Popular Economics Weekly: 2025

“The new law will reduce federal revenues by significant amounts, even after allowing for the impact on economic growth. It will make the distribution of after-tax income more unequal. If it is not financed with concurrent spending cuts or other tax increases, TCJA (Tax Cuts and Jobs Act) will raise federal debt and impose burdens on future generations. If it is financed with spending cuts or other tax increases, TCJA will, under the most plausible scenarios, end up making most households worse off than if it had not been enacted.” Brookings

How times have changed! Republicans during the Eisenhower era paid for the deficits their tax cuts caused. The Brookings Institution analysis of Donald Trump’s 2018 Tax Cut and Jobs Act has US households paying for it because it added some $4 trillion to our federal debt even “if it is financed with spending cuts or other tax increases.”

The 90 percent corporate tax rate and 92 percent maximum personal tax rate of the Eisenhower era paid for the “new hires, new equipment, and product research which are deductible from taxable earnings.”

In other words, the higher tax rates made corporations use their profits to finance their own growth, rather than pay Uncle Sam. Whereas today the TCJA tax cuts will mostly finance corporate stock buybacks.

And Trump wants to renew the TCJA when it expires this year, which the Congressional Budget Office says will add at least another $4 trillion to our national debt.

It doesn’t have to be this way. The Clinton/Gore government downsizing of the 1990s created four years of budget surpluses, because they negotiated with congress to make the cuts, because they were congressionally mandated programs.

“Unlike the current effort, the cutting didn't start until they had gone through a six-month study process and developed a blueprint of how to best reinvent the federal government,” said a recent Newsweek article on the subject. “Government agencies were brought into the process to determine the best ways that efficiencies could be realized. In fact, the effort was led by some 250 federal employees that remained on their agency payrolls.”

The federal workforce was reduced by close to 400,000 employees between 1993 and 2000, or about 17 percent of the total. The cuts made the government the smallest it had been since the Eisenhower administration, according to the Newsweek report.

Who do the Trump tax cuts benefit? Corporations and households in the top 5% — who earn more than $450,000 a year, roughly — are the “biggest winners.” They’d get over 45% of the benefits of extending the Tax Cuts and Jobs Act, according to a July 2024 analysis by the Urban-Brookings Tax Policy Center and would reduce federal tax revenues by $4.4 trillion by 2035.

So why would Republicans want to reduce federal revenues when we have a $36 trillion national budget deficit that is 120 percent of GDP?

It’s because Republicans don’t want to pay their bills rather than provide social services and environmental protection that would benefit all Americans. That’s their history from at least 1980 when President Reagan declared that “government was the problem” and immediately fired the federal air traffic controllers who were striking for higher pay and better working conditions.

We know how that turned out with the latest brouhaha over Musk’s slashing of the already understaffed FAA workforce that regulates airline travel.

President Eisenhower would have turned over in his grave, if he knew this would happen to the Republican Party.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Monday, March 31, 2025

Can We Prevent Stagflation?

During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations…The onset of the embargo contributed to an upward spiral in oil prices with global implications. The price of oil per barrel first doubled, then quadrupled, imposing skyrocketing costs on consumers and structural challenges to the stability of whole national economies. history,state.gov

BEA.gov

The 1970s stagflation, a combination of stagnant growth and high inflation, was not a happy time. It caused then Federal Reserve Chair Paul Volcker to raise the Fed Funds rate to as high as 20 percent to tame the inflation tiger in the 1980s and many bank failures.

It might happen again, but not because of an energy shortage. Friday’s report on the Commerce Department’s Personal Consumption Expenditure Index (PCE) raised alarms that inflation was on the rise, which is one of the two main components of stagflation. Inflation hasn’t been tamed, as it rose 2.5 percent, 2.8 percent without food and energy prices, per the BEA graph.

Stagflation last happened in the 1970s because of the 1973-74 Arab oil embargo that caused gas stations to run out of gas and consumer prices to soar. It ultimately resulted in a 14.8 percent CPI inflation rate in 1980. And it was more than a decade before inflation and interest rates dropped back to single digits, and we lived through three recessions.

This was also the beginning of the Second Gilded Age so well documented by political scientists Jacob Hacker and Paul Pierson in Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class that was initiated by President Reagan and supported by the Business Roundtable of Chief corporate Executives.

It began the huge transfer of wealth from wage earning Americans to the owners of capital with successive tax cuts and restrictions on labor organizing, as well as the massive deregulation of industries such as the airlines and telecommunications.

US Corporations took advantage of the globalization of technologies and began the massive move of factories overseas, along with the blue-collar jobs that had built middle America, to countries with cheaper wages and fewer environmental regulations.

The gutting of rust belt jobs in the Midwest resulted in the red state-blue state split we have today, with right to work laws in those states that restrict the right of unions to collect dues from their members, many with wages still stuck at the national $7.25 per hour minimum wage.

This is while economic growth, the other main element of stagflation, is slowing. Why? Consumers are not happy with the high prices and economic uncertainty caused by Trump’s tariffs and Elon Musk’s DOGE massive job cuts, so they aren’t spending as they did in the past, and consumers are the main driver of economic growth.

The loss of tens of thousands of federal jobs and depopulating the service sector industry, the fastest growing economic sector that depends on undocumented workers, will do the same.

This is reflected in falling consumer confidence. The University of Michigan’s final February survey said: “Consumer sentiment extended its early month decline, sliding nearly 10% from January. The decrease was unanimous across groups by age, income, and wealth. All five index components deteriorated this month, led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff induced price increases are imminent.

All of these factors make a reduction in first quarter economic growth more likely. In fact, the Atlanta Fed’s estimate of first quarter growth declined further into negative territory.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.8 percent on March 28, down from -1.8 percent on March 26. The alternative model forecast, which adjusts for imports and exports of gold as described here, is -0.5 percent.

Can we prevent a recurrence, in which we again have double digit inflation and slow to no growth? Trump would have to learn how to negotiate with congress rather than issue unlawful executive orders and take away Elon Musk’s chainsaw for that to happen.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Thursday, March 27, 2025

Too Dumb To Fail?

“Anyway, at this point we should assume that the same combination of incompetence and bad intentions that afflicts national security and budget policy applies to everything the Trump administration touches. Incredibly, quite a few investors and journalists still believe that there’s deep thinking underlying the administration’s trade and currency policy. I guarantee you, there isn’t” Paul Krugman Substack

Amazon

I would expand Nobel Laureate Krugman’s surmise of why the Trump administration keeps showing their incompetence and bad intentions not only in national security and budget policy. but outright governance—details of the secret Houthi battle plan leaked to the media beforehand, their latest faux pas.

Such incompetence comes from a history of dumbing down the Republican Party itself, a history that spans decades and includes denying the theory of evolution, climate change, scientific knowledge and common sense thinking in general.

Matt Lewis, Daily Beast columnist, in his book, Too Dumb to Fail, said this in 2016:

“This is the dirty little secret of the conservative movement in America today: everyone knows that it has lost its intellectual bearings. Empty-headed talking point reciters, rookie politicians who’ve never managed anything in their lives, media clowns such as Donald Trump, dim bulbs in tight pants or short skirts, professionally outraged shout-fest talking heads, and total political neophytes dominate conservative airwaves and the Right’s political discourse.”

Republicans’ incompetence has allowed an autocrat and con artist like Donald Trump to come to power to their own detriment. He is not at all concerned about their agenda, just his own—whether it is invading Greenland or the Panama Canal, attempting to impoverish Canadians so they will give in to his tariff blackmail, or backing out of NATO to please Vladimir Putin,

Republicans’ ‘empty headedness’ shows when they allow Trump/Musk to dumb down their own constituents by shutting down the Department of Education that supports 80 percent of American students in public education. This will harm Republicans’ red states citizens the most. Nine of the lowest ten states ranked on national education scores are red states, according to Wallet Hub.

Such ignorance breeds conspiracy theories, rumors, and feeds an entire propaganda machine to keep certain voters in line that polls show are the least informed politically.

President Trump lied some 30,573, or 21 times a day during his first term, according to a recent NYTimes article. A con artist must lie to cover up and justify earlier lies, whereas a truth-teller doesn’t have to lie or change his or her story. This is basic common-sense thinking, of course, something anyone can understand, if they choose to.

Donald Trump dazzled Republicans so much so that they allowed him to choose the least-qualified candidates to run his government and carry out their agenda of deregulation, tax cuts and tariffs—so he would maintain the disinformation campaign that supports the red meat issues conservatives have always wanted in some form or another—cutting taxes in order to downsize parts of the government that protect the public sector rather than the pockets of the wealthiest.

Tax cuts always sound good to those who don’t believe in the public good of better healthcare, market rules that punish cheaters, and laws that protect the environment.

Dumbing down their electorate makes it easier for MAGA Republicans to lie about issues that require some degree of education and understanding, but it will ultimately come back to bite them. Trump and Republicans are not only harming their red states, but now the whole country with their cuts in social security and national security agencies that protect our military secrets.

So can Trump deliver what Republicans want? I believe as Paul Krugman does—"we can assume that the same combination of incompetence and bad intentions that afflicts national security and budget policy applies to everything the Trump administration touches.”

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Tuesday, March 25, 2025

You Are Fired!

“It’s 100 days into the Trump (first) Presidency and looking more and more like President Trump is no more effective at running the country than his business interests. His book, The Art of the Deal was meant to tout his negotiating skills, but the results were never very successful.”

Huffington Post

I wrote this Huffington Post column in April 2017 during President Trump’s first 100 days in office, and the Trump 2.0 administration is showing even more incompetence. We have just learned that they know even less about keeping military plans secret.

Editor-in-chief of The Atlantic, Jeffrey Goldberg, reported that senior members of the Trump administration planned the March 15 U.S. attack on the Houthis in Yemen over Signal, a widely available encrypted app that is not part of the United States national security system.

In any other administration Defense Secretary Pete Hegseth and National Security Advisor Mike Walz would have been immediately fired for disregarding national security protocols, just as Trump liked to fire people on The Apprentice, his TV show.

In fact, Hegseth should follow his own advice given in an interview on Fox News during his Senate hearings: “Anyone breaching national security protocols would be fired and prosecuted on the spot. (sic)”

When asked about the security breach, Trump responded: “I don't know anything about it, reports Heather Cox Richardson. “I'm not a big fan of The Atlantic. To me, it's a magazine that's going out of business. I think it’s not much of a magazine. But I know nothing about it. You're saying that they had what?”

It’s a sign that the Republican Party and the Trump/Musk administration has doubled down on their extreme incompetence (and naivete), so much so that it threatens our national security.

There is nothing that the administration could say to make the situation better, but this made it worse. As national security specialist Tom Nichols noted: “If the President is telling the truth and no one’s briefed him about this yet, that’s another story in itself. In any other administration, [the chief of staff] would have been in the Oval [Office] within nanoseconds of learning about something like this.”

Nothing ever came of Trump’s first term legislative efforts either; with no repeal of Obamacare, or real tax reform, an immigration ban, new trade policy, and sanctuary city victories because of poorly thought out strategies. Instead, he threatened judges, sanctuary cities, Congress, and even other countries when they didn’t support his various executive orders.

I cited a 2017 Fortune Magazine report on candidate Trump’s negotiating tactics: “As he campaigns, Trump often touts his skills as a negotiator,” says Fortune. “The analysis shows that lawsuits are one of his primary negotiating tools. He turns to litigation to distance himself from failing projects that relied on the Trump brand to secure investments. As USA TODAY previously reported, he also uses the legal system to haggle over his property tax bills. His companies have been involved in more than 100 tax disputes, and the New York State Department of Finance has obtained liens on Trump properties for unpaid tax bills at least three dozen times.”

Do we expect a different outcome with the peace negotiations over the Ukraine war? Putin wouldn’t accept Trump’s 30-day cease fire offer. It looks like Putin is once again playing him, which seems easy to do.

Americans are already realizing that we are even less safe today. The Conference Board’s Consumer Confidence survey is showing an increasing lack of confidence in their future.

“Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low. Meanwhile, consumers’ optimism about future income—which had held up quite strongly in the past few months—largely vanished, suggesting worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations.”

Isn’t that a definition of insanity—when Republicans keep doing the same things over and over again expecting a different result?

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Monday, March 24, 2025

Why Kill Social Security?

“Let's say social security didn't send out their checks this month. My mother who’s 94, she wouldn’t call and complain. She'd think something got messed up, and she'll get it next month. A fraudster always makes the loudest noise, screaming, yelling and complaining.” Trump Commerce Secretary Howard Lutnick

It’s a sign of Republican Party and the Trump/Musk administration’s extreme incompetence (and naviete) if they believe Americans will buy Howard Lutnick’s story that only fraudsters would care if our seniors miss a social security payment when a major share of seniors list their monthly social security payment as their major (and only) source of income!

Commerce Secretary Howard Lutnick’s comments thereby reveal why Republicans and Trump want to at least damage it enough that Republicans can privatize it for their Wall Street cronies.

It is an insane attempt to destroy social security in its current form, of course, and a reflection of Republicans’ efforts to dumb down its mostly red state electorate.

Even GW Bush attempted it, to no avail when the profit windfall that brokers would reap for managing it as a private pension fund was revealed ($5Billion at the time), which would come out of taxpayers’ pockets, of course.

Nobel Laureate Paul Krugman in a recent Substack column said why they are so blatant about it: the differences in education and the information media their red stater supporters have access to. Sixty three percent of Republican/Trump voters in 2024 were less than college educated.

Paul Krugman

Krugman also pictured who will be most harmed by his attempt to destroy social security. It will be our elderly and retired with a high school education or less, with 60 percent of their income comes from social security. And these are Republicans’ main red state supporters.

They tried something similar in Trump’s first term with more than 30 attempts to repeal Obamacare. It was a major reason Trump lost to Biden in 2020. It should be the main reason Republicans lose at least the House of Representatives in the upcoming 2026 midterm election.

The only real way to combat this wall of ignorance is with a better information infrastructure, or more effective propaganda machine, if we want to call it that. It will be necessary to expose the blatant ignorance Republicans have historically relied on to maintain their power in the red states and with swing voters that pay less attention to political news, polls have shown.

AOC and Bernie Sanders are having rallies in red and purple states like Arizona and Colorado talking what makes “common sense” to most American voters, and that have been effective in drawing up to 50,000 member crowds, for starters.

Trump/Musk are blindly rushing ahead with Musk’s so-called DOGE efficiency drive and Trump’s tariff wars that could cause horrendous damage to our economy, when there are much better ways to accomplish their stated goals of lowering regulations and decreasing the budget deficit and national debt.

Such haste is causing irreparable damage to lives and livelihoods; just as Musk’s failure to correct Tesla’s design flaws have killed people. There are better ways, and maybe the SCOTUS 5-4 ruling that Trump can’t indiscriminately fire federal workers without cause can begin to slow down the wholesale destruction enough to prevent a very large economic ‘fire’ and even a major recession, I said last week.

There is a lesson to be learned. The Tesla automobile’s sometimes fatal design flaws seem to be because of his lack of attention to details in his single-minded drive to invent new and better technologies, just as Trump’s pre-occupation with revenge and retribution clouds his thinking, and that of those that are tasked with carrying out his executive orders.

It's an opening that will combat the Republican Party’s nihilism, not to denigrate the less educated, but is common sense to most Americans—not tariffs that boost inflation and make enemies of our allies, or allow measles and bird flu epidemics to run their course rather than vaccinate, and bipartisan legislation that protects our borders rather than illegal deportations. The list goes on and on.

Common sense policies are something understood by all income groups and social classes that oligarchs and their enablers, the real fraudsters, don’t want Americans to know.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Thursday, March 20, 2025

How Long Must We Wait?

The Mortgage Corner

Total existing-home sales^[1] – completed transactions that include single-family homes, townhomes, condominiums and co-ops – progressed 4.2% from January to a seasonally adjusted annual rate of 4.26 million in February. Year-over-year, sales slid 1.2% (down from 4.31 million in February 2024).

Calculated Risk

Will home sales pick up at all this year? They should pick up if the Fed Governors get off their duffs. But everyone seems to be waiting to see what President Trump’s grand plan may be.

Housing should be aided by moderating consumer inflation but fixed mortgage rates are still hovering close to 7 percent. Housing construction has picked up to fill the supply void. Homebuilders seem to believe the housing market will improve.

Overall housing starts increased 11.2% in February to a seasonally adjusted annual rate of 1.50 million units, a good number, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“Despite elevated interest rates and policy uncertainty, ongoing lean levels of single-family existing home inventory helped to boost single-family production in February,” said Jing Fu, NAHB senior director, forecasting and analysis. “NAHB forecasts that single-family starts will remain effectively flat in 2025 as prospects of a better regulatory business climate are offset by uncertainty on the tariff front.”

NAR Chief Economist Lawrence Yun has said the same. “Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand.”

There are simply not enough homes for sale to attract more buyers. The unsold inventory of existing homes sits at a 3.5-month supply at the current sales pace, identical to January and up from 3.0 months in February 2024. An inventory of 5 to 6 months is more usual, but only when mortgage rates are lower.

Homebuilders and sellers can buy down the interest rate. Lowering the 30-year fixed rate ¼ percent adds just 1 point to the price, and buyers can also choose a lower 5-year fixed adjustable-rate loan and then refinance when 30-year fixed mortgage rates ultimately decline to a more normal level, which they eventually will.

We shouldn’t forget that the Fed is still in a tightening cycle, having dropped its Fed Funds overnight rate just one percent from its high of 5.33 percent to 4.33 percent. It was last this high in 2007 at the start of the Great Recession. Its timing was wrong then (i.e., led to Lehman Bros. bankruptcy, which precipitated GR), and the timing is wrong today.

This is because inflation is already down to 3 percent, so it should be easing further to boost further economic growth, which has slowed and is in danger of going negative in Q1 2025. It would be immensely helpful to the housing market where there is a tremendous pent-up demand with homelessness at a record level since the pandemic.

This uncertainty has affected the financial markets and that affects Americans’ overall wealth and health.

The Conference Board’s Index of Leading Economic Indicators (LEI) that attempts to predict future growth is the latest measure of consumer attitudes. It is also stuck, is the best way to describe it.

“The US LEI fell again in February and continues to point to headwinds ahead,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “Consumers’ expectations of future business conditions turned more pessimistic…given substantial policy uncertainty and the notable pullback in consumer sentiment and spending since the beginning of the year, we currently forecast that real GDP growth in the US will slow to around 2.0% in 2025.”

It would be nice if Trump understood this, so that he wouldn’t be in such a hurry to precipitate a tariff war, which by its nature creates more uncertainty and maybe higher inflation, and which is stopping the Fed from enacting more rate cuts at the moment.

So, Trump has everyone waiting to find out what his grand plan may be, if he has one.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Wednesday, March 19, 2025

Incompetence = Recession

"Trumpian Incompetence will provoke a counterreaction, which will prove to be an opportunity and rebirth. When that happens people will be ready to hear the truth that Trump will never understand—that when you turn America into a vast extortion machine, you will get some short-term wins as weaker powers bend to your gangsterism, but you will burn the relationships, at and abroad, that are actually the source of American’s long-term might.” David Brooks NY Times

Reuters

I quoted David Brooks last week because people will be ready to hear the truth when they realize that Trump’s “vast extortion machine” won’t lower inflation but raise it, won’t eliminate waste and fraud but slash essential governmental services instead (such as social security), and cut regulations that actually prevent financial markets from crashing.

Treasury Secretary Scott Bessent must therefore find excuses why inflation is still rising and the Trump/Musk administration isn’t finding much fraud, but tearing out the guts of government that make it work.

This is why Treasury Secretary Bessent is hinting at a recession in making excuses for their incompetence, because “The market and the economy have just become hooked, and we’ve become addicted to this government spending, and there’s going to be a detox period. There’s going to be a detox,”

It will take time for people to hear the truth because Trump’s executive orders are an attempt to stay ahead of the law and public media he reviles as they are uncovering his administration’s lawlessness and incompetence.

Trump believes such tactics will make him the autocrat and law unto himself he has always wanted to be; but only if the tariffs cause other countries cave in to his demands without retaliating for which the US will protect them militarily and favor them economically.

It is why Trump keeps repeating that he wants to corral Greenland, the Panama Canal, Canada and even Mexico into his new “extortion machine”.

The craziness of his intentions shows tremendous ignorance of economics and history. We haven’t done very well in protecting anyone militarily since World War Two. Even the Korean War was a stalemate after our strategic withdrawal from the Yalu River when China entered the war.

Vietnam ended with a complete withdrawal. The Afghanistan exit may have been the most humiliating retreat after our 20-year occupation, and the Iraq war ended up strengthening Iran’s influence by eliminating Saddam Hussein, its arch enemy.

Trump’s history also reveals that he has never cared about most of those that voted for him. History ProfessortimothTimothy Snyder has said his real constituents that he wants to please are fellow autocrats and dictators Russia’s Putin and China’s Xi Jinping.

Musk’s incompetence is also damaging our national security. Heather Cox Richardson reports “Sharon LaFraniere, Minho Kim, and Julie Tate of the New York Times reported that cuts to the top secret National Nuclear Security Administration have meant the loss of critical employees—from scientists and engineers through accountants and lawyers—at the agency that manages the nation’s 3,748 nuclear bombs and warheads.”

Musk is damaging our financial security as well. Judd Legum of Popular Information has reported in various interviews that an internal memo from the Social Security Administration, written by acting deputy commissioner Doris Diaz, called for requiring beneficiaries to visit a field office to provide identification if they cannot access the internet to complete verification there.

This is while they are closing Social Security offices. Diaz predicted “service disruption,” “operational strain,” and “budget shortfalls” that would create increased “challenges for vulnerable populations.”

Tariffs won’t balance the budget and take away the need for other taxes (like income taxes) either, because the targeted nations are already retaliating. The modern world is far more complex. President Mckinley’s first Gilded Age that Trump so admires used tariffs because we needed them to protect our young steel and manufacturing industries.

The first Gilded Age ended because massive corruption was unearthed during Teddy Roosevelt’s trust-busting progressive era, which led to creation of the Federal Reserve, income taxes and eventually FDR’s New Deal to protect us from future Robber Barons.

Karl Rove as GW Bush’s campaign manager and Republicans also openly yearned for a return to the McKinley’s Gilded Age. Tariffs have worked in developing new or better industries, which is why the Biden administration used them to protect our computer chip industry, which is a national security priority.

The president’s tariff authority is based on the need to protect our national security, whereas Trump wants to use it to protect his own grandiose ideas, as the authoritarian ruler he has always wanted to be.

David Brooks is right. The American public will eventually see the harm Trump's extortion machine will cause Americans as well as our friends and allies. And that by leaving the alliances that protect US—not only NATO, but the World Health Organization that protects against more pandemics, the Paris Accord where nations have agreed to bring down greenhouse gasses—we will be less secure.

Please to God this happens before we must go through another recession, or pandemic, or both.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Sunday, March 16, 2025

It's the Law of the Jungle

I wonder what Republicans expected when they allowed Donald Trump to choose the least-qualified candidates to run his government and carry out their agenda of deregulation, tax cuts and tariffs?

Republicans made the same mistake with GW Bush when his tax cuts and deregulation push led to the first $1 trillion budget deficit, liar loans, the housing bubble and Great Recession.

Why has the stock market fallen 10 percent from its post-Biden high, in what is called a “correction”, and in danger of falling further into recession territory? Because it is becoming obvious to Wall Street that the Trump administration, once again, doesn’t know what it is doing.

Only this time they are doing it on steroids by adding Elon Musk with his chainsaw into the mix. The result has been the destruction of whole agencies that protect us against diseases and pandemics, climate disasters, and health of the economy, since Trump’s tariffs are making no economic sense.

It is the natural consequence of President Trump wanting to destroy our closest alliances with a trade war and allying himself with the Putins and Kim Jong un’s of the world that kill their citizens with impunity, where the only law is might makes right.

He is attempting to bring back the Law of the Jungle in installing a government with those that will only obey him, an impossible situation in the modern world that can only precipitate another Great Recession, or even Great Depression.

President Biden did the right thing with his New, New Deal legislation by working with congress to modernize our infrastructure and manufacturing that has brought back 700,000 manufacturing jobs.

Foreign governments are already retaliating against Trump’s tariffs, creating a trade war that no one can win. The aluminum and steel tariffs will drive a hole in the US auto industry, say their CEOs, when the Great Recession had once before bankrupted them so that President Obama and congress agreed to bail them out.

Trump was able to fool American voters into a second term because of their wholesale ignorance of the US economy and its position in the world. The US is still the world’s wealthiest country that recovered most quickly from the COVID-19 pandemic yet has also the most unequal wealth and income disparities in the developed world.

The Last Tech Age

When I last wrote about our wealth gap in 2017, the U.S. was in 106th place of the 149 countries in income inequality as ranked by the CIA’s World Factbook. The Gini Index compiled by the CIA measures and compares living standards.

The U.S. had a Gini inequality index on the level of Peru and Cameroon. Whereas Finland and the Scandinavian countries are at the top of equality rankings, Germany and France are 12th and 20th, respectively. The higher the index, the greater the income gap between the wealthy and poor citizens of a country.

It is why we have such a partisan divide between Democrat-led blue states and Republican-led red states that Republican tax cuts and record budget deficits most harmed.

Donald Trump has always wanted tax cuts because he has barely paid any taxes himself. But this is only because he has extorted, stiffed and lied to so many people and institutions when running the Trump Organization. Why would he behave differently as president?

We are already “hearing the truth” about the havoc his “extortion machine” is wreaking. When will we be ready for “a counterreaction, which will prove to be an opportunity and rebirth ?“

When the damage is so great that Americans become “as mad as hell and are not going to take it anymore.”

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Friday, March 14, 2025

Do Job Cuts = Recession?

“I don’t see any kind of well-thought-out, comprehensive strategy coming out of the White House,” said Bernard Baumohl, chief global economist at the Economic Outlook Group, a nonpartisan forecasting firm.

What is the White House strategy? Is it based on the campaign promises to bring down inflation on “Day 1”, eliminate waste and fraud, and cut regulations that impede new investments, such as in AI?

The White House to date is attempting to explain why it hasn’t developed a strategy. Treasury Secretary Scott Bessent opined that,

“The market and the economy have just become hooked, and we’ve become addicted to this government spending, and there’s going to be a detox period. There’s going to be a detox,” Bessent, a former hedge-fund manager, said during a CNBC interview.

This description of a “detox” period is alarming, because the term has nothing to do with an economic plan, or anything else, but in fact means the Trump administration is hinting that a recession may be required to wean US off what they deem as too many government services that benefit ordinary Americans rather than the Oligarchs that have jumped onto the Trump/Musk bandwagon.

The wet dream of Republicans and conservatives has historically been to downsize government to little more than military defense. That’s why Trump has targeted USAID and the Department of Education, as well as cuts to social security, Medicare, and Medicaid.

Douglas Holtz-Eakin, a former (Republican) director of the Congressional Budget Office, said it was a fine sentiment for a Treasury secretary to want to reduce government spending but noted that there was no GOP plan in sight to accomplish this goal in any sustainable way, according to MarketWatch.

FREDfederalspending%GDP

Part of the problem in downsizing government is that it’s extremely difficult to bring federal government spending below 20 percent of Gross Domestic Product as portrayed in the above FRED historical graph dating from 2010. Spending surged above that level only twice to aid recoveries from the Great Recession and COVID pandemic.

Part of that surge was the Biden administration’s new, New Deal legislation that has already brought 700,000 manufacturing jobs home in the CHIPS, Infrastructure and Inflation Reduction Acts.

These were public/private investments that resulted in the US having the fastest economic recovery from COVID-19 in the developed world.

Trumps says he also wants to bring manufacturing jobs home with the trade tariffs. But his single-minded emphasis on tariffs against friend or foe without negotiating up front will increase inflation, largely because it will be reciprocated, launching a trade war.

And rather than eliminating waste and fraud, the DOGE firings are downsizing or eliminating departments and agencies that make it work—such as the FAA, Energy Department, VA and even social security—which will do exactly the opposite—make us less safe.

“It all seems to be very capricious,” continued Baumohl, “and I think this has been of great concern, not just to U.S. and foreign investors, but certainly to consumers, and we’ve seen that in the abrupt decline in confidence, which is now showing up in in their spending patterns. Once consumers start to cut back, there is nothing that the government can do to make sure that the economy keeps out of recession, because we’re talking about 70% of all economic activity.”

Will such a strategy, or lack of it, work? American consumers are already starting to give the final word. The University of Michigan’s consumer sentiment survey showed consumers becoming even more pessimistic about their future.

“Consumer sentiment slid another 11% this month, with declines seen consistently across all groups by age, education, income, wealth, political affiliations, and geographic regions. Sentiment has now fallen for three consecutive months and is currently down 22% from December 2024.” said Survey Director Joanne Hsu.

It looks like the Trump/Musk administration doesn’t want Americans to know what they are really up to, and it is leading to the wholesale destruction of the U.S. economy.

It will take more than picketing Tesla factories and dealerships for Americans to prevent what is sure to become a recession from happening.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Wednesday, March 12, 2025

What Happened to Animal Spirits?

"We're seeing a strong divergence between animal spirits of the stock market and what we're actually seeing unfold from businesses and business leaders," a White House official told reporters Monday, CNBC reported, adding, "The latter is obviously more meaningful than the former on what's in store for the economy in the medium to long term."

FREDconsumersentiment

The White House admission that the rise in “animal spirits” over Trump’s reelection had waned and that business leaders with were guiding the financial markets lower “in the medium to long term” because of Trump’s on again, off again tariff announcements, thereby doubting the possibility that the Republican campaign promises of lower taxes and fewer regulations will be of much benefit.

Such market enthusiasm couldn’t last when it became obvious that Trump’s contradictory messaging and his lack of knowledge about foreign trade could lead to tariff wars, which in the words of a growing number of business leaders, showed “he doesn't know what he is doing”.

Consumers are beginning to catch on as well, which is resulting in the decline of their own animal spirits. The above chart of declining consumer confidence as measured by the University of Michigan last peaked in January 2024 with Donald Trump’s re-election, when consumers believed in Trump’s promises to bring down inflation on “Day 1” of his second term.

But that hasn’t yet happened, and consumers are not happy about it. In the words of the U. of Michigan’s survey director Joanne Hsu:

“Consumer sentiment fell for the second straight month, dropping about 5% to reach its lowest reading since July 2024. This decrease was pervasive, with Republicans, Independents, and Democrats all posting sentiment declines from January, along with consumers across age and wealth groups.”

The term, “Animal Spirits”, was first coined during the Great Depression to explain why consumer behaved the way they did. Roosevelt’s New Deal that gave workers more benefits, such as the 8-hour work day, workers compensation, and social security, was created to boost their spirits and led to the recovery from the Great Depression.

Nobel Laureates George Akerlof and Robert Shiller even wrote a book about it that was entitled, Animal Spirits; How Human Psychology Drives the Economy and Why It Matters for Global Capitalism.

It was an important book because it refuted the long-held theory that so-called free market, or Laissez Faire, economic theories create more sustained growth with fewer regulations.

But Republicans’ touting of the benefits of sless regulated markets was a giant lie that led to President Reagan’s trickle-down economic theories, because with little or no oversight or regulations of their trades, the wealthiest always prospered the most because they had the time and money to research the markets.

Therefore conservatives that favored less regulation had to create a myth that some of that wealth was bound to “trickle down” to Main Street and benefit ordinary wage-earners to placate voters.

Professors Akerlof and Shiller showed it was a lie. Most consumers in fact do not have the resources or knowledge to adequately research what they buy or invest in. They discovered in their research that most consumers act on hearsay, or word of mouth, in making purchase decisions, including when to buy real estate.

And because consumers didn’t or wouldn’t do the necessary historical research in early 2000 when buying homes, but believed that housing prices could never decline, they pushed up housing prices so much that builders built too many homes, which was a major reason for the busted housing bubble and resultant Great Recession.

History has shown that the tax cuts and market regulations the Trump campaign promised will make the wealthy even wealthier, and 80 percent of Americans that are wage earners, less wealthy.

It’s the real reason Trump has unleashed “Chainsaw Musk”—to terrorize government workers into quitting their jobs and destroy as much as possible of Roosevelt’s New Deal, and the laws and regulations that have benefited most Americans since then.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Monday, March 10, 2025

What Happens Next?

“In an interview with Fox News on Sunday, Trump refused to rule out a recession for the U.S. this year, implying his tariff strategy and attempts to cut government spending were part of a necessary transition that in the short term could cause problems for the world’s biggest economy.” MarketWatch

AtlantaFedGDPNow

I find it laughable that President Trump is now saying the ‘R’ word on a Sunday talk show, when one of his most famous campaign promises was that “Starting on day one, we will end inflation and make America affordable again, to bring down the prices of all goods.”

So the question to ask is, what happens next when and if he succeeds in enacting his agenda? We should know by now it isn’t words but his administration’s actions that will determine (or hinder) how much the economy and prices will grow (or shrink) this year.

In fact, Trump has inherited a fully employed and still growing economy. Prices and inflation can’t come down in such a situation because there is more demand (i.e., money in circulation) than goods available. It’s good old Economics 101 that is taught in business classes.

But economists do agree on what would bring prices down, a recession. Many economists and pundits have been looking at the Atlanta Fed’s estimates of first quarter GDP growth, and been seeing the possibility of the ‘R’ word.

Why? It’s mainly because consumers have been spending less since the holidays, in part because they are losing confidence that they may even have a job, or the ability to change jobs in the future. Why wouldn’t they lose confidence when “chainsaw Musk” cuts federal jobs with abandon and the newly jobless federal workers competing in the private sector?

That why first quarter growth estimates, such as the Atlanta Fed’s GDPNow estimate have fallen.

“The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.4 percent on March 6, up from -2.8 percent on March 3,” is their latest

That’s also why the stubbornly high inflation and interest rates are making creation of a new fiscal budget so difficult. Republicans want the tax cuts they promised to spark more spending, which is inflationary, but need Democrats to agree. Yet Democrats don’t want the cuts to social security, Medicare, and Medicaid that Trump said would never happen, but must happen for any preservation of the tax cuts enacted during Trump’s first term.

Hence there will probably be a so-called continuing resolution to keep the existing budget until end of the fiscal year in September. This will avoid a possible government shutdown, but what then?

This week’s news will be mostly about inflation, since February’s Consumer Price Index and wholesale Producer Price Index will come out that may paint a clearer inflation picture, and whether the Fed might resume cutting interest rates.

And we need not only to be talking about the prospects for higher prices from tariffs, but also the trade disruptions that tariff wars cause, because President Trump will antagonize both friend and foe in his flailing (and counterproductive) attempts to decree rather than negotiate a new foreign trade policy.

There is something seductive to many voters about a new foreign trade policy that promises to bring more jobs home. But firstly, it’s more expensive to make things in the U.S., which is why we import more than we export. And with Trump making enemies of our friends and closest allies, they will be sure to reciprocate with higher tariffs.

Trump has to know that is no way to do business from his history of bankruptcies and lawsuits. He has always chosen confrontation over cooperation to get what he wants, and the financial markets as well as consumers will soon figure this out. The only question is when, and what happens next.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Sunday, March 9, 2025

Job Growth vs. Job Cuts

“Total nonfarm payroll employment rose by 151,000 in February, and the unemployment rate changed little at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment trended up in health care, financial activities, transportation and warehousing, and social assistance. Federal government employment declined.” BLS

FREDpayrolls

The February payroll numbers were somehow comforting because of the looming ‘R’ (recession) fears. There was not the sudden halt in hiring that many economists feared because of Trump's on and off tariff announcements and ‘chainsaw Musk’s” indiscriminate (and mostly illegal) firings of government workers.

Fewer new jobs have been added to payrolls even before Musk’s machinations, as can be seen from the decline in FRED’s payroll formation graph through February before his firings took effect. It’s partly because companies don’t know what to expect. But I will make a prediction that things won’t get better unless Republicans better understand the budget making process.

We know this because the five recessions and record budget deficits since 1980 have all occurred during Republican administrations. That is why most of the Republican-controlled red states are the poorest states, many with no minimum wage of their own.

And there are also real signs that consumers that make up 60 percent of economic growth have exhausted their savings and become more pessimistic.

The real tragedy is that Republicans don’t have to act so callously. The Trump/Musk induced chaos is intentional, since they aren’t bothering to negotiate with anyone—such as congress that created most of the agencies being affected, the employee unions, or even checking with the courts beforehand to see if it is legal.

The Clinton administration did it the right way by negotiating with the parties affected and stringing out the job cuts over years, as I’ve said before, thereby handing off four years of budget surpluses to GW Bush, who promptly wasted them with unpaid tax cuts and the wars on terror.

We also know that Americans have been very lucky with the unemployment rate at or below 4 percent for more than two years. What is confusing consumers and small businesses in particular is why Trump and Musk are so acting so unnecessarily unpredictable with the growing public blowback, confusing everyone as to their motives.

One clue is that both Trump and Musk are autocrats who don’t like to consult with anyone but themselves, hence the yes-men and women they surround themselves with.

But why do Republicans follow so docilely when Musk is cutting spending or eliminating programs in their districts and states? Part of it is an almost complete ignorance of economic principles. For instance, tax cuts only boost the wealthiest incomes if they aren’t paid for—or paid by cutting the social safety net of Medicare and Medicaid that service the poorest.

The unemployment rate crept up to 4.1% in February from 4.0% in the prior month, largely because some 588,000 fewer people said they were employed in February, the U.S. Bureau of Labor Statistics said. That's the biggest one-month decline in 14 months, per MarketWatch’s Jeffry Bartash.

We are nearing the end of this post-pandemic business cycle as well. Morningstar, the rating agency, attributed the hiring slowdown to lower economic growth in general.

“At the industry level, the slowdown in hiring in the past three months has been driven by government (payrolls slowing from 3.4% to 1.6% growth) as well as construction and real estate (payrolls slowing from 3.5% to 1.4%).”

We are now in fact seeing a drop in job formation that is sure to continue—January added just 146,000 jobs, and there is a federal government hiring freeze that will affect state hiring as well.

It’s also not surprising that construction job growth is slowing, as high interest rates are causing a renewed slowdown in housing and as well as nonresidential construction, which shows up in the GDP.

Interest rates are falling again with the growing signs of economic weakness, such as the big drop in first quarter 2025 growth expectations—now down to -2.8 percent, when earlier estimates were as high as + 4 percent GDP growth in Q1.

What’s more, data released Wednesday from the Mortgage Bankers Association showed that mortgage rates hit their lowest levels since early December 2024 when the FHA rate dipped to 6.42%, which in turn led to a 20.4% increase in mortgage applications.

Lower interest rates are really the only event that would continue economic growth this year, and encourage more Federal Reserve rate cutting, but only if Trump’s tariffs don’t give a big bump to import prices and inflation.

Fed Chair Powell wouldn’t hint at the Fed’s future actions in a speech for the U.S. Monetary Policy Forum. “The White House is in the process of implementing significant policy changes in four distinct areas; trade, immigrations, fiscal policy, and regulations…It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.”

However, the Trump administration is showing woeful ignorance in the four areas Powell spoke about, as well not knowing how to balance or pay down the federal budget.

So, it looks like we could probably muddle through the next four years, as we did during President Trump’s first term; without a discernable economic plan other than more tax cuts. And, whether Musk’s chain saw doesn’t wreak too much havoc on the government bureaucracy that makes everything work.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Thursday, March 6, 2025

What Happened to the Budget?

“The House Republican budget passed today calls for massive cuts in health coverage, food assistance, and help paying for college, among some other areas, to pay for huge tax giveaways for wealthy households and businesses.” CBPP.org

CBPP.org

President Trump had to know that devoting a large part of his State of the Union speech insulting Democrats would make it much more difficult to forge a budget for the fiscal year that ends September 30, when they will need Democrats’ support because of their thin majorities.

It will make it all but impossible to ratify an annual budget that significantly reduces the budget deficit. It’s not a great way to negotiate, in other words, unless Republicans don’t believe they need Democrats to fund their tax cuts.

House Republicans have passed a purely Republican budget resolution that relies on massive cuts to federal programs that the Center For Budget and Policy Priorities (CBPP), a nonpartisan research and policy organization, recently analyzed.

“The House budget would require the Energy and Commerce Committee to cut at least $880 billion; the Agriculture Committee to cut at least $230 billion; the Education and Workforce Committee to cut at least $330 billion; and other committees to also cut programs to reach a cumulative target of at least $1.5 trillion in cuts through 2034. The magnitude of these reductions would force congressional committees to make enormous cuts in Medicaid, SNAP, student loan assistance and other vital sources of support when they develop the “reconciliation” spending and tax bill that follows the budget resolution.” CBPP

Yet Republicans must compromise with Democrats to pass the annual budget that keeps the federal government open for business because of their paper-thin majorities in both the House and Senate, as I said. And the Democrats’ cooperation will require that some of their own budget priorities be included.

Trump must know by insulting Democrats he won’t get much of what he wants. He must believe there is a better way to narrow the budget deficit. Of course, he and Elon Musk have said so out loud—find some $2 billion in savings in the current budget that totals more than $4.2 trillion at last count.

Instead, Trump/Musk are firing federal employees and closing whole agencies with abandon to make their case that it will eliminate enough fraud and waste to bring down the deficit to justify their tax cuts. But it can’t happen without cuts to the sacred third rails as well—social security, Medicare and Medicaid.

They will be slowed down in their haste to downsize government because most of the DOGE work to date seems to be illegal, according to the many lawsuits that have been filed to stop the DOGE efficiency drive.

It will end up being a failed “Shock and Awe” campaign, according to Thomas Friedman, since their real intent is to cut government “down to the size where one could drag it into the bathroom and drown it in the bathtub,” to quote Grover Norquist, a Republican strategist.

AtlantaFed

And we might already be seeing evidence of the damage; such as predictions of negative first quarter economic growth for the first time since the COVID-19 pandemic. The Atlanta Fed’s GDPNow model of real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.4 percent on March 6, up from -2.8 percent on March 3.

Tariff fears are part of the problem, as importers are ordering as much as possible before tariffs kick in that will raise prices, and that subtracts from GDP growth. But consumer spending in the new year that powers 60 percent of economic growth has declined because of their exhausted savings.

Consumer spending could shrink even further as the federal job firings and layoffs accelerate. MarketWatch reports some 172,017 job cuts were unveiled in February by U.S.-based employers, according to the monthly report by the outplacement firm Challenger Gray & Christmas. That’s the highest total since July 2020.

“It was chiefly because of a large reduction in government employees from actions by Elon Musk and his so-called Department of Government Efficiency, or ”DOGE,” purportedly to reduce bureaucracy,” said MarketWatch’s Jeffry Bartash.

Challenger put the federal job cuts at 62,242 last month, up from just 151 in January and February combined in 2024. Historically, very few federal employees lose their jobs annually. Retail and tech companies also announced sizable layoffs in February.

Economist Claudia Sahm said in a CNBC interview that such a massive number of workers losing their jobs at once has never happened before and will be flooding the job market.

I can’t imagine what such a large loss of jobs will do to our economy this year, even though federal jobs are a small part of the US workforce.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Wednesday, March 5, 2025

What Is Burning?

“Yet another tragic story of people being trapped inside a burning Tesla, this time in Toronto. Four dead; one rescued when a bystander smashed a window. Phil Koopman, cited by Paul Krugman in Substack

Carscoops.com

Paul Krugman in a recent Substack column made a horrific analogy with the damage that Trump/Musk is doing to the American economy that I agree with.

Such haste is causing irreparable damage to lives and livelihoods; just as Musk’s failure to correct Tesla’s design flaws have killed people. There are better ways, and maybe the SCOTUS 5-4 ruling that Trump can’t withhold $2 billion in funds owed to its contractors will cause him to slow down enough to prevent a larger economic ‘fire’, such as stagflation, or even a recession.

There is a lesson to be learned. Tesla’s sometimes fatal design flaws seem to be because of his lack of attention to details in his single-minded drive to invent new and better technologies. At least half of the automated-driver deaths (46 cars without a driver at last count) are Tesla’s, and now there is news that a defect in its electric door opening mechanism won’t unlock the door in the event of a power failure, as ahappened in some of Tesla’s car fires.

“This has been going on for years,” said Koopman. “At least some of the victims were definitely alive and trying to escape a burning Tesla when door lock power was lost. Some escaped. Some did not. Below is a writeup I posted on a blog in 2022. Nothing has really changed. The Tesla door release situation is a fatality-via-burning-alive waiting to happen. As it has multiple times at this point.”

And why is Trump rushing to start a trade war with our closest allies in the name of national security? He is promoting a blatant lie, that our closest neighbors pose a national security threat. Yet Mexico and Canada as border neighbors are in the best position to protect the Americans, hence pose the least danger to our national security But this is if we would pass an immigration bill, such as the bipartisan border bill Biden negotiated that Trump nixed because it would make Democrats look better.

Instead, we are now making an enemy of those nations that are in a position of protecting our borders.

What has become clear is Trump/Musk are good at wrecking everyone else’s economies but their own; at a time when more government oversight is needed because of the greater frequency of natural disasters (NOAA, US Geological Survey), increasing cyber-attacks, new and deadly (African) viruses, bird flu, on top of a potential measles epidemic in Texas.

And, even more sadly, there are signs that Trump will want to make some of Biden’s new, New Deal legislation his own, by canceling contracts and reopening them under his own administration, just as Musk is doing with the FAA.

Musk as already starting to replace Verizon’s contract to upgrade and modernize the FAA’s telecommunication networks ‘that oversee 29 million square miles of US airspace and ensure the orderly and safe movement of 45,000 flights daily’ with his own Starlink Satellite network.

They are selling more snake oil, instead of working with congress on a bipartisan agreement. Trump is rushing to downsize government and instigate tariff wars because he wants Americans to believe there is danger from all sides that only he can prevent, before something horrendous happens and we discover we might need our allies.

It doesn’t have to be this way, but if Trump won’t change his ways, there will be larger fires that will be much more difficult to put out.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Tuesday, March 4, 2025

Why Weaken U.S. Economy?

“On February 28, the same day that President Donald Trump and Vice President J.D. Vance took the side of Russian president Vladimir Putin against Ukraine president Volodymyr Zelensky in the Oval Office, Martin Matishak of The Record, a cybersecurity news publication, broke the story that Defense Secretary Pete Hegseth has ordered U.S. Cyber Command to stop all planning against Russia, including offensive digital actions.”@heathercoxrichardson, Historian, Letters from An American

Reuters

What became clear in last week’s disastrous Oval Office meet with Vladimir Zelenskyy, and Trump’s abrupt switch to Putin’s side of the peace negotiations, is that Trump and Putin are engaging in a very consequential protection racket that could bring down the U.S. economy as well.

They have come to rely on each other to stay in power. Russia’s huge cyber-attack machine helped Trump eke out his two election victories, and Putin wants Trump to hand him Ukraine to justify to the Russian people their horrific losses, and his hold on power.

Outrageous as that may seem, there is no other explanation for Trump’s actions in weakening the major federal agencies that protect our national security and growing isolation from our allies, and persisting in a tariff war that is alienating our closest allies.

Trump has jumped into their extortion racket with both feet. It’s a quid pro quo between two thugs, as happens between mafia bosses. Trump can hand Ukraine to Putin by withdrawing America’s support, and Putin will continue his unrelenting attacks on our national security infrastructure, weakening U.S. power and influence.

We can now see how they are doing it. Musk’s DOGE cuts are gutting the watchdogs that would uncover their protection racket, whether it’s by downsizing the FBI, CIA, NEC, CISA and other watchdogs (e.g., illegally firing 11 agency Inspector Generals), or reorganizing agencies in such a way that they function much more poorly.

The CISA, Cybersecurity & Infrastructure Security Agency, is especially important for our national defense. Former FBI Director Christopher Hays warned in pre-election congressional testimony to be especially concerned with the penetration of our cyber networks.

Wray noted that hostile nation-states, such as China, Russia, Iran, and the Democratic People’s Republic of Korea, are increasingly using “cyber operations” to meet their strategic goals and undermine the United States. These adversaries are “growing stealthier,” he said, and are always devising fresh methods to make their cyber operations more far-reaching and impactful.

“We’re seeing hostile nation states become moraggressive in their efforts to steal our secrets and our innovation, target our critical infrastructure, export their aggression to our shores and front and center is China,” Wray said at last year’s Boston Cyber Security Conference.

And why would Trump and his loyal followers want to take away our protections from such attacks? The answer is even more frightening. So that we align our priorities with Putin’s Russia, of all countries.

Professor Richardson reports, “Shortly after the election, a newspaper reporter asked Nikolai Patrushev, who is close to Putin, if Trump’s election would mean “positive changes from Russia’s point of view.” Patrushev answered: “To achieve success in the elections, Donald Trump relied on certain forces to which he has corresponding obligations. And as a responsible person, he will be obliged to fulfill them.”

It's becoming obvious that President Trump wants the USA to be run under the same one-man rules as Putin’s Russia, where the only laws are Putin’s laws, enforced by terror. He can murder his dissenters, whereas Trump will attempt to silence his opposition by weakening our election laws as well.

Professor Richardson reported that “On February 20, Steven Lee Myers, Julian E. Barnes, and Sheera Frenkel of the New York Times reported that the Trump administration is firing or reassigning officials at the FBI and CISA who had worked on protecting elections. That includes those trying to stop foreign propaganda and disinformation and those combating cyberattacks and attempts to disrupt voting systems.’

In fact, Putin may not need to hack Democratic Party emails, as he did in past elections. Musk’s DOGE hackers can do it for him in the upcoming 2026 midterm elections as they continue to penetrate the federal government’s closely guarded personnel networks.

We could see a WikiLeaks scandal all over again, if state elections officials aren’t careful. Trump/Musk have already attempted to remove Ellen Weintraub, the Democrat head of the Federal Election Commission that rules on election finance laws, without nominating a successor who must be confirmed by the Senate before she can step down.

But there is an even more immediate worry, the direction of our economy. Trump’s announcements of tariffs on Mexico, Canada, and Mexico caused the DOW to drop 800 points once again, and immediate retaliation. He is also threatening the EU. It is almost a kneejerk reaction as happened one week ago. Markets don’t like tariffs levied with no other reason than to collect import taxes to fill the gaping hole of our budget deficit and ballooning national debt.

Reuters just reported that a private survey showed American factory activity last month edged closer to stagnation—slowing growth combined with faster inflation—as new orders and employment contracted. A gauge of prices paid for materials jumped to the highest since June 2022. So how should investors react to all this smoke on the horizon?

It looks like Trump wants to ally with a country and economy that is one-ninth the size of the European Union when economic growth is more dependent on allies we can trust than ever before.

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

Sunday, March 2, 2025

Economic Growth Slowing...Because?