Thoughts for the Day, May 7, 2025: We are headed in the wrong direction
Consumer Confidence is Lacking
The Conference Board said last week that its consumer confidence index fell 7.9 points in April to 86, its lowest reading since May 2020 (early Covid). Nearly one-third of consumers expect hiring to slow in the coming months, nearly matching the level reached in April 2009, when the economy was mired in the Great Recession.
The figures reflect a rapidly souring mood among Americans….About half of Americans are also worried about the potential for a recession, according to a survey by The Associated Press-NORC Center.
A measure of Americans’ short-term expectations for their income, business conditions and the job market plunged 12.5 points to 54.4, the lowest level in more than 13 years. The reading is well below 80, which typically signals a recession ahead.
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The Golden Age appears to be on hold
From Russell Berman of The Atlantic. One of President Donald Trump’s greatest political strengths has suddenly become a weakness. He won a second term in large part because voters believed he could boost the economy. Instead, Trump has shrunk it, and his tariffs have sent both the stock market and consumer confidence tumbling.
Republicans in Congress could soon make things much worse. GOP leaders are struggling to reconcile deep divisions as they try to pass Trump’s “one big, beautiful bill,” which encompasses the bulk of his domestic agenda. The plan revolves around his 2017 tax cuts; Republicans want to permanently extend them before they expire at the end of the year, but they can’t agree on how to cover the more than $5 trillion price tag—or whether to cover it at all. The likeliest outcome, analysts say, is a bill that adds trillions to federal deficits, which could cause an already shaky economy to collapse.
For years, fiscal hawks have warned that America’s ever-increasing debt (now more than $36 trillion) will provoke a crisis: Markets will crater, and interest rates will spike. Even as both parties have run up the nation’s tab, these doomsday predictions haven’t come true, leading to an unspoken bipartisan understanding that growing the deficit would never really wreck the economy. But Trump’s proposals could shatter that assumption.
In addition to making his first-term tax cuts permanent, Trump wants Congress to eliminate a suite of taxes—on tips, overtime pay, and Social Security benefits—while adding hundreds of billions in new spending to secure the southern border and bolster the military. As the fiscal analyst Jessica Reidl observed last month in The Atlantic, the GOP’s budget resolution would, if enacted, add more to federal deficits than the four costliest bills signed by Trump (during his first term) and former President Joe Biden combined.
A more fiscally responsible approach would offset Trump’s tax cuts with spending reductions and revenue increases elsewhere. Both House Speaker Mike Johnson and Senate Majority Leader John Thune have said Republicans want to cut as much as $1.5 trillion in spending over the next decade. But most analysts doubt they’ll be able to trim nearly that much. Tax hikes are anathema to most Republicans, and a push by conservatives for deep spending cuts has met resistance from moderate and electorally vulnerable GOP lawmakers.
Even if Republicans manage to slash $1.5 trillion, they would cover only a fraction of the price of extending the Trump tax cuts. The party claims that lower taxes will generate more revenue through economic growth, and the president says his tariffs can make up the rest of the cost. But analysts are, once again, doubtful. Holtz-Eakin, who advised the late Senator John McCain and now heads the center-right think tank American Action Forum, told me the tariffs won’t generate anywhere close to enough money. “The administration is completely incoherent on this stuff,” Holtz-Eakin said. “The numbers don’t add up.”
Please call your members of Congress today. The U.S. Capitol switchboard is 202-224-3121. Tell the operator where you’re from and the operator will connect you to your representatives and senators. I tested this out today. It is very simple. They will ask for the congress member you want to contact. They will then switch you to that office.
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You cannot make this up.
From Heather Cox Richardson’s Letters from an American. On his social media , President Donald J. Trump announced he was “directing the Bureau of Prisons, together with the Department of Justice, FBI, and Homeland Security, to reopen a substantially enlarged and rebuilt ALCATRAZ, to house America’s most ruthless and violent Offenders…. The reopening of ALCATRAZ will serve as a symbol of Law, Order, and JUSTICE. We will, MAKE AMERICA GREAT AGAIN!”
No one is reopening the island of Alcatraz as a federal prison. Officials closed it in 1963, after 29 years of operation, because it was too expensive to operate: more than three times as expensive as any other federal prison. Since then, it has become one of the most popular sites of the National Park Service, located as it is in San Francisco Bay, easily accessible by ferry.
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Two Videos of the Day
Commencement speeches by Derek Jeter at U of M and Nick Saban at the University of Alabama as part of his introduction of President Trump.
I loved these messages to the graduates. They apply no matter how old you are or where you are in your career.
https://www.wvtm13.com/article/nick-saban-university-alabama-graduates/64648945
Thank you, Dan, for sending these to me.
Quote of the Day: The GOP stands virtually no chance of stabilizing the nation’s finances, the Republican economist Douglas Holtz-Eakin told me. The only question, he said, is “how much worse will it be when they’re done?”
Orchid of the Day: Derek Jeter-See his speech above. Kudos to U of M for inviting him back to U of M. Jeter signed a letter of intent to play baseball at U of M but never attended because the Yankees made him an offer he couldn’t refuse. The rest is history.
Onion of the Day: The University of Michigan. Something stinks when you make President Ono the highest paid president of a public university in the country and six months later, he leaves for a university that does not have the stature that U of M has. My guess is that partisan politics at the regent level played a major part in Ono’s decision to leave.
Lyrics of the Day: Where have all the good men gone And where are all the gods? Where's the streetwise Hercules To fight the rising odds?
Isn't there a white knight upon a fiery steed. Late at night, I toss and I turn And I dream of what I need
If you think you know the answer, send me your response in the comments section of the blog.
Answer to Lyrics of the Day for May 5, 2025: We Built this City by Starship
Question of the Day: Is Trump serious about Alcatraz or is he just using it as a distraction?
Video of the Day: See above Videos of the Day
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