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Checks and Balance newsletter: Mitch McConnell’s legacy

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Mitch McConnell has been overrun, writes James Bennet, our Lexington columnist

Senator Mitch McConnell of Kentucky was right a few years back to call his radical move to block President Barack Obama from filling a vacancy on the Supreme Court his “most consequential decision”. It had not only profound consequences for the country but also unintended, bitter consequences for him, leading to a new version of the Republican Party in which some of his most cherished policy objectives and even his service are no longer much honoured. Mr McConnell announced on February 28th that he would step down as the Republican leader in the Senate, a post he has held, in the majority and minority, since 2007, making him the longest-serving Senate leader in history.

By holding the Supreme Court seat open, in defiance of Senate practice since at least the civil war, Mr McConnell heightened the stakes of the 2016 election, particularly for evangelicals. In case voters might not be getting the message, Donald Trump took to simply shouting “Supreme Court” at some rallies. Luck also had a role in producing the inside straight that got Mr Trump elected via the electoral college, but that open court seat was a crucial card. 

But Mr Trump proved to be a very different kind of Republican, one with little regard for institutions that Mr McConnell revered and no patience for the Reaganite vision of America’s role in the world that the senator believed in. Mr McConnell no longer speaks to his party’s pre-eminent leader—has not done so, in fact, since the attack on the Capitol on January 6th 2021. 

Mr McConnell reportedly believed Mr Trump’s role in stirring up the mob that day was an impeachable offence, but, with his caucus moving the other way, ultimately voted to acquit him on flimsy procedural grounds. He thought that Mr Trump had ruined himself politically. Instead, in his waning days as leader, Mr McConnell has been overrun by younger senators who embrace Mr Trump and reject the support to Ukraine that Mr McConnell considers vital to American interests. Mr McConnell acknowledged he was out of step with his party in the speech announcing his decision, but implicitly rebuked some of his colleagues by repeatedly invoking Reagan, affirming his conviction in the need for America’s “global leadership” and adding, “For as long as I draw breath on this Earth, I will defend America’s exceptionalism.” 

Maybe Mr McConnell hoped that blocking Mr Obama’s choice would ultimately result, as it did, in a court conservative enough to overturn Roe v Wade. But if so he seemed unprepared for the consequences of that, too. My colleague Sacha Nauta writes this week about how the logic of the pro-life movement, given free rein by the court, is leading to outcomes like the Alabama Supreme Court’s decision that embryos created by in vitro fertilisation are “extrauterine children”. As fertility clinics in Alabama suspend the treatment, parents desperate for children are panicking, and Republicans nationally are scrambling to protect themselves from the political backlash without alienating the most stalwart anti-abortion voters.

Mr McConnell’s brief speech was a moving reminder that politicians are also human beings, which is part of what I was going for in writing last week’s newsletter, in a far less melancholy key, about presidents and their animals. One of you wrote back to me that the subject was “asinine”, but others played along. Citing W.C. Fields’s rule that one should never work with children or pets, Mark Cohen wrote from Australia with a thought that hadn’t occurred to me to explain why Mr Trump may not keep pets: “He understands how easily he may be upstaged, performer that he is.” 

Linda Gartz described the experience of having a flying squirrel, Hermann, as a pet (“the little scamp would jump and soar from person to person”), along with a boa constrictor, a raccoon and other creatures. “They enriched my childhood,” she wrote, “and taught me a great deal about empathy, caring for another living being, and also about the reality of predator and prey in our world.” ■

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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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Economics

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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