This story originally appeared at Clean Slate: New Ideas for Justice and Democracy.
If the world has you feeling deeply concerned an uncomfortable, it’s certainly because while there is lots of heat - and panic - there’s precious little light.
While the ludicrous world we are currently living in is beyond parody, and our politics are divorced from reality, reality has a way of making itself known.
A writer named “James” on Substack wrote a surprisingly reassuring piece on Substack in November — “The unexpected virtues of chaos” in which he pointed out that Trump did not succeed in achieving anything that ever required sustained interest and commitment, and where he did deliver for his MAGA base, the general reaction from the public was that they hated it.
While the ludicrous world we are currently living in is beyond parody, and our politics are divorced from reality, reality has a way of making itself known.
“The first law is that taking action requires the use of political capital. There are only a finite number of things an administration can focus on at any one time, and pushing forward an initiative will require the acquiescence of GOP lawmakers who will almost certainly be thinking of their fates in the 2026 elections.”
James pointed out a number of factors that should be clear to politicians. One is that they are up for re-election. The other is that despite the claims that Trump has a strong mandate.
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His margin of victory is less than Joe Biden in 2020
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As counting has continued, he has dropped below 50% in the popular vote.
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The public does not actually like - and specifically voted against - “MAGA” policies. Ballot measures to protect access to women’s health care and abortion won.
The outsized self-regard associated with being a politician usually also comes with a matching sense of self-preservation. Do the words “selfless” or “self-sacrificing” come to mind?
James went on to write
“Tariffs will blow apart the American economy if they’re actually implemented in the manner Trump wants—therefore there is an actual and real political cost to the GOP for implementing them.
Similarly, there are unlikely to be many people who like the images flashing across their televisions of mothers and children being dragged out of their homes by ICE. Voters may like the idea in the abstract of getting rid of the illegal immigrants who are supposedly taking their jobs and homes—but they will almost certainly not like it when it’s actually real.
Voters learned a similar lesson during the pullout of American forces from Afghanistan. Despite loudly proclaiming how much they hated the U.S. presence overseas, they only meant that in theoretical terms. Being forced to witness what that meant in reality—desperate civilians plummeting to their deaths from the wheels of departing C-17s and U.S. troops dying in a suicide bombing attack—was viscerally unpopular.”
This is also the case with the divorced-from-the-real-world real-world recommendations coming from Elon Musk, who want to find $2-trillion in cuts savings, as well as tariffs and other policies that, quite frankly, ignore the actual mechanics of the economy.
Musk, Trump, and the GOP are leaning on seriously fringe inspirations for their ideas of how the economy works. These are not architects and economic engineers: Musk, Trump, Bannon, are pretty much a couple of guys with some “borrowed” tools who start their own renovation business, who lowball you to get you to do it, then end up knocking down a retaining wall because they don’t know what they’re doing.
There are many completely basic things about the economy and the American government’s unique role in it they don’t understand. For example, when they claim that the U.S. government could go bankrupt. The U.S. is monetarily sovereign, and its currency is the most powerful money in the world. The U.S. Government has a global monopoly on the creation of US dollars.
This is not MMT, or some a recommendation to do anything, It is a statement of fact.
Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”
St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.
So there is no desperate crisis to cut the budget.
What’s more, the current $2-trillion deficit is an economic stiumulus for the private economy. That is money that is going directly into growing the economy. The equivalent of
The other is a really basic point in economic accounting. All spending is someone’s income, and cutting that much federal government spending is the equivalent to 25-million people making $80,000 a year losing their jobs. That government deficit is an economic surplus for the private sector.
For that reason, further massive cuts — which Neither Musk & DOGE nor Trump have no legal authority to make — are much more likely to affect Republican states.
if the government is going to cut social security, it’s worth pointing out that 6 of the top 10 states that receive the most in social security are swing states. Those top 10 states, in increasing order of recipients are Georgia, North Carolina, Illinois, Ohio, Michigan, Pennsylvania, New York, Texas, Florida and California.
The same applies to medicare - here are 2020 numbers of the states with the most medicare recipients:
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California – 6,411,106
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Florida – 4,680,137
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Texas – 4,286,051
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New York – 3,672,562
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Pennsylvania – 2,776,113
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Ohio – 2,381,221
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Illinois – 2,265,857
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Michigan – 2,100,420
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North Carolina – 2.035,577
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Georgia – 1,773,148
The other reality is that when it comes to the U.S. federation, Republican states tend to get more than they give back as federal transfers, while Democratic states tend to give more than they get.
The reason for is partly because of another important political and economic phenonenon. The single biggest cultural gulf around the world is between city and country. This is partly because politics is about policies and solutions to specific problems and the solutions that work in the city do not work in rural areas, and vice versa. It is also because economic activity and wealth is concentrated in cities, which created challenges of it own. People in cities tend to vote “left,” people in rural areas “right”.
Transfer and equalization payments are an essential part of any country with multiple juridictions that share a currency.
Every successful economic federation - the US, Australia, the UK, and Canada all have transfer payments to different state or provincial governments. National economies can't function without them.
This is a map of transfers within the U.S. Notably, the transfers come from green states, which are often Democratic because they have large cities with concentrations of headquarters - financial, manufacturing, or conglomerates.
These transfers are usually described as being necessary for providng comparable government services at comparable taxes, but they are more important than that.
Transfer payments within a federation are essential to prevent debt crises. This a fundamental part of currency theory, which experts at the IMF and the EU forgot when setting up the Euro, leading directly to the crisis in Greece.
The UK’s Telegraph reported that the IMF’s “top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the Euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.”
“The possibility of a balance of payments crisis in a monetary union was thought to be all but non-existent,” it said. As late as mid-2007, the IMF still thought that “in view of Greece’s EMU membership, the availability of external financing is not a concern”.
At root was a failure to grasp the elemental point that currency unions with no treasury or political union to back them up are inherently vulnerable to debt crises. States facing a shock no longer have sovereign tools to defend themselves. Devaluation risk is switched into bankruptcy risk.
“In a monetary union, the basics of debt dynamics change as countries forgo monetary policy and exchange rate adjustment tools,” said the report. This would be amplified by a “vicious feedback between banks and sovereigns”, each taking the other down. That the IMF failed to anticipate any of this was a serious scientific and professional failure.
The proposals that are being enacted are already harming Americans, but while there are various measures very specifically aimed at targeting vulnerable groups, some of those vulnerable groups include Republican voters in Republican-held districts and States, who will directly suffer as a consequence.
In the Hill, an article looked at ways the budget could be cut - and it also points out that cuts would face Republican opposition because they will hurt their own supporters.
Republicans have expressed interest in making cuts to the Inflation Reduction Act (IRA), Democrats’ sweeping climate technology law passed in 2022.
A wholesale repeal of that law’s climate provisions would generate approximately $369 billion. But that’s unlikely because the IRA is popular in many Republican districts across the country.
Eighteen Republicans wrote to Speaker Mike Johnson (R-La.) in August, telling him not to repeal the law, arguing it would “undermine private investments and stop development that is already ongoing.”
The current government deficit — and economic surplus is over 6% of GDP. Everything that Trump and Musk are doing is directly undermining the economy, and even the lives of people who voted for them. It’s already happening. Frankly, Musk and Trump are courting disaster, and they are highly likely to get it. Everything they are doing — is eroding certainty and economic capacity.
What’s required is a New Deal — which would actually be effective. Until then, it’s extremely important for people to know that the reason this is happening is because of GOP policy decisions.
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