The Intersection of Business and Government

‘American First’ Trade Policy is a Non-Starter

President Trump’s ‘America First’ slogan may be hurting, well, Americans first. The president’s trade wars are increasingly interpreted by world business leaders as: ‘You’re Not Welcomed.’ That could prove more costly to the American economy and the jobs its produces than even that posed by the trade and tariff wars themselves.

Government data shows that the amount of foreign direct investment into the United States by international firms headquartered abroad has fallen significantly under the Trump administration. This is important because foreign investments create good paying jobs for Americans here in America.

I should know. I worked at BASF Corporation the U.S. subsidiary of the world’s largest chemical company BASF SE, whose headquarters are in Germany. For decades the parent company has invested billions of dollars in the U.S. creating thousands of high quality, good paying jobs.

BASF’s workforce is part of more than 7.1 million U.S. workers employed by global multinationals. These global companies not only hire American workers they also contribute hundreds of billion of dollars annually to our economy in purchases of goods and services, including significant investments in research and development. So, my suggestion to the president would be to cool the rhetoric, recognize the contribution that foreign direct investment makes to our economy and develop policies that encourage, not discourage their interest in investing in America. In other words: roll out the welcome mat.

Who’s Afraid of the Big Bad National Debt? Apparently, Not Congress nor President Trump

The national debt is the accumulation of all past deficits. Today it stands at $17 trillion. It represents 80 percent of what America produces for its gross domestic product of all goods and services. It won’t be long until the national debt equals or exceeds 100 percent of GNP. If this is not a concern of yours today, it will likely be impacting you in the near future.

Some believe there is nothing to worry about. The Federal Reserve and Department of Treasury will simply have more money printed. That would be a false solution since doing so has always produced high inflation—and another set of serious problems.

In the past, the Republican Party served as a check on the Democrat “big spenders.” Not anymore. With large tax cuts and support for additional spending, the breaking of the budget is now a bipartisan sport. So called “spending caps” are a joke and are frequently raised to a higher level to justify additional spending. Our annual deficit will soon hit $1 trillion and is forecasted to rise to $1.5 trillion in eight years according to the Congressional Budget Office.

Many state constitutions require their spending to not exceed revenue, or in other words, they require a balanced budget to be passed by their legislature.

That discipline is lacking on the national level. As a member of the Missouri House of Representatives, I witnessed how legislative leaders grappled with this requirement. It takes time and effort. Something our federal leaders seem unable to accomplish.

That’s why when I was in congress, I drafted a constitutional amendment to require a balanced budget with exceptions for when the nation was at war or there was a national emergency. I obtained 140 co-sponsors in the House, the most of any such proposal to required a balanced budget. At the time the Democrats were in the majority so they were not interested in having my proposal see the light of day. When the GOP took over congress, there was no effort to confront the deficit. Had both parties been more foresighted, we would not find ourselves drowning in red ink from the current trillion-dollar deficit and the economic consequences looming around the corner.

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Cartoon credit: Gary Varvel, Creators.com, March 2018