By Rudy Barnes, Jr. June 7, 2025
Hypernormalization is the public malaise caused by the disconnects in Trump’s Novel and Gratuitous Fiscal Crisis. Adam Tooze has described it, and Americans now know that Trump has created the fiscal crisis that is the major cause of hypernormalization: "At first markets rallied; then after Trump’s tariffs were imposed, everything sold.”
“The concern has now shifted to the $29 trillion market for U.S. Treasuries. The market is waking up to the scale of Republican deficits — rising up to 7 percent of gross domestic product from under 6 percent; and the party’s complete refusal to consider serious measures to raise revenue. That state of denial is depreciating the dollar.”
“What makes America’s fiscal crisis unique is that the economy hums along and the wealthiest prosper as never before with a party calling itself conservative, but actively conspiring to cut the sinews of the fiscal state. This isn’t normal; and markets are finally, slowly waking up to the crisis. The point is that America today is not Weimar, nor Italy in the 1970s and 1980s.”
“The situation is more puzzling and in some sense worse than those societies that were dealing with objectively difficult social and political crises. By contrast, America’s fiscal dilemmas today are gratuitous and have no historical antecedents, but the vertiginous novelty of this fiscal impasse should give us pause. We don’t know how this story ends.”
“Can the United States find buyers for new Treasury bonds being issued at a pace of around $2 trillion a year? Probably. Will foreign buyers still want U.S. debt? Maybe. But it won’t help if the dollar is declining and the Trump administration is cheering. Is there likely to be a fight with the White House? You bet. But that would not be good for public confidence.”
“None of these outcomes look attractive to investors, or for the U.S. economy at large. At the very least they add to uncertainty, which damps investment. To restore normality, many opponents of Mr. Trump are secretly hoping for the bond market to do its worst. But it’s not healthy for self-styled defenders of democracy to be cheering on the bond vigilantes.”
The inability of the Americans to develop a coherent and strategic fiscal policy has not only corroded credit ratings, but it has also undermined political legitimacy. For America to restore its political legitimacy, it must first restore the primacy of the Constitution as the foundation of its rule of law; and that requires the checks and balances in the Constitution.
Elon Musk has condemned Trump’s massive bill “as a disgusting abomination”, and other Republicans have followed suit. If Musk continues to encourage opposition to Trump’s radical agenda in the midterm elections, his condemnation of Trump’s “big beautiful bill” could prevent it from passing.” And that could be a political game-changer for Republicans.
Notes:
See Adam Tooze, America’s Novel and Gratuitous Fiscal Crisis, at https://www.nytimes.com/2025/06/03/opinion/us-debt-trillions.html.
Elon Musk’s condemned Trump’s massive Republican tax bill, calling it a ‘disgusting abominatiion’ days after his White House send-off, see https://www.nbcnews.com/politics/trump-administration/elon-musk-trump-spending-tax-bill-disgusting-abomination-rcna210690.
Some Trump supporters now have second thoughts for supporting his massive bill after Musk’s condemnation of it. See congressional memo, After Muscling Their Bill Through the House, Some Republicans, including Marjorie Taylor Greene, Have Regrets. The sprawling legislation carrying President Trump’s domestic agenda squeaked through the House with one vote to spare. Some Republicans now say they didn’t realize what they voted for. https://www.nytimes.com/2025/06/03/us/politics/house-republicans-policy-bill-regrets.html?utm.
According to the Congressional Budget Office(CBO) Trump’s “big beautiful bill” would add $2.4 trillion to America’s national debt if enacted. “Conservatives and Wall Street investors had already expressed grave concerns that the measure would swell federal deficits, and some Senate Republicans have said they cannot back the legislation in its current form for that reason. That could derail the bill’s progress, given that the party can afford to lose no more than three votes in the Senate if all Democrats vote against it.” That could be a political game changer.
https://www.nytimes.com/2025/06/04/us/politics/trump-policy-bill-deficit-estimate.html.
Deficit Politics Returns in Debate Over Trump Tax Cuts. The legislation that Republicans are trying to push through Congress could swell the very fiscal imbalance that party leaders have promised to tame for years. That’s complicating the White House’s efforts to nail down support for President Trump’s legislation. Normally, the nervousness in the bond market would jolt Washington, since higher yields translate to higher borrowing costs for average consumers. Lately, though, Mr. Trump and other Republicans have swatted away the pessimism, opting to attack economists for what they have argued were flawed projections. “Cut all the crazy spending increases in the Big Ugly Bill so that America doesn’t go bankrupt!” Mr. Musk said in a post on X on Thursday, as he escalated his feud with Mr. Trump. Mark Zandi, the chief economist at Moody’s Analytics, described recent economic conditions as “fragile” in a nation that periodically flirts with bouts of austerity, sometimes yielding grand bargains that constrain federal spending. But this time, in an era of extreme partisan polarization, Mr. Zandi sahttps://time.com/7291550/elon-musk-trump-implosion-can-be-seen-from-space/?utmid there is little appetite for compromise, making it difficult for policymakers to confront urgent fiscal challenges. https://www.nytimes.com/2025/06/06/business/deficit-trump-tax-legislation.html.
Phillip Elliot has likened The Musk-Trump Implosion to one that can be seen from Space. President Trump may be the U.S. President and Commander in Chief, but in the last 24 hours “a more apt title for Trump comes to mind: Chief Petty Officer. Sitting in the Oval Office and on a dueling social media platform billionaire Trump is lobbing threats and invectives at the world’s richest man fellow billionaire Elon Musk, who just last week enjoyed a warm sendoff seldom offered to outgoing Cabinet secretaries, who in Trump's first term were summarily fired on Twitter. Now that Musk owns Twitter—renamed X—the tables are turned, and Musk has used the same platform to derail Trump’s agenda from afar. It’s a political implosion that can be seen from space, and that can shake up Trump’s entire second term and create a new political ball game. And it’s all playing out with more drama than a Housewives reunion. The unscripted unraveling comes as Trump is facing a self-imposed time crunch to finish work on his “one big beautiful bill” that accomplishes much of Trump’s agenda. It carries huge tax breaks, spending to tighten the border and immigration, and drastic cuts to programs promoting clean-energy programs. It’s that last bit that seems to have sparked the shocking split between the two men who, until days ago, seemed to be of a shared mind to trash the federal infrastructure with disregard to its effects. When Musk left Trump’s side, he started lobbing his problems with Trump’s “Big Beautiful Bill " calling it an abomination, a debt bomb, a mistake that would cost incumbents their jobs if they didn’t reverse course; and Trump responded in kind, leaving the world watching a brawl involving two masters of the universe who could change the course of human history. Trump said Musk “went CRAZY!” (Trump used that same description recently for Putin after he began a new offensive against Ukraine). Musk, relishing in his relevance, seemed to be parked on X, hurling whatever he could grab. When one user noted that the U.S. government would be forced to walk away from the International Space Station and its upkeep without Musk’s SpaceX fleet, the tech savant amplified it: “Go ahead, make my day.” “With so much reliance on the billionaires with essential monopolies who can take the government hostage with their expertise, Trump is walking into this spat at a decided imbalance. He can match the pettiness, but he cannot match the political and technological heft. And that should elevate this well beyond a reality-show skirmish to a political implosion that can be seen from space. https://time.com/7291550/elon-musk-trump-implosion-can-be-seen-from-space/?utm.
