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North Korea’s Kim Caves; Global Trade War or Trump Negotiating Strategy?; The Chinese Totalitarian Dictatorship; Political Chaos in Italy; Texas Disaster for Democrats

Al Tuchfarber

In-Brief

  1. N Korea has asked President Trump to meet for negotiations about the future of N Korea and its nuclear weapons and ballistic missiles. This amounts to a capitulation by Kim Jong-un unless he thinks he can out-negotiate Trump. Successful economic sanctions created this opportunity.
  2. China’s totalitarianism and its implications are ominous for the world and foreign investors.
  3. Question of the day…does Trump want a trade war or are the steel and aluminum tariffs just a negotiating ploy?
  4. The Texas primary results last week represent a debacle for the Democrats.
  5. Italy’s governance is in chaos with more populism embraced by the voters.

In-Depth

What’s Important

N Korea’s Kim capitulates

Let’s start with what really counts…the fundamental motivations and goals of Kim Jong-un and Donald Trump in the negotiations offered by Kim and accepted by Trump.

Kim’s has three major priorities…to stay alive, to keep his luxuries, and to continue his family’s dynastic rule. Nuclear weapons had seemed to be the sine qua non of such goals. That is no longer clear.

Trump’s over-riding goal is to de-nuclearize N Korea soon and permanently, resulting in a de-nuclearized Korean peninsula. This would eliminate an existential threat to US cities, Japan, S Korea, and US troops in East Asia. A diminution of N Korea’s conventional military threat would be good but is not essential as a first step in a process that will take many years, even if successful.

Trump has made it clear his administration does not want to tell other countries how to live as long as they do not threaten the US and its allies. That means, in a substantial policy shift that will cause howls from many, democracy and human rights for N Korea’s people are NOT likely to be Trump negotiating goals.

It is in China’s interest to have N Korea as a vassal state and a buffer between a thriving, democratic S Korea, as well as from the US troops there. Short-term or medium term [2-5 years], a N Korea with nukes will lead to a US military attack or a reality consisting of Japan, S Korea, Taiwan and other countries in East Asia with nukes. Neither option is acceptable at all to China, which is one of the reasons they have strongly supported negotiations between Kim and Trump. China has also implemented most of the harsh UN sanctions against the North.

Some of the details look like this…

Last week a delegation of senior S Korean officials, sent by their President, Moon Jae-in, met with Kim. N Korea’s leader offered negotiations with Trump with none of the usual pre-conditions, such as…no willingness to consider denuclearization by the North, demanding the end of US-S Korea war games targeting the North, and requiring the drawdown of US forces in S Korea.

With the full support from President Moon, the S Korean officials travelled to DC with the offer. Trump accepted after the offer was presented to him and senior US officials. Moon credited Trump with the breakthrough and indicated being in sync with Trump’s positions and goals.

President Trump has agreed to meet by May of this year.

Consider the following:

  1. Heavy UN sanctions, mostly implemented by China, have brought N Korea to a crisis. That is especially true of the fuel restrictions. [Recall that China has the power to destroy N Kore’s economy by cutting off imports of oil and fuel.] In effect, it becomes the invisible 3rd party at the negotiating table.
  2. If N Korea should ever attack US cities, or US bases, or US allies with nukes or a major conventional attack, N Korea as a modern society will cease to exist. Kim will be dead, or in- jail, with his life in jeopardy– no luxuries and no dynasty. [Recall his fundamental goals.]
  3. Negotiations and deals between the US, N Korea, and others have been made frequently over the last three decades— with the GHW Bush, Clinton, GW Bush, and the Obama administrations. Every time, the North duped the US administration, lied about its real intentions, enjoyed various types of concessions and goodies, and continued to develop weapons of mass-destruction.

Perhaps Kim thinks he can dupe Trump. But Trump is not naïve. The conservative media is playing a 1999 clip from a Meet-the-Press interview with Trump in which he articulates an analysis accurate then and now. The Democrats and press are advancing talking points that Trump is in over his head, hasn’t thought things through, and lacks the appropriate negotiating team.

I’ll wager that Kim is the one in over his head.

We’ll see…

Elections

Debacle for Democrats in Texas

Democrats and many political pundits have been predicting a great Blue Wave for the party in this fall’s congressional elections. One of the states targeted for substantial Democratic gains was Texas, and the hopes were high because of substantial early voting by Ds and good fundraising successes. Senator Ted Cruz and many Republican House members were said to be in trouble.

Last Tuesday, Texas held 2018’s first primaries. The Democratic hopes were almost all dashed. Several Democratic women did well, but overall it was ghastly for the party.

As usual, Republican turnout was substantially higher than D turnout, disproving the theory, at least in Texas, that displeasure with Trump would drive Democrats and anti-Trump independents to the polls while disenchanted Republicans stay home.

Senator Cruz’s primary total was about 50% higher than that of Beto O’Rourke, the great hope of the Ds.  Cruz now appears in little jeopardy in November.

Across the competitive US House districts in Texas, only one or two Republicans appear vulnerable. Much can change between now and November, but in the first primaries this year, the Democrats struck out in Texas, where they thought major gains were likely.

Looking more broadly across the country, please take note of the following dichotomy as primaries are held. The Democrats are likely to do well in the northeastern states and Virginia, on the Pacific coast, as well as in IL, CO, and NM. These are the 20 states won by Clinton. But, in the 30 “heartland” states won by Trump, the Rs are likely to do well. Only TX has voted so far, but the hypothesis held there.

Unless they make breakthroughs in more than a few of the Trump states, the Ds cannot take back the US House majority.

“Big Warning Signs for Senate Democrats”

The disaster for the Ds in Texas was exacerbated last week by 10 state polls released in a story from Axios with the title above. Axios is a left-leaning media company, but its stories usually avoid excessive political spin and bias.

The 10 polls were in FL, IN, MI, MO, MT, ND, OH, PA, WI, and WV. Those 10 have Democratic Senators running for re-election but were carried by Trump in 2016.The survey results show eight of the 10 Ds in jeopardy of losing. Five are running behind Republicans, three have Democrats with a 5-point lead or less, and only two have the Democrat safely ahead. November is a long way away but the notion that a great Blue Wave is developing seems unlikely given these survey results and the Texas primary results noted in the previous section.

As important, President Trump’s approval ratings in all 10 states are noticeably higher than his national approval in the low 40s. In these 10 states they range from 46% in FL and PA to 65% in WV.

All 10 of the Democratic incumbents face difficult campaigns. In only one state, NV, does a Republican incumbent seek re-election in a state Clinton won.

These facts and many others are why I rate the odds that the Republicans will gain at least five Senate seats in November at 50-50.

The odds that the Democrats will control both the House and Senate next year are extremely low.

PA-18 Special Election

Tomorrow there is a special election of some importance in PA-18. The Republican incumbent resigned because of a sex scandal.

The district is a semi-rural one in southwest PA, south of Pittsburgh. Democrats have a small registration advantage, but Trump won the district by about 20%. It is white working-class territory. The Democratic candidate, Conor Lamb, sounds like a perfect candidate for the district—former Marine, prosecutor, and political moderate. He is young and articulate.

Rick Saccone, the R candidate, is older, a veteran and a state legislator. He is a mediocre fundraiser and campaigner. Trump was in the district Saturday for a typical Trump rally.

The polls have the race very tight and it could go either way, depending on which party gets their voters out.

For the Republicans, a loss would be embarrassing, given Trump’s big win there.

For the Democrats, a loss would be a disappointment, given they have a viable candidate matched well to a traditional labor D district.

Media

Don’t forget the Tuchfarber 30 Day test — when you get upset about something in the news, ask if it is likely to be IMPORTANT in 30 days or so. Only seldom will it be so and you can usually ignore it.

Tuchfarber Global Political – Economics

China Watch

“Emperor” XI, China’s Totalitarian Dictator

Last week, the Chinese Communist Party’s constitution was amended to allow China’s president to serve more than two-terms. This is designed to allow current President, Xi Jinping, to stay in power indefinitely– probably for life. He can already stay for life as General Secretary of the Communist Party, the most powerful role. Without officially receiving the title, he is becoming the all-powerful “Emperor” of China.

He projects a grandfather-like image, but he is a totalitarian dictator in absolute control of an increasingly thuggish and intrusive regime. That regime is increasingly monitoring and punishing individuals using technology and social media.

It already controls most heavy industry and the financial institutions. It has informed China’s private companies that they are to hold the priorities of the “state” as their top priorities rather than profit or their investors.

Communist Party cells are being established in private corporations and the Party is naming some managers and directors.

No one and no organization can now seriously contest Xi’s power. He has power we can hardly even imagine and is willing to wield it in some harsh ways. Many party, military, and corporate leaders, as well as political dissidents, have recently discovered that fact. He is an absolute dictator through his direct control of the following institutions:

  1. The party
  2. The judiciary
  3. The government and bureaucracy
  4. The military
  5. The press
  6. Social media
  7. Public and private corporations
  8. The regulators and financial institutions
  9. The police and interior ministry
  10. The power to name and remove provincial and local leaders

China is becoming more and more like the old Soviet Union. It will become an increasingly dangerous place for foreigners and citizens to invest or build partnerships as the priorities of the state will nearly always prevail.

Italy Rejects the Left

Italy had an election last week and continued several European trends.

Populist parties were the big winners and the main center-left party suffered a devastating defeat.

The top vote-getting party was the anti-establishment, euro-skeptic, 5-Star party.  A coalition of three center-right parties, all anti-immigrant, got the most votes as a group. The center-left and left-wing contestants got only about 20%, a historic defeat.

Who governs Italy will likely takes weeks or more to negotiate.

The importance of the results is that the anti-elite, anti-immigrant, populist trend in Europe continues and grows.

Both Merkel and Center Left Weakened in Germany

Angela Merkel’s center-right Christian Democrats and the center-left SPD concluded an agreement to govern in coalition. Both parties were substantially weakened is the election late last year. Populist parties in Germany are gradually gaining votes and parliamentary seats as in much of Europe.

Merkel’s leadership role in Europe and Germany is weakened and any substantial changes in policy are unlikely. Germany is still very prosperous and Europe’s leading power, but it is now unable to lead Europe to a new model or effectively deal with rising populism at home.

Critical Political & Economic Measures

This is a new section that will appear weekly. The measures are important in their own right, but also influence electoral politics.

POLITICAL MEASURES

  1. Right Direction-Wrong Track— This measure is widely used by pollsters, asking in effect if things are going well or badly in the US. Since 2006, it has proven to be a good indicator before elections if the party “in-power” [controlling the White House] was going to do well or badly. If the “wrong-track” reading is 62% or higher, it bodes ill for them. If 58% or lower, they break even or gain. THIS IS MY MOST-PREFERED ELECTION PREDICTION MEASURE. I use dozens, but this one seems to strip out a lot of noise. Using my adjustments to this measure as described in a note below, “Wrong-Track” is now at 56%, down 2% from last week.
  2. Generic Congressional Ballot—Also used by many pollsters, this indicator measures the current preferences of voters for which party they prefer in US House races. Mine are now 47% D and 39% R, a slight narrowing of the margin for the Ds. Historically, Ds need a solid lead on this measure to win a House majority. They win huge majorities in some states and urban areas while Republican votes produce more wins with smaller majorities—i.e., the R votes are more efficient. This phenomenon is due to both Ds packing themselves into some states and into urban cores as well as political gerrymandering by both parties.
  3. Presidential Approval—Trump’s approval rating, using my measure is now 41%, down 1%. It is at a below average level for recent Presidents. But, because of his unique and often disruptive style, the Gallup organization and others, including myself, believe this measure underestimates his real approval ratings by 5% or more. Many political science models make heavy use of this measure in their predictions. I will report it, but will use it for trend analysis, not election predictions.

ALL THESE POLLS WERE TAKEN BEFORE THE N KOREAN NEGOTIATION DEAL, THE STEEL AND ALUMINUM TARIFFS, AND THE FRIDAY JOBS REPORT WERE ANNOUNCED. THOSE WILL BE REFLECTED IN NEXT WEEK’S POLLS.

ECONOMIC MEASURES

  1. Unemployment Rate [official: U-3]—The current level is 4.1%, a 17-year low. Low or falling levels of this measure are a positive for the “in” party. It is low and falling now, down from 4.8% a year ago. The February jobs report saw a huge increase in jobs created and in Americans returning to the job market, both very positive signs.
  2. Unemployment Rate [broadest measure including under-employment: U-6]—The current level is at 8.2%. This is a very low level and fell from 9.4% a year ago,
  3. GDP GROWTH—Growth last quarter was 2.6% which is significantly higher than the average growth over the last eight years.

WAR

  1. The jobs issue and war issue are the 500-pound gorillas of American public opinion. If the economy is bad or there is a major unpopular war, the party in power is in trouble. Unpopular wars, like Vietnam and Iraq, shatter the support of the party in power. Small wars, like Afghanistan and Syria are nearly always underway and usually do not have major effects unless they grow substantially in the cost in US lives.

ANALYSIS

Among the Political Punditry, the conventional wisdom for months has been that a Democratic Wave was building that would gain them the House majority and minimize their losses in the Senate where they have many vulnerable seats.

I have disagreed and the predictions in the next section quantify that. I’ve disagreed because my preferred metric [right direction-wrong track] is in territory that predicts relative success for the Rs. In addition, the economic situation is excellent, and there is no major war.

The measures above could change, but as long as they stay where they are, the Democrats will make only modest gains in November. If the indicators change, so too will my predictions.

Predictions

Changes this Week

Election Predictions

Policy & Legislative Predictions

*NOTE: Remember that after being impeached by a Republican controlled House in 1998, not one Democratic Senator voted to remove Bill Clinton from office. It takes 67 votes and is more of a political process than a legal one. NO President has ever been impeached and removed. Richard Nixon resigned before the House and Senate could impeach and remove him from office.

Musings

The Tuchfarber Report is grounded by facts rather than advocacy or wishful thinking. But there are times when a little speculation is appropriate which is why I periodically include this Musings section.

Free-Trader, Protectionist or Negotiator?

Is Trump a free-trader or a protectionist?

Given previous actions by him and promised tariffs on steel and aluminum imports, the President is labeled a protectionist. Fears are he wants a trade war or will accidentally provoke one. An accidental trade war is possible.

But, what is Trump’s strategy?

Many will say he doesn’t have one and is just fulfilling campaign promises.

In my analysis, that is part of the picture, but not the core of his strategy.

Trump calls himself a free-trader to the derision of many. But, he also attacks predatory trade, especially by China. Those are not mutually exclusive positions. Free trade and benefitting from comparative economic advantage is a good thing.

But predatory trade includes dumping goods below cost and seeking future monopolies. Those are bad things.

Trump doesn’t want a trade war as he knows all will lose if there is a major one.

But, he is sending a clear shot across the bows of China, S Korea, Europe, and others that the US will no longer be a patsy and accept unbalanced trade deals. He is positioning himself for negotiations. Illustrations of that are that he has already exempted Canada and Mexico from the tariffs because of the ongoing NAFTA negotiations. Australia, as a key ally, also seems near certain to be exempted.

A key to understanding Trump is…HE IS ALMOST ALWAYS SETTING UP A NEGOTIATION WITH THE EXTREME POSITIONS HE TAKES IN ADVANCE.

There is NO GUARANTEE he will successfully execute his strategy, but he has one that is much more nuanced than he is given credit.

Again, keep those thoughts in mind…

Until next week…
Al Tuchfarber
Professor Emeritus of Political Science, University of Cincinnati

Al.Tuchfarber@gmail.com
Tuchfarber Political-Economics LLC, Inc.

Dr. Tuchfarber founded the Ohio Poll, one of the nation’s most accurate, while directing the social science Institute for Policy Research from 1975 to 2004. He also founded and directed the Institute for Health Policy from 1996 to 2004. He is an engaging and dynamic speaker and has published over 100 articles and papers about politics, society, and research methods.

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