Who will control Trump?

This caught my eye:

During that sit-down, on Nov. 29, Mr. Cohn briefed Mr. Trump on what he regarded as the chief hurdle to expanding the economy, according to people who were briefed on the discussion: a stronger dollar, which would undermine efforts to create jobs.

Mr. Cohn also argued that the bold infrastructure projects that Mr. Trump envisioned would need private-industry partners, those people said, in order to avoid weighing down the government with costs.

That got Mr. Trump’s attention.

The president-elect turned to the other people in the room — his son-in-law, Jared Kushner; his chief strategist, Stephen K. Bannon; his chief of staff, Reince Priebus; and Steven T. Mnuchin, his campaign’s chief fund-raiser and Mr. Trump’s nominee to be Treasury secretary — surprised that his infrastructure ideas had such a potential downside.

“Is this true?” Mr. Trump asked the group, according to those people. Heads nodded. “Why did I have to wait to have this guy tell me?” he demanded.

.  .  .

Mr. Cohn collaborates frequently with Mr. Kushner, who is now a senior adviser to Mr. Trump. Along with Mr. Kushner and his wife, Ivanka Trump, Mr. Cohn recently helped persuade the president not to pursue an executive order that would have rolled back rights for gay, lesbian, bisexual and transgender people.

On domestic policy, I see a battle between the “bad guys” like Bannon, Miller and Navarro, who want to “let Trump be Trump”, and the “good guys” like Cohn and Kushner, who want Trump to be more like an ordinary Republican.

Things look worse in foreign policy:

President Donald Trump intervened at the last moment to deny Rex Tillerson his pick to be deputy secretary of state — former deputy national security adviser Elliott Abrams.

The president overruled his secretary of state — following meeting with Tillerson, Abrams and son-in-law Jared Kushner — after reading news reports about their meeting, which included references to Abrams’ criticisms of Trump during last year’s presidential campaign, according to people familiar with the decision. Though his staff was aware of Abrams’ statements, the president was not — until he read news reports about their meeting earlier this week.

.  .  .

One Republican senator worried that foreign leaders look to a secretary of state to have a strong personal relationship with the president — and this is not the way to show the strength of that relationship.

“Now everybody knows he doesn’t have any juice with Trump,” said the GOP strategist. “He can’t even get his own people in.”

And please don’t embarrass yourself by telling me that Abrams is a bad guy.  I know that.  It’s the process, stupid!  Any competent foreign policy expert is going to have said bad things about Trump during the campaign.  If they didn’t, then they obviously are not competent.

PS.  Here’s something useful that Trump could do—reduce the amount of paperwork required to comply with FATCA:

Screen Shot 2017-02-10 at 12.40.08 PMThe numbers are still low in absolute terms, but the trend is not in the right direction.


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28 Responses to “Who will control Trump?”

  1. Gravatar of Ray Lopez Ray Lopez
    12. February 2017 at 09:25

    Oh please. First, if infrastructure is worth doing, then it will not ‘weigh down the government with costs’ as the article Sumner cites says. If it’s pork, then it will (and you’ll have a hard time finding private partners anyway). Second, FATCA is not that onerous, as I would know, and it’s online now, with a PDF form you fill out, sign electronically, and hit Enter. The penalties are draconian if you miss a deadline, so you must be careful.

    OT- “Financial Market History: Reflections on the Past for Investors Today Paperback – December 30, 2016 by David Chambers (Author), Elroy Dimson (Editor)” is a good book on ‘bubbles’, reviewed by this week’s Economist. As Sumner has said, bubbles are hard to define. Read the Economist article on why (a market doubling often continues to go up). That said, the question that Sumner doesn’t answer is: if there’s no such thing as a bubble, then is a X% drop in asset prices good, bad, or indifferent? How does your answer chance if money is neutral?

  2. Gravatar of Postkey Postkey
    12. February 2017 at 11:35

    “Mr. Cohn also argued that the bold infrastructure projects that Mr. Trump envisioned would need private-industry partners, those people said, in order to avoid weighing down the government with costs.”

    Following J.M.K.?

    “I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment; though this need not exclude all manner of compromises and of devices by which public authority will co-operate with private initiative.”
    https://ebooks.adelaide.edu.au/k/keynes/john_maynard/k44g/chapter24.html

  3. Gravatar of d d
    12. February 2017 at 11:51

    the math on Mr T’s jobs program, seems to make it really unlikely to happen
    https://qz.com/899922/once-poverty-stricken-chinas-taobao-villages-have-found-a-lifeline-making-trinkets-for-the-internet/

  4. Gravatar of dtoh dtoh
    12. February 2017 at 16:20

    Scott,
    Totally agree on FATCA. And BTW, if the U.S. government didn’t confiscate your assets and charge $2500 to process the paperwork when you renounce your citizenship, the numbers would be a 100 times higher.

    Compared to the U.S., the East Germans (even with their machine guns, barb wire and dogs) were amateurs when it came to restricting freedom of emigration.

  5. Gravatar of Ray Lopez Ray Lopez
    12. February 2017 at 16:38

    @dtoh – do you do FATCA? It’s not that bad, I do it every year.

    OT – Today’s news (BBC): “People in Switzerland have voted to relax the country’s strict citizenship rules, making it easier for third-generation immigrants to become Swiss. ” – Xenophobia is not as common as Sumner thinks.

  6. Gravatar of Bob Murphy Bob Murphy
    12. February 2017 at 17:38

    Scott,

    Do you really think this is accurate from the NYT story?

    “Mr. Cohn also argued that the bold infrastructure projects that Mr. Trump envisioned would need private-industry partners, those people said, in order to avoid weighing down the government with costs.

    That got Mr. Trump’s attention.

    The president-elect turned to the other people in the room — his son-in-law, Jared Kushner; his chief strategist, Stephen K. Bannon; his chief of staff, Reince Priebus; and Steven T. Mnuchin, his campaign’s chief fund-raiser and Mr. Trump’s nominee to be Treasury secretary — surprised that his infrastructure ideas had such a potential downside.

    “Is this true?” Mr. Trump asked the group, according to those people. Heads nodded. “Why did I have to wait to have this guy tell me?” he demanded.

    So I’m curious Scott, do you really think that Trump didn’t know government spending on infrastructure would cost money?

    And then, when he turned to his other advisors and asked about this, nobody said, “Well, your campaign white paper on infrastructure involved a public-private partnership”?

    And, it’s not weird to you that this NYT writer is ignoring pervious NYT pieces–such as this one from Krugman, published 10 days before the sit-down meeting in which Trump was allegedly first informed that he would need privatization–that ridiculed the Trump plan for public-private infrastructure?

    As much as you hate Trump and think he’s an idiot, don’t you think the more likely explanation is that this NYT writer, and/or her anonymous sources, are getting something wrong in the tale about this sit-down?

  7. Gravatar of Benjamin Cole Benjamin Cole
    12. February 2017 at 18:24

    I am hoping Scott Sumner is barking up the wrong tree with this post.

    The risk with any right-wing president is that they fall under the sway of tight-money fanatics.

    This fellow Cohn seems like a smart guy, seems to have Trump`s ear and is recommending a softer dollar.

    I find that an immense relief.

  8. Gravatar of ssumner ssumner
    12. February 2017 at 19:44

    d, Wrong link?

    dtoh, I completely agree.

    Bob, I agree it was poorly written. Cohn seemed to be saying that the infrastructure spending was driving up the dollar, which would hurt the US trade balance. That’s the thing Trump didn’t know. But you sort of have to read between the lines to figure that out.

    As far as Trump, nothing would surprise me. Once he claimed he’d pay off the entire national debt in 8 years. When asked how, he replied “trade”. We are talking about a moron.

    Ben, You said:

    “This fellow Cohn seems like a smart guy,”

    This is a guy who recently described the Swiss decision to end their strong dollar policy in January 2015. In fact, they adopted the policy then, they didn’t end it. But yes, compared to Bannon and Navarro he’s a genius.

  9. Gravatar of Bob Murphy Bob Murphy
    12. February 2017 at 19:46

    It is really freaking me out that by the end of the year, Benjamin Cole is going to be pro-Trump and E Harding is going to hate Trump.

  10. Gravatar of Benjamin Cole Benjamin Cole
    12. February 2017 at 19:57

    Bob Murphy:

    I was never anti-Trump, or at least in the current florid fashion.

    I hoped Trump would avoid foreign entanglements, and embrace policies that tighten US labor markets. Both positives, in my view. Trump may success on those two fronts, time will tell.

    BTW, LBJ and NIxon dropped 280 million cluster bombs on Laos. Yes, that is a real number. They are small, anti-personal bombs, sort of look cute like turtles, and often attract children.

    http://legaciesofwar.org/resources/cluster-bomb-fact-sheet/

    Trump has flaws to the moon.

    But if Trump can not do the LBJ, Nixon, Bush Jr. thing of foreign (and ugly and counter-productive) entanglements, then Trump may be better than recent Oval Office occupants.

    Forget the headlines and the posturing, look at what happens.

    PS: I like the Free Advice blog.

  11. Gravatar of dtoh dtoh
    12. February 2017 at 21:52

    @Ray Lopez

    Re FATCA – Yes it is that bad especially if you have 50+ accounts that you signatory authority on.

  12. Gravatar of H_WASSHOI H_WASSHOI
    12. February 2017 at 23:53

    IRS counts the expatriates.
    The expatriates are increasing.

    Yeah..I bet President Trump will say “very unfair!!”

  13. Gravatar of H_WASSHOI H_WASSHOI
    12. February 2017 at 23:56

    or… about the efficiency?

  14. Gravatar of Jose Jose
    13. February 2017 at 03:00

    “Trump could .. reduce the amount of paperwork required to comply with FATCA”.

    Why not get rid of the thing entirely, at least as an theoretical goal?

  15. Gravatar of Christian List Christian List
    13. February 2017 at 04:50

    “making it easier for third-generation immigrants to become Swiss”

    So that’s you example against xenophobia?! Living in a country for three generations and still not getting the citizenship automatically at birth? Ray, I like your humor.

  16. Gravatar of Christian List Christian List
    13. February 2017 at 09:00

    Green-card holder who voted illegally in Texas (by unintended mistake!) gets 8 years in prison.

    http://www.washingtonpost.com/news/post-nation/wp/2017/02/11/republican-green-card-holder-who-voted-illegally-in-texas-gets-8-years-in-prison

    Filed under: Crazy America.

    In Germany you can kill somebody and get away with far less than 8 years. Is there no such thing as healthy balance between the extremes anymore?

    Now Trump *just* needs to find 3 million more people like her. 3 million plus 1 actually because she was a registered Republican!

  17. Gravatar of Bob Murphy Bob Murphy
    13. February 2017 at 09:46

    Scott wrote:

    “Bob, I agree it was poorly written. Cohn seemed to be saying that the infrastructure spending was driving up the dollar, which would hurt the US trade balance. That’s the thing Trump didn’t know. But you sort of have to read between the lines to figure that out.

    As far as Trump, nothing would surprise me. Once he claimed he’d pay off the entire national debt in 8 years. When asked how, he replied “trade”. We are talking about a moron.”

    So to paraphrase:

    (1) Trump is a moron because it took Cohn to inform him of the connection between big budget deficit infrastructure projects and the trade deficit.

    and

    (2) Trump is a moron because he noted a connection between big budget surpluses and the trade surplus.

    (I’m half trolling and half serious.)

  18. Gravatar of flow5 flow5
    13. February 2017 at 10:55

    Credit isn’t the “life blood” of the economy, velocity is.

    Trump doesn’t sleep much. Money motivates him. Restructuring some taxes will accelerate money velocity. See: “Trump promises ‘phenomenal’ announcement on taxes in coming weeks”. And accelerated money velocity will increase tax receipts.

    See the Laffer Curve:

    http://bit.ly/2kLe6Xy

    But that’s not how to redistribute income. The upper quintiles save the most money. See:

    Do the rich save more?

    http://bit.ly/1cFe6hm~jskinner/documents/Dy

    The upper quintiles have more disposable income and thus necessarily, or inadvertently, save proportionately more.

    No, “risk on” or an increase in money velocity, isn’t produced by a “wealth effect”, a posited buoyant psychological response – “animal spirits”, that causes people to increase spending as the targeted value of oligopolistic assets rises. No, “risk on” is an obscure, bizarre, theoretical construct.

    See: “The Redistributive Consequences of Monetary Policy” – by Makoto Nakajima

    Bank-held savings are not differentiated by idle vs. active deposit classifications. Unlike non-bank money managers, a bank manager cannot spend or invest their clientele’s deposits.

    No, the Boolean logic [what is true on the level of micro-economics is false at the level of macro-economics] is a “bistable gate”: the circuit’s velocity sequence is not from time/savings deposits to earning assets, rather the sequence is from earning assets, and new demand deposits, these two come into being simultaneously, and from “old” demand deposits (which the public has saved) to time deposits (Keynes’ “optical illusion”).

    “Risk on” is where the upper income quintiles’ savings are expeditiously put back to work thru non-bank conduits. I.e., savings are not matched with investments within the commercial banking system. Never are the CB’s intermediaries between savers and borrowers. The DFIs always create new money, ex-nihilo, somewhere in the system, whenever they lend/invest.

    The democratization of pooled savings was self-evident in the U.S. “Golden Era” in economics. Where the activation of funds outside the commercial banking system, as incentivized back in the nostalgic good ol’ days by the FSLIC, encouraged home ownership (a real-investment non-inflationary outlet).

    Thus, the monetary velocity dichotomy, either increase stagflation via bank lending/investing or real-output via non-bank lending/investing.

    I.e., the solution is to get the DFIs out of the savings business (increase savings’ velocity).

  19. Gravatar of Student Student
    14. February 2017 at 13:14

    Anyone notice this…

    Ladbrokes now has Trump’s chances of leaving office via resignation or impeachment and removal at just 11-to-10, or just about even money.

    The odds of Trump being impeached this year are now 4-to-1, according to Paddy Power.

    At Bovada, its 1.8/1 Trump won’t make it through a full term.

    At these odds, I think I’d bet he makes it the full term but still. Shocking.

  20. Gravatar of Student Student
    14. February 2017 at 13:27

    It’s about as likely that he gets impeached by a republican chamber this year than he repeals ACA according to some betting markets… Sad!

  21. Gravatar of msgkings msgkings
    14. February 2017 at 14:06

    @Student: are any of those offering odds the same as the one who paid out to Hillary bettors before the election even happened? Probably not, those guys are probably out of business.

    Don’t get me wrong, I think there’s a much higher than usual chance he leaves or gets kicked out, but it’s still a pretty small chance. Not 11-10.

  22. Gravatar of ssumner ssumner
    14. February 2017 at 14:08

    Christian, You said:

    “In Germany you can kill somebody and get away with far less than 8 years. Is there no such thing as healthy balance between the extremes anymore?”

    Great comment. This country is utterly insane when it comes to sentencing. The drug laws are one example, but there are many others. I recently read of a 17 year old high school student in Wisconsin who is facing up to 40 years for sex with a 15 year old student. Even if you assume the act is wrong, 40 years seems weird. (That’s above the age of consent in several European countries.)

    Germany sometimes goes to the other extreme, as when the guy who stabbed Monica Seles got zero time in prison. But overall, the German system is probably better.

    Bob, You said:

    “Trump is a moron because it took Cohn to inform him of the connection between big budget deficit infrastructure projects and the trade deficit.”

    No, that’s making up something I never said.

    And yes, Trump’s statement that “trade” will pay of the national debt in 8 years is moronic.

    Student, Yes, I’d clearly bet on him making it at those odds. The problem is that it’s such a hassle for Americans to do overseas betting, as the US government is always cracking down on it. One useful thing Trump could do is legalize betting on whether he gets impeached. Then he could bet against impeachment, which would give him more incentive to be on his best behavior.

  23. Gravatar of Student Student
    14. February 2017 at 14:42

    msgkings, i agree with you, that’s why I’d bet he stays at those odds. Just noting three different markets have crazy high odds he doesn’t make it a full term.

    Scott, haha, he should. Crazy how only fantasy sports online gambling is allowed. Not a big gambler either way though (do like to play some poker, blackjack and make horse bets occasionally at casinos but am no high roller for sure).

  24. Gravatar of Christian List Christian List
    14. February 2017 at 16:13

    @ssumner
    Yes, Monica Seles is a great example.

  25. Gravatar of Christian List Christian List
    14. February 2017 at 16:28

    @Bob

    It is really freaking me out that by the end of the year, Benjamin Cole is going to be pro-Trump and E Harding is going to hate Trump.

    That’s actually a very good sign because Cole was always way more reasonable than Harding.

    Harding is angry because he believed the media hysteria and really thought that Trump would be Putin’s puppet while I said Trump will be tougher on Putin than Obama (which is extremely easy).

    And now let’s see who is right so far. You can read on Reuters these days:

    No lifting of sanctions and: “President Trump has made it very clear that he expects the Russian government to de-escalate violence in the Ukraine and return Crimea.”

    And this pro Putin Flynn guy? Bye, bye!

    It was really naive of Putin to think he could play Trump and the GOP like a fiddle. All his manipulation of the elections was for nothing. It was self-defeating. I bet he could have played Hillary better. She is way more predictable. By far not as easy (and bad) and predictable as Obama but still.

  26. Gravatar of Christian List Christian List
    14. February 2017 at 16:45

    And to Elliott Abrams:
    Guys like him seem to have no backbone at all. They trash-talked Trump during the elections and now they want into his team? How ridiculous is that? This reminds me of Romney. I like(d) Romney but this kind of behavior is just absurd. Stand by what you said. You can not have it both ways.

  27. Gravatar of Tom Brown Tom Brown
    14. February 2017 at 17:30

    Scott, look what the “peace with Russia” president is up to now: http://therightscoop.com/wow-trump-now-demands-russia-return-crimea-to-ukraine-blames-obama/

  28. Gravatar of Tom Brown Tom Brown
    15. February 2017 at 13:46

    http://therightscoop.com/pentagon-considers-recommending-u-s-troops-be-sent-to-syria/

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