Trump makes the Democrats grimace, but maybe the Republicans shouldn’t smirk

Niall Ferguson says jobs and wages numbers gave Trump and the Republicans good reason to smile at Democratic discontent during the State of the Union address, but the economic fortunes boosting the Trump team may be soon to run out

United States

Niall Ferguson

Published: 3:41pm, 5 Feb 2018

Why you can trust SCMP

Sometimes a facial expression speaks louder than words. As US President Donald Trump delivered his first State of the Union address, the Democratic side was one big rictus of pain. The reason Vice-President Mike Pence and House Speaker Paul Ryan’s faces grew more gleeful had less to do with Trump than with how their opponents were looking.

House Democratic leader Nancy Pelosi was a portrait of acute discomfort. New Jersey Senator Cory Booker was shooting for gold in the frown Olympics.

A year ago, in Trump’s inaugural address, he painted a picture of “American carnage”. Last week he radiated optimism. Barack Obama often used these occasions to tell stories of “ordinary folks”, yet the individuals always sounded like plaintiffs in a Harvard Law School case. But Trump pulled off the “shout-out” trick. There was the coastguard officer who saved at least 40 lives after Hurricane Harvey. The firefighter who rescued almost 60 kids from wildfires. The 12-year-old who put thousands of US flags on veterans’ graves.

What made this work were these carefully chosen American heroes, who appeared genuinely moved by the applause they received. The Republican applause, that is. Only very occasionally were their opponents willing to concede some desultory handclaps. Contrary to the media message that this was a “bipartisan” speech, everything, especially Trump’s insincere invitation to work with them on immigration reform and infrastructure, was to inflict pain on the Democratic Party.

“Americans are dreamers too,” Trump declared, goading those who use that term to refer to illegal immigrants brought to America as children and now facing deportation. To rub it in, one of Trump’s all-American heroes was an immigration officer named … Celestino Martinez.

US President Donald Trump delivers his first State of the Union address

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Three-quarters of viewers approved of the speech, according to a CBS News poll. Two-thirds said it made them feel “proud”. If they were lapping this up, the Democrats were right to look agonised. Five weeks ago the Dems led 50 per cent to 37 per cent in the generic ballot that offers a rough indication of who will win November’s congressional elections. Their lead is now down to 46 per cent to 41 per cent.

Two forces are at work which hurt the Democrats. First is the slow stabilisation of Trump’s administration as Chief of Staff John Kelly tightens his grip. Second is the economy. Not only were 200,000 new jobs created in January, but average hourly wages were 2.9 per cent higher than a year before, the strongest since 2009.

If these trends continue, Republicans might just beat the traditional curse of incumbency, in which a new president’s party does badly in the midterms. If they continue another three years, Trump 2020 ceases to be an impossibility.

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Will they? Probably not. First, I doubt that Trump will be helped much by the House Intelligence Committee’s memo accusing the FBI and the Department of Justice of “abuses” in the case of Carter Page, the former Trump campaign adviser targeted for FBI surveillance.

Second, the economy: as I wrote in November, the monetary policy party has officially ended. The Federal Reserve is raising interest rates and shrinking its stockpile of bonds. Demographic factors – reduced workforces, less saving and more consumption as populations age – also spell the end of the 35-year bond bull market. Last week the market cracked. With 10-year rates passing the 2.8 per cent mark, the stock market – Trump’s favourite measure of his stable genius – rolled over too. Rising wages are a double-edged sword: good news for workers, bad for investors.

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As for “the memo”, it’s not the “nothing burger” alleged by Democrats, but nor is it Wagyu steak. Yes, it seems odd that the Foreign Intelligence Surveillance Court was not informed that the basis for the FBI’s surveillance request, former MI6 agent Christopher Steele’s Trump dossier, was partly paid for by the Democratic National Committee and Hillary for America, via the research firm Fusion GPS.

It seems odd that the application cited as corroboration a story in Yahoo News for which Steele himself was the source. It seems odd that Steele was in direct contact with then-associate deputy attorney general Bruce Ohr and that Ohr’s wife was employed by Fusion GPS. All these people, plus FBI agent Peter Strzok and FBI lawyer Lisa Page, seem to have been pretty keen to see Trump lose to Clinton.

Carter Page, one-time adviser of US President Donald Trump, speaks during a presentation in Moscow in December 2016. Page emerged as a focus of the special council probe headed by Robert Mueller investigating links between Trump’s campaign and Russian officials. Photo: Reuters

US President Donald Trump says Republican memo vindicates him in Mueller’s ‘witch hunt’ Russia investigation

But was Steele’s dossier the only reason for the FBI to wonder what was going on between Trump Tower and various Russians? No. Has Trump been entirely candid about his campaign’s dealings with Russia? No. Does this memo do anything to derail special counsel Robert Mueller’s investigation into those dealings? Doubt it.

I still don’t think it’s Watergate. Nor do I think the economy is heading for Richard Nixon-style “stagflation”. Still, look carefully at the facial expressions of leading Republicans over the coming days. Democrats may not be smiling, but they won’t be the only ones grimacing.

Niall Ferguson is Milbank Family senior fellow at the Hoover Institution, Stanford

This article appeared in the South China Morning Post print edition as: Democrats grimace, but Republicans shouldn’t smirk

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