Israel, Iran Truce Tested, But Holds After Strikes
Republican Representative Michael McCaul, a member of the House Foreign Affairs Committee said the US bombing of Iran's nuclear sites damaged sent 'a strong message' about the American commitment bringing peace to the region (Source: Bloomberg)
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Forbes
33 minutes ago
- Forbes
Will The ‘Beautiful' Bill Increase The Deficit?
NEW YORK - FEBRUARY 19: The National Debt Clock is seen February 19, 2004 in New York City. ... More According to a Treasury Department report, the U.S. governments national debt, the accumulation of past budget shortfalls, reached a total of more than $7 trillion for the first time. (Photo by) The performative exchange of military strikes between Iran and the US means that a nuclear tipped hot war in the Middle East is off the cards for the moment, though the bad news is that a far greater crisis awaits. In the past five or so weeks prominent financiers – Ray Dalio, Jamie Dimon and even Elon Musk – have warned about the burgeoning fiscal deficit and the mountain of debt that the US (and other countries) has accumulated. A very decent blog post by Indermit Gill, the chief economist at the World Bank, outlines the viewpoint. Next week, there is a good chance that the Senate passes President Trump's budget, which according to the independent Congressional Budget Office (CBO) will swell the deficit by close to USD 3trn and push debt to GDP towards an unprecedented 125% in the next ten years Additionally, rumours that the next Federal Reserve chair will be picked soon by President Trump (Powell leaves in May 2026) has upset the dollar, making life even more difficult for foreign holders of US debt. What is interesting is not how gargantuan the world's debt load has become, but how few people care. Politics in the West has changed so much that it has neutered what used to be a political class who in a very Catholic way, pronounced themselves to be fiscally responsible. In the US, it used to be the case that a good number of Senators were what was called 'fiscal hawks', or had an aversion to large budget deficits, and an even greater aversion to resolving them through higher taxes (the US has only produced budget surplus twice – under Lyndon Johnson and then Bill Clinton – and in both cases taxes were raised). Paul Krugman has referred to deficit hawks as 'deficit scolds', because the spend more time warning about the dangers of the deficit than fixing it. Ronald Reagan, and the policy makers who surrounded him – namely James Baker, Nicholas Brady and Don Reagan, were fiscally conservative by reputation but had the luxury of being able to grow the US economy through tax cuts and de-regulation. At the time (early 1980's onwards) some Republicans had a 'starve the beast' mindset, which is to say that they favoured lowering taxes so that the government would have less revenue to spend, but there is little evidence that this worked as a strategy (partly because many of the initial Reagan tax cuts were aimed at the rich). In the post Reagan phase, deficit reduction as a virtue came into its own in the Robert Rubin era (at the Treasury), and many of his former colleagues and acolytes continued this during the early years of the Obama presidency (a relevant private body is the Hamilton Project, where Rubin was a founder). One of the notable initiatives of the Obama White House was the creation of the US National Committee on National Fiscal Responsibility and Reform or the Simpson-Bowles Commission as it became known, a bi-partisan body that aimed to reduce the fiscal deficit and debt. Its most noteworthy aspect, in my memory, was the degree of civility and collaboration between representatives of the Democrats and Republicans. Such a body could not exist today. Indeed, the radicalisation of parts of both parties, in the context of quantitative easing (which has dulled the impact of rising debt and deficits) has broken the link between fiscal responsibility and electability. For example, the first crack in the Republican edifice was the advent of the Tea Party Movement, one of whose tenets was tough fiscal responsibility, as inspired by a 'Chicago Tea Party' rant from CNBC commentator Rick Santelli in 2009. Many of the Tea Party oriented voters and Republican politicians then gravitated to the Trump corner in 2016, the price of which was a surrender of their fiscal sacred cows. Today there is only a handful of fiscally conservative Republican Senators (the Club for Growth publishes an annual scorecard of how fiscally rigorous it thinks members of the House and Senate are). The majority of Republican Senators appear happy to give the nod to a policy that edges the US closer to the financial precipice. Indeed, not only will the Trump budget favour wealthy households but it will increase the number of financially precarious households, and damage healthcare and education provision. The other interesting observation I draw is that the relationship between debt and politics has now reached a turning point, and from here debt will condition politics. I see this happening in at least three ways. The first is that in the context of 'zero fiscal space' the constraints imposed by high levels of debt and deficits, will drive new splits within parties, for example between those who are keen to spend more on defence, versus those who wish to preserve social welfare safety nets. The revolt by a large number of Labour MPs against benefit cuts imposed by Keir Starmer is an example. In the future, this cleavage may inspire new political parties. To echo a recent note (The Power Algorithm) new 'tech bro' parties could materialise that prefer using robots to do the work of immigrants and that technology should be deployed for social control. The second, related scenario is that in the absence of money to spend, the traditional 'pork barrel' cycle of politics disintegrates, and instead politicians tilt the broad political debate to non-fiscal issues – identity, foreign policy, and immigration. A third element in the hypothesis is that voters observe mainstream politicians to be helpless and useless in the face of very high fiscal constraints, and they become largely apathetic about politics and in some cases vote for extreme candidates, such as 'chainsaw economists' as in the case of Argentina. In this way, and perhaps exceptionally in history, the coming debt crisis (if the World Bank's economist is correct) will be intertwined with the current crisis of politics.
Associated Press
an hour ago
- Associated Press
At least 34 people killed in Israeli strikes in Gaza as ceasefire prospects inch closer
DEIR AL-BALAH, Gaza Strip (AP) — At least 34 people were killed across Gaza by Israeli strikes, health staff say, as Palestinians face a growing humanitarian crisis in Gaza and ceasefire prospects inch closer. The strikes began late Friday and continued into Saturday morning, among others killing 12 people at the Palestine Stadium in Gaza City, which was sheltering displaced people, and eight more living in apartments, according to staff at Shifa hospital where the bodies were brought. Six others were killed in southern Gaza when a strike hit their tent in Muwasi, according to the hospital. The strikes come as U.S. President Donald Trump says there could be a ceasefire agreement within the next week. Taking questions from reporters in the Oval Office Friday, the president said, 'we're working on Gaza and trying to get it taken care of.' An official with knowledge of the situation told The Associated Press that Israel's Minister for Strategic Affairs, Ron Dermer, will arrive in Washington next week for talks on Gaza's ceasefire, Iran and other subjects. The official spoke on condition of anonymity because they were not authorized to speak to the media. Talks have been on again off again since Israel broke the latest ceasefire in March, continuing its military campaign in Gaza and furthering the Strip's dire humanitarian crisis. Some 50 hostages remain in Gaza, fewer than half of them believed to still be alive. They were part of some 250 hostages taken when Hamas attacked Israel on Oct. 7, 2023, sparking the 21-month-long war. The war has killed over 56,000 Palestinians, according to Gaza's Health Ministry, which does not distinguish between civilians and combatants. It says more than half of the dead were women and children. There is hope among hostage families that Trump's involvement in securing the recent ceasefire between Israel and Iran might exert more pressure for a deal in Gaza. Israeli Prime Minister Benjamin Netanyahu is riding a wave of public support for the Iran war and its achievements, and he could feel he has more space to move toward ending the war in Gaza, something his far-right governing partners oppose. Hamas has repeatedly said it is prepared to free all the hostages in exchange for an end to the war in Gaza. Netanyahu says he will only end the war once Hamas is disarmed and exiled, something the group has rejected. Meanwhile hungry Palestinians are enduring a catastrophic situation in Gaza. After blocking all food for 2 1/2 months, Israel has allowed only a trickle of supplies into the territory since mid-May. Efforts by the United Nations to distribute the food have been plagued by armed gangs looting trucks and by crowds of desperate people offloading supplies from convoys. Palestinians have also been shot and wounded while on their way to get food at newly formed aid sites, run by the American and Israeli backed Gaza Humanitarian Foundation, according to Gaza's health officials and witnesses. Palestinian witnesses say Israeli troops have opened fire at crowds on the roads heading toward the sites. Israel's military said it was investigating incidents in which civilians had been harmed while approaching the sites. —— Mednick reported from Tel Aviv ___ Follow AP's war coverage at
Yahoo
an hour ago
- Yahoo
Trump wants Canada's digital services tax gone before trade talks resume
U.S. President Donald Trump says he's ending all trade discussions with Canada to hit back at Ottawa for slapping a tax on web giants — and he wants it removed before negotiations can begin again. Canada and the U.S. have been locked in talks to get Trump to lift his punishing tariffs on Canadian goods, levies that have already led to major economic dislocations, job losses and a drop in southbound exports. Trump and Prime Minister Mark Carney agreed at the G7 last week to reach some agreement on the trade dispute within 30 days. Speaking in the Oval Office on Friday afternoon, Trump said the U.S. has "such power over Canada," and that he's upset the country is following a taxation strategy similar to Europe's. "It's not going to work out well for Canada. They were foolish to do it," he said of imposing the DST, which was passed into law last year with a delayed application."We're going to stop all negotiations with Canada right now until they straighten out their act," he said. Asked if there's anything Canada can do to appease him, Trump said Ottawa could remove the tax. "They will," he said. "They do most of their business with us. When you have that circumstance, you treat people better." Earlier Friday, Trump posted on social media he may impose some sort of blanket tariff on Canadian goods as retribution for the DST, which will primarily hit U.S. firms since it targets only the biggest earners. Speaking briefly to reporters before Trump's Oval Office comments, Carney said he hadn't talked with Trump that day. "We'll continue to conduct these complex negotiations in the best interest of Canadians," Carney said. He did not address a reporter's question about whether his government is prepared to drop the DST — something the Business Council of Canada is calling on Ottawa to do in exchange for U.S. tariff relief. Set to take effect on June 30, the DST would have U.S. companies like Amazon, Google, Meta, Uber and Airbnb pay a three per cent levy on revenue from Canadian users. The policy will apply retroactively, leaving U.S. companies with a $2-billion US bill due at the end of the month. These global digital firms are often able to skirt paying taxes in the countries where they operate, and the last Liberal government pitched the DST as a way to bring the tax code up to date and capture revenues earned in Canada by firms located abroad. U.S. long opposed DST It's been a bone of contention between Canada and the U.S. for years, with former president Joe Biden's ambassador to Canada warning during his tenure that, if a DST was enacted, the U.S. would hit back. While Canada and other Organization for Economic Co-operation and Development (OECD) countries had been discussing some sort of global DST, the Trudeau government decided to move ahead with its own tax rather than wait for co-ordinated action. Carney's finance minister, François-Philippe Champagne, said last week Ottawa planned to enact the tax even while negotiations with Trump are ongoing. That's what's prompted the president's ire. "We have just been informed that Canada, a very difficult Country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products, has just announced that they are putting a Digital Services Tax on our American Technology Companies, which is a direct and blatant attack on our Country," Trump said. WATCH | Foreign Affairs minister on the trade war: As he has done in the past, Trump mischaracterized Canada's tariff regime on U.S. dairy products. The high tariff rates Trump frequently cites are only applied if U.S. exports exceed a set "tariff-rate quota," something that has never happened. Trump's own Department of Agriculture noted earlier this year that almost all agricultural products traded between the United States and Canada are free of tariffs. In an interview with CBC's Power & Politics, Foreign Affairs Minister Anita Anand said supply management, which places limits on certain products, including dairy, to ensure stable prices, is a "cornerstone" Canadian economic policy that is "extremely important." Anand said that despite Trump's threats, Canada will push ahead with trying to broker a deal that's in the best interest of workers and businesses, "while at the same time ensuring we diversify our supply chains so we are never again dependent on one economy." She touted the New EU-Canada Strategic Partnership of the Future that Carney brokered with the European Union earlier this week. Trump's abrupt decision to call off negotiations may have caught Canadian officials off guard. Speaking to CBC Radio's The House hours before Trump's post, Canada-U.S. Trade Minister Dominic LeBlanc said Canada's negotiators "continue to be optimistic about the constructive tone" between the two countries. Still, Candace Laing, president of the Canadian Chamber of Commerce, said there have been signs the "tone and tenor of talks has improved in recent months." Trump and Carney have had two friendly meetings in that time, and she hopes to see "progress continue" despite Trump's apparent attempt to derail the talks. "Negotiations go through peaks and valleys. With deadlines approaching, some last-minute surprises should be expected," Laing said.
