivered peace and prosperity, with the working class and minorities sharing the bounty for the first time in decades. 

        -- Despite the Fed returning monetary policy toward normalcy after 8 years of stimulus, the Obama era "new normal" of 2% GDP growth was bettered by 1 to 2 %, and unemployment of 4.5 % was reduced below the 4% often considered "full employment". Deregulation (deleting two old for every new regulation; freeing smaller banks from Dodd-Frank), tax cuts (benefitting 85% of payers), energy expansion (offshore; Alaska; fracking; pipelines) , and tariffs (particularly on steel and aluminum) all contributed. The results are undeniable, and they belong to Trump.   

         -- The ISIS caliphate was defeated in short order, and the promise to cut back on being the world's policeman is being fulfilled despite a messy world full of fanatics and despots. 

        --  First important steps were taken to force China to conform to World Trade Organization norms - reducing state support for favored exporters, and stopping industrial espionage - and to engage North Korea in denuclearization talks. Leaders with long term contracts in both countries will try to wait out the Americans. 

        --  The Republicans whiffed on "Repeal and Replace" of Obamacare, but the individual mandate was repealed, it was made easier for small businesses to group together to buy health insurance, and stripped down short term plans were made more available. 

        --  An early offer to Democratic Congressional leaders to trade DACA for a wall was rejected and remains an elusive goal as the Democrats prefer to stoke their voter base.   

        --  The more partisan accomplishments were also myraid: cancellation of President Obama's Iranian nuclear giveaway; withdrawal from the Paris Climate Agreement; moving our embassy to Jerusalem; appointment of two Supreme court justices and 83 lower court judges.   

And the hard part: what the next two years might hold. With Trump's high energy, unconventional style, and broad agenda in the wake of President Obama's globalist, liberal, ineffective legacy, it has been possible to make progress across a broad front. With a Democratic House (and an effective leader), it will be necessary to significantly advance a few key initiatives.   

    - Strategic confrontation of China's trade practices is broadly popular, but will take time and a coalition. When Trump withdrew from the Transpacific Partnership in January 2017, most of the other participants went ahead with a set of trade agreements which do not include China. Whether a formal participant or an interested partner, this coalition is ready-made for a more favorable realignment of East Asia trade relationships. 

    -  North Korea's nuclear program must be dismantled.  Mike Pompeo's performance review in 2020 should be heavily weighted on how well he works with South Korea and Japan to accomplish this goal.

    - We cannot go on with porous borders, millions of largely assimilated young illegal immigrants in the shadows, and a demographic which shows an aging native population in need of young workers to support Social Security, Medicare, and the general economy. Real border secutrity in exchange for DACA is so obvious that only cynical politicians can refuse to find the equation.  Unfortunately we have plenty of them. 

    -  Personality flaws aside, the biggest risk of a President Trump working with a Democratic House is the ballooning budget deficit.  With interest rates rising and current deficits coming out of Paul Ryan's House exceeding $1 trillion, one shudders to think of what Pelosi and Trump might concoct. Someone somewhere in the federal government needs to take notice. 

        One can hope that Mueller will get out of the way, and that the next two years are as productive as the last two. 


    This week's video is a shocker -  Van Jones on CNN praising Donald Trump and Jared Kushner for their role in assembling a coalition to pass major prison reform which will greatly reduce incarceration for nonviolent offenses, and should be a big plus in the African American community.  

bill bowen - 12/28/18 









Brexit: An American Perspective

    What Trump and Mueller are to American political discourse, Brexit is to the British. Both provide arcane lessons in the technical structure and operation of government; both provide the generally disinterested public with reason to pick up a newspaper or watch a pundit; both reveal the ugliness of politicians who place personal ambition above the national good; both will still be discussed mid-century.  

    The setting

        - The muddled result of Conservative leader David Cameron's bungling in 2016 is that the British and European Union negotiators have until March 29 to define the terms by which Britain will leave, and the nature of their subsequent relationship. The date could be delayed by mutual agreement, but all parties want the pressure of a deadline to force negotiations. 

        - There are three potential outcomes:

            -- The British Parliament could accept (perhaps with minor modifications or "clarifications") the 528 page withdrawal agreement and the 26 page political declaration of future relationships which Theresa May has negotiated, envisioning a transition period through 2020 in which Britain would remain in a "customs union" (accepting EU rules, specifications, and court judgments), without the ability to independently negotiate trade agreements until both parties agree on how to solve the Ireland problem. (The issue: how to  be totally independent on trade without re-establishing a hard border between Northern Ireland (part of the UK) and the Republic of Ireland.) May would defer this problem for later solution; the EU insists that the UK would be prohibited from agreeing to trade deals with other countries until it is solved by mutual agreement - perhaps forever.          

           -- Lacking agreement with the European Union, there could be a "Hard Brexit", with major disruptions of commerce and personal movement. Free movement of people and goods would end; British payments to the EU would end; trade agreements with Britain's largest trading partner would end without immediate replacement British agreements; Britain's critical financial services sector would suffer a major shock. Prudent government and business officials on both sides of the channel are making contingency plans, but are fearful of making this seem a viable option. 

    -- There could be a second vote on leaving. Prime Minister Theresa May (who originally opposed exit) takes the view that Parliament once asked the voters what they wanted, and she is committed to serving their will. Others among the former "Remainers" claim that the downside of Brexit was not understood, but now is, and that some two million new voters, who will be mostly affected, have come of age in the interim. This seems the least likely outcome - in part because it is hard to determine whether the question would be "remain", leave under the provisions that Theresa May and the EU have negotiated, leave under renegotiated terms, or leave without a negotiated agreement. There is no majority opinion. 

    An American's observations

        - It was naively irresponsible of former Prime Minister David Cameron to call for a snap election to be won by a simple majority to define the status of the country as fully independent or part of a larger polity. Our founders did not so much trust direct democracy, making constitutional amendment difficult, and inserting the Electoral College between the voters and the presidency. On the other hand, the EU procedures which call for agreement among all 27 member countries cry for reform.    

         - For at least a few years a "Hard Brexit" would be bad for the United States as it would disrupt the economies and politics of major trading partners and allies. With Angela Merkel losing power in Germany, Emmanuel Macron's popularity in France approaching 20% , Italy defying Eurozone requirements for budget constraint, and Russia pushing back against decades of eastward encroachment, Europe is in no position to absorb a chaotic, adversarial withdrawal by its second largest member. A united West is needed to engage China. 

        -  Raw political self interest will carry the day, and Theresa May understands nose counting. The 317 Conservative MPs and their 10 allied Democratic Unionist Party MPs from Northern Ireland have as a first objective retaining their thin majority in the 650 member Parliament. Jeremy Corbyn's Labor Party (257 MPs) would try to defeat any Conservative proposal if that would lead to a successful vote of no confidence in the government and new Parliamentary elections which Labor may win. That cannot be allowed to play out. Many Hard Brexit Conservatives (such as Boris Johnson) would be happy for the government to fall to be replaced by one of their own, but do not have a majority within their party and cannot risk new elections. The Democratic Unionist Party cannot allow a Labor victory which would put them out of power or a Hard Brexit which would re-create a hard border within Ireland. Politically, for the decision makers, May's deal is the least bad option. 

    - Theresa May has been heroic in her effort to identify the small sweet spot which meets the initial Brexit objectives of controlling immigration to Britain, limiting regulations from Brussels, and preserving a unified England / Scotland / Northern Ireland / Channel Islands. By putting off the parliamentary vote until mid-January while continuing talks with the EU leaders, she is taking away the space for any alternative. 


  This week's bonus video is a compelling Tucker Carlson/Praeger U commentary on illegal immigration.

bill bowen - 12/21/2018 

Made in China 2025

    Tariffs are only a weapon. China's "Made in China 2025" policy is the target. This week's announcement from Beijing that they will be revising the policy indicates that the weapon is hitting the target. Let's recap. 

    Chinese Premier Li Kequiang introduced the "Made in China 2025" policy in 2015 as a focused plan to move China up the value chain as a manufacturer, to increase local manufacture of critical technical components of items like cars and cell phones to 70% by 2025, and to challenge American leadership in key future technology areas:

    1) New advanced information technology and artificial intelligence (think Google and Intel);

    2) Automated machine tools & robotics (think Allen Bradley  and Epson);

   3) Aerospace and aeronautical equipment (think Boeing);

   4) Maritime equipment and high-tech shipping (think Korean or German);

   5) Modern rail transport equipment (think General Electric or European);

   6) New-energy vehicles and equipment (think Tesla);

  7) Power equipment (think General Electric and Tesla);

  8) Agricultural equipment (think John Deere or Catepillar);

  9) New materials (think 3M); and

10) Biopharma and advanced medical products (think J&J or Bristol Myers). 

    In prior Five Year Plans China had emphasized domestic innovation in targeted industries. Made in China 2025 changes the dynamic relative to foreign companies wishing to do business in China by seeking to capture and surpass global technologies.  The core reality is that the Chinese economy is comprised of state owned enterprises (often run by the military), domestic privately owned companies, and foreign owned private companies. Despite the incorporation of elements of capitalism, it remains a top-down, state-controlled economy, where nobody prospers without the approval of the Communist Party central authorities, and target industries and companies are subsidized by the government.  Despite Chinese assertions, the level of government subsidies and coercions violates the rules of the World Trade Organization which it was allowed to join in 2001.

     Until Donald Trump took on the growing behemoth with tariffs and the threat to leave the WTO, China was allowed to force companies with targeted technologies to give them up in order to participate in the Chinese market, while China stepped up a global effort to acquire technology through open source and clandestine means. Europe - with Brexit, and lesser problems afflicting France Germany, and Italy - is in no position to lead. With a century-long stigma, Japan is in no position to lead.  The TransPacific Partnership was an effort to assemble an alliance of smaller countries in the effort to reign in China, but at least for now the essential American participation is off the table.

    For clarity, global telecommunications equipment giant Huawei provides a good example. The Trump administration has asked many of our allies to buoycot their equipment because of the intelligence gathering nad potential strategic sabotage capabilities of its network. (The arrest of the company's CFO in Canada for violation of sanctions on trade with Iran is a flashpoint, but not really the driving issue.)  This week's identification of Chinese intelligence services as being behind the hack of Marriott's and several other data bases also provides a public example of Chinese government capabilities and attitudes toward the use of Information Technology to further their development goals. And then there are the 340,000 Chinese students at American colleges and universities. 

    As a very big first step in the agreement between Trump and Xi Jinping to delay the imposition of  increased tariffs, China has announced a change to the China 2025 policy to exclude smaller local companies from its mandates, and perhaps reduce the amount of "local content" required in finished products. More will be needed - doing away with joint venture requirements; a reduction in state-sponsored technical espionage; acceleration of approval of imported products without coopting the technology.

    With apologies to the farmers and oil companies, the trade problem with China will not be solved by increasing their soybean and natural gas imports.  It will require fundamental change to Chinese industrial policies and Trump has gotten their attention. China's leaders think strategically. So does Trump, even if Wall Street runs on quarterly profits. 


    This week's bonus video covers the highlights of the acrimoneous Trump/Schumer/Pelosi meeting on funding the wall. One cynical perspective - Trump staged this televised meeting to help Pelosi with her base as she was trying to win over the Democratic caucus to again become Speaker of the House. They can count votes and do deals. 

bill bowen - 12/13/2018



Vote Harvesting, California Style

    Californians like to think that we are "early adopters", the first to create and utilize technology and social norms which an eager country will eventually embrace. Facebook, Twitter, Uber, Airbnb, and Paypal; gay marriage, sanctuary cities, and marijuana. Thus it is with politics. California Republicans are lost for at least a few election cycles due to several factors - public attitudes on immigration and the environment; a great party disparity in financial resources; media and popular opposition to Donald Trump; and a huge gap in the effectiveness of party leadership - but the California political concept of which national Republicans should be the most concerned is the Democrats mastering of Get Out the Vote (GOTV) operations.  

    The eventual loss by Young Kim, an attractive, well qualified Asian-American woman Congressional candidate in formerly staunchly conservative Orange County, who led by 14% after the close of polls on election day but eventually lost by a few thousand votes, provides a good benchmark of how effective the Democrats' GOTV operation was. This is not about fraud or illegality. It is not about a process that is inherently open to one party or the other. (It does raise the philosophical question of what happens to democracy when the productive portion of society comprises a smaller portion of the electorate, but that is a subject for another day.) It should serve as a warning to Republicans across the country about underlying election laws, the effective use of money from large donors, and a bit on the effective use of technology. Let's recap. 

    California's Election Laws 

        Democrats have controlled California's legislature and governorship since 2011, with near two-thirds majorities. They also claim the Secretary of State who interprets election laws and writes the ballot titles for public initiatives. They have aggressively used this dominance to pass every possible law to advantage Democratic candidates. 

        --  Since 2016, Motor Voter registration, by which voting registration is automatic for people acquiring or renewing their license. 

        -- Registration at age 16 or 17, so that young people are prepared to vote when they become 18. 

        -- Same day registration, allowing people to register and file provisional ballots at the same time. 

        -- No identification requirement. 

        -- Voting rights for inmates in county jails and felons on probation.  

        -- Permanent mail-in ballots for all voters requesting that status. (With ten to twenty ballot initiatives and fifteen to twenty candidate choices to make, this becomes a popular option.) 

        -- New automatic mailing of ballots to all registered voters three weeks in advance of the election - by county option in 2018; required for all counties except Los Angeles County by 2020. 

        -- Acceptance of mail in ballots postmarked or turned in by close of the polls on election day. 

        -- New for 2018, authorization of third parties to gather vote-by-mail ballots for turn-in at the department of elections or polling places. (Previously the voter had to mail in, turn in themself, or have a close relative or roommate deliver the ballot.) 

    The 2018 Election

    This was the perfect storm. Anger against President Trump was strong; billionaires such as Tom Steyer and Michael Bloomberg donated tens of millions of dollars to political action committees to register voters and turn out the vote; public employee unions contributed millions; the Democratic National Committee targeted seven of the 14 Republican Congressional seats in Orange County and the Central Valley. 

            -- Political Data Inc. sells registered voter data to either party, and provides training on its use. This includes voter name, address, history in which elections the voter participated (allowing identification of high and low propensity voters), and status as a property owner or a renter. This can be cross referenced with social media data such as group affiliations (National Rifle Association; Planned Parenthood), and political activities such as volunteering and donating. In California, Republicans do not have the financial resources and volunteer base to make significant use of these tools. Democrats do.

        -- The California Republican Party has not conducted an organized voter registration drive since 2013, largely for financial reasons.  Democrats have made minority and young voter registration a priority. State-wide voter registration is now about 44% Democratic, 24% Republican, and 28% "Decline to State".

        -- Voter turnout was over 64% statewide as compared to an average of 52% in the last three non-presidential elections; Orange County was 70%. For all 2018 California elections (state offices; initiatives; Congress; local) spending exceeded $1 billion  with over two-thirds of the outside spending going to support Democrats and "outside" dollars tracked in targeted Congressional races favoring Democrats by five to one. Much went to negative ads, but much also went to the GOTV effort which is estimated to have cost some $125,000 per day in Orange County districts.   

        -- During the 2018 election the Democrats had over 1000 people on the ground in Orange County, and turned in over 250,000 vote-by-mail ballotss on election day. Voting rallies were held at college campuses and in union halls. Using the PDI data they were able to visit homes of Democratic and Decline to State voters for the three weeks after the ballots were mailed out and help them with their complicated ballots. Baskets of ballots were delivered late on election day, and  took weeks to count. One apparent Republican victor after another fell as the counting stretched on.  

      In what should be taken as a confession, National Committeeman Shawn Steele has reflected on the surprising scope of the Democratic operation, which Republicans neither expected nor made any effort to match.  The lessons for national Republicans are two: continue to pay close attention to election laws, and devote significant resources to data-enabled Get Out The Vote efforts. While imitation is the greatest form of flattery, it is sometimes appropriate. 


    This week's bonus video is an interview with former Canadian Prime Minister Stephen Harper, explaining  the arrest of Meng Wanzhou, the CFO of Chinese telecommunications infrastructure company Huawei,  as part of the Trump administration's broad confrontation of China. Combined with the assignment of hardline Trade Negotiator Robert Lighthizer to lead the current three month round of negotiations, Wall Street is nervous. Here's one vote for the administration's approach. 

bill bowen - 12/7/18