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After winning New Hampshire, Trump is cruising to the nomination

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MOST THINGS become banal after a near-decade of cultural dominance. But not Donald Trump. Republican voters are still enthralled by him, undaunted by all the turmoil and scandal of his time in the White House and his post-presidential life. His rallies retain their feeling of secular religious revival. His fresh-faced rivals, by contrast, have looked unoriginal and uninspiring. By the time Republicans had voted in just one state, Iowa, only one serious challenger remained. All the rest had dropped out; most had endorsed him. The last woman standing, Nikki Haley, a former governor of South Carolina who served as America’s ambassador to the United Nations while Mr Trump was in office, mounted her resistance in New Hampshire, the second state to cast ballots. Like all the rest, she was overrun.

Mr Trump got 54.3% of the vote to Ms Haley’s 43.3%, and quickly pointed out that no one had ever won both Iowa and New Hampshire and failed to secure the nomination. An unbowed Ms Haley vowed to fight on. “You’ve all heard the chatter among the political class, they’re falling all over themselves saying this race is over,” she said at a speech in Concord, New Hampshire, conceding victory to Mr Trump. “This race is far from over. There are dozens of states left to go. And the next one is my sweet state of South Carolina.” Mr Trump was not pleased. “Who the hell was the impostor that went up on the stage before and, like, claimed a victory?” he sniped at his victory speech.

The problem for Ms Haley is that, if she cannot win in New Hampshire, she cannot expect to win anywhere. Entrance polls conducted during the Iowa caucuses, held on January 15th, show Ms Haley overperforming among Republicans with college degrees, who labelled themselves as political moderates, who didn’t identify as evangelical Christians and especially well among those who believe that President Joe Biden legitimately won the election of 2020. Those kinds of voters are over-represented in New Hampshire.

It was not just a demographic dividend that Ms Haley had hoped to cash in. She won the endorsement of Chris Sununu, New Hampshire’s popular Republican governor, who barnstormed the state with her. She and her allies heavily outspent Mr Trump, splashing out $31m versus his $15.7m. She spent months traipsing around the state’s breweries and diners, while Mr Trump eschewed such drudgery. Anti-Trump Republicans had said the only way to beat the former president was to consolidate support into a single opponent—which has now happened. And even after all that she lost by 11 points.

Chart: The Economist

Subsequent states in the primary calendar are more hostile terrain for Ms Haley. Republicans in her home state of South Carolina, which holds its primary on February 24th, look much more like those in Iowa—where Ms Haley came 32 points behind Mr Trump—than New Hampshire. An average of recent polls there shows Ms Haley trailing by a crushing 37 points. Mr Trump has secured the endorsements of the top South Carolina Republicans with whom Ms Haley once worked as governor.

In trying to explain away this uncomfortable reality at an election-eve rally in Salem, New Hampshire, Ms Haley branded herself as somehow more of a populist insurgent than Mr Trump. One candidate “has got the entire political elite all around him. It’s all of Congress. It’s all these legislative people. He’s got the media all around him. But you know what? I’ve never wanted them.” Only the most credulous supporters in the crowd would believe Ms Haley’s line that her former colleagues were abandoning her because she had been so zealous in pursuing ethics reforms while governor. One especially bored reporter (not this one) began timing their Rubik’s-cube-solving abilities midway through the speech.

In a memo released on the day of the New Hampshire vote, Ms Haley’s campaign argued that she had a viable path to the nomination, urging a “deep breath” until “Super Tuesday” on March 5th, when many states hold their primaries. Her team’s argument is that many of the states that will vote in the next six weeks are “open primaries”, in which independent voters who are not registered Republicans can take part. This factor will indeed help Ms Haley. But in order to be the Republican presidential nominee, one unfortunately needs to be able to command a majority of the party.

The bigger battle ahead

The meek and muddied anti-Trump resistance looks close to its last gasp. Only late in her campaign did Ms Haley take to attacking Mr Trump by name. Her criticisms of the man are usually meticulously crafted to avoid moral judgment. “Rightly or wrongly, chaos follows him,” is a favourite line of hers, as if the chaos had been a curse of some vindictive god rather than intrinsic to the man himself.

Ms Haley’s demise would commit the Republican Party to Trumpism, with its blend of isolationism, illiberalism and protectionism, and away from the internationalism of which Ms Haley sometimes seems the sole influential ambassador on the Republican side. In America, voters get what they want. And it seems that nothing—not a dozen vanquished Republican candidates, not the one remaining woman, not the 91 criminal indictments facing Mr Trump—can get in their way.

Mr Trump can’t wait to swat away Ms Haley so that he can focus on the coming contest with Mr Biden. Mr Biden won 56% of the votes in the Democratic primary in New Hampshire on Tuesday, even though (because he disputed New Hampshire’s cherished right to hold the first primary) his name was not on the ballot. He, too, is cruising to the nomination. Brace yourself for a Biden-Trump rematch.

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Economics

Donald Trump sacks America’s top military brass

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THE FIRST shot against America’s senior military leaders was fired within hours of Donald Trump’s inauguration on January 20th: General Mark Milley’s portrait was removed from the wall on the E-ring, where it had hung with paintings of other former chairmen of the joint chiefs of staff. A day later the commandant of the coast guard, Admiral Linda Fagan, was thrown overboard. On February 21st it was the most senior serving officer, General Charles “CQ” Brown, a former F-16 pilot, who was ejected from the Pentagon. At least he was spared a Trumpian farewell insult. “He is a fine gentleman and an outstanding leader,” Mr Trump declared.

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Checks and Balance newsletter: The journalist’s dilemma of covering Trump

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Checks and Balance newsletter: The journalist’s dilemma of covering Trump

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Germany’s election will usher in new leadership — but might not change its economy

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Production at the VW plant in Emden.

Sina Schuldt | Picture Alliance | Getty Images

The struggling German economy has been a major talking point among critics of Chancellor Olaf Scholz’ government during the latest election campaign — but analysts warn a new leadership might not turn these tides.

As voters prepare to head to the polls, it is now all but certain that Germany will soon have a new chancellor. The Christian Democratic Union’s Friedrich Merz is the firm favorite.

Merz has not shied away from blasting Scholz’s economic policies and from linking them to the lackluster state of Europe’s largest economy. He argues that a government under his leadership would give the economy the boost it needs.

Experts speaking to CNBC were less sure.

“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model that makes the competition jealous,” Carsten Brzeski, global head of macro at ING, told CNBC.

The CDU/CSU economic agenda

The CDU, which on a federal level ties up with regional sister party the Christian Social Union, is running on a “typical economic conservative program,” Brzeski said.

It includes income and corporate tax cuts, fewer subsidies and less bureaucracy, changes to social benefits, deregulation, support for innovation, start-ups and artificial intelligence and boosting investment among other policies, according to CDU/CSU campaigners.

“The weak parts of the positions are that the CDU/CSU is not very precise on how it wants to increase investments in infrastructure, digitalization and education. The intention is there, but the details are not,” Brzeski said, noting that the union appears to be aiming to revive Germany’s economic model without fully overhauling it.

“It is still a reform program which pretends that change can happen without pain,” he said.

Geraldine Dany-Knedlik, head of forecasting at research institute DIW Berlin, noted that the CDU is also looking to reach gross domestic product growth of around 2% again through its fiscal and economic program called “Agenda 2030.”

But reaching such levels of economic expansion in Germany “seems unrealistic,” not just temporarily, but also in the long run, she told CNBC.

Germany’s GDP declined in both 2023 and 2024. Recent quarterly growth readings have also been teetering on the verge of a technical recession, which has so far been narrowly avoided. The German economy shrank by 0.2% in the fourth quarter, compared with the previous three-month stretch, according to the latest reading.

Europe’s largest economy faces pressure in key industries like the auto sector, issues with infrastructure like the country’s rail network and a housebuilding crisis.

Dany-Knedlik also flagged the so-called debt brake, a long-standing fiscal rule that is enshrined in Germany’s constitution, which limits the size of the structural budget deficit and how much debt the government can take on.

Whether or not the clause should be overhauled has been a big part of the fiscal debate ahead of the election. While the CDU ideally does not want to change the debt brake, Merz has said that he may be open to some reform.

“To increase growth prospects substantially without increasing debt also seems rather unlikely,” DIW’s Dany-Knedlik said, adding that, if public investments were to rise within the limits of the debt brake, significant tax increases would be unavoidable.

“Taking into account that a 2 Percent growth target is to be reached within a 4 year legislation period, the Agenda 2030 in combination with conservatives attitude towards the debt break to me reads more of a wish list than a straight forward economic growth program,” she said.

Change in German government will deliver economic success, says CEO of German employers association

Franziska Palmas, senior Europe economist at Capital Economics, sees some benefits to the plans of the CDU-CSU union, saying they would likely “be positive” for the economy, but warning that the resulting boost would be small.

“Tax cuts would support consumer spending and private investment, but weak sentiment means consumers may save a significant share of their additional after-tax income and firms may be reluctant to invest,” she told CNBC.  

Palmas nevertheless pointed out that not everyone would come away a winner from the new policies. Income tax cuts would benefit middle- and higher-income households more than those with a lower income, who would also be affected by potential reductions of social benefits.

Coalition talks ahead

Following the Sunday election, the CDU/CSU will almost certainly be left to find a coalition partner to form a majority government, with the Social Democratic Party or the Green party emerging as the likeliest candidates.

The parties will need to broker a coalition agreement outlining their joint goals, including on the economy — which could prove to be a difficult undertaking, Capital Economics’ Palmas said.

“The CDU and the SPD and Greens have significantly different economic policy positions,” she said, pointing to discrepancies over taxes and regulation. While the CDU/CSU want to reduce both items, the SPD and Greens seek to raise taxes and oppose deregulation in at least some areas, Palmas explained.

The group is nevertheless likely to hold the power in any potential negotiations as it will likely have their choice between partnering with the SPD or Greens.

“Accordingly, we suspect that the coalition agreement will include most of the CDU’s main economic proposals,” she said.

Germany is 'lacking ambition,' investor says

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