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Binyamin Netanyahu is alienating Israel’s best friends

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One day more than 30 years ago, during the administration of President George H.W. Bush, the secretary of state, James Baker, flung a newspaper article at an aide, Daniel Kurtzer, and declared he was going to eject the Israeli ambassador. He was furious about a quotation he had just read from the deputy foreign minister of Israel, Binyamin Netanyahu.

Mr Kurtzer pleaded for 24 hours to check that the quotation was accurate. He learned that Mr Netanyahu’s wording was slightly different from what had been reported, but still shocking: America, Mr Netanyahu had said, “is building its policy on a foundation of distortions and lies”. The ambassador got a reprieve, but Mr Baker declared Mr Netanyahu persona non grata and banned him from the State Department.

A few years later, in 1996, Mr Netanyahu became prime minister, and it was President Bill Clinton’s turn to be insulted. “Who the fuck does he think he is?” Mr Clinton vented to aides, after receiving a lecture on how to deal with Arabs during his first meeting with Mr Netanyahu. “Who’s the fucking superpower here?”

Even Donald Trump, who as president delivered item after item on Mr Netanyahu’s wish-list, found himself blindsided by a classic Netanyahu manoeuvre to box America in. When the two men appeared in the East Room of the White House to announce a peace plan they had arrived at without Palestinian participation—the plan went nowhere—Mr Netanyahu declared it meant Israel could now annex parts of the occupied West Bank. “This was not what we had negotiated,” a flabbergasted Jared Kushner, Mr Trump’s son-in-law and lead negotiator, would later write in his memoir, “Breaking History”. “I grabbed my chair so intensely that my knuckles turned white, as if my grip could make Bibi stop.”

Far more than the unpractised Mr Kushner, President Joe Biden had reason to hope that his grip would be enough to restrain the prime minister, whom he had alternately jousted and joked with for decades, since back before Mr Baker imposed his ban. But since Hamas’s rampage into Israel on October 7th, Mr Netanyahu has repeatedly rejected Mr Biden’s counsel about the war and scorned his vision for its aftermath. That is what provoked Chuck Schumer, the Senate majority leader, to give an extraordinary, anguished speech on March 14th naming Mr Netanyahu along with Hamas as an obstacle to peace and calling for an Israeli election to oust him. Mr Netanyahu, he said, “has lost his way”.

Mr Netanyahu and other Israelis would be making a mistake to interpret the speech as just another bump in the often rocky road the allies have travelled since the founding of Israel. “This is very different,” says Mr Kurtzer, who went on to serve as the American ambassador in Cairo and then Tel Aviv. “The Israelis will need to understand that this is a wake-up call, if nothing else has persuaded them that they’re running into a problem with us.”

Mr Schumer, the highest-ranking elected Jewish official in American history, is no fair-weather friend of Israel. Back when Mr Netanyahu outraged Barack Obama’s White House by attacking Mr Obama’s proposed nuclear deal with Iran in a speech to a joint session of Congress, Mr Schumer was one of only four Senate Democrats to vote against the deal. Mr Schumer is also no progressive. Now aged 73, he was at pains in his speech to point out that “unlike some younger Americans” he was of a generation “within living memory of the Holocaust”. He described pressing a transistor radio to his ear at high school as he fearfully tracked news of the Six Day War.

Mr Schumer is a political animal, as alert to danger in his surroundings as they come, but it is doubtful that he was worrying about Mr Biden’s chances of winning Michigan. Mr Netanyahu should worry instead that, given Mr Schumer’s political sophistication, he was correct in saying he spoke for “a silent majority” of Jewish Americans, people, he said, “who love Israel to our bones” yet take a nuanced view of the war in Gaza. Mr Schumer repeatedly condemned Hamas and a double standard in the news media that put all the blame for Palestinian suffering on Israel. But, he said, both Israel and the United States had a “moral obligation” to do more to protect Palestinian civilians: “We must be better than our enemies, lest we become them.”

Mr Netanyahu responded on March 17th by saying that calling for elections in Israel now would be like having called for elections in America in the wake of the attacks of September 11th 2001. “You don’t do that to a sister democracy, to an ally,” he told cNN. But Mr Biden has made clear that he approved of Mr Schumer’s message. “He made a good speech,” he told reporters.

Moving America

Mr Netanyahu was partly brought up and educated in America, and he prides himself on understanding how to manage its politics. “I know what America is,” he remarked once, apparently unaware he was being recorded. “America is a thing you can move very easily.” Maybe not this time. Given the polarisation of foreign policy, he can count on Republican backing, but bipartisan support of Israel has always been a bulwark of its security and, having lost Mr Schumer, Mr Netanyahu has all but lost the Democrats.

Even before Mr Schumer spoke, Mr Biden had boxed himself in, saying if Israeli forces conducted a major operation in Rafah in the southern Gaza Strip they would be crossing “a red line”. He has required “credible and reliable” assurances from Israel that it is using military aid in compliance with international humanitarian law. The Americans will soon decide whether they are satisfied with those assurances. Mr Schumer has dramatically strengthened Mr Biden’s hand, should he choose to find Israel is misusing American weapons. The anger of America’s leaders is directed at Mr Netanyahu, but Israel may wind up paying the price.

Read more from Lexington, our columnist on American politics:
“Dune” is a warning about political heroes and their tribes (Mar 14th)
Has Ron DeSantis gone too far in Florida? (Mar 7th)
Vladimir Putin hardly needs to interfere in American democracy (Feb 29th)

Also: How the Lexington column got its name

Economics

Checks and Balance newsletter: Who is (or was) the smartest person in government?

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Economics

Consumer sentiment worsens as inflation fears grow, University of Michigan survey shows

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A shopper pays with a credit card at the farmer’s market in San Francisco, California, US, on Thursday, March 27, 2025. 

Bloomberg | Bloomberg | Getty Images

The deterioration in consumer sentiment was even worse than anticipated in March as worries over inflation intensified, according to a University of Michigan survey released Friday.

The final version of the university’s closely watched Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago. Economists surveyed by Dow Jones had been expecting 57.9, which was the mid-month level.

It was the third consecutive decrease and stretched across party lines and income groups, survey director Joanne Hsu said.

“Consumers continue to worry about the potential for pain amid ongoing economic policy developments,” she said.

In addition to worries about the current state of affairs, the survey’s index of consumer expectations tumbled to 52.6, down 17.8% from a month ago and 32% for the same period in 2024.

Inflation fears drove much of the downturn. Respondents expect inflation a year from now to run at a 5% rate, up 0.1 percentage point from the mid-month reading and a 0.7 percentage point acceleration from February. At the five-year horizon, the outlook now is for 4.1%, the first time the survey has had a reading above 4% since February 1993.

Economists worry that President Donald Trump’s tariff plans will spur more inflation, possibly curtailing the Federal Reserve from further interest rate cuts.

The report came the same day that the Commerce Department said the core inflation rate increased to 2.8% in February, after a 0.4% monthly gain that was the biggest move since January 2024.

The latest results also reflect worries over the labor market, with the level of consumers expecting the unemployment rate to rise at the highest level since 2009.

Stocks took a hit after the university’s survey was released, with the Dow Jones Industrial Average trading more than 500 points lower.

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Economics

PCE inflation February 2025:

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Core inflation in February hits 2.8%, hotter than expected; spending increases 0.4%

The Federal Reserve’s key inflation measure rose more than expected in February while consumer spending also posted a smaller than projected increase, the Commerce Department reported Friday.

The core personal consumption expenditures price index showed a 0.4% increase for the month, putting the 12-month inflation rate at 2.8%. Economists surveyed by Dow Jones had been looking for respective numbers of 0.3% and and 2.7%.

Core inflation excludes volatile food and energy prices and is generally considered a better indicator of long-term inflation trends.

In the all-items measure, the price index rose 0.3% on the month and 2.5% from a year ago, both in line with forecasts.

At the same time, the Bureau of Economic Analysis report showed that consumer spending accelerated 0.4% for the month, below the 0.5% forecast. That came as personal income posted a 0.8% rise, against the estimate for 0.4%.

Stock market futures moved lower following the release as did Treasury yields.

Federal Reserve officials focus on the PCE inflation reading as they consider it a broader measure that also adjusts for changes in consumer behavior and places less of an emphasis on housing than the Labor Department’s consumer price index. Shelter costs have been one of the stickier elements of inflation and rose 0.3% in the PCE measure.

“It looks like a ‘wait-and-see’ Fed still has more waiting to do,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Today’s higher-than-expected inflation reading wasn’t exceptionally hot, but it isn’t going to speed up the Fed’s timeline for cutting interest rates, especially given the uncertainty surrounding tariffs.”

Good prices increased 0.2%, led by recreational goods and vehicles, which increased 0.5%. Gasoline offset some of the increase, with the category falling by 0.8%. Services prices were up 0.4%.

The report comes with markets on edge that President Donald Trump’s tariff intentions will aggravate inflation at a time when the data was making slow but steady progress back to the Fed’s 2% goal.

After cutting rates a full percentage point in 2024, the central bank has been on hold this year, with officials of late expressing concern over the impact the import duties will have on prices. Economists tends to consider tariffs as one-off events that don’t feed through to longer-lasting inflation pressures, but the encompassing scope of Trump’s tariffs and the potential for an aggressive global trade war are changing the stakes.

Correction: Consumer spending increased 0.4% in February. An earlier headline misstated the number.

This is breaking news. Please refresh for updates.

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