It's Even Worse Than You Think Page 5

  After more than seven months in office Trump had nominated only 36 of 188 ambassadors.

  This meant that in foreign capitals when multibillion-dollar investment decisions were being discussed, political intrigues were unfolding, and informal changes in policy were under way, the United States often had no one with authority at the dinner tables, cocktail parties, or official government proceedings where they could pick up intelligence. Just knowing who sat where, or who was absent, at functions often provides valuable insights into foreign affairs. Not having ambassador-rank representatives on the scene posed serious economic and national security risks to the United States and was not consistent with Trump’s claims that he would always put America first.

  The failure to promptly fill these positions, and many others, raised more than the issue of Trump’s lackadaisical approach to governing and ignoring basic duties while he spent hours watching television to learn what was being said about him.

  His neglect also brought into question whether he was violating his oath to “faithfully execute” the duties of his office as Article II, Section 2 of the American Constitution clearly states.

  The Constitution does not employ the discretionary verb may or the merely authorizing word can, but a verb that imposes a duty to act. And it uses that mandating verb twice: “he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law.”

  Another big reason for the slowness in filling important posts is Trump’s mercurial nature and how it creates unnecessary problems. Instead of thoughtful, even calculated, official actions, Trump’s volatile emotions often drive his decisions. So does whatever he heard from the last person he spoke to. So one of the first things General John Kelly did as White House chief of staff was to control who sees the president and what papers they put in front of him.

  At first Chris Christie, the New Jersey governor, led the team developing names for the four thousand positions a president controls, ranging from cabinet members to ceremonial posts. Then Trump dumped Christie, who was tarnished by scandals including one over political retribution that sent two of his closest aides to prison.

  Trump assigned the task to Indiana governor Mike Pence, the vice president–elect, who started the process anew with less than ten weeks to go before they took office. There is evidence that Pence was not especially engaged in this crucial task or, if he was, that he was less than truthful about his role. Pence has said he was not aware of doubts about the loyalty and integrity of General Michael Flynn, Trump’s choice for national security adviser, even though the transition team received written memos about him and Obama warned Trump about Flynn.

  Trump took no responsibility for the delays. He blamed the Democrats, tweeting “Dems are taking forever to approve my people, including Ambassadors. They are nothing but OBSTRUCTIONISTS! Want approvals.”

  There were three factual problems with that tweet. One was that the Senate can only confirm people who are nominated and Trump was not putting forth names promptly or even at a steady pace. Second, Republicans controlled the Senate and were approving some nominees even before their ethics and other paperwork was completed. Third, every person Trump nominated was approved by the Senate.

  Most presidents name about two career diplomats for each political appointee. The politicals are usually super-rich campaign donors who get plum posts like European capitals or island paradises. For countries with contentious economic, military, or other issues with America, presidents tend to assign career diplomats with skills suited to a specific country.

  Of the positions Trump filled in his first seven months, politicals dominated, getting twenty-one of the thirty-six coveted positions. He chose one of his bankruptcy lawyers, David Friedman, to be ambassador to Israel. The Tennessee campaign finance director, businessman William Francis Hagerty IV, got Japan. Scott Brown, the former Cosmo magazine centerfold who was defeated in the 2013 Massachusetts Senate race by Elizabeth Warren and went on to become a major Trump campaign cheerleader, went south to New Zealand. And a billionaire real estate developer, Doug Manchester, got the Bahamas, a lovely group of islands beloved by South American drug lords.

  Friedman, Hagerty, Brown, and Manchester had no diplomatic experience.

  Another ambassadorship was a savvy political choice. Trump named Nikki Haley, the governor of South Carolina, to the United Nations. That allowed Henry McMaster to move up from lieutenant governor. McMaster had given a speech nominating Trump at the GOP convention in Cleveland and was the first Palmetto State leader to endorse him.

  At the State Department, Rex Tillerson, the CEO of ExxonMobil before he became secretary of state, was pushing people out the door fast. He started trimming the payroll almost immediately. Trump clearly approved. When Vladimir Putin told America to send more than 150 diplomats packing, which also ended the jobs of about 600 Russian locals, Trump said he was delighted.

  “I want to thank him because we’re trying to cut down on payroll, and as far as I’m concerned, I’m very thankful that he let go of a large number of people, because now we have a smaller payroll,” Trump said. “There’s no real reason for them to go back. So I greatly appreciate the fact that we’ve been able to cut our payroll of the United States. We’ll save a lot of money.”

  The White House later said Trump was joking. Maybe so, but his remarks were consistent with Tillerson’s purge at State as well as Trump’s approval of almost everything that Putin does.

  Slashing diplomats, especially senior people with deep knowledge built up at taxpayer expense about the foibles and strengths of players in countries big and small, comes at a price. Getting into the Foreign Service requires serious skills and brainpower. Less than 5 percent of those who apply ultimately get hired, Office of Personnel Management records show.

  Mieke Eoyang, a lawyer and former House intelligence committee staffer who has worked in these areas for two decades, warned that “institutional memory is fading. We are losing many of the senior people who make the building work.”

  She said many young people were also trying to decide if they should leave. “The fast risers see that they will not be getting promoted,” Eoyang said.

  Administrations come and go, but the diplomatic interests of the United States endure. Diplomatic missions can leave important marks that last for decades and they can also roil relations with countries, creating lasting enmity.

  Jeff Hauser, executive director of the Revolving Door Project, which tracks people who come from industry to government and then return, said the Trump administration was adept at getting around Senate confirmation hearings.

  “They are appointing a lot of what are called special government employees,” Hauser said. “They can put someone on the payroll for not more than 130 days. That way they don’t have to go through a Senate confirmation process, which the person might not survive. It’s a way of getting around oversight by the Congress and journalists because who pays attention to a short-term employee?”

  Hauser pointed to the example of Keith Noreika. He was made Acting Comptroller of the Currency. When his temporary assignment ran out, the Trump administration left him in place.

  Before his special government employee position as the nation’s top banking regulator, Noreika was a lawyer defending JPMorgan Chase, Wells Fargo, and eighty other banking clients. The temporary appointment, Hauser said, enables Noreika to scoop up valuable information for when he returns to the private sector. Political appointees have always done that, or always have been able to do that. What makes Noreika different is that he and many others got no scrutiny from the Senate.

  Compounding this, Hauser and others said, are much weaker ethics rules under Trump. Walter Shaub quit as director of the Office of Government Ethics after a series of clashes with the administration, which wa
nted to keep financial matters of its appointees hush-hush, waivers granted so people who owned stocks in companies they would be regulating could keep their shares, and other policies that Shaub considered offensive to honest and open government. They were also, he said, unlike those of any presidents in the previous four decades at least.

  Shaub called Trump’s eyes-wide-open blind trust, in which his sons would run his businesses and tell their dad about profits, “wholly inadequate” because “that’s not how a blind trust works. There’s not supposed to be any information at all.”

  After resigning in disgust in July, Shaub told the British newspaper The Guardian, “The fact that we’re having to ask questions about whether he’s intentionally using the presidency for profit is bad enough because the appearance itself undermines confidence in government.”

  Trump’s conduct “risks people starting to refer to us as a kleptocracy. That’s a term people throw around fairly freely when they’re talking about Russia, fairly or unfairly, and we run the risk of getting branded the same way. America really should stand for more than that.”

  PART II

  * * *

  JOBS

  Hiding in the Budget

  In his inaugural address, Donald Trump pledged that his every decision would put American workers first. But his very first budget directly contradicts that promise. It’s a document few people even in Washington read, an official policy declaration that rarely makes the news.

  The story of this hidden betrayal illustrates the importance of journalists paying attention to government. It is not enough just to cover politics and controversies. Often the most important news goes unannounced, lying right out in the open in the government documents most journalists are loath to uncover and read.

  Only by examining the official record can voters know if politicians use their power to fulfill their promises or break them. For example, we can see with absolute clarity that the Trump budget request for the U.S. Trade and Development Agency directly contradicts his campaign promises to American workers as well as investors in the businesses that employ them.

  Each year a justification for each federal agency must be laid out in the budget requests the administration sends to Congress. The Trump administration’s first report on the Trade and Development Agency says its “mandate is to support job creation at home and promote economic development abroad.” The trade agency does this “by leveraging U.S. industry expertise to build mutually beneficial, trade- and investment-based partnerships with emerging markets” overseas.

  Some 18,000 American workers owe their jobs to exports fostered by the agency, according to the Trump administration.

  Efforts by the agency’s fifty-eight employees generated a $3 billion increase in American exports to poor countries in 2016, according to the Trump administration. That brought total exports the agency fostered to $53.4 billion, a healthy 5.7 percent increase over the previous year, again according to the Trump administration.

  Agency operations cost taxpayers $75 million. That means American exporters sold $752 worth of goods and services overseas for each dollar invested by taxpayers. However, the Trump budget report credited the agency with only $85 of exports per taxpayer dollar spent, with no explanation for the lower figure.

  Given the high rate of return on the taxpayer dollar, even by the smaller ratio cited in the budget report, one might expect the Trump administration to request more money for this agency so it could help grow American exports even more and help create more jobs. Instead, the Trump administration asked Congress to shut it down. It asked Congress to appropriate only $12.1 million, money needed to pay severance and terminate leases.

  Why?

  “The Administration believes that the Agency’s mission is more appropriately served by the private sector,” its budget report said.

  “While the administration wants U.S. businesses to invest in emerging markets to grow their businesses and create American jobs, these businesses have incentive to invest and should rely on private sector financing. In general, the United States should not provide taxpayer subsidies,” it explained, adding that the agency was doing nothing more than putting “the Government in the business of picking winners and losers, potentially distorting the free market.”

  Government interventions that distort markets occur continually, as explained in Free Lunch and The Fine Print, my books exposing how the political donor class uses the federal, state, and local governments to gain unfair advantages against competitors, restrict competition, and jack up prices. Those books champion competitive markets, which are essential for generating the benefits of capitalism, and expose the troubling trend in America toward corporate socialism with gains going to owners and executives while losses are sloughed off onto taxpayers.

  There is no such thing as a “free market,” much as that term of art in economics is loosely bandied about all the time by politicians and journalists. And no free market exists in world trade—not anywhere, not ever.

  “Free market” is an abstract ideal, not a reality, a useful tool in the algebra of economics. This ideal helps in analyzing how government rules and practices shape human behavior and investment decisions. All markets operate subject to rules and those rules guide market decisions.

  What matters in commerce is a level playing field. Market capitalism suffers when rules tilt the field of competition in favor of this company or that industry. Among the many ways that businesses seek to angle the playing field in their favor are campaign donations, jobs for the friends and family of office holders, and handing out favors like travel on corporate jets to those who make or influence the rules.

  In world trade the idea of a “free market” is absurd. Small countries with fragile markets create all manner of formal and, often more importantly, informal rules that distort markets. Those rules may be beneficial or extremely harmful, but in international trade they must be obeyed or navigated around because each nation is sovereign. American exporters to these countries often must contend with kleptocratic government leaders demanding payoffs, which if met would put them in criminal violation of the Foreign Corrupt Practices Act. Then there are the petty and practical problems of customshouse inspectors who want their palms greased before goods can go from ship to shore and many other real-world interferences in markets. And, of course, in export deals there’s the need for basic intelligence—whom to work with and whom to avoid in the developing country? Does a country have the foreign reserves to pay for American goods, for example?

  Because each country has its own culture, its own rules, and its own internal logic, it is far more efficient for the American government to employ experts in trade, international law, and diplomacy to help American companies navigate their way to successful sales in emerging market countries. Otherwise a business lacking the scale to develop in-house the disparate skills required to make deals would have to forgo opportunities to make those sales. Likewise, American firms may not engage with countries whose size as a market makes the costs of working in unfamiliar commercial terrain prohibitive. The trade agency smooths those paths while advancing the national interest of building a robust economy that exports high-value American-made products and services. Eliminate this agency and American workers (and investors) lose. So do taxpayers, because if exports fall, so do the taxes collected from export companies and their workers.

  The Trump administration officials know this, assuming they know a whit about the harsh realities of global commerce. And yet, in large part Trump paved his road to the White House with promises of new trade practices that he said would favor the United States, which he claimed had been taken advantage of by so many other countries, to create more American jobs.

  Aside from the larger questions about trade, shutting down a federal agency that helps sustain 18,000 American jobs directly contradicts the Trumpian promise to always act in support of American workers.

  In response to the North Korean nuclear weapons program, Trump tweeted in Sept
ember 2017 that “The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea.” To fulfill such a threat, the U.S. would have to suspend trade with China, India, Russia, and a host of other countries including Brazil, Chile, France, Mexico, Pakistan, and Saudi Arabia.

  China buys 8 percent of America’s exports, totaling nearly $170 billion in 2016. China is the third largest buyer of American exports.

  Perhaps Trump’s tweets can be set aside as passing thoughts, if not utter nonsense. But the Trump budget proposal to close the Trade and Development Agency is formulated policy, and it clearly undercuts his “America First” claims. So why did the Trump administration adopt this policy? A hint of the reasons the Trump administration would sabotage American workers appears in the trade agency’s reports on its successes in promoting American exports to poor countries. The trade agency does more than encourage exports of high-value American goods like telecommunications and transportation systems. It also promotes certain kinds of energy projects.

  The trade agency “supports efforts to expand energy generation by helping its partner countries develop renewable energy resources, invest in cleaner forms of traditional energy and modernize electric grids.” During the 2015 budget year the trade agency “committed over half of its energy investments to renewable power. These project preparation activities have the potential to unlock over $4.3 billion in financing and produce over 2,400 megawatts of new renewable energy.”

  That focus could mean lots of jobs for American green energy companies—wind, solar, and biomass. It would help encourage more investment to make renewable energy cheaper. It also would help reduce emissions of carbon dioxide and toxic by-products from burning coal, petroleum coke (petcoke), and even natural gas.