Stocks PLUMMET After Trump’s Tariffs Announced! w/ James K. Galbraith
Stocks plunged on Thursday and then again on Friday as U.S. trading reacted to President Trump’s announcement of heavy tariffs on nearly every nation exporting products to the United States. Trump announced Wednesday he would impose a 10 percent tariff on all imports, with higher rates for key trading partners in response to what the White House considers unfair trade practices. Tariff rates ranged from 20 percent for European Union products to a total tariff of 54 percent on Chinese goods. Guest host Aaron Maté and economist James K. Galbraith discuss what Trump hopes to accomplish with the tariffs and whether he’s likely to succeed. Plus segments on Trump’s bizarre method for calculating each nation’s tariff, auto workers cheering Trump’s tariff announcement, Senator Tom Cotton mocking anyone who DOESN’T want to bomb Iran and former Congressman Dennis Kucinich on Democrats’ plunging approval ratings. Also featuring Mike MacRae. Plus a phone call from JD Vance!
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Hey, this is the Jimmy Door show.
Aaron Matte speaking.
Who's calling, please?
Hey, what's up, man?
This is J.D. Vance.
Oh, hello, Mr. Vice President.
How are you doing?
I'm doing pretty good, I guess.
Hey, happy Liberation Day.
What now?
That's what Mr. Trump is calling today when he's announcing his newest slate of big-ass tariffs on other countries that are dumb so that they'll stop taking advantage of America and we get down to the business of fixing this economy.
Well, so far as tariffs have served only to tank the stock market and raise prices on consumer goods.
The economy that he herited wasn't exactly in shambles, especially for the wealthy interests that he serves.
Oh, really?
The economy was good, huh?
Well, tell that to the auto worker who got laid off in 1994.
He doesn't think the economy is so great now, does he?
For real, does he?
I don't know this guy.
What does that have to do with anything?
Aaron, the point of these tariffs is to bring these jobs back to the United States to reinvigorate the domestic manufacturing sector of the economy.
So this wrecking ball approach is based solely on the hope that factories will eventually relocate to the U.S. Yeah, pretty cool, huh?
Even if it is currently tanking the economy?
Well, sure, like Mr. Trump said, sure, there may be short-term pain, not going to lie, but the American people are resilient and will get through it.
And once the entire economy is transformed once again into a manufacturing economy, then everything will be fine and the short-term pain will be over.
Short-term, do you realize how long transforming our entire economy would take?
How long would it take to get a single auto manufacturing plant up and running?
I don't know.
I've never had to deal with anything real before.
A few months?
Try a few decades.
Okay, fine.
So eggs are pricey for a few measly decades and you have to delay retirement for 25 years or so.
The American people are resilient.
Whatever hypothetical economic rebound these tariffs might cause would come long after Trump's time in office.
Given how self-serving he is, it's hard to see his motivation here.
Well, that's a good point, Aaron, but I'm way ahead of you.
You may have noticed that Mr. Trump is already talking about a third term.
Yes, and that is highly disturbing to many people.
He's talking flagrantly now about violating the Constitution.
There was literally an amendment prohibiting a third term.
Okay, and like Mr. Trump told reporters, there are methods for making that happen.
And he's right.
Remember, I'm the lawyer here.
What possible methods are there other than amending the Constitution?
Well, if you're a student of history, you know the methods.
I'm a lawyer.
What methods?
You know, a coup d'état, Palace Revolution, basically Mr. Trump becoming a dictator.
That's what I was afraid of.
I thought you meant legal methods.
Why did you keep reminding me that you're a lawyer?
No, I just meant that since I'm a lawyer, I know what stuff is like super against the law.
But I'm pretty sure that if the president does it, that means it's not illegal.
There's a precedent for that, too.
So you're not a very good lawyer.
No, I'm not at all.
As you may have noticed, I'm not a practicing attorney and have not been for some time.
How do you people think you can get away with this?
Well, Aaron, it's pretty simple.
The base of our support, they don't actually care about democracy or the Constitution or any of that stuff.
They would be more than happy to have a dictator as long as he owns the libs, makes both people mad, threatens other countries that read it as slightly gay, and supports Israel.
And the prospect of this doesn't bother you as an American?
Aaron, if I had any guiding principles or anything even remotely like a moral compass, I wouldn't be where I am today.
And as a history buff, I got to say it would be pretty cool to be the world's first vice dictator.
That would be a first.
Yeah, I mean, imagine seeing Kim Jong-un on TV being dear leader, but then there's always some other second little dude off to the side.
And it's like, oh, yeah, there's somewhat less dear leader.
He's like the assistant dictator.
Yeah, I want to be that dude, but in America.
Well, that's an admirable goal, sir.
Thank you.
I appreciate that.
Well, thank you for calling in and revealing the Trump administration's plans for high treason.
No problem.
My wife, Usha, says nothing I do will be wrong because I'm her big, strong daddy bear.
And she says it in a way that's really comforting, so I believe her.
Besides, I won't get in trouble because I'm white.
Anyway, I have to go.
I have to make other mistakes that will ultimately culminate in my fated, horrific end, a la a Greek tragedy.
Later, dude.
In the aftermath of Liberation Day, Trump declaring tariffs on basically the entire world.
Here are some of the headlines.
Stocks in freefall as China hits back with 34% tariffs.
Stocks plunge as China responds to Trump's tariffs.
Wall Street slides as trade war escalates.
So a lot of gloom in the financial markets.
People's 401ks taking a hit.
The stock market plunging.
But the Trump administration insists that things are still going okay.
And how do we make sense of all this?
What is really going on?
Well, let's bring in our guest.
James Galbreth is an author and professor of economics at the University of Texas at Austin.
His latest book is Entropy Economics, The Living Basis of Value and Production.
James Galbraith, thanks for joining us on the Jimmy Door Show.
Thanks very much for having me on.
Help us make sense of all this.
Trump announced that this was Liberation Day, that this is now a time to make America wealthy again.
But so far, it's not looking so good, and there's a lot of panic in the stock market.
How do you make sense of what is happening right now with Trump's tariffs?
Well, I think we're seeing one of the largest shocks to the stable functioning of the economy since the early 1980s when Paul Volcker raised interest rates to 20%.
And that also, or unless you want to count the pandemic, but basically the largest policy shock since the early 1980s.
And it is obviously going to disrupt the existing pattern.
To come back to the effect of tariffs as such, if you go all the way back to the early 1930s when tariffs were put up very sharply by the Congress, a major effect was on the financial markets as it made it very hard for certain businesses to cover their debts.
And as a result of that, there was considerable shock to the banking system, which ultimately precipitated the Great Depression.
So one has to expect a lot of repercussions from this, and that's what we're seeing.
I want to get your response to Stephen Miller, a top aide to Trump.
He was on Fox News defending Trump's tariff, saying that, look, we already are in a depression, and so a drastic measure like this needs to be taken.
This is what he said.
Guys are all about growth.
I know you're about lowering taxes, rolling back regulations, and seeing that growth.
Are you concerned that this is going to put us into a recession?
The exact opposite.
We inherited from Joe Biden an economy in total free fall.
There has been zero jobs growth for American workers in four years.
In other words, all jobs growth had gone to foreign workers.
That is a depression, not a recession.
That is a depression for the American worker.
We had debt and deficits that were rising unsustainably that would lead us into a certain debt and deficit crisis.
We had inflation that was in high double digits, crushing the American family, making it impossible to afford the essentials of life.
We had an economy that was in a state of calamity and catastrophe.
So, what's your response to this?
Because although many people might take issue with him saying we were in a depression, certainly things were not great.
Prices were high.
There was a huge demand for jobs and relatively unstable, and certainly there's a lot of people who can't find steady jobs, don't have employment stability.
So, what do you make of his claim here that we already were in a depression and therefore the tariffs had to be imposed?
Well, there was a lot of dissatisfaction with the condition of the economy in the last years or so, last year or two of the Biden term, but it certainly wasn't a high unemployment rate.
It was down in the 3.5% rate.
It's still very close to that.
The inflation rate, cost of living, had gone up dramatically, but the inflation rate itself had topped off and stabilized.
So, I don't think one can say that we inherited that Trump inherited an economy in depression.
His concern and the concern of the people around him is that over a very long period of time, the American economy has deindustrialized and has become highly dependent upon foreign sources for all kinds of consumption goods.
And that is certainly true.
A question is whether one can scramble that omelet and what the consequences of attempting to do it, which they're clearly setting out to do, will be.
And this is obviously not something that's going to be resolved over the course of a week, but surely it should be expected that the initial shock will be quite severe, and it will include a shock to capital asset values because the companies that have been propping up the stock market are highly internationalized.
They're heavy exporters from the information sector, in particular, high technology.
And when you sever their supply chains and sever their markets, their fate is very much in question.
I mean, I'm not sure if you can make a prediction, but how long do you think a shock like this will endure?
I mean, people are looking at their 401ks, their retirement savings accounts.
They've seen a big dip.
I mean, do you anticipate that this slide will continue?
Oh, sorry.
The question about 401ks?
Yeah, and people just worried that, you know, people seeing the value of their 401ks decline pretty much overnight.
I mean, do you anticipate that this will continue over a prolonged period, or is this just an initial reaction to such a shock announcement from Trump?
Well, the stock market had gone up maybe 50% over the 2023-24 period.
So it is already at historic highs.
It went up additionally after Trump was elected for whatever reason, anticipation of tax cuts and further stimulus programs.
And of course, what we're getting instead is one of the largest tax increases on the American consumer.
And we'll have to see what happens in terms of the further policy measures.
Obviously, the Republicans are going to come in with another very big tax cut to offset that and shift the burden of taxation onto the tariffs and away from maybe the income tax.
So we will see how that all pans out in terms of the economy as a whole.
But again, what we're seeing here is the initial shock.
The stock market is down a little over 10% from its peak.
And I wouldn't say that we're in Great Depression territory yet.
From 1929 to 1930, the stock market lost 90% of its value.
We're a long way from that, although the future is difficult to predict within an administration that is as dramatic in the moves that it's prepared to make as this one.
What's your sense of what Trump's motive is here?
Now, his critics will say that this is just an effort to get some basically some short-term revenue from tariffs, which he will then use to justify his aim for more massive tax cuts for the wealthy.
That's the critique I'm hearing from the progressive side, from Democratic side.
I'm inclined to take him more or less at his word, that he sees the economy as something that just fundamentally took a wrong turn a long time ago.
And there were a lot of us who don't entirely disagree with that.
That this was the path to globalization was a path that hollowed out the industrial states of the United States.
I worked in the early 1980s for the Joint Economic Committee.
The chair was a congressman from Milwaukee named Henry Royce.
And we watched this happen.
As Paul Volcker raised those interest rates, the dollar went up by 40 to 60 percent.
And the advanced capital goods producing firms, the machine tool makers in Milwaukee and Cleveland and Toledo, all went bust and they never came back.
And that then set out, you know, first of all, the rise of imports from Germany and Japan, and then ultimately from China that developed a very deeply interconnected global economy that we have now.
And Trump has been around and he's seen this as well, and he's apparently attempting to reverse it.
My issue with what he's doing is that I don't believe it's quite possible to recover the position that has been eroded over 40 or 50 years.
As regrettable as that is, it seems to me that he just put up a price barrier on imports.
The first thing you're going to do is disrupt the existing economy, and we're seeing the effect of that.
We're going to greatly depress the living standards of working Americans.
And you're going to make it very possible for some companies, the ones that are mostly internal or prepared to move back to the country very quickly to operate under very high prices.
And will they be tempted to expand their capacity, increase their output, and improve their competitiveness?
That's really doubtful.
They will be in a very good market position to exploit the closed market that they'll be enjoying.
And I expect that's, you know, given the way American capitalism works, that's what I expect them to do.
You know, I think there will be some companies that will come back and some companies that will invest from Europe.
But this is not the general phenomenon that you see when you give a lot of essentially monopoly power to a small number of business leaders, they tend to exploit it.
That's what they're about.
Talk to us more about why you do not think it's possible for Trump to achieve his goal of reversing this 40-year deindustrialization.
You need to lean into your mic.
Oh, sorry.
Just talk to us more about why you do not think it's possible that Trump can achieve his goal of reversing this 40-year slide into deindustrialization and bringing jobs back, bringing manufacturing back.
Well, there are two things going on in the Trump program so far as one can figure it out at this point.
The tariffs are obviously a very big shock to the economy.
And the other thing is the disruption of the federal government and the elimination of regulatory agencies and consumer protections and the attack on the National Labor Relations Board and on labor power, generally speaking.
So what one says here is, you know, on the one hand, this protectionist move and on the other hand, a kind of free market libertarian approach, which is not going to work to the benefit of the working Americans who voted for Mr. Trump.
And I think they're going to find that the disillusionment here is going to be quite substantial and pretty fast.
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I'm Mary Matte sitting here for Jimmy Door.
We're talking to James Galbraith, economist and professor at the University of Texas, Austin, about Liberation Day and Trump's tariffs and the market turmoil that has resulted.
James Galbraith is the author of many books, including his latest Entropy Economics, The Living Basis of Value and Production.
And Professor Galbraith, I wanted to get your response to some new reporting from the Washington Post on how these tariffs were calculated by the Trump team.
This comes from the Washington Post, Jeff Stein.
President Trump personally selected the now widely mocked formula for determining country-specific tariffs from a menu of options.
Multiple sources say numerous Trump aides had for weeks been at work crafting country-specific tariffs that took into account a broad range of tariff and non-tariff barriers.
Several sources said more sophisticated approaches had been developed.
I can't confirm precisely who authored the one Trump picked, but it bears striking similarities to methods previously backed publicly by Peter Navarro, the ultra-trade hawk.
And here are some of the details from the inside story on President Trump's whirlwind decision to blow up global trade.
Not long after Trump's inauguration, the administration's economic staff went to work on a daunting task, determining tariff rates for dozens of countries to fulfill the president's campaign pledge of imposing reciprocal trade barriers.
After weeks of work, aides from several government agencies produced a menu of options meant to account for a wide range of trading practices.
Instead, Trump personally selected a formula that was based on two simple Variables, the trade deficit with each country and the total value of its U.S. exports.
So, Professor Galbraith, what do you make of this approach by Trump, shunning the formulas that were given to him by his aides and instead going well, it's quite astonishing.
First of all, it's nothing like a reciprocal tariff arrangement.
It is not connected to the tariff rates that other countries are charging us.
The trade deficit that we have with any particular country is an entirely different matter.
And what he, the apparent basis of this is the idea that we should be engaged in balanced trade with every country out there.
And the world hasn't worked that way.
And I don't think it's ever worked that way, but it's certainly not working that way in recent times.
And the tariffs are very unlikely to achieve that result.
But I don't understand why you would want to.
You look at particular cases.
Well, you find that with certain very poor countries like Madagascar, Lesotho, you have countries which export vanilla or diamonds or something like that to the United States and don't import very much from the United States because we don't produce anything they can afford to buy.
And why would you hit their exports with a big tariff?
It's a very strange strategy.
But that's a really sidelight of the major thing here is the effect on our major trading partners.
And I think here there are two separate broad cases.
One is with Mexico and Canada.
The tariffs are relatively light.
And the idea there, I think, is to basically make it survivable for those companies which have very, very deeply integrated supply chains with those countries.
And the other part is with China and with the extensions of the Chinese trading bloc in East Asia, Vietnam, Myanmar, Thailand, where companies have been leaving China in order to establish export platforms for the United States.
And all of that's coming under very heavy tariffs, against which the Chinese are retaliating.
And so what I think you're going to see there is just deepening integration of the Eurasian economic sphere.
Japan, South Korea, and China have already gotten together in a very remarkable meeting to coordinate their response.
And I think you're seeing it to the extent that there's a strategy behind this rather strange formula.
It is it will consolidate the Asian economies as an internal trading block and reduce the cross-trans-Pacific trade by substantial amounts in favor of North American trade.
So here's an example of how the Trump administration made its tariff calculations.
This comes from James Suroaki on Twitter.
Just figured out where these fake tariff rates come from.
They didn't actually calculate tariff rates plus non-tariff barriers as they say they did.
Instead, for every country, they just took our trade deficit with that country and divided it by the country's exports to us.
So we have, for example, a $17.9 billion trade deficit with Indonesia.
Indonesia's exports to us are $28 billion.
So 17.9 out of 28 billion equals 64%, which Trump claims is the tariff rate Indonesia charges us.
What extraordinary nonsense this is.
I mean, first of all, do you agree, James Galbraith, that this is nonsense?
And, you know, explaining.
It's nothing to do with the tariff rates that Indonesia charges or the Vietnam charges or that China charges.
It's not connected to the tariff rates at all, which I say that the tariff that's being imposed is not a reciprocal tariff in any normal meaning of that word.
So it's a confected number, which is supposed to represent trade barriers generally, but it doesn't.
It represents the pattern of trade, which has a lot to do with the income levels of different countries and what the composition of what they export and what they import.
The United States exports very high value products to the extent that we still have them.
And those tend to go to high income countries to a larger extent.
So there's only a certain number of aircraft and a certain number of, let's say, oil field systems and a certain number of medical imaging devices and so forth that low-income countries can absorb.
So this is the, you know, there's an underlying, if there's an underlying idea that we should have balanced trade with everybody, it's obviously something of a pipe dream.
But again, I don't think that's, I mean, I think you look at the results and then you say, well, this is really going to hit the suppliers that are based in East Asia, Southeast Asia.
And it's going to, because of the easier deal that Canada and Mexico got, it will hit them less.
And maybe there will be trade substitution, which will strengthen their trade with the United States, although even they will experience substantially higher tariffs than they've had before.
And what do you think this means for the goods that these countries produce that provide cheap products for American consumers?
Is this era of cheap goods, cheap merchandise?
Is it over?
Yes, I think we're going to see very substantial increases in all kinds of consumer goods.
Anything that is coming from Asia, that supply chain has just been hit with a very big tax, and that will show up basically as a kind of sales tax on American consumers.
Lots of food products will be subject to very substantial price cost and price increases.
They're coming from, I was just reading about seafood.
85% of that's imported, and a lot of it is imported from Asia.
And you're going to see that's a product with a very short shelf life, and you're going to see price increases there quite substantially.
So, the American consumer has been living for a long time on the strength of the dollar and on the free trade system and the willingness of other countries to ship us goods at low prices.
And the Trump administration came in and put an end to that.
And they certainly have a tool that will make that happen.
And the first effect will be on living standards.
A second effect will be on the financial system, I think, because companies that are caught up in supply chain disruptions are going to have trouble meeting all of their commitments.
So we'll see that.
I think that's what you're seeing in banking stocks.
There may be an effect on the dollar as well, which would contribute further cost increases.
Down the road, what they're hoping for is that there will be investment, an increase in import substitution, we call it, increase in jobs in the United States.
And that's a very problematic proposition.
My view is it would take a lot to reverse the damage to the industrial base of the United States over the last 40 or 50 years.
You would need a lot more personnel who are capable of doing that.
You need a lot of investment in infrastructure.
You need regulatory structures that will press corporations to make those investments.
And they're just relying on the market for that.
And that's a good luck.
You're not going to get it.
What you're going to get is the empowerment of a small subset, a subset of American companies that will take advantage of the higher prices that they can charge.
And the American consumer will absorb the blow.
We're talking about the impact of Trump imposing global tariffs with James Galbraith.
He is an economist and professor at the University of Texas, Austin, author of many books, including his latest, Entropy Economics, The Living Basis of Value and Production.
Now, while there are many Wall Street analysts and economists that have been critical of Trump tariffs, he has gotten support from some workers.
And they were among the crowd at the White House for Trump's so-called Liberation Day announcement.
A group of auto workers were there at the White House, and one of them spoke alongside Trump.
Thank you.
Mr. President, we can't thank you enough.
And in six months or a year, we're going to begin to see the benefits.
I can't wait to see what's happening three or four years down the road.
Thank you.
So that's a clip from the White House announcement where Trump enacted the executive orders imposing global tariffs.
And you see there a contingent of auto workers saying that, you know, yes, there might be some short-term pain right now, but within six to 12 months, this is really going to help us.
So James Galbraith, can you respond to that?
This is not just.
There's no doubt they're speaking to their interest.
I can't fault them for being happy with getting a protective barrier against a body of imports that have been undercutting them for a long period of time, for sure.
No question about that.
But the question is for the larger question I would ask is: if we're going to see a significant decline in imported automobiles, are we going to see a corresponding increase in high-quality American automobile production?
That is, again, an open question.
That's the question I would focus on.
I don't know that we think we will see some.
I think also I should have added here that the position of the European producers is even weaker, and they are almost surely going to accelerate the movement of European factories to the United States.
So we'll see some of that for sure.
I'm not saying this isn't going to work in the interests of some segments of the economy.
And what do you make of the critique that basically whatever Trump might be doing wrong here, at least he's doing something.
Whereas Democrats have talked about, some Democrats like Bernie Sanders, well, Bernie's an independent, but Bernie is an independent on the Democratic side and Barack Obama, they've criticized these so-called free trade deals, but they've done nothing about them, including Obama when he was in office.
I mean, here, for example, is David Sorota pointing out that workers, some workers are applauding Trump's tariffs.
Neither Democrats nor elite media seem interested in exploring the other side of the tariff debate.
And he quotes Sean Fane, the head of UAW, saying, we applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities.
And here's Bernie Sanders back in 2008.
And listen to what he said about the impact of these so-called free trade deals on the working class.
Further, what they have said is that we need to not worry about manufacturing in America because what we should establish is a policy of unfettered free trade.
We don't need tariffs.
What we need is to allow corporate America the freedom, the freedom to throw American workers out on the street, people who are making 15, 20, 25 bucks an hour health care pensions, throw them out on the street because somehow, Madam President, we are going to create wealth in America and good paying jobs in America as we shut down plants.
We move to China.
Corporations there pay workers 20, 30 cents an hour, and we bring the product back into this country.
And anyone who goes shopping in a mall knows how difficult it is today to find the product made in America.
But that is the philosophy.
And I have to say, in that regard, the champion, and he is honest on this one.
Senator McCain has been criticized recently for not being the most honest candidate we have seen in terms of his ads and so forth.
He has been honest on this one.
He is the lead advocate of unfetted free trade.
And that's.
We can't keep passing unfair trade deals like NAFTA that put special interests over workers' interests.
And it's because of this long-standing commitment to working families that I will not sign any trade agreement as president that does not have protections for our environment and protections for American workers.
NAFTA needs to be amended.
And I've already said that I would contact the president of Mexico and the Prime Minister of Canada to make sure that the labor and environmental agreements are actually enforceable in the same way that patent protections and other things that are important to corporate America are enforceable.
So, what would you say, James Galbraith, that someone who might look at this and say, well, you know, Democrats have been talking a big game for a long time, but have done very little about it.
Here is Trump finally coming along and doing what progressive voices have been promising to do for a very, very long time and wanting to do for a very long time.
No, that's entirely true.
Again, I was working for the Congress at the start of this, which predates NAFTA by well over a decade in the early, late 70s and early 80s with the so-called Reagan Revolution and Paul Volcker's shock to the dollar, which devastated the American industrial base in the recession of 1981 and 82.
The point I would make is we're a long way from that.
It is not simply possible, it's not simply a question of putting up a trade barrier and then saying it's all going to get better very quickly.
You can set the conditions where it might start to get better, but it's very likely that the same American corporations who rapaciously outsourced and deindustrialized are going to look for the easiest way to make a few dollars off of the tariffs without producing the great expansion of industrial capacity,
which has been lost and which may, well, be at least very slow to return, if it's possible to bring it back at all, remembering that to do this successfully, you probably need larger markets than just the United States.
You need to be competitive in the world.
And out there in the world, the situation has changed dramatically.
In the 1980s, China was not an industrial power with any significant presence in the world.
And it's now the world's largest industrial economy with very cost-effective products and very great market access around the world.
So we are reentering.
If we are truly re-entering the race at this point, we have two great disadvantages.
One is that we have a serious competitor on a scale that we didn't have before.
And the other is that we are trying to do this with one tool, which is to say the tariffs, and not with any of the other tools that would be required to map out a plan for effective reindustrialization.
So that makes me not very optimistic.
If you think you're just going to set up a tariff wall and then the market will fix everything else, then you're basically handing the initiative to, let's say, people who are not going to execute.
And that's the point I would make.
So I'm not disagreeing with the position that Bernie Sanders just described.
I'm not disagreeing with the happiness of the auto workers.
There obviously are still significant interests and workers' interests in this country that will benefit from the tariffs.
That's clear enough.
But that's only a very small part of what this project is supposedly setting out to achieve.
And just very briefly, as we wrap, if you were advising President Trump, what other tools would you be advising him to use to achieve the goals that he says he wants, which is to rescue American jobs and raise the needle?
And we have to do an effectively functioning federal government, an effectively functioning federal government with the expertise to give you advice over a wide range of industrial and other areas and to understand what you are doing to the financial sector and to be prepared to cope with that.
And so far as I can tell, judging from, among other things, the clips you've just been playing, that's precisely what he doesn't have.
And they set out, in a sense, to further degrade the government, which was already deeply degraded from the time of Bill Clinton, but especially the time of George W. Bush onward, even earlier.
And so the capacity of the federal government to be a partner and an effective force for a major economic strategy is not there as it was in the 1930s and the 1940s when Roosevelt came in with the New Deal and then built up the country in such a way that it could provide the armaments necessary for basically all the combatants on the Allied side.
to prosecute the Second World War.
You can imagine if you go back and look at that history, the government was deeply involved at every level of the transformation that was required.
It didn't just call on the private sector to go do it.
And that's the concern I have.
I don't think we have that capacity anymore.
I don't think we even have a consciousness of the need for that capacity.
James Galbraith, author, professor of economics at the University of Texas, Austin.
His latest book is Entropy Economics, The Living Basis of Value and Production.
James Galbraith, thank you so much for joining us today on the Jimmy Door show.
Thank you for having me.
It's a pleasure talking to you.
All right, we're talking about Trump threatening to bomb Iran.
And one person who was not upset by these threats is the Republican Senator Tom Cotton.
And in fact, he doesn't understand what the big fuss is about to the point where when he recently questioned the incoming chairman of the Joint Chiefs of Staff, Dan Kaine, Tom Cotton asked Dan Kaine, will you be ready to execute an order to bomb Iran?
If the president asks for military options to support what he has said publicly, that if Iran is not willing to make a deal, that there will be bombing.
Do you commit to provide him the best and candid advice you can about viable military options and the likely consequences of each?
Senator, I think that's what the job of the joint staff is to do, is to provide a range of options for the president to consider and then allow him to select whatever those options work best for him.
Thank you.
And finally, there's some hysteria about the prospect of the president ordering these strikes or someone like you in uniform providing him advice that it's going to lead to another forever war or another endless war.
Are you aware of operations, maybe operations against Iran, like the tanker wars in 1988, in which the forceful but discriminate application of military power did not lead to a forever war or an endless war, but rather led to peace and stability?
Yes, sir.
Those examples in our history do exist.
Maybe the Qasim Suleimani strike in 2020 as well that caused Iran to pull in its horns for the rest of President Trump's first term.
Thank you, General Kane.
Thank you, Senator.
All right, let me bring in former Democratic member of Congress, Dennis Kucinich.
When he was in Congress, he had a much different take on the prospect of war.
He was leading the charge against it.
He was the leading congressional opponent of George W. Bush's invasion of Iraq.
So, Dennis Kucinich, when you hear that from Tom Cotton, he's mocking people who are afraid of an attack on Iran.
He calls that hysteria.
And then he tries to argue that, look, we've done this before.
We've had wars with, we've had battles with Iran before, and things went fine.
So what's the worry about?
What do you make of that argument from Cotton?
A couple of things.
First of all, I've met Senator Cotton a few times.
He loves America.
Otherwise, he wouldn't be serving in the U.S. Senate.
And he wants to protect America.
I understand that.
The general who we had a colloquy with has a responsibility to follow orders.
He wants to protect America.
That same kind of thinking existed when we were told back in 2002 that Iran had weapons of mass destruction that they were going to use against the United States.
Iran didn't have those weapons, but we were lied to.
Iran didn't have the intention or the capability of attacking America.
Iran was not involved in the Antrax attack.
We found out later on, the Antrax came from Fort Dittrick, Maryland, from an Army lab.
Now, let's compare that to where we are right now.
Iran doesn't have the intention or capability of attacking the United States.
Iran hasn't, you know, done, has not developed a nuclear weapon.
Our own intelligence agencies say that.
So if that's the case, what is compelling senators, congressmen to say, yeah, go for it, bomb Iran.
People aren't thinking.
America's not at risk here unless we do bomb.
And this is as old, you know, this is an old story in history, which historian Barbara Tuchman brilliantly analyzed in her book, The March of Folly.
You know, she did a sweep of history from the Trojan Wars all the way through to Vietnam to show how leaders, wooden-headedness, she calls it, made worse the better reason and ended up attacking other countries to the detriment of the country that did the attacking, and of course to the ruination of the people they attacked.
So this is, we have to evolve as a species here.
You know, this is about, do we have a capacity to do that?
We have to, or we're going to destroy ourselves.
And so I see even the talk about the bombing, you got to think there is unity of thought, word, and deed.
When people think about it and then they articulate it, and when it's the president of the United States who's doing this, you have to pay very close attention and then they get ready to do it.
You know, there's a chance they might go ahead and bomb Iran's nuclear infrastructure.
No one's thinking about the consequences of that.
And if they are, they should share that with the American people.
Because what I did in my column in Substack was show that if you bomb a nuclear reactor or a nuclear lab, radiation is going everywhere.
If you use nuclear weapons and every one of those bombs that the B-2 bomber can carry, each one of them is 80 Hiroshima, 8-0.
What are we talking about?
You know, Presidents Obama and Biden talked about moving the B-83 bombs out of the American inventory.
President Trump kept them alive.
Again, this is not just about President Trump and who he is.
This is about who we are.
We ought to be calling our members of Congress and the Senate and saying, hey, wait, stop it.
Stop this madness.
You know, most people aren't, if you ask most people where Iran is on a map, they wouldn't be able to find it.
But let me share some information.
Iran is a technologically advanced society.
They're part of the Persian culture, very famous for art and literature and mathematics.
90 million people, 90 million.
You know, you're talking about a country bigger than Texas, okay?
Where are we going with this?
We're actually thinking about bombing the nuclear Infrastructure with nuclear weapons of a country with 90 million people.
And we don't think there's going to be any consequences to that.
If you bomb one place out of the over a dozen installations that are nuclear, you're talking about radioactivity that is going to result in radioactive poison, increases in cancer, genetic defects.
And of course, the more place you bomb, the more the wider it's spread.
You know, this is a doomsday scenario we're talking about here.
Yeah, and this one that Trump campaigned against.
What's funny about that clip of Tom Cotton mocking people who are concerned about what he calls forever wars, which he puts in quotes derisively, is that, you know, Trump campaigned against forever wars explicitly.
This is Trump back in 2020.
We are ending the era of endless wars.
In its place is a renewed, clear-eyed focus on defending America's vital interests.
It is not the duty of U.S. troops to solve ancient conflicts in faraway lands that many people have never even heard of.
We are not the policemen of the world.
And the slash Trump in 2020, during this most recent cycle, he explicitly criticized Joe Biden for bombing Yemen.
I look at your policies.
I see secure the borders, bring jobs back.
I look at the Democrats and many Republicans, and it's foreign war and foreign expansion.
What is that?
I think it's just a failed mentality.
It's crazy.
You can sell problems over a telephone.
Instead, they start dropping bombs.
I see recently they're dropping bombs all over Yemen.
You don't have to do that.
You can talk in such a way where they respect you and they listen to you.
So Denis Kucinich, I mean, you're a rare Democratic politician who's tried to reach across the aisle.
And I know that there are people in Trump's base who agree with this message.
It's what they voted for, which he now seems to have completely abandoned, at least when it comes to ending the wars in the Middle East.
Well, we have to ask why.
And it's a tragedy because as you played that tape, and I'm listening to it, I'm thinking, yes, he gets it.
He understands that what America risks.
But what's happened?
What's happened is that President Trump, as many presidents have been, is open to influence by individuals who are not necessarily Americans, who don't have America's interests at heart, and who have their own political agenda.
And when you look at Prime Minister Netanyahu, he is trying to stay out of jail.
In order to do that, he's got to keep his coalition together.
His coalition are some of the most devastatingly right-wingers, hardcore Zionists who are okay with killing Palestinians.
And they're okay with killing Iranians.
Now, if there is a war against Iran, it will not be without consequence for people in Israel.
Iran has the ability, even if being bombed, they have a missile system that is all over their country.
They have the ability to launch multiple independently targeted missiles that they can change the direction and flight, defeat Israel's missile shield.
They have the ability to strike Israel.
And I don't have any doubt that if the United States bombs Iran, that Israel is going to pay the price.
The people of Israel will pay the price.
In addition to that, if it's a full-scale attack on a nuclear infrastructure, the radiation could reach the Middle East and Israel, Syria, Lebanon, the wider region.
People have to think about consequences here.
And one, I mean, one of the things we do with the child at the earliest age, we teach them the consequences of their action.
And no one's talking consequence here.
It's just like, well, if we can do it, we'll do it.
Really?
That's not what life is about.
You have to make decisions based on what's rational and what's right.
Now, President Trump is a celebrated deal maker.
He broke the deal in 2017 that it took six nations 13 years to construct, but he set it aside.
Iran continued with its program, not to make a weapon.
They continue with their nuclear program.
Nuclear power, just like we have nuclear power, provides energy to our communities.
But what's happened here is that the president has now decided that, you know, he's not going to negotiate or he's going to make a non-negotiable demand, which isn't negotiation.
And while the contents of the letter that he sent to Iranian leaders has never been released, it's pretty clear from the sense of things that he's just telling Iran, you got to get rid of everything that is nuclear, your nuclear reactors, your nuclear research labs, everything else, or else we're going to bomb you, the likes of which you've never seen before.
Now, come on.
I mean, he's president of the United States.
When a president of the United States says that, you better take it seriously.
All right.
Here's the headline from The Hill, New Poll.
Democrats' approval remains at low point.
And to break it down, let's go to CNN.
Holy Toledo, voters' views of the Democrats and Congress among all voters disapprove.
68%.
And look at the approved number.
Just 21%, even lower than the Democratic Party at large.
This is the lowest on record for Democrats, according to Cornipiak University polling.
You think these numbers are bad?
Let's go to this side of the screen.
We'll look how Democratic voters feel.
Get this.
The plurality of Democratic voters disapprove of Democrats in Congress at 49% and just 40% approve.
Horrible, horrible, horrible.
Oh my goodness gracious, you just can't get worse than these numbers.
And this is the number right here really driving all of this.
If Democrats have turned, if Democratic voters have turned on Democrats in Congress and the Democratic Party, that's what puts the numbers at historic lows.
What is it they want to be seeing?
What is going on?
I'll tell you what's going on.
They don't like what's coming out of some of those Senate Democrats like Chuck Schumer, because.
Let me bring in a former Democratic member of Congress, Dennis Kucinich, who's ran for the Democratic presidential nomination.
Try to take your party in a different direction.
Economic populism, Medicare for all being about peace.
The party decided they didn't want that, went in a much different direction.
And now they're at a record low approval rating.
What are your thoughts on the state of the Democratic Party brand, Dennis Kucinich?
Well, because the American political system, which is essentially a two-party system, although, you know, I've run as an independent at times, as actually elected, defeating both political parties when I was Mayor Cleveland, this system requires parties to offer something different in order to create like the dialogue
that is like a dialectic that somehow could benefit the American people.
What's happened is this.
About 40 years ago, the Democratic Party started to take corporate contributions.
As a matter of fact, when I first came to Congress, you get a book, the party will give you a book that's like this thick, and it'll have potentially hundreds and hundreds of people you could dial for dollars and they'll give to your campaign.
Well, a lot of them are corporate PACs.
You take that money and you're marked.
And so when the Democrats started taking corporate money, they changed the tune of the party.
The opportunities for economic reform started to whittle away.
You know, I had, I ran into this when I was advocating Medicare for all, and I was the last person standing when President Obama was pushing the Affordable Care Act, and he wouldn't hear about even a public option where states would have the ability to be able to have their own public system.
They didn't want to hear about that.
The Democrats and the political system are held captive.
The decision of Citizens United basically put that in, you know, stone.
Money-free speech corporations can buy elections now, and other interest groups weigh in, buy elections.
So what happens is you have a homogenization of our politics.
It's all the same.
And so when people are being told by the Democratic Party, vote Democrat, well, why?
So here's the Democrats need to go back to that old-time religion of economic reform.
In 1932, Franklin Roosevelt demolished Republicans at the poll.
Herbert Hoover won big in 1928.
But when Roosevelt proposed a way of getting out of an economic depression and put a new deal forward that really lifted people from the bottom up, okay?
This was the cardinal principle of a Democratic Party, that you protect everyone.
1932, the Democratic Congress, which was in bad shape in 28, suddenly rocketed to control in 1932 with the Roosevelt banner.
When Medicare was formed under Lyndon Johnson, that was a seminal moment where Democrats recognized the economic needs of the people.
What happened is that we forgot, as a party, we forgot that history of Roosevelt and the New Deal, of Johnson, and the great society, Medicare.
And the trade deals, NAFTA, and things like that, it was like all of a sudden people are just being used.
So Democrats know they're being used.
And Trump's election and his reelection was not so much that people were in love with Donald Trump, although, you know, he does have a lot of supporters.
But there is also a good number of people who say the Democratic Party has failed us, and we're not going to give them support just because they exist.
So there needs to be a dramatic change in what the Democratic Party stands for.
And you got to go back to what were the motivating principles in the New Deal.
What were the motivating principles of the great society?
I mean, we can do that, but it's going to require a dramatic change in our politics.
And whether or not, and frankly, based on those poll results you just put on the screen, American people, I think, are ready for something different inside the Democratic Party.
Or maybe an entirely new party altogether.
Look, that's quite possible.
You know, I can tell you as, you know, in this past election, I ran as an independent for Congress because I had it up to here with the Democrats being for war.
I'm not for war.
War is stupid.
You defend your country, but you don't need to aggress against other countries.
What I found out was this: I got more votes than any independent running for Congress in the House in the whole country at over 50,000 votes.
But the polarization in the country right now is so great, Aaron, that people, even if they don't know the candidates, they'll vote the label, RD.
And that's something you got to think about.
It's not like just because you come up with all kinds of great ideas or people know you may not be enough.
So, you know, Does America need more options?
Of course.
How about a two-party system?
Dennis Kucinich, former Democratic member of Congress representing Ohio, former mayor of Cleveland, and former Democratic presidential hopeful and consistent advocate for peace and justice.
Thank you so much for joining us on the Jimmy Dore Show.
Thanks so much.
And read my sub stack and see where I stand.
Thanks again.
Thank you, Dennis.
Thank you.
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