Dems seize on trade turmoil

President Donald Trump arrives on Marine One at the White House in Washington, after speaking at the American Veterans 75th National Convention in Louisville, Ky., Aug. 21, 2019. Democratic candidates have taken a calibrated approach to talking about the economy, but the trade war with China provides a potent new line of attack. (Anna Moneymaker/The New York Times)

WASHINGTON — Weeks of turmoil in financial markets and an extraordinary outburst over trade from President Donald Trump have opened a fresh lane of attack for Democrats hoping to unseat a president who has put the strength of the economy at the center of his reelection pitch.

On the campaign trail this past week, Democratic candidates blasted Trump for his economic stewardship, criticizing his gyrating trade policy and accusing him of hurting American workers and farmers and stoking a possible recession. In doing so, they signaled a readiness to seize an issue that has been a strength for Trump — the nation’s economy — and harness it as an advantage for themselves.

That strategy appeared to gain potency Friday when the president viciously attacked his own Federal Reserve chairman, escalated hostilities with China over tariffs and demanded that American companies stop doing business with the Chinese. It was a day of stunning economic tumult that sent stocks plunging, which the president then joked about in a tweet.

Democrats quickly cited the day’s developments to press the case that Trump was losing his grip on economic policy.

“Donald Trump has no strategy or plan,” Sen. Elizabeth Warren of Massachusetts wrote on Twitter Friday night. “His reckless actions drove his own companies into bankruptcy — now they threaten the global economy and increase the risk of a recession that will hit working families hardest.”

Campaigning in New Hampshire on Saturday, former Vice President Joe Biden said the trade war with China was “blowing up.” He portrayed the administration as “falling apart” on the economy, and pointed to economic warning signs in the bond market and manufacturing.

Until this month, Democratic candidates had taken a more calibrated approach to talking about the economy. They have asked voters to look past the data points that Trump has touted — benchmarks like the lowest unemployment rate in 50 years and a surging stock market — and have pushed the argument that working-class Americans were not benefiting despite the positive signs.

Candidates proposing ambitious change, like Warren and Sen. Bernie Sanders of Vermont, have focused on structural inequalities and framed their positions in term of fairness and dignity, rather than raw economic indicators.

They were also prioritizing other issues while hammering Trump for his divisive policies and personality. Democrats unveiled plans to combat white supremacy and hate crimes in the wake of a mass shooting in El Paso, Texas, to reduce the greenhouse gas emissions driving climate change, to improve mental health care in America and to help Native American tribes.

Trump has regularly taken to Twitter to proclaim the economy under his administration as “the greatest.” While economic data show the economy is slowing down, it is still growing. Average wages are growing faster under Trump than they did under President Barack Obama. Polls have consistently shown voters rate Trump’s performance on economic issues higher than they rate his performance overall.

But this month, the bond market signaled a possible recession through what is called a yield-curve inversion, and stock markets have churned over the turmoil with China, prompting Trump to raise, then quickly drop, ideas for additional tax cuts to stimulate growth.

While the election is still more than 14 months away, these developments suggest that the overall direction of the economy could become more of a liability for Trump. Polling for The New York Times by the online research firm SurveyMonkey this month found that nearly 3 in 5 Americans — and 7 in 10 independents — are worried about the national economy, regardless of how their personal finances are faring.

“I think the economy is in a very risky place right now, and every day that goes by, Donald Trump makes it worse,” Warren said last weekend in South Carolina. “He makes it worse with his unpredictability.”

“There are a lot of danger signs right now in this economy, and I’m very worried,” she added.

The Trump campaign said Democrats were trying to frighten voters with warnings about the economy.

“President Trump’s policies, including the most aggressive deregulatory agenda ever and the Trump Tax Cuts, have boosted paychecks, strengthened our labor market, and provided over a million more jobs than job seekers,” Erin Perrine, a spokeswoman for the Trump campaign, said in a statement. “The entire field of Socialist Democrats are rooting for a recession and their ridiculously price-tagged policies would certainly tank our booming economy.”

Even before Trump’s stream of invective against China on Friday, a few Democratic contenders were beginning to make a shift toward a more robust discussion of the economy. Warren released a plan last month warning that recession threats were building. Former Rep. John Delaney of Maryland announced a “renewed focus” on the economy this past week, citing damage from the trade war with China. Sen. Michael Bennet of Colorado released an economic plan Wednesday that included measures to automatically boost safety net spending in times of a downturn.

Leading candidates such as Warren, Sanders and Biden face challenges in deciding how much to focus on immediate economic threats. Warren and Sanders have long criticized U.S. trade policy, in the same vein as Trump. Every top candidate is proposing tax increases — which could be difficult to push through Congress in a time of contracting growth — to fund expanded government programs, like universal health care and free college tuition.

There are also tensions over what strategy to adopt: Some Democrats believe their best arguments to win the White House next year would be to focus on Trump’s temperament and divisiveness, and on issues like race and immigration, in hopes of winning key swing voters like suburban white women.

Trump has accused Democrats of trying to “will” the economy to be bad so that they could gain an advantage in the 2020 election. But Democrats were measured in how they responded.

“I don’t really see it as political,” Sen. Amy Klobuchar of Minnesota said. “I’m worried about those workers out there, and people that may be losing their jobs if there’s a downturn.”

Democratic contenders have been more aggressive in accusing Trump of undermining growth — particularly with his trade policies — than in proposing plans to revive it should a recession hit.

Few candidates have thus far proposed spending increases, tax cuts or other measures designed as immediate economic stimulus. Sen. Kamala Harris of California has built her economic platform around a middle-class tax cut that could deliver an immediate jolt to consumer spending. Bennet proposes expanding so-called automatic stabilizers that deliver federal aid to struggling Americans when the economy worsens, including sending money directly to individuals when unemployment rises substantially.

Warren has a series of plans addressing aspects of the economy, including a broad economic platform that calls for an “aggressive intervention” in markets to help American workers. Her plan on averting a recession lays out a series of steps to shore up the economy, such as reducing household debt, monitoring corporate lending and improving the manufacturing sector.

Most plans remain focused on longer-term issues in the economy. Sanders released on Thursday a plan to combat climate change that envisioned creating 20 million jobs, and “ending unemployment” in doing so. Biden has a plan to help the rural economy, and his climate change plan envisions boosting growth by investing in clean energy.

The struggle of American workers, said Pete Buttigieg, the mayor of South Bend, Indiana, “is not something you can solve with a sugar high or a rate cut.”

He added, “We’ve got structural problems in our economy that are leaving far too many people behind, even when the numbers are looking good, let alone when they start to change.”

The escalating attacks by Democrats in recent weeks recalls the shift the party’s candidates made in the fall of 2007, as the housing market worsened and stock markets dived in advance of the 2008 financial crisis.

Candidates including Obama, Hillary Clinton and John Edwards started their campaigns attacking President George W. Bush on rising inequality and a ballooning federal budget deficit. By September, they were all turning toward economic storm clouds.

Obama gave a speech at the Nasdaq in which he outlined a series of structural reforms, meant to lift workers and to reduce the odds of a future financial crisis. Only later in the campaign, after stocks dropped further and the country fell into recession, did Obama release a targeted economic stimulus plan.

So far, relatively few voters in early states like Iowa are demanding answers on how to stoke economic growth in the current conditions.

“If there’s a recession, Trump loses,” Sherri Bogue, a 45-year-old teacher from the Des Moines area. “It’s a little early, right this second, today, to be talking about the recession.”

But Bennet suggested the time for a full-fledged debate on the economy may come sooner rather than later.

“I would say that the president’s trade war has had a tremendous effect on creating the sense that there’s a recession around the corner,” Bennet said in an interview. “I don’t have a crystal ball, but I think it’s more likely than not that we will be having that conversation a few months from now.”

New York Times

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