If Democrats win, they can’t turn clock back

If Democrats win, they can’t turn clock back

US, world have changed

 Gordon L. Weil

Many Trump opponents believe that when the Democrats regain power, partly through this year’s congressional elections and in the 2028 presidential race, they will be able to reset national politics back to life before MAGA.

It may be a nice dream, but it’s only that.  It won’t happen, because it can’t happen.

The immediate problem is money.  The federal government now operates with a massive national deficit, mainly because it keeps spending more while cutting taxes.  Without a huge reduction in military spending and an increase in taxes, the money simply isn’t there to restore the pre-Trump government.

The Democrats have worked hard to shed an image of being weak on defense, which is as much about job creation as building a better war power.  They see risk in trimming the defense budget, but might have to make cuts to revive Social Security and Medicare.   Otherwise, those social welfare programs will weaken.  Tough choice.

Progressives favor taxing the wealthy to recover revenues lost from Trump tax breaks.  The currently highest tax rate is 37%.  In 1963, it was 91% and as late as 1981, it was 70%.   Progressive proposals are far more modest, and they would pass the revenue on to middle-class taxpayers, not the poor.  Cutting deficits, now at their highest annual growth rate, is unlikely.

But there’s more that cannot be reversed.  Under Trump, the U.S. has not only greatly reduced efforts to halt global climate change, but it actively tries to unravel what has already been done.  Glaciers melt into the sea, and no Democratic policy can halt global warming and its impacts on the climate and the sea.  Restoration must give way to real remedies, not band aids.

That would require stepped up regulation, a Trump destruction project.  The Supreme Court has not allowed the EPA much latitude in rulemaking, meaning that change will have to come from Congress.  If anything can pass, it’s likely to be more limited than under previous administrations of either party.

The U.S. has been the world’s leader in science.  Look at the Nobel Prizes in the sciences, and there’s clear American leadership.  Many of the top scientists are at leading American research universities.   Trump has declared war on many of them, using doubtful charges about mainly undergraduate protests, to withdraw funding for advanced research.

American scientists are tempted to accept appointments at foreign universities.  Younger scientists may also prefer the prospect of foreign employment over the risks of working for the universities dependent on the federal government.  When the top talent is gone, it will be difficult to attract it back to the uncertainty or companies at home.

Relations with allies have been broken.  They have learned that American policy can be erratic and that they can no longer rely on the certainty of joint action on common challenges.  Trump rightly challenged their overdependence on the U.S., but seemingly misunderstood the nature of an alliance of sovereign countries, which may have differing analyses of world affairs.

The result of his pressure has been increased effort by all NATO allies.  But with their greater strength has come their sense of independence from reflexive support for the U.S.  Both Trump’s plan to take Greenland from Denmark, a loyal ally, and his war on Iran, for which he did not consult them but expected their support, wounded the relationship.

While some advocate a return to Atlantic partnership, the absence of trust and predictability would lead to a more careful and arms-length network.  Realistically, the Russian threat, revealed in Ukraine to be weaker than believed, may eventually require less of an increasingly questionable U.S. guarantee.

Finally, there is the nature of American democracy itself.  The growth of presidential power at the expense of Congress has come at the hands of presidents of both parties this past quarter century.  The Democrats can hardly be expected to abandon many of the powers that Trump has magnified with the Supreme Court’s approval.

To modify the Constitution by agreeing to answers to the questions that have been raised about its meaning over the past 250 years would open it to a transformation reflecting the views of conservatives or liberals rather than a consensus.   Because this is understood, both sides come to the brink but back away.

Unless members of Congress show greater faith in the leading constitutional role of their branch than in loyalty to their party, little would change under a Democratic presidency.  Compromise has come to mean “my way or the highway,” yet it remains essential for the American system to work.  

The country and the world undergo irreversible change.  It is too late to turn back, especially as increased executive power has become more acceptable, and charisma may matter more than character.  The times require creativity and leadership, but both are lacking.

 

 

  

Iran War pushes debt to dangerous level

 

Iran War pushes debt to dangerous level

Tariffs lead others to avoid U.S.

 

Gordon L. Weil

Americans are getting richer and poorer at the same time.

Last year’s changes to the federal income tax have brought lower taxes for many, showing up in their refund checks.  This year’s Iran war has created shortages.  Coupled with the effects of tariff policy, they push consumer and business prices higher.  Some economists calculate that the increased cost of gasoline exceeds the tax refunds.

Inflation is growing.  President Trump’s quest to have the Federal Reserve lower interest rates to promote growth would serve to boost it even more.  Even if he can remove Jerome Powell as Fed chair, its rate-setters probably won’t agree to a cut; they may even raise rates.

The national debt grows.  Tax cuts have been funded by both reducing programs and increasing borrowing.  Debt is the present borrowing from the future.

The International Monetary Fund, a worldwide financial agency, neutral on political issues, published its annual outlook last week.   Its view of the world’s economy reveals much the same concerns as exist in the U.S.

Two major forces are shaping the economy now, and they may have long-term effects. Both are made in the U.S.A. and especially in the White House:  the new tariff system and the U.S.-Israel war in Iran. 

The new tariff regime was quickly installed and is now resulting in entirely new trade patterns rapidly developing among nations.  The war has spread in the Middle East, impacts China and Japan, and drives up worldwide oil and gas prices.

While the Iran war has brought increased defense spending, that provides only limited help to the economy.  Unlike much other spending whose effect is multiplied as it flows through commerce, military outlays are consumed on the battlefield with much less of a multiplier.  Other elements of domestic production are reduced, and the debt grows.

For the IMF, much depends on how long the war continues.  The current ceasefire could be extended, though Israel may be reluctant to end the conflict.  If not, the war’s economic impact could “mean a close call for a global recession.”  It would take at least a couple of years to recover.

What about world trade?  Will the U.S. allow tariffs to stabilize, based on real economic justification?   New trade patterns are emerging that could revive commerce, though the American role would not remain the same.

American trade has declined with China and Canada, the two countries that retaliated against U.S. tariff increases.  U.S. trade shifted to Taiwan, Vietnam and Mexico.  China, setting a record in the export of its goods in 2025, focused on Asia and Europe.   Canada created new links with them as well, and it’s unlikely that these links will later unwind.

If Trump resumes raising tariffs on short notice for political reasons, the uncertainty will have an economic impact.  His moves would encourage other nations to continue orienting their trade away from the U.S.  The World Trade Organization, designed to keep trade fair and free and now largely ignored by the U.S. and China, will disappear.

One big question mark is the effect of artificial intelligence.  It may produce productivity improvement that could offset some of the negative impacts of the Iran war.   Much would depend on where and when these gains occur.  The IMF assumes its growth could be beneficial, but does not deal with concerns about its increasingly worrisome effects.

The U.S. remains the world’s dominant economy in the IMF’s current view.  Rather than allowing the private sector to retain its influence, the federal government asserts its ability to direct the economy, going beyond fiscal policy, to economic investment and even increasing its role in monetary policy.

But its influence is sure to decrease as other countries seek to develop more stable relationships.  The U.S. will continue to be an importer and its producers will want foreign markets, but its global position will be reduced.

The worst is yet to come. The national debt is about $39 trillion, far more than GDP, and steadily increasing.  Its annual servicing cost is now higher than military spending. 

The Trump administration won’t estimate the cost of the Iran war, though it is hundreds of billions of dollars.  Without a congressionally funded appropriation, most of the cost will be added to this year’s deficit and to the national debt.

The dollar is the world’s standard reserve currency.  In 1933, the U.S. killed the gold standard, the previous reserve, replacing it with a devalued dollar, backed by the American economy.

National debt payments could swamp the budget, surpassing the ability of future generations to pay it off.  The dollar would have to be devalued again, so that debt could be repaid in cheaper dollars.  Seeing this grim future, the world will gradually abandon the dollar as the stable reserve currency, and America’s last dominant power will be gone.

 

 

 

 

 

Big Beautiful Bill opponents: right thing for right reason

 

Gordon L. Weil

If you oppose him, it isn’t like swimming against the tide.  It’s like swimming against a tsunami.

The One Big Beautiful Bill, President’s Trumps hoped-for legislative triumph, will happen in some form.  He probably doesn’t care what form, so long as it happens.  If you get in his way, you may be drowned.

Two senators opposed the bill for the right reason.  It would deprive hundreds of thousands of people in both of their states of Medicaid, health care for people who otherwise cannot afford it.  Trump has promised to protect Medicaid, but the only way he could get the tax cuts he wanted had to come at its expense.

Thom Tillis, the Republican senator from North Carolina, could not accept that 663,000 people from his state would lose health care coverage.  Trump’s response was to attack him and threaten to have a MAGA candidate challenge him in the GOP primary next year.

Tillis stuck to his position and said he would not run for reelection.  His move might be interpreted as giving in to threats, but he made it clear that he was tired of the loss of bipartisanship in Congress.  He preferred to walk away from political extremism, just as had Maine Sen. Olympia Snowe.  There must be more to life than constant conflict.

That made Tillis’ decision the right thing to do and for the right reason.

He will leave after serving two terms in the Senate.  If time in government is meant to be public service rather than building a career in politics, his decision amounted to a self-imposed term limit. 

Susan Collins, Maine’s Republican senator, voted against the OBBB, mainly because of its harmful effect on 400,000 Maine people.  She tried to amend the bill to deal with the problem, but was soundly defeated with only a few poor states helping her.   After that, because she’s up for re-election next year, her vote in opposition was a good political move.

Trump had little chance of opposing Collins, so she could afford to take a stand against him. At 72, she should be retiring after five terms, but, unlike Tillis, she wants to stay.  Supporting him would have made her more vulnerable to a Democratic challenger.    

Tillis did the right thing for the right reason.  While hoping for a political reward, Collins also did the right thing.  Alaska’s Lisa Murkowski, usually a Collins ally, was bought off by adding even more debt to the deal.

A word must be written about Kentucky Sen. Rand Paul, the third GOP senator to break with the president.  He opposes increasing the federal debt, which the OBBB not only did, but used dishonest accounting.  He stuck to principles closely identified with him and refused to be swept under by Trump’s tidal wave.  He showed integrity.

In the end, that’s what it boils down to.  The disastrous and dishonest OBBB, a jumble of conservative causes piling up more debt, led some members of Congress who could have resisted Trump and forced through a better bill to abandon their integrity.