Late last week, Americans for Prosperity and Freedom Partners published a new study on the economic impact of the Border Adjustment Tax, and Kevin Brady immediately labeled it a "so-called study" and "fake news". I happen to be mentioned in the study, and it's an honor to be called "fake news" by the illustrious Mr. Brady. After all, he's a so-called Congressman!
Let me help you with this use of the term "fake news". In a Kevin Brady context, "fake news" is an inconvenient fact that appears in the media. It is deemed especially "fake" if it is associated with an opponent of whatever ridiculous position Brady is pushing at that particular moment.
This is not entirely different than our President's practice of citing flagrantly ridiculous reporting on Fox News (e.g., Andrew Napolitano's assertions about Obama wiretapping) while at the same time pointing the finger at the "failing New York Times" or CNN as a source of "fake news". I guess, "fake" depends on where you sit these days. Some people also call this a validation bias, or just plain old delusional behavior. Take your pick.
So what did this "fake" study show? Well, among other things, it drew from data I have previously highlighted in this space, namely the "fake news" promulgated by the U.S. Census Bureau (fake!) about 2014 import totals. State totals are actually now available for 2015, as well as a range of other updated information. The data is similar between 2014 and 2015, so the conclusions don't change.
And the "fake" news being flogged by the always suspect U.S. Census Bureau (practically the National Enquirer of the U.S. Government, as you know) is state import totals. The links are above, check them out for yourself. The Freedom Partner report performs some simple fourth grade math on the Census Bureau data and observes that regional patterns of trade will punish certain states more than others. You probably could have guessed that. Consider that Rep. Erik Paulsen represents the home district of Best Buy and Target but spinelessly stands strong behind the BAT. Yup, some places will get hammered. The study shows that, and dares to publish a ranking.
Like most "fake news", the study provides copious citations, presumably to other sources of fake news. Who knows.
The state most sensitive to the BAT using this data is actually Michigan. Michigan is a seat of the auto industry. My home state of Illinois, that great state, is seventh on the list. We also feed the auto industry. Have you ever heard of global supply chains? Most of the top adversely-affected states have heavy exposure to auto manufacturing. Again, the report correlates this data and makes it digestible. Unlike the coarse and baseless remarks of Mr. Brady. [The study does similar correlation work on retail jobs by state.]
If there is anything "fake" here, it's the kindly assumption on page six that the impact of exchange rate movements will cover half of the burden of the BAT. I strongly doubt that, myself. Okay, it's not "fake" just because I disagree with it but, frankly, it's kinda fun calling it "fake news". Try it, you'll like the sense of power and condescension calling news "fake". Am I right??
To make matters more unpleasant for Congressmen with a penchant for stretching the truth, Americans for Prosperity released this commercial to run on cable stations this week:
It's a real shame that House Republican leaders cannot deal with the truth, and have a career-threatening compulsion to push bad policy with even worse politics. That's not our fault. We will push back hard and since they are on some sort of kamikaze mission, they may pay the ultimate political price for their insistence on this terrible policy initiative.
And in the meantime, we can savor our "fake news"!