The risks for Trump
I’m on record predicting that Trump will be re-elected. But the events of the last month give me a bit of pause. Here I’d like to present some of the risks facing Trump. In my view, there’s a likelihood that Trump will fail to achieve six of his primary objectives, to a greater extent than recognized by even his critics. Indeed, some of his critics say, “I hate the guy, but you’ve got to admit he’s doing what he promised.” But is he? Here are 6 key promises:
1. Raise trend RGDP growth (his biggest win, so far.)
2. Bring back manufacturing
3. Cut the trade deficit
4. Build a wall and reduce illegal immigration.
5. Build infrastructure
6. Repeal Obamacare
Some would add conservative judges (a Trump win), but here I’m focusing on the so-called “Obama/Trump voters” in Pennsylvania, Michigan and Wisconsin, who have never even heard of the Federalist Society. We don’t live in a democracy where 250 million eligible voters get to pick the president. The president is picked by a handful of relatively uneducated white voters in those three states, who voted for Obama and who voted for Trump. I’d prefer to call them “Biden/Trump” voters (they voted for Biden as VP), as I think the Dems would be foolish not to nominate someone who is acceptable to those voters. They will pick the next president.
As far as tax cuts, for average voters the tariffs may raise taxes almost as much as the 2018 tax bill cut them.
Trump has completely failed on Obamacare, infrastructure and the wall. He’s done nothing to reduce the trade deficit. Illegal immigration is soaring higher at an amazing rate. Indeed it’s rising so fast that total immigration to the US is now rising sharply despite a modest cut in legal immigration of high skilled workers caused by Trump making it harder for those people to get visas to study in America, or keep working here after graduation. So low skilled illegal immigration is soaring while skilled immigration is down modestly. Is that an alt-right success? The silver lining for Trump is that this will boost the monthly payroll jobs numbers (above what I anticipated) and even RGDP growth.
There was a modest boomlet in manufacturing during 2017-18, although nothing special. Since January, that growth has ended and I anticipate that manufacturing will remain weak through 2020. If I’m right then Trump will lose a big issue in those Rust Belt states. Trade wars are hurting manufacturing.
The bond market seems to expect RGDP growth to slow going forward, and I agree. I predict that trend RGDP growth will be back to Obama levels (i.e. 2%) by late this year and throughout 2020.
If I’m right, then by 2020 Trump will have completely failed on all 6 of the key Rustbelt issues. In fairness, the growth we have achieved so far has led to a very strong job market, and even with slower growth going forward I expect the jobs market to remain strong, with low unemployment. So that helps Trump sell his message, and he’s especially good at convincing his supporters that he’s getting wins when he is actually losing. (Let’s see if his supporters believe he won the recent Mexican standoff.) Plus, there’s a good chance the Dems will pick someone as annoying as Hillary, not a reassuring figure like Biden. I sometimes think the entire Democratic Party should be renamed “The Committee to Re-Elect the President.”.
So for the moment I continue to predict a Trump win. But this has been a bad month, especially the May surge in illegal immigration and lower yields in the bond market signaling slower growth ahead. This anticipated slowdown is partly, but only partly, due to Trump’s foolish trade war. Monetary policy is the bigger problem.
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8. June 2019 at 08:51
Polling data continues to paint a bleak picture in must-win states for Trump. Biden has nice leads in those states, and get this:
https://www.realclearpolitics.com/epolls/latest_polls/general_election/
Biden’s even leading Trump in a poll of Texas voters.
Sure, it’s early, these are hypothetical race polls, Biden could get bruised in the primaries or even may lose the nomination. But, the evidence so far is that Biden’s running away with this thing.
The more I watch Buttigieg, however, the more I think he might be the Bill Clinton of this Democratic primary season. He’s the most articulate candidate in the race and in many ways has a stellar resume. His manner of speaking reminds me much of Obama. I wouldn’t underestimate him.
8. June 2019 at 08:55
Oh, and to Trump supporters, some of you called me stupid when I said we could see a backlash against anti-immigration cruelty a la California in the 90s, but less extreme. Well, if these Texas polling results hold up, the Republican Party is finished in Presidential elections for a long time. And that’s the mild case.
8. June 2019 at 10:39
Trump will rise or fall with asset prices. As Sumner indicates, monetary policy is the key.
8. June 2019 at 11:31
Election betting odds has Trump’s chances pretty flat over the last month, although only at 45%
https://electionbettingodds.com/President2020.html
8. June 2019 at 12:34
“(Let’s see if his supporters believe he won the recent Mexican standoff.)”
I’ve just read the joint declaration. It is very much a one-sided list of concessions – the most notable probably being this one:
“The United States will immediately expand the implementation of the existing Migrant Protection Protocols across its entire Southern Border. This means that those crossing the U.S. Southern Border to seek asylum will be rapidly returned to Mexico where they may await the adjudication of their asylum claims.
In response, Mexico will authorize the entrance of all of those individuals for humanitarian reasons, in compliance with its international obligations, while they await the adjudication of their asylum claims. Mexico will also offer jobs, healthcare and education according to its principles.”
In fact, the only thing Mexico didn’t give in (yet?) was on the “safe third country” status. However, there’s a meaningful section under further actions:
“Both parties also agree that, in the event the measures adopted do not have the expected results, they will take further actions. Therefore, the United States and Mexico will continue their discussions on the terms of additional understandings to address irregular migrant flows and asylum issues, to be completed and announced within 90 days, if necessary.”
This is, of course, why the tariffs were “indefinitely suspended,” rather than canceled – Obrador committed to sort out the problem; Trump agreed strictly on a conditional basis.
I can’t even imagine the degree of intellectual dishonesty necessary to try to claim the side that makes no concessions whatsoever and only obtains them is the loser of a standoff. Relatively to the status quo ante of Trump’s pressure, there’s nothing at all where the US is worse off.
What exactly would be Sumner’s threshold for this to be a victory for Trump?
Here’s a fearless prediction:
– if this deal is followed by a decline on the number of caravans originating from Central America and illegal border crossings, Sumner will claim that this is a) a loss for Trump because he an electoral card b) a positive outcome from Trump’s perspective but that happened in spite of Trump c) a combination of both; and therefore another of Trump’s “failures”. However, if there is no decline, Summner will argue that Trump failed. If Trump unsuspends the tariffs in case Mexico doesn’t succeed on curbing the caravans, Sumner will claim that was actually proof of Trump failing – even though that’s pretty much the reason why this deal is a tremendous win for Trump.
Mind you that this deal is basically Mexico saying “okay, we’ll sort out the issue, no need to force safe third country status on us”; and Trump replying “Okay, let’s give you a chance, but you better be right or tariffs will come back to force you into safe third country status”.
Yet, whatever the outcome of the deal, Sumner will claim this was a loss for Trump.
If there is an example of fanaticized tribalism clouding one’s mind, this is a great one.
Anyway, how many people believe that Scott Sumner even read the text of the agreement? I’m curious.
8. June 2019 at 13:19
The risks for Trump????
Trump is the symptom not the cause. It might be better in the long run if Trump won again.
Until the underlying dysfunction of the United States congress is addressed (if ever) we will continue our down hill slide.
Let’s hope the oligarchy fails and fails soon.
8. June 2019 at 15:25
Polls over a year out are more like by-elections/special elections; ways to express annoyance with the incumbent.
https://en.wikipedia.org/wiki/By-election
I am also sceptical about how much voters, particularly swing voters, track policy outcomes. Especially when “blame Congress” is a real option. Models such as Douglas Hibbs’ “Peace and Bread” model do pretty well predicting US presidential outcomes without incorporating any such element.
8. June 2019 at 15:26
Douglas Hibbs’ model is outlined here:
http://www.douglas-hibbs.com/Election2012/2012Election-MainPage.htm
8. June 2019 at 15:27
If anyone can lose to Trump, the Donks can. They will find a way.
Trump also promised to get out of Afghanistan and Iraq, and yet American soldiers are still stationed in those nations.
My guess is that the immigration issue will play to Trump’s favor. The Donks are clearly on record as being against extending border walls, which increasingly looks like the only way to prevent illegal immigration. Oddly, there is already more than 600 miles of border wall, built before Trump became president, and which is apparently not a controversial issue.
It appears each party prefers to play the obstructionist game. Whether extending the border wall is good or bad is not the issue; Donks want to flummox Trump (vice versa for the GOP when Obama was President).
Also, the establishments in both parties want cheap labor.
8. June 2019 at 17:31
I predict a Trump loss due to economic weakness+failure to enact campaign promises (not due to Congress, but due to Trump being a c*ck).
“Plus, there’s a good chance the Dems will pick someone as annoying as Hillary, not a reassuring figure like Biden.”
Biden may well screw up, too. However, I think the weakening economy will bail him out. I predict recession in 2020.
“Oh, and to Trump supporters, some of you called me stupid when I said we could see a backlash against anti-immigration cruelty a la California in the 90s, but less extreme.”
There was no backlash against “anti-immigration cruelty” in California. There is in Texas… but not among Hispanics. The backlash is among college Whites.
8. June 2019 at 17:53
“I’d prefer to call them “Biden/Trump” voters (they voted for Biden as VP)”
No one votes for VP…that’s Poli Sci 101. Obama had some appeal to some white working class voters, especially when running against a perceived plutocrat like Romney. Then they fell for Trump’s populism.
It’s hard to know whether the lackluster May jobs numbers are due to economic weakness or just the recovery finally ending by pulling in every single last discouraged worker possible. If it’s the latter RGDP growth would still slow down, but would you expect real wages to rise faster? If so this would help Trump possibly more than continued elevated job gains.
8. June 2019 at 23:34
Sumner: “Plus, there’s a good chance the Dems will pick someone as annoying as Hillary, not a reassuring figure like Biden.”
A “good chance” must mean around 50% but there is not a good chance at all. Around 90% chance that Biden is the nominee. Warren at 7%? Yesterday’s news Sanders at 17%?
9. June 2019 at 06:27
Lorenzo from Oz,
If the poll results showing Trump trailing in Texas are robust, Trump is finished, period. It could also mean the Republican Party is finished.
I suspect Republicans are about to be severely punished for vast overreach.
9. June 2019 at 08:00
Scott,
One might consider that the number of people illegally crossing the border is a good prediction market for the likelihood of it becoming more difficult in the future.
I predict Hillary will again be the Democratic nominee in 2020
9. June 2019 at 08:50
Hugo, You said:
“I’ve just read the joint declaration.”
I see. And did you also read the previous Mexican agreements to do similar things, which were never enforced? And do you trust Mexican border patrols to do things that the US border patrol is unable to do? And did you read declarations by China to the Obama administration to stop the theft of intellectual capital? And did you read all the things that Trump falsely claimed were part of the agreement that in fact were not part of the agreement?
Trump caved because he knew that even the GOP in Congress was opposed to his actions, and he was worried about the impact on the stock market.
dtoh, You said:
“One might consider that the number of people illegally crossing the border is a good prediction market for the likelihood of it becoming more difficult in the future.”
So can I assume that in early 2017 when crossings dropped sharply you put comments here saying that this was a sign that Trump’s policies were expected to fail? Or is it the case that there is no data point that could possibly show that Trump’s policies had failed?
9. June 2019 at 09:03
I do believe Trump is politically finished for one simple reason: he has totally failed on illegal immigration, which is the issue which put him in the White House.
9. June 2019 at 11:59
The whole idea that Mexico should be responsible for our border enforcement is laughable. What a fool Trump is, as are his followers who think this is a good idea. We’re a laughing stock around the world and no one negotiates in good faith with this stupid, insane administration.
9. June 2019 at 20:27
Scott,
Scott, you put it better than I could have. I’m a believer in EMH. So my assumption is that in early 2017, people didn’t think Trump would succeed in creating an effective barrier. Now they do. What other explanation could there be? Did Trump implement policies which made it easier to illegally immigrate to the U.S. Or is your theory that the Trump Boom economy encouraged job seekers to come to the U.S.
9. June 2019 at 20:29
Oh… and I notice Bernie is now doing a shift on illegal immigration…. which is not surprising since he has always been singing the same populist song as Trump (just in a different key.)
10. June 2019 at 00:37
I was also going to bring up https://electionbettingodds.com/. My default mode is to dismiss people’s pet theories about what will happen and take the market’s stance as my best guess. But I’d be more hesitant to do that in your case.
Here’s something interesting. This site shows both the odds for winning the Democratic primary (=D) and the odds for winning the presidency (=P). This allows one to compute the odds of winning P conditional on winning D, as Pr(P|D) = Pr(D and P) / Pr(D).
According to those odds, the candidates most likely to beat Trump are Gabbard >>> Yang > Warren > Biden > Sanders > Buttigieg >> O’Rourke > Harris >> Clinton. Not sure how that squares with your perception of who else would be as unlikable as Clinton.
I’m somewhat surprised that you think policy results are an important factor. Does the typical Trump voter really know whether any policy was achieved? I guess it might make it just a little easier to tell people you got something done if you actually got it done.
10. June 2019 at 06:05
Scott,
I rarely disagree with you but I do when you say: “The president is picked by a handful of relatively uneducated white voters in those three states, who voted for Obama and who voted for Trump. I’d prefer to call them “Biden/Trump” voters (they voted for Biden as VP), as I think the Dems would be foolish not to nominate someone who is acceptable to those voters. They will pick the next president.”
Post-2016 election analyses seem to show that a bigger factor was the decline in African-American turnout for Clinton compared to Obama in places like the Detroit and Philadelphia metros. Perhaps it would have been unrealistic to expect turnout to stay that high, but the drop was more than enough to swing the tallies in PA and MI. Hillary just didn’t appeal strongly to those voters. The Dems need a candidate who can reverse that (Biden? Harris? Probably not Sanders, Warren, or Buttigieg)
10. June 2019 at 06:24
An interesting puzzle for me: Which of Trump’s promises matter for his supporters? It’s complicated because Trump often makes multiple self-contradictory promises.
Trump didn’t just promise to repeal Obamacare. That was the standard Republican line in the primary. He promised that everyone would have health coverage that the government would pay for.
He also promised not to cut taxes on the rich, not to cut Medicare, and not to cut Medicaid.
10. June 2019 at 06:25
You write: “Trump has completely failed on Obamacare”
I think that you’re glossing over the repeal of the individual mandate.
During the Trump administration the least popular aspect of Obamacare was repealed (and that aspect was not minor).
c.f. https://www.vox.com/policy-and-politics/2018/4/13/17226566/obamacare-penalty-2018-individual-mandate-still-in-effect
10. June 2019 at 08:27
Kryzs, But if you watch Fox News, etc., it’s not clear that his supporters know that he’s completely failed on immigration.
dtoh, You said:
“Did Trump implement policies which made it easier to illegally immigrate to the U.S. Or is your theory that the Trump Boom economy encouraged job seekers to come to the U.S.”
I’d say three things:
1. An exogenous shock caused by problems in Central America.
2. The strong economy drawing in workers.
3. Trump’s failure to compromise with Congress, which resulted in them being unwilling to give him the tools he asked for.
Expectations can play a role, I agree. Perhaps that explains the smaller surge in late 2016. But the recent surge predates Trump’s tariff threat. Not sure why Central Americans would have expected a crackdown a few months ago, after Trump had done nothing for 2 years. In any case, smugglers will be easily able to bribe Mexican police, indeed even now the central government of Mexico has little control over their own (corrupt) police.
David, You said:
“I rarely disagree with you but . . . ”
And when you do it’s a pretty good indication that I’m wrong. 🙂
Brent, My understanding is that that mandate wasn’t really being enforced. Is that correct? I doubt that many voters will see Trump as having kept his promise to repeal Obamacare, which was labeled “socialized medicine”. There’s also an auto insurance mandate–I don’t seem many people calling that socialized auto insurance.
10. June 2019 at 08:28
@ssumner: You’re overthinking it. You’re very intelligent so you think those voters care about things like policy and RGDP and the like. All they care about is voting for their tribe, their ingroup. Trump, to these folks, represents them, ‘gets’ them, and the Democratic party represents the others, the coastal liberals who look down on them.
So they will still vote Trump for the most part. However, you are correct that nominating a guy like Biden, who many in this crowd feel ‘gets’ them as well, gives the Dems a good shot. Won’t take a lot of shift to give the Dems a win.
Of course, as you note, the Dems may own goal it again and nominate someone too lefty and make it hard for these Rust Belt types to switch back. Feels like a tossup now, with the Dems at a small advantage if they go with Biden (as old as he is)
10. June 2019 at 08:33
Brent, I guess this is what I recall, from your link:
“It worked out as you’d expect. In 2016, 6.5 million Americans paid an average fine of $70 for not being covered the year before. Along the way, the Obama administration expanded the exemptions people could claim to avoid the mandate.”
That’s pretty trivial relative to the cost of health care/health insurance.
10. June 2019 at 08:34
@dtoh:
“I predict Hillary will again be the Democratic nominee in 2020”
This is obviously a joke but I don’t get it, could you explain?
10. June 2019 at 09:57
Silver, I’m not sure the conditional probabilities are reliable, as these markets are pretty small.
Silver and MSGkings, I agree that Trump supporters overestimate the extent to which he’s hitting his goals, which is one reason why I expect him to win. But surely reality has a weight greater than zero, doesn’t it?
10. June 2019 at 10:15
@ssumner:
Not much greater. And reality is trumped (yes intended) by tribalism.
10. June 2019 at 12:22
@ssumner: yeah, I definitely agree that Trump not delivering on his promises has a negative impact on his chances. But I took your post to say that it’s an important factor, which is what surprised me.
I may be trusting prediction markets too much. Mainly I think they’re more trustworthy than almost any other source. Even so, I’m not happy to hear that you think Trump’s re-election is probable.
10. June 2019 at 14:39
Dr. Sumner: I’d be fine with a characterization of “failure” as opposed to “total failure”.
11. June 2019 at 04:24
Anyone old enough to remember the hated Richard M. Nixon will also recall that in the election of 1972 (less than 2 years before his ignominious resignation) RMN managed to defeat the helplessly liberal George McGovern in 49/50 states. Yes, it was an historical blowout.
Will Trump be reelected in 2020? Wait to see 1) the economy/markets prior to November 2020 and 2) who the Democrats will run against him. For today, however, peace, prosperity, stable money, ready access to healthcare, and blueberries on our January oatmeal all bode well for President Trump’s chances.
Ain’t politics fun?
11. June 2019 at 22:34
Trump’s success in 2016 was based on his credibility. His vulgar clown act attracted the WWC in the Midwest since it signaled a wholesale rejection of the uniparty consensus on immigration. However, he has governed since like a standard chamber of commerce republican with a nasty twitter habit. He has failed on his most visible promise: the wall. Whatever the sycophants on Fox News say, his base noticed the failure as his numbers among WWC in the Midwest and even in Texas are collapsing. He’s politically finished. They will not turn out for him like they did in 2016 and class prejudice among educated whites will work against him.
13. June 2019 at 09:47
Brent, Fair enough.
Krzys, I hope you are right.
13. June 2019 at 13:57
Okay “Krzys”, I stopped reading after that.
13. June 2019 at 22:01
Christian,
It’s not the credibility to the political/mandarin class. He’s proven they don’t matter. But, to the WWC and their concerns. The fact that he was willing to reject the shibboleths of the high court press and to insult their priests bought him the said credibility. That’s why he got the massive turnout of WWC in the Midwest. They decide election, if they turn out. He’s squandered it all, though.
14. June 2019 at 20:17
I have a pretty spotty resume. The job market is a lot better than it was in 2016. That should help him. Home purchase prices r higher, too, I think (I’m not a homeowner). Stocks r higher, and Trump explicitly agitates to send these things higher
@E. Harding y do u think 2020 will c a recession? a census year with big surveyor hiring, an election year with 20 D campaigns hiring. Medical and rec pot still building out in a few states. Homebuilding looking good. minimum wages popping. giant birth cohorts turning 30. a bunch of raises for teachers in large cities and states. NIMBYs finally losing a few battles here and there re: TOD and ADUs