Here's Why Trump's Tariffs Could Make America Less Exceptional
The American economy is richer, more innovative, and has expanded at a faster rate than most of the developed world for many years. How will Donald Trump's tariffs affect that trajectory? Bloomberg's head of economics and government Stephanie Flanders joins host Stephen Carroll to discuss.
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Yahoo
12 minutes ago
- Yahoo
Liz Warren Says Crypto Bill Creates a ‘Superhighway' for Trump Corruption
The Senate is set to pass the GENIUS Act early next week, a controversial piece of cryptocurrency legislation that critics say will hand an undue amount of financial power to the tech industry. On its face the bill, which has advanced with bipartisan support, purports to offer a regulatory framework for the expansion of 'stablecoins,' a form of crypto pegged to an existing, recognized asset — in many cases the U.S. dollar. In reality, it could enable corruption, screw over taxpayers, and potentially destabilize the economy. The GENIUS Act would allow banks and private companies to issue stablecoins, essentially their own currencies, with light oversight from regulators. It mandates that issuers of stablecoins hold a reserve of the stable asset backing their cryptocurrency at all times, and that firms abide by certain anti-money laundering laws, as well as U.S. sanctions against foreign entities. It sounds like a step in the right direction, but this piece of legislation is working its way through Congress as sitting President Donald Trump and his family build a cryptocurrency empire that steamrolls anti-corruption laws and ethical norms — one they hope will flourish under the industry-friendly policies and laws created by the administration of the Trump patriarch. One of Trump's priorities has been the normalization of these so-called stablecoins — a type of asset that his family is now hawking. Despite the moniker, stablecoins can be extremely unstable. A 2023 study published by the Bank for International Settlements found that of 60 stablecoins analyzed in their review, all of them had become de-pegged from their underlying asset at least once. The 2022 crypto crash was triggered by the failure of Terraform Lab's Terra/Luna 'algorithmic' stablecoin — the collapse of which saw $45 billion erased in the span of a week. The stablecoin bill comes as the government reorients its approach to crypto. Under the Biden administration, crypto kingpins began to feel the sting of consequences for schemes gone wrong. FTX crypto exchange founder Sam Bankman-Fried was sentenced to 25 years in prison after carrying out one of the largest financial scams since Enron. Tether, the largest stablecoin in crypto, settled a lawsuit brought against it by New York Attorney General Letitia James in 2021. Changpeng Zhao, the founder of the global crypto exchange Binance, pleaded guilty to money laundering in 2023. Trump pledged a new, friendlier regulatory environment in Washington — and the crypto industry poured many millions into Super PACs to elect allies throughout Congress. Now, the industry has its moment to push through a public smokescreen of barely-there regulation, while continuing to rake in the cash. No one has been more outspoken on the failings of the GENIUS Act than Sen. Elizabeth Warren (D-Mass.), who told Rolling Stone ahead of key votes that the bill would 'create a superhighway for Donald Trump's corruption.' The Trump family's cryptocurrency venture, World Liberty Financial — which is currently being operated by his sons and Zach Witkoff, the son of Trump's Middle East envoy Steve Witkoff — recently launched its own stablecoin, designated USD1, which is pegged to the U.S. dollar and backed by treasury bonds. The GENIUS Act would allow major tech companies, banks, and other financial institutions to issue their own stablecoins, and many are poised to buy Treasury bonds so they can back the digital currency with real assets, as is required. According to a report issued last week by ARK Invest, the stablecoin market may become one of the largest holders of U.S. debt in the coming years — potentially tying large swaths of U.S. debt to a dubiously regulated and often unstable asset. (For example, if Tether — the largest stablecoins in the market — was a country, it would be the 18th-largest holder of U.S. debt in the world.) The lines grow even murkier when considering Trump's habit of using his position in the White House to enrich himself, as well as to tip market scales. World Liberty Financial already landed a $2 billion transaction deal to help an Abu Dhabi-state backed company purchase a stake in the Binance crypto exchange using the USD1 stablecoin. 'As soon as the players understand that Trump's intervention is a real possibility, then the stablecoin market is no longer about a careful review of whether there are adequate dollars to back up a particular stablecoin, or whether the stable coin issuer has an AAA rating,' Warren says. 'Instead, the whole game becomes one of trying to engage the president to weigh the end and make one set of coins more valuable, and therefore another set of coins less valuable. It's corruption, but it's also a market manipulation that ultimately drains away any development. … It undermines all the markets at that point.' Warren compares the development of the GENIUS Act to efforts to regulate derivatives and the feverish rise of money market mutual funds in the early 2000s, both of which were major factors in the 2008 financial crisis: 'The derivatives industry came to the Congress and said, 'Regulate us,' and they wrote a sample. They wrote the regulation, and Congress — not knowing much about that world — passed it.' The consequence was, in Warren's view, that lay people believed the industry to be effectively regulated, when in reality investors essentially tailored legislation to their own priorities. 'The risk kept building in the system until in 2008 it blew up the entire economy and required a $700 billion bailout from taxpayers,' Warren says. 'So think about why an industry comes to Congress and says, 'Regulate us.' They want the imprimatur, they want the gold seal of the United States government. … They don't actually want the government to oversee the activities of the industry.' Warren is not alone in her concerns, and has found an unexpected ally in Republican Sen. John Hawley of Missouri. Last week, Hawley described the GENIUS Act as a 'huge giveaway to Big Tech' that would effectively allow private tech companies to create their own currencies that compete with the dollar. 'The U.S. dollar is the reserve currency,' Warren says. 'The United States does not gain from creating a competing electronic currency. Getting more people to hold stable coins rather than dollars during their investment transactions, does not serve us interests, but it injects risk into the U.S.' 'Anyone who thinks that when a financial crash hits [the value of stablecoins] will translate one to one into dollars is fooling themselves,' she adds. The ripple effects can be catastrophic when a stablecoin collapses. Existing stablecoins are already buying up billions in Treasury bonds, and in the event of a run on a coin, or any type of collapse within stablecoin, the issuer would sell off their own holdings — in this case Treasury bonds — to pay back their customers. Economists warn that such a scenario could destabilize the underlying treasury securities market that serves as the foundation of the U.S. economy. As Warren and Hawley point out, the risks of economic destabilization increase significantly if legislation like the GENIUS Act passes. PayPal has already launched its own cryptocurrency, and Apple, Facebook, X, and Airbnb have all explored releasing their own stablecoins for customers to conduct on-platform transactions in crypto. If, for example, Elon Musk 'is controlling a significant portion of cash-light money moving through our economy and X gets in trouble, the federal government will face the possibility of bailing out not just the coin, but the underlying business, because they're so deeply intertwined,' Warren explains. 'There's a reason why there has always been a wall between banking and commerce,' Warren says. 'This GENIUS Act, for the first time, destroys that wall.' Nothing is too big to fail. Seemingly secure, lucrative schemes have left the U.S. and global economy in ruins. In a way, the GENIUS Act has already built in a bailout fund for crypto traders should the bubble pop: your deposits. A provision in the bill mandates that financial institutions issuing the coins prioritize reimbursing stablecoin holders over other checking and savings depositors in the event that the bank or financial institution becomes insolvent. Essentially, as Georgetown Law professor Adam Levitin wrote last month, 'Congress is about to put the claims of stablecoin investors ahead of ma and pa's bank deposits.' Because most standard bank deposits are insured under the Federal Deposit Insurance Corporation (FDIC), the result is that depositors' checking and savings would be used to pay off lost crypto holdings and everyone else can file for an insurance claim. 'Which means,' Warren warns, 'the U.S. taxpayer is right in the crosshairs.' More from Rolling Stone 'No Fat Soldiers': Ft. Bragg Troops Were Carefully Screened for Trump's Stunt Visit Katy Perry Supports Migrants Amid ICE Raids: 'Deep Injustice' Los Angeles ICE Raids Are Driving Immigrants - And Citizens - Underground Best of Rolling Stone The Useful Idiots New Guide to the Most Stoned Moments of the 2020 Presidential Campaign Anatomy of a Fake News Scandal The Radical Crusade of Mike Pence
Politico
12 minutes ago
- Politico
Americans think Trump's big military parade is not a good use of government funds, poll shows
A majority of Americans believe President Donald Trump's multimillion-dollar parade celebrating the Army in Washington on Saturday is not a good use of government funds, a new AP-NORC poll shows. Sixty percent of Americans surveyed in the June poll said they believe the parade is not a good use of funds, while 38 percent said they believe the parade is worth the cost. Forty percent of Americans approve of Trump's decision to hold the parade, compared with 31 percent who neither approve or disapprove and 29 percent who are against the decision to hold a parade. The parade this weekend, which also coincides with Trump's 79th birthday, is expected to feature 6,600 soldiers marching along with 25 M1 Abrams main battle tanks and dozens of other military vehicles. Several generations of military aircraft are planned to fly overhead, including a World War II-era B-25 bomber, Huey helicopters similar to those used in the Vietnam War, and a P-1 biplane fighter aircraft like the ones first used in the 1920s. Trump is also expected to give a speech. The cost of the parade is estimated to cost between $25 million and $45 million, according to Army officials. Some Republicans have raised concerns over the cost. Sen. Roger Wicker (R-Miss.), who chairs the Senate Armed Services Committee, told POLITICO last week he 'would have recommended against the parade' after learning of its estimated cost. In an NBC News interview in May, Trump said the amount spent on holding the parade would be 'peanuts compared to the value of doing it.' Most Republican lawmakers are planning to skip the parade, including Speaker Mike Johnson and several members who have previously served in the military. Only seven out of 50 congressional Republicans surveyed by POLITICO as of Tuesday said they were planning to attend. The poll also finds 60 percent of Americans disapprove of Trump's job performance, while 39 percent approve, marking Trump's highest disapproval rating in an AP-NORC poll since he returned to office in January. The AP-NORC poll was conducted June 5-9 and is based on interviews with 1,158 adults around the country. The poll has a margin of error of +/- 4.0 percentage points.
Yahoo
12 minutes ago
- Yahoo
Trump will target US employers in next phase of immigration crackdown, Homan says
The Trump administration is planning to ramp up civil and criminal prosecutions of companies that employ workers without legal status, White House border czar Tom Homan said in an interview Wednesday. 'Worksite enforcement operations are going to massively expand,' Homan said. The White House has faced criticism from Democrats and even its own anti-immigration allies for exaggerating an immigrant crime wave while holding harmless the employers whose decisions shape huge sectors of the American economy. President Donald Trump 'won't prosecute companies for bribery and won't prosecute companies for hiring illegal immigrants,' Sen. Ruben Gallego, D-Ariz., said on X Tuesday. 'This administration just takes care of its donors.' But behind the scenes, American companies are 'freaking out' about the possibility of civil and criminal sanctions, or about the operational impact of losing a huge labor force, said Chris Thomas, a partner at Holland & Hart, who represents employers in immigration cases. He said clients have been 'calling in a panic — asking if they should be looking for ways to cut out potentially undocumented workers.' (He added that his clients do not know themselves to be employing any.) Employers are 'very scared — folks in LA, particularly,' said Bruce Buchanan, a leading immigration lawyer based in Nashville. Trump appeared to respond to those worries on Thursday morning: 'Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace,' he posted on Truth Social, promising that 'changes are coming.' For now, however, Homan confirmed that employers' fears are justified. Though the Trump administration prefers to focus on 'sanctuary' city policies that prevent police from turning over migrants who have committed crimes, this week's turmoil in Los Angeles began when federal agents raided four workplaces in the city's garment district as part of criminal investigations. Homan said the government will seek sanctions against employers. And major public companies have begun to warn investors that their models depend on migrant labor: 'Increased enforcement efforts with respect to existing immigration laws by governmental authorities may disrupt a portion of our workforce or our operations,' Smithfield, a major meatpacker, wrote in late March, the first time such language had appeared in its securities filings. DoorDash said in a recent filing that a crackdown 'may result in a decrease in the pool of Dashers.' 'They're coming here for a better life and a job, and I get that,' Homan said. 'The more you remove those magnets, the less people are going to come. If they can't get a job most of them aren't going to come.' Federal authorities have generally avoided targeting companies for a range of reasons, including the high burden of proof under laws that require showing that employers affirmatively knew the workers they hired lacked legal status. Unlike most developed economies, the US has no standardized national requirement that employers use its system for checking workers' papers, known as eVerify — and many workers evade that system by using a different legal worker's identity. Trump's first term saw some stepped-up Immigration and Customs Enforcement action against employers, with a two-step nationwide audit in 2018 and a record-setting $80 million civil settlement against the giant Asplundh Tree Experts over an investigation that began in the Obama years. Allies had expected the enforcement, which typically comes as much as a year after worksite raids, to ramp up before the coronavirus pandemic derailed immigration enforcement. Employer enforcement 'makes sense, but it has political impact on both sides,' Sen. Dick Durbin, D-Ill., told Semafor. 'Many entrepreneurs who are Republican by inclination would protest mightily. They can't have it both ways.' Such a move 'would reverberate through Congress,' he said. A concerted focus on employer enforcement would also shake huge segments of the US economy. Almost a quarter of construction workers lack legal status, a 2021 survey found, and as many as half of meatpacking workers. A focus on those industries could also undercut two of Trump's campaign promises: to make housing more affordable and bring down food prices. 'I won on the border, and I won on groceries,' he told NBC's Kristen Welker in December. President Trump suggested in April that he would propose a guest worker program for some of those businesses: 'We have to take care of our farmers, the hotels and, you know, the various places where they tend to need people.' But ICE raided a Nebraska meatpacking plant this week. 'Congress has a job to do,' Homan said. 'We're going to do worksite enforcement operations until there's a deal made.' When I first asked Homan about employers' role, he turned to talking points about sanctuary cities and the importance of sending agents in to arrest 'bad guys' who municipal authorities wouldn't turn over. Are employers, I asked, 'bad guys' in his view? 'Depends,' he replied. 'I know some employers don't know a fraudulent document from a legal document. But I truly believe that nobody hires an illegal alien from the goodness of their heart. They hire them because they can work them harder, pay them less, and undercut their competition — that hires US citizen employees, and drive wages down.' And yet, if and when the Trump administration moves past the popular, theatrical pursuit of alleged gang members and criminals, the White House and Congress will need to make hard decisions about how America sees its vast migrant workforce. Even the most dedicated restrictionists, like Homan, acknowledge that criminals are a tiny minority. 'Most illegal aliens are regular working stiffs,' said Mark Krikorian, the executive director of the Center for Immigration Studies. 'If you're not going after those people, you're not going to change the fundamental calculus.' (Krikorian is a longtime leader of the US anti-immigration movement — a figure who was so marginal in the Republican Party 20 years ago that when I, as a young reporter for the conservative New York Sun, tried to quote him, my editor told me he was beyond the pale. Now he's the intellectual architect of White House policy.) Gallego's comment suggests that Democrats, flailing for an affirmative policy on the border and immigration, may also see employers, rather than workers, at the center of the debate. The 'magnet' of migration is a decades-long, tacit agreement that meatpackers, construction companies, and farmers can employ migrants without any real penalties, and without the kind of tax and regulatory enforcement that's common across other developed countries. The US has struggled for decades to reach an agreement to regularize that system. Restrictionists have long dreamed of trading the legalization of immigrants who arrived illegally as children, known as Dreamers, for broad use of employment authorization. But many in Trump's movement simply want fewer immigrants, pitting them against big American business and Democrats alike, and while the outlines of a deal have been clear since the early 2000s, the prospect of a bipartisan agreement seems as remote as ever. The mixed signals toward employers have fed cynicism among those who like Trump's economic nationalism. 'The contradiction at the heart of the administration's approach reveals a fundamental tension between populist rhetoric and pro-business reality. While cameras roll for dramatic deportation footage, the industries dependent on illegal migration are maintaining business as usual. This disconnect could ultimately undermine the economic nationalism that propelled the Trump campaign to victory,' Lee Fang wrote on Substack. Trump's focus on immigrants with criminal records in US cities has produced an expanding national conflict, per The New York Times. the apprehension among employers, who are bracing for a wave of audits.
