Month: July 2025

While we’re waiting around for the House to act on the BBB, Trump announced that he had a trade deal with Vietnam. The deal consists of a 20 percent tariff on Vietnamese goods, increasing to 40 percent for pass-through goods, and no tariffs on American goods. What should we make of this?

I think you can assume this will be the template for agreements with less developed areas in Africa and Asia. The objectives clearly are to maintain incentives for friendshoring relative to China and to encourage domestic production relative to the rest of the world; the ultimate hope is that the tariff wall will create a domestic manufacturing boom which will reduce imports and cause our bilateral trade deficits to disappear.

American consumers will pay for this deal in the form of higher prices. The real question is whether these tariffs are sufficient to create competing domestic manufacturing businesses. I’m pretty sure the answer is no, even in the long run, but I guess we’re going to find out.

Back in the day, when the GOP was a club run by and for business interests, the leadership could attack the safety net without much concern for the voters. Today, the party’s support comes primarily from working people, so the leadership has to at least pretend to care about their welfare. The benefits of the BBB, however, will flow primarily to capitalists. How will the party explain this to the base?

The first gambit, of course, is to argue that deserving people will still have health insurance; the cuts to Medicaid and food aid only eliminate waste and fraud. That won’t go very far, however, because the victims of the cuts are unlikely to view themselves as waste and fraud. Then what?

There are two pages in the playbook. They are as follows:

1. OK, you lost your health insurance. But look at all you’ve gained! Illegal immigrants are no longer coming for your job and driving up the cost of housing! Your daughter won’t be raped in the bathroom by a trans person! Your tax dollars won’t support lazy black people anymore! The government won’t shut down your church! The benefits of Republican rule far exceed the costs.
2. You don’t really want a handout. What you want is your old job back–the one that was stolen from you by global elites and Democrat overregulation. We’re working on bring that job back. Just be patient, and things will be much better! You’ll have real health insurance again, not a government handout! Trust us!

In other words, culture wars and nostalgia. They worked before; why not now?

The BBB just passed the Senate by the smallest of possible margins. Collins voted against it; Murkowski reluctantly voted for it. While I won’t speculate as to their actual motives, from a political perspective, those votes make sense; Murkowski is vulnerable to an attack from the right, while the danger to Collins comes from the left. Collins can now disclaim any responsibility for what happens to the economy in the next few years, which will help her in the next general election.

Will the Senate bill pass the House? The House SALT warriors appear to be satisfied with the Senate’s compromise, which leaves Medicaid spending and the deficit as the remaining sticking points. The few remaining CDs won’t like the additional Medicaid cuts, but they had already embraced the concept of massive reductions by voting for the House bill, so the difference there is only one of degree. As to the CLs, they will be very disappointed in the final product, which they will view as a once-in-a-lifetime opportunity gone begging, but their initial tough talk is usually followed by acquiesce to Trump and the leadership. Don’t expect this episode to be any different.

Trump’s favorite way of keeping GOP legislators in line is a threat of a primary. But Murkowski has already beaten a Trump-backed opponent, Tillis is not running for re-election, and Susan Collins is probably the only Republican who can win a Senate seat in Maine. She is effectively the Joe Manchin of her state. Defeating her in a primary would mean losing the seat to a Democrat, as both Collins and Trump well know.

And so, the answer to the question is yes. Does she have the will and the nerve to play them? TBD.

You motivate wealthy people to work even harder and invest more by giving them money, but you motivate poor people, whose only goal is to lounge in the hammock of dependency, by eliminating their benefits.

The GOP has changed quite a lot since the Reagan era, but that belief remains the same, as evidenced by the BBB.