Thursday, March 16, 2017

Thune Figures It Out: Older South Dakotans Will Get Creamed By Trump/Ryan/Whoever-Care. Do Noem and Rounds Have A Clue?

Senior Senator
Senator For Seniors
     Our senior U.S. Senator, Republican John Thune, begged off on supporting the Obamacare replacement bill oozing out of the political entrails of a befuddled House of Representatives today. Thune told The Rapid City Journal that he and the rest of the Senate could work on a plan that would be "more helpful to people on the lower end."  Good idea, since it's the lower end where many oldsters in South Dakota will be feeling the most acute financial pain if this over-hyped and under-considered fiasco of a replacement bill ever becomes law.
     Disheartening as it is, our all-Republican congressional delegation has spent years dissing the Affordable Care Act and voting countless times in a wasted political show of disdain to end it--and all that time these reflexive partisan yes-people haven't had a clue as to what a replacement would look like.  Now that the House of Representatives--in a show of fealty to President Trump and his reckless promise to repeal and replace ACA immediately upon taking office--has hurriedly trotted out a poorly conceived and politically poisonous replacement, our elected reps are forced to pay attention to the details of healthcare policy.  
     Not much has been heard from Senator Rounds or Congresswoman Noem, who've long been part of the GOP chorus determined to undo ACA with nary an afterthought about what would occur next.  No surprise there, as neither has been much of a distinguishing force in Congress. Thanks to seniority, Thune has advanced far enough in party leadership to grab some attention now and then, though his lock-step voting behavior has been predictably partisan.  That he has some public reservations about the bill says much for the growing GOP hostility toward a replacement of its own party's creation.  An overhaul is likely now that enough recalcitrant Pubs in both houses may
Rounds, Noem
Opinion, Please?
be likely to sink this ship before it's even christened.  

     That should be welcome news to aging South Dakotans.  A study of the replacement bill by the Kaiser Family Foundation shows that it would raise health insurance costs for lower- and middle-income 60-year-olds on average by $3,000/year. Considering the rapid growth of the aging population of our state (South Dakota State University calls it a "dramatic increase"), our nearly 200,000 residents aged between mid-40s and mid-60s stand to get financially hammered as the years go by if the GOP plan goes into effect.  That's the aging group that probably most needs health insurance, just at a time when they're most likely to develop penny-watching retirement plans and budgets.

Thursday, March 9, 2017

Buen Comercio, SI! Mexit, NO!

Mexico City--Amazingly (color me facetious), Donald Trump and his anti-Mexico histrionics aren't on everybody's mind, every single minute of the day here.  The 8+ million inhabitants of this city (almost that many more in the greater area) have to contend with all the pressing urban issues that consume city dwellers.  For the most part, the local media devote most of their attention to parochial concerns, with the expected amount of limited op-ed attention paid to matters connected to relations with the U.S.

     Not that there's any love lost between Mexican editorialists and President Trump.  In its analysis of Trump's issues with the complications of repealing Obamacare, Mexican News Daily refers to Trump as "the Tangerine Tornado."  The rest of today's edition has a piece about Mexican avocado growers "not sweating over NAFTA" because they sell $2.2 billion worth of fruit to the USA every year and will continue to do so, NAFTA or no NAFTA.  I shouldn't have been, but was, taken aback by a note in the piece about local environmentalists concerned that rapacious avocado growers are continuing to expand by destroying Monarch butterfly habitat in order to plant more trees. Another reaction in the piece noted that the trade issues with the U.S.A. could be an opportunity in disguise, as Mexicans will be forced to seek out other markets and develop trade ties with a broader array of countries if relations with the U.S. continue to sour.  
     That prospect has already emerged.  A couple of weeks ago a bill requiring Mexico to buy its corn from Brazil and Argentina instead of the United States was discussed in the Mexican senate. Meantime, the Chinese global news giant YIBADA reported last month that while U.S.-Mexican trade tensions are building, China "is taking the opportunity to strengthen ties with Mexico." These are probably incremental, baby-sized steps at this stage of Trump administration's handling of the NAFTA relationship, but they are definitely going in the wrong direction from our local perspective. As I noted here last week, South Dakota's $400 billion a year in sales to Mexico (out of a total of $1.4 billion in exports) should be enough to keep us focused as our trade relationship evolves.  

     My sense is that Mexico--if not exactly defiant--is nevertheless developing its fallback options.  It's a country with considerable comparative advantages, particularly in the way of natural resources and a cheap but increasingly skilled labor force.  A revisit to NAFTA is probably way past due.  A Mexit wouldn't do us much good and could be exceptionally bad for South Dakota. 

Thursday, March 2, 2017

I'm South Of The Border, Down Mexico Way.

  As you read this I'm in Mexico City, soaking in the history and culture--and trying to get a sense of how the drama of our relationship with this country will affect us in South Dakota.  My
It's A Big Market
And We Need The Business
(from Colombia Post)
take on departure is that the rockiness of our association can only hurt where we'll feel it the most--in the pocketbook.  Mexico, since the inception of NAFTA, has turned into an immense market for South Dakota during the past couple of decades, particularly when it comes to our agricultural production. I watched much of this happen during my years in local cattle production and marketing back in the '80s and '90s, but even as things were heating up on the free trade front back then, it hardly seemed realistic that we'd get to where we are now with our sales to Mexico.  In 1995 total SD exports to Mexico amounted to a virtually negligible $6 million.  Mexico 
was then our 10th largest market. In 2015 that number swelled to $400 million as Mexico became our 2nd largest foreign market. 
      This broadly tracks the overall growth of American sales to Mexico, which jumped from $46 billion to $230 billion during the same period.  But that's where South Dakota's experience parts company with the United States as a whole.  Where our national macro-experience has resulted in the much-derided but insufficiently understood  (It's too simplistic to call them "bad" despite what politicians say.) trade deficit of $63 billion, South Dakota's experience with Mexican trade has resulted in a huge surplus.  The U.S. Census Bureau calculates that South Dakota imports (in 2015) just $70 million of goods from Mexico, which gives us a state-surplus of well over $300 million. This sounds nice but isn't particularly reflective of anything other than the fact that we sell more to
Closing Doors?
Bad Way To Relate
Mexicans than we buy from them.  What we need to focus on is the amount of our sales, not the net dollar differential in our trade.  

     And that's where the more insidious problem resides.  If Mexico responds to our protective trade impulses with retaliatory trade measures of their own, we're off and running to a trade war, which could easily result in a serious slowdown of South Dakota's agricultural sales to Mexico.  In the meantime, tariffed, goods that we buy from Mexico will get more expensive.  Of such dynamics are international financial crises bred.  That anybody thinks a scenario like that will get American workers back to the production lines because we'll all be "buying American" again is a poor reflection on our collective grasp of history.