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Rickards Warns “Helicopter Money Is No Panacea”

Rickards Warns “Helicopter Money Is No Panacea”

Authored by James Rickards via DailyReckoning.com,

In recent decades, the Fed has engaged in a series of policy interventions and market manipulations that have paradoxically left it more powerful even as those interventions left a trail of crashes, collapses and calamities.

This contradiction between Fed omnipotence and Fed incompetence is coming to a head. The economy has been trapped in a prolonged period of subtrend growth. I’ve referred to it in the past as the “new depression.” And the Fed has been powerless to lift the economy out of it.

You may think of depression as a continuous decline in GDP. The standard definition of a recession is two or more consecutive quarters of declining GDP and rising unemployment. Since a depression is understood to be something worse then a recession, investors think it must mean an extra-long period of decline. But that is not the definition of depression.

The best definition ever offered came from John Maynard Keynes in his 1936 classic, The General Theory of Employment, Interest and Money. Keynes said a depression is, “a chronic condition of subnormal activity for a considerable period without any marked tendency towards recovery or towards complete collapse.”

Keynes did not refer to declining GDP; he talked about “subnormal” activity. In other words, it’s entirely possible to have growth in a depression. The problem is that the growth is below trend. It is weak growth that does not do the job of providing enough jobs or staying ahead of the national debt. That is exactly what the U.S. is experiencing today.

Long-term growth is about 3%. From 1994 to 2000, the heart of the Clinton boom, growth in the U.S. economy averaged over 4% per year.

For a three-year stretch from 1983 to 1985 during the heart of the Reagan boom, growth in the U.S. economy averaged over 5.5% per year. These two periods were unusually strong, but they show what the U.S. economy can do with the right policies. By contrast, growth in the U.S. from 2007 through today has averaged something like 2% per year.

That is the meaning of depression. It is not negative growth, but it is below-trend growth.  And growth under Trump has been no greater than it was under Obama.

The bigger problem is there’s no way out, as I said. One manipulation leads to another. My greatest fear is that the U.S. is becoming like Japan, which has used every trick in the book to no avail.

In my 2014 book, The Death of Money, I wrote, “The United States is Japan on a larger scale.” That was six years ago now.

Japan started its “lost decade” in the 1990s. Now their lost decade has dragged into three lost decades. The U.S. began its first lost decade in 2009 and is now entering its second lost decade with no real end in sight.

What I referred to in 2014 was that central bank policy in both countries has been completely ineffective at restoring long-term trend growth or solving the steady accumulation of unsustainable debt.

In Japan this problem began in the 1990s, and in the U.S. the problem began in 2009, but it’s the same problem with no clear solution.

Now in 2020, central banks have been cutting rates again, as the trade war and slowing global growth have policymakers considering the implications of a new recession without the firepower they need. As things stand, the next recession may be impossible to get out of. And the odds of avoiding a recession are low.

The only way out is for the Fed to guarantee inflation “whatever it takes.” Nothing else has worked. So why not try a more active fiscal policy? Why not load the helicopters with cash and dump it out over Main Street?

First, we need to understand what helicopter money is, and what it isn’t.

The image of the Fed printing paper money, and dumping it from helicopters to consumers waiting below who scoop it up and start spending is a popular, but not very informative way to describe helicopter money.

In reality, helicopter money is the coordination of fiscal policy and monetary policy in a way designed to provide stimulus to a weak economy and to fight deflation.

Helicopter money starts with larger deficits caused by higher government spending. This spending is considered to have a multiplier effect. For each dollar of spending, perhaps $1.50 of additional GDP is created since the recipients of the government spending turn around and spend that same money on additional goods and services. The U.S. Treasury finances these larger deficits by borrowing the money in the government bond market.

Normally this added borrowing might raise interest rates. The economic drag from higher rates could cancel out the stimulus of higher spending and render the entire program pointless.

This is where the Fed steps in. The Fed can buy the additional debt from the Treasury with freshly printed money. The Fed also promises to hold these newly purchased Treasury bonds on its balance sheet until maturity.

By printing money to neutralize the impact of more borrowing, the economy gets the benefit of higher spending, without the headwinds of higher interest rates. The result is mildly inflationary offsetting the feared deflation that would trigger helicopter money in the first place.

It’s a neat theory, but it’s full of holes.

The first problem is there’s not much of a multiplier at this stage of the U.S. expansion. The current expansion is already the longest in U.S. history. It’s also been the weakest expansion in history, but an expansion nonetheless. The multiplier effect of government spending is strongest at the beginning of an expansion when the economy has more spare capacity in labor and capital.

At this point, the actual multiplier is probably less than one. For every dollar of government spending, the economy might only get $0.90 of added GDP; not the best use of borrowed money.

The second problem with helicopter money is there is no assurance that citizens will actually spend the money the government is pushing into the economy. They are just as likely to pay down debt or save any additional income. This is the classic “liquidity trap.” This propensity to save rather than spend is a behavioral issue not easily affected by monetary or fiscal policy.

Finally, there is an invisible but real confidence boundary on the Fed’s balance sheet. After printing $4 trillion in response to the last financial crisis, how much more can the Fed print without risking confidence in the dollar itself?

Quantitative tightening brought the balance sheet back down to $3.8 trillion. But now it’s over $4 trillion again, as the Fed has added hundreds of billions to its balance sheet since September, when it starting shoring up short-term money markets. It’s basically been “QE-lite.”

Modern monetary theorists and neo-Keynesians say there is no limit on Fed printing, yet history says otherwise.

Importantly, with so much U.S. government debt in foreign hands, a simple decision by foreign countries to become net sellers of U.S. Treasuries is enough to cause interest rates to rise thus slowing economic growth and increasing U.S. deficits at the same time.

If such net selling accelerates, it could lead to a debt-deficit death spiral and a U.S. sovereign debt crisis of the type that hit Greece and the Eurozone periphery in recent years.

In short, helicopter money could have far less potency and far greater unintended negative consequences than its supporters expect.


Tyler Durden

Wed, 01/15/2020 – 11:45

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Business Finance

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The Democratic Debates Are Downers. That’s a Big Problem for All of Us.

I found last night’s Democratic presidential debate to be profoundly depressing and downbeat, yet I struggle to explain why exactly. As a small-l libertarian who is unaffiliated with any party, my vote is up for grabs and I pay attention to these sorts of events out of more than just a sense of professional responsibility. There is plenty wrong with the country, on levels big and small, and politics can—and should—address some of that.

Yet listening to the candidates last night, I mostly didn’t recognize the country they were describing. They live in a world where dark, shadowy forces—billionaires, corporations, Russian operatives especially—conspire with near-perfect success to make us all poorer and sadder, dumber and sicker, more alienated and hopeless. According to the candidates, nobody can afford the doctor, college, or child care. The whole planet may be baked in a decade because of fossil fuels, but we shouldn’t really talk about expanding nuclear power or even using natural gas and fracking as a bridge fuel. Sexism, racism, homophobia, Islamophobia, police violence, and more are worse than ever.

Ironically, their collective inability to see little if anything positive in contemporary America mirrors that of the man they seek to remove from power. President Donald Trump’s fixations are of course different but the net effect is the same: These are the end times unless I wield power.

But being relentlessly negative is no way to unseat an incumbent president, even one as temperamental and divisive as Trump (this is the guy who invoked “American carnage” in his first inaugural and says he’s been treated worse as president than good, old, shot-in-the-head Abe Lincoln). At least, it’s no way to win my vote and, I suspect, the votes of the 41 percent who consider themselves independent. As CNN’s Van Jones (a Democrat) put it, the level of “vitriol was very dispiriting. Tonight was dispiriting. Democrats are going to have to do better than what we saw tonight. There was nothing I saw tonight that would be able to take Donald Trump out.”

As it happens, just a day before last night’s debate, researchers from Tufts University and the University of Vermont announced the creation of what they’re calling “xenobots,”the “world’s first living, self-healing robots created from frog stem cells” that “could be used to clean up radioactive waste, collect microplastics in the oceans, carry medicine inside human bodies, or even travel into our arteries to scrape out plaque.” Holy hell, it’s like Fantastic Voyage, but without the high-grade Cold War hysteria! In profound ways, this sort of invention typifies life in the 21st century: a moment when we take life-enhancing technology for granted, surround ourselves with hot and cold streaming media that was unimaginable even a few decades ago, and, for the first time in human history, “half the world is now middle class or wealthier.“

Even in a moment when military tensions are idling warm, opioids are still taking a toll, and the federal government has racked up a trillion-dollar deficit, this is a hell of a time to be alive. Forests are expanding, the amount of “stuff” we consume on a per-capita basis peaked around 2000, and infant mortality rates continue to decline, leading writer Matt Ridley to declare the 10 years that just concluded “the best decade in human history.” The U.S. economy has been growing without interruption for over a decade, wage parity between women and men is growing, and the percentage of high school grads immediately attending college is at a historically high level. About “three in four adults—and the overwhelming majority of poor children—live better off than their parents after taking the rising cost of living into account,” writes economist Scott Winship.

None of that made it onto the stage at last night’s Democratic presidential debate, and unless it does, why would enough people vote for a Democrat to take over the country? I’m not talking about some sort of phony, upbeat, Panglossian message—the electoral equivalent of telling a woman on the street that she should smile. But if you’re promising (threatening might be the better term) major transformations of the economy, health care industry, education system, and more, having a positive vision of the future rather than a punitive one seems to be a prerequisite. Yet with the possible exception of Andrew Yang, the long shot candidate who didn’t make the cutoff to appear last night anyway, all of the remaining Democrats talk more about settling scores than about creating a richer, smarter, more innovative world.

About a year ago, Trump spoke at the Conservative Political Action Conference (CPAC), shortly after progressive Democrats unveiled the Green New Deal, a set of programs whose sponsors promised would radically transform many aspects of American life. Sensing an advantage, Trump uncorked a two-hour stemwinder that was by turns mean, nasty, funny, and, above all, optimistic about the future. I prophesied then that he might win the 2020 election because “Trump is becoming sunnier and sunnier while the Democrats are painting contemporary America as a late-capitalist hellhole riven by growing racial, ethnic, and other tensions.” The president has since retreated back to his darkness and will likely stay there, especially as impeachment proceedings get underway.

But as incumbent, Trump merely has to hold onto office while his challengers need to vault into power. If last night’s rhetoric is any indication, the Democrats might have one more thing to be depressed about after election day. More importantly for the rest of us, we will still be without a major political party that can paint a positive vision for the country. And voters like me will still be searching for presidential candidates for whom we can vote.

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The Democratic Debates Are Downers. That’s a Big Problem for All of Us.

I found last night’s Democratic presidential debate to be profoundly depressing and downbeat, yet I struggle to explain why exactly. As a small-l libertarian who is unaffiliated with any party, my vote is up for grabs and I pay attention to these sorts of events out of more than just a sense of professional responsibility. There is plenty wrong with the country, on levels big and small, and politics can—and should—address some of that.

Yet listening to the candidates last night, I mostly didn’t recognize the country they were describing. They live in a world where dark, shadowy forces—billionaires, corporations, Russian operatives especially—conspire with near-perfect success to make us all poorer and sadder, dumber and sicker, more alienated and hopeless. According to the candidates, nobody can afford the doctor, college, or child care. The whole planet may be baked in a decade because of fossil fuels, but we shouldn’t really talk about expanding nuclear power or even using natural gas and fracking as a bridge fuel. Sexism, racism, homophobia, Islamophobia, police violence, and more are worse than ever.

Ironically, their collective inability to see little if anything positive in contemporary America mirrors that of the man they seek to remove from power. President Donald Trump’s fixations are of course different but the net effect is the same: These are the end times unless I wield power.

But being relentlessly negative is no way to unseat an incumbent president, even one as temperamental and divisive as Trump (this is the guy who invoked “American carnage” in his first inaugural and says he’s been treated worse as president than good, old, shot-in-the-head Abe Lincoln). At least, it’s no way to win my vote and, I suspect, the votes of the 41 percent who consider themselves independent. As CNN’s Van Jones (a Democrat) put it, the level of “vitriol was very dispiriting. Tonight was dispiriting. Democrats are going to have to do better than what we saw tonight. There was nothing I saw tonight that would be able to take Donald Trump out.”

As it happens, just a day before last night’s debate, researchers from Tufts University and the University of Vermont announced the creation of what they’re calling “xenobots,”the “world’s first living, self-healing robots created from frog stem cells” that “could be used to clean up radioactive waste, collect microplastics in the oceans, carry medicine inside human bodies, or even travel into our arteries to scrape out plaque.” Holy hell, it’s like Fantastic Voyage, but without the high-grade Cold War hysteria! In profound ways, this sort of invention typifies life in the 21st century: a moment when we take life-enhancing technology for granted, surround ourselves with hot and cold streaming media that was unimaginable even a few decades ago, and, for the first time in human history, “half the world is now middle class or wealthier.“

Even in a moment when military tensions are idling warm, opioids are still taking a toll, and the federal government has racked up a trillion-dollar deficit, this is a hell of a time to be alive. Forests are expanding, the amount of “stuff” we consume on a per-capita basis peaked around 2000, and infant mortality rates continue to decline, leading writer Matt Ridley to declare the 10 years that just concluded “the best decade in human history.” The U.S. economy has been growing without interruption for over a decade, wage parity between women and men is growing, and the percentage of high school grads immediately attending college is at a historically high level. About “three in four adults—and the overwhelming majority of poor children—live better off than their parents after taking the rising cost of living into account,” writes economist Scott Winship.

None of that made it onto the stage at last night’s Democratic presidential debate, and unless it does, why would enough people vote for a Democrat to take over the country? I’m not talking about some sort of phony, upbeat, Panglossian message—the electoral equivalent of telling a woman on the street that she should smile. But if you’re promising (threatening might be the better term) major transformations of the economy, health care industry, education system, and more, having a positive vision of the future rather than a punitive one seems to be a prerequisite. Yet with the possible exception of Andrew Yang, the long shot candidate who didn’t make the cutoff to appear last night anyway, all of the remaining Democrats talk more about settling scores than about creating a richer, smarter, more innovative world.

About a year ago, Trump spoke at the Conservative Political Action Conference (CPAC), shortly after progressive Democrats unveiled the Green New Deal, a set of programs whose sponsors promised would radically transform many aspects of American life. Sensing an advantage, Trump uncorked a two-hour stemwinder that was by turns mean, nasty, funny, and, above all, optimistic about the future. I prophesied then that he might win the 2020 election because “Trump is becoming sunnier and sunnier while the Democrats are painting contemporary America as a late-capitalist hellhole riven by growing racial, ethnic, and other tensions.” The president has since retreated back to his darkness and will likely stay there, especially as impeachment proceedings get underway.

But as incumbent, Trump merely has to hold onto office while his challengers need to vault into power. If last night’s rhetoric is any indication, the Democrats might have one more thing to be depressed about after election day. More importantly for the rest of us, we will still be without a major political party that can paint a positive vision for the country. And voters like me will still be searching for presidential candidates for whom we can vote.

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Watch Live: Trump Signs Landmark ‘Phase 1’ Chinese Trade Pact

Watch Live: Trump Signs Landmark ‘Phase 1’ Chinese Trade Pact

As US stocks swing between slight gains and losses, investors are waiting with baited breath for President Trump and Chinese Vice Premier Liu He to sign the ‘Phase 1’ trade deal, the first sign of comity in what has been an acrimonious two-year trade battle between the world’s two largest economies.

Earlier, we delved into the details of the agreement, the text of which is expected to be released on Wednesday. The basic takeaway is this: While it should narrow the US trade deficit with China, the agreement does nothing to curb China’s illegal state subsidies and rampant cyber theft, some of the biggest concerns of China hawks.

The US will scale back some tariffs, but the trade war tariffs will remain in place until after the election, a mechanism to help ensure Chinese compliance with the trade deal.

While markets remain largely optimistic, China’s Global Times posted an editorial earlier complaining about the deal, and claiming that the negotiations for ‘Phase 2’ might not start for a while.

But in the short term, the deal should boost US exports to China by $200 billion over two years, which will help reverse the trade war-inspired drop.

Infographic: A Longterm View On U.S. Trade With China | Statista You will find more infographics at Statista

But as the two sides gear up for the next round of negotiations, will the trade detente last? That, of course, remains to be seen.


Tyler Durden

Wed, 01/15/2020 – 11:25

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Business Finance

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‘Danger Today Or Tomorrow’: Iran’s Rouhani Threatens US & EU Troops In Middle East

‘Danger Today Or Tomorrow’: Iran’s Rouhani Threatens US & EU Troops In Middle East

A day after European signatories to the Iran nuclear deal took took the drastic step of triggering the agreement’s dispute resolution mechanism regulating conformity to the deal by formally notifying the EU Iran is in breach, seen as the harshest measure taken thus far given it means EU sanctions are possible, President Hassan Rouhani has responded with his own ominous warning. 

On Wednesday Rouhani in televised remarks demanded that foreign powers immediately withdraw their forces from the Middle East or face “danger”. 

“Today, the American soldier is in danger, tomorrow the European soldier could be in danger,” he said in reference to the Western allies. 

Via Government of Iran via Reuters.

Ironically, the countries of Britain, France, and Germany said they were acting in order to de-escalate soaring tensions following a Jan 6 declaration of Tehran leadership to no longer be beholden to uranium enrichment limits. This itself was in response to Washington dramatically raising the stakes with the assassination of Qasem Soleimani.

The European JCPOA signatories underscored they are “acting to avoid a crisis over nuclear proliferation” Reuters reported of the prior joint statement. Iranian FM Zarif charged that the EU investigation into Iran’s alleged non-compliance meant Europe is allowing itself to be bulled by the United States. He told reporters Wednesday:

“They say ‘We are not responsible for what the United States did.’ OK, but you are independent countries. Europe, EU, is the largest global economy. So why do you allow the United States to bully you around?”

As for Rouhani’s newest threat against US and Europe troops in the region, there have already been at least two separate rocket attacks this week against bases in Iraq which house American troops and contractors, in a slow and steady escalation expected to continue. Washington has pointed the finger at Iran-backed Shia militia groups despite no group claiming responsibility for these latest. 

You will find more infographics at Statista

And as for the apparent breakdown in Iran-Europe relations, given it looks like EU capitals now look more ready to reluctantly conform to Trump’s “maximum pressure” campaign (despite explicit denials that this is what the ‘dispute mechanism’ triggering is all about), it’s perhaps confirmation for Tehran of its prior charge that the Europeans are ‘too little too late’ with half-hearted measures to provide relief to Iran’s economy decimated by US sanctions, such as the ‘SWIFT-alternative’ special purpose financial vehicle INSTEX.

Meanwhile, seizing on the nuclear’s deal’s apparent unraveling in progress, British Prime Minister Boris Johnson said something else that certainly won’t be taken warmly in Tehran: “If we’re going to get rid of it, let’s replace it and let’s replace it with the Trump deal.”

Though of course there was at least one leader thrilled to hear this.


Tyler Durden

Wed, 01/15/2020 – 11:05

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Politics

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“Bonds Ain’t Buying It” – Trader Warns “A Lot Can Still Go Wrong” With China

“Bonds Ain’t Buying It” – Trader Warns “A Lot Can Still Go Wrong” With China

Authored by Richard Breslow via Bloomberg,

It certainly doesn’t make you a cynic to poke holes in the idea that the trade dispute between the U.S. and China is coming to an end, courtesy of the phase-one deal being signed today. There’s an awful lot of questions left unanswered and a lot that can go wrong. Just read the Chinese media and you will get the point. And we all can acknowledge that any phase-two agreement is a long way off. On the other hand, putting this very public dispute in abeyance is a lot better than nothing.

Kicking the can down the road is a time-honored tradition in politics and, in most cases, financial markets are willing to go along with the practice if it lessens headline risk and lets us get on with looking for securities to buy.

Make no mistake, however, the two countries may be doing business with each other, but it doesn’t make their rivalry and level of distrust any less real.

The deal suits the needs of the principals involved on both sides and, at the least, may be a welcome distraction from the tawdry events and sniping back and forth that will be taking place on Capitol Hill.

In any case, we’ll see how this plays out over the coming months. And need to keep in mind the relationship between the two countries remains very much a campaign issue which will likely cause periodic lurches between extolling the virtues of progress made, and to come, with maintaining a hard line. Variations on the removal of the currency manipulation designation versus maintained tariffs through the election theme.

Having said that, one of the defining characteristics of markets has been the rapid appreciation of the yuan. Likely very much a part of the negotiating process. The move through 7 versus the dollar has been seen as an important signal for optimism about the global economy. Just as the reverse was true when it weakened through that level last August. It’s an understatement to say a lot of assets have moved in response. Quantitative, as well as discretionary, traders have taken notice. And as each day has passed featuring continued yuan strength, the forecasts for how far it could go have become more stretched. Why pass on a good opportunity to extrapolate?

Yesterday’s low in USD/CNY at 6.8670, however, brought the currency pair right into a potentially formidable band of support. And this needs to be watched carefully if the continuation of this move is the basis for your investing thesis. Getting through here opens up a look at 6.83, rather than simply clear sailing toward some of the more extreme predictions. The currency is most definitely in play. That doesn’t mean it will continue to be an easy one-way trade. This isn’t your typical free-floating currency and the Chinese will have a lot to say about how far it will be allowed to roam. They practice signaling on a regular basis.

Another development that definitely merits watching is the seeming failure of global bond markets to build on any momentum toward higher yields. It hasn’t been a dramatic turn around, and there are technical levels galore, but it definitely looks deflating when looking at the charts, if that was your view. Trade news is encouraging. Economic numbers less so. Treasury bears are unlikely to get much help from today’s slate of Fed speakers.

Ten-year Treasuries and bunds look like they are moving in lock-step and which direction the spread moves off of the circa 200-basis points wide level will be telling. There has been a lot of interest in trading these two bonds against each other. And it doesn’t look like bunds are going back to a zero yield in a hurry.

It may be grossly premature, but it is January and, therefor, always prudent, if nothing else, to question the moves that look like they will define the trends setting the tone for the year. You might want to start with the dollar. It has been confounding a lot of analysts and stopping out traders along the way.

The simplest way to follow developments may just be to see which end of the Bloomberg Dollar Index’s December 27 range ends up giving way.


Tyler Durden

Wed, 01/15/2020 – 10:45

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Business Finance

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Democrats Chased the Peace Vote Last Night, but Can We Trust Them to Follow Through?

Last night’s Democratic presidential debate on CNN featured a good deal of foreign policy chatter, for a change—one of the only semi-reassuring parts of the two-hour televised show. Comments from the 2020 candidates about the U.S. wars in Iraq and Afghanistan and the possibility of war with Iran highlighted just how far the center of gravity has shifted on American military adventurism and regime-change wars in the Middle East.

“We need to get our combat troops out” and “stop asking our military to solve problems that cannot be solved militarily,” said Sen. Elizabeth Warren (D–Mass.).

In the Middle East, President Donald Trump “is going from crisis to crisis, from escalation to escalation,” said Tom Steyer. “But if you look further over the last 20 years, including in the war in Afghanistan, we know from The Washington Post that, in fact, there was no strategy. There was just a series of tactical decisions that made no sense.”

And Iraq? That was “the worst foreign policy blunder in the modern history of this country,” said Sen. Bernie Sanders (I–Vt.).

Even Sen. Amy Klobuchar (D–Minn.)—in many ways the most conservative of the Democratic presidential candidates on last night’s stage—touted her early opposition to the Iraq War. She also pushed the current Senate resolution to tell the Trump administration “you must have an authorization of military force if you’re going to go to war with Iran.”

The debate featured just six Democratic candidates: former Vice President Joe Biden, Mayor Pete Buttigieg (of South Bend, Indiana), Klobuchar, Sanders, Steyer, and Warren. Moderator Wolf Blitzer kicked things off by pointing out that the U.S. and Iran had recently been “on the brink of war” and this had “reignited the debate over America’s role in the world.” He asked the candidates, with that in mind, “why are you…the best prepared person on this stage to be commander in chief?”

Sanders stressed his long-time opposition to the Iraq War and (in contrast to Biden) his ability to see through the Bush administration’s misdirection on that front. “Joe and I listened to what Dick Cheney and George Bush and [Donald] Rumsfeld had to say. I thought they were lying,” said Sanders. “I didn’t believe them for a moment. I took to the floor. I did everything I could to prevent that war. Joe saw it differently.”

Sanders also warned people not to get fooled again, as the Trump administration tries to lie us into a war with Iran.

Biden’s defense of his vote for the Iraq War wasn’t much of one: he had voted for it, it was a mistake, “but the man who also argued against that war, Barack Obama, picked me to be his vice president,” said Biden. OK then.

Ultimately, Biden showed few signs of real change on U.S. policy in the Middle East. He said we should send U.S. troops whenever “the overwhelming vital interests of the United States are at stake,” which is worryingly vague standard. He said he would “leave troops in the Middle East in terms of patrolling the [Persian] Gulf” and that it would be “a mistake to pull out the small number of troops that are there now.”

When challenged by others on stage, he caricatured their argument (saying they thought the U.S. could “walk away and not have any troops anywhere” in the world) before appealing to threats of terrorism and then making the perverse argument that we must police the world in order to not police the world.

“You have to be able to form coalitions to be able to defeat [terrorists] or contain them. If you don’t, we end up being the world’s policeman again,” said Biden.

But Biden was arguably the most hawkish person on stage, which is saying something.

Warren especially pushed back on Biden’s foreign policy claims. “We’ve turned the corner so many times, we’re going in circles in these regions. This has got to stop,” she said. “It’s not enough to say someday we’re going to get out. No one on the ground, none of our military can describe what the conditions are for getting out. It’s time to get our combat troops home.”

Buttigieg was on the same page. “We can continue to remain engaged without having an endless commitment of ground troops,” he said. He also pushed for greater congressional oversight of military actions:

When we lost troops in Niger, there were members of Congress who admitted they didn’t even know we had troops there. And it was all pursuant to an authorization that was passed to deal with Al Qaeda and 9/11. And often, Congress has been all too happy to leave aside its role. Now, thanks to Democrats in Congress, that’s changing. But the reality is, year after year, Congress didn’t want to touch this, either, because it was so politically difficult.[…]

Fundamental truth is, if our troops can summon the courage to go overseas into harm’s way, often on deployment after deployment, then we’ve got to make sure that Congress has the courage to take tough up-or-down votes on whether they ought to be there. And when I am president, anytime—which I hope will never happen—but anytime I am compelled to use force and seek that authorization, we will have a three-year sunset…

Klobuchar said she would get most troops out of Afghanistan but would have left them in Syria and would leave them in Iraq, albeit “not in the level that Donald Trump is taking us right now.”

You can find a full transcript of last night’s debate here.

All in all, the efforts to distance themselves from pro-Iraq and Afghanistan War votes, denounce the ongoing presence of U.S. troops there, and push for greater congressional oversight of military action was a very good sign.

But as the discussion turned more specifically to Iran, responses from the Democratic candidates weren’t quite as reassuring. While eager to condemn whatever Trump’s strategy with Iran has been, they were less clear on how their own approaches would differ. What we were left with was promises to accomplish Trump (and Obama) administration goals with regard to Iran—such as thwarting the country’s development of nuclear capabilities—while somehow avoiding anything that has already been tried.

Given that it’s unlikely Iran will just do whatever we say without getting anything in return, this probably won’t get us far. And few of the candidates on stage seemed sufficiently committed to keeping us out of war with Iran should even some slight provocation or shift in public opinion occur.

More debate coverage from Reason:

QUICK HITS

  • Meanwhile, in Trump world:

  • And House Speaker Nancy Pelosi (D-Calif.) announced that she’s picked the seven people who will serve as “impeachment managers” in the Senate. Rep. Adam Schiff (Calif.) will lead things, assisted by fellow Democratic Reps. Jerry Nadler (N.Y.), Hakeem Jeffries (N.Y.), Jason Crow (Colo.), Zoe Lofgren (Calif.), Val Demings (Fla.), and Sylvia Garcia (Texas).
  • “Is there any better time to have a president who might be not from either party?” asks Rep. Justin Amash (I–Mich.).
  • How Tom Steyer keeps getting on the Democratic debate stage.
  • The woke primary is over and everyone lost, writes Matt Welch.
  • Positive momentum on occupational licensing reform in Iowa:

  • More from Reason staffers on last night’s Democratic presidential debate on CNN:

On the Sanders/Warren woman-president drama:

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A Missed Opportunity

Speaker Nancy Pelosi has now announced the slate of House managers who will prosecute the impeachment case before the Senate. Consistent with the Democratic approach to the impeachment process as a whole, there was no real effort to reach across the aisle and try to appeal to and persuade those on the political right who might be skeptical of Trump and sympathetic to his impeachment. The Democratic leadership failed to reach across the aisle in conducting the impeachment hearings, as Volokh co-blogger Jonathan Adler noted. They have now compounded that mistake.

Justin Amash would have made an excellent House manager. Amash has formally left the Republican Party but remains a vocal advocate of the classical liberal principles that once were understood to be at the heart of modern American conservatism. Amash broke from the GOP over the actions of President Trump and the complete inability of the party to tolerate any criticisms of the president. His appointment as a House manager would have been the obvious political play to make to signal that a presidential impeachment was in the nation’s interest and not just the Democratic Party’s interest.

For many months, Amash has been among the most eloquent critics of President Trump in the House of Representatives. He did a far better job than most Democrats in explaining the significance of the findings of the Mueller Report, and he has done a far better job than most Democrats in explaining the impeachment power and the reasons why the House needed to pursue an impeachment of the sitting president. He had served on the House Oversight Committee, one of the main committees investigating the administration, until he left the GOP.

An impeachment should not be a partisan affair. The Republicans in Congress have failed to take their constitutional duties seriously. The Democrats have made a hash of the process as well and made Trump’s job easier as a result.

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Democrats Chased the Peace Vote Last Night, but Can We Trust Them to Follow Through?

Last night’s Democratic presidential debate on CNN featured a good deal of foreign policy chatter, for a change—one of the only semi-reassuring parts of the two-hour televised show. Comments from the 2020 candidates about the U.S. wars in Iraq and Afghanistan and the possibility of war with Iran highlighted just how far the center of gravity has shifted on American military adventurism and regime-change wars in the Middle East.

“We need to get our combat troops out” and “stop asking our military to solve problems that cannot be solved militarily,” said Sen. Elizabeth Warren (D–Mass.).

In the Middle East, President Donald Trump “is going from crisis to crisis, from escalation to escalation,” said Tom Steyer. “But if you look further over the last 20 years, including in the war in Afghanistan, we know from The Washington Post that, in fact, there was no strategy. There was just a series of tactical decisions that made no sense.”

And Iraq? That was “the worst foreign policy blunder in the modern history of this country,” said Sen. Bernie Sanders (I–Vt.).

Even Sen. Amy Klobuchar (D–Minn.)—in many ways the most conservative of the Democratic presidential candidates on last night’s stage—touted her early opposition to the Iraq War. She also pushed the current Senate resolution to tell the Trump administration “you must have an authorization of military force if you’re going to go to war with Iran.”

The debate featured just six Democratic candidates: former Vice President Joe Biden, Mayor Pete Buttigieg (of South Bend, Indiana), Klobuchar, Sanders, Steyer, and Warren. Moderator Wolf Blitzer kicked things off by pointing out that the U.S. and Iran had recently been “on the brink of war” and this had “reignited the debate over America’s role in the world.” He asked the candidates, with that in mind, “why are you…the best prepared person on this stage to be commander in chief?”

Sanders stressed his long-time opposition to the Iraq War and (in contrast to Biden) his ability to see through the Bush administration’s misdirection on that front. “Joe and I listened to what Dick Cheney and George Bush and [Donald] Rumsfeld had to say. I thought they were lying,” said Sanders. “I didn’t believe them for a moment. I took to the floor. I did everything I could to prevent that war. Joe saw it differently.”

Sanders also warned people not to get fooled again, as the Trump administration tries to lie us into a war with Iran.

Biden’s defense of his vote for the Iraq War wasn’t much of one: he had voted for it, it was a mistake, “but the man who also argued against that war, Barack Obama, picked me to be his vice president,” said Biden. OK then.

Ultimately, Biden showed few signs of real change on U.S. policy in the Middle East. He said we should send U.S. troops whenever “the overwhelming vital interests of the United States are at stake,” which is worryingly vague standard. He said he would “leave troops in the Middle East in terms of patrolling the [Persian] Gulf” and that it would be “a mistake to pull out the small number of troops that are there now.”

When challenged by others on stage, he caricatured their argument (saying they thought the U.S. could “walk away and not have any troops anywhere” in the world) before appealing to threats of terrorism and then making the perverse argument that we must police the world in order to not police the world.

“You have to be able to form coalitions to be able to defeat [terrorists] or contain them. If you don’t, we end up being the world’s policeman again,” said Biden.

But Biden was arguably the most hawkish person on stage, which is saying something.

Warren especially pushed back on Biden’s foreign policy claims. “We’ve turned the corner so many times, we’re going in circles in these regions. This has got to stop,” she said. “It’s not enough to say someday we’re going to get out. No one on the ground, none of our military can describe what the conditions are for getting out. It’s time to get our combat troops home.”

Buttigieg was on the same page. “We can continue to remain engaged without having an endless commitment of ground troops,” he said. He also pushed for greater congressional oversight of military actions:

When we lost troops in Niger, there were members of Congress who admitted they didn’t even know we had troops there. And it was all pursuant to an authorization that was passed to deal with Al Qaeda and 9/11. And often, Congress has been all too happy to leave aside its role. Now, thanks to Democrats in Congress, that’s changing. But the reality is, year after year, Congress didn’t want to touch this, either, because it was so politically difficult.[…]

Fundamental truth is, if our troops can summon the courage to go overseas into harm’s way, often on deployment after deployment, then we’ve got to make sure that Congress has the courage to take tough up-or-down votes on whether they ought to be there. And when I am president, anytime—which I hope will never happen—but anytime I am compelled to use force and seek that authorization, we will have a three-year sunset…

Klobuchar said she would get most troops out of Afghanistan but would have left them in Syria and would leave them in Iraq, albeit “not in the level that Donald Trump is taking us right now.”

You can find a full transcript of last night’s debate here.

All in all, the efforts to distance themselves from pro-Iraq and Afghanistan War votes, denounce the ongoing presence of U.S. troops there, and push for greater congressional oversight of military action was a very good sign.

But as the discussion turned more specifically to Iran, responses from the Democratic candidates weren’t quite as reassuring. While eager to condemn whatever Trump’s strategy with Iran has been, they were less clear on how their own approaches would differ. What we were left with was promises to accomplish Trump (and Obama) administration goals with regard to Iran—such as thwarting the country’s development of nuclear capabilities—while somehow avoiding anything that has already been tried.

Given that it’s unlikely Iran will just do whatever we say without getting anything in return, this probably won’t get us far. And few of the candidates on stage seemed sufficiently committed to keeping us out of war with Iran should even some slight provocation or shift in public opinion occur.

More debate coverage from Reason:

QUICK HITS

  • Meanwhile, in Trump world:

  • “Is there any better time to have a president who might be not from either party?” asks Rep. Justin Amash (I–Mich.).
  • How Tom Steyer keeps getting on the Democratic debate stage.
  • The woke primary is over and everyone lost, writes Matt Welch.
  • Positive momentum on occupational licensing reform in Iowa:

  • More from Reason staffers on last night’s Democratic presidential debate on CNN:

On the Sanders/Warren woman-president drama:

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A Missed Opportunity

Speaker Nancy Pelosi has now announced the slate of House managers who will prosecute the impeachment case before the Senate. Consistent with the Democratic approach to the impeachment process as a whole, there was no real effort to reach across the aisle and try to appeal to and persuade those on the political right who might be skeptical of Trump and sympathetic to his impeachment. The Democratic leadership failed to reach across the aisle in conducting the impeachment hearings, as Volokh co-blogger Jonathan Adler noted. They have now compounded that mistake.

Justin Amash would have made an excellent House manager. Amash has formally left the Republican Party but remains a vocal advocate of the classical liberal principles that once were understood to be at the heart of modern American conservatism. Amash broke from the GOP over the actions of President Trump and the complete inability of the party to tolerate any criticisms of the president. His appointment as a House manager would have been the obvious political play to make to signal that a presidential impeachment was in the nation’s interest and not just the Democratic Party’s interest.

For many months, Amash has been among the most eloquent critics of President Trump in the House of Representatives. He did a far better job than most Democrats in explaining the significance of the findings of the Mueller Report, and he has done a far better job than most Democrats in explaining the impeachment power and the reasons why the House needed to pursue an impeachment of the sitting president. He had served on the House Oversight Committee, one of the main committees investigating the administration, until he left the GOP.

An impeachment should not be a partisan affair. The Republicans in Congress have failed to take their constitutional duties seriously. The Democrats have made a hash of the process as well and made Trump’s job easier as a result.

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