The efforts of President Donald Trump to keep his word and do what he promised to do during the election campaign hit bumps. House Speaker Paul Ryan sensationally pulled his Obamacare repeal bill from the floor on March 24 to make pro-Trump Republican supporters raise their voices, calling for Ryan’s departure. This happened after the Federal Reserve System (FRS) raised its benchmark short-term interest rate from 0, 5-0, and 75 to a range of 0, 75-1 percent on March 15. According to its forecast, there will be two more such increases this year and three in 2018.
Now the government will have to pay more to serve the debt, with money flowing away from the administration-backed programs to the FRS. With no money and no support from the Congress, President Trump has his hands tied when it comes to economic policy.
With the ballyhoo raised over the alleged ties to Russia, statements on NATO, the national security adviser’s resignation etc., the wiggle room to take game-changing foreign policy decisions has been significantly narrowed.
True, the president is ahead of most of his predecessors on fulfilling campaign promises. But with so many defeats suffered and hurdles on the way to overcome, Trump is losing public support, even as economy improves. According to Fox News, approval of Trump’s overall job performance is down five percentage points. Currently, 43 percent of voters approve, while 51 percent disapprove. In February it was 48-47 percent. The approval rates go down on when it comes to such issues as immigration (41 vs. 56 percent), health care (35 vs. 55 percent), and America’s relationship with Russia (33 vs. 55 percent). Less than half of voters (47 percent) are confident the Trump administration will be able to make «significant positive change for the country».
His opponents are chomping at the bit to launch impeachment procedures waiting for the rates to plummet further to new lows. They’ll certainly manage to find a reason. He can try to achieve a major foreign policy breakthrough. Joining forces with Russia in the fight against the Islamic State (IS) could raise the chances for success. But the «ties to Russia» scandal is an insurmountable obstacle. If the president makes a mistake, the opponents will not miss the chance. They make no secret of the plans to attack him for anything that could serve as a pretext.
Is the president trapped? Cornered? Impotent? Not at all. He just has to wait and seize the chances when the time is right.
In 2018, he can do a major shake-up of the Fed. The president can push through a new chair of the Board of Governors of the Federal Reserve System. The Janet Yellen’s term expires on February 3, 2018. Federal Reserve appointments aren’t tied to presidential elections. Under certain circumstances, Donald Trump could get seven appointments within his first two years to the Board of Governors of the FRS to control its policy. He’ll have an effective tool to bring his election campaign promises into life.
The US $20 trillion national debt is under control of the FRS. Just imagine if the bigger part of the debt is written off to greatly reduce the government spending on interest payments! The global demand for US dollars will ease the financial burden as government treasury bonds are bought out and written off.
The consequences of the dollar being weakened (which is quite a possibility) could be mitigated by the weakening of other world currencies, with the FRS hiking the rates. Then President Trump will have it his way. The dollar will remain the world currency, but the rates will not cause problems for the real sector of economy. Cash flows will spur economic growth and fill the budget. It will enable the administration to fulfill the anti-crisis plans. If it works, Trump’s approval ratings will hike sky high.
There will be a hurdle to overcome. To have his people appointed FRS governors, the president will need a majority in the Senate, not a simple Republican majority but a pro-Trump majority to push through the bills he needs and have his nominees confirmed.
The way to have the needed majority is to rely on the broad public support coming from all walks of life. President Trump backed by pro-president’s Republicans needs to win the 2018 mid-term Congress election to prevent the system of «checks and balances» obstructing each and everything he does. Trump has to mobilize his backers to wage a struggle for control of the GOP. He could call upon his supporters inside the Democratic Party to join the ranks of the Republican Party being reformed to reshape the country.
Actually, a third influential force with vast representation in Congress will alter the country’s political landscape.
Then President Trump will have his chance. The country will change. Perhaps, that’ll be the time Russia could become a partner to deal with for the common good instead of being used as a bogey to scare voters and stymie the administration policies.
Photo: Financial Times