Timothy Birdnow

What kind of devil's lettuce has Grassley been smoking?

Republican Chuck Grassley and Democrat Maria Cantwell introduce bill to reassert congressional power on tariffs

While in normal times I would advocate for this, these are not normal times. And Chuckie should understand that if the Democrats are on-board with him on this he's on the wrong side of the issue.

Grassley is usually good but he's perhaps going Joe Biden on us; he's 91 and a half years old after all. More than likely this bill came from his staffers, and probably at the behest of some damned rich donors.

The International Emergency Economic Powers Act of 1977 granted the President these powers, although the President had long enjoyed considerable leeway when it came to tariffs. Grassley was elected to the Senate just three years later, in 1980, I might add. He was serving in the U.S. House of Representatives at the time this bill was passed, so voted on it. In fact I suspect he voted IN FAVOR of it (I may be wrong on that though) - and now wants to remove that authority from a Republican. You may remember Jimmy Carter was President in 1977.

In a sane world I would favor this, but these are desperate times. We have to give Trump his chance and if this fails he will have to bear the responsibility. Hamstringing the President only opens the door to the Democrats.

There is no historical evidence tariffs cause either inflation or economic malaise. Multiple Presidents, including some of our greatest Presidents, have used tariffs in just this same way as Trump is now - only they were quieter about it. Reagan did, for instance. Calvin Coolidge, Mr. Conservative himself, imposed some stiff tariffs on foreign countries and he ignited the Roaring Twenties. I am not saying the tariffs caused the boom, but they probably didn't hurt either as the money they brought in helped to pay off our national debt from WWI.

Critics of tariffs point to Smoot-Hawley and say "see!" but Smoot Hawley came with a very unique set of circumstances. It came in 1930, right after the stock market crash in October of '29 (SH passed in June of '30), at a time when trade was really hurting anyway. And it came on the heels of a massive spending push by The Wonder Boy Herbert Hoover (that's what Coolidge called him because he was always tinkering with the economy; Roosevel ran as an economic CONSERVATIVE against Hoover.) And it came during a huge austerity campaign by the Federal Reserve, who had contracted the money supply by 31% between 1929 and 1933. And the Feds pushed up interest rates precipitously at this same time. Smoot-Hawley was just the cherry on top of a frozen excrement sundae.

I would add Warren Harding pushed the Fordney-McCumber Act of 1922, and that came just at the end of the depression that had been ongoing (and that depression was every bit as bad as the Great Depression, except it ended much sooner because Harding and Coolidge had the good sense to let it burn itself out.) While I would not go so far as to say it was responsible for ending the depression, it certainly didn't prolongue it or make it worse.

If one looks at the economies of each period where tariffs were raised you will not see any relationship between economic activity and the tariffs. It can be argued they are bad but not immediately so. It can equally be argued they benefitted the country. Neither side can win the argument because there is no actual evidence of either. They just are what they are. But Smoot Hawley is often blamed for the Great Depression, and that is because the Keynsians who wound up in control (and have largely remained there ever since) needed a scapegoat to blame for the failures of Keynsian economic theory under Hoover and Roosevelt and every other President. Roosevelt had to be lionized as the hero who "got us out of the Deprssion" when in fact he prolongued and intensified it with his reckless spending and confiscatory taxation.

Socialists love to blame the tariffs. It hides their own failures.

Grassley ought to know that. But I suspect he bought into Milton Friedman's argument that tariffs are always bad and that free trade must be in force even if only one side follows the rules. I love Friedman and think most of what he says is golden, but he was wrong about this. Asymmetrical "free trade" is nothing but stupidity. It's like the kid at school who gives his lunch money away to make other kids like him; all he winds up with is their contempt and no lunch.

All one need do though is look at who Graassley's compatriots are here. In politics there most certainlyis guilt by association.

Luckily this won't pass, and if it does Trump will veto it.

Posted by: Timothy Birdnow at 10:05 AM | Comments (1) | Add Comment
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