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US Federal Reserve raises interest rates to 1% in bid to hold off inflation

Fed chair says US economy in strong health as she announces third rate rise since 2008 and the first of several expected this yearJanet Yellen discusses interest rate rise live updates

The US Federal Reserve has sought to head off rising inflation with a third interest rate rise since the 2008 financial crash and the second in three months, taking the base rate from 0.75% to 1%.

The central bank set aside concerns about the impact of higher interest rates on consumer spending to confirm analyst projections that it is prepared to increase rates several times this year to keep a lid on inflation as it rises above its 2% target level.

The Feds chair, Janet Yellen, said a wide range of indicators showed the US economy was in rude health, allowing its interest rate setting committee to push rates back towards historically normal levels. Policymakers voted nine to one to raise rates.

Speaking after the decision, Yellen said she had met Donald Trumps treasury secretary, Steven Mnuchin, a couple of times but had only been introduced to the president himself.

I fully expect to have a strong relationship with secretary Mnuchin, she said. We had good discussions about the economy, about regulatory objectives, the work of the FSOC [Financial Stability Oversight Council] global economic developments, and I look forward to continuing to work with him. She said she had had a very brief meeting with Trump and appreciated that as well.

Earlier in the day the Department of Commerce said retail sales had inched up by 0.1% in February, and that they had been better than it had previously estimated in January.

US interest rates

The Department of Labor said consumer prices were 2.7% higher in February than a year earlier. After excluding the costs of food and energy, inflation was 2.2%. A housing market index from the National Association of Home Builders also surged to its highest level since 2005.

US stock markets moved up on the news, rising 90 points in the minutes after the decision, and US crude rose 2%. The increases were modest following Yellens signals in December that interest rates were on an upward path. Investors were also caught out by Yellens bullish comments in the wake of the announcement and by projections showing that 11 of her 17 policymaking colleagues saw borrowing costs rising another three times in 2017.

Dennis de Jong, the managing director of the currency trader, said: Given the bloating effect Donald Trumps presidency has had on US inflation, it would have been more of a surprise had Fed Chair Janet Yellen not announced a rate hike at todays Federal Reserve meeting.

Trumps grand plans for American infrastructure spending have signalled an about-turn for US economic policy after just one rate increase in ten years, weve now seen two in the space of three months, and plenty more are expected for 2017.

This all spells bad news for US borrowers, who will likely have to foot a larger bill over the coming months. With at least three more hikes on the cards by the end of the year, todays news could hit many where it hurts the most the pocket.


Some economists argue that weak wages and productivity growth in the US will limit the Feds rate increases to a handful before reaching a peak at around 2%.

Gus Faucher, the deputy chief economist at the stockbroker PNC, said: I think the concern, in terms of why the Fed is raising rates now, is that inflation is picking up. The unemployment rate is 4.7% and thats putting upward pressure on prices.

He told the Guardian economic forces were acting against a return to interest rate levels of 4-5% seen before the 2008 crash.

We have slower labor force growth because of the ageing of the baby boomers, [and thus] slower productivity growth in terms of output per worker, he said. That has reduced the potential for long-run growth, its reduced inflationary pressures, and I think rates in the future will be lower than they have been in the past.

US retail sales

Faucher also said further interest rate rises could dent consumer spending, which has come to rely on cheap loans.

I do think eventually that higher interest rates are going to have an impact on rates for car loans, so that may be a problem for automakers. It may be a problem for big-ticket durable items, home appliances, stuff like that. There is a ceiling on those effects, though, and Faucher doesnt think they will affect home loans.

There isnt much bleed over into mortgage rates; its mostly the short-term borrowers, he said.

Fed policymakers are known to be concerned that the tax cuts and extra government spending Trump has demanded could overheat the economy and lead to a deep recession. Should that happen, the Fed will want to have substantial interest rates in place.

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Q&A: What will happen if the US Federal Reserve raises interest rates?

Janet Yellen, the Fed chair who has been criticised by Donald Trump, is set to raise rates for third time since financial crash

The US central bank is poised to raise interest rates for only the third time since the financial crash of 2008. With its headquarters just round the corner from the White House, the Federal Reserve and its chair, Janet Yellen, are in Donald Trumps sights.

On the campaign trail Trump said Yellen should be ashamed of the Feds low interest rate policy, and accused the bank of creating a false stock market. Trump has called for higher rates, but Yellen can not take a positive presidential reaction for granted.

The reaction of markets across the world is even less predictable. So what is the likely impact on the US and the global economy?

What is the Fed expected to do?

The Federal Reserve raised the base interest rate by a quarter of a percent in December last year and is expected to follow with a further rate rise on Wednesday. Some analysts expect a quarter-point rise, though most of the betting is now on a half point, pushing the base rate to a range of 1% to 1.25%.

Why will it raise rates?

The US economy has grown for the last 30 quarters and shows no sign of slackening off. Consumer spending is robust and the latest jobs numbers showed employment increasing and unemployment staying low.

Fathom Consulting, an economic forecaster, said spare capacity in the labour market was disappearing fast and it would not be long before wages started to rise rapidly. Wage rises push up demand, and that triggers higher prices.

The Fed has a remit to control inflation, but also to mintain high levels of employment. By raising rates, it will appear to do both.

How will consumers and corporate America react?

The Fed is betting businesses will shrug off the extra cost of borrowing, continue to invest in the US economy and create jobs.

Setting aside concerns about Brexit and a string of potentially destabilising elections on the continent, Fed policymakers have judged that the strength of the economy is enough to override a series of rate rises, possibly taking the base rate to almost 2% by the end of next year.

Consumers have embraced the Trump rhetoric of tax cuts and deregulation to continue spending, undeterred by the prospect of higher mortgage costs.

How will the market react?

Central banks like to signal their intentions, albeit in opaque language, to prevent investors being spooked. This rise was heavily trailed in recent weeks and has been priced in as a certainty by market participants in New York, London and Tokyo though some would be surprised by a half-point rise.

Turbulence could come from the foreign exchange markets if the dollar rises following a slump in the Turkish lira, Indonesian rupiah, Mexican peso or other developing world currency. More importantly, the bond markets could overreact.

Why do the bond markets matter?

Much of the world borrows money in dollars or seeks to lend to the US government and US corporations in dollars. A rise in interest rates would encourage an influx of funds into the US, pushing up the dollar relative to other countries. A rise in the Fed funds rate would also increase the cost of borrowing.

When the Fed first hinted in 2013 that it planned to stop pumping funds into the financial system, the prospect of higher borrowing costs for those holding dollar debts spooked the bond markets. Turkey and Russia were highlighted as countries with corporate sectors that expanded quickly based on heavy borrowing using dollar-denominated bonds. It was clear that much of Turkeys corporate sector could go bust if its interest bill jumped too far or fast.

Such was the strength of the reaction, Ben Bernanke, who at the time chaired the Federal Reserve, abandoned his plan. A similar reaction preceded a rate rise in December 2015, and while markets regained their composure, the extra costs imposed on Turkey and Russia hit their economies hard and arguably shored up the position of their authoritarian leaders.

Is a currency war possible?

Trump has already attacked China for artificially depressing its currency, even when Beijing was doing all it could to close the gap between the yen and the dollar. Now China is letting the yen fall and with interest rate rises in the US pushing up the dollar, the gap will widen, increasing the cost of US exports and reducing import prices.

Trump can only complain about the currency, but he could make good on threats to impose tariffs on Chinese goods, sparking a trade war.

Is there any reason to keep rates on hold?

Annual US GDP growth since the 2008 crash has averaged 2.1%. This might seem like a healthy rate, but it is the slowest recovery from recession since the second world war. Business investment remains low and productivity in the US, as elsewhere in the developed world, is growing sluggishly. To boost borrowing and demand, the Fed needs to keep credit cheap.

But Trump plans to make up for the tightening of monetary policy by cutting taxes and running up a huge budget deficit. He also plans to take his shears to corporate and consumer regulations, unleashing a surge in economic activity.

Bloomberg said investors expect three more rises before the end of the year. Fathom Consulting said there was enough momentum in the economy for rate increases of 25 basis points seven times between now and the end of next year.

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Trumps honeymoon with the stock market will soon be over | Nouriel Roubini

His promises have rallied the Dow Jones but his inconsistent, erratic and destructive policies will take a toll on growth

When Donald Trump was elected president of the US, stock markets rallied impressively. Investors were initially giddy about Trumps promises of fiscal stimulus, deregulation of energy, health care and financial services, and steep cuts in corporate, personal, estate, and capital-gains taxes. But will the reality of Trumponomics sustain a continued rise in equity prices?

It is little wonder that corporations and investors have been happy. This traditional Republican embrace of trickle-down supply-side economics will mostly favour corporations and wealthy individuals, while doing almost nothing to create jobs or raise blue-collar workers incomes. According to the non-partisan Tax Policy Center, almost half of the benefits from Trumps proposed tax cuts would go to the top 1% of income earners.

Yet the corporate sectors animal spirits may soon give way to primal fear: the market rally is already running out of steam, and Trumps honeymoon with investors might be coming to an end. There are several reasons for this.

For starters, the anticipation of fiscal stimulus may have pushed stock prices up, but it also led to higher long-term interest rates, which hurts capital spending and interest-sensitive sectors such as real estate. Meanwhile, the strengthening dollar will destroy more of the jobs typically held by Trumps blue-collar base. The president may have saved 1,000 jobs in Indiana by bullying and cajoling the air-conditioner manufacturer Carrier; but the US dollars appreciation since the election could destroy almost 400,000 manufacturing jobs over time.

Moreover, Trumps fiscal stimulus package might end up being much larger than the markets current pricing suggests. As Ronald Reagan and George W Bush showed, Republicans can rarely resist the temptation to cut corporate, income and other taxes, even when they have no way to make up for the lost revenue and no desire to cut spending. If this happens again under Trump, fiscal deficits will push up interest rates and the dollar even further, and hurt the economy in the long term.

A second reason for investors to curb their enthusiasm is the spectre of inflation. With the US economy already close to full employment, Trumps fiscal stimulus will fuel inflation more than it does growth. Inflation will then force even Janet Yellens dovish Federal Reserve to hike up interest rates sooner and faster than it otherwise would have done, which will drive up long-term interest rates and the value of the dollar still more.

Third, this undesirable policy mix of excessively loose fiscal policy and tight monetary policy will tighten financial conditions, hurting blue-collar workers incomes and employment prospects. An already protectionist Trump administration will then have to pursue additional protectionist measures to maintain these workers support, thereby further hampering economic growth and diminishing corporate profits.

If Trump takes his protectionism too far, he will undoubtedly spark trade wars. Americas trading partners will have little choice but to respond to US import restrictions by imposing their own tariffs on US exports. The ensuing tit-for-tat will hinder global economic growth and damage economies and markets everywhere. It is worth remembering how Americas 1930 Smoot-Hawley Tariff Act triggered global trade wars that exacerbated the Great Depression.

Fourth, Trumps actions suggest that his administrations economic interventionism will go beyond traditional protectionism. Trump has already shown his willingness to target firms foreign operations with the threat of import levies, public accusations of price gouging and immigration restrictions (which make it harder to attract talent).

The Nobel laureate economist Edmund S Phelps has described Trumps direct interference in the corporate sector as reminiscent of corporatist Nazi Germany and fascist Italy. Indeed, if Barack Obama had treated the corporate sector in the way that Trump has, he would have been smeared as a communist; but for some reason when Trump does it, corporate America puts its tail between its legs.

Fifth, Trump is questioning US alliances, cosying up to American rivals such as Russia, and antagonizing important global powers such as China. His erratic foreign policies are spooking world leaders, multinational corporations and global markets generally.

Finally, Trump may pursue damage-control methods that only make matters worse. For example, he and his advisers have already made verbal pronouncements intended to weaken the dollar. But talk is cheap, and open-mouth operations have only a temporary effect on the currency.

This means that Trump might take a more radical and heterodox approach. During the campaign, he bashed the Fed for being too dovish, and creating a false economy. And yet he may now be tempted to appoint new members to the Fed board who are even more dovish, and less independent, than Yellen in order to boost credit to the private sector.

If that fails, Trump could unilaterally intervene to weaken the dollar, or impose capital controls to limit dollar-strengthening capital inflows. Markets are already becoming wary; full-blown panic is likely if protectionism and reckless, politicised monetary policy precipitate trade, currency, and capital-control wars.

To be sure, expectations of stimulus, lower taxes and deregulation could still boost the economy and the markets performance in the short term. But, as the vacillation in financial markets since Trumps inauguration indicates, the presidents inconsistent, erratic, and destructive policies will take their toll on domestic and global economic growth in the long run.

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‘I feel used and betrayed’: readers affected by the recession on who they’ll vote for

Eight years after the economic collapse, are Americans better off? As the election nears, readers share their experiences and how it will affect their vote

Eight years ago, the US economy went to hell. Lehman Brothers bank collapsed, the first of many. As a financial crisis swept the globe, unemployment soared, house prices and stock markets collapsed. Today, stock markets are at record highs, house prices have bounced back, the unemployment rate is 5%, half its peak during the recession. And yet …

Earlier this month we told the stories of five people who lived through the recession, many of whom said the recovery feels hollow. Below readers who responded to the story share their experiences and how it will impact their vote.

Craig from Jacksonville, Florida

Are you better off today than you were in 2008? I am about the same. In 2008 I was just two years out from finishing my undergraduate degree. I had the option to graduate early but when things began to turn dark, every intelligent person I knew told me to hold off. I remained in school for another year thinking I could wait it out. Boy, was I wrong. I ended up going to graduate school hoping to wait out the storm again. Turns out, that didnt help much either. After graduating as a highly skilled student, finding full-time employment was about as easy as finding affordable living in Manhattan.

Since then, I worked just about everywhere. I have done consultant research, bussed tables, worked in an emergency room and even spent a year working at a Florida beach bar all while applying for applicable jobs in my field that came with benefits. I finally have a job, but the amount of debt I have acquired and the amount of job insecurity I still feel has me on edge about as bad as 2008.

Who will you vote for? I am absolutely terrified of what is to come November 8. I am still a Florida registered voter so maybe my vote counts (if it does not end up on a beach somewhere). I plan to close my eyes and vote for Clinton. My biggest fear is that an economic bubble worse than 2008 is coming and that I will go back to bussing tables and serving drinks again.

Lori from Denver, Colorado

Are you better off today than you were in 2008? I am better off than I was in 2008. In 2008, I just started working after an awful divorce. My ex-husband was a homebuilder and laid off in the crash and there went my maintenance and child support. Today, Im an executive assistant for a CEO. Im better off because my first job after being a stay-at-home mom for 13 years paid $50,000 and I was thrilled. In 2016, Im now at $75,000 so Ive taken some job risks but its paid off.

But everything else my cost of living seems to have absolutely skyrocketed. I literally live paycheck to paycheck. I have two kids in college and I pay their auto, health insurance and cellphones. Its crazy and Im a tad frightened for the world theyll enter soon. Not sure theyll ever be able to buy a home, at least here in Colorado.

Who will you be voting for? I literally despise the Clintons so I cant vote for HRC. I always wanted to vote for the first woman, too. Theyre too sleazy for me. Trump scares the shit out of me. I was leaning toward him in the beginning because I do think a business person might bring a fresh perspective but, Jesus, not now.

I think Ill write in Bernies name. I dont know what else to do.

A supporter of Bernie Sanders carries a placard during a rally outside the Democratic national convention in July. Photograph: Dominick Reuter/Reuters

Kurt Johnson from Woodstock, Georgia

Are you better off today than you were in 2008? I am better off than I was in 2008. The economy was in a total nosedive. Obama wasted no time approving large measures to stop the bleeding. I work in real estate investing. Real estate where I live has returned to 2007 prices and as a result, we have enjoyed a good ride of appreciation of homes we have bought over the last eight years.

Who will you be voting for? I cant vote for the current Republican candidate under any circumstances. He is not fit to be a CEO, much less a president. I would be fine with things staying as they are so Hillary doesnt concern me that much. The Senate and House will keep her from making any changes for better or worse so I can stomach another four years until a respectable Republican runs in 2020.

Willard from San Jose, California

Are you better off today than you were in 2008? I am better off than I was in 2008.
The economy is in far better condition. Housing has recovered.

Who will you be voting for? The economy will play a role with how Ill vote. Both parties make big promises which I dont expect to be fulfilled. But at least Trump does discuss trade, jobs and manufacturing. If Congress agreed with a fraction of his bluster it might improve the economy.
But Ill NOT be voting for HRC because she is corrosive, divisive and corrupt to the core. On account of her, and with the current administrations help our trust in the Department of Justice has been destroyed.
Ill be voting Trump.

Donald Trump in Greensboro, North Carolina, last week. Photograph: Evan Vucci/AP

Eric from Framingham, Massachusetts

Are you better off today than you were in 2008? I am worse off than I was in 2008. I have not had a steady income since I left teaching in 2012. I lost my home to Wells Fargo and now live with a friend. I dont have health insurance.

I have a masters degree in education, a BA, speak three languages, and I am a veteran with combat experience, yet dont have a full-time job or meaningful part-time work. I dont make more than $15,000 a year. Its unlikely that at 53 I will ever work full-time again. So what, another 20-plus years of this meaningless existence?
When people do that horrible thank you for your service [thing], I want to scream and tell them that serving my country as a soldier and my community as a teacher were the worst mistakes of my life. I should have gone into business, gone for my self and not the greater good, and been selfish and greedy instead.
Left behind, no. Forgotten.

Who will you be voting for? Not voting, dont care.

Leslie from Wilmington, North Carolina

Are you better off today than you were in 2008? I am worse off than I was in 2008.

Why? I had to close the company. I went from earning $70,000 a year to now working two jobs, one full time for $37,000 a year and one part time (evenings and weekends) to bring my salary to $41,000. My health insurance costs have skyrocketed. Food is more expensive. I have a home that I cannot sell as I am still underwater. I had to use all my savings to help pay for my daughters education so she is not lumbered with loans when she graduates.

Who will you be voting for? I hate them both. I do feel that if Clinton is elected it will be the same, no change in the housing market, no change in income, no change in healthcare costs just more of the same. It is appalling and tragic that we have two awful people to choose from. It just shows the level of corruption and dysfunction in this country.

Jacob Lutz from Portland, Oregon

Are you better off today than you were in 2008? I am about the same.

Why? In 2008, I was a student and a cashier at Kmart. I was transitioning from foster care to adulthood while balancing a part-time job with my first and last attempt at higher education. I was overwhelmed with the responsibility of college and surviving on $6.75 an hour but managed to survive thanks to my home states support system for foster children and lack of financial burden.

Today, I am a motorcycle technician and make around $30,000 a year and owe $20,000 in student loans. I also pay $200 a month for health insurance and bills on top of barely supporting myself. The stress is still the same but Ive gotten better at handling it. Lowering my hopes and expectations significantly has helped too.

Who will you be voting for? I had more faith in Bernie than Hillary regarding the economy but since hes not an option, Im with her. I still believe Hillary knows how to listen to what people are wanting and has the clout in Washington to get more done.

Hillary Clinton greets the crowd after speaking at a fundraiser in San Francisco earlier this month. Photograph: Lucy Nicholson/Reuters

Peter Berry from Seattle, Washington

Are you better off today than you were in 2008? I am worse off than I was in 2008. I no longer have a good, well-paying job and benefits. I was forced by circumstances to use up a good portion of my retirement savings to relocate and survive. I also used a lot of my savings to pay off my sons college law school loans as he has been unable to find even an entry-level job in the law profession.

I had a successful, lifelong, professional career that disappeared overnight, and was unable to find comparable work because of my age and the terrible state of the economy.

I think my efforts to navigate my way through the economic downturn likely mirror those of so many others. It isnt just the loss of decent paying jobs that has been an issue. Its also the erosion of savings meant for retirement. Also the enormous debts that have been run up for financial bailouts and the cheap money used to inflate the stock market will have to be faced eventually.
I believe the entire political establishment has been complicit in what has happened. I worked on Obamas first election campaign and contributed quite a bit of my own money believing the hope and change message. I felt optimistic that it was a possibility. Now I just feel used and betrayed.

Who will you be voting for? I will be voting for Jill Stein because she represents the only real choice that exists. The Democrats and Republicans are the same in virtually every meaningful respect and do not represent the interests of the average person at all. The definition of a wasted vote is voting for either of them.

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The Guardian view on the US presidency: the time is right for a female leader | Editorial

Editorial: Hillary Clinton failed to take account of the populist anger and lost ground to the rightwing demagoguery of Donald Trump. But in belatedly recognising widespread frustration with elites she deserves to win

The final presidential debate, thankfully the last set piece in a wretched campaign, revealed what is admirable and loathsome in American politics. Hillary Clinton displayed a razor-sharp intelligence and a quick wit. Her facility with facts trumped Donald Trumps lack of them. Americans finally saw on Wednesday why Secretary Clinton had got rich from giving lectures after leaving office. Her fluency with words, which has earned her $22m in speaking fees, appeared to silence her opponent. Mr Trump, a boastful, thin-skinned billionaire who trades in racism and misogyny, was left squawking on the sidelines of the debate. His jibes revealed aman out of his depth. His answer was to plunge down deeper. By disgracefully refusing to rule out calling this a rigged election he gave up a fight he had by then lost.

Americans should vote for Secretary Clinton as an able and proven politician. A Trump presidency would be bad for America and dangerous for the world, so a vote for Secretary Clinton is the most effective way of preventing it. Mr Trump has been exposed for questionable tax arrangements, outrageous business practices and irregularities at his charity. The billionaire is a grabber and kisser of women who he presumed gave consent because he was famous. There are numerous allegations of sexual assault by Mr Trump. He has demonstrated that he has neither the conscience, training nor sense of history and the desire to be judged well by it to occupy the White House. Secretary Clinton possesses such attributes. She has a serious and sustained commitment on issues like education, healthcare and equality, and she has stood consistently for the rights of women, ethnic minorities, children and the disabled through her long career.

However, there are fewer reasons to vote for Secretary Clinton than one would have hoped. For more than two decades she has been part of a political establishment that shaped a dysfunctional country. She has been unable to escape being tarnished by the most damaging policies notably around criminal justice ofher husbands administration. There are well-founded concerns, highlighted by transcripts of her speeches, that she is too close to Wall Street to be an effective check onits excesses ifelected.

The mood for change

Even so, as the first female president she would represent a symbolic transformative change in American politics. In some ways what Secretary Clinton has had to deal with are ingrained cultural attitudes about what success and leadership look like. These were exposed by the finding that Mr Trump would win if only men voted and Secretary Clinton would win if only women voted. That most men favor MrTrump over Secretary Clinton demonstrates at some level a more insidious sexism than the one Mr Trump peddles: that centred on the mind, not the body. It is a hostility deeply embedded but rarely conceded against seeing women as genuinely equal.

There is little doubt that the 2016 presidential campaign has been one of the most confrontational contests of the modern era. The mood for change has been more pervasive and volatile, and has been supercharged by Mr Trump, a braggart with tyrannical instincts. The backdrop to this election has been genuine and understandable public anger about economic insecurity, growing inequality and frustration with elites. Mr Trump on the right and Bernie Sanders on the left have reflected that mood in their very different ways. That is not going to disappear after 8 November. The election has also raised real questions about the crisis of American democracy. Mr Trump encouraged violence against opponents and threatened to jail Secretary Clinton if he took office.

The civility that has marked out US democracy as ordered and restrained appears dead. The next president will have to resurrect it. The political topography of a polarized and resentful nation has been obscured by the preternatural equanimity of Barack Obama. Mr Trump has in some ways skilfully exploited these divisions. On social security he has moved to the left on the campaign trail, telling jobless Americans that he would not touch their benefits. Mr Trump also wants to repeal the Affordable Care Act, the landmark measure that increases health coverage for low-wage workers and benefits large numbers of immigrants and minorities. This contrasts with the real estate magnates offer to expand the US health programme for the elderly Medicare which benefits overwhelmingly older, whiter voters.

These dog whistles have been part of American politics for decades. But they come at a time when there is a sense that there are too many losers from economic growth in the country. Driving discontent in the US is a system that no longer defuses high levels of inequality with opportunities for all. Themiddle classes are poorer today than in 2000. Since the Great Recession the top 1% of families in the US have captured 52% of the income growth. Theres understandable anger that the wealthy were bailed out while ordinary Americans were hollowed out. Voters rage that, in the current incarnation of globalization, jobs that disappeared when the US decided to import rather than manufacture did not come back they simply popped up elsewhere, usually in China.

The Sanders effect

Nowhere has this fury been more keenly felt than in the countrys former manufacturing heartlands, tapping into Americas long history of resistance to free trade and making protectionism a potent political force once again. The politician who has shaped the politics of the country and accounted for populist anger is Senator Sanders. The man from Vermont understood, earlier than most, that voters see the economy as rigged against them by a political system that has been corrupted by big money. His campaign was backed three to one by millennials in the Democratic primaries. This month his favorability ratings in opinion polls are only bettered by MichelleObama.

Senator Sanders insurgent campaign has transformed Democratic politics forcing Secretary Clinton to adopt, albeit sotto voce, key planks of his program such as a federal minimum wage of $15 an hour, tuition-free public college and opposition to the Trans-Pacific Partnership President Obamas big trade deal. Until this week, Secretary Clinton failed to outline enough of a bold reform program. Tellingly, she offered signs of one in the final televised debate, making unprompted promises to push immigration reforms, a key Sanders point, within the first 100 days of her presidency.

Although domestic politics has framed the campaign, Secretary Clintons election would be greeted with relief and optimism in most world capitals other than Moscow and Damascus. Despite her hawkish outlook, she will have no alternative but to recognize that the 21st century no longer always looks to the United States as an indispensable hegemon, whether benign or threatening. Secretary Clinton should focus on US soft, not hard, power dealing with climate change and working out fairer global trade arrangements.

If Secretary Clinton is elected she must recognize the mood without pandering to its demons. She needs to bring the bold ambition about the role of government to this era that Theodore and Franklin Roosevelt each did in earlier times. She has the intelligence, the seriousness and the experience to do this. TheUS presidency is hugely powerful: 10% of all posts in federal government are allocated on the basis of political patronage. Secretary Clinton offers the best chance of ensuring those jobs go to competent people. Her choice of Treasury secretary in the aftermath of the banking crisis will be watched with special care, as will an olive branch appointment to Senator Sanders of the kind that president Obama made to her in 2008. She offers the greatest hope that the supreme court defends abortion rights and looks again at issues like campaign finance as well as background checks on gun owners. Yet America will soon find itself weakened at home and abroad if the new president is as badly served by congress as Mr Obama has been for most of his tenure.

There is a danger, if Mrs Clinton wins, thatthe Republicans will relapse into the Hillary-hatred that has marked them for a quarter century. The tragedy of this election isthat, to become president, Secretary Clinton has had to talk more radically than she actually felt; to be an effective president she may be compelled to act more conservatively than shenow says she wants to do.

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Why financial security should be addressed in the first presidential debate

Trump and Clintons plans to prevent or respond to another financial crisis are an integral part of national security. But they probably havent even considered that

This election season is enough to drive a normal voter by which I mean anyone in search of substantive debate on real issues to the brink of insanity. And the losers are us.

With the very real possibility that we are heading towards another financial crisis, all we are discussing is whether Hillary Clinton had a body double after the her fainting episode. Or the latest outrage from Donald Trump, or his kids. Its idiocy ad nauseam.

With the two main candidates finally set to meet face-to-face for the first televised debate tomorrow, youd be forgiven for hoping that might be finally about to change. I wish I shared that confidence.

I do believe that both Clinton and Trump will engage in a free-for-all in an effort to show just how tough theyll be when it comes to homeland security. Thats probably inevitable, given that the debate will take place only about 10 days after a bomb exploded in a dumpster on West 23rd Street in Manhattan, injuring 29 people.

Clearly, its important for the two candidates to spell out their views on national security issues. Hopefully this can be accomplished with a minimum of melodrama and a maximum of substantive dialogue.

What worries me is that theres one aspect of national security that no one has mentioned, that no one will mention, and that neither of the two major candidates is even thinking about.

What am I talking about? The risk that we could be heading for another financial crisis one that might make the events of 2008 look like a walk in the park. And that kind of event the prospect that the banking system will collapse, leaving us without access to our savings, and with no way to pay our bills or collect our paychecks is just as much of a threat as the more conventional perils that spring to mind when I use the phrase national security.

Lets be clear: statistically its much more likely that the next president will have to deal with a massive financial crisis than it is that she or he will have to contend with a terrorist attack of the magnitude of 9/11. It not a certainty, but it is a possibility given our never-ending cycles of boom and bust. And neither has even mentioned how theyd prevent, or respond to, to such an event.

The problem with trying to evaluate the probability of a financial crisis is that all the risk-management tools we use inevitably rely on what happened in the past. Inevitably, the next crisis comes from something we hadnt imagined could or would become a problem, or hadnt been watching. After the collapse of Long-Term Capital Management in 1998, regulators knew they needed to worry about contagion, or the way that the financial links between banks and other financial counter-parties, could spread problems, like a virus, throughout the system. But they were looking at hedge funds, not mortgage lending.

Someone needs to ask Trump and Clinton who their top candidates for treasury secretary are and what kind of instructions they would give that individual in terms of monitoring the financial markets and guarding against catastrophic outcomes.

Well-informed candidates could deliver revelatory responses. Someone representing a traditional Republican view, for instance, might echo the view that private equity tycoon Stephen Schwarzman of Blackstone Group put forth in a Wall Street Journal opinion piece last year, and argue that new rules passed following the 2008 crisis might create another liquidity crunch, cutting off access to capital just when its needed most.

Someone from the other side of the aisle would focus on the fact that the shadow banking system has exploded in size since the 2008 crisis. The private funds that form part of this universe now handle about 60% of all trading in the US Treasury securities market found in virtually every major investment portfolio using high-speed trading based on algorithmic models.

This does assume that we end up with an informed candidate, of course, and not just someone who blusters that because he is rich, we should trust him with the nations finances. (Forget about that unpleasant matter of the multiple corporate bankruptcies ) Or someone who does seem to be well-informed, but who may still be getting a lot of her information on the subject from one powerful constituency. (Yeah, Id still like to see those speeches, even if I can pretty much guess whats in them.)

An informed moderator would asked an informed candidate during tomorrows debate what kinds of risks have been created in the name of trying to jumpstart the economy by keeping interest-rates at rock-bottom levels?

At best, the result has been a surge in the issuance of junk bonds speculative investments offering above-average bond yields because investors have become desperate enough to take those risks. In some areas particularly energy they have discovered the perils of that approach, sometimes losing billions in days when crude oil prices slumped. But what will happen when interest rates make all of these bonds look like bad investments?

At worst? Well, thats a trickier matter altogether. The Federal Reserve now has an astonishing $4.5tn on its balance sheet, compared to only about $1tn at the onset of the financial crisis. The difference? Thats all the assets it bought from the banks to stabilize the banks and keep interest rates low. Now, how does it reduce that bloated balance sheet without freaking markets out? No one really knows, because no one has ever done it before. Thats another factor that could end up causing or worsening a crisis, because it means the Feds hands would be tied behind its back in the midst of another crisis. So how would the next president cope in such an eventuality?

Both presidents have said they want to reinstate Glass-Steagall financial regulations and break up the big banks. Setting aside the merits of that policy, how would the deal with the instability that would accompany its implementation?

While were on the subject Since most banks today would fail a real stress test, do the candidates know what one incorporating realistic scenarios would look like? In other words, can they do more than utter the words, Id get tough on big banks and make sure they wouldnt take foolish risks with your money again?

All of this matters even in the best of all possible worlds. And when it comes to financial markets, we arent living in the best of all possible worlds. Stocks and bonds alike are priced for perfection, and when thats the case, the slightest hiccup like comments made by Federal Reserve officials early this month can ignite a big selloff. And there are many, many things that could send markets into a tailspin, and generate a massive loss of confidence.

Including, its worth noting, whether or not the countrys next commander-in-chief seems to have a grasp of how financial markets work, and how to manage that part of his or her national security responsibility.

Im hoping financial security will make it into Mondays debate. But given this election cycle Im not holding my breath.

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Trump presents vision for creating 25m jobs in economic policy speech

The Republican presidential nominee projected audaciously that millions of new jobs would be created broadly within a two-term Trump presidency

Donald Trump attempted to combat widespread criticism of his sketchy economic policies by setting out what he presented as a new vision for the country that he audaciously claimed would create 25m new jobs in a decade and put the American worker first.

Addressing one of the countrys most august economic debating societies, the Economic Club of New York, the Republican presidential nominee sought to dispel the criticism that has dogged his campaign that his mathematics do not add up in balancing tax cuts and new spending. Sticking closely to a pre-prepared script despite an initial malfunctioning of his teleprompter – he delivered a speech that was billed in advance by his senior advisers as the culmination of his thinking on how to get America back to work.

American cars will travel the roads, he said, American planes will soar the skies, American ships will patrol the seas, American steel will send new skyscrapers into the clouds, American hands will rebuild this nation, and American energy harvested from American sources will power this nation.

Despite the unapologetically populist tone, Trump tried to puncture criticisms that his plan lacked substance by putting figures to his ambitions. He projected 25m new jobs would be created broadly within the timeframe of a two-term Trump presidency, as a result of an average annual growth rate that would rise from current projections of about 2% to 3.5% through his tax-cutting and trade policies.

The audaciousness of that boast is underlined by comparison with previous presidents. It would bring American job creation levels back to the golden days enjoyed by Bill Clinton in the 1990s when the dotcom boom and an expanding global economy saw 21m jobs created under his watch.

By contrast, Barack Obamas two terms in the White House have seen almost 10m jobs created within a sluggish recovery from the 2008 collapse.

Even more audaciously, Trump said he could achieve such a boon to employment while keeping the national budget deficit neutral. If we achieve 4% growth it will reduce the deficit, he said.

Buoyed by new polls showing him in effect tied nationally with his Democratic rival Hillary Clinton, the real estate billionaire said he could pull off such a turnaround in the US economy through a combination of traditional conservative tax cutting and by tearing up trade deals and bringing jobs back to America from Mexico and China. His words were given added poignancy, though he did not make overt reference to the fact, by the setting of his speech in the ballroom of the Waldorf Astoria on Park Avenue, a legendary hotel bought by a Chinese insurance company in 2014.

On taxes, Trump proposed to simplify the tax code into three brackets down from seven, and to take poor earners out of tax altogether with individuals with an income under $25,000 (19,000) and married couples under $50,000 paying no tax.

However, with his tax cuts applying to all earners, no matter how wealthy, they would have a regressive effect. The Tax Policy Center has calculated the richest 0.1% would on average see tax cuts under his plan of $1.3m in 2017 compared with just $5,100 for everybody else.

Trump tried to counter that criticism that he was putting forward policies that would benefit the 1% by modelling how average families would fare under his vision. A married couple earning $5m a year with two children and $12,000 in child care expenses would only get a 3% reduction in their tax bill, he said, compared with a 35% reduction for a similar couple earning $50,000 and with $8,000 in child care.

People earning $5m will receive virtually no change in their tax bill at all, he said.

But in other parts of his address, he underlined reforms that would be to the advantage of wealthy Americans, including his proposed abolition of the estate tax that is only paid on inheritances valued at over $5m. He also repeated his promise to slash the business tax rate from 35% to 15%, earning a robust cheer from the many corporate leaders eating lunch on the ballroom floor in front of him.

Trumps economic manifesto has been widely criticized by analysts. This week the global firm Oxford Economics predicted that the US economy could shrink by $1tn by the end of a single term Trump presidency as a result of his proposed tax cuts, barriers to trade and mass deportation of undocumented immigrants.

That would be the equivalent of 5% of US GDP, with knock-on effects for growth around the world.

One of the specific sticking points with the Trump plan highlighted by experts has been how the sums add up. On the one hand, he wants to see massive tax cuts, greater he said than any time since President Reagan; but on the other he also wants to pump more money into the US military and to preserve spending on social security and medicare.

Independent analysis has calculated that his tax cuts would bring down federal revenues by almost $10tn (trillion) over a decade, leaving even less fat in the system to cover his other ambitions.

The point was raised in a question to Trump after his speech from Martin Feldstein, an economics professor from Harvard, who asked the Republican nominee what assets he would deploy to offset the sharp reduction in federal revenue from tax cuts. The candidate replied that he believed eventually, over time it will work out. The big thing over neutrality is the amount of business we will generate, and how we will stop companies take jobs out of the country.

Despite the new figures that he peppered through his talk, the policy he outlined remained posited on faith that his strong leadership would bring about levels of growth and job creation that have eluded recent incumbents of the Oval Office. This is what our new future will look like, he said. Im going to lower your taxes, Im going to get rid of regulation, Im going to unleash American energy. We are going to put the American worker back to work.

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Clinton v Trump on the economy: speeches underscore competing visions

The presidential candidates stick to party lines as Democrat backs expanded version of Buffett rule and Republican calls for tax cuts for all Americans

Hillary Clinton and Donald Trump laid out their competing visions for the US economy in the past week, with varying degrees of detail and some surprising overlap. But the bulk of each speech was spent on the differences: Trump embraced more tenets of Republican orthodoxy and Clinton made pledges that progressives would be comforted to hear.

Tax cuts v the Buffett rule

Trump proposed tax cuts for all Americans, though the terms would disproportionately benefit wealthy people. The conservative-leaning Tax Foundation found that tax revenue would fall by $2.4 tn over the first decade, and the top 1% of Americans would make 5.3% more money under the Republican plan, which would consolidate seven tax brackets into three, of 12%, 25%, and 33%. Trumps new plan accepts more common Republican proposals; his old plan would have cut the top rate to 25%. The Tax Policy Center estimated his plan would reduce revenue by $9.5tn over a decade and increase the deficit by 80% by 2036.

Clinton, in contrast, has backed an expanded version of a proposal by billionaire investor Warren Buffett to tax the ultrarich. She proposed a fair share surcharge that would place an extra tax on people who make more than $5m a year, in an effort to close loopholes that often mean millionaires pay lower effective rates than middle-class families.

Corporate tax cuts v a carrot and stick

Corporate profits have by and large increased over the past 15 years while wages have stagnated. Trumps plan entails a cut to the corporate tax rate, to 15% from 35%, which he argues will entice companies to return to or stay in the United States to invest and create jobs. He has also often told crowds that he will threaten companies who want to move overseas with extremely high tariffs.

Clinton offered both benefits and threats. She said she would simplify taxes for small businesses and offer tax credits to companies that share profits with employees. Her campaign has laid out similar benefits for companies that invest in the US. But Clinton also threatened an exit tax for companies that want to move overseas, close the carried-interest loophole and strengthen financial regulators, such as the Consumer Financial Protection Bureau.

Repealing regulations v clean energy funds

In another nod toward conventional Republican ideas, Trump said he would place a moratorium on any new regulations, and he has frequently blamed environmental safety rules on the decline of the coal industry, whose market has been hugely taken over by natural gas companies.

Clinton took the common Democratic path and proposed new investment in clean energy and research. She gave no real specifics in her speech but her campaign has proposed a clean energy challenge that would partner the federal government with local counterparts to reduce pollution and invest in clean energy infrastructure.

Infrastructure funding

Clinton promised $250bn in federal infrastructure funding and a $25bn national infrastructure bank to create jobs and rehabilitate things such as the countrys roads, airports, water and electrical grids . Barack Obama struggled for years to pass major infrastructure funding through Congress, until he finally managed to convince lawmakers over to a five-year, $305bn plan last December. Clinton has said that higher taxes on the richest and corporations would offset the spending, and gave a few specifics about her plans, including expanded broadband internet around the US.

Trump spoke at length about deteriorating conditions of American infrastructure in his speech, and has said at many rallies that he wants to re-invest in utilities and transportation at home. But in his speech in Detroit he only spoke of infrastructure vaguely, saying: We will build the next generation of roads, bridges, railways, tunnels, sea ports and airports that our country deserves.

Trade deals and tariffs

Both Clinton and Trump said they would renegotiate trade deals they deem unfavorable to the US. But while the Republican has said he would start from scratch on deals, and possibly impose tariffs as high as 45% on imports from foreign companies, the Democrat said she would specifically stop any trade deal that kills jobs or holds down wages, including the Trans Pacific Partnership.

She also said she would appoint a chief trade prosecutor, triple the number of enforcement officers, and when countries break the rules we wont hesitate to impose targeted tariffs a less protectionist stance than Trump, yet sharing some of his philosophy about penalties directed at foreign corporations.

The death tax

Trump called for the repeal of the estate tax, a fine levied on wealthy inheritors that affects about 0.2% of all Americans, according to the Center on Budget and Policy Priorities, as the tax exempts the first $5.45m a person inherits. Clinton would leave the estate tax as law.

Families and childcare

Trump called for allowing parents to fully deduct the average cost of childcare spending from their taxes, which would most benefit families with moderate to significant childcare costs but not low-income families, who would have the least to deduct, and who by definition, pay less in federal income taxes. His campaign has said he also supports a credit to stay-at-home caregivers and an exemption on childcare expenses from half of payroll taxes.

Clinton has proposed tax credits, subsidized childcare and increased pay for childcare workers expensive proposals that she says will be offset by increased taxes and closed loopholes. She said she wants to limit the cost of childcare to 10% of family income, and to expand social security.

Higher education

Trump has largely ignored the issue of higher education, though he has bemoaned the high debts that many young Americans shoulder. In his speech, he merely said: likewise, our education reforms will help parents send their kids to a school of their choice, an allusion to supporting the repeal of federal education standards at the grade and high school levels. His partys official platform supports privatizing student loans, saying: the federal government should not be in the business of originating student loans.

Clinton said she would liberate millions of people who already have student debt by making it easier to refinance and pay what you owe as a portion of your income. She also advocated for federal support for trade schools and high-quality union training programs, and tax credits to companies that offer paid apprenticeships.

Earlier this summer her campaign compromised with Bernie Sanders, and agreed to support a plan that would eliminate tuition costs for four-year state colleges, for families who make less than $125,000 a year.

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‘Donald Trump was part of the problem’: Cleveland’s subprime lesson for Republicans

Down the road from the Republican national convention, the decaying evidence of the carnage wreaked by property speculators and subprime loans abounds

The House of Wills Funeral Home is slowly being reclaimed by undergrowth. Weeds climb up the walls, fanning out like veins, unkempt hedges soar skywards and tufts of grass sprout through cracks in the tarmac parking lot.

No one from the [Republican national committee] bothered coming here before they chose Cleveland, Ill bet, says Xavier Allen, 44, pointing to three bullet holes in the front window and a collapsed ceiling in the porch, where two red armchairs sit covered in rubble. Donald Trump doesnt care. He was part of the problem.

The building, in the Mount Pleasant neighbourhood on the citys east side, was abandoned in 2014 after the owners fled without announcement or explanation, amid allegations of fraud. They left behind urns of cremated remains, empty coffins and hundreds of personal client documents. The building was looted shortly afterward and has remained a hotspot of criminal activity.

But the House of Wills is just one of hundreds of blighted and abandoned properties in this neighbourhood, one of the hardest hit throughout the citys foreclosure crisis that intensified during the 2008 housing market crash and savaged Clevelands poorest neighbourhoods as the city lost 17% of its population within a decade.

In Mount Pleasant, where more than 15% of the neighbourhoods housing stock is currently vacant or abandoned, average property sale prices plunged from an average of $84,000 in 2005 to just $14,837 in 2015. Evictions soared. Slum landlords continue to prosper. Much of the occupied property is now in effect worthless.

But at the height of Mount Pleasants suffering, Trump sought to capitalise.

In 2008, the billionaire Republican advised pupils at his now defunct business education company, Trump University, that they could make a million dollars within a year by targeting vulnerable communities with individuals desperate to offload their properties. Investors Nationwide are Making Millions in Foreclosures AND SO CAN YOU! he claimed in targeted newspaper advertisements that carried photos of Trump staring sternly at camera with a slight smirk.

Residents of the Mount Pleasant neighborhood in Cleveland, Ohio, bike down a street littered with abandoned homes. Between 2000 and 2010, 17% of the people in Cleveland left and the city is slowly recovering. Photograph: Mae Ryan for the Guardian

At the time, the real estate mogul had only recently shuttered a brokerage company, Trump Mortgages, which had, according to insider accounts, offered subprime mortgages to customers through cold calls.

Trump is set to accept his partys nomination for the US presidency three miles down the road from Mount Pleasant on Thursday. Some in Cleveland, Americas second-poorest major city, are flabbergasted.

Trump is a speculator. Hes a scavenger. They tell you how you can get rich, and often that means getting rich [by] taking advantage of other peoples foibles or miscues or faults, said Jim Rokakis, vice-president of the Western Reserve Land Conservancy, a land conservation thinktank operating in northern Ohio.

I find it ironic that Donald Trump is accepting the nomination for president about three and half miles from one of the most devastated neighbourhoods in the country. A neighbourhood that was wracked repeatedly by predatory lenders and the practices that caused these problems.

Thats not what Mount Pleasant looked like back in 2000, when these loans took off.

Its like they cant see this

Anita Gardner, who has lived in Mount Pleasant for more than four decades, formed the Concerned Citizens Community Council in 2008, in an attempt to organise residents to fight blight and combat rogue landlords.

In the Cleveland neighborhood of Mount Pleasant more than 15% of the homes are abandoned or vacant. Photograph: Mae Ryan for the Guardian

Its like our community has gone sight-blind. Its like they cant see this, she said, driving along Aetna Road where, in some parts, almost every home seems abandoned. There are so many of these properties that people dont see them any more. It doesnt bother anybody anymore.

Gardner reels off a seemingly endless list of cases her organisation has helped bring before the housing courts: a woman evicted during a foreclosure process that was not completed, who, years later, was served with an arrest warrant and told she was told she was responsible for the propertys debt; tenants she claimed had dog faeces shoved in their letterbox as punishment meted out by a landlord trying to unlawfully evict them; a man forced to live in a house with roof made almost entirely of tarpaulin.

Despite this, both Gardner and Allen, who serves as a director for Concerned Citizens, remain hopeful that the blight can be remedied. Demolishing irreparable properties and then returning the plots to a county land bank, created in 2010, for fair redistribution, is key to this.

In 2010, about 20,000 properties in the city were awaiting demolition. According to a recent survey conducted by the Western Reserve Land Conservancy, the citywide number is now only 6,000. Rokakis, who served as county treasurer between 1997 and 2010, estimated the city could get to most of these final 6,000 properties by 2020.

But there is unease in Cleveland about what a Trump presidency would mean for cities still trying to recover.

Im very concerned if somebody who made money as a real estate speculator takes the Oval Office, Rokakis said. I dont think cities will fare too well and I think our efforts will be stymied.

As Gardner stood by an abandoned property on Mount Auburn Road, a stench wafting from the garbage dumped behind it, she issued a plea to Republican national convention delegates descending on Cleveland this weekend, and likely hoping that Ohio, which twice voted for Barack Obama, may swing red in November: Why dont you try to look at the state of the people in Ohio? Not just the upper class, the people in the glass towers come down and really see the people.

If youre for the blue collar worker or the people that have been pushed aside, this is what the people who have been pushed aside have to deal with, she said pointing to collapsing doorframe.

So if you want to Make America Great Again, come down here and see what America really has to deal with.

Watch the video

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How Donald Trump upended Republican orthodoxy on free trade

In trying to appeal to white working-class voters hit hard by the effects of trade agreements such as Nafta, Trump has defied party dogma

Donald Trump alienated an entire wing of his party this week. It wasnt because he made another racially charged comment or cringeworthy gaffe. Instead, the presumptive Republican nominee laid out a detailed trade policy that is anathema to decades of conventional wisdom within the GOP.

In a speech on Tuesday in Pennsylvania, which will be followed by a speech on Thursday afternoon in Manchester, New Hampshire, Trump outlined views that broke with decades of conservative orthodoxy on the importance of free trade and alienated business interests within his own party in an attempt to woo blue-collar white voters.

Free trade has long presented advantages and disadvantages to Americans. It has been linked to outsourcing as manufacturing jobs have shifted to countries with lower wages. But it has also contributed to significantly cheaper consumer goods for American consumers and opened up new markets to US exporters.

Traditionally though, Democrats have emphasized the costs of trade agreements while Republicans have emphasized the benefits. These positions have not been black and white. Many Democrats have been willing to support trade agreements with what they consider to be adequate labor and environmental standards and some Republicans have long been skeptical, harking back to a protectionist strain that predominated in the GOP prior to the second world war.

However, for the past half-century, the Republican party has believed in the importance of removing barriers to trade. Although this position has not been universally held, every major free-trade agreement in decades has been wholeheartedly supported by a majority of Republicans, starting with the North American Free Trade Agreement (Nafta), which was negotiated by the George HW Bush administration, and on to the Trans-Pacific Partnership (TPP), which was featured in the 2012 GOP platform, was signed earlier this year and is awaiting congressional approval.

However, Trump has flipped this position. His speech on Tuesday argued for protectionism and asserted that decades of free-trade policies were responsible for the collapse of the American manufacturing industry. Trump denounced a policy of globalization moving our jobs, our wealth and our factories to Mexico and overseas and argued that in promoting trade our politicians took away from the people their means of making a living and supporting their families.

Trump laid out a policy that included potentially pulling out of Nafta, immediately withdrawing from the TPP, and taking steps that might start a trade war with China that include introducing retaliatory tariffs, bringing trade cases against the country in the World Trade Organization and labeling Beijing a currency manipulator.

Trumps speech was denounced by the Chamber of Commerce, the business lobby which is one of the Republican partys biggest allies. The group called Trump flat-out wrong and praised his 2013 statements in favor of a cohesive global economy over the 2016 version of the real estate developer.

The presumptive Republican nominee responded by calling the business lobby a special interest . . . controlled totally by various groups of people that dont care about you whatsoever in a Wednesday rally in Bangor, Maine.

In alienating the Chamber of Commerce and attacking free trade, Trump is doubling down on his bet that he can attract disaffected white working-class voters who have been the net losers from the major changes in the global economy in recent decades. These voters, many of whom are longtime Democrats, will flock to Trump based on his promises to restore steel and coal jobs and return the American economy to the glory days of the past.

The question for Trump is whether in the process of gaining these voters he will alienate the middle- and upper middle-class suburban fiscal conservatives who have long been the Republican partys electoral backbone.

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