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Slender, high-spirited and young, at least by the sagging standards of American politics, Nikki Haley, the former governor of South Carolina, and Chris Sununu, the current governor of New Hampshire, make a dynamic team as they barnstorm his state in advance of its primary on January 23rd. “What better place to meet the next president of the United States than in a candy shop,” boomed Mr Sununu, grinning, as he introduced Ms Haley recently to a gaggle of constituents in Chutters sweet store in Littleton, in the White Mountains. Smiling as brightly as her ally, she reeled off a list of policy objectives before warning that America could not hope to move forward with either Joe Biden or Donald Trump as president. “You can’t do it if you’ve got two 80-year-olds as the choice of where we’re gonna go,” she said.
That is the essence of her argument as Ms Haley tries, after Mr Trump’s thumping victory in the Iowa caucus, to block his march back to the Republican nomination. Ms Haley came in a close third there to Ron DeSantis, the governor of Florida, but both were out of hailing range of Mr Trump. The next day, her campaign began running a new advertisement in New Hampshire saying that Mr Trump and Mr Biden were America’s most disliked politicians, “consumed by chaos, negativity and grievances of the past”.
Yet the paradox of Ms Haley’s candidacy is that although she looks like the party’s future she, more than Mr Trump, can sound like its past. While Mr Trump continues to revise Republicanism, Ms Haley wants to return the party to its pre-Trump principles, to when it at least made a more substantial pretence of caring about cutting debt, reforming entitlement programmes and containing Russia, not to mention being polite and not getting indicted.
Though Mr Trump may have stolen Ronald Reagan’s campaign slogan (“Let’s make America great again”), he has otherwise shown little deference to the values Reagan laid down. In a sign of how Mr Trump has upended the party, and of his lingering anxiety about Ms Haley, he is running an ad in New Hampshire attacking her as wanting to cut Social Security, traditionally the kind of thing Democrats say Republicans are out to do.
There is a whiff of nostalgia in the very way Ms Haley is campaigning, not just in her commitment to retail politics but in the company she keeps. In 1988 another Governor Sununu—John, this Sununu’s father—rescued George H.W. Bush after he came in third in Iowa, delivering a victory that propelled him to the White House. “We’re copying a few pages out of that playbook,” Mr Sununu acknowledges, after snagging a chocolate bar from one of Chutters’s giant jars. “But only in that it’s tried and true.”
He argues that his state’s politics still depend on activating networks in towns such as Littleton, and that if Ms Haley, whom he endorsed last month, beats Mr Trump in New Hampshire, and then in her home state of South Carolina, “everything would flip upside down on him very, very quickly.” That is a very long shot but somehow, borne along on Mr Sununu’s stream of enthusiastic patter, it starts to sound more than barely plausible.
Mr Sununu, who is 49, has been elected to four consecutive two-year terms, most recently by more than 15 points, in a state whose two senators and two representatives are all Democrats. In his party he is a relative moderate on social issues, including abortion rights, but he boasts of being the most fiscally conservative governor in the country. He has little patience with the argument that Mr Trump has fundamentally changed the Republican Party, insisting he has merely hijacked it.
Mr Sununu thinks the anger of Americans over the failures of “elitists in Washington”, rather than any policies, led them to support Mr Trump in 2016 as a disrupter, and now as a victim. “He provides no leadership, no guidance, no basis in the Republican fundamentals of being fiscally conservative or limited government, or any of that,” Mr Sununu says. “His unique skill is making people feel like he’s sharing their troubles and chaos, right?” But Mr Trump is “using their anger for his own personal benefit. He’s not going to help them, at all. He didn’t before.” He fears a Republican wipeout at other levels of government if Mr Trump is re-elected.
He predicts that once Mr Trump leaves the scene—after a Haley victory, or further down the road—the old dynamics in the party will reassert themselves, “with no one individual trying to redefine where the party goes”.
Courage about conviction
This may sound wishful, or even delusional, particularly in light of Mr Trump’s showing in Iowa. But the picture remains more complicated than that. Less than 15% of registered Republicans turned out, and of them almost half preferred a different candidate from Mr Trump, a quasi-incumbent. More broadly, Republican governors—not just in New Hampshire but in states like Georgia, Ohio and even Iowa—are succeeding not as Trump acolytes, but with more conventionally conservative and pragmatic Republican politics. Congressional Republicans, particularly in the House, are falling in line behind Mr Trump, but Mr Sununu insists that is only because they need him to raise campaign money. He thinks they will also revert to previous form when “they won’t have this emperor, this, you know, this dictator, if you will”.
Maybe. For all his criticism of Mr Trump, Mr Sununu, a fierce opponent of Mr Biden, has also said he would support Mr Trump if he becomes the Republican nominee, even if he is convicted of a felony. Mr Sununu insists he was engaging in a “hypothetical” for “shock value”, to persuade Republicans they should not rely on the courts. “If you think Trump is a threat to democracy, then get up and participate in the democratic process and vote him out,” he says. “It happens in the primary.” But if it does not happen in the primary, conservatives such as Mr Sununu will have to ask themselves a hard question: whether they will really save their party by helping Mr Trump burn it down. ■
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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.
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.
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.