Maine U.S. Senate race: Collins-Mills for the swing seat

 

Gordon L. Weil

Susan Collins now has her chance for her place in history. 

No, it wouldn’t be from being elected six times to the U.S. Senate.  It would arise from her taking a stand in favor of traditional American and Republican values.   She should show courage and principle even if it brings crude denunciation by President Trump.

Sen. Collins has prided herself on being a moderate Republican, true to the values of limited government, free enterprise with a commitment to equal rights and environmental protection. She comes from a Maine political family closely identified with that brand of Republicanism.

Donald Trump has stolen that party away from her.  The Trump GOP has crushed her ambition to become a major influence on public policy in the Senate, while reducing her power by using the functionally stunted Republican Senate to rubber stamp his policies.  The only use the GOP and its president have for Collins is her vote to maintain his unquestioned control of the Senate.

Collins has made political sacrifices to advance the interests of the nation and Maine and her political career.  When her integrity clashes with Trump’s excesses, she temporizes by cloaking her positions in expedience or dubious superior knowledge, as compared with the rest of us, of how the system really works.

She occasionally breaks with Trump and his demands for blind loyalty, and that is to be commended.  But she seldom either recruits support or casts the deciding vote.  This is leadership by gesture, not by consistent and assertive application of her principles.

Maine and the country may be shortchanged by her approach.  Now is the time that demands her vindicating the courage of her convictions as a moderate or being held accountable for having misled us about her principles.

She likes recalling the story of Sen. Margaret Chase Smith’s Declaration of Conscience, her public stand against Joe McCarthy, a Republican colleague intent on destroying political decency.  That took courage, yet she made a partisan speech, making clear her belief that real Republicanism could defeat the Democrats without McCarthy’s vitriol.

Margaret Chase Smith ultimately lost re-election.  But her electoral defeat is not what we remember.  Her assured place in history derives from that single statement of her principles in defiance of her party.

The nation needs a functioning two-party system, operating through compromise. The majority party should dominate decision making, but it should accommodate views of the minority to promote a sense of unity of purpose.

Instead, we have a nation divided.  The two sides appear beyond any hope of compromise. The war is on, not only for this presidential term, but for the indefinite future. 

The Democrats are dazed by finding themselves in this situation and remain unable to pull themselves together with a coherent policy under strong leadership.  While the times demand a bold alternative to Trump, they rely simply on the slim hope that opposition to him and his ego-based politics will produce their electoral victory. 

The country not only needs the Democrats to find themselves but the recovery of the traditional Republican Party.  If this is the great nation that we believe it is, that’s the result of the historical interaction of the two parties.  The nation needs two strong political parties; neither now qualifies.

Susan Collins can do more for her country by keeping the spark of Republicanism alive and giving it oxygen than by mere futile gestures.  She may not turn the Party around, but in the current crisis, she can play a strong, visible and independent role in preserving and promoting the traditional GOP.

 

Collins v. Democrats

The Trump Republican Party is likely to see Collin’s situation differently.  It wants to retain at least 51 seats in the U.S. Senate to ensure that the president can pursue his personal agenda without interference from Congress.  That’s the same reason for the Texas redistricting aimed at picking up five more GOP House seats, which otherwise might fall under Democratic control.

Collins is not loyal by Trump standards, though she has either backed him on critical matters or opposed him with meaningless opposition when he could prevail without her.  But she casts one critical vote – to keep the Trump Republicans in control of the Senate.  It is doubtful if Maine could find another person who could hold the seat for the GOP.

That means the Maine campaign could boil down to a single question: which party will control the Senate?  If it’s the GOP, Trump could have a blank check for his entire second term.  If it’s the Democrats, he may be held to account or face somewhat limited powers.   

The challenge for the Democrats is simple.  They need to find a candidate who can defeat Collins.  She successfully overwhelms lesser-known candidates.   Polls showing her popularity is fading are not a basis for Democratic optimism.

The best hope for the Democrats is Gov. Janet Mills.  She is widely known and is more favorably viewed by Maine voters than Collins.  She is a right-of-center Democrat, entitling her to be considered a moderate.  With the chance to defeat Collins, liberal Democrats would likely support her, despite past differences.

The problem with Mills is her age, now 77.  She would be the oldest new senator ever; she would begin when most senators retire.  With Sen. King at 80, Maine would probably have the most geriatric U.S. Senate duo ever.

The Democrats could elect the next governor at the same time as a Mills’ victory, who could appoint her replacement, if necessary.  To ensure their hold on the Senate seat, the Democrats would need the next governor to serve as their insurance policy.

No matter the governor’s affiliation, the Legislature could adopt a law requiring that any replacement must belong to the same party as a departing senator, as is done in 10 states. 

In either case, Mills could serve less than a full term, secure in the knowledge that her seat would go to another Democrat.  (The Legislature could also require a special election to fill a vacancy, as is done in five states.)

Dollar in danger as Trump creates new crisis

 

Gordon L. Weil

President Trump has been warned that his economic policies, including his high tariffs, will drive up costs, possibly leading to inflation.  He wants lower interest rates to reduce inflation and to lower the cost of paying off the immense federal debt that he and the GOP Congress have created.

The Federal Reserve, the agency that has the greatest influence on interest rates, has remained beyond his grasp.  But he aims to get the Fed.

The Supreme Court, usually supportive of his expansionist schemes, affirmed that he could remove members of regulatory agencies, but the Court exempted the Fed.   "The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States," it ruled. 

Failing to harass Fed Chair Jerome Powell to quit, thus allowing him to appoint a rate-cutting replacement, Trump came up with a new ploy.  The president can remove a Fed Board governor “for cause,” leading Trump to hunt for a cause to be used against Powell.

The renovation of the Fed’s headquarters, running over budget, looked like a good target.  But Trump found there were good reasons for the cost run-up and no taxpayer money is involved.  Trump could find nothing to use against Powell.

Firing a person “for cause” means more than firing a person “at will.”  Legal experts may regard cause as requiring some failure in the performance of official duties, but some other issues, like a criminal conviction, might also qualify.  Courts have not ruled on the question.

Certain government officials, fired “for cause,” are likely entitled to due process of law.   If they have been confirmed by the Senate to their positions, they are considered to have a property right to their office.   They are expected to be given a formal opportunity to answer charges and have a third party judge their validity before they must leave office.

Trump has come to know that Powell is one vote among seven Fed governors and could not alone change interest rates.  He has set out to find a four-person majority.   He may fill one existing vacancy.  He counts on his two appointees to the Fed to rubber-stamp his rate cutting, though he may be overly optimistic in his hopes, based on their performance until now.

If he figures correctly, he needs another vacancy.   Bill Pulte, his top housing regulator, seeks ways to help him dump independent officials.  He claims that Lisa Cook, a Fed Board governor, cheated on at least one mortgage application. He has referred the matter to the Justice Department, which would decide if she should be charged.

Trump did not wait.  Pulte’s mere referral, by itself, is enough for him to find “sufficient cause” to remove Cook.  Cook was not given any kind of due process in which she could deny or explain.  And, in the absence of a judicial definition of “cause,” it’s unclear if such a minor, nonofficial matter rises to the level of justifying her removal.

But Trump made clear his focus is interest rates.  His removal letter states: “The Federal Reserve has tremendous responsibility for setting interest rates….  Cook’s alleged action “calls into question your competence and trustworthiness as a financial regulator.”   Trump might also believe that Cook, a Black woman, was an unqualified DEI appointee.

The Fed doesn’t set rates.  The Federal Open Market Committee, composed of the seven Fed governors and the presidents of five of the eleven regional Federal Reserve Banks, decides.  The bank heads are elected by regional banks, not by the president.  Each is independent, not subject to the president.

The firing will now face outside scrutiny.  She is suing Trump, a case that will almost certainly get to the Supreme Court, probably first over an injunction suspending his action.  The Court could give Trump an outright win if it denied an injunction, define “cause,” or tell the president he has gone too far.   This could take time.

Trump has erred in this move against Cook in ways that extend beyond the unproven charge.  The harm to the Fed, the U.S. and the world economic system could be considerable.

 

Here are my views on Trump’s moves against the Fed.

He has abused his power in trying to get the low interest rate he seeks by attacking Fed governors.

He attacks the intended independence of the Federal Reserve and its freedom from partisan considerations, the precise reason for its governors having 14-year terms.

He is undermining confidence in the Fed, endangering its support for a stable economy, which erodes confidence of the financial markets.

By politicizing the Fed’s monetary policy decisions, he has increased the risk of lost confidence in the U.S. dollar, now the world’s reserve currency, virtually as good as gold.

By undermining confidence in the dollar and American debt, he has caused the U.S. to lose influence and even power across the entire world.

Unless the system works quickly and effectively to halt Trump’s move, this damage has already been done.

Carney, Powell stand up to Trump

Gordon L. Weil

President Trump seems to convert almost all leaders into fans, mostly because they know he thrives on flattery.  He readily accepts their artificial praise.

The media likes to report how he forces skeptics or critics to appease him in pursuing their own interests.  They end up settling for less than his original demand and consider the deal a win or else helplessly let him take advantage of them.

But this week, two people have carefully stayed on their own course despite his pressure.  Canada’s Prime Minister Mark Carney and Federal Reserve Chair Jerome Powell stand out from crowd.

When Trump first sharply hiked tariffs, then Canadian Prime Minister Justin Trudeau promptly retaliated.  His countermove, rare among the early U.S. tariff victims, was designed to get the U.S. to retreat.  Tariffs between the two countries soared to the point that would harm both sides.

To his credit, Trump realized he had gone too far, depriving the U.S. of needed fuel and raw materials.  He eliminated tariffs on trade under USMCA, the trade agreement among the U.S., Mexico and Canada.  Major barriers remained on steel, aluminum, autos and softwood lumber. 

The Canadian government changed when Carney took office.  Politically, he could not quickly reciprocate for the Trump cut, though he recognized that its effect on essential imports was harming Canadian consumers and industry.   He also found that the overall effect of the USMCA preference gave Canada the lowest U.S. tariff at 5.6 percent.

Trade talks repeatedly missed deadlines as Canada held firm.  To negotiate with the U.S. and provide some relief to Canadians, Carney has just reciprocally reduced Canadian tariffs to the USMCA level.  Some in Canada erroneously saw this move as appeasement, ignoring the fact that the U.S. had moved first.

Before acting, he called Trump, who apparently accepts Canada’s independent policy and recognizes U.S. dependence on some Canadian imports.  The New York Times reported that Trump said that he and Carney “are working on something.”  He continued, “We want to be very good to Canada. I like Carney a lot. I think he’s a good, good person.”

Carney had been ready to seek other trading partners.   Now, a deal on autos is likely and accords on the other three products are possible.  The U.S. and Canada may also be finding areas of agreement on the upcoming revision of the USMCA, under which Mexico has gained the most benefit.

If Trump has kind words for Carney, despite the Canadian’s independent stance, he does not hold back when it comes to the Federal Reserve’s Powell, whom he calls a “numbskull” for refusing to cut interest rates.  He’s gradually realizing that Powell does not act alone and that the kind of deep cuts he wants aren’t likely, no matter who sits on the Fed’s Open Market Committee.

Powell, who clearly believes in the Fed’s independence from the politics of the day, appropriately refrains from answering Trump’s attacks.  To do so would plunge the Fed into politics.

The Fed’s missions are maintaining full employment and controlling inflation, striking a delicate balance with the entire world waiting to judge its actions.  In recent years, it has leaned toward the fight against inflation.  Now, Powell’s analysis suggests that the Fed can ease up on inflation and reduce the interest rate until it sees the impact of higher U.S. import tariffs.

The current Federal Funds interest rate, used for lending among banks and dominating short-term interest from credit cards to mortgages, is set between 4.25 and 4.5 percent.  In July, two Trump appointees favored a one quarter percent cut, hardly the three percent that Trump wants, while the majority left the rate unchanged.  The media exaggerated this small difference.

Trump and his economists could have sat with Powell and made the case that the inflation risk is less worrisome, avoiding the usual unrealistic demands and threats.  The president would have been playing, perhaps persuasively, on the Fed’s court, but that’s not his style.

Instead, Trump attacked.  Based only on an unsubstantiated charge that a Fed member had cheated on a mortgage application, he demanded her resignation.   Knowing that it was grandstanding, the Justice Department baited Powell by demanding he fire her, though he has no such power.

The U.S. and much of the world depend on a soundly managed American economy and dollar, still the international reserve currency.  Trump would willingly endanger both if he could claim before the next election that he had boosted the economy to new heights.  He expects his Fed appointees to be his foot soldiers in this effort.

There’s no doubt that higher tariffs will increase some costs and prices.  Trump cannot make Powell responsible for that, simply because he won’t lower interest rates.  Trump may not understand that, but Powell does and holds firm.  So far, that works. 

Trump could sacriifice Ukraine to win a Nobel Prize

 

Gordon L. Weil

Russia’s Vladimir Putin wants to destroy an independent Ukraine.

America’s Donald Trump wants to win the Nobel Peace Prize.

Trump would give Putin what he wants, hoping that his role in ending hostilities would produce the Prize.

If the killing is halted, he believes he will have achieved “peace.”  It probably won’t be more than a dubious truce.  Ukraine would surrender, justifying Russia’s invasion.   The shooting would stop in time for him to win this year’s prize.  Then Russia could then resume its invasion, just as it has done twice before.

Trump tried to browbeat Ukraine into accepting a deal under which it gives up 20 percent of its territory and remains vulnerable to Putin’s expansionism.   Because Ukraine has depended on American military support, he implies that common sense will lead it to accept his deal rather than face outright defeat. 

He even gave Ukraine, the victim of aggression, a sample of life without the U.S. when he temporarily cut off arms supplies and intelligence to the beleaguered country.

Putin tries to rally support for his attempt to obliterate independent Ukraine by claiming that it is under Nazi rule.  Yet Russia, like Nazi Germany, is the invader.

Beginning in 1937, Nazi Germany pursued an almost identical policy, taking control of European areas with German-speaking populations.  Encountering little opposition from the major powers, it invaded more than ten other countries in its effort to dominate the entire Continent and beyond. 

Putin now demands from Ukraine its territory, its neutrality, having only a weak military and a change of leadership.  Ukraine would become a Russian satellite, an element of Putin’s effort to restore as much of the Soviet Union as possible.  It could serve as a platform for invading at least five more countries.

Trump’s hope and Putin’s plan have encountered Ukraine’s Volodymyr Zelenskyy and his opposition to giving up sovereignty.  Another problem is Europe and other countries who back Zelenskyy because of their bitter memories of Nazi aggression.

After the war, NATO and the European Union were created to provide regional deterrence to any such move by Russia.   NATO relies heavily on American security guarantees.  Ukraine wants to join both groups.  Russia invaded to make that impossible and the U.S. acquiesces.

Facing the Russian invasion, the Europeans are joining together to reject it.  They back Ukraine for its sake and their own.  They count on the continued support of the U.S., their World War II ally, and the historical opponent of foreign takeovers of independent countries.   They are not yet ready to assume full responsibility themselves.

But, as usual, Trump has upset traditional expectations.  Unwilling to supply arms directly to Ukraine, the U.S. would sell them to the European nations who could give them to Ukraine.  Grossly exaggerating the previous amount of American aid, he will go no further.

His apparent agreement with Putin’s terms for a quick end to the war has awakened a strong European reaction.  Inadvertently, he may have helped boost European unity.  He refuses European requests for increased U.S. sanctions on Russia, but at least listens to their demands for an immediate truce.  Still, he does not press Russia to agree.

Experience has shown that any new Russian peace agreement would need to be policed.  Europe could provide a protective force, but the U.S. would go no further than conducting overflights and providing intelligence.  For the time being, even these assurances are shaky.

Before security arrangements are needed, there must be a truce.  Peace negotiations cannot take place while war rages.  Putin has convinced Trump that he is winning, so he will not negotiate directly with Zelenskyy.  Europeans believe that Trump must join them in forcing Putin to negotiate by applying tougher sanctions, which Trump threatens, but never deploys.

Trump’s Nobel ambition is hostage to Putin’s decision about a truce and peace talks.  The future of the Atlantic alliance and opposition to further aggression await Trump’s willingness to risk his hopes for a greater cause.  His current approach is likely neither to end the war nor win him the prize.

His self-promotion for the Nobel Prize is unprecedented and awkward.  His love of praise, including soliciting Nobel nominations, is often gratified, but he may not understand the depth of European concerns if Ukraine is placed in greater jeopardy.

At his White House meeting with European leaders, he managed to mention that he had already settled six conflicts, part of his Nobel campaign claims.  While history does not support him, the Europeans, mindful of his sensitivity, continued to avoid directly differing with him. 

Trump may be unconcerned about the loss of U.S. leadership in the world, the hallmark of his second term.  He rejects the concerns and interests of traditional allies.  The result may be American isolation, which awards no prize.

 

 

 

Trump backs down from ceasefire demand in Putin meeting

 

Gordon L. Weil

While waiting for the Trump-Putin Anchorage talks to end, workers tested microphones in the media conference room.  They were readied for questions from the large media corps assembled to learn about the discussions and to question the leaders.

It was a futile effort, because after two statements composed of great generalities, Trump and Putin promptly left the room. No questions. 

The immediate impression was that the two had performed a significant achievement in the field of physics: they created a perfect vacuum.  The journalistic air was totally drained from the room.  Feel sorry for Anchorage; its name will always be associated with a massive diplomatic flop.

There are four players in the Ukraine War – Ukraine, Russia, Europe and the U.S. 

Ukraine tossed out a pro-Russian president in favor of seeking to align with the EU and NATO.  It removed itself from the Russian sphere of influence that Putin had been trying to reassemble after the demise of the Soviet Union. 

Putin’s Russia could not accept an increased NATO on its border, though it knew that the defensive alliance had no designs on its territory.  But a Western economy and values could seep across the border, undermining his autocratic rule and Putin’s hopes for a greater Russia. To reverse the westernization of Ukraine, exploited by Russia for centuries, it went to war.

Nobody counted on Ukraine’s ability to resist and the sham state of the Russian military.  A supposed easy military victory turned into a multi-year war costing hundreds of thousands of lives.  Russia became dependent on China, Iran and North Korea.  Ukraine became dependent on the U.S.

Across Europe, the Russian invasion was seen as a push to reassert Soviet-style regimes on the Continent.  Hungary, betraying the EU’s values, was a prime example of the risk.  Europe steadily increased its resolve and support for Ukraine, but kept looking over its shoulder for U.S. leadership.

The instinctive American reaction was to back Ukraine, the victim of a foreign invasion by a traditional U.S. adversary.  But Biden was unwilling to risk American boots on the ground, making a NATO response impossible, and worried about nuclear-armed Russia.  The best Russian weapon remained America’s overblown fear of it.

After seeing Ukraine’s resistance, Biden stepped up critical military support.  Weapons flowed, creating more armaments jobs in the U.S.  Ukraine resisted Russian advances.

Then came Trump.  Ignorant of Russia-Ukraine history, he saw peace there as a matter of trading real estate for silent guns.  But Ukraine land would be gone, while the guns could again begin firing.  He and JD Vance tried to browbeat Ukraine into going along.  Not only did they fail, but they succeeded in convincing Europe it had to step up its efforts.

Frustrated, Trump was repeatedly disappointed in trying to convince Putin that he could get him a good deal if he ended his aggression.  When brotherly conversation did not work, he moved to the threat of tougher sanctions and weapons sales to Europe, which could pass them on to Ukraine.  This, he thought, was what brought Putin to the Alaska talks.

Contrast the red carpet, hand-clapping greeting of Trump to the aggressive abuse of Ukraine’s Zelenskyy at the White House.  Trump conceded Ukraine territory and NATO membership before even arriving in Alaska.  That’s the art of the deal?

Giving Putin the Invader an image boost, he gained nothing.  It was a classic case of TACO – Trump Always Chickens Out.  Arriving back at home, the incredible, shrinking Trump dropped his repeated demand for an immediate ceasefire, allowing Russia to war on, just as it wished, and directly against Ukraine’s interests. 

He meets with Zelenskyy, perhaps even civilly.  But he must understand that, just like Russia, Ukraine has specific demands about territory and other matters like its captive children in Russia.  He sees that Europe now openly backs Ukraine with less reliance on the U.S.  A good American answer to Putin would be a major and immediate weapons supply for Ukraine.

The U.S. should also be willing to guarantee, along with Europe, a Ukraine-Russia accord, even though many will have questionable confidence in it, given Trump’s meandering on NATO’s Article 5, governing mutual defense.

European nations, too, can do more.  They can send their own currently home-based weapons to Ukraine now.  If they truly believe that the attack on Ukraine is an attack on them, they should regard Ukraine as their front line in a real war.

In the end, so long as Ukraine is willing and able to fight on, Trump won’t be the dealmaker.  He is obviously biased toward Putin, who obligingly affirms his assertion that Russia did not try to influence the 2016 election, and readily envisages peace as merely a matter of real estate.  Approving aggression, he gave away America’s world leadership in Anchorage.

Journalist attacks by Israel aimed at killing free press

 

Gordon L. Weil

I have been a journalist, full-time, part-time, or sometime, since 1967.  The news this week has made me deeply angry.   Journalists have been killed by the government of Israel as part of its war in Gaza.  Innocent journalists have been killed for no apparent reason other than that they reported on Israeli military operations there.

After the outrageous Hamas attack on Israel on October 7, 2023, Israel understandably launched a punitive military operation against the terrorists, vowing to eliminate it entirely. While the reaction was justified, many have questioned whether it was proportionate.  My purpose here is not to question what Israel has done in responding to Hamas, except for one critical element.

To shield its operations from outside scrutiny, Israel has prevented foreign journalists from entering Gaza.  But Gaza journalists remained in the territory and issued their reports to a wider world.  They worked for Al Jazeera, a news organization based in Qatar.

From its origin in the 1990s, Al Jazeera was condemned as allegedly being aligned with terrorist groups.  The opposition came from Arab governments, targets of its revelations, and Israel, mistrustful of Arab news sources.  But it persisted, largely overcame the criticism and has been generally accepted, though not in Israel, as a reputable news organization.

One other element of the Israeli retaliation is relevant.  It designates people as members of Hamas and, being in a state of war, it feels no need to offer proof.  Once an alleged Hamas figure is identified, they are targeted for death.  If they are in the company of innocent people, the others are likely to be killed alongside them, deaths known as collateral damage.

Israel has reportedly killed over 200 journalists in Gaza, though many may have been hit in air raids on civilian populations.  But some clearly have been intentionally targeted.  It is not a question of shooting the messenger; it is an attack on a free press.

Last week, an Al Jazeera news team, reporters for its Arabic and English services and their cameramen, were working out of an identified tent near a Gaza food delivery point.  Naming one of them a Hamas operative, Israel killed all five people – one person whose alleged Hamas affiliation had been widely denied and four admitted cases of collateral damage.

The other slain reporter worked for the English service, providing on-site evidence to the world that some Israeli military claims were not true.  His was surely a voice that Israel would want to silence.

At one time, I appeared regularly on the New York public television station.  When you are on air, you know and appreciate the camera and audio operators, who get scant public recognition.  They are just as important to the story as the person in front of the camera.  Israel killed three of them along with the Al Jazeera reporters.

Almost any reporter is likely to find themselves in an uncomfortable or dangerous situation, but that’s part of their responsibility.  Like a soldier or a police officer, they may knowingly put themselves in harm’s way.

My own experience is truly insignificant compared to the heroic efforts of the Al Jazeera reporters, but a couple of times I put myself in situations where I could suffer harm so I could get the story.  To do the job, you may have to take risks.

Why do it?  In any society, the people deserve to know about events that can affect their lives.  The media is their representative and ultimately is responsible to them.

Beyond that, the press is an essential part of the system of government.  In democratic societies, the independent media holds officeholders accountable for their views and actions.  Power corrupts, and officeholders grow to dislike the media scrutiny that can hold them responsible. 

The arrogance of power resists accountability.   When President Trump attacks publications and individual journalists, he tears at the fabric of the political system.  Still, the media dutifully reports his attacks on the media itself.  The situation is even worse when a government, accused of war crimes, defends itself by suppressing reporting and killing journalists.

Americans may believe that any decent democracy has the kind of freedom of speech and the press guaranteed by the First Amendment.  The U.S. has traditionally supported democratic countries.  But you cannot find freedom of the press or of speech in the Basic Laws of Israel, claimed to be the democratic model in the Middle East.

I have never met a journalist from Al Jazeera.  But what happened to its reporters makes me despair, feel deeply sad for their fate and their families and angry that the U.S. and our supposedly democratic allies readily abandon the enlightened values of truth and justice in favor of untruths and brute force.

The phony economics of Trump's trade policy

 Gordon L. Weil

“You can’t put lipstick on a pig.”   But you can try.

Trump’s petulant trade policy lacks any underlying economic theory.  He wants to eliminate the U.S. trade deficit no matter the cost or effects.  If imports cost more or new domestic production is more expensive, the price will be paid by American customers unless foreign suppliers swallow them. 

But a loyal member of the Trump administration is trying hard to make that brutal trade policy appear to have a rational economic basis.   U.S. Trade Representative Jamieson Greer asserts that Trump wants to almost instantly replace the entire world trade system that has grown up since the end of the Second World War.

International commerce is based on a division of labor under which each country exports the products and services resulting from its economic strengths and buys the output of foreign production that best serves the needs of its people.  Competition sometimes exists, improving choice and increasing value.

Under the system that came to be managed by the World Trade Organization, tariffs were set at low levels and nations freed their trade with one another, treating each as its most favored partner.  Some nations benefit more than others from the low, reciprocal tariffs.  But most prosper from it.

The system has worked reasonably well and, more importantly, nations have become accustomed to it.  It has major problems, the result of historic change and attempts at manipulation by countries.  It needs reform, but Trump is throwing it out, because it has not given the U.S., the world’s largest economy, enough advantages.

One problem is that the manufacturing potential of developing countries has been hindered, limiting them to the sale of their raw materials.  The vestiges of colonialism have survived.

The other problem results from countries with state-run economies rather than open markets. The biggest mistake the U.S. made was to allow China to become a member of the WTO, enabling it to prey on free market countries by manipulating the value of its currency and exports.

Clearly, it’s time for the world’s trading partners to reform outmoded rules to deal with these and other issues.  The U.S. might have taken the lead in such reform, but it has refrained, because it has enjoyed the low cost of imports from China.

Greer says that, more than simply trying to enrich American industry at the expense of others, Trump intends to replace the relatively free flow of trade with something like a cut-throat unmanaged market.  U.S. nationalism is dressed up to look like a serious trade plan.

While his theory might be offered as a bold and original alternative to the WTO, it has in fact previously been tested, and it failed disastrously.  In 1930, the U.S. adopted high tariffs that Trump now tries to surpass.  They were meant to protect the U.S. from the Great Depression, but they stymied world trade and did not spur domestic industries. 

In two of the hardest hit countries, the Depression brought the New Deal in America and the Nazis in Germany.  High tariffs worsened the economic crisis worldwide.  Greer obviously hopes for better this time, but he ignores history.

Trump daily demonstrates that he has no carefully conceived economic strategy behind his tariffs.  Federal courts now consider whether his policy is even legal.  He uses emergency powers in a situation that may not qualify as an emergency.  And his haphazard application of tariffs is hardly a consistent response to an emergency. 

He uses tariffs as a political weapon, not an economic tool, raising them on Brazilian imports, because he dislikes its judicial system treatment of a former president.  He lifts tariffs on trade from India to pressure it to stop buying Russian oil.  He hits Canada hard, well, because it is still Canada.  Many of his actions are based on blatantly false data, but he persists.

He claims to be making deals. The art of the deal is that all participants believe they have benefitted.  He usually does not propose a satisfactory deal; instead, he makes other countries keep making offers, hoping to get Trump tariff reductions.  This is not dealmaking; it is bullying.

The proof that there is no coherent economic policy, despite Greer’s valiant effort, is the frequent adjustments that Trump makes day by day.  No specific level has an economic basis.   It is simply a matter of getting as much as you can now, ignoring longer term economic or political effects.  America loses allies, needed because trade is not the only challenge the U.S. faces.

When other countries hold firm or fight back or Trump realizes the degree to which the U.S. is dependent on certain of their exports, he may back down.  That’s called TACO – Trump always chickens out.  Is that real economic policy, Mr. Greer?

 

Trump as Colossus of America

 

Gordon L. Weil

Millenia ago, the Greek city of Rhodes built a huge statue, bestriding its harbor to commemorate a military victory and honor its patron god.  This Colossus of Rhodes, was classed as one of the Seven Wonders of the Ancient World.

Donald Trump seemingly seeks to become the New Colossus of America.  He aims at such impressive achievements that the country will add his likeness to Mount Rushmore, and the world will crown him with the Nobel Peace Prize.

President Trump is a member of the American nobility, a status acquired by becoming a celebrity.  For them, fame is all that matters, and people give them their adulation.  “The Apprentice” made Trump a celebrity; the presidency could make him a colossus.

Celebrities understand the importance of creating illusions.  What you do is less important than what you seem to do.  For Trump, appearance, if not everything, matters more than anything else.  Unembarrassed, he continually touts his supposed achievements.

He dislikes the report of the economy softening, published by the nonpartisan Bureau of Labor Statistics.  The report has modified downward its initial estimates, as it frequently does, based on newly received data.  The agency is struggling to perform well after its budget was cut by DOGE and Trump.

But Trump sees the revision as a message that his tariff policy is not working.  That doesn’t look good, so he fires the agency chief, claiming she was out to get him.  If the new BLS boss produces questionable reports to his liking, he’ll face protests from business and academia.   Trump’s core backers know better; he is simply wiping out the deep state.

Or take the chair of the Joint Chiefs of Staff.  The accomplished four-star Air Force general holding the job was quickly fired.  He is Black, and his mere existence made him a symbol of what Trump regards as the dreaded result of diversity-equity-inclusion policies.  His ability and experience didn’t count.

Trump promptly picked a retired, three-star Marine general for the job, skipping over many qualified officers.  He liked the man’s macho nickname, Dan “Razin” Caine.  And he also liked his looks, right out of “central casting”.  So far, Caine, a thoughtful man, may have been something of a disappointment to Trump, but he sure does look good.

During his first term, Trump joined a long line of foreign chiefs of state to have been invited to watch the French Bastille Day parade.  He was impressed, and wanted the same kind of military review in Washington and got it. 

But the Army was celebrating its 250th anniversary and produced more of an historical pageant than a show of strutting soldiers.  Trump encountered the quiet resistance against making the American military march with the grandeur seen in Paris or London. He gained few image-building points.

He is redecorating the White House with lavish and garish splashes of gold paint.  He may have seen similar ostentation in a European royal palace, but that’s not the American style.  Nixon also tried European style, but it quickly flopped.  But that’s not enough; Trump wants to build a big ballroom in the historic house the people let him use.

By using tariffs as a weapon, he seeks to be the person who reshaped the world economy.  Perhaps he’ll succeed, but he will gain little glory.  His reputation and America’s are suffering.  His successors will have to pick up the pieces of the shattered U.S. influence in the world.  Trump’s “beggar thy neighbor” trade policy is a good way to alienate friends.

Some deals he has proudly announced probably won’t produce the promised foreign investment in the U.S.   Japan was forced to agree to a seemingly huge amount to be placed under his control.  The details remain to be quietly worked out, but it’s likely investment will be a trickle, not a flood.  Meanwhile, he has undercut a country whose support the U.S. needs.

Similarly, he has sought to add territory – Greenland, Panama, Canada – to the U.S., which would make him the greatest president since James K. Polk, the champion of America’s largest  territorial expansion.  And we all remember him.

Then, there’s Epstein, whose files are a major threat to his image.  Having promised to reveal them, without knowing if they existed, he catered to his core.  When screeners found nothing more to reveal, the core attacked him for his self-made cover-up.  Do the suppressed files contain information harmful to him?  More than any other issue, this one threatens his valued image.

Trump is the best self-promoter the White House has ever seen.  But it is not working to provide him with historic acclaim.  Still, it should provide him with historic profits, thanks to his having exploited the presidency for personal gain more than any of his predecessors.

A lesson from history awaits.  The Colossus of Rhodes collapsed.

Social Security war looms

 

Gordon L. Weil

The war over Social Security is on the verge of breaking out.  It will run short of funds to pay for promised benefits in less than 10 years.

Many American leaders intentionally ignore the issue, which may be the most important economic and political challenge before them. They dodge the problem because there are only two solutions – raising taxes or cutting benefits, and both are politically dangerous.  Facing only downsides, politicians push the problem off, making it worse.

Either payroll taxes will have to be raised or retirement and disability payments will have to be cut – or both – to keep the program solvent.  The aging population does not include enough people paying payroll taxes to cover the costs of benefits for current beneficiaries.  Expenses rise, but income either does not rise as fast or might decline.

The Republican textbook answer is that revenues could be increased if Social Security reserves could be invested in the stock market instead of lower interest Treasury debt.  Over time, the financial markets have grown, though during recessions and other economic setbacks, they have faltered.  This proposal has not been endorsed by Congress, but it lives on.

Treasury Secretary Scott Bessent said a provision of the One Big Beautiful Bill, known as Trump accounts, “is a backdoor for privatizing Social Security.”  Trump accounts give newborns an account of $1,000 with gains used to supplement their education spending when they are 18. 

After he set off immediate alarms, Bessent retreated, claiming that privatization would supplement Social Security, not replace it. Two funds, the original and the add-on, would co-exist.

Trump accounts will come at a cost to taxpayers, and so would a parallel investment fund.  Does Bessent propose taking part of the payroll tax revenues for private investment, thus reducing the reserve for paying benefits that would otherwise flow from the original Social Security?  Would for-profit investment firms handle the add-on funds?

Though not an exact parallel, this proposal sounds like a variation on Medicare Advantage, run by insurers, instead of using original Medicare, operated by the government.  Recent reports suggest that the insurers put profits over health care, and retirees may suffer both physically and financially.

Two senators have proposed creating a separate fund from the Social Security Trust.  Revenues from that new fund would be used to close the gap between traditional benefits and the money available from the Trust.  The new fund could invest in the stock market rather than only in U.S. Treasury debt, as does Social Security.  After 75 years, it would repay its balance to the Trust.

This proposal would require an initial investment to get the new fund into operation so that it could produce enough income to cover the benefit shortfall and to maintain its assets, enabling it to survive for 75 years.  The senators estimate that it would take $1.5 trillion to create the fund, right from the start.  What would be the source of that seed money?

Social Security was originally intended as a retirement supplement to other income and, based on the life expectancy at the time, it was not planned for payments stretching over decades, as they now do.  For many people, it has become their main or entire source of retirement income. In effect, it may have come to be widely, if not openly, considered a national retirement plan.

In the U.S, there is a belief, virtually the Eleventh Commandment, stating: “Thou shall not raise taxes.”  If Social Security must abide by that rule, the only realistic option is to reduce benefits.  That’s what many pre-retirement people accept as inevitable, though they themselves may have failed to save for their later years.

Bessent and others seem to believe that investing in the market will increase returns enough to ensure Social Security will never have a shortfall.  Retirement payments would be hostage to the performance of those making the investments – amounting to an act of blind faith.

Congress has been approving changes that reduce the shortfall by boosting the age to receive full benefits, raising the cap on how much income is subject to the payroll tax and making most of the benefits for higher income people subject to income taxes.  These are all helpful, but not enough to close the gap.

A wide array of other options is available, and it is possible to estimate the effect of each of them on reducing the Social Security shortfall.  You can be the policy maker by using this questionnaire.  Go to the Revenues (or the other tabs) tab and make your choices, and you will see their relative effect. 

Note that diversifying Social Security investments, the Bessent idea, only solves 6% of the problem.  It’s not the solution.

Have fun with the questionnaire.   Members of Congress ought to give it a try.

 

China aims toi pass U.S. as top superpower

 

Gordon L. Weil

The magician waves his wand in the air and all eyes in the audience follow.  They don’t pay attention to what’s in his other hand or where he is walking.  He fools them.

China is today’s conjuror.  The wand is its threat to Taiwan.  Its real aim is to be the world’s only superpower, filling a gap left by Trump’s retreat to “America First.”

This sleight-of-hand has a precedent in Nazi Germany.  Its wand was insisting on absorbing ethnic Germans living in other countries.  Its aim was to control Europe and North Africa, while isolating the U.S.  The fools were in the U.K. (Chamberlain cedes Czechoslovakia to Hitler), and the U.S. (Charles Lindbergh’s first “America First”).

China would not normally be expected to seek influence over the political and military situation in Europe.   But the U.S. is turning away from Europe to face what it sees as an Asian menace.  That helps China to become a military factor there, using Russia as its agent.

Russia, the home of practical Communism, inspired the Chinese Communist Party.  But it has lost influence, while China has extended its reach.  The Ukraine war has made Russia increasingly dependent on its much larger ally.  In effect, it is becoming a satellite of China.

Here, too, history offers a precedent.  Hitler’s political thinking was influenced by the success of Italian Fascism under Mussolini.  Germany and Italy drew closer.   As World War II progressed, Italy failed to defend itself and became a German satellite with much of the country under Nazi occupation.

Russia has become dependent on China, which allows it to continue the Ukraine war into its fourth year.  Despite its initial statements about remaining neutral, China provides drones, a key element of the Russian offensive.

Even more important, it has become the leading market for Russian raw materials, especially oil.  The Russian economy depends heavily on foreign oil and natural gas sales, which form the core of its economy.  China replaces its lost European markets and pays bargain prices.  It sells manufactured goods to Russia.

China also is the leading customer for Russian coal and, soon, natural gas. It can rely on Russia for fuel by creating a tight and long-lasting tie.  The smaller, weaker country comes more closely under the control of its neighbor.  Total trade between the two countries is estimated at $240 billion. (This compares with $762 billion in U.S.-Canada trade.)

But, Chinese support for Russia’s continuing war against Ukraine comes at a price.  The EU has said that it will not replace its faltering relationship with the U.S. with China while it backs Russia.  Like Canada, this could force Europe into new trade relationships elsewhere.  They may also assume some of the American world role, as the champions of liberal democracy.

The Trump administration has encouraged these developments, perhaps unintentionally.  By rationing its support for Ukraine, it reduced risks for China in forging close ties with the Russian aggressor.  At the same time, the U.S. has struggled to come up with a workable, reformed trade relationship with Beijing.

Trump’s “America First” policy continues to appear isolationist to other countries. He seeks to gain advantages over other countries while weakening his cooperation and support for them. Whether he really would abide by NATO’s Article 5 requiring mutual self-defense remains a matter of lingering doubt.

Taiwan may be used as a distraction, but China remains intent on invading it.  The American policy of strategic ambiguity (does it favor one China or support Taiwan independence?) is increasingly difficult to sustain.  It is expected to support the island if it is attacked, though there are limits on how much American power can be deployed.

The U.S. Navy is patrolling the South China Sea, refuting China’s wild claims that the international waterway is part of its territorial waters.  Hostile warnings from Chinese vessels have been sounded, leading South Korea, Japan and the Philippines to draw closer to the U.S.

It is widely believed that China supports Russia in Ukraine for its own direct purposes.  If Russia can succeed in extending its influence there despite European opposition, then China could be encouraged to make a similar move on Taiwan despite American opposition.

Trump signals that he will strengthen sanctions on Russia, which could implicate China.   He could deploy secondary sanctions – economic penalties on countries that continue to do business with Russia thus financing its war effort.  Europe, Canada and others could sign on to this policy.

China also continues to aggressively push its role in Africa and Latin America, often through its investments.  Its obvious goal is to extend its influence by creating economic dependence and gaining naval bases.  China needs these regions to achieve its goal as the world’s leading superpower.  Quite like the pre-Trump U.S., it might not be liked, but it would have to respected,