Theresa May

Brexit, Border Wall Throttle Leading Democracies, Delighting Putin

Britain’s inability to negotiate an exit from the European Union and President Trump’s inability to win funding for his promised border wall have left the world’s two largest democracies in political limbo, to the apparent delight of Russian President Vladimir Putin. Despite enormous economic consequences, a smooth Brexit and an early end of the partial US government shutdown seem out of reach.

Britain’s inability to negotiate an exit from the European Union and President Trump’s inability to win funding for his promised border wall have left the world’s two largest democracies in political limbo, to the apparent delight of Russian President Vladimir Putin. Despite enormous economic consequences, a smooth Brexit and an early end of the partial US government shutdown seem out of reach.

Maybe it is coincidence or a case of bad karma extending across the pond as the United States and United Kingdom find themselves in shutdown mode – with seemingly no clue how to escape, despite enormous economic consequences.

The partial federal government shutdown is simple to understand. President Trump wants $5.7 billion for a border barrier and Democrats refuse, calling it wasteful spending on an ineffective deterrent to illegal immigration.

Trump has said the budget stalemate could be resolved in 15 minutes, which is true. The Democrat-led House has passed a nearly identical spending bill to what the Senate approved unanimously last year after Trump signaled his support. Then Trump changed his mind and demanded border wall money. He has refused to budge, other than to acquiesce to a steel instead of concrete barrier.

Federal employees and contractors caught in the cross-hairs of the border wall fight have been furloughed, forced to work without pay, not paid or encouraged to find new jobs. National parks have closed, airport security lines have lengthened and farmers haven’t gotten their subsidies to compensate for losses they incurred from the Trump trade war. Pre-season forest thinning and hurricane forecasting has been disrupted. A workplace training session for Oregon lawmakers was postponed. Federal income tax refunds could be delayed. 

As bad as all that is, it may pale in comparison to Britain’s predicament. The British Parliament on Tuesday rejected the Brexit deal that took Prime Minister Theresa May two years to negotiate with her reticent European Union counterparts. The 432-202 parliamentary defeat of the May Brexit plan is the most lopsided loss for a sitting government in British history.

Britain faces a March 29 deadline to withdraw from the EU. May, who survived a no-confidence vote by her own Conservative Party last year and faces another one by an opposition party, was given until next Monday to come up with a plan.

Unlike the US government shutdown that is stuck on a single issue, the UK is trying to disengage from an alliance. It is similar to a state like California trying to secede from the United States.

May faces a Rubix Cube of options, none of which is very promising. EU leaders have shown little inclination to grant further concessions to Britain. Asking the British people to vote a second time on Brexit risks having a second vote in favor of the pullout, with no more clarity on how to achieve it. Extending the deadline for the EU exit without a consensus game plan would be like a prisoner asking for more torture.  

That leaves Britain with the somber prospect of slipping out of the EU without a deal and without substitute bilateral trade deals with key trading partners such as the United States. The plan-less exit also would pose serious internal problems, such as how to manage the border between Ireland, which would still be in the EU, and Northern Ireland, which wouldn’t. This is a border that has a troubled history as a true humanitarian crisis. Many worry it could return to that troubled history.

From a wider angle, this is an awkward time for the world’s two leading democracies to indulge in self-inflicted combat. As one veteran traveler told a news reporter, this is bad time to visit either the United States or Britain because both appear to be in the middle of civil wars. Add to that the yellow vest protests that have rocked France and what you see is not a pretty picture of economic, social or political stability.

British unrest stems from a nationalist drive to maintain Britain’s sovereignty. French discontent pivots on restive attitudes about persistent income inequality. The US stand-off centers on an unmet campaign promise.

The US political stalemate would seem the easiest to resolve, but has been elevated to a larger political battlefield. Supporters have warned Trump, who brags about his deal-making prowess, that his presidency could effectively end if he fails to get money for the border wall. The newly elected Democratic majority in the House is disinclined to toll over to Trump demands. Trump’s threat of a presidential declaration of emergency that would go around Congress to find the money to build the border wall could trigger a constitutional crisis.

What seems missing in the United States and Britain is a sense of the bigger picture – a more aggressive Russia, China’s ascendancy as a world power and the rise of right-wing authoritarian governments. Any one of these could be the tinder box that sparks a major conflict engulfing the bickering and compromised democratic powers. It has happened before when there have been voids in international leadership.

Commentators are beginning to point to Russia as a culprit in both seasons of discontent. Sowing division among the major world democracies is a much cheaper foreign policy than a military build-up, and perhaps a defter strategy to undermine NATO, a major objective for Russian President Vladimir Putin. The shadow of Russia will grow longer as Special Counsel Robert Mueller moves to wrap up his investigation into Russian election meddling and potential collusion with the Trump campaign in 2016.

Whatever the reasons, there is no doubt Brexit and the border wall stalemates are causing economic pain, with little relief in sight.

 

Dark Corners, New Lights Loom for Nation’s Capital

As the new year nears, darker economic possibilities lurk as a result of President Trump’s trade war with China, his threats to shut down the US-Mexican border and his kneecapping of Prime Minister Theresa May’s attempt to negotiate an exit from the European Union. The new year means Democrats regain control of the House, but a new bright light from Queens is already causing a stir in the nation’s capital as she pushes her agenda, fends off critics and waits for the keys to her congressional office.

As the new year nears, darker economic possibilities lurk as a result of President Trump’s trade war with China, his threats to shut down the US-Mexican border and his kneecapping of Prime Minister Theresa May’s attempt to negotiate an exit from the European Union. The new year means Democrats regain control of the House, but a new bright light from Queens is already causing a stir in the nation’s capital as she pushes her agenda, fends off critics and waits for the keys to her congressional office.

Congress returned for its lame duck session and faces a December 7 deadline to pass a spending bill to avoid a partial federal government shutdown. However, deeper economic rumblings presage more difficult times ahead, and there is a new tweeter in town.

General Motors stunned its workforce – and the White House – with a pre-holiday announcement that more than 14,000 employees will be laid off and five factories (four in the United States and one in Canada) will be shuttered. The news undermines President Trump’s boast that his economic policies will bring manufacturing jobs back to America. GM said it was restructuring as Americans abandon passenger cars and Trump’s tariffs eat into profitability.

Trump is threatening to shut down the US-Mexican border over continuing attempts by thousands of migrants to enter the United States and seek asylum. Even though US law permits migrants to enter the nation legally at ports of entry and apply for asylum, Trump is trying to prevent them from gaining entry, including use of force such as tear gas. A complete shutdown of the border would have severe economic consequences on the daily $1.7 billion movement of goods between the two countries.

A longer-term threat involves the United Kingdom’s unexecuted exit from the European Union. Prime Minister Theresa May has negotiated a complex pull-out deal that still must be approved next month by the British Parliament, which is not a foregone conclusion. Trump weighed in and undercut May’s bargaining position by raising doubt the agreement with the EU would permit a US-British bilateral trade deal, something the prime minister has touted as a positive payoff for Brexit. British officials deny the EU-exit agreement bars Britain from entering into bilateral trade deals.

Congresswoman-elect Alexandria Ocasio-Cortez hasn’t waited for the keys to her congressional office to stir the waters in DC with forceful advocacy of her progressive agenda and a savvy pushback to conservatives who seem mesmerized by her growing national prominence as a symbol of the new wave of women and more diverse political representatives.

Congresswoman-elect Alexandria Ocasio-Cortez hasn’t waited for the keys to her congressional office to stir the waters in DC with forceful advocacy of her progressive agenda and a savvy pushback to conservatives who seem mesmerized by her growing national prominence as a symbol of the new wave of women and more diverse political representatives.

The United States is still on a glide path to impose even more tariffs on Chinese goods on January 1, which would likely result in reciprocal tariffs on US exports to China. Trump trade officials insist China must act to end what amounts to an escalating trade war. Ahead of a summit this week, Trump’s officials also poured cold water on a suggestion that the G20 group of industrialized nations could play a role in resolving the dispute. For its part, China says it is opening up key markets such as banks, automobiles, aircraft, telecommunications and medical. It calls many US demands “unrealistic.”

While no one is exactly predicting an economic downturn, there are some cracks surfacing in the current economic boom. The US stock market has plunged from its dizzying record heights. There has been a slight uptick in unemployment filing. Interest rates continue to inch up, which could cool hot housing markets. Millennial trends away from car and homebuying are beginning to disrupt traditional industries and their extensive supply chains. In addition, China’s economy may be weaker than most economists thought. All of which suggests the international economy may be fragile and capable of slowing US economic growth.

Another drag on the US economy is higher-than-promised national deficits, mostly attributable to the GOP-backed tax cut. The beneficial effects of the tax cut may be mostly used up as the country heads into a new year.

In January, Democrats regain control of the House, which may add more complications to charting an economic path to avoid a downturn.

Then there is Congresswoman-elect Alexandria Ocasio-Cortez, who as the youngest member of the new Congress is already stirring the DC pot with Twitter posts about Medicare-for-All, a Green New Deal, immigration and reducing student college loan debt. She has fended off criticism from conservatives, who have singled her out because of her potential political stardom. She has tried to avoid irking Democratic leaders while still extoling her more left-leaning positions (she announced she will vote for Nancy Pelosi as Speaker). She has traded tweets with Senator Lindsey Graham and the tweeter-in-chief. 

Ocasio-Cortez, who started the year working bar in New York, is part of a wave of more diverse congressional newcomers, but her quick rise to political prominence – matched by her quick wit and knowledge of social media – make her a force beyond her years, experience or congressional seniority.