gary cohn politics

Gary Cohn: The Economy Is Great, But Trade War And Tariffs ‘Totally Hurt The United States’

"At this point, I don’t have any intention not to vote for the president".

Donald Trump has far too much on his plate right now to care what Gary Cohn says to CBS, but in “better” times, when the only things occupying the president’s time were “trivial” matters like prodding Pyongyang into nuking Guam, he might well have responded to Cohn’s tariff jabs on Sunday.

Overall, Gary was cordial and complimentary of the administration’s domestic economic priorities, which is no surprise because he was the architect of the tax cuts.

“I know lot of people have been talking about a recession. I do not see a recession on the horizon here”, Cohn told Margaret Brennan. “The US economy is strong. The US consumer is very strong”.

 

“If you look at what’s happened with tax reform, we have put more disposable income in the hands of the US consumer”, he continued.

At least some of that is correct. The US consumer is, in fact, strong. As to how much the tax cuts have actually helped the people with the highest marginal propensity to consume, that’s an entirely different discussion. Indeed, there’s a good argument to be made that the Progressive wing of the Democratic party has the strongest platform when it comes to putting more disposable income in the hands of the Americans most likely to spend it. If you eliminate the albatrosses of health insurance premiums and student loan debt, large swaths of America would suddenly have quite a bit more money to spend.

In any event, Cohn’s glowing assessment of the economy and the effects of the tax cuts did not extend to the trade war.

“I think it’s totally hurt the United States”, Cohn said, unequivocally. “The US economy is very strong, very solid. Employment growth is great. But we’re missing a big component. We’re missing the capital expenditures from companies in the United States”. Then, he said this:

The minute a company is thinking about spending capital, what do you go out and buy? You go out and buy steel and aluminum. That’s how you build factories. That’s how you build property, plant equipment. So all of the sudden, the advantages that we were trying to give companies to help stimulate the economy — to build facilities, to go out and hire people, to drive wages — we took away that advantage by taxing the input that they needed to build.

And there it is. That’s the truth of the matter. Donald Trump’s MAGA mercantilism is misguided and, at the end of the day, it is by no means clear that threatening allies and foes alike with tariffs and non-tariff barriers actually achieved anything that couldn’t have been achieved through determined negotiations.

Here is the full exchange with Brennan on the tariffs:

 

You’ll also note from the first clip above that while Cohn refused to openly condemn Trump and Larry Kudlow for their incessant berating of the Fed, Cohn did say, very firmly, “I’m not worried about interest rates right now”.

Headed into the election, Cohn – who was maligned by administration hardliners for being an “establishment” guy – was critical of Progressives.

“It’s probably easier to talk about corporate greed, and talk about Wall Street, and talk about technology companies because they don’t really have an answer for an economy that’s growing”, he mused. “I haven’t heard their answer on that, except let’s tax it to death”.

That is wholly disingenuous for a laundry list of reasons. Frankly, it’s disappointing that Gary would trivialize the debate that way. He is not a stupid man, and is fully capable of having an intelligent conversation about the fact (because that’s what it is) that capitalism in America is broken. That doesn’t mean it can’t be fixed. But it is broken. Ask Ray Dalio. Or Jamie Dimon, who, despite himself being critical of Progressives, has on numerous occasions discussed the extent to which the system is in desperate need of reform.

To be fair, Gary did say he’s concerned about income inequality, but contended that the Trump tax cuts actually helped ameliorate the situation. That’s a laughable claim.

Finally, Cohn said that when it comes to his vote in November, “I’m leaving the door open”.

“At this point, I don’t have any intention not to vote for the president”, he added.


 

 

5 comments on “Gary Cohn: The Economy Is Great, But Trade War And Tariffs ‘Totally Hurt The United States’

  1. Gary loves Trump because he can manipulate the feeble minded president. The voodoo economics he espouses has been a failure every time it has been implemented to provide trickle down benefit to the masses yet having a fantastic benefit to the top 1%. Oh, and of course not paying for itself not matter how hard you pray.

  2. Anonymous says:

    Trillion dollar deficit in a “great” economy.

    NIPA profits.

    2% GDP growth.

    Real wages.

    Auto loans. Student loans.

    Young adults living with their parents. Household formations. Birth rates. Declining life expectancy.

    Goldman’s business and IPOs.

    My how “great” has changed.

    • Anymouse says:

      So confused. I’m a 4 years retired 66 year old. I’ve lived through the skyrocketing inflation of the 70’s and the nil inflation/deflation of the present (and the various crises that came with them). I’m still the same 100% stock market (and, these days, some cash, enough for 2-3 years expenses) where I’ve been since my 30’s, largely because there is simply no alternative now. I earn plenty on dividends, enough to not need SS, due to my relatively frugal lifestyle and lack of debt. So everything is grand! Or is it? How I long for the days of 3% on a passbook, and 6% on a CD (plus a toaster).

      Do I count on the 3.5 million annual US retirees and companies just buying back stock to keep pumping up the market because TINA? These new retired folks really have no choice but dividends. But what happens when the music stops? The only this I can see from 0% rates is ill advised M&A, crushed public/private pension plans and insurance companies, and an eventual financial collapse. Things I worry about:

      Global collapse in yields
      Still $11T in negative yields worldwide
      Yield curve inversion
      Slow global growth
      Trillion dollar deficits from here on
      $23T US debt
      Debt to GDP increase from 65% to 105% in last ten years
      Highest corporate debt in history, double that in ’07
      Escalating trade tariffs between the U.S. and China (maybe Europe, too)
      The United Kingdom heading toward a “hard” Brexit
      Renewed U.S geopolitical tensions with Venezuela, Iran and North Korea (oh, just everyone!)
      Lagging effect of interest rate hikes by the Federal Reserve
      Slump in corporate earnings
      High consumer confidence (lagging indicator)
      Consumer confidence at levels that preceded past recessions
      Global manufacturing recession
      Global purchasing managers’ index falls for 13 months in a row
      Global CLI indicator at recession threshold
      Most CFOs expect a recession this year, 70% in US

      And everyone buying the stock market and the consumer to save the day!

  3. Anymouse says:

    Funny, I have enough money, but I have yet to think of any of it as “disposable”. What’s with Cohn and Bannon returning from exile? Bannon on CNBC saying that Trump tweets should be taken as “Papal bull”? Yet, I don’t think he was bleeped…

  4. gdhalpha says:

    H, you clearly call the situation correctly. Gary Cohn and all the other Republicans live in a bubble. They look in the mirror and say “Well I’m doing ok, my friends in the Hamptons are doing ok, so everyone else must be doing ok too.”

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