Debt may doom the dollar

Debt may doom the dollar

Interest rates climb

Gordon L. Weil

Nine out of ten Americans are in debt.  The federal government, just having crossed $40 trillion in debt, owes more than all individuals together.

Interest rates are rising.  The more people or the government must pay on their debt, the less affordable is everything else.  The federal government allows itself to keep piling on more debt to be repaid sometime later.  The problem is getting bigger.

Republicans traditionally fought to control debt, while Democrats were seen as big spenders.  Compromises between them kept some limit on the federal debt.  But the GOP has changed; it openly supports increases in the federal debt by spending more and taxing less. 

Debt affects everybody and could be the major threat to the American way of life.  It affects all costs from mortgages to groceries.  The more businesses and farmers pay for the loans they need to operate, the higher the costs they must pass on to consumers.

President Trump wants lower interest rates.  Rate cuts are politically popular, and he believes lower rates will reduce the amount of huge government interest payments resulting from massive federal deficits.  He wants the Federal Reserve, the central bank which sets short-term interest rates, to be the driving force to lower the long-term cost of federal debt.

The Fed’s Open Market Committee sets interest rates, based on economic not political factors. Its goals are low inflation and full employment.  It has not cut rates to Trump’s satisfaction.  He attacks the Fed, but the Supreme Court has upheld its independent role.

Trump blames former Fed Chair Jerome Powell, his own appointee, for not cutting rates.  When Powell’s term as chair ended, Trump replaced him with Kevin Warsh, who might be more favorable to his goal.  At the outset, Warsh was walking a tightrope, and refused to discuss the possible future of rates, leaving rate decisions to the market.

Treasury Secretary Scott Bessent thought he could do better by trading government debt.  He apparently thought he could do the Fed’s job and cut rates.  His policy worked for a few hours, then it flopped, and interest rates went back up.  He could not control enough Treasury securities to sustain his policy in a trillion-dollar world.

Bessent and Warsh had worked under star investor Stanley Druckenmiller, who roundly rejected Bessent’s move.  Britain’s Financial Times headlined, “Bessent gets Drucked.”  Druckenmiller opposed the Treasury trying to take over the Fed’s job of setting monetary policy.   And market leaders said they wanted to know Fed thinking and disliked Warsh’s reticence.

Warsh got the message.   He admitted that persistent inflation could lead the Fed to increase interest rates.  As a responsible central banker, he eased market worries by recognizing reality.  Trump would not get the lower rates he demands, largely because the Iran war is pushing prices up.

Interest rates are soaring.  Competing borrowing demands by the AI sector force governments to pay higher rates to sell their debt.   Fighting the Iran war’s inflation requires central banks to raise rates to reduce borrowing and slow the economy.  Long-term interest rates are hitting highs, contrary to Trump’s intent.

He continues to wage war on the Fed, aiming to gain a majority of rate-setters beholden to him.  Winning has become an end in itself, detached from market reality.

The president still wants to harass Fed Governor Lisa Cook, a Black woman, off the Fed Board.    A Trump lackey argues that she cheated on two mortgage applications.  She proved that a clerical error was fixed and did not result in her receiving duplicate homeowner benefits.   Secretary Bessent also claimed two principal residences, but Trump has not sought his removal.

Cook has already spent about $1.3 million defending herself.  Trump has similarly gone after Powell, who protects himself from false charges by remaining on the Board.

This Fed foolishness is far less important than the huge and growing federal debt.  Annual debt payments exceed all U.S. military spending, and they keep increasing.  At some point, government outlays would have to be cut and taxes increased just to cover debt payments.  That’s not likely to be politically acceptable.

Then, the only way to pay for government to reduce the federal debt will be to make each dollar less valuable -- devaluation.  The U.S. did it in 1933 and 1971 by ending the dollar’s link to gold.  With devaluation, the dollar’s value would be cut relative to other currencies and gold.  The fixed dollars of the federal debt could be paid off with new dollars worth less. 

Devaluation is not painless.  While exports may be stimulated by cheaper dollars, people may have to struggle with inflation, as happened in the late 1970s.  And the devalued dollar could lose its place as the world’s reserve currency, the money other countries want to hold, drastically undermining American world power.

 

 

  

Blue Wave may be coming

 

Blue Wave: wholesale or retail elections

‘All politics is local’ no longer true

Gordon L. Weil

This year’s election may reveal the difference between retail and wholesale politics.

The Republicans and many pundits see the congressional elections as hundreds of individual contests.  For most of them, picking a winner is easy, because voting traditionally hews to a single party.  The balance of power in Congress can be determined by a few swing elections, where there’s usually only a small gap between the two major candidates.

The GOP is increasingly worried about becoming a minority party.  They would be endangered if Democrats could add to their blue-collar and Black support with more women and, thanks to immigration, Hispanic voters.  Republicans have made inroads among union members and other blue-collar workers, but they are not expected to equal the Democratic gains.

Republicans look for ways to suppress voting among those voters seen as likely to support Democrats.  Their arsenal includes difficult identification requirements, shorter voting periods, reduced mail ballots and House redistricting to maximize the chances for their candidates to win.

However spurious his claims might be, Donald Trump’s assertion that his 2020 election had been fraudulently stolen, is used as justification for most voter suppression, which claims to help eliminate fraud.  For added GOP security, he pushed for congressional redistricting years before it is required by the Constitution and laws.

The president’s party often loses seats in the midterm election, and premature redistricting is meant to nullify that shift.  Redistricting for political purposes was explicitly approved by the Supreme Court.  The Democrats tried to match the GOP slicing-and-dicing moves, but have come up short.

The object of all these moves is to retain Republican majorities, no matter how thin, in the House and Senate.  That would not only help Trump continue to adopt policies by executive order without congressional oversight, but also to protect him from what he sees as an inevitable third impeachment if the Democrats gain control of the House.

Taken together, all of these moves constitute a retail approach to the elections.  The goal is to win just enough states and districts to hold onto control of both houses.  Most analysts have bought this approach, because it’s familiar. 

“All politics is local,” said the late House Speaker Tip O’Neill.  If retail politics prevail this year, then O’Neill’s wisdom prevails.  But Donald Trump has radically changed American politics and, if he is becoming the predominant issue in any congressional race, then the old sage can be proven wrong.

All serious polls show that Trump’s rating on every major policy is solidly negative.  Despite having almost unchecked power, he hasn’t delivered on key promises.  Even worse, he continues to promise success, but many people are losing confidence.  For example, he repeatedly announces that the unpopular Iran war is nearing an end, but it isn’t.  Then, he escalates it.

He promised no long wars, instantly lower consumer prices, deporting unlawful immigrants with criminal records and ending any special breaks for women and minorities.  He delivered a prolonged Iran war, higher prices, deportation of long-term immigrants leading productive lives and open discrimination against women and minorities, especially in military leadership.

In his second term, Trump has adopted or approved policies harmful to African Americans, women, farmers, Hispanic people, science and education.  While his policies may not create new Democrats, some of their members could vote for them as alternatives to his Republican enablers or simply not vote.  A relative few could tip many balances.

Trump relies on personal loyalty and keeps his core support.  Voter suppression and expected massive fraud claims where GOP candidates lose could help him.  By making the Democrats appear dangerous, he would frighten voters away from them.

Will Trump’s falling approval translate into enough Democratic votes for them to take Congress?  When the campaign began, few gave the Democrats a chance of taking Senate control.   Now nine Senate seats are in question.  This shift suggests that the Trump Republicans’ congressional control of the Senate is now in question.  The Democrats have a good chance in the House.

But will the success of Democratic Socialists in some primaries scare enough voters nationally to allow a clear path for Republicans?  The media promotes a possibly exaggerated struggle between the party’s progressives and moderates, but they could appear united in their opposition to Trump.

The Democrats make Trump the issue (wholesale); the Republicans make individual Democrat’s shortcomings the issue (retail).  Trump’s impulsive moves create political opportunities.  The Democrats’ infighting and inability to create a unified agenda do the same.

If the Democrats succeed, the result would be the Blue Wave.  It would extend the usual midterm congressional losses into a major rejection of Trump’s presidency.  If the Iran war continues and prices remain high, chances for a Blue Wave increase.  Trump probably knows that and has about two months to complete his defenses.

 

 

 

 

Trump policies abd their unintended consequences: American boomerang

 

Trump policies: American boomerang

Unintended consequences always happen

Gordon L. Weil

 

Here’s the theory of Trump’s policy: I dispose of the power of the U.S., the greatest military and economic power in the world, and can use it to force others, weaker and dependent, to fall into line.

Here’s the reality: I dispose of the power of the U.S., but it is not enough to force others, who increasingly sense their independence, to fall into line, revealing limits on American power.

The policies Trump tries to impose on others turn on him.  The American symbol is less the screaming eagle than the boomerang, the Australian missile that comes back to its sender.  What goes around, comes around.

These days, boomerangs are flying.

Trade negotiations with Canada finally seemed to become focused.  Canadian Prime Minister Mark Carney proposed “Fortress North America,” a free trade agreement between the two countries and a joint foreign trade policy.  That’s similar to what the two countries had been developing before Trump launched his tariff wars, when Canada was almost the 51st state.

Trump claims that Canada wants the benefits of American statehood at no cost.  But the U.S. wants to formally install the 51st state in all but name.  It sought to determine Canada’s trade policies, be authorized to freely nullify their new trade agreement, and let American exporters ignore Canadian language laws.  In return, the U.S. would lower some tariffs it had raised.

While Trump thought he was nearing a deal, Canada refused last-minute American demands.  Canada insisted on its status as a sovereign nation, despite the sneers of U.S. officials.  U.S. negotiators believed that Canada was ready to surrender, leaving them surprised when Canada quit the talks.  Boomerang.

In Iran, the U.S. went to war, while Iranians were ready for continued negotiations. But supposedly the threat of American power was so great that Iran should simply fold.  Why negotiate when a brief display of American power could settle matters?

The war turned out to be lengthy and made matters worse, as Iran managed to close the Strait of Hormuz, causing an increase in world oil prices. In the U.S., rising consumer prices and dislike of “forever wars” hampered Trump’s extended and costly attacks.  The president could not convince Americans that ending Iran’s nuclear potential was worth the cost.

Military pressure having fallen short, Trump reverted this week to increased economic sanctions.  Usually, countries apply maximum economic pressure before taking up arms.  It saves lives.  But this time, the U.S. did it backwards.  Boomerang.

As part of its desperate economic sanctions, the Trump administration also threatened other countries that trade with Iran.  Will that apply to Russia?  For all the bluster, the U.S. recognized its dependence on China and limited the sanctions.  China was not happy and remains a major customer for Iran’s oil.  Boomerang.

Trump’s tariff policy has been aimed at restoring American production thanks to increased tariff protection.  He has gradually learned that American consumers pay the price when importers pass on their increased costs.  He may punish some foreign producers, but he also punishes Americans at the gas pump or in the grocery aisle. 

The trade policy has failed.  Part of it was not legal, and the government must refund tariff revenues.  Tariffs have boosted prices faster than incomes, turning “affordability” from a bureaucratic term into a political banner.  Tariff policy went from being a MAGA basic to a GOP embarrassment.

This week, Trump cut beef import tariffs as hamburger prices soared.  The American cattle industry, beginning to recover with the tariffs, was furious.  When the tariff policy did not work at the supermarket, it was suddenly reversed.  That created a political reaction in cattle country, and congressional candidates immediately knew it.  Boomerang.

Even when Trump’s policy works, its excesses lead to unintended consequences.  He ran on keeping his promises and, in perhaps the key area, he has.  He took advantage of broad public sentiment in stopping the flow of illegal entrants across the southern border.  It worked.

But he has gone further, promising to expel illegal residents with criminal records.  That, too, received broad support.  But, to reduce the population of undocumented residents quickly, his administration focused more on people leading ordinary lives.  Those people are the easiest to catch and their arrests run up the number of expulsions.

Sectors like agriculture and health care have suffered for the lack of immigrant employment.  People may react negatively when their law-abiding, long-term neighbors are whisked away.  The most popular Trump policy has failed to produce popular results.  As with all other policy areas, immigration has become a net negative for Trump.  Boomerang.

All of these over-confident policies have been adopted without a good understanding of their implications.  They come back to Trump, making matters worse for him, others and the country.  It’s a classic boomerang.

 

 

Strangle the enemy, end freedom of the seas

 

Strangle the enemy – it’s better than nuclear

End of freedom of the seas

 

Gordon L. Weil

Fearing that Iran would develop a nuclear weapon that it could use to disrupt the Middle East, the U.S. attacked.   Then, Iran realized that it already had such a weapon immediately at hand.

It is not a super-destructive missile, but a narrow passage of water through which 30 percent of the world’s petroleum is transported and which Iran can control.   The Strait of Hormuz has become a weapon of war that need not cause widespread death and destruction while delivering a bomb-sized blow to the world, day after day.

Historically, the Strait of Hormuz, a narrow body of water between Iran and Oman, has been used as an international waterway.  Vessels of all nations could pass freely.  Traffic was mainly related to petroleum and fertilizer exports.  International law covering such usage is well-developed and detailed.

Iran understood that it could exert economic and political power by controlling maritime traffic.  Action in the open sea is less constrained than conflict on land.  Retaliating for the American-Israel attack in February, Iran found, even though it is a minor naval power, it could block the Strait.

The U.S. does not want to damage shore facilities that are essential for the petroleum trade, so must limit its range of action.  Its bellicose threats and attacks on mainland facilities have not yielded submission by a determined defender.  By causing a stoppage in oil deliveries to China, Japan and other Asian countries, it faced opposition to its Iran gambit.

Even the U.S. is affected.  When the world market price of crude oil rises, American producers raise their prices in the domestic market.  Their profits are boosted without any increase in their production costs.  Consumers pay at the pump.

The Strait of Hormuz is one of at least four international waterways where a bordering country threatens to gain control in pursuit of its political objectives.  Reducing passage is turning out to be more powerful than armaments.  The prime American goal of eliminating Iran’s nuclear potential has been replaced by efforts to open the strait.

Middle East oil access has two marine gateways.  One is Hormuz. The other is Bab-el-Mandeb, a strait at the southern end of the Red Sea.  Vessels using the Suez Canal, the gateway to Europe and the Americas, must transit this narrow passage. 

Bab-el-Mandeb can be made impassable by the Houthis, Iran’s southern arm that dominates much of Yemen.  They resist the armed might of the U.S. and Saudi Arabia and have recently picked up on Iran’s strait strategy.  They are less vulnerable that Iran’s proxies in Hamas or Hezbollah and do not depend on Iran.  They fight their own battles.

The Houthis have begun moving to cut off oil through that strait, which sees the transit of more than 9 percent of the world’s petroleum traffic.  Closures of Hormuz and Bab-el-Mandeb raise consumer prices for gas and food throughout the world.  The fleeting pleasure of having knocked off Iran’s Supreme Leader seems unimportant in comparison.

The biggest marine chokepoint could turn out to be the South China Sea.  This waterway is not narrow, but forms a vital link for Korea, Japan, and the Philippines.  It is an international thoroughfare and an estimated one-third of all world trade passes through it. 

China claims it as its own territorial waters.  Its navy and air force patrol it, and it has created artificial islands in it.  It accosts foreign vessels and warns away U.S. naval aircraft and vessels.  It is the path to its takeover of Taiwan.

Freedom of the seas there depends on the U.S. Navy.  Two aircraft carriers, destroyers and air surveillance tame Chinese ambitions.  But the U.S. has stripped the fleet there to concentrate on attacks on Iran.  No carriers are on station.

The American-Israel war on Iran is helping China move toward domination of a vital international waterway.  It gains influence on Asian nations while displacing the U.S.  It increases its threat to Taiwan.  For the U.S., these are the unintended consequences of an unintended war.

The fourth marine closure is the Black Sea.  Ukraine and Russia can block each other’s free access to it.  Together, they supply about 30 percent of the world’s wheat.  One expert warns that the loss of most of this supply would cause “severe global food price shock.” Many people might be unable to pay for food.

The U.S. could play a key role by pressuring Russia’s Putin to negotiate and end his invasion of Ukraine.  Russia’s lost sales as the world’s largest wheat supplier will weaken it, though it could also be impacted by more sanctions coupled with greater American help for Ukraine.

President Trump seeks to enforce America’s will on the world.  He is not succeeding, because other countries can develop and use maritime leverage that is powerful enough to replace nuclear weapons.

 

Election key: Trump turnout

 

Election key: Trump turnout

War over ballots

Gordon L. Weil

A single factor may be the key to the outcome of the midterm elections – turnout.

President Trump gets it.  He gives signs of believing that it’s better for his Republicans if fewer people vote. 

In the 2020 presidential election, he lost by 7 million votes out of the 156 million between the two main candidates.  Four years later, he won by over 2 million votes out of about 153 million.  The Democrats shed over 6 million votes.

He asserts that he won in 2020 and could conclude that a lower turnout favors Republicans.  Because most Republicans vote at the polling places on Election Day, while most Democrats prefer early voting, often by mail, that might have led him to oppose mail voting.

Republicans want to tighten access to voting.  They say they are combating election fraud though there’s little demonstrated evidence of it.  But Trump claims his loss resulted from widespread fraud.  Massive efforts to prove that point totally failed, but the claims persist and accepting them is a required mark of loyalty to Trump.

Voter fraud is a myth. While there may be rare problems, they are so minor that they cannot influence the results.  But donning the cloak of protecting democracy, the GOP can seem to be the good guys while preventing many Democrats from participating.

The Republicans try to limit voting access and question vote tabulation (only when they lose).  Making voting access more difficult, the GOP expects to deter lower income workers and the poor from making what could be a big effort to register and vote in person.  They also try to influence how votes are counted, which aims at throwing out Democratic ballots.

Trump is currently thinking about declaring a national emergency giving him the power to reduce or eliminate mail voting and to impose strict identification rules to screen out lower income and less educated voters who won’t have time or transport necessary to collect needed paperwork.  Reducing mail voting could get some help from the Postal Service.

He has fought hard to secure passage of the SAVE act that could allow him to accomplish his goals, but Congress won’t pass his bill.  Declaring a national emergency would be a shortcut, though it would be challenged.

This year, increased turnouts for midterm primaries encourage uncertain expectations of a big November turnout.  In Texas, for example, the 2.3 million Democratic votes compared with 2.2 million Republicans ballots.  Both the turnouts and the Democratic showing were unusually high, but three-quarters of eligible voters did not participate.

In November, Republicans who are disappointed with Trump could stay away.  But if the Democrats are thought to be leftwing extremists, GOP voters are unlikely to swing to their side.  That’s why there’s so much handwringing by pundits when a Democratic Socialist wins a primary.

But, even merely by staying away, a lower GOP turnout could help the Democrats. And it’s possible that high prices caused by the Iran War and uneasiness about immigration enforcement could cause some to protest by voting for Democrats.  Turnout will depend heavily on whether the elections are a referendum on Trump.

In practice, the question is whether voter suppression will work and if so, whether it will have a partisan effect. The GOP may believe that educated, affluent people will vote and remain reliable Republicans.

But, despite the focus on the Democrats losing the blue-collar vote, they are making major inroads among what once was a solid GOP vote. If women, affluent, and better educated people continue moving toward the Democrats and show up at the polls, they could upset the GOP strategy.

If Trump aims to make it easier for those groups to dominate the electorate, he may have missed that they are moving away from the GOP.  If he believes less educated voters are increasingly Republican, he may have erred in making voting access more difficult for them.  Plus, their share of the electorate is declining, while the more affluent Republicans are defecting.

In both parties, campaigns could boil down to GOTV – get out the vote.

Rarely does an issue affect turnout to the point it can determine the election outcome.  But consumer price hikes could cause results that go well beyond partisanship.  Prices rose under Biden, and Trump won by promising to reverse them quickly.  The Iran war made the situation worse, but he tells voters that small gas price increases are worth it.

Whatever politicians claim, consumer price increases have not been small.  When gasoline shoots up more than one dollar a gallon, it can fuel the kind of turnout that flips the Congress. 

Talk of a Blue Wave, a massive Democratic win, has begun to pass the straight-face test. But it may take a Blue Wave to drown the voter suppression that Trump seeks.

 

 

 

 

Trump counterattacks Supreme Court

 

Trump counterattacks Supreme Court

PLUS Pundits’ mistakes

Gordon L. Weil

Trump fights the Supreme Court

Trump wants to limit birthright citizenship, mainly because he does not want the children of illegal foreigners to become citizens.  The Supreme Court has overruled Trump, finding that the 14th Amendment grants citizenship to any person born in the country and “subject to the jurisdiction” of the U.S., (excluding children of foreign diplomats).

Justice Kavanaugh, voting with the majority, pointed out that Congress could define what is meant by being subject to American jurisdiction.  Because it had failed to do so, he agreed with the majority.  (The minority thought the Amendment applied only to Blacks and that the parents must be permanently domiciled in the U.S.)

The Kavanaugh opinion broadly hinted that the administration could have a chance to limit the scope of birthright citizenship, if it induced Congress to define “subject to the jurisdiction.”  It could draft a bill and send it to Congress, either creating a good campaign issue or getting it passed.

But that is the kind of legislative work Trump avoids.  He dislikes the time it takes and the need for dealmaking with members of Congress.

Instead, he issued new executive orders with his own definitions of who could be excluded under the jurisdiction provision.  Besides the undocumented, he wanted to exclude person who came to the U.S. for vacation childbirths (who are already denied visas).  His orders will go through a new and lengthy judicial process and will likely be suspended until a final decision is made.

Trump is launching his boldest remaining ideas and moves before he runs the risk of facing a hostile Congress.  He avoids exposing himself to the possibility of congressional rejection now, but might again use immigration to influence voters.  His support on reversing illegal immigration and expelling people has been falling, so he needs a boost.

Pushing back on the Supreme Court ruling also enables him to express his growing and openly hostile attitude toward the Court.  He believes its conservative majority betrays him, when justices he appointed fail to faithfully support his policies.  He wants to put the Court in its place, joining Congress in accepting or approving his policies. 

He expects other branches of government to support his presidency.  For him, the unitary executive should extend to other branches by dominating or ignoring them.

Pundits mislead, use anecdotes to support their prefab analyses

The November elections are either a national test of movements the MAGA and Democratic Socialist movements or a collection of the usual midterm challenges to the president.

The results could be a validation of Trump, a Blue Wave or the continuation of extremely narrow majorities in Congress.

The conventional wisdom is that the Democrats are engaged in a national struggle between DS and moderates.  They could blow their chances if it prevails.  The pundits view the facts influenced by this thinking.

The main directions of analysis are that (1) the election will depend on a few swing races and will be close, (2) the Democrats are throwing away their chances and (3) prices at the pump may turn Trump supporters away from voting for Republicans.

The underlying belief is that Trump’s Iran war is making GOP candidates vulnerable, but that Democrats are failing to take advantage of the opportunity it provides.  And what’s true in Michigan is also true in Maine, because politics have been nationalized.

To support that belief, news people spread out across the country to produce anecdotal reports based on a few interviews.  Their reports are tailored to conform to the national narrative.

I won’t hazard my analysis, because, like the pundits, I don’t know enough.

But here are some questions that I think should be explored before leaping to conclusions based on a short visit.

1. What is the local media saying about state or district politics differing from national analyses?

2. What is the price at the pump in the state compared with pre-Iran?

3. What are in-state industry and commercial groups telling their members?

4. How does the state behave politically compared with national elections and why?

5. Are candidate age and demographic change relevant?

6. What are the recent indicators of conservative or liberal leanings among voters?

I don’t see questions like these addressed in the New York Times or Washington Post.

In Maine, the national media sees Troy Jackson, the Democratic U.S. Senate candidate, as evidence of the risky, progressive takeover of the Democratic Party.  What’s the risk in a state where Democrats favored Bernie Sanders in 2016 and which was one of only three states to approve same-sex marriage though a referendum?

The bottom line is that you are your own best pundit.  What do you think?  What about people you know?  Whatever you conclude, don’t rely on the national media to tell you about yourself.

Power of the superpowers wanes; rise of "middle powers'

Power of the superpowers on the wane

Rise of the 'middle powers'

Gordon L. Weil

The idea that the world can be dominated by superpowers is outmoded. There soon may be no superpowers left, especially as the U.S. quits aspiring to the status.

A superpower is nation that, when it says “jump,” smaller countries jump.  A superpower can influence events anywhere in the world or at least in large parts of it.   Each may use an array of measures, overt and covert, legal and illegal, to gain an advantage over another.  Most of the remaining countries are either spectators or victims.

Why does a nation want to be a superpower?  The obvious but incorrect answer is territory.  Of course, the country wants to be surrounded by a buffer of states.  From that comes the idea of a central nation and its satellites.   A country may not need to occupy others, so long as it can be assured of a sympathetic and compliant regime.

A superpower seeks to show that it produces better results than any other nation and the greatest benefit for itself and its people (or at least its ruling class).  To accomplish these goals, it must bend others to its will and make them tributaries to its success.  Its tools for domination may be military, economic or political.

At the end of World War II, analysts saw three superpowers, based mostly on the size, reach and the power of their armed forces.  Foremost was the U.S, the leader and supplier of the other two – the Soviet Union and Great Britain.

Soon, there were only two.  Britain didn’t have the economic strength to retain its role.  The U.S. could treat it like a satellite, and India and other colonial possessions could rebel and shed its rule, a pattern set by its earliest lost colony in 1776.

Later, there would be only one superpower.  The Soviet Union underwent a process similar to Britain and even faced growing discontent at home when its people began to see how well others lived.  It disintegrated and Russia, though the second nuclear power, stayed onstage but no longer a star. 

Its failure to gain a victory in Ukraine revealed that its power was overrated.  NATO worried about its potential aggression along its borders, so expanded and regrouped.  Russia was no longer the cosmic threat its had once been, and it could be deterred.

The conventional wisdom after the Soviet Union was that, dominated by a benevolent and democratic America that had no territorial designs, a kind of permanent peace could prevail with Uncle Sam as the world’s top cop.

Pax Americana was undermined by at least three forces.  One was terrorism, the ability of non-state players, to shape world events.  A superpower could seem vulnerable when others toppled its key buildings and successfully thwarted its policies. 

Another change came from China, the historical giant that was modernizing itself into a world force.  It is a military threat in its Asian neighborhood.  It wants Taiwan, and knows the U.S. won’t sacrifice American lives to protect that island.  In the South China Sea, China probably wouldn’t risk conflict by attacking American planes or ships if they are kept on station.

Then came Trump’s ego.  He focuses on his personal influence and fame and the accumulation of an ever-larger fortune.  While he uses American power, especially the U.S. military, to support his goals, he may undermine its superpower status.  His inconsistency has made America appear weak.

He launched a war on Iran.  As Russia’s Putin learned, when the limits of his arms supply were revealed, the reputation of American armed forces suffered.  Also, seeking control of the Fed, he weakened confidence in the dollar, possibly the most powerful instrument of the country’s domination.  Overreaching led to underperforming. 

Finally, there is the superpower that never happened. The creation of the European Union was meant to yield a new world economic and military power.  On the military side, the EU hired out its defense to the U.S.  It’s better at talk than action on foreign and defense issues, leaving decisions to 27 governments, each with veto power.

The EU integrated national economies, preventing the Europeans from attacking one another and launching another world war.  That worked.  Through supranationalism, Europe was supposed to become the partner of the U.S., almost its equal.  That didn’t work.  Nationalism survives; Europe’s flag and anthem are purely symbolic.  In short, it can’t get its act together.

In effect, the world is arriving at competition more than conflict among the waning superpowers.  A new model is coming from countries, like India, Saudi Arabia and Canada, that are increasingly adept in dealing with China, Russia and America.

Canada’s Prime Minister Carney issued what others have called a “declaration of independence.”  Those he labelled as “middle powers,” including European nations, may be the most influential actors in world affairs.

 

Fed chair alarms market; Grenada; a GOP moderate

 

Fed chair alarms market; Grenada; a GOP moderate

Brief notes of the week

 

Gordon L. Weil

New Fed chair raises alarm

The new Federal Reserve chair has lost support in financial markets in record time.  The non-financial media and the political world have not caught on, but his moves to recast the Fed’s role is causing reactions approaching alarm.  One leading expert opined that “the bond market puked on him.”

The Fed sets short-term interest rates and buys and sells federal debt to influence long-term rates.   It has huge economic clout, alongside the federal government’s spending and taxing. But Kevin Warsh wants to keep quiet about the Fed’s future thinking on interest rates and to reduce its holdings of federal debt. 

Warsh wants the market to drive the economic policies, uninfluenced by Fed forecasts.  He believes that market participants should “play the game rather than watch the referee.”

That would make the economy a playing field (between what parties?) with the Fed assuring fair play.  Meanwhile, the Fed would say less and, presumably, do less.  The Federal Open Market Committee, composed of Fed Board governors and regional Fed bank presidents, could meet less often.

The market wasted no time in reacting to Warsh’s closed-mouth policy, scolding him for not recognizing that the Fed is a major player not simply a ref.  Left unsure of the Fed’s future thinking, the market lifted interest rates.

FOMC members are independent of the chair, making it likely that his new policy lost him support.  The powerful president of the New York Fed bank quickly sketched his view of the economic future.  Other members split with Warsh on rates.

Ironically, the man Trump sent to lower interest rates finds that the president’s Iran war and his own policy shift increase rates.

Grenada or Greenland

The State Department is reportedly closing several diplomatic offices abroad, including the embassy in Grenada, a small, independent country in the Caribbean, located about 100 miles from Venezuela by sea.

The U.S. invaded it in 1983 when Ronald Reagan was president, because of fears it was coming under the influence of Cuba and Russia.  In more recent years, it has developed a two-party political system with elections resulting in peaceful change.  Grenada’s sovereign is Charles III, the King of Grenada and of the United Kingdom.  Grenada has a population of about 115,000.

Its economy depends on tourism and the export of nutmeg and other spices.  Its major economic problem is the large burden of public debt.  It is avid about the game of cricket, and China has financed a $40 million stadium there.

This year, the U.S. opened a consulate in Nuuk, Greenland, which is an autonomous territory of Denmark.   The U.S. has an embassy in Copenhagen, the Danish capital, to which the consulate is subordinate.  Greenland’s sovereign is King Frederik X of Denmark.

The population of Greenland is about 57,000.  While it has half the population of Granada, President Trump wants to acquire it over the opposition of Greenland, Denmark, the EU and Canada.  Its area is 6,288 times greater than Grenada’s.

Trump worries about China having invested in Greenland, and wants to take overt action.  He is unconcerned about Grenada, where China has also shown interest.  Despite its potentially strategic location, Grenada is not in the running to be the 51st state.

How to be a Republican moderate

A moderate is defined in Congress as a senator or representative who sometimes splits with their party to vote with the other side.  Their vote may be especially telling if they oppose a president of the same party.

In the age of extreme partisanship, acquiring the status of a moderate requires only a handful of votes in opposition to one’s own party.

But there is one step even better, enabling the dissenter to break with the party to justify home-state claims to be a moderate without the vote making any difference.  You can vote against your party when it has enough votes to prevail without your help.

Voters in the home state are supposed to see the independence asserted by the officeholder, which gains them votes.  Party allies in Congress accept the opposing vote, aware of its help to the supposed moderate and the continued loyalty of the senator or representative. You can almost see the nod and wink.

This week, Maine Sen. Susan Collins was the sole Republican to vote with Democrats on an environmental issue.  No matter, the GOP had enough votes to defeat it.  Facing a tough reelection, Collins could add evidence to her claim to being a moderate.

She also announced that she would vote against the confirmation of Todd Blanche as Attorney-General.  By announcing early, she could avoid direct responsibility for being the swing vote.  He would squeak by without her vote.  Maybe her vote would dim memories of her unpopular support for Justice Brett Kavanaugh or Secretary Bobby Kennedy, Jr.

Trump’s goal makes Congress irrelevant

 

Trump’s goal makes Congress irrelevant

Arc de Trump, yes; serious legislating, no

 

Gordon L. Weil

Grumbling about the failure of Congress to perform its designated role, including by me, may be wrong.

The conventional wisdom is that members of Republican majority in the House and Senate retreat before Trump’s assertion of power and his threats to their reelection.  While he has seized control of the nation’s political agenda, taking it way from the branch of government that is supposed to make policy, that’s far from the underlying reason.

Trump apparently believes he can bypass or overrule Congress at will, but a good case can be made that he simply doesn’t care.   It may not matter to him whatever Congress does or does not do.  His goal is not to leave a legislative legacy or to contribute to the betterment of the lives of Americans.

He has little need for Congress, and it has responded by slowing down.  Both the House and Senate have met in working sessions and enacted legislation far less than is normal for Congress.

The One Big Beautiful Bill (OBBB), the highest expression of Trump’s agenda, is a notable example.  The pro-Trump House would almost reflexively pass his requested spending requests. Importantly, OBBB allowed the president go around the normal and cumbersome appropriation process, especially in the Senate, a less reliable part of his team. 

In the Senate, spending bills are considered by the Appropriations Committee, now under GOP control and chaired by Maine Sen. Susan Collins.  Traditionally, departmental bills would be considered individually but gradually they were adopted in packages.  If passed late, bridging funding would be adopted.

The Republicans had promised separate consideration of each bill, but Trump wanted quick success rather than a legislative process with extended negotiating.  That lightened the Senate work load, and senators got their earmarks, money for home state projects.  Collins, having lost much budget authority, could still bring home the bacon.

While the Senate appears to remain in session more than the House, it’s an illusion.  To prevent gaps allowing the president to make recess appointments to top positions, the Senate holds daily pro forma sessions with a single senator present.  Still, the Senate passes more bills than the House, thanks to a few senators breaking party ranks, but the House lets the bills die.

The House has reduced its work load by taking the longest recess in modern House history.  After it enacted Trump’s budget, Speaker Mike Johnson took any possibility of negotiating with the Senate off the table by sending the House members back home.  He sought to strongarm the Senate, though it was led by his own party. 

Johnson also called snap recesses when he could not gain agreement among Republican members to support or oppose a bill, risking action by Democrats and a few Republicans.  He fights to keep bills, like one on Epstein documents, from coming to a vote.

Both bodies have fewer bills to consider.  Members’ bills become scarcer as party discipline stifles individual initiative.  Even more important is the relative lack of presidential proposals, which would involve the president in prolonged negotiations with Congress.  He does not seek a legacy earned through conventional politics, beyond the passage of a few key bills.

In their new book “Regime Change,” Maggie Haberman and Jonathan Swan explain the president.  “Trump saw himself as a transformational figure in history, one who was already remaking the world in his image, something few leaders ever had the chance to do so definitively.”

Trump seeks an unforgettable place in history alongside names that have long been revered and remembered.  He does not pursue the acclaim that they had received after the adoption of their legislative programs.  As much as he has tried to show himself as a leader in great crises, like Lincoln or Roosevelt, he has had to create a mythology of comparable achievement.

And he wanted to cement his historic standing quickly, realizing that his influence would be limited to his second term.  That left him no time for Congress and he has ruled by executive orders, even if they are subject to protracted judicial challenges whose outcomes would be delayed for years.  There would no lasting legislative monuments to his leadership.

Instead, his monuments would be tangible, permanent and personal.  His name might be attached to an “Arc de Trump,” the White House East Wing, a Mount Rushmore bust, U.S. currency and passports, a reflecting pool, a D.C. football stadium, and a New York railroad station, plus a Nobel Peace Prize medal.  And personal glory could create the opportunity for personal profit.

In the end, Congress has been bypassed because it cannot contribute to his effort to gain permanent and exalted historical recognition.  While Republican majorities in both houses have bent to his will, Congress is irrelevant to his quest for lasting fame.  That helps explain its failure.

 

Trump’s personal theory of war

Trump’s personal theory of war

It’s a negotiating tool

 

Gordon L. Weil

 “He kept us out of war.”

That was President Woodrow Wilson’s winning slogan in the 1916 campaign.  Within five months of his reelection, the U.S. entered World War I.

In his first term, President Trump sought to send the same message as Wilson.  While not quite promising the U.S. would never go to war, he asserted that the combination of his personality and the strongest armed forces in the world would serve as a deterrent, eliminating the need to resort to war.  There would be no more extended conflicts.

He touted his skill as a negotiator.  Based on his view of his own business experience, he believed he could pressure or convince others to back away from confrontation.  It would mainly be a matter of identifying the weaker party and inducing it to accept his deal.  The vanquished might receive American investment.

Trump’s peacemaking might include this economic development element, likely thanks to his viewing negotiations as real estate transactions.  A country’s losses or concessions might be cushioned by providing it with increased outside investment.  The new economic stimulus would also benefit American investors, especially Trump family operations.  Peace for profit.

Aside from diverting conflict into a business opportunity, Trump has also measured his success in avoiding war by reducing or eliminating the loss of life.  American involvement in conflict situations may take on a cost he clearly dislikes if the lives of U.S. service personnel and others are lost.  Easy victories are best.

The world’s leading thinker about war, Carl von Clausewitz, had written: “War is merely the continuation of policy by other means.”  This might be interpreted as favoring negotiations before resorting to war, embodied in a quotation mistakenly attributed to British Prime Minister Winston Churchill – “jaw, jaw is better than war, war.”  

For Trump, war is an integral part of policy, not left to serve as the last resort. 

Traditionally, peace negotiations bring the parties together because both agree that they want to find an end to a conflict.  Entering talks implies a mutual understanding that compromise is better than an armed confrontation.  Each side knows that it must make concessions.  The negotiations give them the chance to get the best deal for their constituents.

Trump departs from this tradition.   He creates situations, possibly involving the threat of armed conflict, and expects his opponent to offer proposals revealing how far it will go to meet his terms.  If they fail to satisfy him or if their response suggests weakness and the possibility of more concessions, he rejects their response.

If his gambit works, he attributes success to his personal attributes.  If it does not work, he steps up military pressure in hopes of forcing the other side to accept his terms.  His negotiating position, the demands he makes, don’t change, while he increases his saber rattling or the actual use of force.

Venezuela encouraged Trump to believe his methods are correct.  Failing to gain concessions from President Maduro, he invaded, seized the president and intimidated the leadership without the loss of American lives.  An act of war appeared to have paid off.

His tariff policy worked the same way.  He raised duties and expected other countries to make unspecified concessions to get them lowered, and most did.

He apparently believed that the same formula would work in Iran, especially with the support of dissidents there who oppose the Islamic regime.  He failed to get Iranian concessions, but he assumed new leaders, responsive to street demonstrations, would reach a deal on nuclear and other issues.   

The U.S. and Israel could force regime change, possibly in just a few days.  If not, a major display of American power would force acceptance of U.S. demands.  Iran would fold.  War would be the critical element of the negotiation process.   Yet, until now, the war has accomplished nothing positive and has entered its sixth month.

Alliances bolster defense according to Clausewitz, and most NATO members agree.  With U.S. armed forces stretched, Trump was angered by allies’ reluctance to support his offensive war against Iran.   But Trump had already undermined the alliance by proposing to occupy Greenland, the territory of one of his NATO partners, by force. 

American foreign and military policies project Trump’s preferences and prejudices.  His Ukraine policy is influenced by his relationships with Russia’s Putin and Ukraine’s Zelenskyy.  He disrespects his NATO partners, considering them dependent and informing them that Ukraine holds little interest for the U.S.

Trump’s actions express powerful feelings derived from his “morality.”  The Iran war reflects his long-held dislike of its Islamic rule, while his fluctuating policy reveals the lack of a negotiating strategy going beyond the use of force.

Clausewitz wrote: “Strength of character does not consist solely in having powerful feelings, but in maintaining one’s balance in spite of them.”   Trump misses the point.

 

 

  

How Congress could control the president

How Congress could control the president

Fixing slippage in the system

 

Gordon L. Weil

The federal government has changed a lot recently.  Most of the reason for the almost revolutionary change has come from within the system itself.

Congress is heavily responsible.  It is supposed to set national policy.  The president is supposed to execute that policy.  That was the idea behind the Constitution, but it didn’t work for long.  Constitutional amendments were expected to meet change, but they haven’t worked.

The world is far more complicated than it was two centuries ago. Time brings change and change creates complexity.  While it continues to try to set national policy, Congress has increasingly asked the executive branch to fill in the details.  You know, the place where the devil lives.

While policy is set in broad terms, it is reshaped when applied to concrete situations.  Because of emergencies or their enjoyment of exercising power, presidents have increasingly become legislators, often using executive orders to substitute for acts of Congress.

The current Supreme Court has added a new twist on how the government should work.  It has ruled that if a federal power is not clearly defined as legislative or judicial, it belongs to the executive.  Their theory of the unitary presidency leads to the concentration of power.  Though presidents are elected, they have unchecked, regal authority during their term. 

Congress has created independent agencies to regulate private action, maintaining uniform and expert application of the law.   Such agencies exercise delegated legislative power and are kept relatively free of short-term political demands, even when made by the president.

The Supreme Court has ruled that such agencies are subject to the will of the chief executive. Presidents may use the power of appointment and removal of regulators to reshape the law.   Congress has lost its powers; I have previously proposed how they might be recovered.

Congress could counter the centralization of power under the president.  It determines the scope of its delegation of authority.  It has the power of the purse, enabling it to direct if and how the executive spends federal funds.

All presidents, including Trump, have acknowledged these congressional powers, though they may try to stretch the scope of the authority granted to them under law.  The Supreme Court has refrained in recent years from restraining Trump and encouraged the expansion of executive power. 

A president can enjoy the powers of office achieved by election while Congress could recover its inherent ability to set the limits on most forms of executive power.  Two tools – legislative authorization and the exclusive power to authorize federal spending – can do the job.

Congress should always approve any presidential authority subject to a sunset clause.  Every relevant Act of Congress should include a provision terminating the authority it grants without new congressional action.   For existing executive branch authority, Congress should enact an across-the-board sunset clause.

This week, Trump showed why Congress needs to recapture its authority.  He relied on a never-used provision of the ultra-protectionist Smoot-Hawley Act of 1930 to impose 50 percent tariffs on Canadian exports.  The provision had been unused because the act was a major contributor to the Great Depression and abandoned. 

The provision, almost a century old, had been deemed dead.  Yet nobody had killed it.  Trump unearthed.  Sunsetting would finally have ended it long ago.

It allowed Trump to decide that Canada’s trade measures are discriminatory for which it could be punished.  Because the Canadian tariffs in question were retaliation against Trump’s prior tariff increases, his move amounted to declaring a trade war.

Under a sunset policy, presidents could still have their policies adopted by a friendly Congress, subject to sunsetting during the next presidential term.  An intervening presidential campaign could allow for public debate on the policy.  When renewal time came, it could be the subject of renewed political negotiations.

Another way for Congress to control the executive is through authorizing or denying appropriations, a power that it alone can exercise.  It can refuse to fund proposed presidential initiatives.  It can mandate that funds must be used for specific purposes; Trump should not have been able to eliminate the Agency for International Development by cutting its funds.

The problem arises of what sanction Congress can use, aside from impeachment and conviction, if it is defied on spending by the president.  One obvious option is to block other presidential requests, though that can open new political issues.

The president controls executive office operations funded at more than half-billion dollars annually.  Congress might consider enacting an automatic 10 percent reduction each time required spending is halted by the president.  This, too, might be accomplished by across-the-board legislation.

These changes would require action by Congress and approval by the president.

If Congress does not defend its constitutional powers, then, like the Supreme Court, it is little more than a presidential adornment.  Is that what Americans want? 

 

Collins-Jackson election is about her Trump support

She goes on the attack

 

Gordon L. Weil

 

Maine Democrats have come up with their candidate to challenge Republican Susan Collins as she seeks her sixth term in the U.S. Senate.  His hazing began immediately.

His path to the nomination came via Graham Platner, a political neophyte who turned out to have more personal problems than the Democrats could bear.  Because taking this seat is critical to their hopes for gaining Senate control, revelations about Platner threatened their plans.  He had to be replaced.

The Democratic State Committee did not handpick his replacement, but created a mini-primary/convention system.  Democrats caucused in Maine’s 16 counties and select uncommitted delegates to a state convention, composed of 601 delegates to select the nominee, using a variation on ranked choice voting.

On Saturday, the meeting took place in Bangor, but the winner was a foregone conclusion.  Though delegates were technically unpledged, most had preferred candidates.  Senate hopefuls promoted the selection of delegates favorable to them.

More than a week before the state meeting, one Senate candidate had enough delegate support to be sure to win, and other candidates withdrew.  The party was unified, despite some grumbling about the winner’s effective organizing.   The selection process was open, included a televised debate, and it worked.  Outside pundits had mistakenly forecast a mad scramble.

Who is the Democratic candidate for Maine senator?

Troy Jackson, a logger and the former president of the Maine Senate, is the Democratic candidate.  He had run for the party’s nomination for governor and was able to deploy his existing organization effectively to get his supporters to the county caucuses.

He’s from northern Maine, a Trump-leaning area.  While the Democrats normally carry the southern part of the state handily, he offers the possibility of picking up votes in the region where they need added support.

He is a former legislator running for a legislative seat, giving him the chance to hit the ground running if elected.  And he is well known to the state’s Democratic leaders and activists.  Like most of them, he is part of the dominant progressive wing.

What’s Jackson’s relationship with Platner?

Platner preferred Jackson; both were endorsed by Sen. Bernie Sanders.  Like Platner, he is working class, so he may appeal to average voters.  His association with Platner could have a negative effect.

Having missed badly on Platner, the GOOP and the media may compensate by overdoing scrutiny of Jackson. They will try to “platnerize” him by seeking past behavior that could weaken or destroy his candidacy.   Undoubtedly, he will be subject to more attacks than Collins, thanks to clear media bias in her favor.

Even before the convention, the media reported on his admitted temper with few details about his record.  It also focused on a late income tax payment of $4,600 and how his positions have changed over time. 

Is Jackson starting too late to have a chance?

His campaign will be far shorter than Platner’s, but most Maine voters don’t focus on campaigns until after Labor Day.  The Democrats’ selection process has drawn favorable attention to the party and to Jackson.

The key may be fundraising.  If Jackson runs close to Collins in early polling, outside money could flow to make him competitive with her.  It will take time for Jackson to become known and for reputable polls to emerge.  There’s enough time for effective television buys and mailings.  In a small state, there’s just so much money can buy.

In Maine, field organization matters.  Platner’s campaign was said to be chaotic, so Jackson’s battle-tested operation is likely to be an improvement.   He will inherit help from workers for the other Senate/Governor hopefuls, who have endorsed him.

Can Jackson defeat Collins?

She has been able to overcome weak poll forecasts with election victories.  She has enjoyed being considered a moderate Republican, though she is often loyal to Trump and may carefully oppose him when her vote does not change the result.  She brings home federal money.  The conservative Maine GOP sticks with her. 

She will be well funded.  The out-of-state, pro-Trump funding, massively available alongside her campaign, could itself become an issue.

In 2020, she won with only 51 percent of the vote.  Jackson is a stronger candidate than the last Democratic candidate.  Like Collins, his family has lived in Maine for generations.  His working-class credentials, missing among past Collins’ opponents, might have appeal. 

Age is an ignored factor in this election.  He is 58, while Collins is 73.   Voters seem concerned about older candidates this year. 

In the end, the election will be a referendum on Trump.  Collins will try to revive her reputation as a moderate.  But she voted with him 94.6 percent of the time in 2025.  If Maine voters believe she has been too closely aligned with him, Jackson has a path to the Senate.