China and the Middle East Gambit, Budget Bill Debacle, and Trump Price Fixing EO
Media Hit, 5/17/25
I was on the Randy Tobler show yesterday morning, talking about all things economics. Here’s a link to the recording (note: this link is to Facebook. I’ll update this when the Spotify link is live but I also want to close this tab and I hate “drafts.”)
One of the fun things now is that Randy will text me every so often and ask, “what’s up with [this absurd thing], am I crazy or am I on to something?” And when it makes sense to do so, we take our text conversation to the airwaves later that week and hope that nothing crazy happens between!
This week, we had a wide-ranging discussion, but all focused on the latest (and greatest?) out of the Trump administration. Anyway, on to the talking points!
Note: these were prepared in advance, the night before and this is the page I had open while on the program. Obviously, things may change between now and then and we may talk about other things, too. I’ll include that in the “So What Happened Section,” which I’ll write after we’re done.
China
Oh boy, where to even start with this one? I suppose I’ll start with the article and podcast I did on this subject this week:
The Unforced Error of Trump’s Trade Deals - National Review (with Paul Mueller)
Shameless plugs over, the “deal” with China isn’t really so much a deal as it is a ceasefire. Both sides clearly agreed that the current situation was untenable.
So after months of bluster and “getting tough” with China, we’re just… back where we were on April 1st, I guess?
But only for 90 days, then… who knows what will happen!
This is certainly better than what we had at the beginning of the month vis-a-vis tariffs, but it’s a far cry from what we had at the beginning of the year.
To be clear: I’m not calling the situation with China at the beginning of 2025 good by any means. There was clearly a lot of room for improvement.
Unfortunately, all Trump has done with this is created even more room for improvement!
Middle East Gambit
This one, I’ll admit, I’m a little less familiar with than I’d like - there’s just been too much other stuff going on this week that’s prevented me from keeping up with all of this!
This WSJ piece seems like a pretty excellent summary of what’s going on.
Here’s what I can gather:
Trump wants deals and peace above all else.
He doesn’t seem to care about promoting democracy. If other nations want it, great. If they don’t, also great. This is about what America can get out of relations with other nations, plain and simple.
At some level, while I share the belief that democracy is a pretty solid form of government, I’m less upset than I thought that Trump isn’t trying to “spread democracy” like some of his predecessors (though he could have done without the pointed remarks toward Bush II, Obama, and Biden but… are we surprised he took those pot shots at this point?)
We tried our hand at “nation building” for a good long while. Didn’t seem to work.
Maybe the best we can do is to let other nations do what other nations are going to do (within reason, of course - we certainly don’t want to condone slavery, the subjugation of women, etc.) and find ways to work with them.
After all, if they’re not friends with us, then they could easily become friends with Russia or China. And is that what we want?
But if we’re friends with them, does that further entrench their current regimes?
Does this get us out of the “world’s police force” role that we’ve taken upon ourselves for so long?
Budget Bill Debacle
So this is an area that I know a little bit more about than I would like, at least on procedural grounds.
Here’s the bottom line: our economy is very much addicted to government spending and Congress has no problem being the drug dealer in this situation.
Even Congressional Republicans are reticent to actually do anything other than cut taxes.
DOGE came in with tremendous fanfare and saved a couple hundred billion dollars at best.
That’s a lot of money to you and me, but to Congress? Please, they spend that much in two weeks!
AND. The savings are actually going to end up costing us dearly anyway due to the ridiculous ways in which they’ve been implemented, so the true, actual savings are even smaller than what Musk is reporting.
Right now, Congress is scheduled to spend $7 trillion this year, with about $1.8 trillion of that being deficit spending.
President Trump keeps throwing out new tax deductions, like no taxes on tips, no taxes on purchasing new, American made cars, etc. And then floating a “soak the rich” tax scheme, walking it back, and then bringing it back up for discussion.
All this while Speaker Johnson is still trying to figure out how to actually legislate and get things done.
There’s just so. much. that’s still undecided, even amongst Republicans.
This article a friend sent me was particularly helpful.
THEN, you’ve got the fact that the Senate has this pesky thing called the Byrd Rule, which places pretty strict limits on what can be considered under “budget reconciliation” and House Republicans seem to think that they can just… ignore this.
Honestly, if this bill gets through the House and the Senate and reaches the President's desk, I’ll be pretty shocked.
And oh by the way, this budget is for FY2025, you know, the fiscal year that we’re already over halfway through?
Yea, we’re going to be gearing up for this same fight for the FY2026 budget, which is due in September.
Trump Price Fixing Executive Order
Trump (rightly) pointed out that Americans are paying more for healthcare than any other nation and getting, for the most part, ripped off.
And he’s exactly right - other countries can get exactly the same drugs made in the same labs/factories for much, much cheaper than we can.
But he misses the mark on understanding why this is the case and thinks he can just write down on a piece of paper called an “Executive Order” and magically fix it.
This is pure fantasy.
The sad truth is that right now, 26% of the federal budget goes toward healthcare in this country. This would be Medicare, Medicaid, and Affordable Care Act subsidies and tax credits.
Whenever you give a group of people a giant pile of money and only allow them to purchase one, specific thing with it (healthcare, in this case) the inevitable result is that prices will rise as the companies selling that one, specific thing realize that millions of Americans have dollars that they can only spend at their “store” and that, if they don’t spend it there, they lose it.
Think of all the people who go get a new pair of prescription glasses every year to use up their annual eye care insurance.
Think of all the people who go to the doctor a few extra times once they’ve “met their deductible.”
The solution to this is simple: get government out of the way.
Instead, Trump is doing the opposite and putting government even more in the way.
So What Happened?
Randy was, as always, an excellent host and we really just had a ton of fun talking. But this is not surprising - we always have a ton of fun, or at least, I always have a ton of fun and he’s remarkably good at faking it.
I was scheduled to talk only during one segment but we were having so much fun that Randy asked on-air if I could stay on for another segment. Naturally, I said yes. The first segment was a discussion of government spending and the Big, Beautiful Bill. The second was a whirlwind of sorts as we got to everything else that we had planned to talk about.
All in all, it was another great discussion and I thoroughly enjoyed every second of it. I would have stuck around for a third segment but 1) Randy didn’t invite me to do so and 2) my son had a soccer game.