The DOGE wrecking ball keeps swinging, but the Supreme Court, and even Donald Trump himself, might finally be slowing Elon down. Trump backs off his trade war with Canada and Mexico—without extracting a single concession—as economic indicators begin their predictable slide. Jon and Dan break down the latest on government cuts, why Social Security is in danger, and the Democratic infighting over censuring Rep. Al Green for heckling Trump. Then, The Bulwark's Sarah Longwell joins Jon to discuss how voters are reacting to Trump's big speech—and why the economy remains their top concern. For a closed-captioned version of this episode, click here. For a transcript of this episode, please email [email protected] and include the name of the podcast.
Chapter 1: What is the current state of Trump's trade policies with Canada and Mexico?
A few days after launching an economic trade war against our fiercest adversaries in Canada and Mexico, Trump is... Already backing down. On Wednesday, the White House announced that their new 25% tax on everything we buy that's made in Canada or Mexico would exempt cars, preventing what analysts say would be up to a $12,000 increase in car prices.
Then on Thursday, right before we started recording, obviously, Trump said, just kidding, trade war is basically off until April 2nd on most goods from Canada and Mexico. What changed, you might ask? Well... Canada didn't offer any concessions. Mexico didn't offer any concessions. But here in the United States, the stock market tanked over the last week.
Chapter 2: How are economic indicators affecting Trump's decisions?
The Atlanta Fed's forecast model now predicts that the economy will shrink this quarter. Consumer sentiment is at an eight-month low. Retail sales dropped by the largest amount in two years.
And even though the Bureau of Labor Statistics jobs report won't be out until you're listening to this, we learned on Thursday that employers cut more jobs in February than at any time since the last two recessions. I don't know, Dan, do you think any of those economic developments might have factored into Trump's decision to surrender to Canada and Mexico after just a couple days?
I do. I do think it did. Because if there's one thing Trump cares about, it's how rich people feel about him. And here are all of his Wall Street buddies, his newfound tech friends, all losing tens of millions of dollars in the market over a three-day period. And so I think he reacted to that. And frankly, Trump probably also lost a lot of money himself. I'm sure he has money in the
Various meme coins. I think he probably has some stocks and bonds too. And so yeah, I think that this is – he reacts to it. He takes the Dow very seriously. He used it as a measure of economic success in his first term. He did once tweet a long time ago that if the Dow – any president who has the Dow drop 1,000 points over two days should be impeached. I'm sure he still stands by that opinion.
But so yeah, I think this is – he blinked because the market responded in a way that he did not anticipate, which suggests he really didn't prepare very well for this because it was pretty obvious what was going to happen.
That's what I was going to say. What did he think was going to happen? Did he think everyone's going to be like, oh, great. America's back. He did say he was asked. We're recording this on Thursday afternoon. He was asked in the Oval about this. And he said, you know, why do you think the stock market has been so spooked? And he said, well, a lot of these are globalist companies anyway. Yeah.
We were trying to figure out, what does that mean?
Companies with business abroad? Like, I don't know, the guy who owns a couple of golf clubs in Scotland?
I mean, it's the stock market. It's also an issue that, just aside from the stock market and aside from all his rich friends, just breaks through, I think, in the media in a pretty big way because you have impacts of tariffs on every different region of the country. And, you know, we talked about this after the State of the Union, I think. I can't remember what we talk about when.
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Chapter 3: What are the implications of government spending cuts?
Even if the economic outlook is not good, they want to have confidence in that outlook 6, 12, 24, 36 months in advance to make decisions about whether you're going to open more stores, hire more people, build a factory, launch a new product. And if you can't have any sense of what's going to happen,
because there's a guy in the White House who's just capriciously making decisions left and right for no foreseeable reason, then they're going to hoard cash to try to wait out the uncertainty and the chaos for a better time for investment. And that's going to be a self-fulfilling prophecy that's going to hurt the economy because it's going to mean less economic growth.
So fairly or unfairly, presidents are usually blamed when a recession or inflation happens on their watch, even if they inherited the problem. You know, people sometimes give them a little grace period if they've inherited it, but then eventually they get blamed if it persists. But it's not often you can draw such a direct link between a president's actions and an economic downturn.
The Trump regime is already trying to avoid the blame for the economic uncertainty we're facing right now. Elon Musk is saying that the U.S. should stop including government spending. in GDP calculations. Some Republicans are claiming that we shouldn't count federal workers who lost their jobs in the jobs numbers. What do you think? How big of a problem is this for Republicans?
And do you think they'll be able to lie their way out of this one?
No, I don't think they're going to lie their way out of this one, right? The one thing that people fully understand is the economy. And for all of Trump's messaging skills, the size of his megaphone, all of that, he cannot bend reality to his whims. maybe for his most ardent fans, but not for the middle of the electorate.
And you're already seeing the softest Trump voters, the new Trump voters, the men under 40 who came to him. Navigator research uses a measure of people who voted for Trump but don't strongly approve of him. All of those people are souring on the economy and they're souring on Trump because of what they're seeing. And you're right. This is directly attributable to him.
And it is a message that Democrats should latch onto because people are going to see what's happening. And we do have to tell a story about why it's happening. And the fact that Trump is chaotic and erratic is a story that is quite believable to people because it – It fits with what they see. To anyone with eyes, ears. They know it.
And I think you see this lesson in the 2020 election too, which is people will put up with a lot of Trump's chaos because they think there are positives to it in a sclerotic broken system. But when that chaos starts impacting their lives, then they turn on him. And we are at the point where it is infecting people's lives.
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Chapter 4: How are Democrats reacting to the censure of Rep. Al Green?
It's just the – it's not – it will not be a turnkey. Usually – When you switch administrations, there is a sort of a turnkey element of it. You get rid of all the old executive orders, you put new people in, you put new executive orders in, and the wheels of government can start moving in your ideological direction here.
That is not going to be available to the next president because the wheels of government are being smashed by a bunch of people who hate government.
Yeah, it's also going to be hard to recruit people to work in government after the way that thousands and thousands of people have already been treated in this.
People go into government for many reasons. One is public service. Many of them, particularly like the scientists, the doctors, they could make a lot more money doing something else, working elsewhere. But they choose this out of public service, but also because a government job is an incredibly stable, up until now, had been an incredibly stable job with very good benefits. You had job security.
Now that does not exist anymore. In a world where we're just flipping back and forth between a Democrat and a MAGA Republican every four years, you're not going to go back into government for a long-term career because four years from now, Donald Trump Jr. could be there, or J.D. Vance, or whoever else, and you could lose your job all over again.
Yeah, no, that's exactly what – and I think that's their intention, at least some of them. How much do you think this has to do with the legal challenges that they've been facing? Because, you know, if it's Elon and Doge doing all the damage – then as we're seeing in some of these legal cases, it's not going well for them.
But if it's an agency head deciding, hey, we're just going to reduce the workforce of my agency, that seems like it's a lot more legally viable.
Yeah, that probably is part of it. It's hard to imagine that Trump's giving public comments based on the advice of a lawyer to try to have a better legal strategy. That seems somewhat unlikely and out of character.
Unless Susie Wiles is really effective.
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Chapter 5: What does the poll reveal about public perception of the Democratic Party?
Right. But so far, you know. The courts have been stepping in. Yeah. So I don't know how that's going to work. And look, I think it's something like 90% of education funding is state and local, but you know.
The Department of Education does provide a lot of funding when it comes to student loans, federal financial assistance for college, also Title I, which helps students with disabilities in school. And so there's a lot of that funding that goes to public schools. So, you know, you're really playing with fire if you're going to start.
And, like, I think I've heard them say, well, if we shut it down, then the funding that goes to Title I and stuff like that, that'll just get devolved to the states. But, like, I don't really think there's a plan here. No, it's a good plan. One other sign of the times here with the deadline for funding the government coming up. Pardon me with the shutdown looming. We like to say shutdown looming.
Congressional Republicans are now leaning against including any of Doge's spending cuts in the continuing resolution, opting instead for a so-called clean CR, which would keep the government open through September 30th at current levels of spending. Chuck Schumer apparently supports this as well. because it would get enough Democratic support to avoid a shutdown.
I feel like we heard this from some of the senators who joined our live stream before the State of the Union. I've even seen an address for Joe. Nope, nope.
I just had to play the role of love.
And I even seen it from some more progressive Democratic politicians. It seems like just no one wants a shutdown, partly because what we have been saying, which is like, what do you what do you ask for and what can you expect to win from a shutdown? But what do you think?
Yeah, the wind is coming out of the sails on this very quickly. People, Democratic activists, are going to be super pissed about this. And I understand that reaction for sure. This is a – as we talked about with Senator Schiff, this is a singular point of leverage we have. And to let it pass by seems – you can understand why people would be mad about that.
Now, the question – and I've been very torn about this question. You and I have kind of gone back and forth over the course of the podcast on this.
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