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 U.S. military on Wednesday carried out new strikes in Iran, shooting down four attack drones and targeting a ground control station. The military stated both the drones and ground facility posed a threat to the Strait of Hormuz, a U.S. official said in a statement to MS NOW.
The official said the ceasefire agreement remains in effect and described the U.S. military actions as intended to maintain the ceasefire.
“Today, U.S. Central Command forces shot down four Iranian one-way attack drones that posed a threat around the Strait of Hormuz. U.S. forces also struck an Iranian ground control station in Bandar Abbas that was about to launch a fifth drone. These actions were measured, purely defensive, and intended to maintain the ceasefire,” the official said in the statement.
At least three explosions were heard east of Bandar Abbas, a port city in Iran along the Strait of Hormuz, The New York Times and CNN reported, both citing Iranian state media. The explosions briefly activated Bandar Abbas’ air defense systems, Fars News Agency, a media outlet affiliated with Iran’s Islamic Revolutionary Guard Corps, reported early Thursday local time.
The latest strikes come amid an unstable ceasefire agreement between the U.S. and Iran.
Speaking at a Cabinet meeting at the White House earlier Wednesday, President Donald Trump said Iran wants “very much to make a deal” but “they haven’t gotten there,” adding that Iran was “negotiating on fumes.”
“We’re not satisfied with it, but we will be,” Trump said. “Either that or we’ll have to just finish the job. Their navy is gone … their air force is gone, everything’s gone. And they’re negotiating on fumes. But we’ll see what happens. Maybe we have to go back and finish it, maybe we don’t.”
On MondayU.S. Central Command said in a statement that the U.S. carried out “self-defense” strikes on missile launch sites and boats in southern Iran in order “to protect our troops from threats posed by Iranian forces.” That same day, Trump said in a Truth Social post that negotiations with Iran were “proceeding nicely!”
Julia Jester covers politics for MS NOW and is based in Washington, D.C.
Carla Herreria is an editor for MS NOW’s breaking news and liveblog team. She was previously a senior assignment editor at HuffPost.
President Donald Trump’s racist policy of welcoming white South Africans while excluding refugees from other countries is back in the spotlight after his administration raised its refugee ceiling — to bring in more white people.
Trump increased the refugee admissions ceiling by 10,000 for this year to allow more white South Africans to come into the country, a signed presidential determination reviewed by Reuters showed.
The document, dated May 21, said white South Africans of Afrikaner ethnicity face an emergency situation due to the “incitement of racially motivated violence” by the government and political parties in the majority-Black country.
The document, found herecites an “unforeseen emergency refugee situation” that doesn’t actually exist. Trump and his allies have pushed false claims that a “white genocide” is occurring, but South Africa’s government — and even advocacy groups representing the country’s white Afrikaner minority — have rejected the claim.
Reuters reported that the increased refugee limit is now 17,500 — and that only three non-South African refugees have been admitted into the U.S. this fiscal year. Reuters previously reported that the administration wanted to bring in 4,500 white South Africans immigrants per montha number that I noted mirrors the number of white German refugees the Ku Klux Klan wanted to welcome to the United States a century ago — when its members were popularizing xenophobic slogans like “America First” and launching campaigns of racist terror against people of color.
It’s noteworthy here that white supremacists have latched on to racist conspiracy theories, such as the “replacement theory,” saying that there is some kind of plot to replace white Americans with nonwhite people, particularly foreigners. In reality, what’s actually underway is the exact opposite: a government effort to deport nonwhite people in America — including people who have lived in the U.S. for years — while Trump’s regime takes steps to import white people, and as some conservatives fret over white birth rates.
It’s hard to imagine the klan itself wouldn’t approve of this policy.
Ja’han Jones is an MS NOW opinion blogger. He previously wrote The ReidOut Blog.
Amid the Republican Party’s ongoing assault on Black peopleDemocrats are borrowing a tactic from 20th-century civil rights activists and putting corporate America on notice.
On Tuesday, the Congressional Black Caucus said it sent a letter to more than 200 companies and business organizations, urging them to oppose the GOP’s push to eliminate majority-Black districts after the Supreme Court’s Callais v. Louisiana decision, which effectively permitted racist gerrymandering.
In 2021, the companies sent a letter to Congress in support of the John Lewis Voting Rights Advancement Act, saying the legislation was needed to guard against racial discrimination and voter suppression. Signees on that letter included AppleDell and Googlewhose executives have since aligned themselves with President Donald Trump’s regime.
“Many corporations spoke clearly during that moment about the importance of protecting democratic participation, defending civil rights, and advancing racial equity,” the CBC’s letter reads. “Today, those commitments are being tested.”
The letter presses the companies to issue statements condemning the GOP’s push to dilute Black voters’ power, as well as information on corporate political spending. The pressure campaign follows the CBC’s public call for student-athletes to boycott public universities in states where Republicans have taken action against majority-Black voting districts.
Meanwhile, 16 Democratic state attorneys general sent a letter last week to three donor-advised funds urging them to lift restrictions on donations to the Southern Poverty Law Centeran anti-racist organization known for helping law enforcement officials take down white supremacist extremist groups. The charity-based arms of Fidelity and Vanguard, as well as a company called Donor Advised Charitable Giving, imposed the restrictions after the Trump administration’s baseless indictment of the SPLC. I recently wrote about how Trump allies have used these charges to downplay and outright deny the existence of racist extremismas well as spread lies about liberals being responsible for groups like the Ku Klux Klan.
This scrutiny of corporate America and its acquiescence to the MAGA movement has me thinking of a conversation I had with the Rev. Al Sharpton and the “Morning Joe” crew last week. During our chat, Sharpton warned that companies that align themselves with Trump’s war on diversity do so at their own risk, because Democrats could take steps in the future to hold these companies to account.
These letters show a strong interest among Democrats in pressuring companies that appear to be propping up, or placating, the rise of what many people see as Jim Crow 2.0.
Ja’han Jones is an MS NOW opinion blogger. He previously wrote The ReidOut Blog.
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