Economics

Donald Trump’s potential SCOTUS picks

Published

1 week ago

October 28, 2024

WHEN HE RAN for president in 2016, Donald Trump released two lists of potential justices to assure Republicans he would choose conservatives to fill Supreme Court vacancies. He issued a third list in 2017 and final roster in 2020—days before Ruth Bader Ginsburg’s death allowed him to cement a 6-3 conservative majority on America’s highest court.

Mr Trump recently said his campaign has turned listless because he “no longer need[s]” to shore up his conservative bona fides. Indeed, thanks to Mr Trump the court has overturned Roe v Wade, bolstered gun rights, hobbled administrative agencies, battered the wall separating church from state and all but immunised presidents from criminal prosecution. With large majorities deploring the end of Roe and the court’s popularity in the dumps, announcing plans to push the court still further to the right may not be an enticement to swing voters. Still, if he is re-elected Mr Trump may get to appoint at least two more justices, because both Justice Clarence Thomas and Justice Samuel Alito might decide to go on his watch to keep the court conservative. That would take him to a total of five justices, a feat only a handful of presidents have managed.

Who would they be? The Centre for Judicial Renewal, a wing of the American Family Association, a religious-right organisation, trumpets five candidates and warns Mr Trump off four judges he appointed to circuit courts because, among other things, one (Amul Tharpar) used a transgender litigant’s preferred pronouns and another (Neomi Rao) converted to Judaism. One of its “green rating” picks, chosen for his “biblical worldview” (one of its ten attributes of a “constitutional judge”) is James Ho, who was tapped by Mr Trump in 2017 for a seat on an appellate court—and who appeared on his 2020 Supreme Court list.

Judge Ho is the most combative jurist on the Fifth Circuit Court of Appeals, America’s most conservative intermediate court. Even on a tribunal that forces right-wing causes backed by dubious legal principles onto the Supreme Court’s docket, Judge Ho distinguishes himself.

In June, writing for a unanimous Supreme Court, Justice Brett Kavanaugh laid out an error in a ruling by Judge Ho and two colleagues that had rolled back access to mifepristone, an abortion medication. The pro-life doctors challenging the Food and Drug Administration’s regulations, Justice Kavanaugh explained, lacked the right to sue because the mifepristone rules had caused them no harm. No mention was made of Judge Ho’s peculiar argument that doctors who “delight in working with their unborn patients” can challenge rules governing abortion pills because they “experience an aesthetic injury” when fetuses are aborted.

The contention that doctors have standing to oppose a medication because it strips them of “a source of profound joy” is not Judge Ho’s only injection of far-fetched positions—and personal scruples—into his jurisprudence. Early in his tenure he wrote of the “moral tragedy of abortion” in a case involving a Texan law requiring the burial of fetal remains. As solicitor-general of Texas in 2009, he wrote a brief describing the right to bear arms as “the ultimate guarantor of all the other liberties enjoyed by Americans”. Two years ago, a covid public-health measure in Mississippi challenged by Golden Glow, a tanning salon, spurred Judge Ho to call for a return to Lochner v New York—the decision that struck down decades of worker protections until the Supreme Court abandoned it in 1937.

Judge Ho also regularly inserts himself into culture-war battles, boycotting graduates of Yale and Columbia for clerkships and lashing out at critics. This outspokenness beyond his chambers is in stark contrast to the more reserved man he could succeed under a second Trump presidency, Justice Thomas. At 76, he is the oldest, and longest-serving, sitting justice. But like Justice Thomas, Judge Ho, aged 51, purports to interpret the constitution in light of its original meaning. Both men seem to have idiosyncratic impressions of that meaning, often writing only for themselves to articulate a position none of their fellow jurists are willing to defend. The ties are intimate: Justice Thomas hired Mr Ho as a law clerk in 2005 and, 13 years later, administered his oath of office in the personal library of Harlan Crow, the right-wing billionaire from whom Justice Thomas has accepted luxury trips, raising ethics concerns.

Judge Ho has a colleague on the Fifth Circuit who could also find himself elevated if the justice he clerked for in 2008—Samuel Alito—retires. Andrew Oldham, aged 46, may lack Judge Ho’s bombast, but his views on the law are just as radical. During his confirmation hearing in 2018, Judge Oldham declined to say whether Brown v Board of Education, a ruling that declared segregation in schools unconstitutional, was correctly decided. He has pursued a deregulatory agenda on the Fifth Circuit that has, at times, found friendly majorities at the Supreme Court. On October 25th, he wrote for Judge Ho and another short-list pick of the Centre for Judicial Renewal, Judge Kyle Duncan, that counting mail-in ballots postmarked by election day but received a few days later is illegal—despite the long-standing practice being adopted in nearly half of America’s states.

If Republicans take control of the White House and Senate in January, little will stand in the way of Mr Trump seating the likes of Judges Ho and Oldham. Their prospects may turn on the Senate margin; with at least a 52-48 gap, Mr Trump could afford to lose Lisa Murkowski and Susan Collins, two moderate Republicans, and still eke out enough yeas to entrench a MAGA Supreme Court for a generation. ■

Economics

Democrats need to understand: Americans think they’re worse

Published

2 hours ago

November 6, 2024

Business Finance News

If you think Donald Trump is too crass or cruel or incompetent to be president—if you are disappointed or even astonished that, having tried and failed to subvert the will of the people in the last election, he has come back to win fair and square—you should be asking yourself this question: why, to so many Americans, does the Democratic Party seem worse?

This victory is a tremendous achievement for Mr Trump, who after his loss in 2020 and the attack on the Capitol on January 6th 2021 was counted out even by leaders of his own party. At the time Mitch McConnell, the Senate Republican leader, who privately regarded Mr Trump as “a sleazeball” and “stupid”, called the insurrection “further evidence of Donald Trump’s complete unfitness for office”, according to reporting he has not disputed in a new biography by Michael Tackett, a journalist.

Yet what might seem a psychological frailty—an inability to brook criticism or concede mistakes, much less defeat—has for Mr Trump been a mighty source of political strength, one that intensifies his connection to the voters he has made the base of the Republican Party. As in 2016, Mr Trump wielded his command of that bloc of voters this year to clear a path through crowded Republican primaries, and then relied upon “negative polarisation”, or fear of the other guys, to unite the party. “Can you believe he endorsed me?” Mr Trump chortled at a rally in North Carolina on November 3rd, gloating over how Mr McConnell eventually fell into line. Mr Trump felt no obligation to reciprocate. “Hopefully we get rid of Mitch McConnell pretty soon,” he said.

Mr Trump has shown courage, not only in weathering assassins’ attacks but in insisting on views on trade, entitlements and other matters that a few years ago were heresy within his party. With his sophisticated grasp of new and legacy media and his instinct for the basic needs and fears of many Americans, he has revolutionised how American politics is conducted and shifted the policy terrain over which it is waged. In terms of disrupting what came before, he has had more effect than even Ronald Reagan.

Unlike Reagan—or the other two-term presidents since, Bill Clinton, George W. Bush and Barack Obama—Mr Trump has never been very popular, though he managed, in this third run as the Republican nominee, at last to win the popular vote. Unlike those predecessors, Mr Trump has relied upon division, not addition, for his electoral maths. In his first term his average approval rating of 41% was the lowest ever measured by the Gallup Poll, which began tracking the statistic under Harry Truman. Democrats have good reason to think Mr Trump repels many voters when he calls adversaries “vermin” or “the enemy from within” or says illegal immigrants are “poisoning the blood of our country”.

Yet, after this victory, whatever disdain Democrats have for Mr Trump should be cause only for humility and self-scrutiny. As in 2016, Mr Trump’s broad support will present his adversaries with a Rorschach test in which they can see their preferred image of America, and it will be ugly. For some, white supremacy and misogyny will explain Mr Trump’s success, while others may attribute it to tax cuts and greed. Some will conclude that poor, non-white or female Americans have been ensorcelled into voting against their self-interest. Rather than retreat into some grand theory, they would so better ro think through how, in a divided country, President Joe Biden might have nudged the balance a few points away from Mr Trump, rather than to him. Kamala Harris was no bystander, but pime responsibility lies with the president she served.

Mr Biden did not heed his own warnings about Mr Trump. He tried to eat into Mr Trump’s support with blue-collar workers through giant investments in manufacturing and infrastructure that offered something to everyone. But, unlike Mr Clinton or Mr Obama, he ducked choices that would have respected the concerns of most Americans but disappointed left-wing Democrats. A political strategy of addition still requires some division.

Most egregious, Mr Biden resharpened Mr Trump’s most effective political wedge by doing away with obstacles he had created to illegal immigration, with no alternative. By the time he restored some of Mr Trump’s restrictions this spring, more than 4m migrants had crossed the southern border, compared with fewer than 1m under Mr Trump. That was terrible for the Democrats as a party, and worse for people they want to help and the cause they believe in: under Mr Biden, Americans who say they want a decrease in legal immigration rose from a minority to a majority, as did the number who favour mass deportation.

How to defend democracy

Even where Mr Biden had accomplishments that undermined Mr Trump’s arguments, he let himself be constrained by his party’s loudest activists. Oil production rose to record levels, but Mr Biden did not boast about that. He was also no longer up to the demands of presidential communication that Mr Trump understands so well. He was not constantly, energetically promoting his success in sustaining economic growth and raising wages. His approval rating sagged as low as 36% just asother Democrats were forcing him to face the obvious: he should not be running again. In the short time Ms Harris had, she waged a good campaign. But any politician would have struggled under such burdens. She could not separate herself enough from Mr Biden, or from the video Mr Trump’s ads used, to devastating effect, of her recently declaring positions that were alienating to most Americans.

“We have learned again that democracy is precious,” Mr Biden proudly declared during his inaugural address almost four years ago. “Democracy is fragile. And at this hour, my friends, democracy has prevailed.” Now it has prevailed again. Will Democrats get the message this time? ■

Economics

The Fed is likely cutting rates again Thursday. Everything you need to know

Published

10 hours ago

November 6, 2024

Business Finance News

Federal Reserve Board Chairman Jerome Powell holds a press conference following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., September 18, 2024. REUTERS/Tom Brenner

Tom Brenner | Reuters

The Federal Reserve likely will stick to the business at hand when it wraps up its meeting Thursday with another interest rate cut, but will have its eye on the future against a backdrop that suddenly has gotten a lot more complicated.

Financial markets are pricing in a near-certainty that the central bank’s Federal Open Market Committee will lower its benchmark borrowing cost by a quarter percentage point as it seeks to “recalibrate” policy for an economy that is seeing the inflation rate moderate and the labor market soften.

The focus, though, will turn to what’s ahead for Chair Jerome Powell and his Fed colleagues as they navigate a shifting economy — and the political earthquake of Donald Trump’s stunning victory in the presidential race.

“We think Powell will refuse to give any early judgment on the implications of the election for the economy and rates, and will seek to be a source of stability and calm,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a a note issued before the election’s outcome was known.

In keeping with policymakers’ historical desire to stay above the political fray, Powell “will say the Fed will take the time it needs to study the new administration’s plans” then will “refine this assessment as actual policies are developed and enacted,” Guha added.

So while the immediate action will be to stay the course and enact the cut, which equals 25 basis points, the market’s attention likely will turn to what the committee and Powell have to say about the future. The fed funds rate, which sets what banks charge each other for overnight lending but often influences consumer debt as well, is currently targeted in a range between 4.75%-5.0%.

Market pricing currently favors another quarter-point cut in December, followed by a January pause then multiple reductions through 2025.

Preparing for Trump

But if Trump’s agenda — tax cuts, higher spending and aggressive tariffs — comes to fruition, it could have a meaningful impact on a Fed trying to right-size policy after the mammoth rate hikes aimed at controlling inflation. Many economists believe another round of isolationist economic moves from the president-elect could reignite inflation, which held below 3% during Trump’s entire first-term despite a similar recipe.

Trump was a frequent critic of Powell and the Fed during his term, which ran from 2017-21, and is in favor of low interest rates.

“Everyone is on the lookout for future rate cuts and whether anything is telegraphed,” said Quincy Krosby, chief global strategist at LPL Financial. “Also, however, there’s the question of whether or not they can declare victory on inflation.”

Any answers to those questions would be largely left to Powell’s post-meeting news conference.

Though the committee will release its joint decision on rates, it will not provide an update on its Summary of Economic Projections, a document issued quarterly that includes consensus updates on inflation, GDP growth and unemployment, as well as the anonymous “dot plot” of individual officials’ interest rate expectations.

Beyond the January pause, there’s considerable market uncertainty about where the Fed is heading. The SEP will be updated next in December.

“What we’re going to hear more and more of is the terminal rate,” Krosby said. “That’s going to come back into the lexicon if yields continue to climb higher, and it’s not completely associated with growth.”

So where’s the end?

Traders in the fed funds futures market are betting on an aggressive pace of cuts that by the close of 2025 would take the benchmark rate to a target range of 3.75%-4.0%, or a full percentage point below the current level following September’s half percentage point cut. The Secured Overnight Financing Rate for banks is a bit more cautious, indicating a short-term rate around 4.2% at the end of next year.

“A key question here is, what’s the end point of this rate cut cycle?” said Bill English, the Fed’s former head of monetary affairs and now a finance professor at the Yale School of Management. “Fairly soon, they’ve got to think about, where do we think this rate cut period changes with the economy looking pretty strong. They may want to take a pause fairly soon and see how things develop.”

Powell also may be called on to address the Fed’s current moves to reduce the bond holdings on its balance sheet.

Since commencing the effort in June 2022, the Fed has shaved nearly $2 trillion off its holdings in Treasurys and mortgage-backed securities. Fed officials have said that the balance sheet reduction can continue even while they cut rates, though Wall Street expectations are for the run-off to end as soon as early 2025.

“They’ve been happy to just kind of leave that percolating in the background and they probably continue to do that,” English said. “But there’s going to be a lot of interest over the next few meetings. At what point do they make a further adjustment to the pace of runoffs?”

Economics

Donald Trump wins big and fast

Published

16 hours ago

November 6, 2024

Business Finance News

IT IS AN extraordinary comeback—or, as Donald Trump triumphantly put it in West Palm Beach, Florida, in the early hours of November 6th, “a political victory that our country has never seen before”. After losing four years ago he has survived impeachment, conviction as a felon, numerous other indictments and two assassination attempts, and will become America’s 47th president, to add to his stint as the 45th. He becomes the oldest man ever to win the White House.

Many had expected a long wait for the result of an extremely close election to become clear. In the event, the outcome was evident within hours. Mr Trump looked set to win all seven of the critical swing states: he triumphed in North Carolina, Georgia, Pennsylvania and Wisconsin, and had strong leads in Michigan, Arizona and Nevada. That translates into a decisive advantage in the electoral college.

It appears that Mr Trump was able to draw support from both urban and rural voters at levels notably higher than in his contest against Joe Biden in 2020. In state after state, Mr Trump performed better than he had in 2020. In Florida, for example, where he won by three percentage points last time, his margin is on track to surge to 12 points. And although opinion-poll aggregates had consistently shown Kamala Harris to be ahead in the national popular vote, it seems that Mr Trump may have won that too. Just as in 2016 and 2020, in other words, the polls underestimated Mr Trump’s support.

What went wrong for Ms Harris? For one thing, her advantage among women voters, on whom Democrats were pinning their hopes, turned out to be smaller than expected. The gender gap, between the votes of men and women, actually narrowed, from 23 points in 2020 to 20, according to exit polls. Among Hispanic voters, Mr Trump made striking inroads, improving his margin by ten percentage points compared with 2020, according to CNN’s exit poll. The trend was particularly strong among Hispanic men: Joe Biden won their vote by a margin of 23 points; this time Mr Trump was on track to prevail among them by a margin of ten points. More broadly, dissatisfaction with high inflation and immigration contributed to a sense among voters that the country was on the wrong track, for which they naturally blame the incumbent. Much as Ms Harris sought to present herself as the candidate of change, she was stuck with her association with the current administration.

As well as the White House, the Republicans also wrested back control of the Senate. It was always going to be hard for Democrats to hold on to their slender majority in that chamber, given that they were defending a disproportionate number of seats (a third of which are up for election in each election cycle). Not only did Republicans take the vacant seat in West Virginia, as expected; they also flipped Ohio and Montana and prevailed in a close contest in Nebraska. The upsets Democrats hoped for in Florida and Texas failed to materialise. Republican control of the Senate smooths the way for Mr Trump to make important appointments—from cabinet secretaries to generals to Supreme Court justices—that require Senate confirmation.

Whether the Republicans complete their sweep by retaining control of the House of Representatives is still not clear. Results in California, to arrive later, will determine that. But Mr Trump, in his victory speech, was confident that the House would be his, too.

“This will truly be the golden age of America,” he declared. Few will question that the country is indeed entering a new age. Whether Mr Trump will truly “heal” America, as he promised, is more debatable. Beyond America’s borders, too, the consequences are momentous. From tariffs to climate change to Ukraine, the world must brace itself for Trump II.■