Category: The Presidency

Tariff Collections Are Climbing

The Daily Escape:

The cash flow of Customs and Excise Taxes has doubled in the past two months. From Wolf Street:

“Collections from customs and excise taxes spiked by 81% in April from March, to $17.4 billion, more than double the average monthly collections in 2023 and 2024, according to Treasury Department data today.”

This is the amount in customs and excise taxes that the Department of Homeland Security (which includes Customs and Border Protection) transferred in April into Treasury’s checking account at the Fed. Here’s a graphic representation:

The chart shows that something substantive is starting to happen. Tariffs are taxes paid by businesses to our government. And it adds up:

“For example, GM just announced that the new tariffs would cost it $4 billion to $5 billion this year and lowered its earnings forecast with respect to that. It has also begun to shift production to the US to dodge some of those tariffs.

GM manufactures components in China, it manufactures its Buick Envision at its joint venture in China and imports it, it imports vehicles and components from Mexico and Canada, it imports components and materials from around the world. After its bailout out of bankruptcy by the US government in 2009, GM focused on China and Mexico and shed dozens of US production facilities for components and vehicles. So now there’s a price to pay.”

Today’s automobile market is such that GM cannot pass on these tariffs to consumers. Automakers are having to discount their models and provide incentives to the market to sell enough vehicles to keep their production lines going.

More from Wolf:

“After the massive price hikes during the pandemic, there is no more room left to hike prices. Consumers have had it.”

But profit margins in the auto industry were huge following those massive price hikes. And the companies can eat those tariffs, show up with lower profits, and still be fine.

And not just in the auto industry. Non financial companies in the US made out like bandits during the Covid era of massive price increases. Their balance sheets have plenty of room to absorb the tariffs.

Mere mortals like Wrongo can’t keep up with all the tariff chaos. The governments of China and US are at least now talking about talking about tariffs. Numerous negotiations are apparently underway with governments of other countries, each one trying to get their special deal with Trump.

Under the Biden administration, there were numerous announcements of large investments in US manufacturing facilities by manufacturers. These investments will take time to play out: Years of big investments in the US before mass production can start. These investments alone are a big boost for the US economy. And companies such as GM that already have plants in the US have started to shift more production from their foreign plants to the US plants.

Trump has misplayed his own China tariffs strategy. In 2024 he said that if China tried to invade Taiwan he would impose tariffs:

“I’m going to tax you, at 150% to 200%.”

But today he already has tariffs at 145%. A trade war is about who can take the most economic pain, and that is a fight China clearly thinks it can win.

Trump’s trade protectionism is also harming America’s allies. Trump is pressing Taiwan and others to shift plants to America. Australia, Japan and South Korea face tariffs and demands to decouple from China, a large trading partner for each.

While no Asian country is about to break its security alliance with America. However, countries will be even more queasy about being dragged into a fight over Taiwan.

Trump’s problem is twofold. First, people are smarter than he thinks. They know the economy has worsened since the chaos of Liberation Day. They can see the demarcation in time when the vibes shifted. Second, of all the insanity of the first 100 days of Trump, nothing broke through to the broader public besides tariffs.

From the NYT:

“By late May or early June, consumers could start to see some empty shelves, and layoffs could occur for retailers and logistics industries. The major effects on the US economy of shutting down trade with China will start to become apparent in the summer of 2025…”

Trump desperately wants to evade blame. People have soured on his economic leadership devastatingly early into his presidency. It puts his power — and the Republican majorities’ power — at risk. Trump is very good at getting out of messes. But can he escape this one?

The stated dual purpose of tariffs is to first, change the math for manufacturing in the US. That was already underway with Biden. Second, to increase tax revenues.

Tariffs were the original tax revenues in the US, predating income taxes. And Trump mistakenly wants to take us back to that.

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Murkowski Fears Republicans

The Daily Escape:

Wrongo wrote here about Republican politicians behaving with deference to power in their Party and a fear of standing out:

“Standing up to Trump would mean risking access to donors, media cycles, committee power, and the favor of a political ecosystem that now functions more like a loyalty marketplace than a deliberative body.”

Finally a Republican Senator, Lisa Murkowski (R-AK) said on-camera what many elected officials have said off camera and off the record: They’re afraid of MAGA retaliation:

“We are all afraid,…I’m oftentimes very anxious myself about using my voice, because retaliation is real. And that’s not right.”

More from CNN:

“The senator’s candid comments gained national news attention on Thursday…when Murkowski spoke with a group of Alaska nonprofit leaders. Thankfully the publication had a multimedia journalist there, too, so there is YouTube video of the exchange.” 

More from Murkowski:

“We are all afraid….It’s quite a statement. But we are in a time and a place where I certainly have not been before. And I’ll tell ya, I’m oftentimes very anxious myself about using my voice, because retaliation is real. And that’s not right.”

Credit Murkowski for giving voice to her fears. But there’s nothing really keeping her from leaving the Republican Party and caucusing with the Democrats besides fear. In 2010, she lost the Republican Party’s nomination to serve another term, but ran in the general election as a write-in candidate and won. Then, in 2022, the Alaska Republican Party endorsed a challenger, as did Donald Trump, but she won the nomination anyway. This was despite her decision to vote to convict Trump in his Second Impeachment Trial.

Despite her long tenure in the Senate and accrued seniority, she is relegated by Republicans to chairing the Committee on Indian Affairs. To be sure, this is an important position for her state which has a large indigenous population, but it keeps her on the sidelines for the most important policy debates within the Party. She has a position on the Appropriations Committee, but she’s watching Elon Musk usurp that committee’s authority to control how money is spent.

She has said that the potential cuts she is most stressed by are broad changes to Medicaid, the Supplemental Nutrition Assistance Program and the National Endowment for the Humanities, because of the disproportionately large impact they have on Alaskans. She also said she was unnerved by how USAID had “just been obliterated,” and by threats to end Ukrainian refugee resettlement inside the U.S.

These are issues she shares in common with Democrats.

Murkowski also said that amid recent rumors that AmeriCorps would be terminated, she’d texted Trump’s Chief of Staff Susie Wiles to try to register her concerns, but wasn’t clear how effective that kind of access to the White House might ultimately prove:

“I share this with you not to say that we don’t know anything, but I’m saying that things are happening so fast through this Department of Government Efficiency, DOGE 
 none of us understand the half of it,….It’s literally piecing it together.”

It’s understandable that she fears speaking up will put her physical and political security at risk, as well as potentially harm the constituents she represents. Giving open expression to those fears is a form of bravery. People need to drop their fear and get angry. Not enough good people are angry, including Murkowski.

She could become an independent and caucus with the Democrats. The Democrats can offer her the ranking member position on Indian Affairs and a continued position on the Appropriations Committee.

From BooMan:

“Hershel “Woody” Williams was the last surviving Medal of Honor recipient to have fought in the Battle of Iwo Jima. He said ‘if fear overtakes you and becomes the dominant instinct, you cannot operate. You cannot operate under fear. Your brain won’t let you.’”

Murkowski isn’t just worried about a nasty tweet; Trump has an army out there to be afraid of.

Appeasement doesn’t get you anywhere. It just raises the stakes. So Murkowski should switch Parties. It would help conquer the fear while making it more likely that the issues she cares about are addressed.

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Trump’s Threat To The Constitution

The Daily Escape:

From Steve Inskeep, speaking about the legal plight of Kilmar Abrego Garcia, who Trump says he can’t get back from El Salvador:

“If I understand this correctly, the US president has launched a trade war against the world, believes he can force the EU and China to meet his terms, is determined to annex Canada and Greenland, but is powerless before the sovereign might of El Salvador. Is that it?”

There is a lot of stuff happening. Trump has tested all sorts of limits, including defying a 9-0 Supreme Court order in  the case of Abrego Garcia’s extradition to El Salvador mentioned in Steve Inskeep comment above. He has turned the US economy into a giant guessing game by toggling tariffs on and off.

From Dan Pfeiffer:

“….everyone is focused on Trump’s tariff policy. How could you not be? The stock market has been crashing, the bond market is freaking out, and worries about inflation and recession are mounting. When watching your retirement account drop like a rock, it’s hard to focus on anything else.

But we are also amid an emerging Constitutional crisis that could fundamentally reshape democracy.”

Last month, Trump deported Abrego Garcia to El Salvador where he is being held in a notorious prison known for torturing and starving inmates. Abrego Garcia is from El Salvador and was in this country illegally. But a judge had ruled that he could not be sent home because the gangs there posed a threat to his life.

After Abrego Garcia’s illegal deportation, the case went to the US Supreme Court where the Trump Administration admitted that Abrego Garcia was sent to El Salvador in error, but they have refused to do anything to bring him back to the US. The Supreme Court, in a unanimous decision, declared:

“The order properly requires the Government to ‘facilitate’ Abrego Garcia’s release from custody in El Salvador and to ensure that his case is handled as it would have been had he not been improperly sent to El Salvador.”

In a bit of a coincidence, Nayib Bukele, the President of El Salvador, was in Washington  Monday for a previously scheduled meeting with Trump, where Bukele said he refused to return Abrego Garcia  to the US.

Moreover, in the single most disturbing display since he was reelected, Trump asked Bukele to build several more Terrorism Confinement Centers to house US citizens. Trump also told reporters that he was open to deporting US citizens if they had committed violent, criminal acts. Trump said:

“If it’s a homegrown criminal, I have no problem….We’re studying the laws right now. Pam [Bondi, the attorney general] is studying. If we can do that, that’s good.”

But, US citizens cannot legally be deported.

The only exception is if a US citizen is credibly accused of committing a crime in another country and the government decides to honor an extradition request.

The administration’s position is that they can remove people in error or in defiance of court orders, and once deported, they cannot be compelled to engage in any specific act of diplomacy or foreign policy since those are the exclusive powers of the Executive Branch.

What this all means is that Trump will most likely escalate to deporting US citizens. The courts can try to stop this by, for example, holding executive branch officials including the president in contempt. That is highly unlikely since the Supreme Court ruled last year that the office of the presidency cannot commit a crime if it is done in the pursuit of normal job responsibilities, which would include foreign affairs.

It seems that Trump may not be held legally accountable even for deporting US citizens.

There is nothing to stop him unless the Republicans in Congress decide to stop him. He could be impeached and removed from office, of course, But the Republicans have taken a pass twice already on that option, despite airtight cases against him.

Republican politicians are behaving with deference to power and a fear of standing out. From Kyla Scanlon:

“As Umberto Eco warned in Ur-Fascism, authoritarian systems don’t return with parades and uniforms. They return in a culture where obedience masquerades as patriotism – or as economic strategy.

When disagreement becomes disloyalty, when nuance is dismissed as weakness, when conformity becomes civic virtue, we’re no longer living in a democracy. We’re participating in the performance of one.”

Congress could stop him. They have the authority, but they do nothing. This paralysis is what Umberto Eco described as a “fear of difference” where dissent is dangerous, alternative views are threatening, and deviation is punished.

What we get is a legislative body that performs democracy, but no longer willingly exercises its Constitutional powers.

Standing up to Trump would mean risking access to donors, media cycles, committee power, and the favor of a political ecosystem that now functions more like a loyalty marketplace than a deliberative body. So they completely ignore the Constitution at great costs to their constituents.

At this point, the Democrats can no longer treat Trump with any deference. The entire House Democratic Caucus should draw up articles of impeachment and seek to introduce them. The Senate Democrats should put a hold on everything until hearings are granted. Everything must stop until this is resolved.

From Dan Pfeiffer:

“This is the moment. We are at a crossroads. It’s time to speak up. Corporations have bent the knee; law firms are submitting to Trump; Congress is ceding its authority, and corporate media is making excuses. The courts are trying to stop Trump’s worst offenses, but he ignores their dictates.”

This is the most serious threat to our democracy since the Civil War.

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The Art Of The Bad Deal

The Daily Escape:

You cannot negotiate with a market. You can manipulate it, but in the long run markets do what they do. From the NYT :

“A sharp sell-off in US government bond markets and the dollar has set off fears about the growing fallout from President Trump’s tariffs, raising questions about what is typically seen as the safest corner for investors during times of turmoil.

Yields on 10-year Treasuries — the benchmark for a wide variety of debt — whipsawed on Wednesday after Mr. Trump paused the bulk of the levies he had threatened the week before and raised the rates charged on Chinese goods after that country retaliated. The reversal sent U.S. stocks soaring.”

And the bond market is not having any of Trump’s nonsense. We nearly had a major financial crisis. This is the part you don’t know. The bond markets freaking out means that, unchecked, we were maybe a week away from possible bank failures.

We’re talking about the market for US Treasury bonds—normally among the safest assets in the world. They started convulsing, along with the stock market. The yield on 10-year Treasuries leapt to 4.5%, up from 3.9% days earlier. That meant bond prices, which move inversely to yields, had cratered. The failure of both risky and supposedly safe assets at once, threatened to destabilize the financial system itself.

Why did the bond markets start to collapse? There was a technical reason, which was that losses in the stock market were so severe and widespread that hedge funds needed to sell bonds to cover losses. And money managers moved away from the slumping US dollar.

But more than that was a general, widespread loss of confidence In the US itself.

So what happened was something like this. Whatever sane minds are in the Oval Office probably desperately tried to warn Trump that we were indeed likely just a few days away from bank failures. That if the catastrophic fire-sale of US government bonds didn’t stop, the consequences would be ruinous.

From JV Last:

“William Cohan had an excellent explanation last night of where the bond market is after Trump’s tariff pause”:

The bond market can be broadly understood as a device that measures risk. The riskier an economic environment is, the higher the yield on bonds goes.

Over the course of Trump’s brief tariff regime the 10-year yield on T-bills went from 3.86% to 4.54% —a 17.6% climb in less than a week. That’s a screaming klaxon alarm.

Yesterday, after Trump announced his 90-day pause, the yield only dropped back to 4.4%. Which suggests that the bond market was not especially reassured.

One of the big risks is China. China holds $760b in US Treasuries. Should the Chinese decide to lower their purchasing of T-bills at the next auction, that will drive up the yield as the Treasury Department has to make them more attractive in the face of slackening demand. Which would in turn ratchet the entire bond market up another level of fear.

Why do bonds matter? Because bonds are how people finance debt—they are a rough approximation of the belief that it is safe to extend credit. And without credit, financial markets can’t function.

It’s all about risk. From Larry Summers: (emphasis by Wrongo)

“Long-term interest rates are gapping up, even as the stock market moves sharply downwards. This highly unusual pattern suggests a generalized aversion to US assets in global financial markets. We are being treated by global financial markets like a problematic emerging market.”

Donald Trump’s erratic and foolish actions have turned America, the most desirable financial haven in the world, into a whirlpool of risk. The safest way to conduct business now is to limit exposure to the US to the greatest extent possible. From the NYT: (emphasis by Wrongo)

“The chaos that has followed last week’s announcement has made companies wary about adding more upheaval with a drastic change to their supply chains. Faced with constant flux and unpredictability, companies are choosing to stay with what they know: longstanding relationships with Chinese suppliers or manufacturing partners.”

Driving multinationals deeper into relationships with China is not the art of the deal. It’s the destruction of stability and the start of a long, slow slide into a vortex.

Consider if you were to make an offer to buy a house: Would your opening bid be 50% of the asking price and would you expect a counter-offer? No, that’s bad faith negotiating. That’s pretty much what this tariff rollout has been like. “Let me start with the most ridiculous thing I can come up with and see if they bite!” The seller would tell you to go F yourself and find someone else to buy the home.

The whole world is going to do this. We’re going to carve ourselves out of a seat at the table.

Let Scott Galloway have the last word:

“The definition of stupid is hurting others while hurting yourself. Let’s hope the Republicans riding shotgun will realize the guy with his hand on the wheel is crazy.

My prediction: Xi will not back down. With Trump, he’s come to the same conclusion as Succession’s Logan Roy re his own kids: ‘You are not serious people.’”

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Mobilize Congress Against Trump’s Tariffs

The Daily Escape:

America is staring into an economic black hole because of Tariff Man. “America” as a country is no longer a democracy. And its government is no longer a legitimate government. Trump is now an Occupying Regime. Individual American states may have legitimate governments, but the Federal government is not.

The market crashed because tariffs are bad for corporations. Tariffs extract taxes from companies. Many companies involved in foreign trade would otherwise not pay significant income taxes in the US. Hence, stock prices fall. The market understands that perfectly, despite the relentless BS in the media that tariffs are a sales tax for consumers, they primarily hit corporations.

Passing on higher tariff costs to consumers is very hard for most consumer products. They cause sales to plunge, as Americans hate higher prices. And then, with sales dropping, corporations are forced to roll back their price increases.

Sen. Chris Murphy (D-CT) says the Trump tariffs aren’t about economics at all. Rather, he says Trump’s plan should be viewed as a political tool to win loyalty from industrial sectors of the US economy.

In a lengthy thread on X, Murphy said the president will use potential relief from the tariffs to gain fealty from private industry. (Excerpts of Murphy’s thread by Wrongo)

“Those trying to understand the tariffs as economic policy are dangerously naive. No, the tariffs are a tool to collapse our democracy. A means to compel loyalty from every business that will need to petition Trump for relief. This week you will read many confused economists and political pundits who won’t understand how the tariffs make economic sense.

That’s because they don’t. They aren’t designed as economic policy. The tariffs are simply a …super dangerous political tool.”

More: (emphasis by Wrongo)

“….our founders created a President with limited and checked powers. They specifically put the power of spending and taxation in the hands of the legislature. Why? Because they watched how kings and despots used spending and taxes to control their subjects. British kings used taxation to reward loyalty and punish dissent. Our own revolution was spurred by the King’s use of heavy taxation of the colonies to punish our push for self-governance.

The King’s message was simple: stop protesting and I’ll stop taxing.”

More: (emphasis by Wrongo)

“Trump knows that he can weaken…democracy by using spending and taxation in the same way. He is using access to government funds to bully universities, law firms and state and local governments into loyalty pledges….The tariffs are Trump’s tool to erode that independence. Now, one by one, every industry or company will need to pledge loyalty to Trump in order to get sanctions relief. The tariffs are DESIGNED to create economic hardship. Why? So that Trump has a straight face rationale for releasing them, business by business or industry by industry.

As he adjusts or grants relief, it’s a win-win: the economy improves and dissent disappears….The tariffs are Trump’s tool to erode that independence. Now, one by one, every industry or company will need to pledge loyalty to Trump in order to get sanctions relief. The tariffs aren’t economic policy. They are political weapons. But as long as we see this clearly, we can stop him. Public mobilization is working. Today, a few Republicans joined Democrats to vote against one set of tariffs. The people still have the power.”

Murphy is suggesting that where tariffs are concerned, Trump is a common enemy of both the American people and its corporations. Meanwhile, a bipartisan group of Senators led by Iowa Republican Chuck Grassley and Sen. Maria Cantwell, a Democrat from Washington, introduced the Trade Review Act of 2025. The bill would require the president to notify Congress of any new tariff within 48 hours of its imposition. And any new tariffs would need to be approved by Congress within 60 days or they would expire.

Murphy speaks to public mobilization. Americans in the streets is the only way to apply enough pressure to Republicans in Congress to take action to rein in Trump. If those who’ve never joined a street protest before needed a good reason to join their neighbors in the streets tomorrow, the world has one this week.

Trump’s tariff plan sent stocks off the cliff. Even Americans with little of their life’s savings in the markets can read that chart. And the headlines.

Indivisible, a grass roots activist group who works to hold Congress accountable, reported Thursday night that 514,000 had signed up to attend 1,000 events in all 50 states tomorrow. Even with a 50% flake rate, that’s a quarter of a million people in the streets. And Indivisible saw a 25% increase in signups since Thursday morning. Fewer pissed-off Americans will flake at future rallies.

Because Trump has declared war on both the American people and its corporations, there is nothing immoral or seditious about Chris Murphy and the others offering thoughts on how to blunt or overturn Trump’s tariff scheme.

There is nothing seditious about We The People taking to the streets either.

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Trump’s Art Of The Deal Hurts Sales Of The F-35

The Daily Escape:

The Black Pearl, Outer Banks, NC – March 2025 photo by Jim Feaster

Several countries are reconsidering procurement of Lockheed’s F-35 fighter given Trump’s unreliability as a military partner. Many but not all, are NATO partners, like Germany, Canada and Portugal and Turkey. It seems clear that Trump doesn’t understand NATO is basically a captive export market for US war products!

Take Germany:

“As the rift between the United States and the European Union continues to widen, German security experts are concerned that the Donald Trump administration could pull a “kill switch” on the F-35 Lightning II fighters that Germany is acquiring from the US. Shortly after Russia invaded Ukraine, Germany decided to procure 35 F-35 jets from the United States in March 2022, along with missiles and other armaments, for about 10 billion euros (US$10.89 billion).

A kill switch is typically believed to be a software-based backdoor mechanism which could be used by the supplier of a technology to disable or deteriorate the operation of a system, in this particular case, the F-35 stealth fighter jets.”

Or Canada:

“Canada is actively looking at potential alternatives to the US-built F-35 stealth fighter and will hold conversations with rival aircraft makers, Defence Minister Bill Blair said late Friday, just hours after being reappointed to the post as part of Prime Minister Mark Carney’s new cabinet… The re-examination in this country is taking place amid the bruising political fight with the Trump administration over tariffs and threats from the American president to annex Canada by economic force….

There has been a groundswell of support among Canadians to kill the $19-billion purchase and find aircraft other than those manufactured and maintained in the United States.”

Or Portugal:

“Portugal is getting cold feet about replacing its US-made F-16 fighter jets with more modern F-35s because of Donald Trump — in one of the first examples of the US president undermining a potential lucrative arms deal.”

The country’s air force has recommended buying Lockheed Martin F-35s, but when outgoing Defense Minister was asked by Portuguese media PĂșblico whether the government would follow that recommendation, he replied:

“We cannot ignore the geopolitical environment in our choices. The recent position of the United States, in the context of NATO 
 must make us think about the best options, because the predictability of our allies is a greater asset to take into account.”

The ministry added a series of criteria that will be considered by Lisbon, including: “The geopolitical context” and “The extent of restrictions on the use of aircraft.”(Kill switch)

Or Turkey:

“Turkey has submitted a request to purchase 40 Typhoon fighter jets from BAE Systems….The request has been sent to the Ministry of Defense of the United Kingdom, which is to make a decision on the sale of the aircraft and the export of British technology to Turkey.

The implementation of this potential export contract will be entrusted to the United Kingdom, namely to BAE Systems.

In 2022, Turkey began to consider the Eurofighter Typhoon as a temporary solution to modernize its air force, especially after the country’s original exclusion from the F-35 program and the ban on their sale due to Turkey’s purchase of the Russian S-400 air defense system.”

The F-35 is a massive arms program that tied together the technological and military fortunes of the Global North and bound NATO to Northeast Asia and Australia. One of the key selling points of the aircraft is that it comes with the promise of US technological integration and US security support. Those things are now in jeopardy, even before Musk sinks his tentacles into the program.

There are already concerns about the US attaching “strings” to arms sales, even to our allies, and seeing the US disable certain capabilities of F-16s in Ukraine where Trump cut off intelligence and delivery of arms did nothing to encourage other nations to purchase our planes.

When US defense contractors develop new weapons, they game out how many orders they expect to receive, and over what time frame they can expect income from those sales. If they find out late in the game that the orders they expected are not going to come in, they may try to get the US DOD to pick up some of the development costs that would have been covered by late orders.

It will be curious to see the extent to which the kind of comments coming from the Portuguese, the Canadians and the Swiss (also claiming Trump an unreliable partner) show up in Wall Street analyst reports on Lockheed Martin and its many F-35 subcontractors.

Trump thinks he can force the world to do business on his terms. He’s going to impose tariffs on all countries and plans on easing tariffs on those countries that will do his bidding. “Play ball with me, and I’ll be nice to you. If you balk, you won’t be able to sell anything to me. I will isolate you, and the countries that play by my rules will isolate you and destroy your economy.”

He banks on having most countries accept his bullying as the cost of doing business with the US.

Wait until he finds out that countries have high quality options when it comes to buying weapons. It will take a generation to fix what Trump has destroyed in less than two months, starting with trust in America. They won’t want to vacation here, buy our products, or work with us because of one man who gets off on being a loud mouth and a bully.

It’s going to be a long four years.

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Firing Federal Workers

The Daily Escape:

It should be possible for a non-expert (like any of us) to look at how the Trump administration implements a policy and tell whether they are serious about delivering material results.

One such place is the plan to fire federal workers. As the co-heads of the newly created Department of Government Efficiency, or DOGE, billionaires Elon Musk and Vivek Ramaswamy are promising to slash at least $2 trillion from the federal budget. Trump and his DOGE sidekicks Elon and Vivek have made a lot of statements about cutting the federal budget by firing huge numbers of government employees.

The duo have cited areas they’d like to target, such as the Internal Revenue Service, the Department of Education, the Federal Bureau of Investigation and the Nuclear Regulatory Commission. And they want to take a hard look at foreign aid, defense spending and the inaccurate payments the government sends to Social Security recipients and others.

But taking that big a chunk out of federal headcount would be a tall order. Much of the headcount money supports mandatory programs, which must be funded in accordance with existing laws. These include Social Security and Medicare benefits and interest on the federal debt.

Based on summary numbers at federalpay.org, most federal employees (around 3 million) are associated with the Department of Defense, which Trump is reflexively likely to support. The next two biggest departments are the departments of Veterans’ Affairs (over 400,000) and Homeland Security (over 200,000). Again, big cuts to these departments are not likely to play well with Trump fans, and the number of Homeland Security employees will need to go up, not down, if Trump is serious about deporting large numbers of people. Federal employees are spread out across every state in the US, with most workers living in the DC area, Texas, and California.

Here’s a chart showing total US government employees by department:

Many federal programs are distributed around the country, especially those that deliver federal benefits (Veterans, HHS). Cutting those jobs will disproportionately hurt employment and government services in low-tax Red states that don’t have much in the way of state-level programs to pick up the slack.

Elon and Vivek can undoubtedly find a few DC offices to sacrifice, but that’s just a stunt. It won’t have a big impact on the US budget. For example, reduce the headcount at the Department of Transportation by 25k jobs that we assume are all 100k/yr. positions saves just $2.5 billion while wrecking the department.

The Department of Education, a favorite target of Republicans long before Trump, has only a little over 4,000 employees. The department has a $45 billion budget, but most of that is pass-throughs to local schools to pay for things like special education. Anything that interferes with those pass-throughs will not ultimately play well in rural areas that cannot fund such luxuries other than with federal dollars.

It is also important to remember that a $100,000 a year job in Washington DC might not be considered all that great, but it looks pretty darn good in Wichita. At the end of the day, the biggest thing the working class cares about is the availability of living wage jobs. Cutting some of the best-paid and most secure jobs throughout the country does not provide an immediate net benefit to the working class. It mostly just provides cover for giving more tax-cuts to the rich.

It may be theoretically possible to improve the economy by making the federal government more efficient, but it is fiendishly difficult to do in practice. The size of the federal work force has held about constant for the last 50 years, despite increasing responsibilities of the government. Downsizing has occurred in the past, (under Clinton), but events like the 9/11 attacks halted this trend due to increased security needs.

Although the bar is set low, the low-hanging fruit doesn’t offer lots of opportunity for Trump and Elon to make real gains on the headcount front in DC. Even though Democrats are not in control of much in Washington, they have a chance in 2026 and 2028 if a big backlash from firing federal workers occurs on Trump’s watch.

We’ll see what happens.

Happy New Year from the Mansion of Wrong to all who celebrate!

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The Chaos Musk Go

Cartoon of the week:

Since the GOP won control of the House 2 years ago they have not passed a single appropriations package into law. That’s the primary job of the House of Representatives. Government has operated at funding levels set by Democrats two years ago via passing Continuing Resolutions every few months. This is not normal.

And it continued last week, just in a weirder way. From CNN:

“The House has voted to pass a stopgap funding bill just hours before a midnight deadline to avert a federal government shutdown. The Senate must next take up the bill. The vote was 366 to 34. Thirty-four Republicans voted against the bill, and one Democrat voted present. The bill would extend government funding into March and includes disaster relief and farming provisions, but does not include a suspension of the debt limit, which President-elect Donald Trump has been demanding Republicans address.”

The Senate passed the measure as expected just after midnight. And Biden signed it.

But, just two days ago, Trump and Musk threatened to ensure a primary challenge for any House Republican who voted for a bill that didn’t include a debt limit increase. On Friday, 170 of them took him up on just that.

Musk is now claiming that he’s really fine with all this. But back up two days to this from Robert Hubbell:

 “Musk ordered Republicans not to pass “any bill” until Trump is sworn in on January 20, 2025. If Republicans follow Musk’s command, there will be no government funding for a month (at least)–from Friday, December 20, 2024, through Monday, January 20, 2025. If that happens, chaos will ensue.”

And it got worse. Co-President Trump remained on the sidelines of the budget debate until after Musk tweeted “This bill should not pass.” Trump then posted a curveball:

 “Unless the Democrats terminate or substantially extend the Debt Ceiling now, I will fight ’till the end.”

The end happened way before the end, though. Increasing the debt ceiling is something that didn’t need to be done until June of 2025. But Trump didn’t want a debt ceiling increase to happen on his watch. The reason that Trump wanted to force a debt limit increase under Biden is that Trump needs that increase to pay for the proposed extensions of his 2017 tax cuts for millionaires and corporations. From The Hill, Lawmakers caught off guard by Trump debt ceiling demand: (emphasis by Wrongo)

“…Sen. Chris Murphy (D-CT) accused Trump of wanting Democrats ‘to agree to raise the debt ceiling so he can pass his massive corporate and billionaire tax cut without a problem.’….‘Shorter version: tax cut for billionaires or the government shuts down for Christmas,’ he added.”

The chaos caused by Musk foreshadows a second Trump administration with unelected, unaccountable billionaires mucking about in our politics. What could go wrong? With this kabuki, Hubbell thought this:

  • Trump looked like he is subordinate to Musk.
  • Musk has—for now—seized momentum from Trump as the dominant political force in the second Trump administration.
  • It is difficult to see how Mike Johnson survives as Speaker….Johnson has been humiliated and back-stabbed by Trump and Musk. Mike Johnson’s credibility with his own caucus and Democratic counterparts is non-existent. And some of that showed in the bill that was passed on Friday.

If you’re looking for a way to combat this, Democrats should publicly embarrass Trump about Musk. Call Musk the President-elect. Or the richer & smarter co-President; the one people really want to talk to. Trump will HATE it and might eventually ‘fire’ Musk. Remember, you can’t spell FELON without ELON.

We’re more than a decade now into the GOP’s performative politics of destruction. It gains power by touting its aim to break stuff and then runs into a brick wall when it’s forced to make the hard choices that come with holding power. Any GOP effort to govern at least temporarily is susceptible to being undermined by its many bomb throwers, now including Musk, who can exert leverage by striking a purer “blow it all up” posture than the rest of the GOP.

The events of the last week should give us hope that there are limits to the delusional, performative, grandiose claims and threats being peddled by Musk and Trump. They were losers in their first attempt of a smack-down with Congress. The lesson that the deficit hawks in the GOP should take from the tussle is that Trump and Musk are not as tough as they think.

In fact, it may signal the start of Trump’s “lame duck” presidency.

Ron Filipkowski of MeidasNews accurately summed up the chaos we now find ourselves in. The question is whether non-elected officials should control funding the US government:

“The owner of a car company is controlling the House of Representatives from a social media app.”

What does it say about America that Elon Musk had to pay $44 billion to buy control of Twitter, but only $250 million in campaign contributions to Trump to buy control of the U.S. government?

This country is falling apart. Kind of like a Cybertruck.

Musk has to go.

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Democratic Party Messaging

The Daily Escape:

Pikes Peak, Colorado Springs, CO – December 2024 photo by Monica Breckenridge.

The Democrats are meeting this week to decide on who will lead them into the 2026 midterms and the 2028 general election. Wrongo thinks it’s time for a revolution.

The key question is how do Democrats go back to winning presidential elections? And it may not be the way you think. From Jon V. Last:

“Since Trump’s emergence in 2016 the opposition has responded by acting as if it were still 2015. The Biden administration pursued a vigorous, bipartisan agenda filled with popular legislation designed to promote economic growth across the board. Biden spent money on infrastructure and manufacturing—much of it in red states and rural areas where Democrats had little support.

The Biden administration’s theory was that by governing from the center and focusing on employment and economic growth, Democrats could retain the support of the majority….”

But that theory didn’t work, and Trump won, running on zero ideas about growth, prosperity, or progress. His campaign was posited on the infliction of pain to outsiders. Trump didn’t promise to improve the lives of his voters. He promised to punish the people his voters wanted to hurt. That was the entirety of his electoral proposition, and none of it was subtext. Instead it was bold-face, ALL CAPS text.

Last says it worked because America has changed and the majority of voters are no longer motivated by wanting progress for themselves. Instead they’re motivated primarily by anger that out-groups—the people they do not like—might be succeeding or getting benefits they’re not getting.

If this is true, and at least some evidence suggests it is, how do Democrats persuade voters not to be quite so angry and to vote for them?  From Brian Beutler: (emphasis by Wrongo)

“…winning the next election will require Democrats to persuade some as-yet unpersuaded voters that they’re worth voting for. Whatever policies Democrats think are popular, whatever affects they associate with normalness and affability, if they can’t do the delicate work of changing a mind, they can’t get anywhere.”

More:

“Democrats are about to have as little power as they’ve had at any time in the past two decades for a simple reason: Most Americans weren’t convinced that they’d be better off under Democratic rule. That’s it. And there’s no shortcut back to power that avoids the difficult task of convincing people to change their minds.”

More: (emphasis by Wrongo)

“The Democrats need more and better communicators, and, crucially, it needs the people who don’t understand their potential to influence conventional wisdom and public opinion to get with the times. Most persuasion doesn’t happen person to person, it is mediated. When it does happen person to person, it is most often between people who already know each other, and usually one of those people is regurgitating ideas they picked up….And the ripest targets are no longer classic swing voters who are happy to talk politics with strangers….”

Couple all of this with the problem of where people get their news, and you have Dems digging out of a ditch partially of their own making. What Democrats are missing more than anything is creative thinking about how to reach people who will never answer a telephone call from a number they don’t recognize, never answer the door for a canvasser, and never form lasting political beliefs by watching or reading professional newscasts (because they rarely, if ever do).

This time around, Democrats either need their leaders to adapt, or else they need new leaders.

Jon Last thinks what will win votes in this environment is a lefty demagogue akin to what Bernie Sanders has been selling for years with his “millionaires and billionaires” rants. Sanders’s pitches resonated with younger voters. He got quite a lot of traction in 2016, but Democratic Party primary voters were not ready for him.

Who should the Dems support to lead them into the next round of elections? It should be a group of people in the 30’s, 40’s and 50’s. And thank God there is at least some movement among “younger” Democrats on the Hill to challenge the party’s gerontocracy.

Billy Ray is a screenwriter. His Captain Phillips screenplay earned him an Oscar nomination. He thinks the Democrats’ storytelling ought to start with:

“Whoever is going to be our next presidential candidate needs to look to the American people and say, ‘You matter. Not me, not Trump. You matter. You matter to your family, you matter to your community, you matter to your country,’” he adds. “‘You matter to our collective future, and you matter to me. And what I’m going to do for the next four years is just work for working families. I’m going to do the things that made the Democratic Party your party for so long.’”

Working families. Who among the Democrats out there can build on and carry this message home?

Evolve or Die, Dems.

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Implications Of Brian Thompson’s Assassination

The Daily Escape:

Bear Trap Gap, NC – November 2024 photo by Mandy Gallimore

“If you want things to stay as they are, things will have to change”– Il Gattopardo

If you’re on social media, a concerning number of people seem to openly support gunning down a “corporate rich guy” in broad daylight. Brian Thompson, the CEO of United Healthcare was murdered in what appears to be a targeted killing. And the comments about it on the internet underscore there is kind of a depravity circulating in too many Americans.

This, after two attempts to assassinate Trump during the campaign. Which stirred up similar, although more muted reaction on social media.

The killer left anti-insurance messages on the shell casings of the bullets that killed Thompson, using the words: “deny,” “defend” and “depose”. Those words are references to the ways insurance companies avoid paying for care.

An excellent summary by Bob Lefsetz:

“And we thought the revolution would arrive as a result of the red/blue divide. When in truth, it’s all about income inequality. Please don’t criticize me for having sympathy for those screwed by the insurance companies. If I were in charge, there’d be no guns at all, or a law akin to that in Australia. But one would posit that the shooter is pissed because the insurance company didn’t pay.

But that’s what insurance companies do, not pay. That’s their business model. Even assuming you can see the doctor of your choice, which is rare.”

Yes, not pay whenever possible is what insurance companies do.

To be clear, this is why advanced societies have tended to create broad publicly funded social safety net programs. It’s not because their bleeding heart politicians love giving away money. It’s because making sure people have humane standards of living keeps them from becoming desperate and doing stuff like this. During the Great Depression, capitalists agreed—grudgingly—to the New Deal because they were afraid otherwise the country would “go Communist”.

We have no clarity on the actual motive behind the killing, but all signs point to it being linked to dissatisfaction with our health insurance system. And we need to remember that Brian Thompson was a human being with a family. So calling his death justified is despicable.

It’s the health insurance payment system and healthcare pricing for goods and services that is despicable.

From STAT:

“The public’s dissatisfaction has never been higher. Recent polling data show the health care system is as unpopular now as it was before the Affordable Care Act went into effect 15 years ago — a time when insurers could decline to cover people if they had any number of pre-existing health conditions and nearly 49 million people lacked insurance. A survey from Gallup released Friday reveals that “Americans’ positive rating of the quality of health care in the U.S. is now at its lowest point” since 2001.”

More:

“Roughly 25 million Americans remain uninsured. Tens of millions of others have health insurance but can’t afford their deductibles, coinsurance, or copays due to the high prices of tests, surgeries, and prescription drugs….These barriers aren’t just a nuisance — they can have real effects on patients’ health.”

The KFF foundation reports that 100 million Americans have medical debt, and its highly doubtful that they can afford to pay it down. Even people with platinum forms of coverage face long waits coordinating the complex and uncoordinated delivery of their health care, as Wrongo knows firsthand.

After getting care, patients are inundated with medical bills they don’t understand — perplexed why their insurer isn’t advocating on their behalf, and fearful that hospitals and other providers will send them to collections or sue them.

It’s all part of a health care system that is projected to spend $5 trillion this year, eating further into workers’ wages. Those who feel most aggrieved often are the sickest. Most people are generally satisfied with their health insurance. However, people who have more health conditions and therefore need to get care more frequently don’t like their coverage nearly as much as healthier people, according to polling from KFF.

So, the more they know you, the more they dislike you. People are feeling a sense of helplessness in trying to address this mammoth commercial insurance industry that’s putting restraints on people’s ability to get care. When you feel that sense of helplessness is when you end up having situations like this. People don’t really know what else to do.

The murder of the CEO and the public’s reaction reveals that:

  • Americans are blindingly angry, and not just with the healthcare system.
  • Due process is no longer trusted. Have enough money and you’re likely to buy your way out of a bad situation. The FTC says Twitter must comply with the consent decree and Elon Musk just doesn’t do it. The government is no match for the rich. Money can insulate you from so much.
  • Vigilante justice has become a solution in some places because of the lack of due process.

We’re entering a period that is very similar to the Gilded Age of the 1880s and the 1930s.

Our social contract is in free fall. And the Trump administration’s proposed cabinet officers will make it worse.

What will happen in a country with 400 million guns and 320 million people? Things may go downhill quickly. Never forget, most change is fomented by individuals. A fruit vendor in Tunisia ignited the Arab Spring.

Is this the start of change in America? One person gunning down an insurance company executive?

Wrongo doesn’t condone the shooting. At this point we have no motive. But what we do know makes you think about our broken health care system and the overcompensation of the people who run it. They’re getting rich on our illnesses. They take our money and then, don’t pay.

Ain’t that America.

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