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Donald Trump goes to war with his employees

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T
O GET a sense of what Donald Trump’s first week did to the federal government, talk to people who work in it. “I’ve been with the government for over 10 years, I lived through the first Trump administration, and nothing compares to this,” says one Treasury employee. Some workers are busy scrubbing their personal social media for items that could be interpreted as disloyal. Others are scrubbing up their resumes, anticipating that they will soon be looking for new work. Those who plan to stay expect their jobs to get worse, as colleagues flee or are not replaced. Everyone is “in absolute panic mode”, says another senior civil servant.

As a candidate, Mr Trump promised that he would “shatter the deep state”. Since taking office, it has become more clear what he meant. In a barrage of executive orders, Mr Trump has asserted that he can do just about whatever he likes to the federal government. He has, he claims, “sole and exclusive authority” over the executive branch, to include hiring, firing and all spending decisions. In effect, Mr Trump is claiming he is not merely a president, putting into action laws enacted by the legislature. He is claiming to be something closer to a king, able to withhold or redirect expenditure as he sees fit.

On January 27th Mr Trump revealed quite how far he intends to push. He decreed that all grants and loans that the federal government makes—excepting disbursements for Social Security, Medicare, and some other vaguely defined categories—would be suspended the following day, even though Congress had approved them. This apparent usurpation of Congress’s role under Article I of the constitution was “sweeping and vast” and “really, really illegal”, says Eloise Pasachoff of Georgetown University law school. The memo laid out no legal justification for the freeze and on the evening of January 28th, a federal judge stopped it temporarily. The next day, the administration rescinded its memo; what happens next is unclear. A parallel freeze of all foreign aid created similar chaos.

In the meantime Mr Trump has launched an extralegal power grab almost as ambitious against the federal bureaucracy—the over 2m civil servants who actually implement federal policy. He has directly fired dozens of senior staff, including senior immigration officials, Department of Justice prosecutors and others he and his appointees have identified as being hostile to his goals. These included more than a dozen inspectors general (watchdogs who investigate departmental efficiency and wrongdoing). In the case of the inspectors general, the president is required by law to give 30 days notice and an explicit reason to justify firing. He did neither.

These decisions came on top of a complete hiring freeze across most departments (the military, immigration authorities, as well as jobs related to social security and veterans healthcare are exempt). He also reinstated an unimplemented order from his last term allowing his administration to redesignate any career civil service job as a political job, and thereby remove the usual job protections and sack whomever he wants. He has also pledged to shut down all “diversity, equity and inclusion” jobs, known as “deiA”, in government. To top it off, he banned all work from home.

The aim is transparently to get federal workers who do not like Mr Trump to leave. On January 28th, an email went out from the Office of Personnel Management (opm) offering every single federal employee “deferred resignation”. Essentially, the terms were: agree to leave this financial year and you can work from home until then. The touches—including instructions to reply with the word “RESIGN” by February 6th—implied the influence of Elon Musk, the billionaire head of Mr Trump’s “Department of Government Efficiency”, or “doge”. Since the opm is not actually a corporate hr department, the offer is unlikely to withstand scrutiny. Federal tech employees report that outsiders, many seemingly junior employees of Mr Musk’s companies, have come into offices to take over government it systems and do “code reviews”.

Were Mr Trump to make these changes stick—a questionable prospect—it would amount to “probably the most fundamental alteration of the civil service system since 1883” says Don Moynihan, of the Ford School of Public Policy at the University of Michigan (a verdict many in the White House would love). The president appears to have little interest in the idea that most government officials should be non-partisan specialists whose expertise is deployed to keep the public safe, among other benefits. Under Mr Trump’s plan, decisions about hiring and firing would be made by his political appointees.

According to Max Stier, of the Partnership for Public Service, a charity which works to improve government, Mr Trump is “tearing apart the civil service” so as to recreate “the spoils system” of government that persisted until the end of the 19th century. That was a model whereby new presidents came in and immediately distributed jobs to their pals as a reward for supporting their election campaigns.

Will he succeed? This seems unlikely, says Larry Jacobs, of the University of Minnesota. “Mr Trump’s orders, he says, are “impressively sweeping and breathtaking in their institutional arrogance” but he argues that much of what Mr Trump is trying to do will probably be undone by the courts or Congress. He points out that even after Mr Trump appointed sympathetic new members in his last term, the Supreme Court often overruled him. Congress has ceded much power to the presidency, but controlling the federal purse is a prerogative it is unlikely to yield readily.

Yet it could take years for challenges to work their way through the courts. The damage done in the meantime could be considerable. Employees who find other jobs after being pushed out will not necessarily return just because a court says their dismissal was wrong. Talented new hires will not join. And with government lawyers cowed by fears of firing, all manner of illegality could reign. Mr Stier worries about things like the Internal Revenue Service and the Department of Justice being used to punish Mr Trump’s enemies, without civil service lawyers able to say no.

Even the best-case outcome is not good. In the last Trump administration, hiring freezes caused parts of government to shrink and jam up (see chart). Some of this may have been intended: the issuing of green cards and citizenship applications ground to a halt thanks in part to cuts at the State Department. But queues also lengthened for basic government services like getting passports, or tax refunds.

Chart: The Economist

The “swamp”, as Mr Trump might call it, may feel like a lot of busybodies in Washington dc pushing around bits of paper. It is certainly true that it can often be slow, rule-bound and unaccountable. But a system based more on political loyalty than on merit is one primed for failure. Bureaucrats make sure that foods are not poisonous; that cars do not explode when they crash; and that toxic waste is not dumped into the wilderness. “The federal government is very vulnerable,” says Paul Light, a political scientist at New York University. Mr Trump, he says, risks becoming “the president of ‘I didn’t give a shit and a lot of people got killed.’” Uneasy lies the head that wears a crown.

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Economics

An alternative theory to explain America’s murder spike in 2020

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You might call it a new golden age. America’s economy is strong, overdose deaths are falling and crime rates are down. For the second consecutive year murders in America have plummeted. The surge in violence in 2020, which was the deadliest year in over two decades, may now seem like a distant memory to some. Yet for criminologists and policymakers the question of what caused that spike in the first place remains unanswered.

A popular theory, advanced prominently by Heather Mac Donald of the Manhattan Institute, a think-tank, is that it was caused by a “George Floyd effect”. The theory is as follows: after the murder of Floyd by police officers in Minneapolis in 2020, police lost trust in high-crime communities and among African-Americans, leading to lower clearance rates for murders. When people think they will not get caught, they commit more crime. Another version of the Floyd effect thesis holds that police officers, beset by rising public hostility, deliberately pulled back from high-crime neighbourhoods, for fear of being prosecuted for doing their jobs. Either way, protests against police brutality lead directly to more murders, a bitter unintended consequence for the protesters and, perhaps, evidence of the kind of soft liberalism from big-city Democrats that Donald Trump was elected to expunge.

A recent report from the Brookings Institution, a think-tank, advances an alternative theory. Rohit Acharya and Rhett Morris, the report’s authors, argue that the rise in murders began in April 2020, about six weeks before the murder of Mr Floyd. They contend that high unemployment and school closures in poor neighbourhoods, both brought about by covid-19 and the policy response to it, left teenage boys idle. This, not the Floyd effect, was responsible for the murder spike. This would suggest an awful trade-off: those early lockdowns saved many lives, but they also may have resulted in more murders.

Chart: The Economist

Using weekly national homicide data, Messrs Acharya and Morris show that throughout the summer of 2020 murders rose 30% compared with the summer of 2019. Crucially, they do not find an inflection point around the end of May, when Mr Floyd was killed. Across the six weeks preceding his death national weekly murders increased by around 17 murders per week, a rate 70% greater than the same period in 2019. And during the six weeks following his death, murders rose at a similar rate.

What, then, caused this increase? The authors theorise that the economic circumstances of the pandemic are to blame. Criminologists concur that, in general, poverty correlates with crime rates. In Atlanta, 65% of all homicides occur in neighbourhoods where at least 30% of the population lives below the poverty line. Nearly every big American city displays this trend. Poorer neighbourhoods were also disproportionately affected by the pandemic: job losses and high-school dropout rates were far higher. Cities with a greater share of young men living in these conditions saw larger increases in homicides in 2020.

Juveniles typically commit few murders. Though roughly half of murders go unsolved and not all jurisdictions report the age of the murderer, the available data suggest that fewer than 10% of homicides are committed by those under the age of 18. Yet between 2019 and 2020 juveniles accounted for an estimated 15-20% of the overall surge. That seems consistent with the idea that closed schools and idle teenage boys are a big part of the story.

Criminologists tend to be wary of single explanations. “It’s very difficult to come up with a definitive conclusion about what happened in 2020, because so many things changed at the same time”, says Aaron Chalfin, a criminologist at the University of Pennsylvania who was not involved with the Brookings report. He notes that, in the past, unemployment rates have not correlated with murder rates, although that does not necessarily mean no such relationship arose during the pandemic. And teasing out the interactions between variables is trickier still. Were school closures in poorer neighbourhoods responsible for juveniles committing more murders, or was it school closures plus fewer police officers patrolling the streets?

The research, says Neil Gross, a professor of criminology at Colby College (who was also not involved in the study), suggests that the nature of social ties in poor areas matters. Crime is often lower where “people know their neighbours and can look out on the street for errant teenagers and contact their parents”, says Mr Gross. That suggests yet another potential suspect: such neighbourhood watchers were locked down at home. 

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Economics

Donald Trump’s Defining Decade

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Donald Trump invoked the 1890s in laying out the agenda for his second term. But from his demand for the Panama Canal to his declaration of a national energy emergency to his order releasing the records of the assassination of John F. Kennedy to the music he grooved to at his inaugural balls, Mr Trump, in his first days back in office, has instead evoked a different decade: the 1970s, formative years for him, and for America.

It was in 1971 that Mr Trump, then in his mid-20s, moved from Queens into Manhattan, taking a rent-stabilised studio apartment with a view of a water tank. He had ambitions to turn his father’s Brooklyn-based business building middle-class housing into something grander. By the decade’s end he would be a millionaire in his own right, married to a glamorous immigrant and a fixture at clubs like Studio 54, with growing celebrity for projects such as his eponymous tower rising on 5th Avenue.

As he exited the 1970s in his mid-30s, the apprentice years of adulthood behind him, Mr Trump, like many Americans, had reasons to be cynical about politics and business, to be fearful of inflation and oil scarcity and urban crime, to be drawn to conspiracy theories, to think America had lost the national self-assurance of his childhood in the 1950s. During what Tom Wolfe branded “The ‘Me’ Decade”, amid revelations of dirty deeds by sainted figures, as Americans more freely embraced and divorced each other, old ideas about duty and service came to seem like frauds. “Forget foundationless traditions, forget the ‘moral’ standards others may have tried to cram down your throat,” advised one bestseller in those years, “Looking out for Number One”.

“The 1970s were daunting and frightening because habits and institutions that had succeeded brilliantly for half a century suddenly sputtered,” David Frum writes in his history of the decade, “How We Got Here: The 70s”. “Never—not even during the Depression—had American pride and self-confidence plunged deeper.” The disillusion, fear and reaction of those years hardened into the worldview that has carried Mr Trump twice to the Oval Office.

At the start of the 1970s Mr Trump met Roy Cohn, the man who probably influenced him more than anyone besides his father, sharpening his reflex to fight all comers for every advantage, as he is doing now as president. A ferocious New York lawyer, Mr Cohn became Mr Trump’s mentor, “introducing him to the netherworld of sordid quid pro quos that Cohn ruled”, wrote Mr Trump’s dogged biographer, Wayne Barrett, in “Trump”. Over the course of the 1970s Mr Trump became the largest individual donor in New York state and local elections. “I can buy a US senator for $200,000,” he once told an associate back then.

Revelations spilling out of the Watergate investigations were teaching all Americans similar lessons, and implicating more than just President Richard Nixon. America’s great corporations for years had evaded the law with donations to politicians of both parties. Not only Nixon had secretly recorded meetings in the Oval Office. So had Lyndon Johnson and John Kennedy.

In 1976 Congress for the first time created a permanent committee to oversee the intelligence agencies, and it revealed shocking secrets about coups and assassinations by the CIA. Then came revelations about the FBI. Robert Kennedy himself had ordered wiretaps on Martin Luther King. As suspicions of skulduggery grew, Congress in 1976 ordered investigations into the assassinations of John Kennedy and King. Hollywood seized on the spectre of rot in America’s foundations for the plots of such movies as “Three Days of the Condor”, about CIA murders of Americans, “Chinatown” and the “Godfather” series. Mr Trump’s response in 2017 when an interviewer called Vladimir Putin a killer—“You think our country’s so innocent?”—was straight out of the 1970s.

Government was coming to seem not just corrupt but incompetent. New York City teetered at the edge of bankruptcy as officials struggled to stem rising theft and homicide. “Welcome to Fear City” read pamphlets bearing a death’s head that police officers in casual clothes handed out to tourists in 1975. During a citywide blackout in 1977, chaos swept the streets, resulting in hundreds of injuries to police officers and thousands of arrests for looting. One might well have called it American carnage.

Four years of the condor

Nationally, new laws in the 1960s led to a surge in immigration in the 1970s, and illegal immigration along with it. Backlash was building against new rights granted to non-citizens, as it was against policies meant to advance integration and equality such as affirmative action and busing. Mr Trump first hired Cohn to defend him against a Justice Department suit accusing the Trumps’ company of excluding black renters. Asked at a deposition in 1974 when the first black people moved into one of his projects, Mr Trump replied, “I don’t care and I don’t know.” He was insisting on the same sort of “colour-blindness” he declared in his inaugural address this month to now be government policy.

Mr Trump once lamented that during the 1970s America lost “the feeling of supremacy that this country had in the 1950s”. In the 1970s, ceding control of the Panama Canal divided conservatives. In a televised debate with Ronald Reagan, William Buckley, the founding editor of National Review, said turning the canal over would bring Americans “increased security and increased self-esteem”. Time has proved him correct as far as security goes. But to many on the right the treaty with Panama became an exhibit of the same weakness that led to failure in Vietnam and the Iranian hostage crisis. Mr Trump’s pledge to retake the canal is a direct assault on the 1970s, and it underscores a basic question about his second term: will he lead Americans to transcend that decade at last, or to wallow in it?

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Economics

GDP grew at a 2.3% pace in the fourth quarter, less than expected

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GDP grew at a 2.3% pace in the fourth quarter, less than expected

U.S. economic growth slowed a bit more than expected in the final three months of 2024, the Commerce Department reported Thursday.

Gross domestic product, a measure of all the goods and services produced across the sprawling U.S. economy during the period, showed that the economy accelerated at a 2.3% annualized pace in the fourth quarter. Economists surveyed by Dow Jones had been expecting an increase of 2.5% after growth of 3.1% in the third quarter.

The report closes out 2024 on a somewhat downbeat note, though growth held reasonably solid. For the full year, GDP accelerated 2.8%, compared to 2.9% in 2023. Thursday’s release was the first of three estimates the department’s Bureau of Economic Analysis will provide.

Growth held up largely on the backs of consumers who continued to spend briskly despite the ongoing burden of high prices on everything from homes to cars to eggs at the supermarket. While inflation is well off the boil from its mid-2022 40-year high, it remains a burden for households, particularly those on the lower end of the income scale.

Consumer spending rose at a robust 4.2% pace and, as usual, amounted to about two-thirds of all activity. Government spending also provided a boost, accelerating at a 3.2% level.

Trade was a drag on growth in the period, with imports, which subtract from the GDP calculation, off 0.8%. Exports also declined 0.8%. Gross private domestic investment slumped by 5.6%, shaving more than a full percentage point off the topline number. An easing in inventories also cut nearly 1 percentage point.

In other economic news Thursday, initial unemployment claims totaled 207,000 for the week ending Jan. 25, a sharp decline of 16,000 from the prior period and well below the forecast for 228,000. Continuing claims, which run a week behind, also fell, down 42,000 to 1.86 million.

The resilience of the U.S. economy and the relative deceleration in inflation has allowed the Federal Reserve to assume a patient stance on monetary policy. Though the Fed cut its key interest rate by a full percentage point in the last four months of 2024, officials have indicated that aggressive reductions are unlikely this year.

At the recently concluded Fed meeting, central bankers gave no indication that they are expecting cuts anytime soon, with Chair Jerome Powell insisting that he is in no hurry to ease.

Fed officials have been expressing some concern about whether the moves lower in inflation have stalled. Thursday’s report showed that the so-called chain-weighted price index, which measures prices and accounts for consumers substituting less expensive products for more costly items, increased 2.2% on the quarter, faster than the 1.9% move in Q3 but slightly below the 2.3% estimate.

However, the data also showed that consumers are dipping into savings to fund their purchases. The personal saving rate was 4.1%, down 0.2 percentage point from the prior quarter for the lowest level in two years.

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