A BRIDGE TOO FAR

 People are not prisoners of fate, but only prisoners of their own minds. ~ Franklin D. Roosevelt 

There’s no doubt that the 44 days we have endured Donald Trump’s presidency have been fraught, excessive and soon-to-be expensive. That’s especially true because the majority Repubs in both houses of Congress have behaved as supine sycophants. As a consequence, the president has trampled over numerous established conduct standards. This includes his all too notable efforts to certify himself as a modern-day Caligula, one of Rome’s most treacherous emperors. Caligula’s reign as emperor was cut short when officers of the Praetorian Guard, senators and courtiers assassinated him. During his almost four-year reign from 36 - 41 AD, the decadent Caligula tirelessly worked to strengthen the already-unrestrained power of the Roman emperor. Sound familiar? 

Caligula Caesar (12 – 41 AD)

Meanwhile, the leaderless Dems remain in a myopic muddle. They are still attempting to figure out why they lost 120 days ago. Despite their uninspired efforts, I yearn they’ll be ready to challenge successfully their opponents way before the next-year’s federal elections on Nov. 3. Given the Dems’ pace so far I’m not sure they’ll be ready. Nevertheless, hopes spring eternal, despite recent polling that shows the Dems’ approval ratings are the lowest recorded in nearly the last 2 decades. 

My principal consolation is that the Repubs have buoyantly reached a way too early peak, electorally speaking. The multiple, adverse consequences associated with the president’s becoming a misguided tariff warrior, among other things, that will heighten inflation. Substantial price increases will soon occur for veges and fruits imported from Mexico, as well as electronics, shoes (99% of shoes sold in the US are imported, mostly from China) and other traded items from around the world. Your wallets will soon need to be thicker. 

And don’t forget cars. One automotive expert stated there’s probably not a vehicle on the market today that wouldn’t be affected in some fashion by the new US tariffs. And these price increases could begin increasing within several weeks of the tariffs going into effect. The cost of producing cars throughout North America may soon rise between $3,500 and $12,000, according to particulars. Imported cars’ prices will be directly affected by the tariffs. 

Importantly, the hydra-headed (Elon Musk and Donald Trump) Musketeerian cohort’s efforts include stripping the federal government of vital strategic capabilities, including the significant human capital held by experienced public sector professionals. Their hard-earned knowledge cannot be replaced by Musk’s cocksure DOGErs using fiscal chainsaws. The Musketeers’ efforts will ultimately yield sobering political and economic tempests for the Repubs once they start affecting regular folks beyond the DC beltway, like you and me. 

A major goal of the imprudent Musketeers’ staff cuts in federal agencies is to provide some fiscal breathing room for Mr. Trump again to lower federal taxes. When he did it in 2018 the already-rich benefited disproportionately. Within several years the top 5% of households had received 40% of Trump’s individual tax cut benefits. According to Census data, the average annual earned income in the top 5% of US households is about $500k. Do such income levels need tax reductions? Clearly not.  

The president’s dreadful milieu of profligate changes produced an unexpected thought for me involving the game of bridge. I learned how to play contract bridge when I was in high school. Any skills I might have once had with this interesting card game dissipated long ago. My parents regularly played bridge with a group of friends, one of whom took it upon herself to teach me how to play. At that time – the 1960’s – bridge enjoyed considerable popularity. To excel at playing bridge, it’s important to apply mental insight, logic and deliberate tactics to make your bid. These skills, rather elusive for me way back when, are particularly important when no suit has been designated as trump so the highest card of the suit that’s initially played in a hand wins. 

Continuing my bridge analogy, all of us will benefit now from publicly bidding No Trump. The president’s actions represent a bridge too far to take beyond November 2026. 

My hazy memories of playing bridge are distinct from my vivid recollections of driving over several of the nation’s marvelous bridges. First place goes the Bixby Bridge, shown below. 

The Bixby bridge. 

This iconic 93 year-old bridge was completed for $200,000. When you’re driving south on CA Rt. 1, the Bixby bridge serves as the gateway to Big Sur. I’ve driven on this bridge several times, each one a delight. 

I hope the Dems will be searching for a Bixby bridge to the future. The Musketeers’ efforts represent a bridge to a future that’s utterly ominous. 

The Ugly Tragedy of Tariffs

No nation was ever ruined by free trade. ~ Benjamin Franklin 

The US-China trade war is continuing and will get much worse on Tuesday. First initiated during President Trump’s initial term, US tariffs on specific imported Chinese products ranged from 10% to 50%. As of February 4, tariffs on all Chinese imports will be 10% above any existing tariffs. The president didn’t forget the other 2 nations that we trade most with. He also increased US tariffs on Canadian and Mexican imports to a stunning 25%. Kaja Kallas, the European Union’s chief diplomat, correctly labeled them saying, “There are no winners in trade wars.” 

The president’s Order contains a clause that will increase US tariffs if Canada, China, or Mexico retaliate. All three governments already have promised to answer Mr. Trump’s higher levies with their own retaliatory tariffs on US exports including Florida orange juice, Tennessee whiskey, Kentucky peanut butter as well as other goods. 

On October 15, 2024 Donald Trump stated that of the 470,000 entries in Webster’s English Dictionary, “Tariff is the most beautiful word in the dictionary.” Now as president again, he’s attempting to beautify America. His new tariffs will not be beautiful; they will be ugly, especially for consumers. 

Tariffs have a long history of creating revenue for public potentates. The world’s first tariffs of record were established by English King Henry VII in 1489. 

Henry VII (1457-1509)   Wikipedia

Three (3) centuries later, the US Tariff Act of 1789 was promptly enacted by the newly-created US Congress. This law allowed only the US government to levy uniform tariffs, no state can create tariffs. Tariffs remained the primary source (up to 90%) of US federal revenue for well over a century. Tariff revenues now provide about 2% of federal revenues. Before the president’s January 31 tariff proclamation, the average US tariff across all products was 2.77%. 

Today the US has increased tariffs on all imported Chinese goods. Such an escalation will raise prices for companies and consumers likely accelerating domestic inflation. Higher US tariffs have incited additional retaliation from Canada, China and Mexico, further ratcheting up a trade war that has already exacted economic harm for each country. 

Hundreds of products’ prices were subsequently increased by President Trump’s first Chinese tariffs started in May 2018. They were imposed on $200 billion (B) of Chinese imported goods that represents 40% of Chinese imports to the US. The list of tariffed Chinese items included everything from “frozen retail cuts of meat of swine” all the way to “furniture of plastics.” China predictably retaliated with new tariffs on roughly $60B US exports into China, that represented 46% of 2017 US exports to China. Although China has certainly stretched WTO rules to its advantage, it’s doubtful that the president’s current hardball tactics of raising tariffs will be worth the pain and cost that will harm US exporters and consumers. 

A prominent paradox of the president’s tariff increases is his nascent administration’s justification for the new tariffs’ anticipated loftier tax revenues. Higher tariff revenues will serve as a means of justifying the president’s extension of sizeable tax cuts for the wealthiest Americans. 

The US imports more goods from China than any other nation in the world. In 2022, China accounted for 16.5% of all US imported goods. This fact is reflected in the sizeable, continuing trade deficits the US has with China, $279.4B in 2023. China’s dramatic economic growth over the past decades has been principally export driven. It is the leading exporter of goods in the world, ahead of the US. China’s exports of goods represent a hefty 18.6% of its GDP. In 2023, total US goods’ and services’ exports represented 11% of our GDP. 

In this assessment of our trade conflict with China, I focus specifically on US farmers who have endured heavy and direct economic cross-fire from the president’s trade war. More than 20% of US agricultural exports face reciprocal tariffs from China and other countries. 

I examine an incongruous pair of agricultural products, soybeans and lobsters that have been subject to Chinese tariffs. Before the president initiated his new tariffs, the US exported to China $21.6B of soybeans and $128.5 million worth of live lobsters. I will soon dive into marine crustaceans, but let’s first consider the humble soybean. 

Soybeans.  Soybean plants are widely grown for their edible bean. US farmland is awash with soybeans. They are now planted on 86 million acres of American farmland, more than any other crop. Thus, soybeans are very BIG agriculture in the US. They are our nation’s single largest agricultural export; almost double that of corn. This is one reason why China imposed a retaliatory 25% tariff on US soybean exports. Another reason is based on where soybeans are grown – in bright red, Trumpian mid-western states. In addition to being the source of all things in the tofu universe, soybeans are widely used in animal (especially pig) feedstocks, and as an ingredient for biodiesel fuel and astoundingly even crayons. Fermented soy foods include soy sauce. 

About 60% of US soybeans are exported. The Chinese market dominates US soybean exports. However, the Chinese tariffs on US soybeans have transformed that situation. China retaliated in 2018-19, with tariffs on US soybeans entering China which caused US exports to plunge by 98% into the country. 

The Chinese imported only $15.1B of US soybeans in 2023. They’ve been buying more Brazilian and Argentinian soybeans instead. Also distressing for US soybean growers is that 2024 year-end prices per bushel have collapsed to August 2020 soybean prices. The USDA/ERS expects 2024 net farm income (a measure of farm profits) to drop by 1.1%. “It’s a big concern,” said David Williams, a Michigan soybean farmer. The trade conflict, which President Trump initiated with steel and aluminum tariffs in 2018, has spread far afield. 

US soybean farmers have taken it in the beans with respect to their livelihoods due to Trump’s tariffs. These reliably Republican farmers notably complained to the Trump administration about the first Chinese punitive tariffs. The US government responded to these grievances by providing $3.6B in unplanned, taxpayer-paid fiscal assistance to soybean farmers to offset their financial distress caused by price and income drops. 

Lobsters.  Lobsters are large marine crustaceans. North Atlantic lobsters are found off the ocean coasts of New England and Canada. The largest lobster ever caught weighed 44 lb. They are sold and shipped as living animals. The biggest producer and exporter of American lobsters is the state of Maine. Lobster is an acquired taste for some, but they’re eaten by increasing numbers of consumers. It is a staple in North American seafood markets and is featured on many restaurants’ menus. 

For New England and especially Maine, lobsters have long been a fragile business. In 2023, Maine’s 4,800 lobster fishermen (there are very few women who commercially catch lobsters) “landed” 93.1 million (M) pounds of live lobster; that’s just 58% of 2016’s catch and the lowest since 2009. The lobster industry has often experienced significant ups and downs. In 2019, US lobster exports to China dropped more than 40% due to China’s retaliatory tariffs and stringent inspections. But in 2023, the US exported $182M worth of live lobsters to China, after the Chinese eliminated both their tough Covid-related inspections for imported food and some of the punitive, retaliatory tariffs that eliminated virtually all US lobster exports to China during several prior years. 

    Mark Barlow is the owner of Island Seafood, a large business that ships live Maine lobsters around the world. Barlow mentioned that as soon as China slapped its 25% tariff on US lobster exports, he told his sales team, “China’s dead.” His Chinese customers confirmed his expectation. “I don’t think there is [a] way to import US lobster,” one Chinese buyer stated. Barlow confirmed the Chinese tariff was a significant blow for Maine. As he put it, “The orangutan in Washington woke up from a nap and decided to put tariffs on China, and then Chinese stopped buying [Maine lobster] immediately. We’re getting absolutely slaughtered.” Maine’s drop in lobster sales became Canada’s bounty. Instead of buying Maine lobsters, the Chinese purchased Canadian ones. Trumpian tariffs threw US lobstermen overboard. 

Although it's unlikely, introducing stronger US tariffs on hundreds of imported goods might eventually benefit some US manufacturers who are not subject to the tariffs. But Maine lobstermen and Minnesota soybean farmers will suffer again from their lobster losses and soybean sorrows. Their travails will coincide with millions of US consumers who will be paying extra for imported goods like vegetables, petroleum, automobiles and medical drugs. Mexican avocados will become pricier, and Trump’s happier, go figure. 

One estimate of the increased costs we will face because of these tariffs is at least $1,170 per household. The president’s provocative tariff policy – mimicking President William ("I am a tariff man.") McKinley’s failed policy preferences – does not appear to be a winning economic strategy, even if he blames it on DEI programs. 

GALACTIC MERGERS & ACQUISITIONS

 How many times must a person look up / Before they can see the sky? ~ Bob Dylan 

For some time now - beginning very early Wednesday morning on November 6th - the sun has been setting on the Biden administration.  

Since then, the Dems have been conducting extended post-mortem finger-pointings on why and how the Repubs and president-elect Donald Trump (the Lyin’ King) successfully captured the federal government trifecta. Triple ouch! Unlike the Dems, the Repubs are understandably licking their chops. 

Nevertheless, the federal government continues operating despite challenges by MAGA radicals. During the remaining 13 days before Donald Trump assumes the presidency, Joe Biden and his cohorts appear to be doing what they can to get some satisfying stuff done, especially if it will complicate Mr. Trump’s presidency. One example is Biden’s prohibiting future oil and gas leasing across 625 million acres of US waters in parts of the Atlantic Ocean, the Pacific Ocean, the eastern Gulf of Mexico and even the Northern Bering Sea. Take that Donald! 

But why didn’t President Biden and Congress pass a law giving citizenship to Dreamers, as they were promised long ago? A fine question. Should we be pleased that most of the prior federal government trifectas have only lasted 2 years? Maybe. 

So we can lament that congressional Dems haven’t managed to appoint even more liberal-ish judges to our federal courts; something they should have been doing way before now but didn’t find time for. And bemoan that the president hasn’t somehow reduced the almost stratospheric price of arabica coffee beans – a 30% wholesale price increase in just the last several months – that has us coffee drinkers in a tizzy. We’re again remined (thankfully) that presidents have next to no power to reduce individual goods’ prices, despite their sometime claims. 

The Federal Trade Commission (FTC) has principal federal responsibility for sustaining market competition by prohibiting anticompetitive mergers and acquisitions (M&A) and other business practices that could lead to higher prices, fewer alternatives and/or less invention. Ms. Lina Kahn was appointed by President Biden as Chair of the FTC on June 15, 2021. Although she’s been running the FTC a relatively short time, Ms. Kahn has aggressively pushed to reduce market concentration held by giant US businesses. However, Chair Khan’s remaining tenancy as FTC Chair is now expected to be quite short, assuming the 47th president wants to bother with the FTC. 

Under her leadership the FTC has strengthened its pro-consumer emphasis, with particular focus on M&A deals. Unfortunately, the FTC’s efforts to limit large M&A activities, have been decidedly mixed with more legal losses than wins. 

One recent success was the FTC’s opposition to the merger of two large grocery store chains – Kroger’s efforts to purchase Albertsons. Last month a US judge in Oregon blocked the merger in a ruling agreeing with the FTC that this merger would end up harming consumers and lead to higher prices. Kroger is the second largest grocery store chain in the US, behind the behemoth Walmart; Albertsons is the fourth largest. Will egg prices – the recently-discovered talisman of consumer well-being – dramatically decrease as a result? Unlikely, but it’s the thoughts that count. 

At this point, it's too late for Dems to do any more about promoting reductions in US market concentration. Soon-to-be President Trump’s heart and soul believes that concentration of corporate power should be promoted, not stymied. 

Ms. Kahn should focus her attention on something far more consequential – very large-scale M&A. I’m talking about President Biden appointing her to lead a new agency perhaps akin to the recently created and wholly unformal, Trumpian Department of Government Efficiency (DOGE). It’s headed by the conceitedly-focused duo of Elan Musk and Vivek Ramaswamy (M&R). Let them begin their promised, Sisyphean attempt to reduce the federal government’s budget by $2 trillion (29.6% of total FY2024 federal spending). A little trimming would probably be useful. But don’t hold your breath. Reducing the federal budget by almost 30% ain’t gonna happen. Why? Because M&R will fiscally need to step on too many influential political toes to cut even 10% of discretionary federal spending over a multi-year period. 

Instead, Ms. Kahn should evoke Bob Dylan’s stalwart Blowin’ in the Wind lyrics (see above), swiftly resign as Chair of the FTC and look skyward to observe the vast amount of M&A happening in the heavens. President Biden will promptly create the Transgalactic Trade Commission (TTC) and have Ms. Kahn serve as its initial Grand Leader. It will be an opportunity of a lifetime for her, given her interest in combating M&A. This time on a galactic scale. 

Sure, there’ll be a starship’s worth of challenges in crafting the TTC, but potentially it will be worth far more than the efforts that has been invested in its creation. If the Biden administration can commit to providing $8 billion in last-minute aid to Israel’s defense, offering a tiny fraction of additional funding to create the TTC should work. Assuming no unexpected challenges (who’s kidding whom, but …), I hope in several years the TCC will be able to tender 25% of the FTC’s current average number of legal case submissions in federal courts. 

Is there heavenly M&A? For sure. The image below from the Hubble Space Telescope shows 2 galaxies in the process of merging to eventually form another, even larger galaxy. 

NGC 6040 & LEDA 59642 merging to create ARP 122

This image shows the tilted, warped spiral galaxy on the left (NGC 6040) merging with the round, face-on spiral galaxy on the right (LEDA 59642) to form the combined ARP 122 super-galaxy. This cosmic merger is taking place 570 million light-years away from Earth’s spot in in the Milky Way galaxy. Referencing the galactic scheme of things, 570M light-years is considered a significant distance even by astronomers. For comparison, the closest major galaxy to us, Andromeda, is a mere 2.5M light-years from Earth. But reducing M&A activity on a galactic scale no matter where it’s located can be a worthy effort. 

The Milky Way, our neighborhood in the universe, is a small-ish barred spiral galaxy spanning more than 100,000 light-years. Its disk contains 100-400 billion stars and at least that number of planets. The Earth and our solar system is perched about halfway from our galactic center, along one of its spiral arms. 

According to recent cosmological calculations based on observations from the Hubble and others of the more than 40 space-based telescopes now circling the earth, there are at least 200 billion galaxies in the observable universe. From this appraisal, astrophysicists think that between 5% and 25% of these galaxies are merging with or being acquired by other galaxies. 

Because there’s an incomprehensively vast number of galaxies twinkling in our skies, even a relatively small number of those actively merging with one another (say, 5%) translates into a gigantic number of galaxies merging or being acquired. OMG! This grandiose, heavenly M&A activity that may produce even more dark matter desperately needs to be managed by none other than Ms. Kahn. Rather than drift in the amorphous realm of what I might do for my next job, is Lina Kahn willing to up her game and become the initial Grand Leader at the TTC, and rise above the challenges to reign in transgalactic M&A? I hope so.