Josh Barro
Appearances
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And that makes the country a more attractive place to do manufacturing. And this has been a stated objective for them. They say that it's a problem. There's a thing that economists call the exorbitant privilege, which is the idea that the US persistently runs trade deficits that are financed by other people around the world buying U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Treasury bonds because they formed the basis of the global financial system. Basically, the idea is people in China send us dollars, we send them slips of paper that say U.S. government on them, and then we send the dollars back in order to buy actual goods from them. So basically, they're getting slips of paper, we get goods.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I'm totally refreshed. Really? I'm happy for you. What did you do yesterday? Did you get a massage or something? Green juice? No, I took two flights. I drove to the Inland Empire from Coachella and then flew through Salt Lake City to New York. Okay. Nice Delta Airlines day.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
We enjoy a dollar that is stronger than it otherwise would be, which means that we get to buy more things with each of our dollars, and we enjoy lower interest rates than we'd otherwise have because other people are lending us money because that's the way they store their money. They store it in U.S. government debt. That sounds like quite a good thing, and in fact, it is a good thing.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
It is a thing that creates a higher standard of living in the United States than we would enjoy if we were not the bedrock of the global financial system. Some of the people around Donald Trump explicitly want to pull that apart.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
They want a weaker dollar, and that would ultimately also imply higher interest rates, even though they don't really talk about the fact that it would cause interest rates to go up. And they want that because it would make the U.S. a more attractive place to do manufacturing. And it's true, but the tradeoff there would be a lower standard of living. Americans would have lower incomes.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
They'd be able to buy fewer products, whether those are domestic or foreign. And other countries have pursued policies like this in the past. This is the sort of policy that some middle-income countries have had as they've been coming up. I mean, you know, they look to places like South Korea and Taiwan that had these export-driven growth through the 1980s, etc. But I would rather be the U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
in 2022 than be Taiwan in 1985. Taiwan was a country that had some good things going for it and was getting richer in but was poorer than the United States. And that's part of why it was an attractive place to do manufacturing. And so they have this weird set of priorities where they'd rather be a good place to manufacture than a good place to live and consume.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And as you start seeing that come through for Americans, that you have a suite of Trump administration policies that not only lower our standards of living, but are designed to lower our standards of living so that we can be the sort of people who are putting iPhones together. It's crazy. It is not what U.S. workers and consumers want.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And as you start seeing the deterioration in standards of living, which will come from the weaker dollar that buys fewer products, that you can see forecasted in the stock market, that will arise because businesses, they don't know what to invest in, they can't expand, they can't grow, they can't hire, that's going to be really unpopular.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And I think that it hasn't really settled in for people that this is what the administration is trying to do.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, a lot of people are quite invested in that system around the world. The cost of changing it is substantial. The Eurozone is not without problems of its own, although I'd probably rather be them than us right now. And so, you know, I don't want people to think that it's like it's gone.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And the moves that we've seen in interest rates and in the exchange rate, it's material, but it's not like shockingly large. Like we've gone from, what is it, 153 yen to a dollar to 145 or something like that. This is not outside the range of of where these currencies have traded in the past.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So I don't want people to think that we are in, you know, that we're already headed into a global economic depression and things can't be turned around. I think what we're seeing from the markets is a significant warning sign. And I think it entails some risk that that system could unravel, but I don't think it has unraveled yet. I don't think it's set out on an unstoppable path toward unravel.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And this is also, I mean, Matt Iglesias makes this point eloquently a lot, which is that, you know, there's a lot of things that probably won't happen under Donald Trump, but that are, you know, have a high enough probability of happening that it's very concerning.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
If a negative event might have happened 10% of the time, that's something you should still concern yourself with even though you are not forecasting that it is going to happen.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Just as a side note, one thing I love about these like super old people stories is that a huge fraction of people who purport to be 110 or something like that, in fact, just the birth record is wrong. And they are, in fact, substantially younger than they say they are, sometimes even substantially younger than they believe they are.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
There was that woman in France who seemed to be basically defrauding the government out of her mother's pension and had assumed her mother's identity. This is such a Josh Barrow take.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Like, you know, some jurisdiction started issuing accurate birth certificates in 1923 or something like that. And then you see that there were way more centenarians purportedly born in 1922 than 1924, that kind of thing.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Yeah, well, so, I mean, first of all, to talk about what is supposed to happen in the bond market when things go wrong. I mean, normally when there's a crisis around the world, the U.S. dollar will strengthen and interest rates on U.S. government bonds will fall. And both of those are because of flight to quality. Basically, you know, people, they don't know what's happening.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Well, so I'd say two things about this. One is that, again, it goes to that they're more focused on that the U.S. should be a good place to grow tomatoes than that the U.S. should be a good place to eat tomatoes. And the vast majority of us do not grow tomatoes. We only eat them. And yeah, explicitly, the goal of the policy is to make tomatoes more expensive.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
What they say is unfair is that the Mexican farmers are selling us tomatoes at too low a price. The tomato price needs to be higher because that will be fair to U.S. farmers. And so again, this is a policy that is not written with the benefit of the U.S. consumer in mind. The other thing I'd say about it is that this is kind of the least weird part of the Trump trade policy. Okay.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, lots of administrations have done trade policy like this around things like aluminum and steel, which the Trump administration is doing, but so did George Bush. Democratic administrations also have taken this position that it's— The shrimpers.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And so the idea that you would impose a tariff to protect a specific U.S. industry from foreign competition is a bad idea. But that's actually one of the trade ideas that Trump does that isn't really unique to him. What's unusual with him is these vast tariffs across all kinds of products, across all kinds of countries that are not aimed at the protection of specific industries.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Now, I don't think we should be using tariffs to protect specific industries because I care about the U.S. consumer. And this has been a long running dispute about the tomatoes. This is one of the things that Trump is doing on trade that is actually kind of within the set of bad things that other presidents might do. That's comforting.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
It's another reason to take away the president's tariff authorities. I don't want tariffs on tomatoes either. But this is, you know, in a way, this is like one of the least norm breaking parts of the tariff stuff that he's doing.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I don't know what to make of it. I've sort of been wondering, you know, what would life be like right now if we had Gary Cohn and Steve Mnuchin and Jared back? in the Oval Office, giving the president good advice. I think people should realize, by the way, that as much as you may not like Jared, it's actually worse with him not there than it was with him there.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think the worse the better is almost never true because you assure yourself worse and then you have a theory of how that might produce better.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
They're concerned about future economic prospects. They want to be in the safest thing possible and normally the safest thing possible. is U.S. Treasury bonds and the U.S. dollar. There was also an expectation that the dollar would strengthen if we started imposing tariffs because that's what happened last time around when the Trump administration imposed tariffs specifically on China.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, it's kind of amazing watching what's happened over the last three months that the first Trump administration went as well as it did, especially on the economy. Um, where you saw like a broadly, basically competent economic policy from the first Trump administration, which is why he was, you know, popular enough to almost win again and then to win four years later.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think that, you know, if he didn't have that economic record, I think you're right that he would have been less competitive. Um, I don't know whether that's because the personnel was better or because he was more inclined to listen to them. I mean, when Steve Mnuchin was picked in 2017, or maybe he was announced in 2016, he looked underqualified for the Treasury Secretary job.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
It was kind of like this, you know, he had been politically associated with Trump and was this kind of, you know, middling finance guy that had been picked for this job. He turned out to be very good at it. Partly because I think he was less egotistical than some of these other officials. He knew that he was maybe a little bit underqualified, and so he really listened to expert advice.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Anyway, he did a good job, and so did Gary Cohn. But Trump also clearly had a willingness to listen to them, and he had big ideas about tariffs that he repeatedly got talked out of during the first term.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And so I think in significant part, there's been a big change in Trump, where he just is less interested in consensus advice and listening to other people's guidance rather than his own wacky ideas that he's had about the economy for 50 years.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So, I mean, I think Scott Besant is a smart guy, and the stuff that he said about tariffs before the administration started made clear that Scott Besant doesn't think the policies they're actually implementing now are good policies. I just think he doesn't have any juice.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But there's no good way to market this tariff policy. I think that's an even more hopeless assignment than certain other aspects of the administration's policy.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Marco, in the immigration stuff, a lot of it is awful, but it's at least responding to a real political impulse in the United States where people were really unhappy with the level of irregular immigration under Joe Biden and get tough on that as a thing that there's a big market for. The president's approval ratings are actually still a little bit above water on immigration.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
as an assignment in terms of go out and defend this awful thing. I think it's a lot easier with that than it is with this really idiotic tariff policy that is just going to make everybody poorer. And that's especially because Trump is so insistent on being so unpredictable about the tariffs because he clearly, he loves that.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And the idea there is, you know, if you impose tariffs, we are not importing as much as we would have otherwise. So we're not sending as many dollars abroad. And so basically other countries, in order to get dollars to buy things from us or to buy U.S. Treasury bonds, they have to get them from somewhere. They basically have to bid up the price of the dollars. There was this
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
He loves that, you know, everyone is hanging on his every word and people have to come into the Oval Office and beg him to make changes and And Tim Cook is there lobbying him all the time about, you know, please give me an exemption, et cetera, et cetera. Trump loves that.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But that just makes the terror policy not only so much worse for the economy, it also makes it completely incapable of achieving the stated goals the Trump administration has here. This is not a policy that is designed such that it will actually foster the construction of factories in the United States, for example.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So there's a version of the tariff policy that would have been large tariffs that are clearly telegraphed, that are announced and they stick to them. And it still would have been a bad policy, but at least you would have been able to explain what the hell you were doing. This, there's no available explanation for. I don't think Steve Mnuchin would be doing a good job messaging it if he were here.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think the thing that you see, the demonstration that Steve Mnuchin is smart is that he didn't come back to serve in this administration. I think Besson has an impossible job.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But, you know, I mean, we are not a Borg. I'm not responsible for what Scott Besant does because Scott Besant is attracted to men. I mean, that's his problem.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Steve Myron is gay, too. Is he? Yeah, it's this little gay mafia, like, implementing the worst economic policy of the last 90 years in the United States. It's not great for respectability politics. I get that. But I just think it's important for us to assert that we are all individuals. The fact that some gay individuals are doing something stupid is not our fault or our responsibility.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
expectation that we would impose these tariffs and the dollar would strengthen. And Scott Besant, the Treasury Secretary, was going around telling people that this would happen.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Yeah, I mean, I think people need to remember that there's a difference between policies that poll well if you ask people about them and policies that will poll well if you actually implement them. I think that there's been a lot of broad sort of free-floating discontent about NAFTA and the global economic system. And people talk about tariffs as something that's supposed to protect the U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And that's a message that some voters find appealing. But now we're seeing tariffs actually get implemented and they're already unpopular. They're especially unpopular with Democrats. And they're going to be even more unpopular in six months as the damage gets visited on the economy. And I think that's because tariffs are a bad idea.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
He said in his confirmation hearing, people say Americans will pay the tariffs, but because the dollar will strengthen, Americans will be able to buy more than they could before because the dollar will have more purchasing power, and that will offset maybe 40% of the cost of the tariffs, is what he told members of the U.S. Senate when he was seeking his confirmation.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Once you implement them and people see what they do, it's going to be a toxic policy idea. And so I think for certain reasons of populist messaging and for misunderstandings of economics, some Democrats have gotten relatively hostile to free trade over the last 15 years and have gotten some political mileage talking about trade restrictions being good.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think that's just out of date as a political matter. It was always wrong as an economic matter. And now what you're seeing is the vast majority of Democrats say tariffs are bad. I don't like tariffs. And so there's no reason for Democrats to be hedging on this issue.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
What they should say is Donald Trump is making you poorer and imposing a tax on you and cutting us off from the global economic system that has been, you know, very important for upholding the U.S. economy. And we need to put that back together. So not only should we oppose Trump's tariffs, we should oppose tariffs generally.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
We should seek to rebuild our global economic alliances by entering into binding free trade agreements. I mean, you know, the— We were supposed to have a trade policy that was built around isolating China because China is hostile for non-economic reasons.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And so if you were going to do that, you needed to have friendly trade relations with Japan and Vietnam and all these countries that Trump is giving the middle finger to. The way you could put that back together is you could have a free trade agreement that's built around isolating China. That's something that the Obama administration was negotiating. That was the Trans-Pacific Partnership.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And then Bernie Sanders had his anti-global elites messaging that Hillary Clinton felt the need to copy. And so you had Democrats turn against that stuff, and Trump obviously didn't want to do it. I think that's something that a next Democratic president should say, we're going to build that stuff back together again.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
We're going to do a Trans-Pacific Partnership because we're going to rebuild our alliances in Asia and then similarly in Europe. I think the time is ripe for Democrats to be the pro-global party, the party that wants the U.S. to remain independent at its position at the head of the global economic system. And I think that as Trump makes us poorer, I think that's going to become a popular thing.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So I don't think there's a good reason for Democrats to hedge. I think it's worth noting, not all Democrats are hedging on this. I've been critical of what Congressman Deluzio has to say about this, but part of why Deluzio is notable is that he's been one of the figures in the party where not everybody's saying this. He's been saying this wrong thing. Jared Polis gets an A, the
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, he not only talks about Trump's tariffs are bad, but he talks about voluntary trade makes both parties engaging in the trade richer. That's why people do trade. It's because you'd rather have the thing the foreign country has than have what you have.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And so his messaging on this has been really crisp and clear and tying Trump's policies to a broader ideological idea of why we want to be open. And some of the other presidential hopefuls have been pretty good on this. J.B. Pritzker, you know, has been very, you know, clear on the messaging. Trump is imposing a tax on you.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Both him and Josh Shapiro have been going to local businesses and saying, you know, you know, look at these vats in this brewery. Those are made of steel. Trump is imposing steel tariffs that will make that more expensive, make it harder to make beer here. The aluminum for the cans is going to be more expensive. They're really tying this to everyday business and consumer concerns.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
What has actually happened, if you've been paying attention to the bond market, and increasingly people are paying attention to the bond market, which is unfortunate, is that first the interest rates on Treasury bonds fell sharply, but then they rose very sharply starting about a week and a half ago, Friday. And the reasons that interest rates would go up in a crisis like this
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Because it was interesting, Josh Shapiro was on with Stephanie Ruhle on MSNBC, and she used to be a business journalist over at Bloomberg. And she was asking Shapiro about, you know, a lot of people are upset about what happened in the 90s in Pennsylvania with NAFTA.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And Shapiro talks about, oh, well, you know, those trade deals, you know, Pennsylvania workers got screwed by bad trade deals, but we're going to make good trade deals now, more or less. There's an inconsistency there because he's talking about today we need cheaper steel and cheaper aluminum so that businesses in Pennsylvania that use steel and aluminum can get it more cheaply.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But the implication about the 90s, I mean, when people talk about NAFTA screwed people, what they mean is that U.S. steel workers ended up having to compete with steel workers from abroad selling cheaper steel. So in a way, he's having it both ways there. He's talking about, you know, now we shouldn't have these metal tariffs, but the implication is the metal tariffs were good 30 years ago.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think you kind of need to admit that, you know, a lot more people in the U.S. work in industries that consume steel and aluminum than in industries that make primary steel and aluminum. And so you want cheaper materials. There's, you know, a few steel workers that'll be bad for, but there's a lot more auto workers that's good for.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And I think we're about to get an object lesson in that that makes clear, you know, if you have tariffs and they make auto parts more expensive, that's not going to protect the U.S. auto industry. It's actually going to make the U.S. auto industry less competitive. It's going to be bad for workers.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But I think you end up wanting, you know, a really clear, crisp pro-trade message there because you end up with, you know, not only are we friendlier with the world and not picking fights for no reason, we're also richer if we open ourselves up to trade.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Yeah, I mean, I thought Ben Dreyfus had this right, that Bucolet is dressed like the manager of a Zara in the Valley who goes to the food court and asks 19-year-old girls whether they've ever considered modeling. That's creepy. That's a creepy image. Adult braces, maybe. Yeah, but he looked creepy. Yeah.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Yeah, I mean, it just goes to show the craziness of the Trump administration foreign policy where we're, you know, we're giving the middle finger to Europe and Japan and, you know, other rich country trading partners of ours and, you know, also middle income countries like Mexico that we have deep economic ties to.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And where we're building the deeper relationship is with El Salvador, a tiny, relatively poor country that cannot do that much for us.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Right. That's clearly a top goal for them. It's gross. I mean, it was a gross scene, him there in the Oval Office. And I think, you know, look, El Salvador has been an absolute basket case for a long time.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
are basically that investors don't feel good about the United States. They want to get into safer investments. Bonds are safer than stocks. But they're also concerned about growth prospects in the United States. They could even be concerned about the creditworthiness of the U.S. government.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And I think if you are in El Salvador, there is an argument to be made that Bukele's administration has been better than the prior administration because you basically had no rule of law in the country. And so, you know, whatever, you know, the manner in which that government is abusive is probably less abusive than the lack of governance regime that preceded it.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Yeah, letting the gangs just slaughter people, yeah. Right. But we are not a basket case like that. And so the idea that we need this sort of, you know, iron fist strongman to assist us is, you know, obviously substantively crazy. But it appeals to Trump, and he wishes that he could be a leader like Bukele.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But Bukele also has a really high approval rating because his administration is better for El Salvador than the prior one. Donald Trump is not bringing improvements for the United States, so that's why he doesn't have the kind of numbers that Bukele has.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, I think it's interesting that as this administration becomes more bold about disregarding court orders, they still feel the need to pretend that they are following the court orders. I mean, Stephen Miller could have gotten up there and just said, you know, screw the Supreme Court, we're going to do what we want. He didn't.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
He instead chose to mischaracterize their ruling and say that they were complying with it. Which they're not. On the other hand, the Supreme Court could have been a little more clearer than it was, and I think maybe they will be a little bit clearer the next time the case gets up to them. I think it'll be interesting to see what the administration does when there isn't the available fig leaf.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
You know, you have the president going around breaking all sorts of agreements, trade agreements, laws that are supposed to bind the executive, that sort of thing. There are some wacky ideas that have been floated by Steve Myron, who runs the Council on Economic Advisors in the White House, that you could argue about whether or not they would constitute a default on U.S. government bonds.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Because the Supreme Court, for those who didn't look at the order closely, the district judge had ordered the government to facilitate and effectuate Kilmar's return to the United States.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And what the Supreme Court said was they should facilitate it, but the district court needs to go back and say what they mean by effectuate because you have to have a certain degree of deference to the executive branch and the conduct of foreign policy.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Right, and the Supreme Court can come back, and I think quite possibly will end up having to come back to give more detailed instructions to the U.S. government about what it should do here. The obvious fact on the matter is that if we wanted this guy back, we would have him back. The government of El Salvador is quite pliant to the Trump administration, as you saw from him in the Oval Office.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
It's literally true that we cannot extract an El Salvadoran citizen from El Salvador without the consent of the government of El Salvador. But the obvious thing is that we would get the consent of the government of El Salvador if we actually wanted it.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Right. So that's another way that the courts might end up intervening here is they can say, you know, well, you can't send money to El Salvador for this. And that's a domestic thing, even though there's the foreign policy component here. So I think we're not quite done with this case and the Supreme Court and seeing what the administration will do.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
There's been a lot of desire on the part of the conservative justices on the court. to treat the Trump administration like an essentially normal presidential administration where the U.S. government generally gets a lot more deference than other litigants when it's before the Supreme Court.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And I think that that was an unreasonable view on their part to begin with, but it's becoming increasingly untenable. And I don't know the extent to which they actually believed that or they don't want to be crosswise with Trump or whatever versus that they felt that that's the position the court has to start from. We're dealing with the U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
government, and the first thing we have to do is act like they are a normal, good-faith litigant and see what happens. But I think it's becoming clear that they are not only becoming clear, but becoming impossible to look away from the fact that they are not a good-faith litigant. And so I don't know exactly what the court is going to do as the administration increasingly gives them the finger.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But I think one possibility is that the court is going to set itself up to be more adverse to them in the long run.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think it's a good thing that Harvard did. I think that the list of demands that the administration sent to them was unworkable and in some cases contradictory. I mean, the government told them to stop doing hiring practices that are based on characteristics. And then another one that says basically you need to hire more conservatives.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So for a number of reasons, it could be considered— What are some of those wacky ideas?
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
The other thing about this is that the list of demands was quite different from the list of demands that was sent to Columbia and more expansive. And then also when Columbia said, okay, fine, we're going to do what you tell us to do, instead of saying, okay, thank you, Columbia, for complying with our demands, they just sent more demands to Columbia.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And so it's different from what's gone on with the law firms, where the administration seems eager to cut these deals with big law firms. And a lot of the deals with the law firms kind of look like the administration isn't actually demanding that much from them. They have to say that they're going to follow employment law, which they already had to do.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
They have to do certain pro bono work in certain areas, but those areas are quite broadly defined, such that, you know— If the law firm has to do pro bono work supporting veterans and fighting anti-Semitism, maybe they were doing some of that work already. They can recategorize that or maybe there are areas of sufficiently shared interest that it's not a gross thing for them to be doing.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
It was literally that we would impose a quote-unquote fee on foreign holders of U.S. government bonds. Basically that, you know, we'd say, you know, the interest rate this bond is supposed to be paying is 4%, but we're going to withhold 15% of that because, you know, we're not happy with your trade practices, we think you hold too many bonds, etc.,
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Regardless of whether or not the firms are right about this.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
We'll see what's coming. But there's a non-crazy case to be made internally at the firms that, you know, well, gee, we're not really agreeing to very much here. The list of demands that they sent to Harvard, there was no way to say, well, gee, we're not really agreeing to very much here. It was basically subjecting Harvard's whole, you know, their academic decisions to politicians in the U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
government and letting them tell them who to hire and which departments need to be diversified ideologically and all sorts of things. It was a list of demands that looks to me like it was written to get a no from Harvard. If they wanted a yes, they could have written a list of demands that was designed to get the yes in the way that they have done with the law firms.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think the administration wants the fight with universities, and Harvard is exceptionally well financially resourced. So they're in an especially good position to say no. But I think that this looks to me like the administration is not actually trying to get the universities to heal, but is trying to get to this fight with the universities.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
They want them to say no, and they've sent such an expansive list of demands because it is designed to get a no out of them. Yeah, sometimes.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think it's possible, although I think it remains to be seen how effective the law firm strategy is about denying representation to people that the administration doesn't want represented.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Law is such a fragmented industry, and there are so many law firms out there, and there are litigation boutiques that rely less on a positive relationship with the government as compared to these giant firms that do a lot of M&A and other things where it's, you know, they go in and meet with government officials and it's important that everyone be nice.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And so I think it's possible that they have made it significantly harder for people to get lawyers to fight the administration. But I think it's also possible that they haven't actually made it that much harder and that the representations will just sort of be shuffled around in terms of which firms they go to.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So I don't know whether it's true that the administration has actually gotten a lot out of the law firm fight. other than getting people to make a show of deference to the president, which I think he personally values a lot. I think he likes the fact that these powerful managing partners of these law firms have to come to the Oval Office and beg him for something.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And he basically says in this paper that he published before the administration came in, before he received the CEA job, said, well, you know, people could call that a default on treasury bonds, but there's already taxes on interest income on bonds. So is it really that different from that? I don't think the market would be as sanguine about that.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But I also think that they could have demanded more from the law firms and still gotten some of them to say yes. If they were really trying to put the screws, they would have made the list of demands sufficiently onerous that you would have had some firms saying yes and some saying no. And I think that they would enjoy the show of causing one of these law firms to go bankrupt.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, you know, if you have one of these firms that stands up to the administration and wins in court, but their clients for M&A and antitrust and other things where they're really relying on a relationship with the government, if those fall away and the attorneys in those practice areas fall away, I mean, you could see these firms blowing up, especially since the administration is also pushing us into a recession.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Right. that is already bad for the legal business. So I would have expected them to want that. I think they would have wanted a big high profile law firm implosion. And I think they may well have been able to cause one. I mean, and maybe it'll happen to one of the handful of firms that's fighting them.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But I think that generally the firms that are fighting know that their business is different and they're not as exposed as the firms that folded. I'm a little bit surprised by what they've done with the law firms because I would have expected the administration to sort of
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
welcome that fight more and actually try to make demands such that some of them would have said no in the way that they've done with universities. I don't know entirely what to make of it.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I love Charli, Charli XCX. She is such a presence. She's just up there on, like Gaga has dozens of backup dancers and had this amazing lush production. Charli's just up there by herself holding a red solo cup in one hand and the microphone in the other. And she manages in her like messy chaotic way to command this giant stage.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I think it's actually, it's really impressive and it was a super fun set.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Well, I mean, nobody's more brat than Donald Trump.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Anyway, I want to be clear, the administration hasn't done this yet. This is just something that Steve Myron put in a paper. But I think that given the lawlessness of this administration and the wacky things that they have surprised people by doing, I think concerns about whether there's going to be a future effort to monkey with the repayment on our bonds is something reasonable.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But I think the bigger concern, actually, and probably the other reason why the dollar is falling in addition to interest rates rising – is just that what they're doing is terrible for the U.S. economy and terrible for growth. And so one reason people might want to hold U.S. dollars is, I think they're safe, I want to hold them. But another reason people would hold U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
dollars is, I expect to do business in the United States. I need to send money to my subsidiary in the U.S. so it can build a factory there. That kind of thing. And that's what the tariffs are theoretically supposed to do. They're supposed to draw investment into the U.S. and say, well, gee, if you want to make widgets, you better make them in the U.S. so you can sell them in the U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
without tariffs. But what seems to actually be happening is other countries are looking at our policies and saying, not only are tariffs going to be higher, I don't know how much higher because the president won't tell me what the tariff policy is going to be.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
That's not drawing people to put in the factory because the tariff on widgets might be 25% tomorrow, but in four years, it might be zero again. I'm not going to stand up a widget factory that's only going to come online right when Donald Trump is supposed to be about to leave office. And so it's basically freezing investments in the United States.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
It's making Europe look attractive as a place to invest relative to the U.S., which, you know, is not something that you could really say for decades. And so that's, I think, a key reason. Right, exactly. Well, soon they will because Europe is going to be richer than us. They're going to have air conditioning.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
They're going to have, you know, the SUVs, all the things that we used to make fun of them for not having. But so I think that what you see in the markets is that there's an expectation that what they've done is terrible for the US economy. So obviously that shows up in stock prices going down. Corporate profits are expected to be lower than was expected previously.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But you also see that in the bond market because what you're seeing in the bond market and in exchange rates is people are not feeling enthusiastic about investing in the US relative to other countries. The one thing you can do to get away from the uncertainty of Trump's tariff policy is to do something that's completely unrelated to the United States.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Say, I'm going to build a factory in Germany and export from Germany to France or to the Mideast or wherever. And so I always know that the Trump tariff on that activity is going to be zero. That stuff looks a lot more attractive than stuff that involves U.S. trade right now.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Yeah, I'm worried about it in part because of the long time horizons that these things involve. I mean, for example, the weakening of the security partnerships is pushing Europe to spend more on defense, which is something that I have wanted. So I don't think the goal of getting Europe to rearm is actually a bad one.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
The problem is that when you push them into that, at the same time that you're showing unreliability in all these other dimensions, with Ukraine, for example, and these questions of the usefulness of U.S. weapons systems in Ukraine if the U.S. government decides they don't want Ukraine to be using them anymore?
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So what does that mean if you're Germany or you're France or you're Denmark and you need to buy fighter planes or you need to buy other defense systems? Do you really want to buy them from Boeing and Lockheed Martin? and other U.S. companies where you're concerned that the U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
government might have some ongoing control over technology or parts or other things that you would need to maintain the usefulness of those defense systems. I mean, that should have been a boon to the U.S. economy. We are a leader in military technology, and U.S. defense contractors ought to make a lot of money if Europe decides it's going to buy a lot more military equipment.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But instead, what we're seeing is huge gains in European defense stocks Because you have these European countries saying, not only do I need a stronger military and more equipment for that, but I would really like to find a way to buy it from a non-American manufacturer. I mean, that's a terrible thing for one industry in our economy.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And you can see that repeated in other places where anything that involves having a long-term dependency on U.S. policy, whether that's for defense or whether that's just because you're exposed to the tariff regime, and your investment in a U.S. subsidiary, the entire question of whether it's going to be profitable or not depends on the tariff regime. That just looks very unattractive when U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
policy is both hostile and uncertain. And so I think partly the long-term effect depends on how people are thinking about the after-Trump period, because so many of these things are, if you're going to build a factory, that's a years-long investment before it starts to produce returns.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
If people expect that basically this is a weird period and things are going back to normal, then in the long run, maybe that will be fine for the U.S. economy, although we're in for a rough few years. But if, on the other hand, it's sending a signal that the U.S.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
is a permanently less reliable partner and people are concerned that the next Republican administration could be as wacky and hostile as this one has been – then that makes it hard even for an administration that's trying to put the pieces back together to convince people that they should come invest in the United States.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
They might say, well, now we have a president who doesn't want to change tariffs every day, but we don't know what the next president's going to do. So even though you've set a tariff policy that should be favorable to investment in the U.S., We don't feel comfortable doing that. Now, there's some things that could be done about that.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
For example, the very expansive tariff powers that the president has under quite old laws that were not really misused that badly by any presidents up until now with Trump, you could repeal a lot of those powers. And that might make it more credible to say, yeah, we're sorry about what Trump did, but the next guy is not going to do that because he's not even allowed to do it, even if he wanted to.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Maybe that sort of thing will work, but it's going to be a real challenge for the next Democratic administration or even for a subsequent Republican administration that wants to get more integrated into the world system, the damage to our credibility that Trump is doing right now.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
The president could veto it, though. You would need two-thirds in both houses. Your broader point that Republicans, if they wanted to stop the president, they could, but you'd need a lot more than four of them.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Well, I think that this is all going to be quite politically damaging for the Trump administration. We're already seeing, you know, I think some people are looking at the polls about the president and sort of like being like, how are they not shifting faster? But they're shifting quite quickly.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, the president's approval ratings in just, you know, the last couple of weeks have posted a material deterioration. And that's when with only the financial market effects of the tariffs, we haven't even really started feeling the real economy effects. I mean, you're going to have all sorts of products that are just getting vastly more expensive. as the tariffs roll into force.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And that's what's being forecasted in the financial markets, that the real economy is going to face a lot of problems. And you're already seeing people reacting strongly to the fact that stocks are falling. The rise in interest rates, I don't think most people are paying attention to the bond market yet, but that's going to flow through into mortgage rates.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
It's going to flow through into credit card rates. And I don't think we need to assume that it's going to stop at sort of the 4.3, 4.4 on the 10-year Treasury bond that we're at right now.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
So I think that if the Trump administration really goes through with a significant increase in the tariff policy and also continues with this absolute uncertainty where it changes from day to day what the tariffs are going to be, I think you're going to have fairly quickly quite damaging effects in the U.S. economy. The president's numbers are going to get worse and worse.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
I mean, for one thing, that reduces his political fearsomeness that I think we have seen with a lot of the reaction to lawless things the administration has done. But I think that also increases the likelihood that a future administration is not going to repeat what they're doing.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
Yeah, I mean, and I think the other thing that's important to note about the theory of what the Trump administration is doing is it's internally very confused because, you know, the things like that paper that I referenced from Steve Myron that had some of these suggestions about what to do about tariffs in a more orderly manner than what the president has actually done.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
But the argument from him and from some of the economists around the president has been that you should impose tariffs. And at first, that will strengthen the dollar. But what you ultimately want is a weaker dollar. So the dollar wasn't supposed to weaken yet, but they were eventually supposed to have policies that were going to pursue a weaker dollar.
The Bulwark Podcast
S2 Ep1021: Josh Barro: Total Idiocy
And the reason for that was supposed to be that a weaker dollar makes the U.S. a more attractive place to invest and do manufacturing. And that's true in the abstract because if you have a weaker dollar, it is cheaper if you're a foreign company to pay U.S. workers than to pay foreign workers because U.S. workers are paid less.