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News Brief: U.S. Economy, Iran Sanctions, Syria's Civil War

Aug 21, 2019
Originally published on August 21, 2019 10:53 am
Copyright 2019 NPR. To see more, visit https://www.npr.org.

DAVID GREENE, HOST:

The Trump administration keeps saying that the U.S. economy is fundamentally healthy.

NOEL KING, HOST:

Right. But the White House is talking about doing some things that are usually used to stoke an economy that's not doing so well. So for example, President Trump says he's considering two different kinds of tax cuts. And he's continuing - mostly on Twitter - to yell at the Federal Reserve about cutting interest rates.

GREENE: All right. Let's bring in NPR economics correspondent Scott Horsley to talk about this. Hi there, Scott.

SCOTT HORSLEY, BYLINE: Good morning, David.

GREENE: OK. So the president's floating this idea of cutting payroll taxes, something that, in theory, would affect just about everyone who gets a paycheck in the United States, right? Let's take a listen to how he put it.

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PRESIDENT DONALD TRUMP: Payroll tax is something that we think about. And a lot of people would like to see that. And that very much affects the working - the workers of our country.

GREENE: What's the history of this, Scott? Has this been tried before?

HORSLEY: It has. Congress cut the payroll tax temporarily back in 2011 as the country was digging its way out of the Great Recession. Lawmakers reduced the tax by two percentage points in an effort to put more money in workers' pockets and increase consumer spending. If Congress were to do something similar now, it would add about $150 billion a year to a deficit that's already ballooned to more than a trillion dollars a year. It would also give the typical worker about $800 a year to spend.

Now, here's the thing - consumer spending is really not the weak spot in the U.S. economy. Consumer spending's held up pretty well. It's business investment that has been slowing down. Also, any savings from cutting the payroll tax might be offset by the president's China tariffs. We've got a forecast now from JPMorgan Chase that those tariffs, if they fully take effect, would cost a typical household about a thousand dollars a year.

GREENE: All right. So some questions about whether this - what impact this would have. But it's not the only tax cut the president's talking about. He's also talking about reducing the capital gains tax. Remind us what that is and why he might be thinking about that.

HORSLEY: This is an idea the White House has floated before. It's popular with a lot of conservative anti-tax groups. Capital gains tax is what you pay when you have an investment - like stocks or real estate - that goes up in value. And the president wants to exempt that part of the gain that comes from inflation. Again, this would add to an already large federal deficit.

And it's a tax cut that would overwhelmingly benefit the wealthy. More than three-quarters of capital gains tax is paid by people making more than a million dollars a year. One reason the White House likes this idea is they think the administration could do it on its own without needing to get a vote from Congress, although that's a theory that would truly be tested in court.

GREENE: So which is it? I mean, is the economy doing really well, as the president likes to say? Or does it need sort of a helping hand from him if he's considering this stuff?

HORSLEY: The economy is still growing, and it is still adding jobs. But it has definitely downshifted. It's not growing as fast as it was, say, a year ago. Manufacturing in particular has taken a hit. And that's a sector that the president likes to boast about helping. Manufacturing is a sector that is particularly vulnerable to slowdowns in other parts of the world, which we've certainly seen. And it's also disproportionately affected by the president's trade war.

Even parts of the manufacturing base that are supposed to benefit from the president's protectionist moves, like domestic steelmaking, are hurting. U.S. Steel has notified authorities in Michigan that nearly 200 workers at its blast furnace south of Detroit could be laid off for six months or more. Now, I don't want to overstate this. It doesn't look like we're staring at an imminent recession. But even a modest slowdown could be challenging for a president who's facing re-election in less than 15 months.

GREENE: That's right, the election coming up. And a White House that is looking for reelection always keeps a close eye on that economy to see what might happen. NPR economics correspondent Scott Horsley. Scott, thanks as always.

HORSLEY: You're welcome.

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GREENE: Right. So how much have U.S. economic sanctions affected Iran?

KING: Well, Secretary of State Mike Pompeo said yesterday that the U.S. is taking 2.7 million barrels of Iranian oil off the world market every single day. The U.S. imposed these new sanctions after dropping out of a nuclear deal with Iran. Pompeo told the U.N. Security Council that Iran is not responding well.

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MIKE POMPEO: Since the United States declared our intention to bring all Iranian oil purchases to zero in April, the ayatollah has gone all in on a campaign of extortion diplomacy.

KING: So what he means by extortion diplomacy is that Iran has been seizing oil tankers in the Gulf and has stopped complying with parts of the nuclear deal that the U.S. pulled out of first.

GREENE: All right. So one big question is whether U.S. sanctions will actually pressure Iran enough to change course. And we're going to get a view from Iran now. Our colleague Steve Inskeep is reporting this week from the capital Tehran. Hi there, Steve.

STEVE INSKEEP, BYLINE: Hey there, David.

GREENE: All right. So oil is Iran's biggest export. It's crucial, and the U.S. has now mostly cut it off. So can Iran sustain the pressure that's coming here?

INSKEEP: Well, here in the capital, Tehran, the people we have met over the last several days have not seemed destitute. But a lot of them are having trouble paying the bills. There are a lot of middle class people in Iran, a lot of educated people in Iran. And now there's a lot of inflation. Food prices are up. Prices for everything are up. There's a fair amount of unemployment as well.

And this has intensified a discussion here about inequality that's familiar to Americans in some ways. Some people in this country are still really rich. There are luxurious parts of Tehran. But other people know they are not rich, and they are feeling it when the bills come due.

GREENE: What are the conversations like for you as an American journalist? I mean, are people willing to point the blame directly at the United States when they're talking to you?

INSKEEP: Oh, sure. Well, their government does, and in many cases people on the street do. We've met dozens of people in many walks of life. And many criticize the United States, as you would imagine. But this is important, David. It's also common to find people who trace their country's problems, partly or entirely, to their own government.

We spoke the other day with people in a park. It was in the evening after dark when it finally cools off here. And a student named Lilith Farr (ph) told us she needs to leave Iran in order to have a future.

LILITH FARR: I think if a young person in Iran want to have a good future, a good job and good lifestyle, good husband and other things - good salary - I think should go to other country.

INSKEEP: All right. Now, that's a really common sentiment in Iran, David. We've heard people talk that way for many years. But she added something else that was a little rare. She was one of several people on the street who said she's disappointed in Iran's supreme leader, Ayatollah Ali Khamenei, because he declined the latest U.S. effort to negotiate. Khamenei has said there's no point in talking with President Trump, who dropped the last agreement with the United States. It is not very common at all to hear Khamenei criticized even slightly.

GREENE: Well, does the supreme leader seem to have a plan to withstand the pressure coming from the U.S.?

INSKEEP: Well, the Iranian authorities insist that they do. Partly it's a battle for global public opinion. Iran clearly thinks it has a story to tell because so much of the world favored the nuclear deal that the U.S. withdrew from. But there's one other thing also, David. We spoke with a conservative newspaper editor here. He's considered a good barometer of insider opinion. And he calculates the economic pressure, while it's really damaging for Iran, will actually bind people more closely to their government. They will need their government to help them survive.

GREENE: Our colleague Steve Inskeep reporting this week from Tehran. Steve, we look forward to more of your reporting, and thanks so much.

INSKEEP: Glad to do it, David.

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GREENE: All right. Now to the situation in Syria in the northwestern province of Idlib.

KING: Yeah. This is the last province that's held by Syrian opposition forces. It's been under attack by the Syrian military. And there's a big humanitarian problem there, which is that more than a million refugees from all over Syria live in Idlib. So hundreds of civilians have been killed in fighting over the past few months. Right now, the government appears close to taking an important town - an important opposition town in Idlib.

GREENE: And NPR's Ruth Sherlock is following this from Beirut. Hi, Ruth.

RUTH SHERLOCK, BYLINE: Hello.

GREENE: So people are talking about this town. This opposition-held town is very important. What is the town, and why is it so crucial here?

SHERLOCK: Well, the town is called Khan Sheikhoun. And it's close to a highway that links the major city of Aleppo with the capital, Damascus. And so this is the highway that the Syrian regime wants to take back. But it's also symbolically very important, you know. This was an area that suffered a chemical attack in 2017 that prompted President Trump to launch airstrikes on Syria. So - and it's been controlled by the rebels for years. So it would be a big boost to the morale of the regime troops to take it back. As of now, they seem to have made inroads into the town, but the fighting is still ongoing.

GREENE: Well, and as I understand, you managed to speak to a doctor in one of the hospitals here. What did he tell you, and what did you learn about the situation?

SHERLOCK: Yeah. So in the conversation, I'm going to identify him as Dr. Ahmed (ph) because doctors have been targeted in this war. And, you know, you really sense that because he says he's in one of the main remaining hospitals in Idlib province.

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DR AHMED: All the medical centers and the hospitals in the south of Idlib and in north of Hama now are destroyed totally. We lost a lot of people because there is no medical service in these places.

SHERLOCK: So he's saying that, as well as civilians who died because of lack of access to medical care, in the last few months alone since the fighting really intensified in April, he also knows of at least 20 medical staff that have been killed whilst working in these clinics. A lot of them were hit by airstrikes. He says many of these people were his friends. And, you know, his hospital has now been inundated with casualties from the recent fighting. And he says more keep coming.

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DR AHMED: About 10 minutes, the regime bombed one of the town about 30 kilometers from here. And there is some casualties current and still will - they will come in. Yeah. OK. Thank you.

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SHERLOCK: You can hear the siren there. And he has to end the call.

GREENE: Wow - because an ambulance was just pulling up at that moment, I would imagine.

SHERLOCK: Yeah.

GREENE: Ruth, isn't this an area where you've said so many people have actually come to flee fighting elsewhere?

SHERLOCK: Yeah, exactly. There's been over a million people who've been displaced from other parts of Syria that are now in this area. And they keep going north up against - being pushed up against the Turkish border. But that border is closed. And the problem is that there isn't really anybody - anywhere else for them to go. Aid groups are trying to help, but they're not really able to cope. People are staying in schools, but some of those schools have also been hit. Many are just now sleeping in the open under olive groves.

GREENE: All right. Talking about a dire situation in the northwestern province of Syria. NPR's Ruth Sherlock reporting from Beirut. Thank you, Ruth.

SHERLOCK: Thank you.

(SOUNDBITE OF EVIL NEEDLE'S "LUCKY LADY") Transcript provided by NPR, Copyright NPR.