The Economic Crisis Upon US

Barbarism Beckons

Today Trump’s insane tariffs of 25% on imports from Mexico and Canada go into effect, as if these will have consequences other than retaliation and derangement of market expectations on a global scale, not to mention higher rates of inflation. Today, Elon Musk’s crazed rampage through the federal bureaucracy continues, as if Viking-style raids on the vulnerable coasts of government are a rational means of reducing current deficits and future debt. And tomorrow?

77% of Americans still feel that they’re not keeping up with inflation, but they’re suddenly saving at much higher rates because they’re rightly afraid that public spending, even that part of it we call “entitlements,” is about to collapse. Seriously? Last week Martin O’Malley, the former director of the Social Security Administration who resigned under pressure from Musk’s DOGE, said this: “You’e about to see the system collapse and an interruption of benefits . . . within the next 30 to 90 days. People should start saving now.” (And why not? DOGE has cancelled the leases on 45,000 Social Security offices nationwide.) Overall consumer expenditures haven’t slowed, however, because the rich are still getting richer: 10% of spenders account for fully half of all consumer expenditures. Inequality is good for economic growth until it isn’t, as per 1922-1929, or 1999-2008, or 2017-2025.

https://www.cnbc.com/2025/03/01/doge-actions-may-cause-social-security-benefit-interruption-ex-agency-head.html

Matt Stoller at BIG has a good overview of the economic landscape. He likes the idea that Trump is stonewalling Booz Allen and other management consultants, whose government contracts are at risk under DOGE scrutiny, but otherwise is not sanguine. The matter-of-fact tone of his presentation makes the facts all the more startling, even terrifying—especially the citations of Musk, Lutnick at Commerce, and Bessent at Treasury, italicized below These people actually believe, contrary to all the available evidence, that a drastic reduction of government spending will be good for economic growth. This belief requires a depth of ignorance that is explicable only by a faith in private enterprise that is messianic. If successful, they will turn North America into a place that makes Cormac McCarthy’s road trip, or Lionel Shriver’s savage frontier, feel like a comforting alternative. (See: McCarthy, The Road [2006] and Shriver, The Mandibles [2016], which I reviewed here: https://www.publicbooks.org/atlas-mugged/)

Buckle up, bear down, and strap yourself in, here’s what old reliable Matt has to say:

“I think we’re in for mass layoffs across the economy, as a result of DOGE. But it’s not limited to government, though we’ll start there. The narrative of DOGE is they are finding efficiencies through the use of AI. So far, about 110,000 Federal employees have been laid off, and that’s just the beginning; Trump has asked for large scale Reductions in Force across government that will take place over the next few months. And for every Federal employee there are two government contractors, so these numbers understate the dynamic. . . .

“But CEOs are looking at what Musk did to Twitter, and what he’s doing to the government, and thinking, ‘why not me?’ A host of corporate leaders are now trying to cut their workforce and replace it with AI. In technology, Microsoft is firing people, Meta is getting rid of 5% of its workforce, and HP and Salesforce are following. Layoffs are happening at Google, Autodesk, Blue Origin, Sonos, eBay, Sophos and Intel. In the non-tech economy, UnitedHealth Group’s Optum, Starbucks, and Walgreens, among others, are engaged in mass layoffs. Stanford and Harvard are freezing hiring, as are higher educational institutions across the country. . . .

“A confirmation of an impending recession is that the boring nerds who run the world are quietly panicking and trying to blame each other preemptively for it. And there is no more of a boring brilliant nerd than Treasury Secretary Scott Bessent, a bespectacled billionaire and former George Soros trader, who now runs the show for Trump. ‘The private sector has been in recession,’ he said last week in a suitably dull speech at the Australian embassy. It’s notable that Bessent is changing his position. As macro-economic analyst Skanda Amarnath said, Bessent ‘flipped from complaining about Fed cuts to claiming a longstanding private sector recession.’

“Another red flag is that the people in charge are trying to change how government statistics work to avoid the recession word. After the Atlanta GDPNow measure came out, Elon Musk called Keynesian analysis evil [that new measure, from the Atlanta Fed, now projects negative growth this quarter], and said that we should judge DOGE not by cuts but by changes in bond yields (which will go down in a recession.) He then tweeted, ‘A more accurate measure of GDP would exclude government spending.’ A few days later, Commerce Secretary Howard Lutnick says he’s considering removing government spending from calculations of gross domestic product. The overt corruption of government statistics suggests they know what’s coming.

“So what’s the plan if we go into recession? Let’s go back to Bessent. We’re still in the Biden economic order, but in 6-12 months, he argued, we’ll be in Trump’s. What he is saying, in other words, is prepare for a recession. And coming out of it, he wants to ‘re-privatize the economy.’

“That is, he’d probably prefer if there were no recession, but as there likely will be one, his goal will be to shape the recovery. Trump will seek to take the resources freed up by mass job loss and government disinvestment in universities and research, clean energy, industrial policy, Medicaid, and so forth, and direct it to fossil fuel oriented resource extraction and and forms of speculative activity.”