American Politics > Moody's negative outlook gets more negative; Trump's dangerous game with the War Industry; USA headed into fiscal collapse - Bloomberg

 

It's curious that Trump is so dependent upon tariffs to rescue the economy. The Miracle of Argentina last year was simply amazing, and yet, Milei did not use tariffs significantly, I don't think. I don't believe that he turned any of his friends or allies into economic enemies, nor threatened to destroy their economies.

Moody’s issues warning on US finances

American fiscal strength is on course for continued multi-year decline, the rating agency has said

FILE PHOTO: The US Treasury Department Building in Washington, D.C. ©  Stefani Reynolds/Bloomberg

Ratings agency Moody’s has sounded the alarm on the United States fiscal health, warning of a continued decline due to widening budget deficits and increasing concerns over debt affordability.

The warning comes as the national debt surpasses $36 trillion and annual deficits exceed $1.7 trillion, raising concerns about the government’s ability to manage its financial obligations.

”[US] fiscal strength is on course for a continued multiyear decline”, having already “deteriorated further” since Moody’s assigned a negative outlook to America’s top-notch AAA credit rating in November 2023, the agency said in a report on Tuesday, as cited by Financial Times.

READ MORE: ‘Economic heart attack’: Ray Dalio sounds alarm on US debt

US President Donald Trump has advocated measures aimed at stabilizing the nation’s finances, including implementing significant tariffs and proposing tax cuts intended to stimulate economic growth. However, Moody’s has cautioned that extending substantial tax cuts without implementing significant spending reductions could exacerbate the country’s fiscal challenges.

”We see diminished prospects that these strengths will continue to offset widening fiscal deficits and declining debt affordability,” it said, according to Reuters.

Republicans are pushing for a $4.5 trillion extension of tax cuts, which would in turn require significant spending reductions, something that may conflict with Trump’s commitment to protect social programs, the agency noted.

The Department of Government Efficiency (DOGE), led by Elon Musk, tasked with reducing wasteful spending, claims to have achieved $115 billion in savings nationwide. However, according to Moody’s, such cuts are relatively minor compared to mandatory spending obligations.

US to review ‘lazy’ Biden-era sanctions – Treasury secretary

The agency projects that, without effective policy interventions, America’s debt-to-GDP ratio could rise from the current 124% to approximately 130% by 2035, with interest payments consuming about 30% of federal revenue.

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Trump is playing a dangerous game with America's War Industry. If they suddenly start thinking that he's going to cost them money, his life is worthless.

Trump’s tariffs threaten US arms production – Politico

Sweeping duties could complicate American weapons manufacturing and overturn international partnerships, the outlet has said  

FILE PHOTO. ©  AP Photo/Matt Rourke

US President Donald Trump’s tariff agenda could threaten American arms production, and if fully enacted, upend global supply chains, Politico reported on Friday citing defense experts.

On Wednesday, Trump rolled out a broad new slate of tariffs ranging from 10% to 49% on imports from all countries, based on what the US president called the principle of reciprocity. Hailing the move as a declaration of economic independence, Trump cast the tariffs as a step toward rebalancing America’s trade relationships. Economists across the globe have criticized the move.

According to a dozen diplomats, lawmakers, officials, and defense industry analysts interviewed by Politico, Washington’s latest move could prompt already wary US allies to look for alternative partners. Such a shift would deal a blow to the US defense industry – a major global arms supplier.

“There’s going to be shortages of supplies, tit-for-tats, and our allies and other partners are going to retaliate,” Bill Greenwalt, a former Pentagon acquisition official told the outlet. “Some potentially vital supplies are either going to cost a whole heck of a lot more than what they did or they’re just not going to be available.”

The sweeping tariffs, including a 20% levy on imports from the EU and 10% on goods from the UK and Australia, could drive up the cost of American-made weapons and disrupt international partnerships, the outlet said.

Among the programs potentially affected are the F-35 fighter jet, which is a partnership involving 20 nations. Rocket and air defense projects with Norway and Israel could also feel the squeeze.

READ MORE: Trump tariffs breach NATO rules – Norway

“We count on the US for the best equipment,” said a European official. “European industrial capacity has greatly improved and we want to be security providers, not just consumers.” This could prompt greater investment in EU manufacturing, the source said, as nations look to reduce their dependence on American components and supplies for key weapons systems.

According to the outlet, a trilateral pact between Australia, the UK, and the US to build nuclear-powered submarines and share advanced technologies could also be at risk if rising parts costs make the project financially unsustainable.

Sen. Mark Kelly, a senior democrat on the Senate Armed Services Committee, highlighted the complexity of the global defense supply chain, noting that many military products cross international borders multiple times during assembly, potentially racking up tariffs each time.

Business groups are reportedly urging the Trump administration to grant the defense industry a strategic exemption from the new taxes, warning that without it, the Pentagon could face soaring costs and critical supply chain disruptions.

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US faces fiscal collapse

– Michael Bloomberg

Congress must focus on restoring fiscal control and deficit reduction in order to avoid “the grim reckoning,” the billionaire believes

Michael Bloomberg. ©  Yana Paskova/Getty Images

The US is heading for a “fiscal breakdown,” and Congress should take urgent measures to restore fiscal control instead of eyeing more borrowing, billionaire Michael Bloomberg believes.

The former New York Mayor warned about the impending collapse on Tuesday in the media outlet he established. He reflected on the latest Congressional Budget Office (CBO) projections, that indicated the US budget deficit and federal debt are bound to grow, albeit at slower speeds than projected a year ago.

These dire forecasts send an “unambiguous message” that “there’ll be a reckoning, and it will be grim” unless Congress urgently changes course, Bloomberg warned. The US is heading towards a “fiscal breakdown” given that public borrowing is expected “to remain at this elevated level or higher for decades,” he pointed out.

“The federal government is currently spending roughly $7 trillion and collecting only $5 trillion in taxes annually. The resulting deficit is a little over 6% of gross domestic product, a disturbingly high number for an economy around full employment,” he wrote. US deficits have reached record levels this decade.

Assuming no recessions, public debt will rise to 100% of GDP this year and 118% by 2035 – and it just keeps rising from there.

The founder of Bloomberg L. P. criticized the proposed tax cuts repeatedly promised by US President Donald Trump as well as the import duties he is pursuing in order to restore the balance of trade. “The [tariffs’] impact on overall revenue is likely to be negative, because tariffs depress commercial activity and job creation,” Bloomberg suggested.

READ MORE: Moody’s issues warning on US finances

The ongoing cost-cutting efforts of the Trump administration are unlikely to have any long-term impact on the budget, while damaging public services and angering voters who see that “public parks are closed, health care is declining, and deaths from infectious disease are becoming more common,” Bloomberg suggested.

“Savings from slashing the federal payroll won’t have any appreciable effect, either. For all the media attention generated by cuts to personnel and programs — and some of them are warranted — they are having almost no impact on restraining the budget deficit,” he wrote.

Instead, the US government should cautiously raise taxes while further reducing spending and keep some pro-growth measures intact, such as a “bigger standard income-tax deduction and stronger investment incentives,” in order to “deliver a substantial net reduction in projected deficits,” Bloomberg suggested.

“Restoring fiscal control should be job No. 1 for this Congress. The only sensible approach is to combine moderate tax increases and judicious cuts in spending. Spreading the burden would allow the changes to be more palatable and gradual, if they’re undertaken soon,” he wrote.

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A Glimpse of the Future > Forward to the Past? Company Towns the "future of a large segment of the working class.”

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Social media recoils as Bloomberg praises Amazon’s warehouse-

based exurban ‘factory towns’ as ‘the future of working class’

The future according to Bezos, looks a lot like company towns from 100 years ago

17 Sep, 2021 23:40

The future of the working class? © Reuters / Clodagh Kilcoyne

Amazon’s massive new distribution centers, soon to be surrounded by infrastructure built to serve workers, are being compared to Gilded Age company towns. While many are aghast at the idea, fellow billionaires are praising it.

The e-commerce empire founded by Jeff Bezos will offer the American working class a better option than scraping to get by in increasingly expensive cities, investment adviser Conor Sen wrote in a Friday oped for Bloomberg, the financial news outlet whose namesake is billionaire former New York mayor and failed presidential candidate Mike Bloomberg.

“Let’s call them ‘factory towns,’” Sen suggests, apparently in an effort to avoid the baggage that accompanies the concept of “company towns.” Popular in the late 19th century among the new breed of mega-corporations – railroads, steel mills, and the like – many of these dormitory communities held workers as veritable prisoners, paying them in scrip that was only redeemable at the company-run store and retaining groups of thuggish Pinkerton “detectives” to stamp out any attempts to unionize.

Amazon’s “factory towns,” however – Sen writes – are supposedly marked by rising wages, massive job creation and the potential for a “higher likelihood of success” in “solving inequality” than “high-cost metropolitan areas.” He believes that those should be encouraged, at one point even calling these ‘Bezosvilles’ the "future of a large segment of the working class.”

The writer waits until the conclusion to acknowledge the “new issues” that will “need addressing,” little details like “adequate amounts of housing, schools and healthcare facilities.”

Sen is known for his ruling-class-friendly takes, which recently included a call for Americans to embrace the idea of “build-to-rent” communities rather than strive to attain the once-commonplace ideal of homeownership. However, many on social media couldn’t help but notice that it took a financier writing for a news outlet belonging to a fellow billionaire to say anything nice at all about Amazon’s silent conquest of the sprawling spaces between American cities – and the populations that call those spaces home.

“Two out of two billionaires agree…” cracked one tweeter.

Others had to control their gag reflex at the idea that Amazon, which made billions of dollars off the Covid-19 pandemic that saw millions lose their livelihoods and is legendary for tight schedules forcing workers to relieve themselves in plastic bottles, was capable of being a friend to the working class.

Some saw the company inching ever closer to ‘The Warehouse,’ a dystopian yet increasingly realistic send-up of modern American mega-capitalism as practiced by an Amazonesque firm called “Cloud,” while others drew their cultural references from the era of the original “company towns.”

Amazon has trumpeted a recent starting wage increase – from $17 per hour to about $18 per hour – in an effort to attract workers who sat out the pandemic collecting unemployment and now need jobs. The company reportedly plans to hire another 125,000 workers in the US and is deploying unusually generous benefits, like hefty sign-on bonuses and tuition assistance, to convince job-searchers it’s a better bet than Wal-Mart or other megaretailers.

However, Amazon's reputation for union-busting – which in one memorable case reportedly extended to changing the timing of traffic lights outside a warehouse in order to prevent workers from discussing organization efforts – along with eerie micromanaging of employees’ appearance and sloppy attempts to refute workers’ stories of ‘peeing in bottles’ have made it a decidedly unsympathetic character in the class war.

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Flurry of Gun Control Bills Pass Across US as Everytown Delights in ‘Winning’ Against Gun Lobby

Guns - third leading cause of death among USA children - 1300 per year

© Rick Wilking / Reuters

Gun control advocates are celebrating a slew of legislation passed across the country. Domestic abusers are targeted in new bills passed by five states, while other states have enhanced their background checks for purchasing firearms.

Louisiana, Nevada, New Jersey, North Dakota, Tennessee and Utah all passed new restrictions on firearms for domestic abusers, according to Everytown for Gun Safety group, which is funded by billionaire and former New York Mayor Michael Bloomberg. Overall, 23 states have enhanced the laws around domestic abusers since 2013, says the gun control advocacy group.

"When you look at what's happening in statehouses across the country, the gun safety movement is winning in state after state — even in this challenging political environment — because volunteers and gun violence survivors have become the counterweight to the gun lobby," said Shannon Watts, who founded Moms Demand Action for Gun Sense in America, a part of Everytown.

Hawaii, Tennessee and Washington state passed new laws requiring that police be notified when anyone who fails to pass a background check tries to buy a gun.

Many of these measures were passed with the support of Republican lawmakers and governors, even though the party itself has promised to roll back restrictions on guns and not to allow new ones, points out Everytown.

Gun regulation advocates claimed victory and a loss for the gun lobby, noting that attempts to repeal background checks in Iowa and Nebraska failed, while 17 of 18 states rejected bills to allow guns in schools and 14 of 16 states rejected bills to allow guns on college campuses.

Additionally, 20 of 22 states didn’t pass bills that would have eliminated requirements for permits to carry guns, a top priority for the National Rifle Association, Everytown wrote in its new “report card.”

The new gun regulations could be challenged in front of the Supreme Court, but in the past nine years, SCOTUS has avoided most Second Amendment cases, including those challenging state and local restrictions.

The Second Amendment of the US Constitution protects the right to “keep and bear arms.”

Meanwhile, statistics of gun violence in the country are grim.

Last month, a study found that shootings in the US kill nearly 1,300 children every year, making it the third leading cause of mortality among children after accidents and congenital disease, the study said.