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.
A Republican congressional candidate Jackson Lahmeyer has dropped out of a runoff for a U.S. House in Oklahoma following reports that he had sent intimate text messages to a woman who was not his wife.
“After prayerful consideration with my wife, Kendra, and my team over the last twenty four hours, I’ve made the difficult decision to suspend my campaign for Congress,” Lahmeyer, a candidate for Oklahoma’s 1st Congressional District, said in a statement Wednesday.
“I do not want to be a distraction to my family, my church, and the great people of Oklahoma’s 1st Congressional District, who deserve a strong conservative voice representing them in Washington,” he added.
President Donald Trump initially endorsed Lahmeyer, whom he called a “MAGA Warrior,” in May but withdrew his support following the controversy. Soon after, Trump endorsed Lahmeyer’s opponentMark Tedford, who now becomes the Republican nominee by default.
“I greatly appreciate Jackson Lahmeyer’s hard work under difficult circumstances — He has always been with me, and I will always be with him,” Trump wrote on Truth Social Wednesday. “But, when it comes to the current Congressional race for Oklahoma’s 1st Congressional District, I will be supporting America First Patriot, Mark Tedford. Mark is Pro Trump and MAGA all the way!”
Lahmeyer, a pastor Sheridan Church in Tulsa, centered his congressional campaign around his Christian faith.
Lahmeyer dropped out of the race after the Daily Mail reported Sunday that he had exchanged numerous romantic text messages with Caitlin Simmons Key, who worked as a fundraiser for his campaign. In one text message obtained by the Daily Mail, Lahmeyer allegedly invited Key into his hotel room. Key also alleged that Lahmeyer once professed his love to her.
“There’s a real problem with the fact that he’s married and a pastor,” Key told the outlet. “There is a responsibility when you are leading people in the name of Christ to hold yourself to a higher standard.”
Erum Salam is a breaking news reporter for MS NOW, with a focus on how global events and foreign policy shape U.S. politics. She previously was a breaking news reporter for The Guardian.
President Donald Trump has digitally signed the memorandum of understanding with Iran while at dinner in Versailles with French President Emmanuel Macron, Pakistani Prime Minister Shehbaz Sharif announced Wednesday.
Iranian President Masoud Pezeshkian also digitally signed the memo, according to Sharif.
The agreement between the United States and Iran establishes a framework for negotiations aimed at permanently ending the conflict, which began when Trump and Israeli Prime Minister Benjamin Netanyahu directed a joint attack on Iran on Feb. 28.
Sharif said in a statement the agreement now goes into “immediate effect.” He noted that the first steps are for Tehran to “instantly reopen” the Strait of Hormuz and for the U.S. to “immediately lift” its naval blockade against Iran in the strait.
“The signing of this agreement at the highest level of the respective governments demonstrates the commitment of both sides to a diplomatic resolution of the conflict,” Sharif said in a statement.
Officials will hold a formal signing ceremony in Switzerland on Friday, Sharif said. A U.S. official did not respond to MS NOW’s questions on if an official document of the agreement will be released to the public.
According to the memothe U.S. and Iran have agreed to finalize a deal within 60 days, “extendable with mutual consent.” The agreement also calls for an “immediate and permanent termination of military operations on all fronts, including in Lebanon.”
Despite the memo’s explicit inclusion of Lebanon, Israeli leaders and U.S. officials continue to offer conflicting views on how that will be implemented. U.S. Ambassador to Israel Mike Huckabee said Israel’s war against the Iran-backed militant group Hezbollah is not part of the agreement, while Netanyahu vowed to remain in “security zones” in southern Lebanon.
Iran has also reaffirmed that it would not “procure or develop nuclear weapons,” which was a central issue Trump cited when defending the conflict in Iran. Both the U.S. and Iran also agreed to discuss how Tehran will dispose of its highly enriched uranium stockpile, with supervision from the U.S. and the International Atomic Energy Agency.
The agreement also includes an end to the U.S.’ naval blockade against Iran in the Strait of Hormuz, one of the world’s most important maritime trade routes, with a goal of restoring pre-war maritime traffic to the region.
“May this Memorandum of Understanding serve as an enduring foundation for greater understanding, mutual respect and shared prosperity for the complete region,” Shebaz said.
Emily Hung is an associate White House producer for MS NOW.
Erum Salam is a breaking news reporter for MS NOW, with a focus on how global events and foreign policy shape U.S. politics. She previously was a breaking news reporter for The Guardian.
The Dictatorship
The more Senate Republicans learn about Trump’s Iran deal, the more they don’t like it
Republicans started the week on Capitol Hill already uneasy about President Donald Trump’s still unreleased plan to end the U.S.-Iran war.
But by Wednesday, as details of the memorandum of understanding finally began to emerge, the unease turned into outright opposition.
“This is the worst foreign policy blunder in decades,” Sen. Bill Cassidy, R-La., posted online.
Cassidy, who recently lost his re-election bid to a Trump-backed primary challenger, said that under the memorandum, “Iran’s nuclear ambitions were not curbed, and they have learned that threatening the Strait of Hormuz works and will undoubtedly leverage it in the future.”
“Now, Iran gets to build brand-new infrastructure under this deal,” he added.
Sen. Thom Tillis, R-N.C., who is not seeking re-election, argued the memorandum falls short given the costs of the conflict.
“We’ve lost two F-18s, several other air frames, 13 people have died, several of our Middle East partners have been attacked, 365 people have been injured,” Tillis told MS NOW, adding that the the U.S. had spent “$100 billion has been spent since the first kinetic strike.”
“I need more than 14 [bullet] points,” he said.
He later added that anyone who “is gushing over it being a great plan, I think, have insufficient information. Anybody complaining that it’s a bad plan, have insufficient information.”
According to a senior U.S. official, the memorandum — signed by President Donald Trump, Vice President JD Vance and Iranian Parliament Speaker Mohammad-Bagher Ghalibaf — outlines a list of commitments as the two sides kick off 60 days of negotiations on a final deal.
In addition to the U.S. ending its naval blockade and the Iranians reopening the Strait of Hormuz, the memorandum calls for the U.S. to take steps to “terminate all types of sanctions against the Islamic Republic of Iran.”
It calls for the U.S. to work with other Middle East partners to “develop a definitive, mutually agreed plan with at least $300 billion for the reconstruction and economic development of the Islamic Republic of Iran.” And the MOU says that “Iran will maintain the current status quo of its nuclear program, and the United States of America will not impose any new sanctions and will not deploy additional forces in the region.”
In particular, the $300 billion proposal is the source of GOP angst — even from some of the president’s fiercest defenders.
“History teaches that giving billions of dollars to theocratic lunatics who want to murder us is not a good idea,” Sen. Ted Cruz, R-Texas, told reporters. “I think the president is receiving some very poor advice on this deal.”
His Texas colleague, Republican Sen. John Cornyn, told MS NOW, “I don’t like that part of the deal.”
He noted, “The president has the authority to negotiate,” but he added that Congress should have an “oversight role.”
While some Republicans were outright critical, many others tried a more tactful approach. Many said they were still waiting for more information.
Sen. Todd Young, R-Ind., told MS NOW he needed to “see the details” before really commenting on the emerging deal. But when pressed on some of the leaked details, he said the U.S. needed to “tighten the thumb screws if we want to get the sort of concessions required to secure or remove the nuclear material.”
Asked about the $300 billion reconstruction fund for Iran, which is supposed to be paid for by private investments from other countries, Sen. Lisa Murkowski, R-Alaska, said she was waiting to hear about a “corresponding win” for the U.S.
She said she wanted the Trump administration to present the deal to lawmakers “with an opportunity for us to actually ask those questions.”
And Senate Majority John Thune, R-S.D., who told reporters Wednesday that he still had not seen the final text, said, “There’s a bunch of things in here that I think we’re going to have questions about.”
“I need to hear more about it, and what the ideas are for implementation, and what the enforcement compliance mechanisms are,” he said.
To be sure, only a handful of Republicans directly praised the memorandum. Sen. Bernie Moreno of Ohio, told MS NOW he was “very happy” with the deal.
“I think it’s historic,” he said.
And Sen. Tommy Tuberville, R-Ala., told MS NOW he “would think” the memorandum is better than the Iran nuclear deal crafted during the Obama presidency.
But most Republicans approached by MS NOW insisted they had not yet seen the memorandum and therefore wanted to refrain from comment — even when MS NOW pressed about the topline aspects of the plan, like sanctions relief and the potential for $300 billion in assistance.
“Haven’t had a chance to read it yet. I’m sorry,” said Sen. Cynthia Lummis, R-Wyo.
“I’m not going to comment if I haven’t read it,” said Sen. John Curtis, R-Utah.
“I don’t know what’s in it yet, and that’s critical,” Sen. Susan Collins, R-Maine, told MS NOW. “I haven’t had a classified briefing yet, and that’s critical.”
But as Republicans learn more details about the agreement, reactions generally haven’t been positive. After spending years blasting the Obama-era Iran nuclear deal — particularly for the agreement sending “pallets of cash” to the Iranian regime — Republicans may have trouble swallowing some of the concessions in this agreement, even if it’s just a temporary deal paving the way to a larger pact in 60 days.
As Democrats have been pointing out, it will be practically more difficult for Trump to walk away from negotiations in August, with the pressure of midterms increasing and the prospect of higher gas prices more daunting.
In general, Democrats have cast the memorandum as an “abject failure,” though they’ve couched that disappointment with an insistence that they’re happy about a potential end to hostilities.
Sen. Tim Kaine, D-Va., who in recent months has spearheaded a Democratic effort to curtail the president’s war powers in Iran, said it sounded like “we’re giving a lot more to get a lot less than we got in the JCPOA” — a reference to the Obama-era deal, which was formally named the Joint Comprehensive Plan of Action.
Sen. Chris Coons, D-Del., told MS NOW that “by virtually every goal that President Trump announced when this war began” — from regime change to cutting off Iran’s support for its proxies in the region to collecting the country’s nuclear material — “he’s failed.”
In particular, Coons took issue with the proposed sanction relief and the $300 billion for reconstruction, likening it to “rivers of cash to help the mullahs not just rebuild Iran but to build a stronger Iran.”
“I hope — but do not expect — to hear from my many colleagues who denounced the JCPOA as funneling ‘pallets of cash’ to Iran to similarly denounce this deal,” Coons said.
Trump has left himself some latitude on the deal — at least on the potential blame for a bad agreement.
On Wednesday, as he faced questions in France over the pending MOU, he explained why he continued to present Vance as a key negotiator of the deal.
“This way, if it works out, I’m going to take the credit,” Trump said. “If it doesn’t work out, I’m blaming JD.”
Julia Jester, Lillie Boudreaux, and Mychael Schnell contributed to this report.
Kevin Frey is a congressional reporter for MS NOW.
- Mamdani boosts congressional slate ahead of primary election
- Meta faces calls for Congress to probe scam ads targeting seniors
- Congress lays out path for final passage of housing bill
- AIPAC looms large ahead of New York primaries
- Steil pushes bill to ban lawmakers from political prediction markets
- Medication abortion restored in Missouri following court ruling
- White House confirms Vance trip to Switzerland delayed
- Special election for Swalwell’s open House seat heads to runoff
- Trump awards 3 Medals of Honor to war heroes
- Top Senate Democrat calls on FAA to reject White House arch approval pressure
-
Politics1 year agoFormer ‘Squad’ members launching ‘Bowman and Bush’ YouTube show
-
The Dictatorship1 year agoLuigi Mangione acknowledges public support in first official statement since arrest
-
Politics1 year agoFormer Kentucky AG Daniel Cameron launches Senate bid
-
Uncategorized2 years ago
Bob Good to step down as Freedom Caucus chair this week
-
The Dictatorship1 year agoPete Hegseth’s tenure at the Pentagon goes from bad to worse
-
The Josh Fourrier Show2 years agoDOOMSDAY: Trump won, now what?
-
Politics1 year agoBlue Light News’s Editorial Director Ryan Hutchins speaks at Blue Light News’s 2025 Governors Summit
-
The Dictatorship9 months agoMike Johnson sums up the GOP’s arrogant position on military occupation with two words