The Dictatorship
Why Bill Clinton was so afraid of bond traders — and Donald Trump should be too
President-elect Donald Trump will sweep into office in January with few formal checks to his power. Republicans control the House and Senatewhile a conservative majority sits on the Supreme Court. For his critics, it’s a dispiriting time.
But as other presidents have learned, there are some checks and balances that aren’t described in your AP Gov textbook.
An unlikely one surfaced recently as veteran Wall Street strategist Ed Yardeni cautioned that investors in U.S. bonds could play a critical role in forcing the incoming Trump administration to back down from its plans for an all-out trade war with everyone from China to Mexico and Canada.
Reviving a term he first coined in the 1980s, Yardeni warned that “bond vigilantes” could take action if Trump’s plans go too far.
Like Batman, these vigilantes only swing into action when the system isn’t working. Instead of putting on a costume and roughing up street punks, though, they simply sell off 10-year government bonds when they think the government isn’t being serious about long-term fiscal policy. That may not sound dramatic, but it can have huge effects, raising the costs of government borrowing and even forcing the Federal Reserve to change course.
There’s a great anecdote demonstrating exactly how serious this threat can be in Bob Woodward’s book “The Agenda,” about the early days of Bill Clinton’s presidency. The Arkansas governor had not yet taken office when he sat down for a briefing on his economic plans. One of his advisers then explained how a lot would depend on whether bond traders thought his plans to reduce the deficit were credible.
“At the president-elect’s end of the table, Clinton’s face turned red with anger and disbelief,” Woodward wrote. “‘You mean to tell me that the success of my program and my re-election hinges on the Federal Reserve and a bunch of f—— bond traders?’ he responded in a half-whisper.”
More recently, bond vigilantes in Great Britain were blamed for the downfall of Prime Minister Liz Truss. After she announced a package of energy subsidies and tax cuts that would be paid for by raising deficits, investors in British government bonds rebelled, causing interest rates to rise and hurting the pound. Truss’ party revolted, and she was forced to resign after just a few months in office, famously outlasted by a slowly rotting head of lettuce.
There’s no risk of something quite so dramatic in the U.S., where bond traders don’t have nearly as much influence due to the strength of the dollar. But Wall Street analysts point to ways in which Trump’s plans to dramatically disrupt the federal government and foreign trade could backfire on him.
If bond traders start to think that deficits are getting too high due Trump’s tax cuts, they could get antsy.
If bond traders start to think that deficits are getting too high due to Trump’s tax cuts and inflation is going to make a comeback due to his tariffs, they could get antsy. If they start selling, the government has to raise interest rates to compensate, borrowing gets more expensive, the Federal Reserve starts worrying more about inflation, local chambers of commerce start nervously calling up their Republican representatives — and suddenly Trump doesn’t have quite so compliant a Congress.
The same dynamic can play out in a number of different ways over the next four years, in part due to Trump’s blunt-force proposals for his second term.
Trump’s plans for mass deportations will be checked by responses from civil rights activists, immigration lawyers, farmers, Democratic state attorneys general, federal judges and foreign officials. His plans for slashing government programs will be balanced by angry constituents, labor unions, government contractors and special interest groups. And many of his plans can be thwarted by sufficient public outrage, especially as lawmakers start looking ahead to the midterms.
Trump has grand plans to remake America. He will succeed in some and fail at others. But in all of them he will face a rule of politics as ironclad as Newton’s third law of motion: Every action he takes will have an equal and opposite reaction somewhere else.
The first response to watch may very well be from vigilante bond traders. But there will be others to come, and often from equally unlikely quarters.
Ryan Teague Beckwith is a newsletter editor for BLN. He has previously worked for such outlets as Time magazine, Bloomberg News and CQ Roll Call. He teaches journalism at Georgetown University’s School of Continuing Studies.
The Dictatorship
The Supreme Court’s conservative majority eyes more power for the president
WASHINGTON (AP) — Chief Justice John Roberts has led the Supreme Court ‘s conservative majority on a steady march of increasing the power of the presidency, starting well before Donald Trump’s time in the White House.
The justices could take the next step in a case being argued Monday that calls for a unanimous 90-year-old decision limiting executive authority to be overturned.
The court’s conservatives, liberal Justice Elena Kagan noted in September, seem to be “raring to take that action.”
They already have allowed Trump, in the opening months of the Republican’s second term, to fire almost everyone he has wanted, despite the court’s 1935 decision in Humphrey’s Executor that prohibits the president from removing the heads of independent agencies without cause.
The officials include Rebecca Slaughterwhose firing from the Federal Trade Commission is at issue in the current case, as well as officials from the National Labor Relations Board, the Merit Systems Protection Board and the Consumer Product Safety Commission.
The only officials who have so far survived efforts to remove them are Lisa Cooka Federal Reserve governor, and Shira Perlmuttera copyright official with the Library of Congress. The court already has suggested that it will view the Fed differently from other independent agencies, and Trump has said he wants her out because of allegations of mortgage fraud. Cook says she did nothing wrong.
Humphrey’s Executor has long been a target of the conservative legal movement that has embraced an expansive view of presidential power known as the unitary executive.
The case before the high court involves the same agency, the FTC, that was at issue in 1935. The justices established that presidents — Democrat Franklin D. Roosevelt at the time — could not fire the appointed leaders of the alphabet soup of federal agencies without cause.
The decision ushered in an era of powerful independent federal agencies charged with regulating labor relations, employment discrimination, the air waves and much else.
Proponents of the unitary executive theory have said the modern administrative state gets the Constitution all wrong: Federal agencies that are part of the executive branch answer to the president, and that includes the ability to fire their leaders at will.
As Justice Antonin Scalia wrote in a 1988 dissent that has taken on mythical status among conservatives, “this does not mean some of the executive power, but all of the executive power.”
Since 2010 and under Roberts’ leadership, the Supreme Court has steadily whittled away at laws restricting the president’s ability to fire people.
In 2020, Roberts wrote for the court that “the President’s removal power is the rule, not the exception” in a decision upholding Trump’s firing of the head of the Consumer Financial Protection Bureau despite job protections similar to those upheld in Humphrey’s case.
In the 2024 immunity decision that spared Trump from being prosecuted for his efforts to overturn the 2020 election results, Roberts included the power to fire among the president’s “conclusive and preclusive” powers that Congress lacks the authority to restrict.
But according to legal historians and even a prominent proponent of the originalism approach to interpreting the Constitution that is favored by conservatives, Roberts may be wrong about the history underpinning the unitary executive.
“Both the text and the history of Article II are far more equivocal than the current Court has been suggesting,” wrote Caleb Nelson, a University of Virginia law professor who once served as a law clerk to Justice Clarence Thomas.
Jane Manners, a Fordham University law professor, said she and other historians filed briefs with the court to provide history and context about the removal power in the country’s early years that also could lead the court to revise its views. “I’m not holding my breath,” she said.
Slaughter’s lawyers embrace the historians’ arguments, telling the court that limits on Trump’s power are consistent with the Constitution and U.S. history.
The Justice Department argues Trump can fire board members for any reason as he works to carry out his agenda and that the precedent should be tossed aside.
“Humphrey’s Executor was always egregiously wrong,” Solicitor General D. John Sauer wrote.
A second question in the case could affect Cook, the Fed governor. Even if a firing turns out to be illegal, the court wants to decide whether judges have the power to reinstate someone.
Justice Neil Gorsuch wrote earlier this year that fired employees who win in court can likely get back pay, but not reinstatement.
That might affect Cook’s ability to remain in her job. The justices have seemed wary about the economic uncertainty that might result if Trump can fire the leaders of the central bank. The court will hear separate arguments in January about whether Cook can remain in her job as her court case challenging her firing proceeds.
The Dictatorship
White House hall of shame targets news outlets
NEW YORK (AP) — President Donald Trump’s White House is taking on the role of media critic and asking for help from “everyday Americans.”
The White House launched a web portal it says will spotlight bias on the part of news outlets, targeting the Boston Globe, CBS News, The Independent and The Washington Post in its first two “media offenders of the week.”
It’s the latest wrinkle in the fight against what Trump, back in his first term, labeled “fake news.” The Republican president has taken outlets like CBS News and The Wall Street Journal to court over their coverage, is fighting The Associated Press in court over media access and has moved to dismantle government-run outlets like Voice of America.
Trump has also engaged in personal attacks, last month alone saying “quiet, piggy,” to a female reporter who was questioning him on Air Force One, calling a reporter from The New York Times “ugly, both inside and out” and publicly telling an ABC News journalist she was “a terrible reporter.”
“It’s honestly overwhelming to keep up with it all and to constantly have to defend against this fake news and these attacks,” said press secretary Karoline Leavitt, who called the new web portal an attempt to hold journalists accountable.
After its debut, the White House asked for volunteers to submit their own examples of media bias. “So-called ‘journalists’ have made it impossible to identify every false or misleading story, which is why help from the American people is essential,” Trump’s press office said.
Devouring the media like hot french fries
Despite the attacks, Axios wrote this week that the mainstream media is ending the year as “dominant as ever” in capturing the president’s attention and setting Washington’s agenda, citing as one example The Washington Post’s reporting on military strikes against boats with alleged drug smugglers.
The irony is that Trump engages with reporters at a level he hasn’t seen with any other president in his lifetime, said Axios CEO Jim VandeHei, co-author of the report with Mike Allen.
“He’s always bitched about the media and the press,” VandeHei told The Associated Press. “He gobbles this stuff up like hot McDonald’s french fries. He’s a mass consumer of this. He watches it, he calls reporters, he takes calls from reporters. … That’s always been the contradiction with him.”
CBS, the Globe and The Independent were criticized for stories about Trump’s reaction to Democratic lawmakers who recorded a video reminding military members they were not required to follow unlawful orders. Trump accused the lawmakers of sedition “punishable by death.”
The White House said it was a misrepresentation to say Trump had called for their executions. The portal also said news outlets “subversively implied” that the president had issued illegal orders. The news articles they cited did not specifically say whether Trump had or had not ordered illegal activities.
Leavitt has been sharply critical of the Post’s story on Defense Secretary Pete Hegseth’s role in attacks on boats used by alleged drug smugglers in Central America. The portal this week accused the newspaper of trying to undermine anti-terrorist operations.
“Let’s be clear what’s happening here: the wrongful and intentional targeting of journalists by government officials for exercising a constitutionally protected right,” said the Post’s executive editor, Matt Murray. “The Washington Post will not be dissuaded and will continue to report rigorously and accurately in service to all of America.”
The new portal also contains an “Offender Hall of Shame” of articles it deems unfair and a leaderboard ranking outlets with the most pieces it objects to. Twenty-three outlets are represented, led by the Post’s six stories. CBS News, The New York Times and MS NOW, the network formerly known as BLN, had five apiece. No news outlets that appeal to conservatives were cited for bias.
Media watchdog welcomes the company
The conservative media watchdog Media Research Center, which has accused news outlets of having a liberal bias since 1987, welcomes the company.
“We’re pleased,” said Tim Graham, MRC’s director of media analysis. “It’s a stronger effort than Republican presidents have done before. I think all Republicans realize today that the media is on the other side and need to be identified as on the other side.”
VandeHei said about the portal, “I can’t think of anything I care less about. If they want to set up a site and point out bias, great. It’s called free speech. Do it. I don’t think it makes a damned bit of difference.”
What is damaging, VandeHei said, is a constant drumbeat of claims that what people read in the media is false. “It makes people suspicious of the truth and the country suffers when we’re not operating from some semblance of a common truth,” he said.
___
David Bauder writes about the intersection of media and entertainment for the AP. Follow him at http://x.com/dbauder and https://bsky.app/profile/dbauder.bsky.social.
The Dictatorship
Trump administration fails in latest bid to halt grants for school mental health workers
SAN FRANCISCO (AP) — A federal appeals court on Thursday rejected the Trump administration’s bid to halt an order requiring it to release millions of dollars in grants meant to address the shortage of mental health workers in schools.
The mental health program, which was funded by Congress after the 2022 school shooting in Uvalde, Texasincluded grants meant to help schools hire more counselors, psychologists and social workers, with a focus on rural and underserved areas of the country. But President Donald Trump’s administration opposed aspects of the grant programs that touched on race, saying they were harmful to students and told recipients they wouldn’t receive funding past December 2025.
U.S. District Judge Kymberly K. Evanson, ruled in October that the administration’s move to cancel school mental health grants was arbitrary and capricious.
The U.S. Department of Education and Secretary of Education Linda McMahon requested an emergency stay and on Thursday, a panel from the 9th U.S. Circuit Court of Appeals denied that motion.
The panel wrote in its decision that the government hadn’t shown it is likely to succeed based on its claims that the district court doesn’t have jurisdiction or that it will be “irreparably injured absent a stay.”
The grants were first awarded under Democratic President Joe Biden’s administration. The Education Department prioritized giving the money to applicants who showed how they would increase the number of counselors from diverse backgrounds or from communities directly served by the school district.
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The Trump administration said in a statement after the ruling in October that the grants were used “to promote divisive ideologies based on race and sex.”
The preliminary ruling by Evanson, a U.S. District Court judge in Seattle, applies only to some grantees in the 16 Democratic-led states that challenged the Education Department’s decision. In Madera County, California, for example, the ruling restores roughly $3.8 million. In Marin County, California, it restores $8 million.
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