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A leaked recording shakes up the Republican Party in Arizona

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“WE’D LIKE to share with you that we have a brand-new AZGOP chair, Jeff DeWit,” said the recorded greeting on the voicemail of the Arizona Republican Party. “He is wonderful to work for, and I know you will be happy getting to know him.” But the recording, still playing on January 25th, was doubly outdated. Mr DeWit was hardly “brand-new”: he had taken over as party chair a year before (with Donald Trump’s backing), promising to unite the party’s feuding factions. More important, he had resigned the previous day, after what amounted to a coup orchestrated by the party’s likely candidate for Senate, Kari Lake—amid drama worthy of reality TV.

Arizona will be a critical state in the elections in November. “There’s no path to the White House that doesn’t run through Arizona,” says Caroline Wren, an adviser to Ms Lake. “And Arizona might well be the 51st Senate seat,” determining whether or not Republicans can wrest back control.

Republican bigwigs were keen to field a Senate candidate with the best chance of winning. The lesson from the midterms was that strident Trump-backed candidates tend to lose. Ms Lake’s own defeat in the Arizona governor’s contest was a prime example: the former TV news anchor was a vocal supporter of Mr Trump’s false claim that the 2020 election was stolen. About 11 months ago Mr DeWit approached Ms Lake with a message from “very powerful people” back east and an offer he hoped she would not refuse: an inducement to sit out the coming election cycle.

Unfortunately for Mr DeWit, she not only refused, but recorded the conversation—and last week it was leaked to DailyMail.com, a British news website. In the ten-minute tape Mr DeWit is heard suggesting that Ms Lake “pause” her electoral ambitions for two years. “Is there a number” that would persuade her to do so, he asks? An offended Ms Lake rejects the attempt to buy her off: “They’re going to have to fucking kill me to stop me,” she says.

Mr DeWit claims that the tape was selectively edited. Yet he felt compelled to go.

Why did Ms Lake wait nearly 11 months to release the recording? Some Arizona Republicans had grown frustrated with Mr DeWit (among his sins, apparently, was being seen at several events of Ron DeSantis, the Florida governor who until recently was competing for the Republican presidential nomination) and were preparing to challenge his leadership at a meeting of the state party on January 27th. Ms Lake’s leak was exquisitely timed to bring about Mr DeWit’s resignation and enable that meeting to elect a new leader, Gina Swoboda, a Trump-endorsed conservative praised by her fans for her knowledge of election law.

In a text to a local political journalist, Dennis Welch, Mr DeWit complained about “the total mess that Kari caused”, which had brought “divisiveness and chaos”. Ms Lake now faces a backlash. At the party meeting “she was literally booed off the stage,” says Sandra Dowling, a retired school superintendent who has been a Republican Party member since 1981. “What you hear in these boos was, Kari, we’re really mad at you, and we’re mad at you for taking out someone we loved.” Ms Dowling reckons Ms Lake has a lot of damage control to do even to win the Senate primary.

The coup leaves Arizona’s Republican leadership, which was already MAGA-aligned, looking Trumpier than ever, and that could be a problem come November 5th. Republicans enjoy an advantage of about five percentage points over Democrats among registered voters in Arizona, and should win statewide elections, points out Samara Klar, a political scientist at the University of Arizona. But more than a third of voters here identify as independents, and many seem put off by Mr Trump. The party badly needs to raise money to help woo them. Democrats achieved surprising wins not only in the presidential election (Joe Biden won narrowly in 2020) but also the race for governor and both Senate seats: a trifecta not seen in Arizona for over 70 years.

In office, those Democrats tend to behave like independents—and often to sound like Republicans, notes Professor Klar. In the case of Senator Kyrsten Sinema, that has involved actually leaving the Democratic Party to become an independent. Whether she opts to run for re-election is one of the uncertainties hanging over this year’s contest. Some doubt that she could muster the required number of signatures in time to get on the ballot.

Arizona will be getting a lot more attention from people “back east”. Mr Trump cancelled an appearance at what was to have been a big fund-raiser for the Arizona Republican Party in Phoenix last week. But he is expected to visit soon. Two other former presidents did make it to Arizona: George W. Bush and Bill Clinton took the stage jointly on January 31st at a conference in Scottsdale organised by TIGER 21, a network of rich people. It was a demonstration of civility in stark contrast to the strife within parties—let alone between them.

Economics

Tariffs to spike inflation, stunt growth and raise recession risks, Goldman says

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U.S. President Donald Trump announces that his administration has reached a deal with elite law firm Skadden, Arps, Slate, Meagher & Flom during a swearing-in ceremony in the Oval Office at the White House on March 28, 2025 in Washington, DC. 

Andrew Harnik | Getty Images

With decision day looming this week for President Donald Trump’s latest round of tariffs, Goldman Sachs expects aggressive duties from the White House to raise inflation and unemployment and drag economic growth to a near-standstill.

The investment bank now expects that tariff rates will jump 15 percentage points, its previous “risk-case” scenario that now appears more likely when Trump announces reciprocal tariffs on Wednesday. However, Goldman did note that product and country exclusions eventually will pull that increase down to 9 percentage points.

When the new trade moves are enacted, the Goldman economic team led by head of global investment research Jan Hatzius sees a broad, negative impact on the economy.

In a note published on Sunday, the firm said “we continue to believe the risk from April 2 tariffs is greater than many market participants have previously assumed.”

Inflation above goal

On inflation, the firm sees its preferred core measure, excluding food and energy prices, to hit 3.5% in 2025, a 0.5 percentage point increase from the prior forecast and well above the Federal Reserve’s 2% goal.

That in turn will come with weak economic growth: Just a 0.2% annualized growth rate in the first quarter and 1% for the full year when measured from the fourth quarter of 2024 to Q4 of 2025, down 0.5 percentage point from the prior forecast. In addition, the Wall Street firm now sees unemployment hitting 4.5%, a 0.3 percentage point raise from the previous forecast.

Taken together, Goldman now expects a 35% chance of recession in the next 12 months, up from 20% in the prior outlook.

The forecast paints a growing chance of a stagflation economy, with low growth and high inflation. The last time the U.S. saw stagflation was in the late 1970s and early ’80s. Back then, the Paul Volcker-led Fed dramatically raised interest rates, sending the economy into recession as the central bank chose fighting inflation over supporting economic growth.

Three rate cuts

Goldman’s economists do not see that being the case this time. In fact, the firm now expects the Fed to cut its benchmark rate three times this year, assuming quarter percentage point increments, up from a previous projection of two rate cuts.

“We have pulled the lone 2026 cut in our Fed forecast forward into 2025 and now expect three consecutive cuts this year in July, September, and November, which would leave our terminal rate forecast unchanged at 3.5%-3.75%,” the Goldman economists said, referring to the fed funds rate, down from 4.25% to 4.50% today.

Though the extent of the latest tariffs is still not known, the Wall Street Journal reported Sunday that Trump is pushing his team toward more aggressive levies that could mean an across-the-board hit of 20% to U.S. trading partners.

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