Tag Archives: political economy

Auto Tariffs Revisited

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EU Trade Commissioner Cecilia Malmström says the EU will respond to any increase in US tariffs on imported autos and auto parts with its own tariffs on autos and parts imported from the US.

And,

The EU cannot offer a bilateral deal only on autos, Ms. Malmström said, to address Mr Trumps complaints about the 28-member bloc’s 10% car tariffs—which are quadruple the US rate.

Never mind that applying its own auto and auto parts tariffs to imports from the US is precisely such a bilateral action.

In the meantime, Malmström, along with the rest of EU governance, continue to studiously ignore an offer already on the table: no tariffs at all on auto and auto parts imports.

Get Rid of Fannie Mae and Freddie Mac?

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Fed Chairman Jerome Powell thinks it’s a good idea.

I think it is really important for the longer run that we get the housing finance system off the federal government’s balance sheet.  I think it is very important for the economy longer term.

Treasury Secretary Steven Mnuchin agrees.

I am determined that we have a fix to the GSEs and that we don’t leave them in conservatorship for the rest of time[.]

But this doesn’t go far enough.  It’s insufficient to kick these Government Sponsored Entities out of conservatorship.  Left as GSEs, they’d still be able to dip their fingers into our pocketbooks; Fannie Mae wants another $3.7 billion of our tax money already.

No.  These GSEs need to be released into the wild and left to stand or fall on their market merits in the economy.

Auto Tariffs

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Auto makers, parts suppliers, and dealers are joining forces to push back against the Trump administration’s proposal to apply tariffs of up to 25% on vehicles and components imported into the US….

The auto industry is aiming at the wrong target.  The German auto industry and the US have already agreed in principle to a regime of no auto tariffs at all.  It’s the German government that’s waffling and the EU that’s ignoring the matter altogether.

These domestic execs need to be asking the German government and the EU why they’re so disinterested instead of whining about domestic matters.

A Good Start

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Congress is considering RESA, the Retirement Enhancement and Savings Act, a bill that would represent a massive change to our retirement system, in particular our 401(k) system.  This bill would, among other things,

encourage more small employers to offer retirement savings plans and make it easier for companies to offer annuities that turn workers’ savings into a guaranteed annual income.

Among specific things that the House wants in such a bill are

  • a universal savings account, funded with post-tax dollars but with tax-free earnings and more flexible withdrawal rules than existing retirement accounts.
  • allow[ing] small employers to band together to offer 401(k)-type plans. By joining a so-called multiple-employer plan, or MEP, small companies can spread plan administrative costs over more participants, lowering fees.
  • encourag[ing] 401(k)-style plans to offer annuities, which help participants transform their balances into a lifetime income stream.

And

[Chairman of the House Ways and Means Committee Kevin (R, TX)] Brady said any new ability for people to tap into tax-preferred savings would be “very limited.”

Despite the support of AARP, the same organization that full-throatedly supported passage of Obamacare, this is a good start.

The ability to convert a retirement savings plan, if left to the option of the saver, can have advantages, even if I do continue to hold that annuities are not as good, in the long run, as investing.  However, once retirement starts, stability and predictability of income becomes important, and the long run will be shorter.

Too, the general moves toward making it easier, mechanically and fiscally, to save for one’s own retirement should be heavily supported.  And controlled to prevent bells and whistles to satisfy this or that Congressman’s (or lobbyist’s) pet wish from being added, cluttering the reform to the point of prevention.  The more we as individuals save for our own futures (and by extension, the futures of our families), the less dependent we’ll be on a failing social “safety” net of Social Security and Medicare.  And the more we’ll be exercising our own responsibilities instead of relying on others.

Finally, as long as we’re modifying our retirement plans, of large importance to me is the removal of existing limits to contributions on IRAs, Roth IRAs, HSAs, and 401(k)s—both traditional and Roth.  Let us put by as much as we want without Government limits.

An Example of Irrationality

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Here’s Donald Trump decrying Germany’s willingness make itself dependent on Russian energy supplies by pushing for Nordstream 2, which will mean that Germany will get 60% of its natural gas from Russia, to go with the 40% of its oil imports that already are from Russia.  Aside from becoming so dependent on an enemy for its energy, Germany will be paying Russia billions of euros for the privilege.

I have to say, I think it’s very sad when Germany makes a massive oil and gas deal with Russia, where you’re supposed to be guarding against Russia, and Germany goes out and pays billions and billions of dollars a year to Russia.

The Progressive-Democrats went hysterical over Trump’s remark.  Here’s House Minority Leader Nancy Pelosi (D, CA) and Senate Minority Leader Chuck Schumer (D, NY) in a joint statement:

President Trump’s brazen insults and denigration of one of America’s most steadfast allies, Germany, is an embarrassment.  His behavior this morning is another profoundly disturbing signal that the President is more loyal to President Putin than to our NATO allies.

Because not wanting billions of euros to go to Russia in return for dependency on Russian good offices is somehow being loyal to Putin.

Sure.