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John Podhoretz
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Abe Greenwald
Comfort from the outside in hope for the best Expect the worst Some preach and pain Some die of thirst the.
Matthew Continetti
Way of knowing which way it's going.
Abe Greenwald
Hope for the best Expect the worst Hope for the best welcome to the Commentary magazine daily podcast. Today is Monday, February 3, 2020. The groundhog saw his shadow. So it's six more weeks of winter, and six more weeks and maybe four more years of policy. Winter. I am John Podhoritz, the editor of Commentary magazine. With me, as always, Executive editor Abe Greenwald. Hi, Abe.
Christine Rosen
Hi, John.
Abe Greenwald
Washington, Commentary columnist, Matthew Con Netti. Hi, Matt.
Matthew Continetti
Hi, John.
Abe Greenwald
I was just distracted by your typing.
Matthew Continetti
Washington. Well, I'm distracted by your Fetterman. Look, everyone who watches our show on YouTube will see that our editor is honoring the great American senator John Fetterman here.
Abe Greenwald
Or Emperor Palpatine. Yes, or the bad guy, Emperor Palpatine. And not to give anybody free ads, but this is a quince hoodie and I can't recommend it highly enough to, of course, our social Commentary columnist, Christine Rosen. Hi, Christine.
John Podhoretz
Hi, John.
Abe Greenwald
Who is in no need of a hoodie.
Matthew Continetti
May I explain my typing now that we've introduced Christine? It's just you mentioned Punxsutawney, Phil and my lovely wife informed me that there is an alternative groundhog. There is Buckeye Chuck. Buckeye Chuck actually says that winter might be shorter this year and he apparently has a higher prediction rate. So all I'm saying is it's just like the economic models on the Trump trade war. You get varying outcomes. You get to choose which. Groundhog.
Abe Greenwald
What a transition. What a transition.
Matthew Continetti
Thank you.
Abe Greenwald
Okay, so apparently in about 24, 38 hours or something like that, the trade war begins. We have 25% tariffs levied on Mexico and Canada and 10% on China. Nobody knows what's going on because these are simply. These have been sort of declared. There is some kind of a document. It's not clear how they're implemented or what, what happens. And of course, now, in within minutes, the Canadians and the Mexicans in particular have responded with their retaliatory tariffs. And apparently the document that Trump put out on tariffs said, well, if you're going to retaliate against us, we're going to retaliate even more against you. And so here we are in contravention of all economic orthodoxy. From the day that I was born and like 25 years before the day was born, as a result of the Hawley Smooth tariffs of the 1930s and everything like that, we are now entering into a period of tariff war. We were told, we have been told that basically the laws of physics and economics and rational sense and all of that show that this is a self defeating, disastrous, internationally destabilizing, economically destabilizing approach. And yet here we are running headfirst into it. I won. I did. As I said just before we came on the air, it's time for John's Math corner, which is bad because I'm really bad at math.
John Podhoretz
Bridger loins, listeners. This is, this is a big one. I saw the scratch pad.
Abe Greenwald
I'm just warning you that these, what I say are percentages may be off.
Christine Rosen
But, and it's not like we correct we just not along with the numbers.
Abe Greenwald
Yeah, we are. Okay, so I looked up. So until the income tax was imposed in 1913 by constitutional amendment, the federal government funded itself half through excise taxes, internal domestic taxes and half through tariffs. The size of the federal government in. Of the federal government of the United States in 1901 was $525 million. So that would mean if half came from tariffs, it's about $262.5 billion.
Matthew Continetti
And maybe I can just add because my research complements yours on this.
Abe Greenwald
Wow.
Matthew Continetti
That number you gave the figure, but that is about 7% of Americans, America's economy. So government as a share of the economy in 1902, McKinley time.
Abe Greenwald
Yes.
Matthew Continetti
Trump's favorite president was 7%.
Abe Greenwald
Right.
Matthew Continetti
Very small.
Abe Greenwald
Right. In 2019, which was the last number in the table that I. So I'm sure there's newer numbers, but this was the bottom that I looked at. The federal government is now $4,728,790,000,000. So it's 4.7 to $4.8 trillion. I'm sure it's now closer to 5 or over 5 since this table was 2019, which means that the size of the federal government in 1901, when tariffs were the main source of the funding for the federal government was 0.01%. Not 0.01, which would be 1/100 of a percent, but 1/100 of 100/100th. So when Trump says we can have a new age in which tariffs are going to pay for everything, we just need to know, as Matt says, the federal government is now 23%, 23% of the US economy, but it was 7% back then. And indeed, if you do the inflation calculator on that $525 million. Excuse me, on the $260 million gotten from tariffs, and you said, okay, how much would that $260 million be in $2024? It would be about 800 billion. So the federal government, which was funded by half by tariffs in 1901, would be funded by a fifth by tariffs in 2024 and, or 2025. And that does not take into account the effect of the tariffs on the overall economy. Meaning this is just out. This is just government, the size of government and the spending of government. It does not deal with the overall economy. It does not deal with the effects of tariffs on the overall economy, on how other governments, what, what cost this is going to impose on consumers, on manufacturers, and what overall economic activity is going to be affected by the imposition of tariffs. All we know is that they are, as this number suggests, an extraordinarily inefficient. You are substituting, you are claiming that you were going to get $800 billion when the cost might be sort of some version of $800 million, when the cost to the overall economy might be in the trillions, thus reducing, potentially even reducing the size of our gross domestic product from its current. I don't have it in front of me. 23 billion, 22 billion, trillion, trillion. Excuse me, to something else. Inflationary, recessionary. Very few things can be inflationary and recessionary at the same time, but tariffs can.
Matthew Continetti
So there are a few other differences, first between McKinley's eras and ours, and then between Trump War 2.0, Trade War 2.0, which was launched yesterday, and Trade War 1.0, which was launched in around 2018. So just to talk a little bit about the differences between the American economy and the world today and in McKinley's time, William McKinley's time, at the turn of the 20th century, we went over the government figures. So government's much, much larger now than it was then. Another difference is the composition of the American workforce. You know, at the time that McKinley was president, a third of American workers were on the farm. We were still an agricultural economy. And the Another third.
Abe Greenwald
Wait, and what's the number now? Less than 1%.
Matthew Continetti
Oh, yeah, yeah, right.
Abe Greenwald
And then it's like 0.75% of American workers work in. Work in agriculture.
Matthew Continetti
So the other third was manufacturing. That's what Trump likes. Right. The industrial might, which was still just about a third of the labor force when McKinley was there, and it has dropped by about 50%. I think it's around 15 or so 10. Between 10 and 15% of the workforce. We have an economy now where most people are in services and in professions. That's how they make their living. Another difference is McKinley, Trump's favorite president, was an economic nationalist and a protectionist, to be sure, but he also presided over an era of mass immigration. So we're trying something new here, which is we're going to have an economic nationalist policy while also having a restrictionist immigration policy, too. So that will add to the uncertainty economic effects of this Trump war, though, based on the last one, we could say that economically, in terms of GDP and in terms of prices and even in terms of manufacturing employment, the results probably aren't going to be good. And so this is why I just want to comment a little bit on the differences between what happened in the first term and what's happening now, really, at the outset of the second. Maybe that's the first difference. If you recall, it took Trump a little a while to really ramp up his trade war in his first term, and that's because there was internal pushback to a lot of his ideas about international economics. Well, that's not the case anymore. The key figures around Trump agree with him. There's really only one figure who's part of the Trump economic team. That's Kevin Hassett, a former AEI scholar who is a free trader, known as a free trader. But he, too, understands Trump's tariffs mainly as a negotiating tool. So there's no internal pushback. The second thing is these tariffs are much larger than the tariffs imposed during Trump's first term. In Trump's first trade war, there were tariffs placed on about $380 billion worth of imports. Mainly about China, mainly on China. And those were the tariffs that have persisted until this day. Trade War 2, the sequel, affects $1.4 trillion of imports, and the time on which these duties are being imposed is much shorter. So if the first trade war took some time to scale up, this one is starting with the bang. Canada, Mexico, and China are our three largest trading partners, and China, of course, is an adversary to the United States, whereas Mexico and Canada are traditionally thought to be allies of the United States. Just one other comment too. I looked this up. So the Trump Trade War 2.0 basically blows up. The U.S. mexico, Canada Trade Agreement, which was negotiated under Trump. And USMCA was negotiated because it was thought that it was time to update the previous North American Free Trade Agreement, the NAFTA agreement, which Trump hates. At the time of NAFTA, when NAFTA came into existence in the early 1990s, the average American tariff on Mexican imports was 2%. And NAFTA actually replaced an earlier free Trade Agreement, the U.S. canadian Free Trade Agreement, which was implemented in the late 80s. When the US Canada FTA was implemented, the average American tariff on Canadian imports was 4%. So what Trump is doing is basically we're beyond USMCA, we're beyond NAFTA, we're putting duties of 25%, which I think you'd have to go back into at least the middle of the 20th century to see similar things. Interestingly enough too, when NAFTA was implemented, the average Mexican tariff on US Exports, that is what the Mexicans charged Americans for sending products to Mexico, was over 10% when all was told. And I just want to say, is the Mexican economy really something we want to emulate?
John Podhoretz
There are also, there's a couple of ideological contradictions here too, which existed obviously, as Matt notes, the first time Trump tried to do this tariff business. But they seem more stark now. First that he ran on saying he was going to improve the economy, and inflation being one of the preeminent things voters were worried about. We know from experience that tariffs tend to be very bad with that. But there's another thing too, which is that he's running on this idea of streamlining government, making it more responsible, firing all these federal workers, really breaking down the bureaucracy. Tariffs require more opacity, more bureaucracy, more micromanaging by federal government officials. I learned this by looking up something which I don't know if all of our listeners know existed. I certainly didn't. There's something called the Harmonized Tariff Schedule of the United States, which is, you know, vast and bureaucratic and is basically why most economists believe that tariffs are bad for the economy, because it does have to be micromanaged in this way. It also discourages the kind of investment and growth that we want our businesses in this country to be doing because they have to engage in all the rent seeking behavior of anyone trying to lobby the government on the business's behalf to lower their tariffs, exclude their products from tariffs. So it becomes actually this vast bureaucratic morass that he's creating at the same time that he is, you know, slashing and burning another government, government agencies. If it has this, this decided economic impact on American voters, they will and should punish him for it.
Abe Greenwald
When we talk about government reforms and very large scale government reforms, there was always a giant roadblock. And that roadblock is the transition time. So, for example, now we're talking about economy. All economists say tariffs are bad. Almost all economists say tariffs are bad. Almost all economists say that the housing mortgage interest deduction has been a horribly distorting event in the course of the construction of the American economy, particularly as we go into the 21st century. And similarly, that the decision to have income taxes collected through companies and their payrolls and health care administered largely through the business that you work for and not as an individual matter connecting you to the federal government. That these were all terrible policy mistakes, taken, done in innocence or out of a desire to be inefficient or whatever, and that they've had these terrible long term consequences. And a lot of people agree with this. And then the problem is when you say, well, we need to lift the mortgage interest deduction, you're like, but there's going to be a 10 year period in which prices will then have to find their proper level. What happens to the people who are living in that 10 year period when the value of the product that they bought two years before the mortgage interest deduction is eliminated? They paid a rate for their house, they paid a price for their house that involved calculating in the mortgage interest deduction. Now it's going to be gone. What happens to them? Their wealth is chewed up. What happens to people who have private, who have their health care through their company and that's lifted. What's the 10 year process by which that all harmonizes? Trump last night was forced to say that the tariffs were going to cause some pain before they brought in this golden age of American everything wonderful that isn't, with no bad consequences. But the period of pain is going to be his presidency. In other words, it's not going to clarify itself in six months to a year, year and a half. If for some reason the tariff system works in the way that the fantasists who love it want it to work, it will restore American manufacturing. It will make it so that Americans buy goods from the United States because in the end, they will be cheaper than goods from abroad. Therefore, Americans will be fully employed, salaries will go up, everybody will profit. But though I don't believe that that would be the outcome. Even if it were going to be the outcome, any sane person knows that that will take a decade to a generation to effect.
Christine Rosen
And the pain, John, that you're talking about is of a magnitude that we haven't seen because we're talking about these giant percentages passed down immediately to consumers. I mean, this is not going to be, this is not going to be a gradual pain. You know, this isn't the frog slowly boiling. This is an immediate.
Matthew Continetti
We'll see about that. It's interesting, you know, the Canadian currency and the Mexican currency have both fallen in overnight trading. And this exchange rate mechanism might actually negate some of the inflationary effects of the tariff. However, it also means that the Canadian and Mexican imports will be cheaper, which means we'll buy more of them, which means that the trade deficit, which is Trump's real fixation here, will increase. And so this is why having a stationary state view of the economy is often counterproductive, precisely because the economy is so large, it's so complex, it's so dynamic, and it's beyond any one person's control. So I've always been of the view that let's see what happens. And oftentimes the most hyperbolic scenarios, pro and con, probably don't work out, even if the empirical data shows that Trade War one was a loser, did not work, and Trade War two probably will have the same. I will say, though, trying to understand why this is happening is interesting. The first is Donald Trump, since he made his declaration of public intent in 1987 in a full page ad in the New York Times when he was thinking of running for the presidency in 1988 and chose not to, ultimately. But that was when he really got interested in politics. He said, our allies are ripping us off. He has been consistent on this point now for decades. He does not think of Canada and Mexico and Europe and Japan and South Korea as allies because he has his real estate, property developers view of the world. There's a deal. Every deal has a winner and a loser. This is totally contrary to economics.
Abe Greenwald
As additive, right?
Matthew Continetti
As additive and as understood by Adam Smith in the wealth of nations, which is you both benefit from trade. That's right. So he has a completely contrary view and he understands this, this mechanism of how allies are cheating us through the trade deficit, which again, the trade deficit is a number. Basically. It's, you know, it's how much we're importing versus what we're exporting. But most economists will tell you the trade deficit is one. It's a function of our budget deficit, because that's what we're getting in return for what we're buying overseas. We're getting foreigners to subsidize our national debt, our profligacy, and two, we're getting cheap goods. So you know, what is, what's really harmful here? Trump thinks that we're being ripped off. And so this is the, this is him unburdened by having any internal, by what has been unburdened by what was the case in his first term, finally pursuing his objectives. And that's why it's an exciting time to be alive, because we have no idea what's going to happen next. And some of it's just finally, Christine, I think Greg Epp put it, Greg Epp of the Wall Street Journal put it very well, which is for Trump, this is all financial gun vote diplomacy, because the tariffs, they're going to be a mechanism to, in Greg Epps words, annex Canada, take Greenland from Denmark and the first step in seizing control of the Panama Canal, all of which seem to be on the table now in the first two weeks of Trump 2.
Abe Greenwald
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John Podhoretz
This episode is brought to you by Shopify. Upgrade your business with Shopify, home of the number one checkout on the planet. Shop pay boosts conversions up to 50%, meaning fewer carts going abandoned and more sales going Cha ching. So if you're into growing your business, get a commerce platform that's ready to sell wherever your customers are. Visit shopify.com to upgrade your selling today. But this is actually, this is an important point because I think the similarities between this episode and stuff that happened in Trump one were quite striking to me, and that's that we've heard two things about these tariffs. One is that he's just using them as a political weapon. He's going to get his way. He might back off. He's using it as a negotiating tool because he's a businessman. We heard that the first time around. But the tariffs are about to be enacted. And two things about them, if he actually cares about our power in the world, the harshest tariffs should be placed on China, but the weakest ones were placed on China and the harshest ones on our allies. So that's one thing. But the other thing is that once again, we have this entire universe of people trying to create an intellectual scaffolding to explain Trump's absolutely very, I think Matt's absolutely right, very straightforward thing, which is that we're getting ripped off. I think this is the way to stop getting ripped off. And then there are all these complicated theories. Who's behind it, who's, who's advising him, who's doing this. It's not that complicated. I think, you know, our colleague Seth on on went on Twitter this weekend, was like, he just likes tariffs. Like he doesn't actually care about the intellectual scaffolding. But we will all be hearing these stories about, oh, he's so prescient, he wants to bring back this heyday of manufacturing in the US Et cetera, et cetera. None of that's true and none of it is likely to happen. But again, this is what's so evocative of the first term, where everybody's scrambling to justify and explain something that is actually quite simplistic when it comes to what Trump is doing.
Christine Rosen
Also, can I just say, I think this is the thing now that's going to put him on the defensive day in and day out. You have a certain contingent of the media and liberals who hated deportations, but countries behind it. This is going to be measured, tested every day, and he's going to get testy about it. It's going to become the sort of battleground now. And it's long term, relatively long term. I mean, we don't know, but it's. It's not. It's not over tomorrow.
Matthew Continetti
Well, just wait until we invade Panama because, like, that's two weeks away.
Abe Greenwald
I, you know, like, this is like listening to yacht rock radio. We invaded Panama once already. People don't even remember this. I was listening to Nats and my favorite show up first on npr. And there's something like. And our close relationship with Panama over many decades is now being tested. We went to war in Panama. Panama was being run for 20 years by a crazy dictator named Noriega. Like, this is not whatever. I just, I needed to put that in there because we don't want to, like, start writing some bizarre, rosy history. But I think a very much larger point emerges from both what Christine and Matt are talking about that is so big that we don't even have vocabulary to deal with, which is that we have a president who very possibly for the first time since Andrew Jackson, I would say, does not believe in friends, does not believe in alliances, does not believe that the United States benefits from steady relationships with countries that are not us. This is a very, very, very, very big thing. For centuries in Europe, the incapacity to maintain steady diplomatic relationships that, you know, in which tensions could be ameliorated before people started shooting guns made Europe an incredibly unstable place. And the world took the lesson at the tail end of the European domination of the world in the first half of the 20th century, that this was not a good way to go. That Europe's constantly shifting alliances based on nothing other than immediate convenience or whoever was mad at who inside the giant hemophiliac, creating royal families of Russia and Germany and England, all of that. And Austria, you know that, you know, this cousin was mad at that cousin, and this one wanted that piece of land. And that this, what this led to in the modern era with modern guns and modern weaponry and modern communications, was mass murder and civilizational collapse. That we better figure out a way to have alliances that seem mutually reinforcing to the benefit of everybody, and in which the goal was a level of pacific harmony that meant that you gave up a little something, they gave up whatever. Trump looks at this and says, you know what? I don't have any friends. I don't have any friends in business. Nobody in business has friends. There's no such thing as an alliance when you're in competition. Right. Microsoft doesn't have an alliance with Apple. In fact, they go at each other. That's the way the world really works.
Matthew Continetti
And he thinks that the post war era was a loser for the United States.
Abe Greenwald
Yeah. Which is, of course, if we could just say wrong. Psychopathic wrong. It's not just wrong. The United States has been the dominating force on the planet Earth since 1945. Some of that was structural because from 1945 till 1960, we had 60% of the world's industrial output because most of the other major industrial countries in the, in the. Had been destroyed, physical plants destroyed, and had to rebuild ever since then. We have the world's largest economy. We have the world's largest, you know, for, certainly in terms of the nature of the, the world's largest per capita income, family formation, you know, like stability, innovation and political stability. We don't rewrite our Constitution every four years. We don't have, you know, we, we, we have, we have a, we have a stable. Though people in America don't really believe this, we have an insanely stable political system that has allowed the country to flourish and prosper. We can shift from being a manufacturing country to a services country without blinking an eye. In a weird way, though, it, of course, it has terrible consequences. It has a lot of effects. I'm not saying it doesn't, but the idea that we're a net loser and that Europe is a net winner. Where is Europe a net winner? Britain is not a net winner. Germany is not it. Germany used to have the strongest currency on the planet Earth. When I was a teenager in the 1970s, the mark was a more reliable world currency than the dollar was. It was, that was sort of like. It wasn't the, it wasn't like the base of the world economy. But if you wanted stability in your currency, you wanted the mark, not the dollar. The dollar is now the international reserve currency of the planet Earth. It is. So anyway, I'm just saying that Trump's view.
Matthew Continetti
It's wrong.
Abe Greenwald
Is wrong. It's disastrously wrong.
Matthew Continetti
But.
Abe Greenwald
And people, people assume somehow that you can have it both ways, like, we can still be us and we can do what Trump wants to do.
Matthew Continetti
Well, what I'm saying is we don't know where we're going.
Abe Greenwald
Right.
Matthew Continetti
Well, that's because the thing about his view is it's been consistent the whole time. And he's won the presidency twice. And this, this weekend was for A lot of people. Oh, blank. He really means it.
Abe Greenwald
He really means it.
Matthew Continetti
He really mean. And it's not just the trade war. It's what's happening in Panama, it's what's happening in Denmark because of Greenland. It is Doge. It's Elon Musk. You know, I like, you know, my beltway conventional wisdom that I talk about with my friends at our cocktail parties, we were all saying, ah, well, you know, Doge, it's going to have a little office and probably be better on the deregulatory side than the spending side. I didn't quite anticipate that Trump would open up the federal government to basically, Tesla and these employees of Musk are now in every agency, including the key agencies like GSA and opm, which do procurement and then personnel for the federal government. And they're like, literally pressing delete on whole programs. I don't know where that's headed. Yeah, I don't think anyone does. And so what this says to me is Trump, you know, we've said, we said when he was elected that Trump was going to be considered one of the most consequential presidents and, you know, in America, in modern American history. But now it's. It's real. I mean, and it's not clear to me. And it's two weeks, and so it's not clear to me what the world looks like at the end of the year.
Abe Greenwald
Yeah.
Matthew Continetti
Much less the end of four years of this.
Abe Greenwald
Right.
John Podhoretz
But it's tempered enthusiasm for disruption, I think, on the left side of the aisle, which used to love disruption in all things.
Abe Greenwald
It's, by the way, one thing to add. One thing to add to the, like, list of people who are going to be, you know, upset and everything. Right.
Matthew Continetti
Is.
Abe Greenwald
Is federal workers. So it. What, What? It amuses me. I'm sorry. It amuses me because it's not people. People shouldn't have job anxiety if they can help it. But the. There's this whole thing where all the reporting on what Doge is doing and what is happening is this has left the federal workforce in a state of extraordinary anxiety. First there was the back order that everybody has to work five days. Then the idea, well, if you don't want to work five days, just send, you know, I quit in response to this email. We'll pay you through the end of September and get rid of you, and that's fine. And then we're going to do this and we're going into the innards. Now. This is, and this is making terrible anxiety how dare, how dare Elon Musk and his people go into, you know, the USAID and.
John Podhoretz
Okay, but actually, you know what, I will. I have to defend the people who are a little concerned about a private unelected citizen who owns a business that does a lot of business with the federal government in terms of contracts having access to the amount of data that he now has access to. Because the privacy concerns there alone should not be a partisan issue. That is not necessarily something ever happened before.
Abe Greenwald
Okay, first of all, the privacy of usaid, which is actually, well, not.
John Podhoretz
But just the general access they have through OPM and other places through aids.
Abe Greenwald
Privacy like AID is not the Social Security Administration or the IRS or even the payroll department of the federal government. USAID is a grant giving agency that hands out federal government money to NGOs and foreign actors and things like that. And that they have a skiff which is a, which is a secure self contained room so that private, so that there's secrets and think, you know what? The hell with that, I'm sorry. Like that is not what AID is supposed to be. It's not supposed to be. Now maybe it is. Maybe it turns out AID is actually an intelligence agency in the form of a, of a grant giving body and that there's a lot of stuff going on there where they're running money through that is going to bribe people and do all that, which will also be something that we may find out about. But what we heard, it was like people at USAIDA were like, you are not going in that room. How dare you. And then they're saying like, no, I'm sorry, the President has sent us. President sent us. He's your boss too. And he says we can go in this skiff. And then they're almost like saying, do you have a warrant? Where's your warrant? You can't come in this room. I'm not making light of the fact that things are happening here that have never happened before. And it's conceivable that they are of somewhat dubious legality. But we don't know that they're of dubious legality. We don't know that AIDS writ means that it has secure, that it's supposed to have a skiff. We don't know that there's a budget line for a scif. We don't know that there are rules governing what the security clearances are for for people who work at usaid.
Matthew Continetti
I had always thought it was part of the State Department and it turns out it not. And that's one thing that Trump is thinking of doing. I also kind of. I will admit I'm biased here. If it makes Samantha Power angry, I'm kind of for it.
Abe Greenwald
Yeah.
Matthew Continetti
And she, of course, ran USAID under Biden, and Biden put her in the Cabinet, which I thought was interesting. And she's very angry at what's happening here.
Abe Greenwald
Yeah. So I don't mean. Honestly, I genuinely. Because I think Christine's point, the larger point is they are doing the thing that. That disruptors do. Right. Which is that they're. They're marching in and they're breaking things. And the federal government is not designed to be a place where you march in and break things. If you have a private company, you buy your company, you buy somebody, you buy another company, you can do whatever. You walk in, you can break their computers, you can tell everybody to walk out the door in five minutes, and you no longer have jobs and all of that. The federal government is not designed to work that way. No one has ever treated it this way. Although apparently the buyout thing happened already. I didn't know this. I read this over the weekend, that in 1993, as part of Al Gore's Reinventing Government program, there was, in fact, a government buyout of federal workers. Now, I think it was in a very limited. It was like a pilot program, and it was very limited. Limited to certain departments and all of that. But even that thing that we heard that is like, what is going on? You're not allowed to do this has actually, actually happened 30 years ago under a Democratic administration.
John Podhoretz
But by, and, but buyouts at the government, federal government worker level also introduced this little kink in the, in, in the narrative that I think that the Doge and Trump people want to tell, which is that the. The smart, entrepreneurial people often will take the buyout because they can go find work in the private sector. Those are the people you most want in government, the ones left behind.
Christine Rosen
Don't take the buyout.
John Podhoretz
We don't want them.
Abe Greenwald
Right. This is what destroyed journalism.
John Podhoretz
Yeah.
Abe Greenwald
In journalism, what destroyed most of American journalism was the decision that people made to offer rather than. Because, you know, they might fire young people, women and minorities, and then they would get in trouble. They would offer, you know, you. You need to. You need 200. 200 people to leave your payroll. You get a buyout. And who left? The most senior, the most experienced, the most talented, the most and the most expensive and the most.
John Podhoretz
And a lot of them were editors, too. A lot of editors. Like people who had this very important role.
Abe Greenwald
You're right. That this is not people who are particularly in the sciences and things like that or in places where we want them like I don't know, Energy Department of Energy running very complicated things in the Energy Department that they might want to, you know, they could, they could certainly that could be convertible to stuff in the new energy economy. But we need them to monitor power stations. I don't even know what they, you know, it's like these jobs, you don't have any, you don't want them leaving, but they will probably be the ones who leave. And you're right. So managerially it's not that it's not a great system, but I thought you were going somewhere else, which is Trump is doing all of this. And I think that he would be in better circumstances to do it and that we're. And to avoid the July 2025 complete crack up of Trump and MAGA if things go wrong, if he just had a better hand to play in the Congress. He is acting. LBJ did the Great Society with 69 Democratic senators and a clear almost hundred seat majority in the House. And he revolutionized the federal government in two years with 78 pieces of legislation collectively known as the Great Society with what was an unambiguous mandate to do whatever the hell he wanted. Democratic Party had total control of the government and almost total policy. And he almost didn't get some things right. He almost didn't get the Civil Rights act in some ways because of Southern senators and all of that, Trump has a three seat majority in the Senate and a one seat majority in the House. And at some point he is going to get crosswise of things that he is trying to do that really do require congressional authorization.
Christine Rosen
I think the LBJ point is interesting because it brings up something else. One way to look at all of all of these things is as you say, John, disruptors. Disrupting the way they do. Another way to look at it is that this is what liberals and progressives do when they start fiddling with things and or tearing things down without paying heed to the reasons that those things were there in the first place and giving thought to what happens without them. And that is very much Trump. And the experimenting here to me feels very left. It doesn't feel right or conservative at all.
Abe Greenwald
Well, it's radical right, so. And conservatism is by definition, conservatism is by definition anti radical.
John Podhoretz
And he's. But he's not a conservative.
Abe Greenwald
I mean I say that MAGA and ultimately here in the end is how we learn that MAGA is not conservative, but this what was radical.
John Podhoretz
But this is why I think the folks on the left and you know, I want to talk about the DNC convention just briefly as a little humorous relief for tariff talk. But the left is having, has always had difficulty with Populous back to Jackson, back to other previous presidents, defining them because they aren't conservative. But I think we'll see. I mean, he's behaving in a way. There was an old book written by Schlesinger about, I guess about Nixon and it's called the Imperial Presidency. So this idea of like when someone's on the right and they're disruptive and sort of aggrandizing their power, they're seen as, you know, an emperor, as being something undemocratic. Whereas when you do it on the left, it's a necessary culture war to move, you know, progress ahead and all this other stuff. So I do think that part of it is our, is our inability to sort of understand the role of a power powerful populism when it actually embraces the institutions. This is also though the long term story of how Congress hasn't been doing its job for decades. So there is this vacuum that he is now filling and the fact that Biden tried to do it and also failed in his own way is, should be a humbling lesson for Trump. But Trump doesn't learn humble lessons.
Abe Greenwald
Look, governmentally, as I say a, there is going to be, there going to be a role of the courts and adjudicating whether or not Trump has the power to do some of the things that he is doing here that involve an expansion of the theory of the unitary executive, which I too recondite to get into. But it's a real expansion of the theory of the unitary executive that I don't think that the conservative courts that have been appointed largely by conservative are going to look with great favor on Federalist Society. Trained people believe in the separation of powers, not necessarily in the unitary executive. That's number one. Number two, when the Democrats do get off their backs and when they're handed stuff like Abe is suggesting, when they're handed daily stories of, you know, horror stories about things going dark, websites going dark, all of that is sort of starting. But people not knowing where to go if they need, if they need to go and like have some conversation about why they didn't get their Social Security check and then they go to the office and the office is closed.
Matthew Continetti
But that hasn't happened.
Abe Greenwald
It hasn't happened yet.
Matthew Continetti
USAID is very different.
Abe Greenwald
It hasn't happened yet. And I'm not right. It's very important.
Matthew Continetti
And interestingly enough, Trump and his availability to the press when he returned to Washington last night said, I don't agree with Elon all the time.
Abe Greenwald
Yeah, right.
Matthew Continetti
We'll see. He convinced me on this one. But they're not going to mess with Social Security or Medicare. Even the spending freeze made sure that that was not the case.
Abe Greenwald
That's why I made the joke about USAID and the skiff and people standing in front of the seat saying, you're not going in this room. How dare you? Is if, if Trump wants a team of people, essentially it's a kind of McKinsey, right? Basically hiring a. He's making a makeshift consulting firm out of the high tech supporters of his.
Matthew Continetti
But they're not consultants. He hates consultants. Because as he always says, you hire the consultants, they come in, they embed in the agency, and at the end of their time there, they come back and they say, well, we'll write you a report about what you should do.
Abe Greenwald
Right.
Matthew Continetti
This is like SpaceX or Tesla or Elon Musk Co. Because they're going in and they're just doing things.
Abe Greenwald
Okay. By saying they're a consulting firm. Is. Some of them aren't even employed. I mean, for all we know, they're all in. Have they all been hired? I mean, are they all, Are they all government? Are they all US Government employees? I kind of doubt it. Like, they, you know, it's hard to, you have to like fill out paperwork and do this and do that.
Matthew Continetti
We've been talking on this podcast about people who are filling other agencies left and right that we've never heard of before. So, I mean, I think they are government employees, but I mean, maybe they.
Abe Greenwald
Okay, but when I say they're a consulting firm, what I mean is they're supposed to go in and do a forensic analysis of what's going on and stop things that the President doesn't like. And as a result, they have to see the books. Like, the point here is everybody say, you're not allowed to see the books. And they're like, no, see, we've been told to go look at the books to see what's on the books. Otherwise Trump. And we have no, that's, that's how Trump's doing this.
John Podhoretz
But this is actually where the messaging.
Abe Greenwald
Yeah, go ahead.
John Podhoretz
But this is where the messaging might matter. Because I think from the perspective of some of these federal employees, it's like, yeah, it's McKinsey if McKinsey just came back from a really hard trip at Burning Man. Like, they don't trust that these guys, these guys are coming in saying, we're going to destroy you now show us your books. So there is a sense in which maybe they're getting the cart before the horse with their messaging in a way.
Abe Greenwald
That I don't care about the Fed. My point is I don't care how the federal employees feel. I'm sorry, I mean, I'm terrible. And if you listen and you're a federal employee, I'm very sorry if your life is being and disrupted and that's all terrible. And you really should take this opportunity to check out, you know, indeed another and job recruiter and stuff like that to see whether you might actually be better served working in the private sector. But having said that, I don't care how they feel. The point is that Trump. Fair enough said, I'm coming in and we are going to reform the federal government. Ordinarily, people come in and say, we're going to reform the federal government. Yeah. There's a two year survey and there's this and there's that. And Trump has made it very clear that he does not trust the permanent workforce in the federal government to enact, not only enact the reforms that he needs, but to provide him and his people with the information that they might require in order to know how to enact the reforms that he wishes to do. And therefore, he's brought in people that he trusts from the outside to come to him and say USAID should be in state. And as Matt says, because somebody told him that, and as Matt says, who didn't think that USAID was in state? I thought it was in state. You thought it was in state. It should be in state. It's an administrator of money appropriated by Congress to be distributed outside the United States. That should be under the aegis of the Secretary of State. Certainly if I said to you there's all this defense, there's all this money we give in defense aid to Egypt, to Israel, to all of these places. But you know what, there's this agency called USADD and it gives money independent of the Pentagon, you would say, well, that's crazy. The Pentagon needs to know where that, where those weapons are and how they're firing and who's doing this and what's that and what's the other thing?
Matthew Continetti
Well, thank God Samantha Power wasn't in charge of our military aid to Israel.
Abe Greenwald
Yeah, thank God Samantha Power wasn't in charge of our military aid to anything because she's perfectly happy to turn on causes that she cared about her entire life in order to suck up to whatever the president, whoever the president is that she is serving. Ms. There's a genocide going on in Europe and in Asia. And then when she's on the National Security Council for Obama, it's perfectly fine for her for Obama to let the Syrian 500,000 people in Syria die without opening our mouth or resigning. So, yeah, maybe.
John Podhoretz
So maybe there is a silver lining here in terms of how our founders wanted our government to work in that. And you've seen a few rumblings of this just over this weekend from Republicans. Congress needs to take back its oversight role.
Abe Greenwald
Right?
John Podhoretz
They actually appropriate the money they have. They're in charge of overseeing how it's spent. So even a wildly independent agency that's now being tamed by Trump still has to answer to Congress for its money. And Congress, that's where Congress has fallen down on the job over the years. Maybe this even, especially if it comes from Republicans rather than Democrats saying to Trump, okay, we see what you're doing. We agree. Let's see how this process works. The oversight function is very important here.
Abe Greenwald
Okay? But here's the problem. The people who have been elected to Washington beginning, let's say, in 2016, but probably really beginning in 2018. So 2018, four elections, Republicans, new Republicans who make up, I'm so sorry, a significant portion both of the Senate and the, and the House caucuses, they are not members of Congress in the conventional sense. They have been elected to be part of Trump's army. Their purpose is to, is to be in the House. What, you know, these people, Michael Anton is in the State Department or whatever, they're there to fulfill Trump's agenda. They do not see themselves as having an oversight role. They do not see themselves as independent of the presidency. They do not see themselves as fulfilling a historic place in helping the separation of powers. Having the American government run the way the American government is supposed to run, that is a huge, huge problem.
Matthew Continetti
Can I just add on to that? Because the federal government now, with a few exceptions, farm programs, pensions, the military, the rest of the federal government serves Democrats. That's what it is. It finances Democrats and Democratic interests. And so there's this weird dynamic now. And it was visible in the OMB spending freeze. The Democrats were the ones up in arms because it was their people, their programs that were being affected. Republicans will get, Republicans will get angry if there's confusion about Social Security and Medicare and that's why I think the OMB memo was rescinded last week, as many Republican lawmakers were hearing from their constituents, scared of hold it. What about my check is coming, right? Or what about my veterans health care? But for the most part, much of the federal government is basically another branch of the Democratic Party. And so when Doge goes after it, the Republicans in Congress don't care.
Abe Greenwald
Right?
Matthew Continetti
They're not affected. And that's why it's just the danger would be for Trump and the Republicans if Elon Musk and his crew get ahead of their skis and start going into programs that are important to the Republican coalition.
Abe Greenwald
We have had to add to Matt's point, even though it kind of contradicts the point that I was making before, but is people get outraged when Republicans do things that Republicans, that Democrats do. So beginning in 2004, 2005, 2006, there was hysterical outrage because the new attorney general came in under, under bush and fired 92 US attorneys and to rehire them, to make them people who are congruent with Bush's policies. Oh, the screaming and the, oh yeah, the hair pulling. This is a takeover. Fascism is coming. Obama becomes president, he fires 92 attorneys general. Crickets. Biden does the same thing in 2021 to whoever Trump appointed. Crickets. Trump comes in and says, you're all gone. And like the U.S. the person who is like the U.S. attorney for Brooklyn or something like that is saying, I'm not leaving.
Matthew Continetti
It's like, and Blue sky was overloaded. They had a Blue sky crashed because of the outrage at the firing of the U.S. attorneys.
Abe Greenwald
What are you talking about? I mean, are you that ahistorical that you don't know what happened four years ago? I mean, or is it just that everything that anyone does that you disagree with is illegitimate and therefore is fascism and this is a fascist takeover. Now, I think Musk, it is a very weird thing that the richest man in the world is coming in to be like, you know, the hatchet man for Trump in clearing out the underbrush of the federal government. And as Christine says, it's weird because we don't know what data they're collecting. And if somebody is then taking a little zip drive and putting it in and then taking stuff that they shouldn't take, do I trust Silicon Valley employees of Elon Musk to be like, you know, rigorously professional in making sure that they don't take advantage of what's going on there with nobody looking over them? I really don't. And I think that, you know, you're, you're setting yourself up, particularly if there's a Democratic takeover of the House and the Senate in 2018, in 2026, which we should talk about the Democratic meaning now over the weekend, because the senior is now complicated by the fact that the Democratic Party seems to be going even more psychotic rather than less. But assume that there's a normal balance and that the Democrats take over. And even if they take over because the economy is all messed up because of what's going on with tariffs and stuff like that, the investigative, bringing the full investigative powers of the Congress to bear on the administration, particularly when it no longer matters whether Trump is impeached or not. So they can, like, they can dispense with he's leaving in 2029. They can sort of dispense with their psychotic fixation on getting him out alone. And they can actually dig deep and find out what scandals may be going on here in this very, in this triage, you know, this like, total mash triage of the federal government could be a very, very, very big moment for them in wresting control of the country back from Republicans if this doesn't go well.
Matthew Continetti
But Christine has some thoughts on their DNC meeting.
Abe Greenwald
Yes, please.
John Podhoretz
I just, I'm sorry. This is shooting fish in a barrel, truly. But to watch some of the. First of all, David Hogg is the vice chair, I guess now of the dnc. This is the kid who's been dining out on his classmates deaths from school shooting for most of his career. Went to Harvard. Can't seem to spell, judging by a lot of his social media posts. But he's, he's the future of the Democratic Party. We had the land. Acknowledgments. We had the, we must, we had the multiple genders.
Abe Greenwald
We should say that the DNC had its annual meeting.
John Podhoretz
Oh, yes, sorry.
Abe Greenwald
Where it had to elect new leadership.
John Podhoretz
New leadership. Yes.
Abe Greenwald
In the wake of the election.
John Podhoretz
And they had a. They polled the people who were there and said what do you, how many of you think racism and misogyny was the reason Kamala Harris lost? All the hands enthusiastic drastically went up. So the, the shorts or the tldr, they've learned nothing. And I think if you watched any of the Grammy Awards last night, Hollywood also has learned nothing. So we have kind of a weird stasis on the left. And however, we have people like Josh Shapiro, Fetterman, others there, there are people in the party who I think aren't happy. Richie Torres, people who aren't happy with seeing the party elect this kind of leadership. And I'll leave it to John Matinee to describe how powerful the DNC is in any case. But it was sort of hilarious for conservatives after this sort of revolutionary return of Trumpism to the White House and, you know, capturing all three branches of government, the Democrats are still talking about their pronouns.
Abe Greenwald
Well, it is very important that you mention Fetterman and Shapiro because Dan Balz of the Washington Post has a piece today about a report written in part by William Galston by the third, by the, by the organization called Third Way. So Third Way is sort of the, remains the effort to find a place in the center for the Democratic Party that is neither, you know, sort of like a rubber stamp fake, fake Trump saying they're Democrats or is an AOC land acknowledgement, Bernie, you know, whatever. And they say that the only path forward for the Democrats, given their loss of the working class, their total dependence now on the college educated who make up, you know, 32% of the American populace as opposed to 68% that is not, does not have a college degree. Not a good, it's great to have supporters, but you want to be closer to, to the 68% than the 32%, particularly if that does seem to be a cultural fault line in which people have different interests. Making the point that because Democrats are now far more affluent, they did not feel the effects of inflation during the Biden period and therefore did not know how central that issue was.
John Podhoretz
This was the lawn sign Harris Waltz. Obviously this captures all of that. Yes.
Abe Greenwald
Yeah. And what Galston, his colleague, I can't remember who his co author are.
Matthew Continetti
It's Elaine Kmark.
Abe Greenwald
Oh, it's Elaine. I'm sorry.
Matthew Continetti
They co wrote the Politics of evasion after the 84 election, which created the blueprint for Clinton and Gore and the Third Way. The original Third way.
Abe Greenwald
Yeah, I apologize. Anyway, they say the model to follow is the state of Pennsylvania because there are all these other places that were swing states that have gone totally red. But Pennsylvania remains a swing state and it is the classic swing state. Right. Went for Trump, but it has a Democratic governor, it has a Democratic, you know, it has Fetterman as this. And the Democratic governor and the Democratic senator are heterodox figures within their own party. And if the Democratic Party does not open itself up to heterodoxy in matter in ways that appeal to voters in their states that they need in order to get out of the ghetto that they're in, which is red states and cities and you know, that's it. And they have no feel for anywhere else in the country. They are doomed.
Christine Rosen
But here's the thing.
Abe Greenwald
Yeah, go ahead.
Christine Rosen
You're talking here about strategic thinkers, right? They make up a tiny fraction of left liberalism. The folks at the DNC are true believers. They have to believe that what they have been preaching is wrong before they drop it. They're not. It doesn't matter. That analysis would show that moving toward heterodox thinking would broaden the appeal of the party. The party is dominated by that kind of true believer thinking, especially now that Trump's in office. The idea is we're supposed to look at our own ways. Now, at the moment of a crisis.
Matthew Continetti
Like this, successful presidents run against their own party. Obama ran against the Clinton dynasty on the issue of Iraq. Bill Clinton ran against the paleoliberals of the 1980s on welfare, on affirmative action, on crime, whole host of issues. Reagan ran against the Nixon, Ford, Bush Republicans. Right. Supply side economics, confrontation, not detente with the Soviet Union. And Trump ran against the Republican establishment of McCain and Romney and the Bushes by calling for the Muslim band fighting immigration, economic nationalism and non intervention. So the next Democratic president is going to have to run against his or her party. And there is no one doing that visible.
Abe Greenwald
Right.
Matthew Continetti
No one visible.
Abe Greenwald
Right. Right. However, structurally, and this is where politics is dynamic, Trump is being an incredibly consequential figure, as Matt says, and there are going to be positives from that and there may be extraordinarily profound negatives. I mean, really, the tariffs, we could be in recession from the tariffs or we could be in an inflationary spiral from the tariffs within a year. We don't know. It's highly unlikely that the tariffs are going to have an effect so salutary immediately that he will get credit for it, he will play it that way. And the problem for him is the same bubble problem that happens to all presidents, which is he's going to say next week that the tariffs have been the greatest success of all time. And then everybody on his side is going to say the tariffs are the greatest success of all time. And this could be their version of oh my God, the Inflation Reduction act is fantastic. Or look at everything we've done on infrastructure, everything that Biden said to take credit for things when the American people start feeling the negative consequences of the tariffs. And Trump is still selling the tariffs as though they're good. And he's not going to have that feel that Biden also lost for when his policies are going wrong and he is on a Knife's edge politically. The Republican Party is on a knife's edge politically as a one seat majority in the House. Two people get in a car accident, you know, in swing, in, you know, in swing districts and Democrats take those seats and Republicans no longer have the House. And you know, what happens to the Republican political program? I know all of this is being done with executive orders, but what happens when they have to do the continuing resolution, when they have to do a budget, when they have to deal with the tax cuts which have to go into effect before the end of this year? They're getting nothing. They're going to go nowhere. And we, and so Trump is like shooting out like a rocket. But, you know, it's like when a horse front runs, you know, in the Kentucky Derby, that horse ends up coming in seventh. You know, it's not necessarily the right pace for a, you know, for a long, you know, for like we're, you know, the, what's the last one, the one that the Belmont Stakes like, is the longest of the three races. And you got to pace yourself because it's a mile and three quarters on the horse. And if the horse shoots out of the gate, he's going to be exhausted by the, by the second turn, you know, it's, or, or it could be juiced and he could never lose the lead. I mean, all of this could happen. However, yeah, the Democrats, Trump's great gift is the Democratic Party's madness, cultural madness, social madness. They still are believing things and preaching things and acting on things.
John Podhoretz
Well, and not to beat a dead horse or a dead metaphor, but this would have been the case for the Democrats either way, because if Kamala Harris had won, they would have patted themselves on the back and doubled down on this stuff.
Abe Greenwald
Right.
John Podhoretz
All the same. So they are going in that direction absent either very charismatic new heterodox leadership or implosion of Trumpism.
Abe Greenwald
Right. So the question then, and we can end here, is, is this 1980 in the sense now, again, Reagan won a huge victory in 1980 and Trump won a narrow victory and Republicans won a very Narrow victory in 2024. Reagan brought in 12 senators. He didn't have the House, but he scared the crap out of Democrats in the house. And Tip O'Neill went along with his tax cuts and like that. And it took 12 years for Democrats to wash their craziness out of their hair. In 2004, they elected a guy who said.
Matthew Continetti
You muted yourself, John.
Abe Greenwald
I did. I was so enthusiastic that I was swinging my arms, I hit my space. So so in 84 they elect a guy who says I'm going to raise taxes. Right. In 88, they, they, they, they have a guy who furloughs murderers and can't say that he would want the death penalty if his wife were raped. And it took, it had the madness, had to sort of leech. It's like we're losing forever if we don't do something. And then various weird things happened and they won in 92. So is this the beginning of the 12 year period of Democratic out of touchness or is it 1988 in the sense that Trump is in does a lot of stuff. By the end of his third year, all the stuff that he did starts seeming like it's a loser or it's Biden or whatever and then he can't even run again. And then the whirlwind is reaped.
Matthew Continetti
We really don't know.
Abe Greenwald
We don't know.
Matthew Continetti
I would say a big tell would be is Kamala Harris, the Democratic presidential nominee in 2028, you know, 33% of.
Abe Greenwald
Democrats, early poll, early poll.
Matthew Continetti
She's far and away the front runner. Now that's very early, but I think that's the question, you know, and.
Abe Greenwald
Or is it Josh Shapiro? Like that is the question. It's like Josh Shapiro, by the way.
Matthew Continetti
It's not like, you know, okay, Josh Shapiro, okay, he's good.
Abe Greenwald
But no, no, no, no, I'm saying.
Matthew Continetti
Even that is a little.
Abe Greenwald
Let me go, let me go, let me go to you with Josh Shapiro because what Josh Shapiro would say in your reckoning of having to go against the party is not only is it okay that Josh Shapiro is, you know, he's a conventional Democrat on almost all things except that he has certain kinds of, you know, he's whatever, but he's also a Jew and he's an Orthodox Jew and he's a support not an Orthodox Jew. He's a sort of Sabbath keeping observant Jew and he supports Israel in that party. And if. Right, that's what I'm saying. The party can get to a Jewish supporter of Israel as its nominee. It could win the presidency. And if it can't, I'm not saying he's the only one, but that would be a pretty, that would be a clear mark of what you're saying, which is that it has to be someone who is running against current Democrats. And Abe's point is if they're all true believers, he's going nowhere. He is getting nowhere. Okay, so we have, we have, we have finished on a deeply high note of we don't know what the hell.
Matthew Continetti
Is happening, so tune in tomorrow.
Abe Greenwald
That's why you're here.
John Podhoretz
Flash of partisan rancor.
Abe Greenwald
Add to the lack of clarity that now exists in American policy.
Matthew Continetti
More confusion.
Abe Greenwald
More confusion. And we'll be back tomorrow to sew even more confusion. So for Abe, Christine and Madame John upwards. Keep the camera.
Summary of "The Tariff Madness" – The Commentary Magazine Podcast
Release Date: February 3, 2025
Introduction
In the episode titled "The Tariff Madness," the hosts of The Commentary Magazine Podcast—John Podhoretz, Abe Greenwald, Matthew Continetti, and Christine Rosen—delve deep into the ramifications of President Trump's escalating trade war. Skipping over promotional segments, the discussion is rich with historical context, economic analysis, and political commentary, offering listeners a comprehensive understanding of the current tariff strategies and their broader implications.
Overview of New Tariffs
President Trump has initiated a significant escalation in the ongoing trade war, imposing:
Timestamp: [02:38]
Abe Greenwald highlights the abruptness and potential chaos of these measures:
“Now we are entering into a period of tariff war. We were told that basically the laws of physics and economics and rational sense show that this is a self-defeating, disastrous, internationally destabilizing, economically destabilizing approach.”
— Abe Greenwald [02:38]
Historical Context
The hosts compare the current tariffs to those of the Hawley-Smoot Tariff Act of the 1930s, emphasizing the severe economic downturn such measures historically precipitated.
Timestamp: [03:00]
Matthew Continetti provides a juxtaposition of government funding sources:
“In 1901, tariffs funded about 25% of the federal government, translating to roughly $800 billion today. Trump’s approach would require tariffs to cover a fifth of today’s economy, an extraordinarily inefficient substitution.”
— Matthew Continetti [05:28]
Impact on Government Size and Economy
The discussion underscores that the federal government's size has ballooned from 7% of the economy in 1901 to 23% in 2019. Trump’s reliance on tariffs, therefore, poses a significant challenge to modern economic structures.
Timestamp: [05:24]
Abe Greenwald elaborates:
“The federal government in 1901, funded significantly by tariffs, would now require an impossible scale of tariffs to match today’s economic demands, potentially costing the economy in the trillions.”
— Abe Greenwald [05:28]
Possible Economic Downturn
The imposition of these tariffs is predicted to have inflationary and recessionary effects:
“Tariffs are substitutionary and can be both inflationary and recessionary, creating an unpredictable economic landscape.”
— Abe Greenwald [08:45]
Private Sector Disruption of Federal Agencies
A significant portion of the episode discusses Elon Musk’s involvement in reshaping federal agencies like USAID, raising concerns about privacy and operational integrity.
Timestamp: [36:22]
John Podhoretz expresses unease:
“There's a sense in which maybe they're getting the cart before the horse with their messaging in a way.”
— John Podhoretz [48:49]
Potential Risks
Concerns are raised about data privacy and the legality of actions taken by private entities within federal structures:
“Privacy concerns... should not be a partisan issue. This has never happened before and could have dubious legality.”
— Abe Greenwald [36:43]
Republican and Democratic Overlaps
The hosts examine how the Republican Party, now a coalition supporting Trump’s agenda with limited oversight, contrasts with historical norms of party operations and governance.
Timestamp: [52:22]
Abe Greenwald critiques:
“The new Republicans are not members of Congress in the conventional sense. They see themselves as part of Trump's army, undermining the separation of powers.”
— Abe Greenwald [52:22]
Democratic Party Challenges
The episode also touches on the Democratic Party's internal struggles, leadership choices, and strategic missteps, particularly in swing states like Pennsylvania.
Timestamp: [61:23]
Matthew Continetti observes:
“The Democrats are dependent on a small, affluent base and lack connection with the broader populace, making their political future precarious.”
— Matthew Continetti [61:23]
Economic Uncertainty
The hosts express uncertainty about the long-term effects of Trump’s tariff strategies, warning of possible recessions or inflationary spirals:
“We could be in a recession from the tariffs or we could be in an inflationary spiral. We don't know.”
— Matthew Continetti [43:13]
Political Ramifications
There is speculation about the political fallout, including potential congressional pushback and the Democratic Party regaining oversight and control:
“If the tariffs result in economic distress, Republicans could face significant backlash, potentially leading to a loss of the House majority.”
— Matthew Continetti [67:25]
Historical Parallels
Drawing parallels to Ronald Reagan’s presidency, the hosts discuss how strong, transformative presidencies can lead to long-term shifts in party dynamics and national policies.
Timestamp: [68:24]
Abe Greenwald concludes:
“Trump is an incredibly consequential figure, and his policies could have profound positive or negative impacts, though the likelihood of immediate positive outcomes is low.”
— Abe Greenwald [68:24]
The episode wraps up with a consensus that Trump's aggressive tariff policies represent a significant departure from established economic norms and carry substantial risks for both the American economy and its political landscape. The hosts agree that the long-term consequences are yet to be seen, with potential for both economic upheaval and significant political shifts.
“We don't know what the end of four years of this will look like. It's a highly consequential and uncertain path.”
— Matthew Continetti [69:57]
Notable Quotes
“We're now entering into a period of tariff war... economically destabilizing approach.”
— Abe Greenwald [02:38]
“In 1901, tariffs funded about 25% of the federal government... Trump’s approach would require tariffs to cover a fifth of today’s economy.”
— Matthew Continetti [05:28]
“Tariffs are substitutionary and can be both inflationary and recessionary.”
— Abe Greenwald [08:45]
“There is a sense in which maybe they're getting the cart before the horse.”
— John Podhoretz [48:49]
“Trump is an incredibly consequential figure, and his policies could have profound positive or negative impacts.”
— Abe Greenwald [68:24]
Conclusion
"The Tariff Madness" provides a thorough examination of President Trump's intensified tariff strategies, placing them within historical, economic, and political contexts. The hosts effectively argue that while the immediate objectives of protecting American industries are clear, the broader consequences—ranging from economic instability to shifts in political power—pose significant challenges. The episode serves as a critical resource for listeners seeking to understand the complexities and potential fallout of the current trade war.