(CNN) President Donald Trump’s chief strategist Steve Bannon has been fired, multiple White House officials told CNN on Friday.
Sources told CNN that Bannon’s ouster had been in the works for two weeks and a source said that while Bannon was given the option to resign, he was ultimately forced out. White House press secretary Sarah Huckabee Sanders confirmed Bannon’s departure, but claimed the decision for him to leave was mutual.
“White House Chief of Staff John Kelly and Steve Bannon have mutually agreed today would be Steve’s last day. We are grateful for his service and wish him the best,” Sanders said in a statement.
The President has privately stewed over Bannon in recent days, including Thursday night from his golf course in New Jersey. He was furious with his chief strategist after he was quoted in an interview with the American Prospect contradicting Trump on North Korea and asserting that Bannon was able to make personnel changes at the State Department.
On Saturday morning, however, the President tweeted out his thanks to Bannon: “I want to thank Steve Bannon for his service. He came to the campaign during my run against Crooked Hillary Clinton – it was great! Thanks S.”
Bannon’s exit comes just seven months after Trump took office and three weeks after retired Gen. Kelly took over as chief of staff, looking to instill order in a chaotic White House beset by internal divisions, staff infighting and a storm of controversies.
Bannon’s exit meant one of the White House’s most controversial staffers, the man generally perceived as the driving force behind Trump’s “nationalist” ideology, would no longer be at the center of the Trump universe.
Bannon joined Trump’s campaign last year, moving from the sidelines as one of Trump’s top cheerleaders to a position atop his campaign apparatus.
He did not travel with the President during the first week of what White House officials described as a “working vacation” at Trump’s golf course in Bedminster, New Jersey. Instead Bannon remained in Washington where he worked out of a temporary office in the Eisenhower Executive Office Building as the West Wing underwent renovations.
Bannon was supposed to be fired two weeks ago, a White House official told CNN’s Jeff Zeleny, but it was put off.
CNN reports the President equivocated after an initial plan was to fire Bannon and then-Chief of Staff Reince Priebus at same time, the official says, because Rep. Mark Meadows, the influential chairman of the conservative House Freedom Caucus, and others urged Trump to keep him on board.
The interview this week was enough for Meadows to change his view, a person close to him says.
What Bannon is thinking
After his firing Friday, Bannon spoke to The Weekly Standard, making a pointed case that the Trump presidency that his brand of populist, right-wing conservatives helped make possible is now “over.”
“We still have a huge movement, and we will make something of this Trump presidency,” Bannon told The Weekly Standard. “But that presidency is over. It’ll be something else. And there’ll be all kinds of fights, and there’ll be good days and bad days, but that presidency is over.”
The question now is whether Bannon will be an ally or a thorn in the side of the Trump administration outside the White House, where he has apparently already returned to his role as head of Breitbart, the right-wing news site he ran until he joined Trump’s campaign a year ago.
However that unfolds, Bannon is expected to remain tightly connected to the billionaire conservative father-daughter pair Robert and Rebekah Mercer, who are major investors in Breitbart News and top Trump donors.
Bannon returned to the role of executive chairman of Breitbart News and chaired the evening editorial meeting, the publication’s White House correspondent reported Friday evening.
Both Bannon and Trump spoke with the Mercers in recent days, a White House official said.
A White House ally who has talked to Bannon said the outgoing chief strategist does not want to go to war with Trump. Bannon is making that clear to close associates in response to Breitbart editor Joel Pollak tweeting #WAR.
“That’s not where Steve’s head is at,” this source said. “He’s been fighting for the exact same things that the President has been fighting for.”
This source quoted Bannon as saying “I want (Trump) to succeed.”
Still, as his firing appeared increasingly likely, Bannon downplayed concerns about being booted from the White House and argued that he would be a more powerful force from the outside, sources close to Bannon said.
He has privately told associates he would return to his “killing machine” — Breitbart — if he was forced to leave for the White House and has said he would be able to more easily target some of his White House rivals — like chief economic adviser Gary Cohn and national security adviser H.R. McMaster — from the outside, the sources said.
Bannon has also worked in recent weeks to put the pieces in place for his agenda to live on without him at the White House, working on hardline trade initiatives in his final weeks.
After pushing the President to start the process of investigating Chinese trade abuses, Bannon also laid the groundwork for a series of aggressive trade actions designed to impose a harder line against China, the sources said.
In his final days at the White House, Bannon was continuing to work up schedules for the rollout of trade initiatives that would come in September, long after he expected to be forced from the White House, the sources said.
“We’re going to run the tables on these guys,” Bannon told The American Prospect in an interview earlier this week.
A quick and contentious tenure.
Bannon’s turbulent White House tenure was marked by controversy.
In the administration, Bannon frequently butted heads with other advisers to the President, feuding with son-in-law and senior adviser Jared
Kushner, chief economic adviser Cohn and other more moderate members of the President’s administration whom Bannon branded as “globalists.”
Bannon was often suspected by colleagues of badmouthing them to reporters and he rubbed colleagues the wrong way by attempting to ramrod his ideological positions.
“Steve was never a team player,” a senior administration official said.
Bannon viewed himself as the populist defender of Trump’s campaign promises in the White House, working daily to tick off items from the list of promises that hung on the walls of his West Wing office.
Bannon focused especially on pushing a hardline trade agenda, recently working to cue up a series of trade policies to aggressively target Chinese foreign trade abuses and work toward rebalancing the trading relationship between the US and China.
Bannon was an influential voice inside the White House, feeding and encouraging Trump’s nationalist and populist instincts.
In the process, he garnered an infamous reputation as a puppet master pulling the strings in the Oval Office, with pop culture portrayals ranging from the moniker “President Bannon” to his depiction as the grim reaper on “Saturday Night Live.” Those portrayals — coupled with a Time Magazine cover that declared him “the great manipulator” — often angered Trump, who chafes at being outshined.
But the reality is that while Bannon was an influential figure at Trump’s side, he was hardly the all-powerful aide so many sought to portray him as.
He did not always come out victorious in his feuds with fellow White House aides and Trump did not always heed his counsel.
Still, Bannon served as a daily reminder to Trump of his populist campaign promises and his bellicose political instincts. Bannon’s rivals in the White House argued that he encouraged the President’s worst instincts, while his allies said he was keeping the soul of Trump’s movement alive.
The fiery chief strategist also led the charge against proposals by national security officials to deepen US military involvement in Afghanistan, feuding vocally during meetings of the National Security Council with McMaster and working behind the scenes to water down hawkish proposals for troop increases and a longer-term US military commitment.
The President is meeting Friday with members of his national security team at Camp David to consider options for the future of the US war in Afghanistan as he nears a decision, but Bannon is not there — and was not scheduled to be, based on a list of attendees the White House sent out Friday morning.
This story is breaking and will update with additional news.
CORRECTION: This graphic has been updated to reflect Shaub’s duration on staff for the Trump administration. He was on staff 180 days.
CLARIFICATION: This graphic has been updated to clarify Scaramucci’s and Comey’s duration on staff based on the their start and end dates. They stayed on staff 11 days and 110 days, respectively.
CNN’s Jim Acosta, Jeff Zeleny, Miranda Green, Gloria Borger and Eli Watkins contributed to this report.
The Pentagon spent $84 million on erectile disfunction medications in 2014, 10 times the estimated annual medical costs for transgender services.
Military Times reported in 2015 that the military spent $84 million on erectile disfunction medications such as Viagra and Cialis the year before. Meanwhile, a 2016 Rand Corporation study estimated that the maximum annual medical costs for transgender military members would be around $8.4 million, Business Insider reports.
“You’re talking about .000001% of the military budget,” being spent on transgender services, Navy SEAL veteran Kristin Beck, who is transgender, told Business Insider.
President Trump announced Wednesday on Twitter his decision to ban transgender people from serving in the military “in any capacity.” He cited the “tremendous” costs for providing medical services for transgender troops.
“Our military must be focused on decisive and overwhelming victory and cannot be burdened with the tremendous medical costs and disruption that transgender in the military would entail. Thank you,” Trump tweeted.
His announcement sparked widespread condemnation from members of both parties, including Republicans who broke with the president to speak out against the ban.
Howard University has reached a tentative agreement with the law professor it found responsible for sexual harassment over a test question about a hypothetical Brazilian wax.
This afternoon, professor Reginald Robinson’s attorney, Gaillard T. Hunt, released the following statement:
We have discussed the case with the University and we believe we have reached a mutually satisfactory solution. Professor Robinson regrets if anyone was offended by the test question.
FIRE reported on the case last week, which we noted at the time was part of a larger pattern of colleges and universities punishing constitutionally protected expression under the guise of addressing sexual harassment.
You can read more about the case in our press release.
Check back to Newsdesk next week for more on this development.
Case given by the professor translated in spanish:
P es dueño y manager de “Day Spa & Massage Therapy Company, LLC.” P atiende tanto a hombres y mujeres. Entre otros servicios, P ofrece “Brazilian wax” y “bikini wax” – también llamados “Sphynx”, depilada total, o depilación estilo Hollywood.
Para prestar estos servicios, P contrató a A, un esteticista, certificado y licenciado por la escuela ubicada en el Estado en que P realiza sus actividades.
Un día, T visitó la compañía de P. T nunca había buscado tales servicios, pero sus amigos habían elogiado el trabajo de P. A se encontró con T en la mesa de atención. T pidió un Brazilian wax. -¿Un brasileño completo o modificado? -preguntó A a T. T parecía confundido, entonces A procedió a explicarle que un Full Brazilian (“FB”) implicaba depilar totalmente a T desde el ombligo hasta las nalgas, por lo que un FB requería que T esté desnudo de la cintura para abajo. Un FB además requiere que A toque el cuerpo de T y realice los ajustes necesarios para que este pueda acceder a todos los folículos del vello púbico de T. Asimismo, A le explicó a T cómo sería un “Modified Brazilian” (“MB”). Un MB le dejaría una fina franja de pelo en la parte superior de sus genitales, es decir, un “landing strip” (pista de aterrizaje). Así, T optó por un Full Brazilian.
Una vez más, A le explicó a T que tendría que tocar sus genitales para completar la depilación. T estuvo de acuerdo y firmó en el Contrato de Servicio el espacio donde reconoce la información brindada por A. T se desvistió en un salón privado, donde también bebió un té de hierbas caliente. Por pedido de A, T, quien estaba desnudo de la parte de abajo, se acostó en la mesa de depilación. Una vez sobre ella y con los tonos instrumentales como fondo, T cayó en un sueño ligero. Finalmente A completó el FB. Al despertar, T se sintió físicamente incómodo, preguntándole a A si lo había tocado incorrectamente. A, le dijo que no, y sintiéndose ofendido, se fue.
Semanas después, P recibió una carta del abogado de T, en la que T alegaba que A lo había tocado inapropiadamente, generando que T buscara consejería y medicación para tratar un Trastorno de Estrés Post-traumático. Habiendo trabajado con A durante 10 años, P respondió que A era un esteticista certificado y licenciado, que nunca había tenido quejas presentadas por sus clientes. T demandó a P, y por testimonio de A, Los abogados de P y T descubrieron que A había tocado a T correctamente durante el FB. Sin embargo, T todavía siente que los tocamientos de A fueron impropios. En la demanda, T alegó que A, envuelto en una aparente posición de autoridad, lo había inducido a través de representaciones falsas a confiar razonablemente en él, de modo que A podría causar daño a T mientras actuaba en el marco de su labor. Si P se hubiera opuesto, en efecto diciendo “Sí, ¿Y qué?” a los pedidos de T, ¿la corte se encontraría a favor de T?
(A) Sí, porque T había establecido que A era un empleado que fue colocado como esteticista, lo que permitió a A hacerle daño a T.
(B) No, porque T expresa e implícitamente consintió los tocamientos de A en cualquier manera razonable para que este le proporcione el servicio FB que aquél solicitó.
(C) Sí, porque P se benefició de los ingresos pagados por T en razón del servicio realizado por A.
Why you should support Common Cause
In January, a federal judge ruled that the Wisconsin Legislature—tasked with drawing legislative districts—would have to re-draw them to less blatantly favor one party over the other.
The Legislature in Wisconsin drew unconstitutionally partisan lines because they wanted to rig the system.
They’ve appealed the ruling to the Supreme Court, and you can bet they’ll be well financed.
This problem is called Gerrymandering, and I’m determined to terminate its poisonous impact on our democracy.
That’s why I’ve partnered with Common Cause, a nonprofit focused on promoting open, honest and accountable government.
We want to hire the best-in-the-business lawyers to argue this and other critical cases before the Supreme Court.
If we win, we have the chance to make gerrymandering unconstitutional nation-wide.
But terminating gerrymandering will be expensive.
Arguing a case in front of the Supreme Court, filing amicus briefs, paying for the research and legal expertise necessary to really have a shot at terminating gerrymandering — that’ll take anywhere from $250,000 to $1,000,000.
We’re hoping YOU can help us get to $150,000. And because we must win these cases, I’m personally going to match each and every dollar we raise with my own contribution.
Please chip in whatever you can afford today — even $3 will send a powerful message that the citizens of America won’t stand idly by as politicians protect their jobs instead of earn them.
Message from Arnold Schwarzenegger:
I have been traveling across the globe, but I had to take a moment to write you a quick note of thanks for joining me in the effort to end partisan gerrymandering.
Now that the Supreme Court has agreed to hear the case, our work begins in earnest. You are on the front lines of this battle, and I’m grateful to have you with me in this fight.
I can think of no better way to celebrate our patriotism after July 4th than boldly proclaiming that as American citizens, we stand united against gerrymandering and the broken political system it has created.
We stand against politicians choosing themselves and their jobs over the people.
We stand for American citizens taking political power into their own hands.
You’ve already done your part by donating — now make sure that your friends know we have the chance to make gerrymandering unconstitutional.
Share your support on Facebook.
Together, we’re going to make Washington work for regular people again.
I hope you had a fantastic fourth,
What Hannah Arendt’s philosophy can teach us about Trump, Brexit and the dangers of isolation
After Donald Trump was elected president, lots of people started buying books by Hannah Arendt: In December, her 1951 book The Origins of Totalitarianismwas selling at 16 times its normal rate.
Why Arendt, a political theorist who died in 1975? She’s an important philosopher but not exactly a popularly read writer. The answer is simple enough: She has a lot to say about what’s wrong with the world today.
Arendt theorized about the nature of totalitarian societies — how they work, what they prey on, and why they spring up. America is not currently under the yoke of totalitarianism, but the preconditions are there, namely a hollow and fractured society full of dislocated, angry people.
This is what most concerned Arendt, and it ought to concern us today.
I reached out by phone to Lyndsey Stonebridge, a Hannah Arendt scholar who wrote a book about Arendt’s influence, The Judicial Imagination: Writing After Nuremburg. We talked about Arendt’s legacy and how her ideas speak to our present political moment. We also discussed Donald Trump, Brexit, and what Arendt meant when she defined totalitarianism as a form of “organized loneliness.”
Our lightly edited conversation follows.
Why do you think so many people are suddenly interested in Arendt?
I think the resurgence in the last year has been around the phenomenon of totalitarianism and that sense that something like a crisis is occurring and we don’t know how to address it. It’s very interesting that it’s The Origins of Totalitarianism that’s being cited and read.
I read that book in graduate school and was sort of bowled over by it. Her idea that totalitarianism is essentially organized loneliness seems awfully relevant now.
I’ve made the point quite a few times that Arendt was very important as a 20th-century thinker. I’m trained as a literary scholar and a historian at the same time. That’s my dual background. What’s brilliant about The Origins of Totalitarianism is she’s saying you need to invent new methods for understanding new things. That’s why she was blasted for writing The Origins of Totalitarianism, because she wouldn’t give a big historical narrative. She insisted that we pay attention to what was new and what was different.
Let’s linger on that thought for a second. What was it about totalitarianism for Arendt that was new? Why was it uniquely a product of the modern world?
There’s a reason she refused to give some grand historical narrative about the roots of totalitarianism. She believed that certain things had to be in place for totalitarianism to take shape — racism, capitalist expansion for the sake of expansion (what we might call globalization today), the decline of the traditional concept of the nation-state, and anti-Semitism.
Arendt said those things conspired to create a constellation which could produce totalitarianism in the form that she was talking about then.
What strikes you when reading The Origins of Totalitarianism now?
Two things. She said studying totalitarianism was like trying to unpack a crystal. She insisted that she wasn’t a “traditional historian” because historians usually write about things because they want to preserve them, whereas she wanted to write about something “I wanted to destroy.”
She thought she could destroy an idea which is both totalitarian but also endemic to lots of ideological thinking, and that is the idea there is a “telos,” or a grand purpose or struggle, and that everything has to be in service of that idea. She didn’t want to replace the totalitarianisms of her day with another master narrative.
She wanted to explode the belief in master narratives altogether.
I’m glad you went there because that’s something that interests me as well, this belief in grand stories about history or justice — all ideologies have something like this at the center. Why did Arendt believe people were vulnerable to these narratives? Why was modern life making them so attractive?
For Arendt, it was about the isolation of modern life, the emptiness of it all. What she understood — more than someone like [George] Orwell — is that you don’t need to be a totalitarian state to exhibit the characteristic features of totalitarianism. Her focus was on modern loneliness, the isolated individual who loses a kind of rootedness in the world and therefore is prime material for the takeover of ideology, for the total narrative that gives life direction and meaning.
What is the political and social price we pay for allowing society to fracture in this way?
I’d like to answer that by raising a couple of things that Arendt didn’t really wrestle with. The big price we pay for mass loneliness is the loss of a shared reality. Arendt disagreed with Orwell that everyone knows two plus two doesn’t make five. We’re not idiots. We know a lie. But the problem is when people decide they don’t have to accept this reality. Then everyone begins to inhabit their own world, and that loss of a shared reality is what produces the loneliness, and that’s what makes the chaos of post-truth and willful lies so politically and existentially traumatic.
Draw a line for me. How do we get from a loss of shared reality to totalitarianism?
Once you’re uprooted from your sense of reality as a community, that allows all sorts of other uprootings to take place. We lose our human connection to other people, and that’s when the conditions are in place for tribalism and mass violence, for the extermination of “superfluous people,” for “others.” This something Arendt understood all too well.
So obviously we’re dealing with this problem right now, this loss of a shared reality. We’re in this bizarre “post-truth” climate in which our president lies with impunity, fake news and misinformation are pervasive, and much of the country is cocooned inside self-affirming information bubbles. At the same time, there’s a resurgence of racism and ethnonationalism, both here and in Europe.
I take it Arendt would have anticipated this?
Absolutely. The relationship between that kind of politics and violence was inextricable for Arendt. One of the things people do when they’ve become uprooted is to retreat into us-them fictions, and that often means dividing the world racially.
I think the politics of Trumpism and politics of Brexit, the politics of the new right, have deliberately merged, and so you cannot pull them apart. What we’re also getting as a product of this organized loneliness is a valorization of race politics and even violent racism.
Can you give me a concrete example of what you mean by violence there? Because I suspect a lot of people will assume that political violence has to be explicit or overt, but that’s not always the case.
Sure. So we’ve just watched a tower block in London kill 79 people, and that’s a very conservative estimate. That tower block was full of asylum seekers, migrants, poor, working-class, black people. It burned down because there’s a politics that has said in our council and in our country for a long time that the interests of the bourgeois elite and their monetary interests come above those people. There are now criminal proceedings, but it’s an act of murder, and it can’t be divorced from the politics that made it possible.
Let’s connect this back to Trump and Brexit if we can. How are Trump and Brexit direct responses to the loneliness and the uprootedness?
I think these movements give people a coherent fiction. My sense is that it gives them a kind of fantasy, and in both Britain and America it’s a nostalgic fantasy, a belief that we can return to some glorious past in which the middle class boomed and everyone had stable incomes and simpler lives.
Britain has the same economic divisions that America has, and in both countries the liberal elites haven’t fully come to grips with the fact that the economic policies of the last 20 or 30 years have produced a monster, a monster that we created.
So you see Trump and Brexit as twin political phenomena?
I’m slightly more worried about the Trump fantasy than the Brexit fantasy, because Trump’s cult of personality is built on power and narcissism, and I’m not sure the Brexit fantasy is quite as mad as that.
But I don’t want to turn this into a competition!
If it’s a madness competition between Britain and America right now, I’ll take America.
So if Arendt were to emerge out of a void and survey our current political landscape, what do you suppose she would say?
“Think! Think! Think!” I imagine she would also tell us to be scared, but I think she’d have been saying that for the last 10 or 20 years. And she’d say to not just be scared of Trump or Brexit, because those are manifestations of something that’s been happening for a very long time.
You seem to imply that the intellectual class has been blind to this brewing chaos. Is that right?
That’s right. There’s a certain type of left intellectual, both in the US and the UK, that simply doesn’t get it. First, we had Brexit. Then we had Trump. The distinguishing feature of that was an absolute incredulity among certain people to understand what had happened, to understand that something totally spontaneous seemed to have happened that we couldn’t predict and that we didn’t like, that we thought was mad and we didn’t understand.
I think Arendt would’ve said this is what politics does. It’s around the space of interruption. It’s around the spontaneous. And whoever owns that space owns the direction it goes, and so you have to be watchful at all times, especially when the signs of disruption are so clear.
Apart from the elections, what sorts of signs do you have in mind?
I think Arendt would point to things like the prison system in the States, to the housing estates in London, to the forgotten spaces in Middle America with no role to play in this booming global economy — Arendt would say these are the new homes for superfluous people. But they’re real people, and people in power are blind to them.
These are also totalitarian features. When you crowd people into spaces, declare them invisible, declare them immaterial, those are the new spaces of what used to be the totalitarian camp.
Political spontaneity works both ways, though. Are there not also encouraging developments?
Sure. I think Arendt would be enthusiastic about other forms of politics that are coming together in the face of all this. Whereas lots of people are troubled that the Democrats don’t have a central narrative, and until three weeks ago it didn’t seem like the left did in Britain either, I think she’d have been very interested to watch the different groups that are coming together — there’s local community groups and political groups, different international groups — that together form a kind of counter-politics.
Arendt would call this an example of natality, an example of the new, the positive creation that can happen in the face of bad politics. So I think she’d be excited about that.
I want to go back to the concept of thinking, which had a particular meaning for Arendt, a political meaning. When you say that Arendt would look at our current moment and tell us to think, what do you mean? What would she mean?
Well, actually, thinking for Arendt isn’t always political by itself. Thinking is something you do by yourself. It is loneliness. It is isolation. It’s always tricky in Arendt’s work to see how she gets from thinking to politics, which I can talk about in a second. But thinking for Arendt was really a way of being; it’s about the dialogue we have in our head. She wanted to valorize that because it’s an internal check, in the moral and political sense.
Which is why she insisted that all totalitarian societies were defined by a kind of thoughtlessness. They were full of men and women who were smart but stopped thinking in this sense.
Right. She was writing in response to what she saw as totalitarian thoughtlessness. What she noticed about [Nazi leader Adolf] Eichmann when she went to see him [on trial] in Jerusalem was that he spoke purely in clichés, in banalities. She said he could only do that because he hasn’t got the inner voice, he hasn’t got that second voice in his head. He’s a human machine, a thoughtless tool. His thoughts were the thoughts drilled him into via the propaganda and the slogans.
Which is why she always cautioned against banal or clichéd speech; this was a sign that people had stopped thinking for themselves, and once that happens, totalitarianism isn’t far behind.
Let’s close with something useful for readers who are interested in reading Arendt as a way of making sense of the present. Where should they start?
The essays that I go back to are the “Thinking and Moral Considerations” essay, which she wrote coming out of the Eichmann trial. The book on Eichmann is wonderful just for its sense of narrative and indignation. But the “Thinking and Moral Considerations” essay is especially interesting because it was written during the Watergate scandal. There was a real sense of America tearing itself down and a belief that something different was happening.
It was an issue that united Bernie Sanders on the left and Donald Trump on the right: opposition to the North American Free Trade Agreement (NAFTA).
It’s one reason Trump won the White House, amid populist calls for protectionism. Many blue-collar workers in traditionally manufacturing-heavy states like Michigan blamed the trade deal for job losses, declining wages, and companies shifting manufacturing to Mexico.
President Trump, in particular, made the debate over free trade one of the central topics of his campaign. He argued in favor of ripping up trade deals, said NAFTA was “the worst trade deal in the history of the country,” and called the Trans-Pacific Partnership, or TPP, “a rape of our country.”
During his first week in office, Trump signed an executive regarding his intent to pull the US out of the TTP. Additionally, he has on multiple occasions stated his intent to “renegotiate” NAFTA.
With its future in doubt, following is a guide to everything NAFTA — past, present, and future.
What is NAFTA?
The North American Free Trade Agreement is a trade deal between the US, Mexico, and Canada. It was negotiated under President George H. W. Bush and implemented under President Bill Clinton in 1994 after heated debate in Congress.
NAFTA eliminated most tariffs, such as taxes on imports and exports, and on traded goods among the three nations. It put in place processes to get rid of other trade barriers too. The agreement followed the Canada-United States Free Trade Agreement, which was implemented in 1989 and aimed to eliminate trade barriers between the two nations.
NAFTA — and other trade agreements such as TPP — should not be conflated with trade in general. Trade, in its simplest definition, is the exchange of goods or services between entities. Trade agreements like NAFTA and TPP establish legal frameworks to ease the flow of goods and services across national borders. As we will see below, this has positive and negative consequences.
What was NAFTA intended to do?
The point of NAFTA was to encourage economic integration among the US, Mexico, and Canada. And that, by extension, was supposed to boost economic prosperity for all three.
Trade between countries can theoretically improve economic efficiency and make everyone wealthier by allowing countries to specialize in what they’re good at.
For example, if the US can grow corn more efficiently than Mexico, and Mexico can build cars more efficiently than the US, then it makes more sense for the US to grow a lot of corn and Mexico to build a lot of cars, and then for both countries to trade cars for corn with each other, rather than for each country to less efficiently do both things on its own.
More concretely, one effect of increased economic integration would be for US firms to move production over to Mexico where labor is cheaper than in the US or Canada — for example, with the auto industry.
Ahead of the deal’s implementation, President Clinton argued that, in the longer-term view, NAFTA was also about the US adapting to the changing technological and economic landscape.
“In a fundamental sense, this debate about NAFTA is a debate about whether we will embrace these changes and create the jobs of tomorrow, or try to resist these changes, hoping we can preserve the economic structures of yesterday,” he said at the signing ceremony for the supplemental agreements to NAFTA on September 14, 1993.
He continued in the speech:
“I tell you, my fellow Americans, that if we learned anything from the collapse of the Berlin Wall and the fall of the governments in Eastern Europe, even a totally controlled society cannot resist the winds of change that economics and technology and information flow have imposed in this world of ours. That is not an option. Our only realistic option is to embrace these changes and create the jobs of tomorrow. […]
Together, the efforts of two administrations now have created a trade agreement that moves beyond the traditional notions of free trade, seeking to ensure trade that pulls everybody up instead of dragging some down while others go up. […] This agreement will create jobs, thanks to trade with our neighbors. That’s reason enough to support it.”
In retrospect, it’s notable that Clinton’s proposed solution to the “changes” happening in economics and technology in the early 1990s — that is, “to embrace these changes and create the jobs of tomorrow” — is virtually the opposite of Trump’s proposed solution to economic and technological challenges of 2016 (“to Make America Great Again” by trying to go back to the old-school manufacturing jobs.)
Is there any point to NAFTA aside from the economics and jobs angle?
At least to some degree, free-trade deals are not just about the economic benefits for your own country, but are also about fostering positive relations with the other country. Or, as some economics professors like to say, “When goods don’t pass international borders, soldiers will.”
With respect to NAFTA, The Wall Street Journal explained it as such:
“NAFTA advocates say the economic debate misses the bigger point of the deal, which has been to ameliorate longstanding tensions across the border and turn Mexico into a more steadfast US ally. By that standard, they say, the pact has been a great success, fostering more bilateral cooperation on issues from crime to the environment—and keeping Mexico from following the path of left-wing Latin American countries or drifting closer to American rivals like China.”
On a related note, analysts had argued that TPP was largely about geopolitical benefits — namely, the US’s position in Asia.
What happened to American workers after NAFTA was signed?
Some believe NAFTA has hurt US workers, and there is empirical evidence to back up these grievances.
In 2016, economists Shushanik Hakobyan and John McLaren explored NAFTA’s effect on the US labor market by looking at wage growth among employed workers and comparing census data from 1990 to 2000 — the census before NAFTA took effect and the one after.
They found mixed effects on the US labor force. Although for the average worker there wasn’t too much of a difference, a concentrated minority saw a significant decrease in wage growth that could be correlated with NAFTA. Blue-collar workers were more likely to be affected, college-educated workers were less so, and executives saw some benefits.
“The most affected workers were college dropouts working in industries that depended heavily on tariff protections in place prior to NAFTA. These workers saw wage growth drop by as much as 17 percentage points relative to wage growth in unaffected industries,” McLaren said in an interview with UVA Today.
“If you were a blue-collar worker at the end of the ’90s and your wages are 17% lower than they could have been, that could be a disaster for your family.”
McLaren said that it wasn’t just the industries that were affected but entire towns that depended on those industries: Factory towns have grocery stores, bowling alleys, and public schools that all rely on industrial workers as customers. The example McLaren gave was this: “A waitress working in a town that depends heavily on apparel manufacturing might miss out on wage growth, even though she does not work in an industry directly affected by trade.”
Ultimately, he notes that, yes, there is evidence to support that for some American workers, wages were hurt by NAFTA. However, at the same time, these figures should not be exaggerated.
“I think it is important to get the information on the table and to show that there do appear to be blue-collar workers whose incomes have been reduced by this trade agreement,” he told UVA Today. “At the same time, I think it is important to use data to prevent those claims from being exaggerated. Some commentators throw around claims that millions of jobs were destroyed by NAFTA, which I don’t think are supported by the evidence.”
Did manufacturing employment start falling only after NAFTA?
No. The decline in American manufacturing employment predates NAFTA, as you can see in the annotated chart below. In other words, NAFTA alone is not responsible for the loss of US manufacturing jobs.
Additionally, it’s notable that a big drop-off in manufacturing jobs correlates with the economic shock of China joining the World Trade Organization (WTO) in 2001. And, the steepest decline occurs after the financial and housing crisis in 2007-08.
Some empirical evidence suggests China’s emergence affected US wages and jobs, too.
Back in January 2016, economists David Autor, David Dorn, and Gordon Hanson published a paper showing:
“Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. …
“Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize.”
Additionally, although Trump has fixated on the US trade deficit with Mexico, it’s notable that it is far smaller than the US trade deficit with China. Both deficits are highlighted in red below.
Has trade been the only factor correlated with manufacturing job losses?
No. Automation has also played a role.
A couple of months back, Capital Economics’ Andrew Hunter shared a chart in a note to clients comparing manufacturing output (purple line) to manufacturing employment (black line).
Although manufacturing employment has been trickling downward since the mid-1980s, manufacturing output has been increasing and is now near its pre-financial crisis high. In other words, firms have been able to increase output overall with fewer workers over the years, which is likely at least partially due to automation.
“It’s true that many of the manufacturing sectors that account for the bulk of the jobs lost over the past 15 years are also the ones subjected to the most competition from Chinese exports. But US manufacturing has also experienced high productivity growth, with the computers and electronics industry, which has lost the most jobs, seeing the fastest productivity growth of all,” wrote Hunter.
Moreover, it’s worth noting that manufacturing as a share of nonfarm employees has been on the decline since the 1970s — before NAFTA, China joining the WTO, and the Great Recession.
The takeaway here is that reversing the downward trend in manufacturing jobs is going to be incredibly difficult.
What were the positives from NAFTA for the US?
Trade among the NAFTA partners increased from about $290 billion in 1993 to over $1 trillion by 2016, according to data cited by the Council on Foreign Relations. Moreover, Canada and Mexico are the two largest destinations for US exports, making up over a third of the total.
Additionally, NAFTA has been credited with helping the US auto sector become globally competitive due to the cross-border supply chains. And American farmers have benefitted from NAFTA: Since the agreement’s implementation, US agricultural exports have nearly doubled to Mexico, and have increased by about 44% to Canada, according to the Office of the US Trade Representative.
How did American voters feel about trade deals leading up to the US election?
A Pew Research Center survey published in March 2016 found that Democratic and Democratic-leaning respondents had a more positive view of free trade agreements (60% good thing vs. 30% bad thing) while Republican and Republican-leaning respondents had a more negative view (40% good thing vs. 52% bad thing).
More strikingly, however, was the data within the bloc of Republican voters. From Pew:
“67% of Trump supporters say free trade agreements have been a bad thing for the U.S., while just 27% say they have been a good thing. Republican supporters of Ted Cruz (48% good thing vs. 40% bad thing) and John Kasich (44% good thing vs. 46% bad thing) hold more mixed views. […]
“[C]riticism of trade deals in general is particularly strong among Republican and Republican-leaning supporters of GOP presidential contender Donald Trump who are registered voters. Americans ages 65 and older and men, especially white men, stand out among this group.”
“Given persistent trade deficits that have contributed to long-term wage stagnation, along with corporate capture and the absence of consumer, labor, and environmental voices at the trade-negotiating table, perhaps it’s not so crazy that these trade deals have become code for a lot of other stuff that’s gone wrong for many in the working class,” Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and former Chief Economist and economic adviser to Vice President Joe Biden, argued in a blog post.
He also emphasized that it’s important to note that trade deals should not be conflated with trade in general, despite the fact that voters and politicians often do.
“From a political perspective, I don’t think the focus on trade is misplaced. It’s effective because it has an ‘other.’ It has a competitor or an enemy. People can picture this,” Alexander Kazan, a strategist at Eurasia Group, said in a video for the Eurasia Group Foundation. “When you talk about technology, it’s much more amorphous. It’s this sense that we all lose. So I think politically it’s less effective.”
Will NAFTA be torn apart?
The Trump administration states on the White House website that it is “committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.”
At the same time, NAFTA has “created a complex integration between Mexico and the US that would be difficult and costly to break,” Barclays’ Marco Oviedo and Nestor Rodriguez wrote in a note to clients in January.
They continued in greater detail (emphasis added):
“After 22 years of this free-trade agreement, the Mexico-US trade relationship, particularly in manufacturing, has become very integrated. In fact, it is estimated that Mexico’s exports to the US comprise 40% of US value added, the largest fraction among similar economies (China is 4.2%, Canada, 25%). In that sense, separating both manufacturing sectors seems highly costly and as difficult as trying to separate the yolk from a scrambled egg. If the US were to leave NAFTA, Mexican exports to the US would face the tariffs set by the WTO, which are rather low (2.5%). However, tariffs applied to exports from the US and Canada would be higher (close to 10%). In this scenario, Mexico could choose unilaterally to reduce tariffs on its imports of US goods to avoid a disruption in trade, given its low labor costs and access to other markets.”
Oviedo and Rodriguez argue that it’s more likely that the agreement will be “renegotiated,” although there are few specifics as of this writing.
“[I]t is unclear what aspects can be modernized or if the administration plans to impose technical restrictions, differentiated tariffs or other forms of protectionism,” the duo added in their note. “Any negotiations would likely be long and could take up Donald Trump’s entire term in office (the NAFTA negotiations took five years).”
What if NAFTA is scrapped? Then what?
The trade deficit with Mexico is primarily driven by transportation equipment followed by computer and electronic products, according to figures from 2015, which you can see below.
Tariffs or other measures to restrict trade within the NAFTA countries could adversely affect US firms in these sectors, according to Andrew Hunter, US economist at Capital Economics.
“The foreign subsidiaries of US automakers have more than $15 billion of plant, property, and equipment in the two countries. Efforts by Trump to force companies to shift production back to the US, where labor costs are higher […] could seriously damage their competitiveness relative to foreign producers,” he wrote in a note to clients.
What does NAFTA mean for stocks?
On January 27, Trump tweeted: “Mexico has taken advantage of the US for long enough. Massive trade deficits [and] little help on the very weak border must change, NOW!”
Not everyone agrees with that characterization.
“Mexico may run a large trade surplus with the US, but the idea that it has ‘taken advantage’ of its large neighbor […] is surely wide off the mark,” wrote Capital Economics’ John Higgins in a note to clients.
“Arguably, the opposite is true, which is why his policies pose a serious threat to the earnings of the companies that dominate the S&P 500.”
US multinationals, which make up a big chunk of the S&P 500, have moved operations into Mexico since the implementation of NAFTA at least in part to keep production costs down (via cheaper labor costs there) in order to stay competitive in the global market. Lower labor costs have then boosted profitability, after which share prices have risen.
“Unwinding this process — whether in Mexico or elsewhere — might bring back some jobs to the US. But goods would be more expensive to produce with US labor than with foreign labor. And the cost of labor in the US would probably rise, given that there is no longer much unemployment in the economy,” wrote Higgins. “The pain for US [multinational enterprises] could conceivably be eased by tax cuts, but at the expense of a bigger fiscal deficit.”
“The S&P 500 has benefited tremendously from globalization. Donald Trump should be careful what he wishes for.”
El presidente Donald Trump visita Miami este viernes para anunciar importantes cambios a la política de Estados Unidos hacia Cuba.
Estas son algunas de las principales declaraciones del presidente Trump:
–“La política reafirma el embargo estadounidense impuesto por ley a Cuba y se opone a los llamados dentro de Estados Unidos y otros foros internacionales para acabar con él”.
— “Es mejor para Estados Unidos tener libertad en nuestra región, tanto en Cuba como en Venezuela”.
— “Cuando los cubanos den pasos concretos, estaremos listos, preparados y capaces de volver a la mesa para negociar ese acuerdo, que será mucho mejor”.
— “Ahora que soy presidente, Estados Unidos denunciaré los crímenes del régimen de Castro”, dijo, además de denunciar los sufrimientos de los cubanos “durante cerca de seis décadas”. “Sabemos lo que pasa y recordamos lo que pasó”.
— “Retamos a Cuba a venir a la mesa con un nuevo acuerdo que esté en el mejor interés tanto de su pueblo como del nuestro”.
Trump cambiará significativamente la política estadounidense hacia Cuba, con la introducción de restricciones para hacer negocios con el mayor conglomerado de empresas militares y mayores controles a los viajeros que visiten la isla.
La nueva política de Trump intenta reducir drásticamente el flujo de dinero que le llega al gobierno cubano y presionarlo para que permita un mayor desarrollo del sector privado. Estados Unidos mantendrá, no obstante, las relaciones diplomáticas con Cuba y su embajada en La Habana. Los viajes familiares y las remesas que envían los cubanoamericanos tampoco serán afectados.
El discurso fue desde el Teatro Manuel Artime, en La Pequeña Habana. La transmisión en vivo concluyó a las 2:15 pm, hora del este.