Trumps policies falter; 'The economy, stupid' -- once again

 

Gordon L. Weil

“The economy, stupid.”

That phrase, posted by strategist James Carville in Bill Clinton’s 1992 campaign headquarters, has entered American political mythology as a revelation of dazzling brilliance and simplicity.

It isn’t.  It’s an eternal political truth; campaigns are always about the economy, though that’s not always recognized.

Inflation is the immediate problem.  Reacting to voter unhappiness with prices under the Biden presidency, Trump promised: “Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods.”  Apparently, many voters, having lost faith in the Democrats, believed him.

Yet, inflation in September was higher than in the last full month of the Biden administration.  Trump runs the risk of facing the same kind of voter frustration with prices that brought him to office.

He asserts that the economy is sound, and people will soon see that he has kept his campaign promise.  Of course, that’s not quite the same as the “day one” promise.

Trump may claim that all is well and getting better for several reasons.  The stock market is soaring, and he may see it as a good representative of the national economy.  Yet its performance might reflect excess optimism about the rapid deployment of AI, which may not happen.  If that bubble bursts, it could harm both the market and the economy.

He may also be only looking at a slice of the American public.  Surveys suggest that Republicans, the wealthiest people and investors are positive about the economic outlook.  But they are out of step with everybody else.  While they wield great economic power, they are not the mass of voters.

Trump’s tariff policy contributes to inflation, though not as quickly as foreseen in some dire forecasts. His team takes credit for the limited early impact, ignoring the lags inherent in economic change, and that inflation will thus increase as the months roll by.  Importers will absorb less of higher tariffs than at the outset, with more costs being passed on to consumers.

By applying across-the-board tariffs, Trump failed to take account of American dependence on certain products that cannot be replaced by U.S. production.  Big price increases have occurred in coffee, women’s clothing and electronics.  Seeing the trend, he has begun lowering some agricultural tariffs.  There may be more reductions to come.

When President Reagan took office facing high inflation, he left it to the Federal Reserve to take the unpleasant measures needed to lower it.  The policy amounted to saying it will hurt more before it gets better.  Reagan remained blameless, while the Fed raised interest rates.  The Fed tamed inflation, but caused much pain in doing it.

By contrast, Trump has plunged in and tried to get the Fed to cut interest rates, which he argues will promote growth.  His pressure may have influenced the Fed, slowing a reduction in inflation.  To the extent that his policy fails, Trump, unlike Reagan, may get the blame.

Housing is a special problem, with demand exceeding supply.  Inevitably, that scarcity drives up prices.  One underlying factor is that by eliminating immigration, the government has cut labor force growth needed for housing construction.

The tariff policy has also had an unanticipated rebound effect.  The U.S. may cut imports and bring production home, but it may lose exports due to retaliation.   After U.S. auto tariffs forced two American carmakers to close some Canadian production, Canada removed a tariff-free exemption on some of their exports to its market, costing the carmakers solid sales. 

One key to Trump’s approach is his heavy reliance on cheerleading to overcome people’s worries about the economy.  An old song included this line: “Wishing are the dreams we dream when we're awake.”  

Unlike the song’s lyrics, wishing won’t make it so.  Trump offers dreams more than paycheck reality.  People pay the price at the check-out counter, an experience that Trump may have missed.  No amount of telling them that it will soon be better, without evidence for the claim, can change the higher costs that people pay.  Dreams can become nightmares.

Trump’s problem, one he shares with many others who have occupied the White House, is in taking responsibility for the state of the economy.  This overstates presidential influence; the economy is usually influenced by a myriad of factors outside of their control.  

In this case, however, Trump’s trade, immigration and Fed games have put him squarely in the game.  He exudes confidence in these initiatives, while they produce uncertainty and come up short on promised results.

Even if he abruptly alters policies, the inevitable economic lag will mean the effects of his past moves will be felt next year.  In short, he has handed Democrats a major issue to boost their 2026 congressional campaigns.  The economy, stupid.

Ukraine, Europe oppose US plan aiding Russia

 

Gordon L. Weil

President Trump’s view is that Ukraine has lost the war with Russia and ought to surrender or lose U.S. support, making its ultimate defeat even worse.

Ukraine’s view is that, while it will negotiate for peace, it will never give up.

In his desire for a rapid end to hostilities, even if it only yields a tenuous ceasefire, Trump is obviously unaware of both international law and Europe’s history with Russia aggression.  A ceasefire is a starting point in negotiations, but Trump has little interest in the details of the deal.  For him, a ceasefire is peace.

A basic definition in international law applies to the U.S. proposals.  There are certain rules that have been generally accepted by almost all countries, often in treaties, that are the real body of international law.  Beyond that, the term is often thrown around carelessly.

Part of the generally agreed rules are the four conditions that define a nation-state. 

1.  It must have sovereignty, able to defend itself and make decisions for itself.

2.  It must have territory, defined by borders accepted by other nation-states.

3.  It must have a population that shares in values, whether ethnic or civic or both.

4.  It must have a government, capable of making decisions for the nation-state.

Trump, who rewrites American constitutional understandings and the world’s trade rules, believes he can strip a nation of characteristics that will result in its disappearance as a state.  Ukraine, which meets these international standards, is threatened. 

On this point Europe (except for Hungary) splits with the U.S.  Many countries there, having lost their nationhood to Nazi Germany in World War II and believing its outcome ruled such threats illegal for good, have opposed Trump’s proposals for a Russia-Ukraine agreement.

Trump’s original 28-point proposal included several points that would undermine Ukraine’s status as a nation-state.  Ukraine would voluntarily turn over to Russia some national territory still under its control, cede the territory seized by Russia, refrain from seeking NATO membership, cap the size of its armed forces, and hold national elections within 100 days.

These proposals would remove sovereign powers from Ukraine.  Because Russia would make no parallel commitments, it could readily overpower Ukraine to make it a satellite.  While the U.S. might pledge to defend Ukraine, its waffling on its NATO mutual defense commitment could worry Kyiv.  Russia would gain the buffer it wants with NATO and could expand its influence.

Trump also implied that, in addition to staying out of NATO, Ukraine’s joining the EU could be questioned.  He also proposed that Russia be invited back into the G-7 group.  The Europeans responded that these are matters for NATO, the EU and G-7, not for an agreement between Ukraine and Russia (or Trump and Putin).

No peace agreement will return Crimea and other Russian occupied parts of the country to Ukraine control.  But Ukraine looks to international law for an answer, likely unknown to Trump.  It’s about recognition.

Together with other countries, Ukraine could recognize the de facto control (control in-fact) by Russia of occupied territory, but refuse to recognize de jure control (control by right) of it.  In that way, it could avoid taking constitutional action required to cede territory, while accepting current reality and keeping the door open for a later resolution.

As U.S.-Ukraine negotiations were under way, Sweden announced that it would never recognize Russia’s annexation of Crimea and other territory.   The statement made clear that Trump could not sweep away Ukraine’s status as a nation-state, because other countries would not go along.

Trump reportedly thought that Ukraine was slowly losing territory to Russia.  He also believed that the Zelinskyy government was weakened by corruption.   Both developments would force the Ukraine president to give way to Russian demands.  He missed the degree of Ukraine’s commitment to its status as a nation-state.

A member of the Ukraine parliamentary opposition dismissed this belief.  “His problems don’t impact our ability to conduct the talks, even if the American side may mistakenly think so.”  A German observer commented that, if Zelenskyy accepted the Russo-American proposal, “he would not be president anymore when he comes home.”

A Ukraine official in the negotiations offered a veiled analogy to Trump’s hard push for a deal and for the Nobel Peace Prize: “We were not sitting in the Netflix headquarters writing scripts that will be Oscar-nominated.”  Trump mistakenly sought acclaim like he received for his multi-point Gaza plan.

Putin wants to turn Ukraine into a satellite, relenting only if the price becomes too high or the U.S. gets tough. Trump wants an end to armed conflict regardless of what would follow and ignoring Ukraine’s future as a nation-state.

If Trump succeeds, Putin would have won his war.   And Trump would have reshaped the law of nations.

Europe's failure helps Russia

Gordon L. Weil

Famed British operetta composers Gilbert and Sullivan wrote about a reluctant military squad that kept proclaiming that it would advance “forward on the foe.”  But, frozen in place, it was repeatedly reminded, “Yes, but you don’t go.”

That looks like the story of today’s Europe facing the Russia-Ukraine war.  Britain, France, Germany and others see the Russian invasion of Ukraine as a threat to all of Europe.  If Russia’s Putin gets away with again breaking a non-aggression promise, he becomes a danger to all of Europe, especially the nations closest to his country.

The Europeans believe that if Putin succeeds in effectively controlling Ukraine through military force, he is likely to want to extend his reach.  He appears to dream of the day when the Soviet Union controlled eastern Europe, including many countries now members of the EU and NATO.  For Europe, the Cold War is back, but it’s hot.

Their worries are justified.  Russia planes and drones have overflown Baltic countries and Poland.  They have harassed British aircraft and airports.  They have sent warships and drone- launching ships into Scandinavian waters.  They have even used British drug money laundering to disguise Russian war funds.

This has brought Europeans together to create what they call a “coalition of the willing.”  But the U.S. is not completely willing and has stood aside.  It provides intelligence to Ukraine and will sell some weapons to European countries that they may then transfer to Ukraine.  But no American dollars or military are involved in the active defense of Ukraine.

Given the relative weakness of European armed forces and its own limitations, Ukraine recognizes that it is dependent on the U.S. in general and President Trump in particular.  It strengthens its links with Western Europe and receives significant financial aid from EU members.

But Ukraine is fighting on an unlevel field.  Russia freely attacks sites in Ukraine, but the U.S. limits the victim’s response in the attacker’s homeland.  The natural alternative for Ukraine is Europe, a region with other countries worried about the war.  The U.S. can write off Ukraine, because, unlike Europe, it finds it has no apparent strategic value, but they can’t.

Here’s where Gilbert and Sullivan come in.  The Europeans make bold statements, hold high-level meetings, attack Russia and press the U.S. but they take little supportive military action.  They would only put peacekeeping patrols on Ukraine’s soil after a peace agreement was signed.  They purchase and forward weaponry, adding to the profits of their American manufacturers.

The coalition of the willing has committed to supporting Ukraine financially “for as long as it takes.”  Could that commitment be undermined by persistent Ukrainian corruption, the end of the Zelenskyy government or loss of interest by Europe’s taxpayers?  Their support is taken for granted and does not help Europe get into the negotiations on the war’s resolution.

In the 1950s, when the European Union was being created, mainly as a way of making it impossible for France and Germany to go to war against one another yet again, the underlying thinking was that the Europeans should become almost fully integrated in a relationship covering their economies and armed forces.

The intent became clear when France vetoed UK membership, claiming it was an Atlantic nation that would not be fully committed to Europe.  By the time Britain later joined, many other countries did as well, but their demands for national sovereignty blocked integration.  As the move toward unity faltered, Brexit proved the French right.

Today, the Europeans see the Russian attack on Ukraine as a threat to themselves.  But, instead of becoming a strong partner to the U.S., they let themselves become America’s dependents.  That leaves them able to protect their own vital interests only so far as Trump will let them.

Trump’s peace proposals would end hostilities by weakening Ukraine, which would allow a future Russian attempt at a takeover.   The Europeans have been excluded in his planning, because they have no relevant power.  He has correctly recognized their dependency and now acts on it.

If the Europeans believe what they say about Russia’s war on Ukraine being the opening gambit in a long-term war against them, they are not acting like they mean it.  They are not sending enough weapons they now have at home to the front lines of their war in Ukraine.

If Ukraine has a NATO-like relationship with Europe, they should act as though it would trigger a NATO-like response, though one without the U.S.  Their arsenals should be fully engaged.  They should offer to keep combat troops in Ukraine to protect against future Russia aggression.  They should not be deterred by Russian saber-rattling or by the temptations of appeasement.

Otherwise, they remain American dependents, giving up their right to make decisions about their own defense to Trump and the U.S. 

  

Democrats need uniy, not purity

 

Gordon L. Weil

The Democrats sense their chance to retake control of the federal government and put a lid on MAGA.  But they run the risk of getting in their own way.

They see their wins in Virginia, New Jersey and New York City as signs the voters are turning away from President Trump and toward them.  Pundits pile onto this snap judgment, possibly engaging in wishful thinking. 

There’s still a long way until November 2026, and we know nothing about intervening events.  Also, notwithstanding its recent victories, the Democratic Party struggles to find its identity and a leader.

Perhaps the Dems biggest problem is that it is engaged in a family feud about what it needs to win next year.   Of course, they agree or hope that opposing Trump might be enough to return them to power.   But, beyond that, the Dems are split on their identity.

Moderates seek a revival of traditional Democratic social welfare policies that could respond to the economic worries of middle- and lower-income people.  They want the restoration and even the expansion of health and food support programs.  Government stimulus spending is possible.  At the same time, they would downplay attention to controversial social issues.

This approach would restore more than it would innovate.  At best, it could extend New Deal-style policies, but it might not amount to real change.  It could represent an attempt to link working people with rising minorities under an activist government.  It would undoubtedly unravel Trump policies.

Progressive Democrats, while not opposing the moderates’ policies, assert that they do not go far enough to meet the popular demand for change.  It is not enough to reanimate the Affordable Care Act or pour government dollars into promoting economic activity.  They see the government being widely regarded as a failure, pursuing policies that do not promote progress.

They would go well beyond the ACA to universal health care, though they avoid government -run socialized medicine as in the U.K.  Federal housing and food assistance would move toward eliminating poverty.  They want to restore environmental regulation. And they favor measures to allow equal opportunity for all people in society who face discrimination.

The moderates worry that progressive policies have limited appeal to the electorate, and progressives complain that moderates ignore increasing demands for major change.  Each sees the other as either being too narrow or too unrealistic to regain the support of a winning, popular majority.

This kind of split in the Democratic Party is nothing new.  It’s almost business as usual.

After World War II, moderate President Harry Truman battled progressives led by Henry Wallace.   They differed on policy toward the Soviet Union with Truman taking a hard line and Wallace believing that partnership was possible.  Truman prevailed.

In 1980, moderate Georgia Gov. Jimmy Carter defeated liberal Sen. Ted Kennedy for the nomination.  Twelve years later, moderate Arkansas Gov. Bill Clinton overcame the drive of progressive California Gov. Jerry Brown.  In 2006, Sen. Barack Obama, seen as a liberal, had to defeat Hilary Cinton, perhaps seen as more moderate.

The split did not prevent Democrats on either side from winning elections when they achieved enough party unity to defeat divided or dispirited GOP opposition.   That’s what the Dems hope for in the 2028 presidential election.   They work to send strong, advance signals by winning next year’s congressional contests.

Each side now believes that Trump will sink himself, and they offer the better alternative.  But there is a better model in their party’s history than seeking to prevail over other Dems.  It was the coalition put together by Franklin D. Roosevelt in winning his first two terms as president.

Roosevelt faced Democratic divisions far deeper than the party does today.  The most obvious divide existed between Dixie Democrats, southerners who supported segregation, and northern Black constituencies, which demanded greater access.  Political tradition and expediency kept them in the same party.

FDR needed the support of all congressional Democrats to deal with the Depression and its economic dislocation.  He identified the issues shared by all their constituents, no matter their views on race.  Improving economic conditions for everybody unified the Dems.   Beyond the necessary core programs, their divide survived.

Today’s Democrats could try to create a unifying platform focusing on their common understanding of broad national priorities.  In a huge nation, it is futile to believe that, beyond their shared core interests, all Dems are likely to see party policy the same way. 

If winning is what matters most, the Democrats need to turn their core agreements into their national platform and not require total unity.  Compromise is essential, and it’s needed now, as is a unifying national leader.

Otherwise, the Dems might end up echoing statesman Henry Clay’s famous declaration: “I would rather be right than be president.”  Despite numerous tries, he never was president. 

MAGA melts; promises can't be kept

 

Gordon L. Weil

MAGA may be failing when it comes to some of President Trump’s key policies.

Like many candidates for executive office, he made promises with broad political appeal, but which ignored and encountered harsh reality – from political to economic to legal – that made keeping them impossible.

After making bold and popular promises, Trump last week backtracked on commitments relating to tariffs, immigration and military action. 

With global free trade becoming increasingly unworkable, Trump imposed a new system depending on a multitude of bilateral arrangements.  He levied across-the-board tariffs on almost all countries.  He acted swiftly in the belief that other countries would flock to make trade concessions so that he would lower tariffs aimed at them.

Economists warned that the tariff burden would fall mainly on American consumers as their cost was passed on by importers.  He denied that tariffs caused inflation and even denied that prices were rising.   Unhappy consumers saw prices on groceries increase, whatever he might claim.

No obvious effort was made to equate the dollar value of trade concessions made by others with the cost imposed by new tariffs.  Instead, Trump lowered tariffs in return for promises of massive new investment in the U.S., though it is doubtful that tracking foreign investment commitments is possible.  In the short-term, domestic manufacturing benefitted little from tariff protection.

Finally, Trump came to realize that his tariffs were driving up prices for individual consumers.  Last week, he ordered tariffs lifted on foods for which U.S. production was insufficient to meet demand, pushing prices up.  More tariff cuts on non-food items are said to be coming.

“Wait. If lowering tariffs lowers prices, what does raising tariffs do to prices?” Erica York, a vice president at the Tax Foundation, asked.  It may be called a matter of “affordability,” but that’s really inflation.

In the end, some relatively low tariffs may survive, but the policy itself is in trouble.  Even more troublesome is the possibility that the Supreme Court, usually supportive of his expanded use of power, could overturn many of his tariffs because they are illegal or even unconstitutional.  Such a decision could lead to undermining his assertion of unlimited power.

He floated the idea of returning some of the tariff revenue to American taxpayers.  This may have been an attempt to encourage the Court not to see tariffs as taxes.  It probably won’t work, leaving him in violation of his MAGA promise to not raise taxes.

On immigration, Trump promised what amounted to the complete elimination from the U.S. of undocumented or illegal immigrants, starting with the most criminal.  Dating from his first presidential campaign, that promise was the MAGA cornerstone.

He made clear he was trying to deport as many as possible, even if they were not criminals.  In fact, law-abiding, productive residents were the easiest to target, which concerned some people who had supported his policy.  He even reduced legal immigration. 

His anti-immigration policy had been the binding force among his supporters.  Last week, that changed. 

Trump said that the U.S. lacks people with “certain talents,’ who should be admitted so they can train Americans.  Some loyal Trumpers disagreed with that and with his willingness to admit 600,000 Chinese students.  Georgia GOP Rep. Marjorie Taylor Greene, the ultimate Trump backer, dissented, so Trump called her “wacky” and ceased supporting her.

When asked if his policy would displease MAGA backers, he asserted that he alone had invented MAGA.   That statement implied they must follow his lead.  However, because he had adopted policies espoused originally by others, that leadership is now in question.

He recognized that the U.S. cannot go it alone, especially in technical areas.  He may come to realize that the economic growth he wants depends on a growing population resulting from legal immigration.   Because of issues related to the immigrants’ ethnicity, he may encounter even more MAGA opposition.

After his first term, Trump prided himself on having kept the U.S. out of armed conflict.  That struck a contrast with the Democrats, pleasing his backers.  The bombing run he ordered on Iran began to raise doubts, though he excused it by noting that no American lives were lost.

Last week, he strayed even further from his commitment.  He stationed a huge American aircraft carrier, the world’s largest warship, in the Caribbean Sea as an obvious threat to Venezuela.  It might have been better placed in the South China Sea to face down Chinese marine aggression than to confront a relatively minor portion of the drug trade.

Trump risked restoring America’s role as the “world’s policeman,” a policy completely contrary both to his claim to being a peacemaker and his policy of keeping the U.S. out of foreign conflicts.  America First now seems to allow for the use of American military power abroad.

MAGA is melting.

 

 

 

The big gap is not wealth, but age

 

Gordon L. Weil

Last week, eight Democratic U.S. senators broke ranks with their party and voted to end the government shutdown.  In return, they got a weak promise for a later vote on health insurance. 

To some, it looked like “snatching defeat from the jaws of victory.”  By hanging tough, the Democrats could have forced the GOP to agree to help for ACA beneficiaries.   Instead, they gave up all leverage.

The Democrats’ split and its political implications ignored its underlying message about the state of American politics.

The average age of all defecting senators is about 70 and six are eligible for Medicare (plus the federal government’s own employee coverage).  The oldest is Maine’s Angus King, who is 81.  The 22 million people adversely affected by the ACA cuts, resulting from an earlier Republican budget bill, are not eligible for Medicare.  They are too young.

The big gap in the U.S. is supposedly the wealthy and everybody else.  But an even bigger gap may exist between the old and everybody else.  The Senate vote may be a good indicator of how much a geriatric Congress is out of touch with the needs and worries of most Americans.

The U.S. is a gerontocracy.  The current Congress is the third-oldest in American history.  The average age of senators is about 64.  The median age of all Americans is 39.

Surveys show that most Americans are not satisfied with the government, but there is little action to modify and improve the system.  Some may believe that the inherent strength of the political system will restore a government that will again merit their trust.  But many seem to feel they must make the best of an increasingly authoritarian regime.

That may not be true of the new, young voters.  They believe that the government fails in dealing with the public’s needs for health care, housing and income support.  That is the similarity between recently elected New Your Mayor Zohran Mamdani and right-wing influencer Nick Fuentes.  Though one thinks it does too little and other that it does too much.

Mamdani favors a government large enough to provide the resources to meet those needs.  Fuentes wants less government.  Mamdani personifies a government reflecting diverse groups in society.  Fuentes espouses racist policies and wants to turn control over entirely to white, Christian men.

Unlike most of the older generation, young activists like these know their way around the new media.  They have escaped the world of traditional journalism and network television for social media and influencers.  They want to be seen as people like their young constituents in their personal taste and familiarity with popular culture.

They want to exploit the frustration of young people which appears to be bringing them increasingly into the political process.  Their participation is putting politics in a different light.

The Republicans have largely become loyal followers of Trump.  Whatever he wants, however erratic, becomes their policy, and many hurry to develop rationales for his personal preferences.  The Democrats have largely become nothing more than the Trump opposition.  They believe that he will offend so many Americans, that, even without offering cogent alternatives, they will win.

In neither party, does the current political leadership actually lead.  The complacent GOP and the cowering Dems can come up with nothing innovative.

In contrast, the new, young activists have proposals.  The Democrats promote universal health care, civil rights and reducing climate change.  Oddly, their oracle is an old man, Sen. Bernie Sanders.  The MAGA influencers propose to dismantle much of the government and return to a society in which privilege ruled.  Oddly, their oracle is an old man, Trump.

The young Democrats are a key component of their party’s Progressive wing, which seeks to make their proposals the central element of the Democratic platform.  They believe that the moderate Democrats are not responding to public needs.  Mamdani’s win encourages them to believe they are gaining momentum.

The young Trump Republicans are at the extreme of the MAGA faithful.  They call Democratic proposals for government policy a socialist conspiracy.  They oppose the growing role of women and non-whites in government.  The reaction to the assassination of Charlie Kirk encourages them to believe they can reach more people with a nationalist message.

Neither the young Progressive Democrats or the extreme MAGA Republicans are likely to prevail.  But they can pull each of the parties somewhat closer to their views and serve as a powerful political influence.  Each lays the groundwork for their future growth.

The old guard leading the parties misses the appeal of the young activists to many average voters who share their belief that the government has failed and cannot be trusted.  Their outmoded perspective prevents them from accepting demands for change.

Clearly, it’s time for new and younger leadership that can listen better. 

 

 

 

Trump makes Biden's mistake; misreads the economy

 

Gordon L. Weil

Donald Trump is making the same mistake as Joe Biden.  And, like Biden (and then Kamala Harris), he may pay the price.

He sees the national economic data as showing prosperity and believes he should reap a political reward for having made it happen.

It’s true that for both national job creation data was good, inflation was being reduced from Covid levels, and wages were beginning to increase. The stock market, which is supposed to embody the prospects for the future economy, climbed.

Biden and Trump had sharply different ways of keeping their versions of the good times rolling. 

Biden relied on traditional Democratic “pump priming” to restore the post-pandemic economy.  Added to that, he tried to boost income support programs.  These measures required government spending, but Biden saw national recovery emerging.  His support for greater government involvement in the economy led Trump to call him a radical socialist.

But Trump has turned out to like big government as well.  His unprecedented tariff moves are aimed to promote domestic manufacturing.  He has made the government a direct corporate investor.  He pushes the national debt to new records by big spending on the military and border security.

Both have believed that their actions promote a strong economy and cite the national statistics to prove their point.  They both have erred in believing that good national numbers translate into prosperity for all individuals.  Implicitly, they argue that national success will trickle down to working people.   That’s an old theory that has never worked. 

Both missed that many middle-income and poor families are struggling to pay for food, clothing and shelter.  A favorable national economy does not spread itself to all people.

This has been due partly to what people see as inflation.  They cannot keep up with rising prices, even if they receive modest pay increases.  Inflation was artificially low before the pandemic, and the Federal Reserve has successfully lowered it, but not fully to pre-Covid levels.  The long effort to restore a balanced, normal economy has led to problems for personal budgets.

Biden used government outlays to meet those problems, but they often missed the mark.  Trump sees great promise through the creation of manufacturing jobs, but that takes time and meanwhile, families struggle.  He also cuts federal benefit programs, compounding the effect as less federal money flows into the economy.

Trump sees the readings he gets from the stock market as a measure of economic health.  Yet the market reflects speculation, these days on AI, as well as short-term profitability.

Some see Trump’s prosperity, real or promised, as being like the U.S. during the 1920s.  Business and the stock market soared. The privileged few enjoyed lives of excess.  The government stepped back.   It couldn’t last and finally, there was an economic price to pay. 

The well-regarded monthly survey of consumer sentiment is a useful measure of how average people see the economy.  Right now, it is at a near-record low with only about half of the people being optimistic about the economic outlook.  Consumers are cutting down on discretionary spending.

The erratic course of Trump’s policy moves makes it difficult to forecast the economic outlook and it generates a sense of instability, which undermines chances for sustained growth.

A major cause of the disconnect between apparent national prosperity and the economic life of most Americans is the gap between the wealthy and average people.  With only a small segment of the population owning a commanding share of the nation’s wealth, views on the state of the national economy are skewed.

Average families don’t have to understand economics.  They can see the income gap. 

The East Wing of the White House is abruptly demolished to build a huge, lavish ballroom.   It is financed by some of the wealthiest Americans, many of whom gain profitable favors from the Trump administration.  At the same time, Trump withholds food stamps.

Elon Musk, whose mythical Department of Government Efficiency devastated government agencies, induces his Tesla investors to agree to pay him $1 trillion.

These actions don’t involve the direct expenditure of public funds.  But they send a readily understandable message about the two Americas – the wealthy and everybody else. 

Trump promises voters that the economy will be working well for them, as it does for the wealthiest, by the time of next year’s congressional elections.  He strongarms the Federal Reserve to lower interest rates even faster to aid that effort, risking greater inflation. 

He is an experienced sales person.  He asserts that the economy is booming, not because he truly believes it, but to imply that better times are on the way.  Biden learned that the people pay more attention to their current expenses than to national statistics or campaign promises.  Trump seems not to have learned from Biden’s hard-earned lesson.

 

 

Trump's ego undermines his policies

 

Gordon L. Weil

Imagine a president who wanted to add to the national territory, sought to reform banking, and staged a bold fight on tariffs.  He won the presidency but without winning a popular majority.

Donald Trump?  This describes him well, though he has not yet succeeded on any of his goals.

But it isn’t Trump.  You may well have never heard of this president.  He was James K. Polk, the eleventh president.  Unlike Trump, he pledged to serve only one term, and he did.  Also, unlike Trump, he achieved all his goals. 

Most importantly, he served without displaying outsized ego or self-promotion, resulting in his historical anonymity.  But he changed the nation.  If you want to make America great again, Polk’s presidency is part of the past that Trump would restore.

Anyone who aspires today to the American presidency must have a big ego.  The task and the responsibility are so great that a person with a normal view of their limits would not have enough self-regard to carry them through a campaign much less the presidency.  But Trump’s view of himself surpasses any of his predecessors.

Trump’s ego is the hallmark of his administration.  He makes extravagant claims about his memory, his knowledge of science, his wealth, and his ability to use power effectively.  He sees his supposed success in real estate as proof of his extraordinary ability to make deals among nations.

He seeks to burnish his status by adding vast territory to the United States (Greenland, Canada, though the Panama Canal seems to have been dropped), and returning the banking system to the banks, and making the U.S. economically independent.  He would by himself turn the tide of American history.

With no embarrassment he has made clear that his political style relies rely on threats to his GOP friends and foreign allies, and depend heavily on flattery.  Foreign leaders quickly found that unbounded praise is an essential tool in inducing him to alter his policies.  They also never tire of admitting their dependence on the U.S. with the resulting need to stay on his good side.

Nowhere is this more obvious than his attempt to collect nominations for the Nobel Peace Prize from the leaders of other nations.  He may believe that a rush of high-level nominations will enhance his chances.  It looks like gaining endorsements for one’s candidacy during a political campaign. 

Trump appears to consider the praise and support he actively cultivates as a sign that others recognize his outstanding qualities and accomplishments.   His ego allows him to miss their obvious flattery, not representing their sincere beliefs, but as a necessary tool of their own foreign policies.  He is not widely regarded as the “very stable genius” that he claims to be.

Nominating him for the Peace Prize amounts to merely promising to write to the Norwegian Nobel Committee.  Nominations remain secret for 50 years.   Sinking small vessels on the high seas, threatening to use force against Venezuela and Nigeria or sending the military to repress domestic free speech will deny him the Prize, no matter what else he does.

The ultimate expression of his ego may have been slapping an added 10 percent tariff on Canadian imports, because he disliked a television ad.  Tariffs are taxes and are supposedly based on economic considerations not presidential whim.

Much of the world sees through his personal management of American policy.  The country is increasingly held responsible for having elected him twice.  Because such a choice may be possible in the future, many countries grow wary of a close, long-term relationship with the U.S. 

Trump uses the powers of his office, enhanced by the backing of the Supreme Court and the GOP Congress, to serve his ego more than the national interest.  This may reshape the U.S. and its effect can extend well into the future.  He may not achieve his goals, but he is making his mark.

And the anonymous Polk?  In the four years of his presidency, he almost doubled the size of the country through the controversial Mexican War and astute diplomacy with Great Britain.

He also created an independent national treasury, arguing the U.S. could manage its own financial affairs, not the banks.  This led eventually to the Federal Reserve, the public-private arrangement setting monetary policy that Trump would now topple.

And Polk changed national tariff policy.  He lowered tariffs so they would cover the cost of government but not overly protect domestic industry, thus reducing prices.  This policy worked for 20 years.

Trump’s excessive focus on himself – his ego gratification – gets in the way of stable and sound public policy, conservative or not.  It offends many whose support he needs.

Displaying little ego, Polk acted for what he saw as the public good.  A contrast with today.

Trump on trade: good idea, bad execution

Gordon L. Weil

President Trump got something right.  But he is handling it all wrong.  It’s about tariffs and trade.

He understood that world trade no longer obeyed the rules that grew up after World War II and that the U.S. suffered from its clinging to the past.  Single-handedly, he decided to end the old order.

After the war, a new trade system was created.  It was called the General Agreement on Tariffs and Trade or simply GATT, and it fostered rounds of multinational trade negotiations.

The idea was that countries could gain improved access to foreign markets and to imports they needed and wanted.  Rather than benefiting from one-on-one deals with other countries, they could derive a net gain from a package of multinational deals.

The GATT system works reasonably well.  A so-called “rules based” system, it relied on all participants having the same commitment to the process and operating through market systems.  Dominated by the U.S. and Europe, it included countries that accounted for most world trade.

As other major players appeared, GATT was replaced by the World Trade Organization.  It accepted emerging countries where the government might still control markets, but which were supposed to evolve into open market economies.

The biggest new participant was China, a supposedly emerging economy.  President Bill Clinton supported its membership in the belief that its WTO participation would move it to the market system.  But with other state-run economies, China began to distort the rules-based system. 

President Kennedy once said of trade that “a rising tide lifts all boats.”  While that might have been true of GATT, it became increasingly evident that some big boats ignored the rules of navigation.  The U.S. and Europe continued to act as if the old rules were still observed.  Trump saw they were outmoded, and the U.S. was becoming a net loser.

Because consumers favor low prices without regard to the reasons for it, the U.S. trade deficits deepened.  Not only did that transfer economic power to China and other low-wage countries, but it cost the U.S. jobs, especially in manufacturing, a loss only partially offset by the growth of the service economy.

Trump promptly stepped outside the structure of rules-based world trade and destroyed it.  A compliant Congress allowed him to set tariffs that it was supposed to control.  Whether he acted legally without congressional approval is now before the Supreme Court.

Instead of using U.S. power to leverage other countries to negotiate a new system, Trump immediately raised tariffs on virtually all other countries (except for Russia).   In one stroke, multilateral deal making in trade was replaced by America First.  Existing trade patterns were abruptly toppled.

Trump’s approach was not exactly the art of the deal.  He simply sharply raised tariffs and expected other countries to come to him with offers to accept more U.S. products and to increase their investment in the U.S.  If he liked the offers, he lowered their tariffs.  The situation became more like an auction than a negotiation.  Flattering Trump personally also helped deals.

Most countries complied.   They could get tariffs lowered, though they remained well above their pre-Trump levels, if they made offers to open their own markets and boost their investment in the U.S.  But friendly relations or even alliances are suffering.   

America has reduced both its trade deficit and its partnerships with others.  Reduced trade means prices are rising in the U.S. and elsewhere, slowing economic growth.  The rest of the world has begun developing new trade relationships to protect against arbitrary U.S. policies.   But that change will take time.

One country has refused to go along with bidding to induce Trump to lower tariffs.   Though Canada is dependent on the U.S., Prime Minister Mark Carney believes the U.S. relies on some of its key exports and must eventually negotiate a deal. 

Canadians understand their country’s dependence on the U.S. won’t disappear quickly, but it moves to diversify its trade on the way to long-term independence.  It is developing its domestic market, long oriented to the U.S., and draws closer to Europe.

Beyond trade differences, Trump has crossed a red line.  He repeatedly asserts that Canada should become the 51st state.  He ignores the direct effect of his remarks on future relations with it and as a signal for other countries to reduce their dependence on the U.S.

Last week, a new book entitled “Elbows Up” appeared in Canada.  It is anti-American. The term refers to a quasi-illegal jab given to an opposing player while battling for a hockey puck.  Launched by Carney, a former hockey goalie, it’s a motto that all Canadians understand.

The U.S.-Canada clash symbolizes the change Trump has caused. World trade will be reformed, as certainly was needed.   But, thanks to his methods, America’s leadership is beginning to wane.   

Congressional redistricting runs wild

Gordon L. Weil

Gerrymandering is running wild, threatening the popular government created by the Constitution.

With the House of Representatives almost evenly divided between Republicans and Democrats, the scramble for control after the 2026 elections is collapsing into a redistricting rush designed to steer more seats to one party or the other.  Gerrymandering is nothing new, but this year there’s a major new twist.

The Republicans, believing that their majority control could be lost as demographics change, use a nationwide push to redistrict, seeking to engineer their long-term control.  Gerrymandering could weaken the influence of Democratic voters and serve as part of the GOP effort to suppress minority voting.

The Supreme Court has ruled that each district within a state must have the same population, ensuring that each voter counts equally.   This usually forces the 44 multi-district states to redraw their lines after each national census, conducted every ten years.

While some states use systems designed to produce non-partisan redistricting, in many others partisan state legislatures tailor the districts to their advantage.  That can mean stuffing as many of the minority party’s voters into as few districts as possible or splitting them to dilute the minority party’s impact everywhere.  That’s gerrymandering.

Now, the once-every-ten-years process is turning into redistricting before each congressional election.  The individual voter is a political pawn, moved to a new district by the party that, for the time being, controls the state legislature.  Elections aren’t an exercise in democracy; they are a game.   The Democrats are now playing the same GOP game.

Gerrymandering (named after a politician who first created a district resembling a salamander) can depress voter turnout.  If a voter is shifted into a district where their party’s candidate is sure to lose, why bother voting?  In gerrymandered Texas, candidates in eight of the 38 districts run unopposed, because opposition would be futile. 

When voters stay home, their absence can affect other races.  A larger turnout of discouraged Democratic voters in Wisconsin, one of the two most gerrymandered states, might have helped the U.S. Senate election of Republican Ron Johnson, who won narrowly.  GOP strategists believe lower turnout helps their candidates.

With constant redistricting, the partisan divide in the U.S. electorate is likely to become locked in.  Control of the House may come to depend on the outcome of a few elections influenced by massive outside spending. 

Before 1967, states could choose how they elected their House members.  Historically, some used statewide voting.  Hawaii, the last state with statewide voting, was forced to abandon it in 1970.  The 1967 law requires all states to use single-member districts.  

If that law were repealed, electing members of Congress statewide could eliminate or reduce gerrymandering.  Candidates might run focusing more on national policy and not merely on their ability to bring home federal dollars. As the Framers intended, they could better reflect the short-term evolution of the popular will on national issues.

This reform is not partisan and would leave the election method to each state.  Both parties could benefit.  Wisconsin, the most gerrymandered GOP state, would likely go from six Republicans and two Democrats to an even 4-4 split.  Maryland, the most gerrymandered Democratic state, would probably go from seven Democrats and one Republican to a 4-4 split.

In some states, like California (more Republican members) or Texas (more Democrats), the changes in House delegations could be substantial.  The potential offsetting advantages across the entire country could reduce the partisan implications of repealing the 1967 law.

States could elect some House members at-large and the remainder by districts.  Maine and Nebraska choose presidential electors this way.  With fewer, larger districts, gerrymandering could be reduced. 

Voters could vote for as many candidates as the number of the at-large House seats in a state, though they could “bullet vote” for as little as one candidate.  This could parallel ranked-choice voting.  Candidates might take moderate positions to broaden their appeal, reducing divisiveness.

Candidates could be listed with their party affiliations.  Voters could choose to vote for all candidates of a single party.  Wider choice could allow non-aligned candidates a better chance of election.   The top candidates equal to the number of a state’s at-large slots, regardless of their affiliation, would be the winners. 

The House election would be separate from statewide voting for president, senators, governor and other state officials.  These are distinct offices, and separate ballots could permit a state’s voters to balance their choices.

If the law were changed and even one large state successfully chose statewide House elections, its move could set an example for other states.  Or elections might stay as they are.

To conform with the Framers’ original intent, restoring this long-standing state right can happen without amending the Constitution.   Ending deepening national division makes it time to think outside the partisan box about reforms like this.

 

 

Trump shows his worry about Supreme Court tariff case

 

Gordon L. Weil

Unlike almost all other countries, Canada has refused to make concessions to President Trump that would induce him to lower tariffs.  While he has taken actions on policies not yet in effect or to match a U.S. concession, Prime Minister Mark Carney insists in negotiations.

But trade talks are making no progress.  Instead of wasting time courting Trump, Canada is working hard on finding alternate markets and on increasing domestic trade.  But it attempts to keep talks going in the hope that the U.S. will realize its dependence on its major trading partner and ally.

Then, Ontario Premier Doug Ford, whose province is deeply involved in the joint American-Canadian auto manufacturing arrangement, vented his frustration with the talks.  As a Canadian Conservative, he had liked Trump’s return to office.  But the president’s tariff policy almost immediately turned him around.

Ford launched a one-minute television ad featuring long-ago remarks against tariffs by then President Ronald Reagan.  Trump immediately blew, impulsively cancelling what seemed to be the almost mythical trade talks with Canada.  Then, he added a new 10 percent tariff.  Out of this ad and Trump’s visceral reaction came a flood of misdirection.

First, was Reagan for or against tariffs?   He was a free trader who had just raised tariffs on Japan in retaliation for its protectionism.  While making this protective move, he sought to maintain his reputation as a free trader.  The statements Ford used were not out of context with Reagan’s entire remarks, but they were out of context with the complete circumstances of the times.

Trump claimed that Reagan “loved” tariffs, which also took his remarks out of context.  The former president tried to make clear that he did not like tariffs and their effects, but sometimes increasing them was necessary.  He did not use them like Trump’s broad-brush approach.

Second, Ford’s ad opportunistically took advantage of the fleeting moment when Americans would pay much attention to Canada, thanks to the opening of the World Series between the Toronto Blue Jays and the Los Angeles Dodgers.  It was an outburst of patriotic support for his province, home of the Blue Jays, and an outlet for his anger over Trump’s auto protectionism.

Third, Ford was seeking to put pressure on Carney.  They are not natural allies.  Besides, Ford’s Ontario has demands that differ somewhat from Carney’s Canada.   Canadian provinces often find themselves at odds with federal policy.  Ford could be seeking a deal that would benefit Ontario, but possibly at the expense of other provinces.

Carney obviously did not like Ford treading on his authority over foreign and trade policy.  He got Ford to withdraw the ad, but only after the first two games, both played in Toronto.  Ford wanted to keep exploiting the inevitable explosion of Canadian nationalism at the games, but he does not speak for Canada.  Carney showed Trump that he had no responsibility for the ad.

Fourth, Trump’s instant reaction scarcely hides the reluctance of the U.S. to arrive at a negotiated deal with Canada rather than simply forcing it to make concessions.  Trump apparently believes that delay weakens Canada and improves his own position.   He ignores the deep anger north of the border about his suggestion that Canada should become the 51st American state.

Fifth, perhaps the most important aspect of the ad flare-up is that it revealed what is truly worrying Trump – the possibility of a Supreme Court ruling unravelling most of his tariff policy.  Two federal courts have already ruled that most Trump tariffs are not allowed.  The case is now before the Supreme Court.

Congress permits the president to alter tariffs in a national emergency, but his current declaration does not meet the standard set by Congress in giving the president its power to set tariffs.  His complete control over tariffs would be unconstitutional.  And, it is hardly a national emergency when tariff talks with Canada are ostensibly ended because of a critical television ad.

Trump charges that Ontario’s Ford is trying to influence the Court’s decision.  But Ford only wants a trade deal on autos.   And it’s an insult to the Court that it, like Trump, would be influenced by a Canadian television ad.

Trump’s reaction could go beyond trade policy and increase his worries.  If the Supreme Court affirms the ruling of the lower court specializing in trade matters, it would be the first serious limit it has imposed on his powers.  If it supports him, the ruling would cement its backing for his virtually absolute power.

He believes that court actions can be influenced by his political pressure.  Federal courts, including the Supreme Court, led by judges he has appointed, have favored him.  By creating an improbable pretext for Ford’s ad, he may want to be seen as a victim, worthy of more judicial deference.

America's two-tier economy

 

Gordon L. Weil

Want a new car? 

For $50,000, it’s yours.  That’s the average sticker price of the new models.  Or you can make unending monthly payments of about $1,000.  When you trade it in, you’ll take a loss, because the car’s value will be less than what you still owe.   

But wealthy people can afford a new car and pay in cash.  They have the money to spend on high-cost purchases. 

As their incomes are squeezed by rising costs, many people cannot keep up with monthly auto loan payments.  They risk losing the car and their money.  The rest of the market wants used cars, though that also drives up their prices.  Dealers entice people who can afford new cars to trade in their cars.  They both sell new cars and supply the profitable used-car market.

The result is a two-tier market.  The wealthy drive the latest models, and others drive hand-me-down cars that may include the defects caused by their previous owners.

This economic split appears elsewhere.   The residential real estate market may be sluggish nationally, because many aspiring home owners cannot afford mortgage interest rates and the increased cost of building materials.  Their tight budgets, caused by stagnating wage increases and higher retail prices, put home buying out of sight.

One contributor to increased building materials prices are the Trump-imposed tariffs on Canadian lumber, widely used in home construction.  One Maine lumber dealer reported that its lumber costs increased by 45 percent due to new tariffs.  It is looking for alternatives.

Trump seems to think that if the Fed cuts interest rates, that could help the housing market.  But the Fed sets short-term rates, while mortgages are usually long-term debt.  Besides, lowering rates cannot fully compensate for costlier construction materials.

While the residential market remains slow, the sales of homes over $1 million exist in a parallel universe.  The prices of these homes are increasing steadily, thanks to an affluent core of potential purchasers, intent on upgrading.  They can pay cash, often out of the proceeds from the sale of their previous homes, so mortgage rates do not matter.

As with autos, a two-tier market occurs.  One level is for the wealthy and the other level is for everybody else.

This happens again when it comes to airlines.  Delta and United have found they can profit more by adding business- and first-class seats and reducing the economy cabin.  Packing more people in limited space does not earn them as much as offering greater luxury, even at unusually high fares.

American Airlines and the low-cost carriers like Southwest got the message.  Ultimately there will be more high-priced airline seats with a likely reduction in economy and budget fares. The two-tier economy is being repeated.

How does this split-level economy grow?  The wealthy are gaining more wealth thanks to government policy and their investments.  Their windfall gains go back into the stock market where they add even more wealth.

The record-setting stock market may produce two myths.  The first is that a healthy stock market is a good indicator of a healthy economy.  Trump often backs this belief when the market rises, and doesn’t mention it when the market declines.

The second myth is that the market is in a bubble with unrealistically high prices, and that the bubble will burst.  Maybe, but there is an alternative explanation for both myths.

The stock market may serve significantly as the savings bank of the wealthy.  The top ten percent own about 90 percent of the value of all stocks.  Coupled with their long-term position in an historically increasing stock market, the market may reflect their influence and interests rather than the national economy.

Again, here are two tiers.  The wealthy have a powerful effect on the market and the economy, while others mostly absorb their effects.  Most people are dependent on a political and economic system that is gradually withdrawing support from them by cutting food stamps and health care to tariff increases that forfeit markets and raise costs.

In theory, the wealthy would invest in new production, creating more jobs – the “trickle down” concept.  That theory has been abandoned.  Accumulation of wealth is now deemed a desirable and sufficient economic goal. 

F. Scott Fitzgerald once wrote that the rich, “They are different from you and me.”

To which Ernest Hemingway is said to have responded, “Yes, they have more money.”

The rich aren’t different.  But they enjoy an income tax system that favors them, while other people lose essential government support.  The aversion of the rich to taxes beats caring about the common good. 

The deepest split in the U.S. may not be the partisan divide between the parties, but the growing two-tier economy, steadily widening the income gap between the wealthy and everybody else.