A RACIST LAW THAT INSPIRED MORE RACIST LAWS and was literally named after its racism is definitely not racist. At least according to the Trump administration.

Laser-focused on the midterms, the White House recently released a 162-page report on the most critical issue facing voters: woke museum exhibitions. The report follows a prior Trump executive order complaining about the Smithsonian Institution, which the president said had “come under the influence of a divisive, race-centered ideology.”

This new report, released by the White House Domestic Policy Council, renders in exhaustive, heavily footnoted1 detail all of the Smithsonian’s alleged sins. Among its worst transgressions:

• Museum exhibitions acknowledge that some of the nation’s founders were slaveholders.

• In a PowerPoint slide in 2022,2 a museum director included an image of a butterfly. This is offensive, the White House report explains, because butterflies are “a well-known symbol in the illegal alien activist community, symbolizing illegal aliens crossing the border from Mexico into the U.S.”

• The National Museum of American History refuses to present a single “unified, national narrative,” and instead “asks visitors, ‘How should Americans remember their Revolution and the founding of the nation?’ without providing an answer.” Just as it was taken to pose a threat to the ruling powers in ancient Athens, the Socratic method is apparently an affront to real patriotism today.

But arguably the most telling section of the White House report relates to its defense of the Chinese Exclusion Act of 1882. The report’s authors bristle at any suggestion that this famously racist law may have been motivated by any kind of racial animus. After all, such an acknowledgment might raise uncomfortable questions about the policies of Donald Trump and Stephen Miller—policies that are explicitly modeled on laws like this one.

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FOR THOSE UNFAMILIAR: The Chinese Exclusion Act of 1882 was the first major federal law to restrict immigration based on race or nationality. It banned nearly all Chinese laborers from coming to the United States for a decade; it also blocked Chinese immigrants who were already in the United States from ever becoming naturalized citizens. The premise was: If you were of Chinese descent, you were incapable of ever becoming an American, on account of your race.3

The law was born of widespread anti-Chinese sentiment. It was passed amid a decade of growing repression and violence against Chinese immigrants in the Western United States, which resulted in massacres such as those in L.A.’s Chinatown (1871) and at Deep Creek in Oregon (1887), as well as many other acts of violence in the region before and after the bill was made law.

And then as now, economic precarity laid the predicate for virulent nativism. The late nineteenth century was a period of significant economic and technological upheaval owing to industrialization, job displacement, and the country’s evolving geographic footprint (including the completion of the first transcontinental railroad, which relied heavily on Chinese and Irish immigrant labor).

Chinese immigrants were an easy scapegoat for a variety of local troubles, and economic uncertainty and racism became mutually reinforcing.

“The economic part was almost an alibi for the racism,” Columbia University historian and Asian-American studies scholar Mae Ngai tells me. “[White Americans] said they couldn’t compete with Chinese labor because the Chinese could supposedly subsist on just one grain of rice per day. There was something racially inherent about them being cheap.”

If the history (and the name of the law) weren’t clue enough as to the act’s racial framing, in 1889 the Supreme Court explicitly affirmed this as the intention—and offered its blessing:

To preserve its independence, and give security against foreign aggression and encroachment, is the highest duty of every nation. . . . It matters not in what form such aggression and encroachment come, whether from the foreign nation acting in its national character, or from vast hordes of its people crowding in upon us . . . If, therefore, the government of the United States, through its legislative department, considers the presence of foreigners of a different race in this country, who will not assimilate with us, to be dangerous to its peace and security, their exclusion is not to be stayed because at the time there are no actual hostilities with the nation of which the foreigners are subjects. The existence of war would render the necessity of the proceeding only more obvious and pressing. [Emphasis mine.]

In other words, as Ngai put it: “This was a racist law, was openly racist at the time, and the Court upheld its racism under the rubric of national security.”

The White House would prefer to ignore this inconvenient history. In its new report, the administration draws attention to a museum exhibition’s display text about the law, which falsely—the memo claims—portrays “restrictive immigration laws as a tool of white supremacy.” It continues:

[The exhibition] alleges that when “thousands of Chinese journeyed to the American West, encouraged by the promise of gold rush opportunity” in the 1850s, “[t]heir race . . . troubled white Americans,” leading to the 1882 Chinese Exclusion Act, “the first of many restrictive immigration laws.” Another states, “White laborers considered the Chinese competition and responded with hostility.”4 [Emphasis mine.]

How scandalous to characterize totally run-of-the-mill economic anxiety as racist, amiright?

Even if the law had been motivated merely by race-neutral economic objectives—despite all available evidence suggesting otherwise—it still would have failed. Recent research on the economic fallout of the Chinese Exclusion Act found that it slowed overall economic growth in the West, hurt manufacturing output, and even “reduced the labor supply and the quality of jobs held by white and U.S.-born workers, the intended beneficiaries of the Act.”

SO YOU CAN IMAGINE why the Trump administration might get a wee bit defensive about anyone offering a critical perspective on this part of our nation’s history, especially since they hope to repeat it.

The 1882 ban on Chinese immigrants was reupped several times over subsequent decades. It became a template for the series of 1920s “national origins” quotas that ratcheted down immigration on racial undesirables from Asia, Africa, and Southern and Eastern Europe.

Trump aide Stephen Miller has frequently held up the era of the racial quota system as the golden age of American history, wherein race-based immigration restrictions were crucial to American global hegemony. (In reality, recent academic research has found that the Quota Acts hurt U.S. economic and scientific development in the mid-twentieth century, and that we benefited from quota repeal in 1965.)

Some of Miller’s rhetoric is spookily reminiscent of rhetoric around the 1882 law, as Stuart Anderson, the executive director of the pro-immigration National Foundation for Economic Policy, has pointed out. Both Miller and politicians who flogged the Exclusion Act in 1882 claimed that people from lowly5 countries could not ever truly become Americans, and were polluting our populace.

“You are not just importing individuals. You are importing societies,” Miller said last year. “No magic transformation occurs when failed states cross borders. At scale, migrants and their descendants recreate the conditions, and terrors, of their broken homelands.”

Miller is also the architect behind Trump’s proclamation last year prohibitively restricting or outright banning immigration from thirty-nine countries (mostly in Asia and Africa, of course). Courts have recently tried to pare it back; the administration, true to form, complains that judges are improperly imputing a racial motive to what is obviously a boring, benign, totally reasonable policy to benefit America First.

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Ramparts

— Since Trump’s One Big Beautiful Bill became law last year, about one million fewer kids are enrolled in food stamps. That’s based on available data from seventeen states that break down recipients by age, according to the Center on Budget and Policy Priorities. Can’t blame this economic hardship on immigrants, though I’m sure the Trump administration will try.

— Reconciliation 3.0 is now upon us. While there have been concerns that Republican lawmakers would cut safety-net benefits further to pay for the war, instead they’re just adding to the deficit. But don’t worry, they also have $3.4 trillion in unspecified “government-wide savings.” (Relatedly, I will binge on cookies tonight, but still plan to lose weight through unspecified diet and exercise.)

— Truth Social will sell Wall Street firms earlier access to market-moving posts from Trump. If only we had a functional Securities and Exchange Commission, or a competently run FBI, or really any part of government that still paid attention to things like market manipulation and other white-collar crimes. We don’t.

— Instead, I guess this is what the FBI investigates now.

— The share of job-seekers out of work for six months or longer is also hovering near its highest level in five years.

— The Writers Guild is suing to block the Paramount–Warner Bros. Discovery merger, a day after a group of twelve state attorneys general also sued to block the deal. The guild says that the new entity would control about 35 percent of writing jobs for those working on top-grossing films and 36 percent of television projects.

— It seems we’re about to tariff lamb imports? Why?

— Costs of climate change not always tabulated in the standard numbers: The Guardian reports that recent heatwaves likely killed about 2,700 people in England and Wales. (If only there were some kind of technology that could help avert those deaths. . .)

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GREAT NEWS! THERE’S A BRAND-NEW marketing hack, courtesy of our salesman-in-chief. If you need free advertising, just claim you have a terrific deal, and say Donald Trump convinced you to do it. He won’t be able to resist hawking your wares.

Earlier this week Walmart found itself enlisted in such a marketing campaign, when President Trump posted that at his administration’s “request to celebrate our great Country’s 250th birthday” the company would be “dropping the price for a pound of ground beef by almost 15%, among many other products.”

This is a huge deal for the many millions of Americans who, smartly, shop at Walmart, which is a truly patriotic Company who loves the U.S.A.

There are a few things worth noting about this.

First, if you’ve ever shopped at Walmart—or really any major superstore—you know they have sales and promotions all the time. Especially around midsummer. In fact, consumer analysts sometimes refer to the doldrums of July as “promotion week,” as retailers offer deep discounts to lure errant, sunshine-soaking shoppers back indoors.

In Walmart’s case, a spokesperson told me that the retailer began one of its regular price “Rollback” events early last week—i.e., the week before Trump blasted out his claim that price cuts were imminent and would be happening at his request.1

The backstory, according to unnamed sources cited by the Wall Street Journal, is that a USDA official had a phone call with Walmart, Kroger, and Albertsons in the days before July Fourth to discuss beef prices.2 During that call, per the Journal, Walmart said that it “already had plans to reduce prices on many items for the summer, including beef.”

USDA, which has been arguing for months that beef prices have been artificially inflated, relayed that information to Trump, who seems to have misunderstood the timing, blasted out the news, and claimed credit for the price cuts.

When contacted for comment, Walmart referred me to a statement it had released minutes after that Trump post on Monday. The statement read like pretty much every other superstore press release, promoting price cuts at Walmart and Sam’s Club for select summer cookout staples like hot dogs and a store-brand ice cream.

The statement did not mention Trump, and a Walmart spokesperson declined comment on the record further.

In a normal democracy—one with, say, free markets and the rule of law—a major retailer should have no issue publicly confirming that it made pricing decisions for business reasons only, and not under any sort of political pressure. Firms should be able to say that they are prioritizing shareholder interests (as they are legally required to do) rather than the president’s ego. But we do not live in that kind of democracy at the moment. We live in Donald Trump’s America, where corporations might reasonably fear retribution if they contradict his preferred message—or worse, embarrass him.

After all, last year, when Walmart executives merely acknowledged the obvious fact that higher tariffs would feed into higher prices, Trump fired a warning shot at the retailer.

“Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain,” he posted on Truth Social. And then, echoing the greedflationists among the populist left, he complained about how much money the company was making: “Walmart made BILLIONS OF DOLLARS last year, far more than expected. Between Walmart and China they should, as is said, ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!”

Trump’s Everyday Low Vices

THIS IS NOT THE FIRST TIME that Trump has amplified, and claimed credit for, a company’s promotions, with or without its consent. In fact it’s not even the first time he did it with Walmart.

Last Thanksgiving, he claimed credit for what Walmart touted as its “best offer yet.” At multiple rallies he cheered that “Thanksgiving this year will cost 25 percent less than Thanksgiving last year under Sleepy Joe Biden.”

In that case, Walmart’s Thanksgiving bundle had indeed gotten cheaper—because the bundle included different brands and fewer food products than the previous year’s deal. So not quite apples to apples (or turkeys to turkeys, or whatever). But who cares about pesky methodological considerations, given the potential for mutually beneficial free advertising?

That same month, the White House also blasted out DoorDash’s “State of Local Commerce” report as evidence “that inflation has been tamed.” Inflation had very much not been tamed, of course, according to official government measures like the consumer price index. Even the firing of the top civil servant at the agency that produces the CPI could not hide this problem.

Apparently, the White House had hunted for alternative measures to cherry-pick. It found the DoorDash report, which bragged that breakfast foods ordered on the delivery app had (just fortuitously) recently become a terrific deal.

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Trump has since also tried to slap his brand on other corporate promotions, including by taking credit for the return of Extra Value Meals at McDonald’s. He has promoted a bunch of “deals” he made on prescription drugs, through both the TrumpRx platform and “most favored nation” agreements on drug pricing. But it’s not clear how much the public is actually benefiting from those developments, given that White House agreements with pharma companies are opaque and unenforceable and appear to cover only a tiny fraction of popular drugs.

More recently, there’s the sketchy Trump-endorsed “Freedom Fuel Network,” a selection of gas stations across Pennsylvania and New Jersey. They appear to be selling gasoline at an unsustainable discount, charging prices far lower than other gas stations and well below cost. The ownership of these Potemkin stations remains unknown; as does the identity of whoever may be subsidizing them and to what end. The White House says it’s not directly involved, and the attorney listed on the Freedom Fuel Network’s trademark application (filed July 1) did not respond to a request for comment.

But there are certainly other deep-pocketed companies and individuals who have used private funds to subsidize Trump’s government initiatives, sometimes with suspect motives. And Trump has often tried to bend market pricing to his whims, too, with or without favor-trading.

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It’s not just about prices

MOST OF THE TIME, though, Trump is the proverbial rooster taking credit for the sunrise. He looks for opportunities to slap his name on politically useful things that companies were already planning to do—seasonal sales, major investments, hiring, et very much cetera.

There’s the aluminum plant getting built in Alabama that the Trump White House tried to steal credit for—even though construction began in 2022, when Joe Biden was still president. If anything, Trump’s aluminum tariffs have jeopardized the future of that factory, according to the president’s own allies. There are similar examples across other industries.3

Not every company has the means to make a big, spendy splash to suck up to the president. I don’t know why more companies don’t get in on the sale grift, though. Just ping the White House every time you already have a promo going on. You’re already stuck in Donald Trump’s America; why not get the free advertising?

Next time Jeff Bezos talks to Trump, he should promise to institute Prime Day (or better yet, “PRIME DAY” in all caps) in the president’s honor. Heck, every bar in America should commit to slash prices at happy hour to celebrate how happy they are that Sleepy Joe is gone. It’s clear our president wants to control prices; maybe our best option is to pretend he already does.

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Ramparts

— The real corporate hero we need, as I’ve said many times before, is Costco. The company has been unafraid to buck Trump (on both economic and culture-war issues). It also delivers low prices and pays its workers well. At one point Democrats recognized this, when former President Barack Obama cheered the warehouse club’s high pay and low employee turnover. These days Democrats are more likely to namecheck Costco as being among the “giant grocery stores and massive food conglomerates” responsible for high grocery prices and “ripping people off.” (When you’re blaming Costco for high prices, you’ve lost the plot.)

— Another way companies have been currying favor with the Trump administration involves giving their products a MAHA makeover. Mars Inc. is launching a new line of M&M’s, without the blue ones, because it told the administration it would use all-natural dyes and a natural blue food coloring is uneconomical at scale.4 Walmart has also committed to remove artificial dyes from its private-label food products. Of course if the Trump administration were actually committed to removing toxins from foodstuffs, it probably wouldn’t do things like this.

— Treasury Secretary Scott Bessent confirmed this week that the administration has abandoned plans to put Harriett Tubman on the $20 bill. Those plans had been in the works for a decade.

— The U.S. brain drain continues: Chemist Omar Yaghi, who had been a professor at UC Berkeley when he won the Nobel Prize in chemistry last year, has departed the United States for a job at Tsinghua University in Beijing. He will lead a new AI materials lab. In a recent interview with Scientific American, he decried declining financial support for scientific research: “The current state is not so encouraging because of the cutting back on grants and support of science by the very agencies that many university researchers rely on.”

— Rep. Claudia Tenney (R-N.Y.) introduced legislation to punish Canada because some Canadian provinces have blocked sales of U.S.-produced spirits. If only she could figure out who started this here trade war. . .

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THIS MAY BE THE HOTTEST summer you remember. And yet—unfortunately for our planet—it may still be the coolest summer for some time.

A heatwave cooked much of Europe this past week, breaking records and claiming lives. France alone recorded a thousand excess deaths over a four-day period, with 85 percent of the deaths occurring among the elderly population. High temperatures, which surpassed 104 degrees, also shuttered schools in the U.K., ravaged crops in Spain, derailed train cars in Sweden, and melted roads across Germany.

Now a “heat dome” is scorching America’s East Coast just ahead of the country’s 250th birthday. Even our northern neighbors in Canada haven’t been spared, with Ontario (Ontario!) reaching 99 degrees.

So let me just say what should be obvious: Thank God for air conditioning, one of the greatest achievements of modern civilization.

Indoor cooling is sometimes portrayed as an indulgence. In reality, it is critical infrastructure, necessary for both public health and human flourishing. The ability to tame the heat, at least indoors, allows students to learn more and score better on tests. It enables workers to be more productive, and consumers to enjoy leisure year-round. It is what allowed lithographers a century ago to first reliably print in color, and enables other industries to produce food and electronics. It has transformed architecture, entertainment, sports, medicine, and virtually every other field you can imagine.

If this sounds obvious . . . well, it isn’t to much of Europe. There, environmentalists, architectural preservationists, and de-growthers have fought the spread of air conditioning.

Switzerland doesn’t outright ban A/C, but some areas make it functionally impossible to install cooling in your own home, sometimes requiring documentation of a demonstrated medical need. In Paris, even disabled residents must persuade first their neighbors and then local officials to allow them access to cooling units, lest they blemish the city’s architectural aesthetics.1 Londoners are being forced to remove existing A/C units if they can’t prove they had first tried ceiling fans, open windows, and other forms of “passive cooling” before installing “active cooling” as a last resort.2

Even some cardiac wards in German hospitals don’t have A/C, meaning that heart-surgery patients in Düsseldorf are expected to recuperate in temperatures above 100 degrees.3

To some extent, I can see the logic: Climate change is an existential risk, and we want to reduce carbon emissions wherever possible. Perhaps it feels particularly immoral or reckless to respond to the (deadly) discomfort caused by man-made carbon emissions by installing appliances that can lead to even higher man-made carbon emissions.

But Europeans are not nearly so abstemious (or judgmental) about access to life-saving indoor heating as they are to access to indoor cooling. Access to heating is nearly universal in Europe, despite heat also drawing energy, because the societal conclusion was that no one deserved to freeze to death. A symmetrical conclusion about boiling to death seems more than reasonable, particularly as efficient, dual-purpose technologies (like heat pumps) hit the market.

And besides, what matters more than whether your indoor thermostat is artificially moving temperatures up vs. down is where the energy used to power the system is coming from. As long as the generation of that energy is clean, efficient, and abundant, who cares?

Alas, here is where we smug, A/C-enjoying Americans have kind of lost the plot.

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IN THE UNITED STATES, nearly 90 percent of homes have some sort of air conditioning, versus only about 20 percent in Europe. Americans often make fun of Europeans for not having A/C, but meanwhile we’re blocking the energy developments that would make the use of our air conditioners more affordable.

The Trump administration announced this week that it was canceling yet another offshore wind development. This project, which was planned for off the coast of North Carolina, was expected to produce 1.6 gigawatts of wind energy, which is enough to power 375,000 homes. Its termination follows the cancelation of hundreds of millions of dollars in other offshore wind leases (in New York, Maine, and California) just a couple of weeks ago, which would have powered some 3 million homes.

You can add these developments to the blocking of many, many more projects for offshore wind (including some where the Trump administration has agreed to pay billions of dollars to companies to get them to walk away), onshore wind, and utility-scale solar. Plus the repeal of lots of Biden-era incentives intended to encourage greater investment in renewable technologies and insulation upgrades.

At best, Donald Trump has created uncertainty around clean-energy investment; at worst, he has deliberately killed off projects that could help meet growing electricity demand—including demand for the air conditioning that has become increasingly necessary in a warming world.

And to be clear, the problem isn’t only Trump, or even his party. In deep blue states, NIMBYist, protectionist forces have blocked or delayed promising renewable development. Meanwhile Texas is far and away the country’s leader in renewable energy.

That is partly because Texas has abundant wind and solar resources to harness. As the state demonstrates, the potential around renewables is often neatly aligned with the demand for cooling: Places that get very hot also tend to get a lot of sunshine, which can be used to power the systems that keep indoor spaces livable.

But building out the infrastructure to take advantage of that alignment requires something more basic than ideology or geography. It requires regulatory flexibility and political will—both of which remain in short supply on both sides of the Atlantic.

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Ramparts

— Speaking of a keep-it-in-the-ground ethos: The Strategic Petroleum Reserve’s oil inventories just fell to their lowest level since 1983 because Trump has been drawing down the reserve to blunt the price impact of his war with Iran. You may recall Trump and his cabinet heavily criticizing the last president for draining the reserve for political reasons.

— The clock for the USMCA trade agreement started ticking Wednesday. Negotiators for the United States, Canada, and Mexico officially met to start talks about whether or not to renew the trade deal that Trump signed during his first term, which back then he called “the best trade deal ever made.”

— Rihanna is suing the Trump administration for a tariff refund. She certainly has the right theme song for the litigation.

— Here’s how the data-center buildout could spark a third wave of inflation.

— It’s good to be the president.

— Wake up, babe. A new top-10 fear just dropped.

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THE TRUMP ADMINISTRATION HAS MADE clear that it wishes to purge America of some of its undesirables. That includes, for instance, deporting 100 million people (a third of the population). But for those he can’t expel, he hopes to simply hide away.

Last week the Department of Justice published a memo authorizing states to institutionalize more people with disabilities. This basically means plucking more people out of society and shutting them into nursing homes, psychiatric hospitals, segregated schools, and sheltered workshops, rather than funding community- or home-based care where they have more autonomy.

“This is at its core about the belonging and inclusion of people with disabilities in our communities,” says Alison Barkoff, a health law professor at George Washington University who worked on disability policy under Presidents Barack Obama and Joe Biden. “This is about moving forward from a very shameful part of our history when we locked people with disabilities away from society.”

The DOJ policy would turn back the clock on decades of law and Supreme Court precedent. Since Olmstead v. L.C.,1 in 1999, states have been required to support disabled people in the most integrated setting possible that is appropriate to their needs. Institutionalization is supposed to be the last resort.

The consequences of this change could be enormous. Community- and home-based care services involve having a home health aide visit a person for, say, a few hours a week at home, rather than sealing them off in a closed facility. They help disabled people achieve both personal and financial independence. This kind of support empowers people to care for themselves, maintain relationships with friends and family, and hold jobs. And there has generally been bipartisan political backing for policies that, for example, enable children with disabilities to live with their parents whenever possible.

The actual legal enforceability of this memo is still unclear. Perhaps because it may not have originated with actual lawyers. Stephen Miller was reportedly behind it, Bloomberg reported, though the White House has officially denied his involvement.2

Even before this memo, states have been slashing disability services for some time as a result of the Medicaid cuts in Trump’s One Big Beautiful Bill. The law’s advocates professed that the cuts would safeguard safety-net programs for the “most vulnerable Americans,” but so far children and people with disabilities are among the biggest victims. More than half of states have already cut home- and community-based services that support elderly people with disabilities living in their homes.

The irony is that, in the long run, these changes may be more costly, since institutionalization tends to be much more expensive than letting people stay in their homes with supportive care.

“The states are a little bit playing Russian roulette,” says Barkoff. “They’re saying: ‘Is this a person who is going to find some way to navigate these cuts, and find family or friends to fill in? Or is it someone who’s going to end up costing me three times as much because they end up in a nursing home or in the emergency room?’”

The DOJ memo is part of a sweeping series of changes from this administration that affect how disabled people learn, live, work, and otherwise interact with society.

The administration also announced last week that it was reassigning the Education Department’s responsibilities for special education and civil rights to the Department of Health and Human Services, raising concerns about whether children will continue to have access to free, appropriate public education.

HHS, after all, is run by Secretary Robert F. Kennedy Jr., who has spoken in degrading and even vaguely eliminationist terms about people with intellectual disabilities and neurodevelopmental conditions. Last summer, for instance, Kennedy lamented that autistic people would never lead productive lives: “And these are kids who will never pay taxes, they’ll never hold a job, they’ll never play baseball, they’ll never write a poem, they’ll never go out on a date. Many of them will never use a toilet unassisted.”3

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Shortly after those remarks, another HHS official, NIH Director Dr. Jay Bhattacharya, announced plans to create a compulsory “registry” of people with autism, using confidential private and government health records without consent—purportedly for the purpose of better studying the condition. These kinds of government lists, when compiled in authoritarian regimes, have not always worked out well for those appearing on them. After public outcry from the disability rights community, the agency eventually walked back the plans.

Elsewhere the administration has ended or suppressed programs intended to help people with disabilities. For example, the government canceled surveys tracking factors that can help disabled people find employment. It has tried to prevent Head Start providers from using the word “disability” when describing their programs, which forced at least one provider to cancel staff training on working with kids with autism spectrum disorder.4 And it withdrew guidance for businesses about their obligations under the Americans with Disabilities Act.

Not all of this can be laid at the feet of Miller, odious though he may be. After all, his boss launched his political career by appearing to mock a New York Times reporter with a physical disability; and both Trump and his top civil rights appointee regularly use a slur for people with mental disabilities.

Long ago Trump promised Americans a new “Golden Age.” And he’s been clear from the get-go who he believes belongs in it, and who does not.

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Ramparts

–The fraction of total economic output that goes to workers—in the form of wages and salaries—is at its lowest level since World War II.

–Trump joined the long tradition of presidents yelling at energy companies for high gasoline prices. There’s a well-documented history of “rockets and feathers” in gasoline markets (i.e., prices tend to rise more quickly than they fall) that presidents refuse to learn, and instead they end up siccing antitrust authorities on oil companies. Good luck with that.

–Last fall I wrote about how the Department of Homeland Security had hijacked the legacy of Norman Rockwell, using the iconic painter’s works to promote Gestapo tactics and a nativist agenda that he never would have supported. Now the White House has stolen another one of Rockwell’s masterpieces, titled “Saying Grace,” which shows a woman and a boy saying grace at a crowded diner while others look on. Rockwell’s granddaughter, Daisy Rockwell, wrote me the following response: “It goes without saying that they have completely misunderstood the meaning of the painting, which is tolerance for others and peaceful coexistence.”

–This is a useful dashboard. It tracks the ongoing consumer burden of the Iran War, as measured by additional aggregate spending on fuel (gasoline/diesel). Current tally: About $62.5 billion.

–Since the start of this year, all of the growth in the S&P 500 has come from just two sectors of the stock market: AI and energy. Everything else is actually trading below where it was in January. (Hat tip to Torsten Slok at Apollo.)

ALAN GREENSPAN, THE FAMOUSLY inscrutable long-time chair of the Federal Reserve, died on Monday at the ripe old age of 100. And just as his signature style was coming back in vogue, too, thanks to our new Fed chair, Kevin Warsh.

Greenspan was appointed Fed chair by Ronald Reagan in 1987 and held the post for nearly two decades. The Greenspan era was known chiefly for two things: a booming economy, with low unemployment and inflation and relatively mild recessions (an era sometimes referred to as the “Great Moderation”); and his impenetrably cryptic public communications, a.k.a. “Fedspeak” or “Greenspeak.”

When Greenspan took over the position from Paul Volcker, the Fed had virtually no public communications at all—no statements following meetings, no published minutes, and definitely no press conferences. That began to change starting in the early 1990s with public announcements of changes in policy. But even so, Greenspan remained wary of too much transparency, and cultivated a deliberate abstruseness and intentional “syntax destruction.”

In fact, at times Greenspan wanted the public to be confused about Fed policy. “I have learned to mumble with great incoherence,” he told Congress in 1987. “If I seem unduly clear to you, you must have misunderstood what I said.” When news reports about his remarks sometimes produced opposing headlines about his intentions, he said that meant “I succeeded.”

Greenspan had started his career hoping to be a professional musician, having studied clarinet at Julliard. But even as a central banker he practiced jazz aesthetics: The art was in the words he didn’t say.

The paucity of Greenspan’s public remarks gave every one of his words extra power. This also at times caused wild market swings, as investors tried to divine the meaning of Delphic decrees about “irrational exuberance.” The mystique made him a household name. A frequent theme in ’90s political cartoons involved Greenspan sneezing or burping, thereby prompting people to jump out of windows.1 The “underwear index” he followed provided comedy fodder too. (Delays in replacing threadbare skivvies were supposed to be a useful bellwether for tracking economic anxiety.)

Even when taking a position that might be viewed as warm, or socially progressive, Greenspan’s words and reasoning could be jarring. Such was the case when he explained why his financial firm, unlike most on Wall Street, employed so many women in senior leadership roles. His apparent feminism was motivated by pragmatic bargain-hunting, he said: “I always valued men and women equally, and I found that because others did not, good women economists were cheaper than men. Hiring women does two things: It gives us better quality work for less money, and it raises the market value of women.”

As Fed chair, Greenspan guided the economy through several bumpy patches,2 and presided over the longest economic expansion in American history. This record, plus his almost mythological dialect and musical background, helped earn him the nickname “Maestro.”

But his actual economic legacy is a bit messier than the name might imply.

That “Great Moderation” he oversaw also masked enormous market bubbles,3 an extremely laissez-faire approach to bank oversight, and of course a brewing global financial crisis that boiled over within a year after Greenspan’s departure from the Fed.

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And thank God, in retrospect, for the timing of that particular changing of the guard.

After all, Greenspan was succeeded by Ben Bernanke,4 a scholar of financial crises who wrote his dissertation on the Great Depression. Relative to Greenspan, Bernanke favored more muscular monetary policy interventions that almost certainly rescued us from plunging into another global depression.5

Bernanke also set the Fed on a path toward more open and more frequent public communication. He declared that the days of the dictum “Never explain, never excuse”—a line attributed to a pre-World War II Bank of England governor—were over. The logic was that increased visibility into the Fed’s actions and aims improves the central bank’s accountability, effectiveness, and (perhaps most critically) its speed.6

“Ambiguity has its uses, but mostly in noncooperative games like poker,” Bernanke explained to his Fed colleagues a few years before getting the top job, while Greenspan was still chair. “Monetary policy is a cooperative game. The whole point is to get financial markets on our side and for them to do some of our work for us.”

A few weeks after Bernanke was appointed chair, in 2006, Warsh was confirmed as a Fed governor, with Bernanke’s help. And while Warsh and Bernanke were reportedly close allies during the early days of the crisis, Warsh ultimately broke with the boss over two things: the bank’s bond-buying, and Bernanke’s emphasis on more public communications and “forward guidance.”

Instead, over the past decade or so, Warsh has called for a rollback of Bernanke’s changes and a return to Greenspanian levels of evasiveness. When Warsh was sworn in as chair last month, Greenspan was the only former Fed chair to whom Warsh paid homage by name. Bernanke, the chair whom Warsh actually served under, was neither mentioned nor even on the guest list.7

Last week, days before the Maestro passed, Warsh gave a taste of what this Greenspanian throwback might look like.

In his first Fed meeting as chair, Warsh slashed the length of the official Fed statement on interest rates, and punted on most reporter questions. (He declared that a future “task force” would resolve whatever issue they asked about.) He also announced that he had not participated in Fed officials’ standard practice of forecasting the path of interest rates, via an anonymized chart known as the “dot plot.”

This approach is consistent with Warsh’s stated preference for opacity—but also, conveniently, allows him to avoid publicly acknowledging that interest rates are going up, not down, contrary to Donald Trump’s demands.

Greenspan lasted through four presidents. If Warsh survives just one, it may be thanks to the Maestro’s playbook.

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AROUND THE COUNTRY, food prices are surging, and Americans are going hungry. They’re about to get hungrier, too, given that we’ve begun the steepest decline in food-stamp enrollment in decades.

Donald Trump’s “One Big Beautiful Bill,” which passed almost exactly a year ago, siphoned more than $1 trillion out of federal safety-net programs to offset his regressive tax cuts. The legislation’s Medicaid cuts got the lion’s share of public attention, but the cuts to food assistance were also enormous. Spending on the Supplemental Nutrition Assistance Program (a.k.a. SNAP) will fall by nearly 20 percent over the coming decade. And unlike the Medicaid rollback, much of which was strategically delayed to begin after the midterms, the SNAP purge is already in full swing.

In the eight months following the law’s enactment, SNAP enrollment plummeted by 4.7 million, according to data released this week by the U.S. Department of Agriculture. And so far, children appear to be the biggest victims, despite Republicans’ pledges that their SNAP “reform” would ensure the program works better for the “most vulnerable among us, including children.”

Not all states break out SNAP participation by age, but in the twelve states that do, enrollment of kids fell by at least 776,000, according to calculations from ProPublica.

Some states were especially bad.

In Massachusetts, a state normally associated with maximizing safety-net coverage, children’s food-stamp enrollment has plunged by nearly a fifth. The commonwealth’s benefits office has struggled to meet OBBB’s new bureaucratic requirements for SNAP, and has coped by just . . . not answering applicants’ phone calls. Over in Arizona, which is also struggling with the new OBBB-forced paperwork, less than half as many kids are receiving SNAP today as there were when the One Big Beautiful Bill passed.

One might see needy children getting less food assistance as a horrifying outcome. But the Trump administration has sold all this as a success story.

Those losing benefits, we’re told, were all lazy grifters who were probably defrauding the government anyway. Or, alternatively, maybe they really did once deserve their benefits, but they have since graduated out of their undignified need for federal assistance thanks to Trump’s economic boom.

“A lot of [the enrollment decline] is fraud,” USDA Secretary Brooke Rollins said last month. “A lot of it is people taking the program that shouldn’t have been. And then a lot of it is just a better economy. We’ve had wage growth that has outpaced inflation for the first time since early 2021. This is a really big day. So people don’t need food stamps.”

Having looked at the numbers and talked to the experts, I feel confident in saying this is cruel, despicable bullshit. And here’s why.

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Buxton, North Carolina
IF YOU’VE WATCHED ANY hurricane coverage on TV in the past few years, there’s a good chance you’ve seen a house here fall into the ocean.

It’s happened thirty-two times in this wispy strip of barrier islands, known as the Outer Banks, since 2020. And not just during hurricanes! The most recent house collapse happened just last week, amid a relatively minor coastal storm. That little blue Buxton house was devoured by the sea in less than half an hour. Once-pristine “oceanfront” property is now just ocean.

Buxton and other towns around the Outer Banks have become the national poster children for the dangers of rising sea levels, coastal erosion, and intensifying storms linked to climate change. But last month, just in time for hurricane season and an intense El Niño event, the Trump administration announced it would strip the coastline of one of its most important lines of defense: the Ocean Observatories Initiative.

The OOI system is being defunded, and its sprawling array of deep-sea monitoring devices will soon start getting pulled out of the water. The loss of this and other data-collection infrastructure could well be existential for the tourism-dependent Outer Banks economy. But like other Trump administration efforts to dismantle federal scientific and statistical programs, it’s pretty problematic for the rest of us, too.

That’s because the $368 million, real-time ocean-monitoring system is responsible for 900 instruments strategically placed around the Pacific and Atlantic Oceans, where they have tracked data critical for weather, environmental, commercial, and military purposes since 2016. The categories of physical and biochemical information being collected are numerous: waves, currents, salinity, the soundscape for marine mammals, carbon dioxide levels, alkalinity, and more. Their measurements are all publicly available, and the data have been a godsend to public researchers, hazard planners and private companies alike.

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Take hurricanes, for instance.

We’ve gotten better over time at forecasting the paths1 of hurricanes, but we are still pretty lousy at predicting their intensity, according to Mike Muglia, a scientist with the Coastal Studies Institute and East Carolina University. For intensity forecasts, he says, we need not only surface water temperatures—which we can collect relatively inexpensively from buoys—but also reliable temperature measurements at various ocean depths. That’s because a hurricane can be slowed by upwelling, the raising of (typically cooler) water from the depths below the storm to the surface. Those are exactly the kind of metrics collected via the Pioneer Array, a part of the Ocean Observatories Initiative located about fifteen miles offshore from Muglia’s home in Nags Head.

That will soon be gone.

Other measurements from the Ocean Observatories Initiative help scientists, developers, and government officials predict coastal erosion, which is helpful for figuring out which homes need to be condemned (or moved) before they too get eaten by the ocean and belched back up as dangerous seashore debris.

But lest you think the applications are limited to insufferably “woke” climate-change-related purposes,2 the instruments have lots of other useful functions. If there’s a search-and-rescue operation for a capsized boat, or cleanup for an oil spill, for example, the instruments help guide where to send help and resources.

“They’re not just taking a guess based on a model,” says Muglia. “They can look at what the current’s actually doing when they have to go make a rescue.”3

The military also has an interest in maintaining this infrastructure—particularly off the North Carolina coast, where German subs once hid in the deep water during World War II. (To this day, you can still scuba around some sunken U-boats that rest off the continental shelf.) Tracking the underwater “soundscape” here continues to be critical for U.S. naval defense. The global Ocean Observatories Initiative helps us do it.

The U.S. military also uses water current data to develop renewable-energy technologies—again, not for particularly bleeding-heart environmental motivations, but to harvest energy from currents so that it can power surveillance vessels or other remotely operated vehicles.

“The ocean drives our entire economy and life systems,” said Stanley R. Riggs, a retired coastal geologist who taught for decades at East Carolina University. He ticked off a list of other uses for publicly funded ocean monitoring instruments, such as deep-sea mining exploration and fishery forecasts. “We’re pulling the plug on some of the most important science being done.”

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SO WHY IS THIS SYSTEM being dismantled?

The National Science Foundation’s official explanation for the “descoping” is that it is bringing the OOI into alignment with the research-funding agency’s larger strategy: “a nimbler approach to prioritizing support for evolving scientific priorities and emerging technologies as well as a deliberate approach to smart life cycle management within its portfolio of research infrastructure.” Whatever that means.

Apparently this “nimbler approach” includes a sweeping effort to delete, defund, or otherwise censor inconvenient data and scientific wrongthink4; purge Ph.D.s from government payrolls; and subject research grants to ideological purity tests.

And that was just in Trump’s first year-and-a-half back in office. The administration’s most recent regulatory effort could be even more apocalyptic for the research ecosystem that has powered the U.S. economy. Its proposed rule would require the president’s political appointees to review and approve all discretionary federal grants to ensure they align with his political agenda—and it explicitly forbids them from deferring to peer reviewers.

In other words, it’s not simply this ocean-monitoring system that’s being dismantled; it’s U.S. science entirely.

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Ramparts

— Speaking of destroying STEM-related fields: The Trump administration says it wants more doctors, but then implements immigration policies that block them from coming here.

— And speaking of practical applications of diminished scientific capacity (and trust): The United States will almost certainly lose its measles-elimination status this year or next. (For more background, read our Jonathan Cohn’s piece on this from February.)

— Today the European Central Bank raised interest rates for the first time in nearly three years as warflation strikes globally. Now we wait to see who else, including the Federal Reserve, might follow suit. Two hot U.S. inflation readings for consumer and producer prices this week have certainly not made Kevin Warsh’s job easier as he heads into his first meeting as Fed chair next week. Right now, market consensus is that rates will stay steady through most of the year, with the next move—a hike—probably coming at the December meeting.

— There is one unexpected force helping Warsh: China. As the Wall Street Journal reports, China has sharply cut its crude oil imports during the Iran war. This has helped hold down global oil prices, and therefore prices for all the other downstream products that use oil.

— Trump is now threatening to end the U.S.–Mexico–Canada trade deal that he himself negotiated and that he claimed, at the time, was the “best and most important trade deal ever made by the USA.”

— Don’t try this at home, kids.

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IF YOU’RE READING THIS, you might be about to help make Elon Musk the world’s first trillionaire.

If so, you’ll also be risking your retirement savings while simultaneously bailing out X and Cybertrucks.

And to top it off: You have pretty much no say in the matter.

That’s because Musk’s SpaceX is IPOing next week, and it’s getting special treatment that allows it to enter many of the major stock indices without meeting the usual requirements to do so. What that means is that if you hold an index fund—which you probably do, if you have a 401(k)—you may be forced to transfer some of your wealth to this money-losing rocket company and, by extension, its megalomaniacal CEO. And you won’t really be able to complain if he screws up.

Let’s talk through how we’re privatizing gains for Musk and socializing the costs for the rest of us.

The rocket stock

SpaceX, the space-travel-but-actually-AI company, will IPO next week at a total valuation of $1.77 trillion. That would make it the largest IPO on record. It’s being valued this high despite the fact that the company loses massive amounts of money—and when I say massive, I mean massive. It lost $4.9 billion in 2025, and almost that much in the first quarter of 2026 alone. The company’s prospectus has a lot of pretty photos of rockets, and not much to show in profits.

Of course, it’s not unheard of for a company to go public before it starts turning a profit, particularly in tech.1 When that’s the case, though, investors often benchmark value against revenues.

But even by that alternative metric, SpaceX’s numbers are kind of insane.

The typical tech firm might trade at 5 to 10 times its revenue. An exceptionally fast-growth AI-related company (like Nvidia) may trade closer to 20 times revenue. But in the case of SpaceX, the multiple will be about 95.2

In essence, the IPO pricing assumes unprecedented, parabolic growth for SpaceX in the years ahead. Put another way, the rocket-ship company needs rocket-fueled profits for any of these numbers to make any sense.

That’s a risk for the casual investor. But it’s terrific news for Musk. He is already the world’s richest man, and now, since he owns roughly half of SpaceX stock, the enormous valuation of the IPO should, ahem, rocket him into the four-comma club.

A Russian nesting-doll of bailouts

With this IPO, Musk also gets bailed out of some of his most embarrassing failures, which he’s buried under SpaceX’s froth.

For instance, X, the social-media platform formerly known as Twitter, got shoved into SpaceX. So if you buy the shiny new spaceship company, you’re also buying a piece of Musk’s decrepit MAGA playground.

Same goes for other Musk screwups.

For example, when no one wanted to buy the ugly Cybertrucks whose wheels3 kept falling off, Musk-controlled Tesla found a willing customer in Musk-controlled SpaceX. SpaceX purchased nearly one out of every five Cybertrucks registered in the last quarter of 2025—meaning Musk booked around $100 million in Tesla revenue by selling trucks to his other companies.

The Boring Company, yet another Musk-controlled firm, is also being paid to do construction work for SpaceX.

In general, Musk has a tendency to take one business he controls and overspend to buy things from other businesses he controls. It’s kind of like a Ponzi scheme, except every subsequent customer is yet another Elon Musk company.

How is all this possible? Why are people still giving this guy money, given these crazy valuations? There are three basic answers:

1. People are genuinely excited about commercial space exploration and think SpaceX is primed to capture the market and become super-profitable someday.

2. There’s a lot of dumb money out there that can’t evaluate the merits of #1 but believes Musk is a visionary. He is, after all, the richest man in the world, so he must know what he’s doing.4

3. There’s a lot of captured money out there that believes neither #1 nor #2 but doesn’t have the option not to buy. These investors are being strong-armed into buying SpaceX because they own index funds that are forced to hold the stock.

Let’s focus on #3, as it probably includes most people reading this newsletter.

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You’re gonna take it and you’re gonna like it

Normally there are a bunch of rules and requirements that public companies must meet before they can be included in major indices like the Nasdaq 100 and the Russell 1000.

For example, stocks typically must be publicly traded for some minimum period of time before being added to one of the major indices. Indices often also have profitability requirements—that’s why Tesla was locked out for so many years after going public—as well as requirements for things like corporate governance and liquidity.

These rules are there to protect investors and the integrity of the index, and to prevent fly-by-night companies from entering the mix.

But this time around, several of the major indices have decided to waive many of these requirements. Not only for SpaceX, to be clear, but for other “megacap” companies expected to IPO soon too (such as OpenAI and Anthropic). The result is that SpaceX’s inclusion in these indices is being fast-tracked. That will effectively force passive index funds to buy it.

Why? Because that’s how these products work.

If I have my 401(k) in, say, a Russell 1000 index fund at Vanguard, I do so knowing Vanguard will invest my money as the Russell 1000 is constructed. My stock portfolio composition will mimic, on a small scale, the composition of the index—it’s indexed to it. So when a new stock is added, the fund has to buy it, at whatever the market price may be. It doesn’t get to pick and choose stocks, or wait until the stock looks like it’s a better or more strategic deal. That’s what it means to be a passive index fund.

A whole lotta money is benchmarked to these indices. About $662 billion is indexed to the Nasdaq 100, for example. It’s true that, as of this writing, not all of the indices will be carving out an exception for SpaceX and the other tech firms: S&P Dow Jones Indices, which runs the most-used index (the S&P 500), announced on Thursday evening that it would not waive its main eligibility requirements after all, surprising markets; but given pressure from market participants, there’s some question as to how long decision will hold.

All the captured index money forced to buy, plus the dumb money worried about FOMO, are likely to reinforce each other and drive prices higher. At least in the near term, anyway. So in that near term, Musk will become a trillionaire thanks to the bending of a few rules.

It may be tempting to blame this fast-tracking on some sort of shady backroom deal—a mega favor for a megadonor made by a Trump administration regulator. But there’s no evidence that’s the case; it’s really more about the not-so-great incentives these index providers face.

The main reason they’re rushing to add SpaceX is that they’re basically competing with each other. Consider a scenario in which the Nasdaq 100 adds SpaceX right away but the Russell 1000 does not. If SpaceX goes up a lot, the Russell 1000 may look bad relative to the Nasdaq 100. Investors may decide to rotate money out of Russell 1000 funds and into Nasdaq 100 funds.

And look, you can’t escape the fact that SpaceX (and perhaps Anthropic and OpenAI) will soon be some of the largest public companies in the world. To the extent that these indices are supposed to represent the market, it would be kind of weird to leave them out.5

Unfortunately, all this is happening amid a confluence of other risks for regular investors, who could soon be left holding the bag.

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With apologies to your 401(k)

If you’re an investor, you’re betting on Musk to deliver on this crazy-high valuation. Which is a risky bet, honestly, given everything we’ve learned about Musk in the past couple of years—including his reported drug use, his bizarre public behavior, and the times he has appeared to undergo a public psychotic break and posted through it. His stewardship of DOGE was a complete disaster.

And, unlike with DOGE, no one can fire Musk if he fails this time.

Even after the IPO, Musk will retain more than 80 percent control of SpaceX. He also chooses the majority of the board. Beyond that, there are a lot of other wild provisions in SpaceX’s governance structure, making it hard for minority shareholders to hold anyone accountable for gross mismanagement.

If Musk decides tomorrow that he’s going to disappear and take shrooms in the desert for six months, investors have basically no recourse. They cannot replace him.

They may not even be able to sue him, based on the fine print in the SpaceX prospectus. Measures banning class-action suits or requiring at least 3 percent ownership before bringing a derivative suit are clearly designed to prevent the kinds of shareholder actions that have plagued other Musk companies.

As Bloomberg columnist Matt Levine put it:

When SpaceX is public, Elon Musk still gets to run it however he wants, and he can do weird stuff, and you have to trust him, and if you don’t like it you can’t complain. This is a sensible goal for Musk in part because he clearly has been burned, or at least annoyed, by the Tesla experience, and he would like to avoid repeating it.

Some of the SpaceX measures, such as forcing shareholder litigation into arbitrations, appear to contradict what the SEC had basically told public companies about governance and accountability for decades. At least until Trump became president, anyway.

Which brings me to the last problem. Shareholders may have trouble holding Musk accountable if he goes AWOL or defrauds them, but the feds won’t even bother trying. That certainly seems to be the case given the light touch the SEC has provided thus far.

So to recap: You and I are going to be forced to buy SpaceX at what appears to be an inflated price; we have no recourse if Musk fail-whales; and our federal overseers are asleep at the switch.

Other than all that, this IPO sounds like a terrific investment opportunity.

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Ramparts

— A reminder that the “oligarchy” is not always as powerful as it seems.

— The latest development in tariff-refund foot-dragging: The Trump administration now says companies must individually sue the government if they want to get back the full value of the tariffs that the Supreme Court had ruled as unconstitutional. To the extent companies worried about applying for refunds before, because they feared retaliation from a vengeful president, this seems likely to make things worse.

— President Trump just signed an order “reclassifying” about 8,000 civil servants so they are easier to fire for political reasons. This has been in the works since his first term. The civil servants I’ve spoken with who have so far been spared from the firings expressed worry that more jobs could be reclassified soon.

— Amazon shut down a contest designed to incentivize employees to use AI because employees . . . used AI to cheat in the contest.

— Finally, some good news: Big Egg stopped being greedy.

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Amid widespread, flagrant corruption happening throughout the government, Donald Trump is trying to impose a gag order on everyone who works in the executive branch.

Every. Single. Person.

This week, the Trump administration proposed a rule for a uniform, government-wide nondisclosure agreement. The draft version of the NDA is supposed to be opted into agency by agency. And while it says signing is “voluntary,” it concludes with a warning that employees can be fired and barred from future government jobs if they do not do so.1 The gag orders would be effective even after civil servants have left government employment—for five years post-departure—and violations come with the threat of criminal charges.

In short, in all but name it would be a loyalty oath to Trump.

Government workers are already bound by strict legal prohibitions against disclosing things like classified or privileged information, personal tax records, and other private administrative data. This vaguely written NDA, by contrast, would bar disclosure of all “non-public, confidential, or proprietary information” or “any sensitive, pre-decisional or deliberative material” that’s not already publicly available and shouldn’t be released under “applicable law.”

Which sounds quite a bit like: Don’t you dare say anything that might be unflattering to this president—or else.

Given the other things the administration has done to eliminate sources of accountability, this gag order seems designed to hide and ultimately enable even more law-breaking across our federal government. It’s among the more alarming documents the Trump administration has produced, once you understand the context. Stick with me as I explain why.

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NOT EVEN DONALD TRUMP’S FAVORITE BRANDS are safe from his economic abuse. Consider the case of Florsheim Shoes, which sells the black leather oxfords famously modeled by Trump’s cabinet members.

“The tariffs have changed fifteen times,” recounts Thomas Florsheim Jr., whose great-great-grandfather founded the brand in 1892. “I think that many businesses felt that the Trump administration was going to be pro-business. And, you know, with the tariff situation, somehow the pro-business thing got lost.”

Florsheim is CEO of Weyco Group, a publicly traded company based in Glendale, Wisconsin that sells several other footwear brands (including Nunn Bush and Stacy Adams) in addition to the family’s eponymous line. Today, Weyco employs about 350 people in the United States. These employees work in design, accounting, warehousing, IT, sales, marketing, logistics, customer service, and so on.

In other words, they do pretty much everything you can think of related to selling shoes except physically manufacture them.

That’s because Weyco shoes, like 99 percent of the footwear sold in this country, are made abroad.1 Virtually the entire industry shifted overseas decades ago, and it is not coming back. Shoe manufacturing is relatively low on the value chain and requires demanding, labor-intensive work, which makes it prohibitively expensive at U.S. wages.

“You really can’t make shoes and sell them in the U.S. unless you want to sell shoes for more than $300,” he says. Florsheim shoes typically retail at less than half that price.

Which is why the whole tariff thing has been so frustrating. Trump’s trade wars have jeopardized the jobs of the hundreds of Americans whom Weyco actually does employ, in those twenty-first-century jobs that the United States excels at creating. And it’s not clear why domestically manufactured wingtips or penny loafers would be of critical strategic interest to U.S. national security, anyway.

Yet at times over the past year, overall tariffs on Weyco shoes reached as high as 161 percent. Which adds up. Over the ten months following “Liberation Day,” Weyco paid the government roughly $21 million in import duties. Florsheim was able to pass along a relatively small proportion of those costs to customers, raising prices just once by 10 percent. His options were limited both because (1) Weyco was already locked into a spring price list for its retailer clients long before Liberation Day, and (2) consumers wouldn’t tolerate price increases much higher than 10 percent. Beyond that point, the company risked losing sales entirely.

Last December, Weyco got hit with a surprise tariff bill for over $1 million. Thomas Florsheim decided he’d had enough.

His company sued the Trump administration, arguing

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IN ECONOMICS, THERE’S A CONCEPT called the “winner’s curse.” It means that the person who ends up winning an auction has often overpaid for the prize. It’s a good way of characterizing the fate of the newly confirmed Federal Reserve chair, Kevin Warsh.

Warsh has been auditioning to lead the Fed for over a decade now, muscling out competitors and massaging his public image. The main way Warsh finally got the gig was by pledging to cut interest rates, which was Donald Trump’s litmus test. Unfortunately for Warsh, he will not be able to deliver on that promise for reasons that are clear to everyone except, perhaps, Trump. This means that Warsh is hurtling toward a reckoning with his benefactor.

This is all related to the scary little chart right here:

Yesterday, for the first time since 2007, rates on new 30-year Treasury bonds surpassed 5 percent. And look, I realize that was possibly the most boring sentence you will read today.1 So let me explain what it means, why it matters to the economy, and why it suggests Warsh is very, very cooked.

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IT STARTS WITH TRUMP’S economic policy agenda.

Inflation had been drifting downward in recent years, at least roughly until “Liberation Day” in April 2025 when Trump announced global tariffs. The rate of price growth soon started ticking back upward.

Then the Iran war happened. And, as was evident in new reports this week on consumer and producer prices, inflation has been supercharged. With consumer prices reaching 3.8 percent growth in April from a year earlier, we’re likely seeing only the earliest glimmers of the war’s effects on prices for energy, food, manufactured goods, and so forth.

Even worse, this one-two punch of tariffs and war threatens to reset expectations for how bad inflation will get. What this means is that instead of these shocks being temporary (dare I say “transitory”), we could be at the start of a vicious cycle in which companies that are fearful of getting surprised by higher prices in the future raise their own prices preemptively today. If everybody does this at once, you get more inflation. It’s a self-fulfilling prophecy.

Companies and consumers aren’t the only ones who worry about inflation. Anyone who lends to the government worries about it, too: They don’t want the interest they receive on those loans to get eaten up by inflation. They want to make money!

This brings us to the infamous 30-year bonds. This week, there was an auction for Treasuries, which are the debt instruments the U.S. government sells so it can pay its bills. And buyers demanded higher interest rates on that government debt as compensation for the very real risk that inflation will run higher for a while. They demanded it both for shorter-term Treasuries and longer-term ones, as well. That’s why you saw 30-year bonds selling at their highest yield in nearly two decades.

If those bonds stay around 5 percent (or higher), a few things can happen.

First, obviously, is that the debt load the government carries becomes more expensive. U.S. debt was already on an unsustainable path, given how much we spend vs. how much we collect in tax revenue. Higher interest rates make carrying that debt even more painful. The government already spends about as much on interest as it does on Medicare. If you’re worried about a fiscal doomsday clock, things like this bring us a few ticks closer to midnight.

Second is that financial conditions for the rest of the economy will remain tight.

Rates for mortgages, business loans, credit cards, car payments, and similar are all sensitive to what happens to rates for government debt. To be clear, most of the time, private debt rates are not mechanically pegged to the rate for a specific Treasury instrument. But in practice, they’re closely related, since Treasuries are supposed to be the safest, least-risky form of debt out there. Everything else gets benchmarked against them.

The more expensive it is to finance a home or a car, the angrier voters will be. This, in turn, will also make Trump mad. And all of this will hem in the Fed, which looks less credible if it’s slashing interest rates while markets are freaking out about inflation.

THIS BRINGS US to Warsh’s quandary. Warsh has said he intended to cut interest rates (specifically, the short-term rates that the Fed has the most control over). But with inflation rising, that objective is increasingly undesirable, or impossible—or both.

Markets have already communicated this: They don’t currently expect any additional cuts through at least the end of 2027. If anything, rate hikes are more likely, particularly next year.

And regardless of what markets are communicating, Warsh himself is primed to believe we need higher rates, too. He is widely known as an inflation hawk2—someone whose concerns about inflation push them to err more on the side of higher interest rates than making risky cuts.

But let’s assume he nonetheless still wants to deliver the rate cuts Trump expects. Guess what? He can’t.

For starters, Warsh will be only one of twelve votes on the Fed committee that sets interest rates, and the rest of the committee is making it clear they’re not interested in more cuts. So Warsh has no good options here.

He could try to convince the rest of the committee to cut rates. But he will almost certainly fail.3

Alternatively, he could watch everyone else vote to keep rates steady (or to raise them), and be a lone vote for cuts. That is, he could throw the rest of the Fed officials under the bus and proclaim to Trump that he really, really wanted to deliver rate cuts, but no one else would cooperate.

I cannot overstate how cuckoo that would be.

The chair’s job, for decades, has been to build consensus. Most of the time, the twelve-person voting committee votes unanimously, with the policy decision more or less pre-negotiated by the chair in advance. There are occasional dissents,4 but the idea of an open dissent by the sitting Fed chair is almost unheard of. The last time it happened was 1939.

Today, it would signal a significant breakdown in leadership. Warsh would look at best ineffectual, and at worst like the sockpuppet Democrats accused him of being when he refused to answer who won the 2020 election. It would be an act of self-humiliation.

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There is another option. Warsh could vote like the hawk that he is in his heart. He could put his name down for either steady or higher interest rates alongside his Fed colleagues. But in that case, he’d face Trump’s wrath—and, possibly, the same type of smears, threats of (illegal) termination, and bogus criminal investigations that Trump has flung not only at Warsh’s predecessor, Jerome Powell, but also at his fellow Fed governor Lisa Cook. For all we know, Trump’s henchman and housing appointee Bill Pulte has already begun amassing an oppo dossier on Warsh in preparation for precisely this scenario.5

If that were to happen, at least Warsh would have someone there to guide him through it. Cook remains on the Fed, awaiting a Supreme Court decision about her fate (though Pulte has recently insisted that if he can get an indictment against her it would prove legally sufficient to fire her from the post). Powell persists on the Fed Board, as well; he chose to stay on after his chairmanship ended as a bulwark for institutional independence. Perhaps just in case, ahem, anyone else at the bank goes wobbly.

Maybe Warsh thinks he can manage Trump. Maybe he thinks his marriage to the daughter of a close Trump ally6 will shield him from the full force of Trump’s rage and retribution. But other onetime confidants with even closer ties to MAGA’s paterfamilias have been shredded for less.

Congrats on your new gig, Mr. Chairman. Good luck to you.

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Ramparts

— The Goodyear tire plant in Fayetteville, North Carolina announced that it will close in 2027; roughly 1,700 people will lose their jobs.

— Perhaps another indicator of a softening labor market: Some big companies are cutting back on their paid leave policies. At one time there was something of an arms race, at least in the tech industry, to provide better and better fringe benefits, including family-related benefits (also fertility benefits, backup childcare, and much else). As the AI-pocalypse comes for tech and other professional services, we may see some of those benefits disappear.

— Speaking of victims of AI: Princeton just chucked its 133-year-old tradition of not proctoring exams and relying solely on a quaint notion called “students’ honor.” The reason: the sordid temptations of Claude.

— And speaking of the victims of AI and college students: The job market sucks for new grads. Or maybe for young people of all educational attainment levels? And why is it seemingly worse here in the States? New Gallup polling finds the United States is one of the few countries where younger workers are more pessimistic about their finances than older workers are; in fact we have the “largest gap of any country in job market perceptions between younger and older adults.”

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IN THE MIDST OF AN ENERGY CRISIS, the Trump administration is paying companies to not build more energy infrastructure.

You read that correctly.

The Trump administration is proudly shelling out almost $2 billion in exchange for agreements from developers to halt wind projects that were already in the works. These projects—wind farms off the coasts of New Jersey, New York, North Carolina, and California—would have generated enough electricity to power roughly 3-4 million households once they came online.

What pot of taxpayer money this payoff comes from, and whether the payoffs are even legal, remain open questions. Even lawmakers don’t know the answers. But these companies should probably count themselves lucky. They got paid to shut down, after all.1

Dozens of other renewable energy projects around the country have not received the same—forgive me—windfall. Instead, they’ve been canceled, stalled, or quietly snuffed out, with zero compensation. The list includes a gargantuan solar project in Nevada and more than 150 wind developments around the country, which collectively could have powered around 15 million homes.2 As a Heatmap headline declared: “Trump is getting away with murdering an American industry.”

Renewables are hardly Trump’s only victim. Our president is basically an economic serial killer, whacking firms left and right.

In addition to the intentional corporate executions—like the deliberate, gleeful “murders” of these wind projects—there are a great many Trump casualties that look more like manslaughter: companies the president is killing by accident, as with the recently departed Spirit Airlines (R.I.P.). The president simply doesn’t understand how his economic agenda of trade wars and hot wars might accidentally kill off already-weakened individual companies—or, in some cases, entire industries.

Just over a year into his second term, the economic landscape is littered with victims mangled by Trump’s agenda. Corporate bankruptcies last year rose to their highest level in over a decade. So join me, friends, for a stroll through the ‘America First’ Corporate Graveyard.

Time to Sell the Farm

Trump often boasts about how terrific he is for farmers. The data show otherwise. Farm bankruptcies rose 46 percent in 2025 from a year prior, and this year the number is expected to be even worse thanks to the Iran war.

Farmers have already lost core markets for staples like soybeans, as China stopped buying from America and turned instead to Brazil and Argentina. And now, U.S. farmers are having to absorb higher costs for diesel, fertilizer, and other key inputs thanks to the war. So their margins are getting hammered thin from both sides. Mass deportations and the cancellation of both domestic and foreign food aid programs have done the same.

Persistently high interest rates, necessitated in part by Trump’s inflationary policies, have weighed on farmers, too.

As with Spirit, Trump has attempted a bailout for farmers harmed by his own policies (euphemized as “unfair market disruptions”). So far this hasn’t done much to staunch the bleeding, though Trump has solicited their gratitude all the same.

Manufacturing a Recession

Throughout each of his presidential campaigns, Trump promised a manufacturing renaissance. This was never likely to happen, despite bipartisan nostalgia for a bygone U.S. manufacturing era. That’s largely because we are now a services-based economy. But a resurgence was especially unlikely given Trump’s specific brand of America First policies, which includes raising costs of the inputs that U.S. manufacturers buy while also closing off export markets where these same U.S. manufacturers hope to sell their products.

The result: There are approximately 80,000 fewer manufacturing jobs today than there were when Trump took office last year.3 Not coincidentally, steel prices here in the United States are about 40 percent higher than those in Western Europe. The increase in corporate bankruptcies last year was driven largely by industrial firms grappling with tariffs.

The sweeping Trump tariffs have been painful enough. But lately, they have been coupled with new stressors resulting from his war with Iran.

For example, aluminum prices are nearly double what they were a year ago, thanks to a combination of Trump’s tariffs; a shutdown at a U.S. aluminum supplier; and the closure of one of the world’s largest aluminum smelters, located near Abu Dhabi, which was struck by an Iranian missile.

This has hit auto companies especially hard. In an earnings call last week, Ford said it expected its commodity costs this year to reach $2 billion, twice its previous projection, primarily because of rising aluminum prices.

Other manufacturers are feeling the pinch, too: In its own earnings filing today, Whirlpool warned that the Iran war had “resulted in recession-level industry decline in the U.S.” As trade nerds may recall: Whirlpool was one of the very first beneficiaries of Trump’s trade wars in his first term, through his global washing-machine tariffs. The company and its workers initially celebrated—but then they were beset by a series of other “America First” policies (including those metal tariffs).

The Supreme Court’s decision in February striking down Trump’s separate, “national emergency” tariffs has provided little comfort to most U.S. manufacturers. That’s not only because the administration has dragged its feet on issuing rebates for those now-invalidated tariffs. The problem is also that many companies were permanently scarred by the business they lost from the tariffs in the first place, and the goodwill Trump frittered away with their customers abroad.

As Pamela Rees, the owner of a small, U.S.-based harp manufacturing company (and a loyal Bulwark reader), shared recently:

Businesses like mine may (or may not) get back tariff monies paid but here is what we don’t get back. When my domestic-based vendors increased their prices to me because of tariffs, I don’t get that difference back. When I lost sales (and we have lost so, so many) to our international competitors because our tariffed prices are not competitive in their countries (remember, tariff wars have two sides), I don’t get those sales back. And the good will my company had built all over the world for our products - how happy do you think potential customers are going to be to buy from me in the future? No - manufacturers have been and will continue to be vandalized by this Trump Trade War and this President.

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The Final Nail in the Coffin

Besides Spirit, several other big consumer-facing firms have also gone under during the Trump II era, such as QVC, Joann Fabrics, and Design Group Americas (a Joann supplier). As with Spirit, these business failures were not due solely to Trump’s actions; bankruptcies are rarely monocausal, and in these cases, the companies were weak to begin with.

But Trump policies were the final nail in the coffin. Spirit was already struggling, and then could not survive jet fuel prices that rose to double its prior projections, swamping its margins. QVC and Joann were both weak before Trump took office, having been displaced by newer online competitors. But higher costs from tariffs put even more pressure on their margins.4

It is, of course, hardly unprecedented for economic policy to kill companies. Republicans have (often accurately) described Democrats as doing this many times over the years, typically by overregulating disfavored firms or entire industries out of business. Again, sometimes this happens deliberately, and sometimes by accident. Renewable projects, for instance, have faced plenty of permitting issues in blue jurisdictions, too.

Either way, Republicans have not always been wrong when they accused Democrats of “picking winners and losers.” But now, they themselves have adopted the same tactic. It’s unfortunate—especially when they so often struggle to keep their chosen winners and losers straight.

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Ramparts

— Speaking of tariffs: The very first tariff refunds are supposed to be issued in a few days, per Customs and Border Protection. But no, sorry, you’re probably not going to see any of that money, at least if you’re a regular consumer. These refunds are for the “trade community.” And on Thursday, a federal trade court struck down yet another set of tariffs that the administration had put in place after SCOTUS smacked down the initial batch.

— The Department of Justice and the Commodity Futures Trading Commission are reportedly investigating a series of suspiciously timed trades in the oil market, per ABC News. What happens if the call is coming from inside the house (as it, uhh, appears to be)?

— Speaking of the DOJ: The New York City Bar Association is holding its annual White Collar Crime Conference next week. Every attorney from U.S. attorneys’ offices abruptly pulled out yesterday, without explanation. It’s not like they’re too busy prosecuting white-collar crime to attend. Federal white-collar criminal prosecutions fell to their lowest level on record last fiscal year.

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— Sen. Thom Tillis (R-N.C.) recently ended his blockade of Trump’s Fed appointees because he said the politically motivated investigation of outgoing chair Jerome Powell was over. Tillis even bragged that he had saved the integrity of the Fed by preventing Trump from further using the DOJ to take over the central bank so he could control interest rates. “The reason I decided to stand in the way of this bogus prosecution of Chairman Powell is not for the one position, but how they could systematically use that if they succeeded with the chair to take out enough Fed voting members . . . to where they could actually control the board outcome.” Well, he may wish to consult with Bill Pulte, the director of the Federal Housing Finance Agency, who said this week that he expects Federal Reserve Board governor Lisa Cook to be indicted, and that this indictment alone (with or without a conviction) would be sufficient to successfully remove her from office before her term ends. (Hat-tip to Wall Street Journal Fed reporter Nick Timiraos for catching.) this.

— Eli Lilly’s blockbuster diabetes drug Mounjaro just surpassed Merck’s cancer therapy Keytruda as the world’s best-selling medication. It’s a new era, boys and girls.

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EVERY TIME REP. JOSH GOTTHEIMER (D-N.J.) lands at Newark Airport, he gets mad. Not about how filthy the terminals are, or those dumb Uber airport surcharges, or even the notoriously pricey meals. No, what inspires the congressman’s wrath is all the pro–New York merch on display.

“Nothing pisses me off more than when I get off an airplane here at Newark . . . and in my face is often a row of shirts in a store screaming, ‘I Love New York.’ Really? We just landed in Jersey,” Gottheimer said Monday.

For Gottheimer, seeing promos for the other side of the Hudson is an intolerable burden. As are the many “I❤️NY” hats and snowglobes at the nearby Jon Bon Jovi rest-stop. (“Makes me want to spit out my coffee,” he said.) But Gottheimer has a solution: a new tax break. The congressman has proposed the “Jersey Pride Tax Credit,” a 25 percent tax credit for businesses that sell New Jersey–branded products in airports, train stations, and rest stops.

New Jersey often has a strange way of showing state pride.1 But in this case, Gottheimer is no oddity. The new fad among Democrats all over the country is trying to win over voters with bizarrely niche, costly, and sometimes regressive tax breaks.

Some are being introduced at the state level, others at the federal. For example, Georgia gubernatorial candidate Keisha Lance Bottoms wants to eliminate income taxes for teachers. Meanwhile Rep. Marie Gluesenkamp Perez (D-WA) wants to exempt cops from federal income taxes on the first $100,000 of their income.

In other words, via the tax code, Dems have sought out a thousand and one little voter payoffs.

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Well, actually, some of them aren’t so little: Sen. Cory Booker’s “Keep Your Pay Act” would eliminate all federal taxes on married-couple households making up to $75,000. Meanwhile, another potential 2028 hopeful, Sen. Chris Van Hollen (D-MD), has collaborated with several Senate colleagues (including Booker!) on a bill that would eliminate federal income taxes on households earning up to $92,000. This would mean wiping out all income tax obligations for about 60 percent of households, according to calculations done for me by both the Penn Wharton Budget Model and the Yale Budget Lab.2

Not to be outbid, California gubernatorial candidate, Democrat Katie Porter, said she would exempt families’ first $100,000 from (state) income taxes if elected.

The bespoke tax-break trend among Democrats is a shift from the days when the party was more inclined to emphasize funding ambitious domestic programs with robust, broader-based tax increases. And it is proof that…

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IF DONALD TRUMP HAS HIS WAY, America’s Worst Airline™ might soon become our national flagship carrier.

Yes, I’m talking about Spirit Airlines.

The ultra-low-cost carrier is going bust. It’s been in trouble for a while: It filed for Chapter 11 bankruptcy protection last summer, for the second time in less than a year, and is now facing the prospect of liquidation. That’s largely because it cannot survive the sky-high1 jet-fuel prices caused by Trump’s Iran war, which is expected to raise Spirit’s costs by an estimated $360 million this year. You can’t sell enough $40 fares to fill that hole in the balance sheet.

One solution Trump is considering? A bailout, on the taxpayer’s dime.

The Trump administration is considering dumping $500 million in taxpayer money into the struggling airline. In exchange, the government would receive warrants allowing it to take up to a 90 percent stake in the company.

“We’re thinking about doing it. Helping them out, meaning bailing them out. Or buying it. I think we just buy it,” Trump said in the Oval Office on Thursday evening. “We’d be getting it virtually debt-free. They have some good aircraft, some good assets, and when the price of oil goes down, we’d sell it for a profit. I’d love to be able to save those jobs. I’d love to be able to save an airline. I like having a lot of airlines so it’s competitive. . . . If we could get it for the right price, I’d do it.”

It’s not clear what value the government would be purchasing; when JetBlue unsuccessfully2 attempted to buy Spirit a few years ago, it said it wanted Spirit’s pilots and jets, not its business model.

Does Trump know he wouldn’t be able to keep the jets—with their non-reclinable seats with minimal legroom? Maybe?

His motivation, instead, appears

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KEVIN WARSH, DONALD TRUMP’S pick for Federal Reserve chair, had his confirmation hearing before the Senate Banking Committee yesterday. The hearing was held under the shadow of Trump’s ongoing efforts to persecute (and prosecute) the current Fed chair, Jerome Powell—a vendetta that simultaneously undermines both the rule of law and the nation’s long-term economic prospects.

It was Warsh’s chance to prove his commitment to independence, and he failed.

He gave plenty of lip service to Fed independence, but he actually needed to answer two specific questions:

1) Is Trump’s criminal investigation into Powell appropriate?

2) What would Warsh do if Trump threatened retribution against him for monetary policy decisions the president disliked?

Both questions are critical, given that Trump’s demands for interest rate cuts—and Warsh’s promise to deliver them—will almost inevitably come into conflict with the inflation stoked by Trump’s war in Iran. But Warsh answered neither. In fact, no one even bothered to ask him the second question.

Kevin Warsh’s “Evolution”

Unlike some of the other candidates Trump has considered for Fed jobs, Warsh is not obviously insane or incompetent. He’s not a clown, or a hack, or someone who makes easily falsifiable claims on TV. On paper, he looks like a terrific candidate. He is polished and fast on his feet, has market experience, and has even served on the Fed Board before (from 2006 to 2011, as an appointee of President George W. Bush). Plenty of people I respect have said he more than clears the bar.

But the question has never been whether Warsh has the brains for the job. It’s whether he has the spine for it. Which he will very much need, given who is in the White House.

As I’ve noted before, Warsh spent nearly his entire career advocating for policy positions the exact opposite of those that Trump demands today. Trump wants looser monetary policy, regardless of economic conditions. Trump even has affirmed that a commitment to cut interest rates immediately was a “litmus test” for anyone wanting his nomination to lead the Fed. But Warsh has generally been considered an inflation hawk, favoring tighter monetary policy with higher interest rates and a smaller Fed balance sheet.

Even in the deepest, darkest depths of the financial crisis—as in, literally one day after Lehman Brothers failed—Warsh said he was worried about inflation. Instead, we immediately experienced deflation.1

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Warsh has been fairly consistent about this positioning with two major exceptions: Each time Trump happened to be entering the White House. Less than two months before Trump was re-elected, Warsh chided the Fed for cutting interest rates. Warsh then reversed himself a few months later, when Trump just happened to be scouting out a new Fed chair.

The timing certainly smelled funny. Particularly given the fact that Warsh had been passed over for the Fed job before, in Trump’s first term, and had attributed his rejection then to the fact that he hadn’t said what Trump wanted to hear.

“My meeting with the president went on for a bit more than an hour, and he was transparent in his views,” Warsh told Simon Bowmaker in a 2023 interview for a forthcoming book (Fed Reckoning: Conversations on America’s Central Bank, due out in January 2027). “It was a very rigorous interview. He asked some very relevant questions, and I offered my best judgments. I left the interview, however, not overly enthused about my prospects for selection. I did not put my ambitions ahead of my principles.”

We don’t know if Warsh’s subsequent transformation from inflation hawk to dove was actually politically motivated. As Warsh said in Tuesday’s hearing, “My opinions change when the facts change.” That is certainly a reasonable approach, and words I hope to live by too.

What makes this latest conversion concerning, however, is how it overlays Trump’s efforts to politicize the Fed, and how Warsh has responded to those efforts.

Trump’s Attacks on Fed Independence

The central bank is supposed to be politically independent. The only way it can keep price growth in check is by being willing to take painful actions that politicians won’t, such as raising interest rates when the economy starts getting too hot—or taking away the “punch bowl” just when the party gets going, as the expression goes.

Politicians pretty much always want to put more booze in the punch bowl—i.e., lower interest rates—regardless of the long-term consequences for the economy. That is why countries where politicians control the money supply tend to have much worse inflationary outcomes.

This was a problem here in the United States too, in the 1970s, when Nixon leaned on the Fed chair to keep rates low. But ever since Paul Volcker helmed the central bank, the Fed has proved its willingness to do “whatever it takes” to crush inflation, no matter how unpopular, and it has aggressively guarded its independence in the process.

Presidents got the memo: However much they might gnash their teeth in private about Fed policy, they knew it was important to stay out of the bank’s way and let it do its thing.

At least until Trump got into office in 2017.

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Trump elevated Powell to Fed chair for a term beginning in early 2018, and within months he was already publicly berating Powell for not doing his bidding. Trump’s angry tweets and interviews about Powell were pretty shocking at the time, at least to us Fed watchers.

But now those early rage-tweets seem almost quaint. Trump has escalated from smearing Powell as an “enemy” of the United States to repeatedly threatening to fire him. Trump actually did try to fire another Fed governor, Lisa Cook, on unsubstantiated allegations that she committed mortgage fraud (this case is now before the Supreme Court). And now Trump’s Justice Department is conducting a politically motivated criminal investigation into Powell, ostensibly related to cost overruns on a building renovation.

The irony is that Powell’s term as Fed chair is already scheduled to end next month. Trump could have just waited him out. But our president cannot help but continue to harass, threaten, and punish his perceived personal enemies, even after a federal court tells him to lay off.

This has all backfired tremendously for Trump.

Retiring Sen. Thom Tillis (R-N.C.) has said he likes Warsh but will not advance any Fed appointments until the investigation into Powell is over. This actually means that Powell could remain leading the Fed for longer, since the law allows the chair to stick around until a replacement is named.2

Warsh Ducks the Issue

So where is Warsh in all this? Mostly silent. But at times, he has encouraged Trump’s bad behavior, at least when he was publicly auditioning for the Fed job.

When asked last year about whether it was appropriate for Trump to publicly jawbone the Fed, Warsh defended Trump’s behavior, and said Fed officials must not be “pampered princes.”

Likewise, when every living former Fed chair signed a Supreme Court amicus brief warning of the dire economic consequences should Trump succeed in firing Cook, Warsh mocked them. “I did not know that senior economic officials’ at the Treasury and the Federal Reserve expertise went all the way to constitutional jurisprudence,” he snarked.

And then came yesterday’s confirmation hearing.

Sen. Angela Alsobrooks (D-Md.) asked Warsh if he would “commit to defending Governor Cook’s tenure as Chairman Powell has done.” She also quoted Supreme Court Justice Brett Kavanaugh as saying that Cook’s firing “would weaken, if not shatter, the independence of the Federal Reserve,” and asked Warsh if he agreed.

Alsobrooks then asked about the criminal investigation into Powell, and asked Warsh if he disputed Powell’s assertion that the investigation and threats of criminal charges are pretexts for disagreements over the Fed’s interest-rate policy.

Warsh refused to answer any of these questions. His rationales (or excuses) were some combination of: he shouldn’t comment on ongoing litigation before the Supreme Court; he trusts the courts; and though he “took a constitutional law class,” he lacks the legal expertise to weigh in.

This was a test, and Warsh failed it. And he knows it. In 2023, in that interview with Simon Bowmaker, Warsh said he had conveyed to the first Trump administration that he would not cooperate with any effort to remove Fed officials over policy disagreements:

Bowmaker: In Nick Timiraos’s recent book, Trillion Dollar Triage, he wrote that at a White House signing ceremony in January 2020, President Trump told you, “I would have been very happy with you [as Fed chair].” What would you have done differently if you had been Fed chair in the 2018–19 period?

Warsh: If you are referencing media reports that the president had grown unhappy with the Fed chairman at certain points, recognize that the Federal Reserve chairman is appointed with a fixed term. If the president wanted to truncate that term and replace the Fed chairman, I suspect that is a case that would have ultimately been decided by the Supreme Court. During the period that you reference, I did hear on occasion from senior administration officials querying about my interest in the role of chairman of the Federal Reserve. My response was that the position was not open and would not be open until the chairman’s term was complete.

How things have changed.

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A Trump–Warsh Confrontation Is Coming

Now one might argue—as some of Warsh’s friends have said to me privately in recent months—that Warsh has to make unseemly rhetorical concessions to get the job. There’s no way around it.

This kind of slippery elision may just be the price of admission for the job. As is the expectation that Trump appointees refuse to acknowledge Trump lost the 2020 election. (When Sen. Elizabeth Warren asked Warsh about this on Tuesday, he also declined to answer.) Most charitably, we can say that however gross these kinds of comments seem, they don’t mean Warsh will do Trump’s bidding if he’s confirmed.

After all, Warsh understands markets, and he has waxed poetic about Fed independence in the past. What matters is how he plans to respond when (not if) Fed independence comes under pressure on his watch.

Unfortunately, in the hearing, Warsh was never asked how he would react if Trump were to, say, call Warsh an “enemy,” or launch a bullshit criminal investigation into him, or try to fire him, or otherwise take him to court. (At the recent Alfalfa dinner, Trump “joked” about suing Warsh if the Fed didn’t cut rates.) When faced with such an onslaught, Powell stood his ground. Would Warsh? We don’t know! He wasn’t asked.

Maybe Warsh thinks he can manage Trump. Certainly every other onetime Trump ally or appointee seems to believe they’re uniquely able to survive a disagreement with him. But smooth and well-connected as Warsh is,3 I am dubious he’ll be able to sweet-talk his way out of presidential wrath. That’s important, because a confrontation over interest rates between Trump and a Warsh-led Fed is starting to look inevitable.

Why? First: Warsh will be just one of twelve votes on the committee that sets interest rates; he can’t deliver them solo.

Second, markets don’t seem to think he’ll really want to. When Warsh was first announced as Trump’s nominee in January, long-term Treasury yields ticked up slightly—suggesting investors expect the Fed to become somewhat more hawkish under Warsh, despite Trump’s demands and Warsh’s recent dovish transformation.

Third, that market reaction occurred before Trump started bombing Iran, leading to severed global supply chains and higher prices.

Developments in the war have led markets to further downgrade the likelihood of big rate cuts this year. Maybe investors will be wrong—particularly if the energy shock leads to a recession—but at the very least, the Fed will be in an even trickier position than it was before the war. Even Treasury Secretary Scott Bessent recently said he’d “understand” if the Fed held off on further rate cuts for a bit while monitoring the war’s impact. If at some point all the Fed’s internal models suggest inflation risks are high and rate hikes are necessary, but at the same time Trump is screaming for rate cuts because he wants to survive the midterms, how will Warsh react?

Senators should have asked that. Warsh should have to answer. Because the public deserves to know.

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WHEN YOU CAN’T OFFER SOLUTIONS, just blame corporate greed. Democrats wrote this playbook, and now the Trump administration has adopted it.

Donald Trump’s war with Iran has disrupted global supply chains. Oil, natural gas, fertilizer, aluminum, helium, plastics, and other commodities that usually transit the Strait of Hormuz were blockaded first by the Iranian navy and then by the U.S. navy too. Additionally, infrastructure around the Persian Gulf has been destroyed, suggesting that even when the blockade(s) end, production won’t resume as normal.

As a result, prices have surged. U.S. gasoline prices just rose at their highest monthly pace on record. Fertilizer prices have spiked too, which will eventually lead to much higher food prices. And voters are big mad.

The Trump administration and its allies have cycled through various deflections and excuses for this mess. Maybe the price increases are temporary, unconcerning, or not that bad. Or, wait—if they are bad, they’re probably Democrats’ fault. Or maybe they’re a small sacrifice to pay for [insert whatever our objective is in Iran].

And now, Republicans are getting around to greedflation. Over the weekend, Trump preemptively criticized fertilizer manufacturers for “price gouging,” an ill-defined, catch-all term meaning ‘prices that are higher than politicians think they should be’:

U.S. Department of Agriculture officials have already begun working with antitrust officials at the Federal Trade Commission and the Department of Justice to investigate whether anticompetitive behavior is driving high costs for fertilizer, machinery, and other inputs farmers buy, Bloomberg reports.

Similarly, Treasury Secretary Scott Bessent said on Wednesday that “We’ll be looking at Treasury to keep the retail gas stations honest. ‘You did this on the way up, you better be doing this on the way down,’” he said, gesturing up and down to indicate rising and falling prices. “And I’m sure the president will call out anybody who’s a bad actor.”

Trump, an icon of the Greed Is Good era who generally has a light touch when it comes to antitrust enforcement,1 appears to be blaming greedy corporations for high prices and prescribing antitrust-related remedies. So let’s consider whether there are merits to this logic.

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LET’S START WITH THE BASICS: Is more competition a good thing? Sure. I’m generally in favor of more aggressive antitrust enforcement (certainly more aggressive than the Trump administration has been to date). But as others have observed, promoting competition is like diet and exercise: good in the long run, but unlikely to solve acute crises.2

And right now we’re in an acute crisis, in the form of a massive supply shock. Whenever there are temporary supply disruptions you should expect short-run increases in prices—and often increases in profit margins as well, which can look “greedy.”

But let’s be clear: The cause of all this is the war; the cause is the closure of the Strait of Hormuz; the cause is Trump.3

What’s more, while the U.S. fertilizer industry is pretty concentrated, the retail gas industry is not. Most of the more than 100,000 gas stations around the country are owned by independent operators, competition is cut-throat, and most operators sell gasoline on razor-thin margins. (The slushies, beef jerkies, and other convenience-store wares are much higher margin.)

None of this is going to stop Trump from fruitlessly jawboning gasoline and fertilizer companies about how they should cut prices, even when doing so is against their economic interest—just as it didn’t stop him from jawboning companies not to raise prices in response to his tariffs.

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ALL OF THIS SHOULD BE A LAYUP for Democrats: Look at the silly things Trump is saying to deflect from his price increases! The challenge, of course, is that Democrats have themselves used nearly identical silly rhetoric too.

They did it when prices surged circa 2021 to 2023, for similar reasons: a COVID-era mismatch between constrained supply and strong demand. In that case, the supply issues were caused by the pandemic and not of Democrats’ making (unlike with today’s supply-chain problems related to Trump’s war). But . . . Biden and the Democrats did boost aggregate demand in ways that made the inflation problem a bit worse than it might otherwise have been, at least on the margin.4

Something similar happened with the great eggflation crisis of 2024. That was also caused by a sudden supply shock (bird flu forcing farmers to cull their flocks).5

But rather than offering boring, technical explanations about supply and demand (which might in some circumstances implicate specific policy decisions), politicians have decided that it’s more politically useful to blame greedy corporations. Both parties do this: Both the Biden and Trump administrations presided over antitrust investigations of Big Egg, and both railed against gas stations for raising prices.

And you can go back much further: There’s a storied history of presidents (and lawmakers) demanding FTC investigations when gas prices rise due to a supply shock, and then not finding anything.

None of which is to say that companies never collude to set prices beyond where market pressures would align them; there are real cases of illegal and anticompetitive behavior (like outright price-fixing); when there is legitimate reason to suspect that’s what’s going on, those firms should be investigated and held accountable.

But when it comes to inflation, if presidents feel the need to Do Something about high prices, launching a performative antitrust investigation is a cheap, easy option, one with seemingly little political cost. Same with yelling about greed, price-gouging, profiteering, and other vague sins that the public loves to hate. The risk in this approach is that none of these actions will actually fix the pricing problem—and so the president just ends up looking ineffectual in the process.

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Ramparts

— Given that those rising fertilizer prices are expected to feed into food prices soon, it’s maybe not the best idea for the Trump administration to propose cuts to nutritional assistance for low-income pregnant women, moms, babies, and toddlers.

— The U.S. fertility rate just hit a record low. This has major cultural, political, and economic implications worth exploring in a future newsletter. In the meantime, you can read JVL’s opus on the subject, from a little over a decade ago.

— Greedflation isn’t the only au courant example of horseshoe theory: Another is data centers. Red and blue states alike around the country are banning them (or considering doing so). The Democratic candidate for Texas agricultural commissioner also recently tweeted that AI data centers cause “chickens to lay 50% less eggs,” among other MAHA-esque claims. Incidentally I heard similar livestock-centric objections to wind farm developments when I reported on that subject in Kansas a few years ago.

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A LOT OF PEOPLE ARE GETTING RICH off the Trump presidency. Donald Trump himself tops the list, of course, but it also includes his kids and in-laws; other grifting nepo-babies; cabinet members (as well as their staff and children), senior aides; and other well-connected friends, investors, and firms.

You know who isn’t on that list?

You.

Yes, you, dear reader—at least assuming you’re not among the small community of courtiers sucking public funds dry. Instead, in virtually every way imaginable, Trump has made it easier for all those insiders to profit and, in turn, rip you off. If you bet on or invest in anything Trump might influence and you don’t have inside information, you’re a chump.

As the expression goes: If you’re not at the table, you’re on the menu.

The recent rash of curiously well-timed trades in prediction markets is one example of how those who have drawn up chairs to Trump’s banquet table appear to be feasting at public expense.

For example, there was the Polymarket account that banked over half a million dollars by betting on Iran strikes and the, ahem, departure of the ayatollah shortly before our military started dropping bombs. Other ‘lucky’ betting-market accounts, created right before the United States invaded Venezuela, engaged only in Venezuela-related bets, and somehow made perfect predictions every time, the Financial Times reported.

Similarly, just this week, a group of newly created Polymarket accounts “made highly specific, well-timed bets on whether the U.S. and Iran would reach a ceasefire on April 7,” Politico found.

These kinds of trades have raised concerns about not only insider-trading based on confidential or classified information, but also the incentives they create for as-yet-unmade decisions. How do we know officials are crafting policy based on what’s best for the national interest rather than what produces the biggest payday?

The risk of public fleecing based on private (or classified) data is not unique to prediction markets. There has been suspicious trading activity in more traditional financial markets, too.

Last month, minutes before Trump posted a market-moving post about his supposedly “productive” talks with Iran, someone (or someones, or some entity) placed bets worth half a billion dollars in oil markets.

“My gut from watching markets for the last 25 years is this is really abnormal,” a portfolio manager told the FT. “It’s Monday morning, there’s no important data today, there aren’t any Fed speakers you’d want to front run. It’s an unusually large trade for a day with no event risk. . . . Somebody just got a lot richer.”

This kind of insider trading is not some victimless crime. When traders front-run a market-moving Trump post, or a military announcement, or some other confidential or classified information, they’re taking money from all the other investors who didn’t have access to that inside information. Put another way: They’re taking money from your 401(k). Or your teachers’ pension funds. Or mom-and-pop investors. Again, all the chumps and suckers who don’t have a direct line to the president.

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Less white-collar enforcement, more eligible white-collar victims

OF COURSE, INSIDER TRADING antedates the Trump administration and has produced its fair share of political scandals in the past. But at least historically federal law enforcement usually tried to crack down on it, along with other white-collar crimes. That is . . . somewhat less true today.

Now, in fairness, Justice Department white-collar prosecutions have been trending downward more or less since the 1990s, with occasional spurts of enforcement (such as right after the 2008 financial crisis). But the Trump administration just hit an all-time low in white-collar prosecutions this past fiscal year, according to data from the Transactional Records Access Clearinghouse.

The Trump administration has dropped 145 major enforcement actions against corporations that it inherited from the Biden administration. And under Trump the head of the Department of Justice criminal division issued a directive last year to turn “a new page on white-collar and corporate enforcement” and divert more resources to bigger administration priorities, like immigration-law violations.

Trump has outlined the same approach through executive orders, including one that called for “fighting overcriminalization in federal regulations.” Another EO essentially adopted higher tolerance for the lucrative nexus between white-collar crime and international bribery—directing the DOJ to temporarily pause Foreign Corrupt Practices Act investigations and enforcement in order to develop a new strategy that safeguards “American economic competitiveness.” Trump has also been trying—with mixed success—to dismantle the entire Consumer Financial Protection Bureau.

Meanwhile, his administration has taken actions that would subject many more people to the riskier markets or predatory acts that these laws and agencies were meant to protect against. Last week the Labor Department proposed a new rule encouraging mom-and-pop investors to stash their 401(k) money in riskier “alternative” assets, such as crypto and private credit . . . right as the opaque and tenuous private credit market may be about to collapse.

Hey, when you run out of greater fools, it can be helpful to mint more of them. Someone needs to be left holding the bag.

Pardon Me

BUT TRUMP IS NOT MERELY content to block prosecutions of new fraudsters. He wants to clear the records of those already found guilty.

He has pardoned or commuted the sentences of dozens of people convicted of fraud and other financial crimes, such as Changpeng “CZ” Zhao, founder of the crypto exchange Binance1; Joseph Schwartz, a former nursing-home owner; Wanda Vázquez Garced, the former governor of Puerto Rico; former Rep. George Santos (R-N.Y.); EV startup founder Trevor Milton (represented by Pam Bondi’s brother); and billionaire former English football club owner Joe Lewis, who had previously pleaded guilty to insider trading charges.

“Over half of Trump’s 88 individual pardons are for white-collar offenses, with money laundering, bank fraud and wire fraud among the most frequent crimes the president has wiped clean,” according to an NBC News analysis from January.

NBC found that the 88 pardon recipients in 2025 had been ordered to pay more than $298 million in fines and restitution—and it’s unclear if the victims will ever receive it. Those being stiffed of their compensation include individual investors, as well as larger groups of victims such as the Oglala Sioux Tribe. (The Crime Victims Fund, created under Ronald Reagan in 1984, has been shortchanged, too.)

But the universe of victims is broader than the direct marks of the criminals whom Trump has pardoned. That’s because this kind of damage to the rule of law undermines faith in the broader market, by destroying trust that promised transactions or restitutions (including those put in place by our judicial system) will be honored.

As I wrote back in 2024, when some commentators argued that Trump’s felonious misrepresentations to banks and insurers were “victimless” crimes because those institutions still got their money in the end:

In a capitalist society, laws against fraud exist to protect not only the direct victims of fraud but also the overall integrity of the marketplace.

The reason we outlaw fraud, among other misbehavior, is to facilitate trust in business transactions. If I sign a contract to pay money in exchange for some service, I want to be confident that the promised service will be delivered. Or that if it isn’t, there will be legal consequences — regardless of the other party’s fame, wealth or political connections.

This level of trust, bolstered by the law, is why companies generally prefer to invest in the United States rather than a “Venezuela” or “Cuba.” The rule of law makes it easier to do business, not harder. The only people who benefit from the freedom to commit fraud are those who commit fraud.

Allowing well-connected sleazebags to lie and cheat hurts lenders, insurers, investors, customers, and others. But it also hurts the competitors of those sleazebags—and, in the long run, anyone else who happens to be engaging in commerce, too.

In this way, turning a blind eye to lawbreaking—whether via insider trading on classified information in newfangled prediction markets, or more traditional defrauding of investors or Uncle Sam—corrodes our markets because it encourages more lawbreaking.

It invites recidivism from those who’ve already been pardoned—as was the case with Adriana Camberos, who recently received her second grant of clemency from Trump (in January he pardoned her for a fraud unrelated to the fraud for which he released her from prison during his first term). But it also encourages more lawbreaking by everyone else. It compromises our democracy but also our collective morality. Because, after all, who wants to be the only chump left not cheating?

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Ramparts

— White House National Economic Council Director (and JVL’s favorite economist) Kevin Hassett predicts 4 to 5 percent GDP growth this year. Unfortunately that is roughly double what every major forecaster predicts, including the Blue Chip survey (1.9 percent); the Federal Reserve (2.4 percent); the Wall Street Journal survey of economic forecasters (2.1 percent); the Congressional Budget Office (2.2 percent, from February just before the war); the Financial Times/Clark Center survey (1.9 percent); and the OECD (2.1 percent). Maybe Hassett’s optimism will still win out, but he is not exactly known for his forecasting marksmanship. That said, he’s undershooting expectations from even more bullish Trump officials, like Commerce Secretary Howard Lutnick who was predicting 6 percent GDP growth just three months ago.

— Speaking of Trump economic advisers, Politico reports that the frontrunner to become chair of the White House Council of Economic Advisers is Chris Phelan, an adviser at the Federal Reserve Bank of Minneapolis. He looks to be a serious economist with an impressive C.V. I’m not totally sure why he’d want the job, but maybe he thinks his recent scholarship on strategic sovereign debt default will come in handy. (Let’s hope not?)

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— The Saudi government will soon be part owners of CNN and CBS, it seems. The Wall Street Journal, quoting “people familiar with the matter,” reports that the Saudi stake in the Paramount takeover of Warner Bros.-Discovery will likely not trigger a mandatory CFIUS or FCC review, which often accompanies a foreign entity gaining control of a significant U.S. business or media company.

— The White House budget proposes massive additional cuts to scientific agencies (including a 50 percent cut to both the National Science Foundation and the Environmental Protection Agency). Even the scientific areas that normally appear to be darlings of the Trump administration are unspared: AI research funding at the NSF, for example, would be cut by a third from its 2025 level.

— I wish we lived in a world where this kind of technological innovation was neither necessary nor profitable.

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I’M NOT SAYING DONALD TRUMP is trying to lose the midterms. But if he were, would he really be doing anything differently?

In recent days, the president has practically giftwrapped affordability-related oppo ads to Democrats via at least four channels:

• his war, and the resultant rising costs;

• his tone-deaf comments brushing off Americans’ concerns about rising prices;

• his proposal for (even more) safety-net cuts; and

• the gilded, marble-walled, money-making totems to Trump himself.

Any one of these things might be seen as political suicide in an election year. But all of them together, at once? It really starts to look like a deliberate plan to undermine his own party. Dems have a unique opportunity to (accurately) blame rising costs on Trump right now, and to shame him for his indifference to—at times, derision of—the pain he has caused. Will they take it?

Americans are big mad about the economy. So mad that they now miss the Biden economy, which trust me when I tell you they absolutely detested:

While some of this Debbie-Downerism may be “bad vibes,” real economic conditions do appear to be deteriorating. New data show that in February we had the lowest level of hiring since April 2020 (i.e., when the economy was shuttered due to COVID). Wholesale prices rose sharply in February as well. And those metrics were captured before Trump decided to start a war in the Middle East, which is making everything worse.

Crude prices spiked after Trump’s confusing and incoherent speech on the Iran war last night, in which he insisted that the Strait of Hormuz “will open up naturally.” Major measures of crude oil futures prices closed Thursday around 10 percent higher, at $110 per barrel; meanwhile “spot prices” for Brent crude reached a whopping $141, the highest level since the 2008 financial crisis.1

And of course the war hasn’t merely forced an oil crisis; we’re well on our way to an everything crisis, given the many supply chains disrupted by the strait’s closure.

Disruptions to fertilizer shipments and higher diesel prices are already raising food input costs. Fuel surcharges for shipments are lifting grocery prices, too. A global helium shortage is jeopardizing the AI boom, since helium is used to manufacture semiconductors (and has lots of other critical industrial applications, like MRI machines). Plastics prices are spiking too. And so on.

These disruptions won’t merely lead to higher prices; they are also boosting the risk of recession. That’s because higher energy costs (among other rising input costs) and lingering uncertainty effectively serve as a kind of tax on nearly all economic activity. Already Goldman Sachs estimates that the war is costing about 10,000 jobs a month.

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Trump’s other misguided economic policies (on trade, immigration, the Fed, etc.) are also compounding the warflation.

For example: aluminum smelters across the Middle East are closing down because of the war. Some have reportedly sustained damage from Iranian drones and missiles. But even if the war ended today, and if a shuttered facility had been completely unscathed by bombing, it can still take up to a year for an aluminum-smelting plant to restart operations. It’s not like flipping a switch.

But amid these developments, Trump has decided to increase the price of products made with aluminum.

Specifically, his administration is overhauling his existing steel and aluminum tariffs so that the tariffs will now apply to the entire value of a product that includes metal inputs, rather than just on the value of the steel or aluminum components alone.

Today is also the one-year anniversary of “Liberation Day,” when Trump announced global tariffs on adversaries, allies, and penguins alike. Even though the Supreme Court struck down those particular tariffs, the Trump administration is still refusing to issue refunds and working to reconstitute the stricken tariffs through other legal authorities.

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Trump Doesn’t Feel Your Pain

What is Trump’s response to concerns over the costs he’s imposed upon American consumers and businesses, via both his trade wars and actual wars?

He says it’s a sacrifice Americans must be willing to make, or, as he puts it, a “very small price to pay.” Maybe, he says, it’s even a good thing if oil prices rise, since America is home to big oil producers. And downstream companies shouldn’t care anyway about the costs: “You make enough money, it doesn’t matter to you, right?” he recently told farmers.

The words of a true political empath.

But it gets worse. Because while Trump is also giving us higher prices, he is also taking away programs to cushion the blow of those higher prices.

For instance, on Wednesday Trump said he directed his budget chief to stop sending states money for daycare because we need that money for wars instead:

Don’t send any money for daycare because the United States can’t take care of daycare, that has to be up to a state. We can’t take care of daycare. . . . We’re fighting wars, we can’t take care of daycare. You gotta let a state take care of daycare, and they should pay for it, too. . . . It’s not possible for us to take care of daycare, Medicaid, Medicare, all these individual things.

This is quite the midterm message: We can afford a billion-dollar-a-day war but not the popular safety-net programs that keep many American families afloat.

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Putting (Your) Money Where His Mouth Is

Lest you think this was merely an errant gaffe, Trump actually did try to freeze federal childcare funds sent to several blue states (though his efforts have been blocked by judges). And soon these spending priorities will soon be laid out nationwide, in black and white, in the White House budget.

Trump’s fiscal year 2027 budget, expected to be released Friday, “will frame his party’s midterm election message around a massive defense buildup, partially paid for by cuts to domestic agencies,” Bloomberg reports.

White House budgets rarely become law, and are usually seen as messaging documents. But on this particular set of fiscal choices, Trump may find a willing audience up on Capitol Hill.

Axios reports that House Republicans are currently weighing cuts to U.S. health programs to offset an additional $200 billion in spending on the Iran war and immigration. These cuts would be in addition to the $1 trillion+ cuts in Medicaid and SNAP that Republicans already passed in last year’s One Big Beautiful Bill, to pay for regressive tax reductions.

Those program cuts, coupled with the expiration of enhanced Obamacare premium subsidies that Republicans refused to re-up, have fed into Americans’ worries about health care affordability. In fact, new Gallup polling shows that health care leads Americans’ list of domestic concerns, with more respondents saying they worry “a great deal” about the “availability and affordability of healthcare” (61 percent) than said so about fifteen other domestic policy areas.

Trump’s timing here is pretty impeccable. The only way he could possibly appear more tone-deaf is if he were simultaneously spending hundreds of millions of dollars on a gilded White House ballroom and erecting a giant golden statue of himself in his presidential library/hotel.

Trump is worsening affordability while building himself a new Versailles—it’s a split screen that Democrats dream of.

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Ramparts

— In case you’re wondering if anyone is getting rich off of those Medicaid cuts, the answer is: Yes.

— It’s a strange state of the world when socialists are fantasizing about the rich getting (even) richer, but the New York City mayor’s office now finds itself doing just that after learning that the city’s finance professionals took in a bit less than expected last year. The city’s 2026 budget under Mayor Zohran Mamdani was counting on the average Wall Street bonus to soar an average of 15 percent above the prior year, but instead it rose “only” 6 percent (to $246,900). Tiny violins, I know; but this leaves an even bigger budget hole for the city to fill. That said, no one in government seems to have had a solid handle on how high the bonuses would climb: New York governor and self-described “staunch capitalist” Kathy Hochul’s office had projected that they would go up by 25.9 percent, resulting in an even larger budgetary hole at the state level.

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— A federal judge ruled that the Trump administration’s efforts to extract a list of Jews from the University of Pennsylvania were legally above-board. You may recall that Barnard got a similar demand last year, and complied. Penn says it is appealing the ruling. Meanwhile, a handful of states say the administration has defied a federal court order by continuing to share the private health information of millions of Americans with immigration officers. (I last wrote about all this, plus other examples of the administration’s abuse of confidential records and compilations of uncomfortable “lists,” back in January.)

— GLP-1s continue to rack up wins, with the latest being a demonstration of the drugs’ potential value for helping to treat psoriatic arthritis. One of my unpopular opinions is that people are probably overstating the medium-term economic impact of AI while underestimating the economic impact of GLP-1s.

— Happy Passover! RFK Jr. is bringing the plagues back.

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MOST PEOPLE THINK ABOUT the Federal Reserve as a dull, technocratic agency. If they think about it at all. Unlike other parts of government, the Fed isn’t trying to make headlines. They’re not trying to have viral moments.

Which is why it’s so weird that Fed Chair Jerome Powell has become something of a folk hero.

The John F. Kennedy Library Foundation announced last week that it would be honoring Powell with its Profile in Courage Award for “protecting the independence of the Federal Reserve . . . despite years of personal attacks and threats from the highest levels of government.”1

That’s a euphemism for: Trump launched a bogus criminal investigation into Powell to try to bully him into doing Trump’s bidding; and at great personal and professional risk, Powell stood his ground. This unlikely gallantry included some (yes) viral moments, such as a tense exchange with Trump on a hard-hatted tour of the Fed’s renovation project. And Powell’s dry-mouthed, direct-to-camera video, released late on a Sunday night, in which he revealed that the DOJ had threatened to criminally indict him.

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The Fed has not released a statement on the award, but confirmed to me that Powell will accept it, and will speak at the May ceremony where he’ll be honored.

For those of us who cover the Fed—as I have for almost two decades now—this has all been super weird. For a few reasons.

First, on the rare occasions that Fed news has gone viral before, it’s never been for anything good. At least I can’t think of anything comparable to this. If normies are sitting around discussing the Fed, and Fed officials are getting memed,2 something has usually gone very wrong for the economy, or monetary policy, or both.

Second, Powell does not want to be a leader of the Resistance. Central bankers are nerds who fiddle with interest rates. They sit around debating the value of r*.3 They’re not looking for political battles; in fact, they deliberately duck them, cognizant of the fact that the central bank needs to be politically independent in order to function.

By “politically independent,” I mean not just that Fed officials have to make decisions without regard to politicians’ preferences. They also must be perceived as operating entirely apart from politics. The public needs to believe the Fed is willing to do politically unpopular things, like hiking interest rates if necessary. That credibility—the mere belief that the Fed would willingly play bad cop—meant it rarely had to, and helped keep inflation low for decades.4

Powell doesn’t want to be viewed as a friend to Trump; and he also doesn’t want to be perceived as an enemy either. He wants to be seen, rightly, as a nothing to Trump.

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This situation is also super weird when you think about the kinds of people and temperaments the central bank tends to attract. The Fed is an institution that operates largely via consensus.5 Fed officials are generally not the kinds of personalities looking for public confrontation, or for opportunities to flaunt how brave they are. They’re not looking to win awards for “courage.”

Then again, maybe most people who truly deserve such awards aren’t those who seek them out. Winning an award for “courage” is like the moral equivalent of having a disease named after you. It’s nice to be recognized, I suppose, but maybe not worth going through what you had to go through to get it.

Just as Trump likes making apolitical things political, he also has a knack for forcing people to reveal either their courage or (too often) their cowardice. Powell’s choices have clearly resonated with the American public. If normie Americans are suddenly stans of a 73-year-old investment-banker-turned-technocrat, it’s because the country has been so starved of basic public virtue.

IF POWELL DESERVES OUR ADMIRATION, his presumed successor may soon warrant our pity: Trump has already put Kevin Warsh in a horrible position, and Warsh hasn’t even been confirmed yet.

Trump selected Warsh to succeed Powell as chair of the Fed when Powell’s term ends in May. A lifelong inflation hawk, Warsh nonetheless secured the nomination after declaring his intention to cut interest rates—something you don’t usually do when inflation is high. Trump had made clear this was a prerequisite for anyone wanting the job, after all.

But Trump is making it increasingly difficult for Warsh—assuming he’s ultimately confirmed6—to keep this pledge.

Even before the Iran war, inflation had been running stubbornly high, boosted in part by Trump’s trade wars. When inflation is elevated, that usually means the Fed wants tighter, not looser, monetary policy—i.e., higher interest rates.

And now, with the war disrupting oil markets (among many others), inflation is expected to rise even higher. The latest OECD Economic Outlook, released today, predicts U.S. inflation this year will be 4.2 percent. Meanwhile investors expect headline inflation to exceed 5 percent in the next twelve months.

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There is an ongoing debate as to how the Fed should think about this risk.

Normally, central bankers would be expected to “look through” a one-time energy shock and not worry too much about it feeding into ongoing inflation. In fact the Fed’s preferred inflation gauge excludes energy and food prices precisely because they’re so volatile.

But that’s not obviously the case now. This is not just an energy shock, it’s arguably an everything shock. And we’ve had five years of above-target inflation already. This raises the alarming question: What if businesses and workers start to expect broad-based price increases, and turn them into a self-fulfilling prophecy? If businesses expect higher prices for inputs, they could raise prices now—and voila, hypothetical future inflation becomes real, here-and-now inflation. The Fed would need to nip that in the bud.

Markets have already been pushing back their expectations for when the Fed will make its next rate cut, and some Fed officials, Powell included, have even suggested that the next move could well be a rate hike.

On the other hand, the U.S. economy has also shown serious signs of weakness lately. The Fed believes there’s been zero private-sector job growth over the past six months. The war is also raising the risk of recession. Maybe rate cuts, usually adopted during recessions, are a good idea after all?

This particular set of economic conditions would be challenging for any Fed leadership to make sense of. It’s genuinely hard to know what to do when you’re staring down the barrel of stagflation. But this will all be especially challenging for Warsh, who has promised to cut rates—and whom Trump has “joked” about suing if lower rates don’t materialize. Warsh and his Fed colleagues presumably also have to think about whether the public will view any rate cuts as an acquiescence to Trump (regardless of their actual rationale), and therefore a threat to that perceived independence of the Fed that I mentioned earlier.

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On the bright side, at least Warsh won’t have to make this decision alone. As I mentioned, interest rates are set not unilaterally by a chair, but by a twelve-person committee. And among those committee members may well be . . . Powell.

Last week Powell made an unusual announcement: Unlike nearly every Fed chair who preceded him, Powell said he had “no intention” of leaving the Fed Board, even after his term as chair ends in May—and will not depart at least until that bogus criminal investigation into him is over. Indeed, he says he may well stay even after the investigation is dropped, depending on what he judges to be best for the institution and the country.

Things may be super weird. But they’re also about to get super awkward.

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Ramparts

— Trump administration officials are reportedly modeling what a potential spike in oil prices to $200 a barrel could mean for the economy, Bloomberg reports. Maybe something they should have considered earlier?

— Relatedly: This past week has seen a brutal series of polls on the economy and Trump’s role in it. Just one example: Approval of Trump’s handling of the economy is at its lowest level across either of his terms as president—and lower than the measure was at any time during the Biden administration.

— Jed Kolko notes that “Miami is the new San Francisco,” in that it had the highest out-migration rate of all large metro areas last year.

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— Deutsche Bank has developed a “pressure index” for Trump,7 defined as a “proxy for upcoming rhetoric or strategic adjustments by the U.S. administration.” Its inputs are: one-month change in Trump’s approval ratings; one-year inflation expectations; and the performance of the S&P 500 and U.S Treasury yields. When the index gets higher, a TACO is supposed to be more likely to happen.

The problem is this measure kinda undermines itself. If it’s a good proxy, people will trade on it; its financial components (S&P, bonds) won’t gyrate as much because investors will anticipate the TACO and not freak out. But then the feedback loop that causes Trump to TACO gets short-circuited, and he doesn’t TACO because no market freakout forced him to.

What we want is probably something more like a positive feedback loop that causes Trump to TACO more. Normally shame might serve that function. But, you know.

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THE IRAN WAR HAS BROUGHT the dreaded r-word—recession—back into play amid a deeply fractured global energy market. To be clear, a massive downturn is not inevitable, nor can we even say it’s more likely than not. Recent surveys of economic forecasters place recession odds over the next year at about a third.

But those surveys were at least partly fielded before recent escalations in the war. And historically, oil shocks have preceded recessions in the United States (and elsewhere). So it’s worth walking through why this war and its resulting supply-chain disruptions have significantly raised the odds of recession—and what that outcome would actually look like. Buckle up. . .

The war isn’t just raising prices—it’s also slowing growth

Even before the war, the U.S. economy was showing serious signs of fragility.

Inflation has been above the Federal Reserve’s target of 2 percent for five years now, and Donald Trump’s trade wars have contributed to rapid price growth. For example, wholesale prices rose sharply in February (i.e., before the war began). Meanwhile, job growth has also sputtered; Fed Chair Jerome Powell said in a press conference Wednesday that if you adjust for what Fed staff thinks may be “overstatement” owing to methodological challenges, there has been effectively “zero net job creation in the private sector” over the past six months. And uncertainty (related to trade wars, regulatory changes, various rule-of-law-type risks) has also been a drag on economic growth.

That was the grim baseline prior to the war. Now layer on to those conditions a global oil shock.

Oil prices have been extremely volatile since the war started. Brent crude briefly surged above $119 per barrel on Thursday morning, then fell back and settled around $108. Fuels made from crude have become painfully expensive, with diesel prices nationwide now above $5 per gallon, and gasoline prices inching toward $4 per gallon. In much of the western United States, they’re already well above that milestone.

Jet fuel prices have likewise nearly doubled in the past month, leading to higher airline fares and canceled flights.

And needless to say, this is not only a U.S. story. Petroleum product prices have shot up even higher in Europe and Asia, leading to fuel hoarding and social unrest. The same holds true for liquefied natural gas prices, although the United States is relatively insulated from that hike because we produce so much LNG ourselves.

Obviously, high fuel prices are frustrating for consumers, who see billboard advertisements on their drive to work every day reminding them how expensive gas keeps getting. But fuel prices don’t just feed into inflation; they also have enormous consequences for global economic growth.

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