Filenews 12 August 2025
By Clive Crook
The U.S. political scene over the past 10 years has been incredible — and continues to get weirder and weirder. A highly successful amateur politician, who is now six months into his second term in the White House, is not content to record victories and count achievements. Instead, he seems willing to throw the ceiling over his head. At the same time, his opponents, career politicians, not only do not hold him accountable, but they are doing everything they can to protect him from the falling debris.
Forgive the average voter who is disgusted, confused, or both. If systemic political failure is anything to go by, it will certainly look like this.
Check out a recent Wall Street Journal poll. On high-interest issues, voters say they trust Republicans more than Democrats — yet, at the same time, they disapprove of the Trump administration's handling of these issues. Voters prefer Republicans over Democrats on the economy, inflation, immigration, tariffs, foreign policy, and Ukraine. However, on each of these issues, there is clear disapproval of the president's initiatives. Specifically, "51% say that the change it brings is a form of chaos and dysfunction that will harm the country. On the contrary, 45% agree with the alternative statement that it is making necessary and useful changes."
The implications for both parties may seem clear. The White House needs to calm down and choose to consolidate [its profits] and avoid further confrontation and chaos. And the Democratic Party needs to abandon (not just downplay) its clearly unpopular positions and focus on projecting an image of adequacy and moderation. Both parties are doing exactly the opposite.
If I liked conspiracy theories, I might suspect that one party is planting agents in the other, secretly dedicated to guiding the enemy to defeat. I would be deeply impressed by the skill of these secret agents, rather than shocked by the deliberate political dysfunction that is parading before us.
To be fair, the Democratic Party, in its attempt to turn in a new direction, faces structural problems: the absence of leadership and activists who prefer to lose rather than compromise. This is difficult. But the dysfunction of the Republicans is more enigmatic. They have a leader, to put it mildly, who enjoys winning above all else. Yet Trump is willing to jeopardize a record of seemingly incredible political victories for little or no return.
On immigration, a clear majority agrees that the border must be secure, there is a difference between legal and illegal immigration, and that some of the millions of people who came to the U.S. illegally (especially those guilty of other offenses) should be sent back home. Simply by adopting this position, the Trump administration managed to defeat the Democrats. But there is also a clear majority that does not support the arrest of all these offenders regardless of the circumstances and without taking into account the legal process. It also does not support the use of a hastily expanded force of masked police officers and a dark network of makeshift detention centers that are blatantly punitive. This seems like a good way for the government to lose an argument it had won.
The same applies to economic policy. As intended, the White House successfully dismantled the postwar trade system and led the U.S. to a new regime of discriminatory tariffs and controlled trade. At the same time, the recent "Big and Beautiful" bill on taxation and spending abandoned any pretence of fiscal prudence and accelerated the course of an unsustainable public debt. However, despite warnings of imminent disaster, the S&P 500 continues to set records, ostensibly validating Trump's thinking. So, for now, at least, this is another big political victory.
The political threat to this new economic regime is not its long-term consequences – which in any case are uncertain. Great powers are in conflict. Will the boost for growth and productivity driven by Artificial Intelligence, regulatory limitation and generous tax breaks for investments be able to counterbalance stagflation from tariffs, poorly designed industrial policy and the displacement of investment due to excessive government borrowing? It's hard to predict. But the debate on these questions will last far beyond the current government. The politically significant threat to President Trump's economic policies is the short-term disruption in financial markets – the risk that Wall Street will stop applauding Trump, turn against him, and drive the economy into recession.
As with immigration, here too it is as if the White House has calculated the exercise of economic policy to sabotage the whole project. Find three things capable of vetoing financial markets without offering countervailing benefits: How about endless uncertainty about future tariffs, a major blow to the Federal Reserve's independence, and undermining confidence in official statistics? All three happened.
Trump has escalated his unwarranted attacks on Fed Chairman Jerome Powell (whom he appointed in 2018), going so far as to make accusations of irregularities regarding the renovation of the central bank's offices. Last week, it appointed Steven Miran, a key figure behind Trump's unorthodox policies, to an interim position on the Fed's board of directors, while the search for a person more willing to comply to succeed Powell continues.
Does it serve Trump's purposes to place a servant at the Fed? No, it does not serve. For one thing, the idea that the Fed plans to overturn Trump's broader policy agenda is absurd. Even if an obedient Fed implements the much lower interest rate that the president deems appropriate, that won't necessarily lower the interest rates he cares about — mortgage rates, credit costs, and long-term lending. It is far more likely that ending the image of an independent Fed (not to mention a large rate cut with inflation remaining above target) will push market-driven interest rates higher. Politically, attacking the Fed is risky and does not pay off.
The placement of a supporter of his at the Fed seems almost a logical step compared to firing the head of the Bureau of Labour Statistics on apparently pretextual grounds. The president accused Erica McEnderfer of falsifying the July employment data released on Aug. 1 because it showed unusually large downward revisions for May and June.
It's hard to see how McEdderfer could have falsified the numbers even if she wanted to. Revisions occur and are likely to be greater when sectoral labour requirements fluctuate widely (as is the case now, amid tariffs and while arrests of illegal workers continue) but also when the government agency does not have the resources it needs to collect data (as is happening now, thanks to efforts to reduce government employees). To be sure, the agency needs to improve its methods and keep revisions as small as possible – goals made even more difficult by the government's abolition of the group of unpaid technical experts responsible for this.
To reiterate, I'm pretty sure a Democratic saboteur hasn't infiltrated the White House — but the real explanation escapes me. As with the attack on the Fed, firing the head of the Bureau of Labor Statistics in order to appoint a man of his own whose independence will be questioned is a risk without any return. Fostering suspicions that employment and inflation data may be manipulated will lead to a further increase in long-term interest rates. And as those doubts gain traction, so does the risk of a "Trump moment" in financial markets — with no short-term political benefit beyond monopolizing the headlines.
In immigration, trade, the Fed, and the integrity of official statistics, the White House seems determined to put aside its successes and take risks that serve no purpose. Of course, as long as the financial markets allow, the president will likely continue to win — you know, because of the Democrats. How such a great country ended up with such politicians, I cannot understand. Look at their works, voters, and despair.
