| ◼ This week’s joke is paused for 90 days.
◼ President Trump wants a “liberation day” do-over. After the stock market tanked and Treasury yields rose in response to his “reciprocal” tariff plan that was supposed to fundamentally alter international trade forever, Trump announced a 90-day pause and said there would instead be a 10 percent tariff on goods from all countries, except 25 percent on Canada and Mexico and 145 percent on China. This is still bad policy. There’s no reason Americans should be paying more to import from Canada and Mexico than from other countries, and the Chinese rate amounts to a sudden near-embargo. National security justifies some restrictions, yes, but the bulk of Chinese imports are everyday goods that don’t threaten the country. The 10 percent minimum is likely not high enough to change production patterns but is still a major tax increase on Americans when Republicans should be focused on extending the 2017 tax cuts and reducing the cost of living. None of the basic facts of economics and trade will be any different 90 days from now. As long as the “liberation day” executive order remains in place and Peter Navarro remains employed by the White House, expect us to have to rehash all of this in early July.
◼ Among the many questions that have been raised in response to Trump’s chaotic experimentation with punitive tariffs is whether he, or any president, has the legal right to impose them unilaterally in the first place. Article I, Section 8, of the U.S. Constitution makes clear that “the Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises,” and yet, since his tenure began, Trump has claimed near-total discretion in this realm. To achieve that, Trump has invoked the International Emergency Economic Powers Act (IEEPA) of 1977, which, he claims, accords him the power to take any steps necessary once he has determined that the United States is in an “emergency.” A lawsuit filed by the New Civil Liberties Alliance dissents from this from the ground up. Among the claims it makes is that there is no emergency to speak of, that the IEEPA statute does not apply to tariffs (and, indeed, has never previously been used to impose tariffs), and that, even if it did apply to them, Congress is not permitted to delegate its taxing power to the executive branch. Since 1928, the governing Supreme Court standard has been that all congressional delegations of the tariff power must contain an “intelligible principle.” It is difficult to see how Trump’s extremely expansive application of IEEPA conforms to that rule. Whether we have five justices willing to say so is another question.
◼ The Supreme Court unanimously held that the suspected Venezuelan gang members Trump has designated for deportation under the Alien Enemy Act of 1798 (AEA) are entitled to notice of their designation and a right to be heard in opposition. That includes the two planeloads of Venezuelans the administration furtively transferred to a notorious prison in El Salvador with no such due process. The president claimed vindication because the Court vacated Judge James Boasberg’s temporary restraining order (TRO) barring the deportation of the Venezuelans. Trump maintains, in AEA parlance, that they have “invaded” or executed a “predatory incursion” at the direction of the Maduro regime. But the Court itself has now barred deportation in the absence of due process. It vacated the TRO because five justices ruled that the correct procedural vehicle for challenging the AEA designation is habeas corpus lawsuits in Texas, where most of the aliens are (or were) being held, not an Administrative Procedure Act class action before Boasberg in Washington. After the Court’s decision, a Trump-appointed judge in Texas promptly ordered the administration not to deport any other AEA designees absent further proceedings. Fight illegal immigration, and fight crime, legally.
◼ House and Senate Republicans fought over a resolution that will serve as the vehicle to extend President Trump’s tax cuts before they expire at the end of the year. A contingent of House Republicans, concerned about mounting debt, was reluctant to go along with a Senate-passed resolution that stipulated a floor of only $4 billion in spending cuts over ten years even as Congress plans trillions of dollars in tax cuts. Only after House Speaker Mike Johnson and Senate Majority Leader John Thune announced their aspiration to cut at least $1.5 trillion in spending did the resolution squeak through, 216 to 214. The House holdouts were right to resist. The federal debt held by the public is expected to reach 100 percent of the economy this year, the highest level since World War II, according to the Congressional Budget Office, and it is on track to surpass that all-time record four years from now. By taking reforms to Social Security and Medicare off the table, President Trump has made it highly unlikely that we will see any significant deficit reduction in his administration (DOGE hype is not changing the trajectory of the federal spending). But House Republicans should continue to insist on responsible budgeting where they can.
◼ Which does not mean cuts everywhere. President Trump is advancing a long-overdue defense buildup, promising to boost defense spending to $1 trillion this coming year. Malign actors from all corners of the world are banding together in a manner that poses a serious threat to America’s security. Despite this reality, there are forces within Trump’s administration and in the Republican Party who, for fiscal and ideological reasons, are skeptical of such a buildup. As dire as the state of the federal budget is, deterring a war with China will prove much cheaper than potentially fighting one. And an ideological tendency whose commitment to American supremacy is dubious should not be in the Pentagon driver’s seat. As Senator Roger Wicker (R., Miss.) has put it, the goal should be a buildup bigger than Ronald Reagan’s and a reform of the Pentagon as significant as that under Dwight Eisenhower. Peace through strength requires strength. |