Populism, our Government and the Trump Presidency

Populism and the Presidency

Donald Trump is a populist president. This is not the first time that populism has made an impact on our politics. In 1896, William Jennings Bryan delivered his famous 'Cross of Gold' speech at the Democratic Convention in Chicago. In this speech, Bryan used a cross of gold as a metaphor for the nation being crucified by the gold standard. He proclaimed, "You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold." Bryan was particularly popular in labor and farming regions, as farmers struggled to secure credit under the gold standard. Bryan advocated expanding the standard to include silver, making credit more accessible. Notably, while this speech secured Bryan the Democratic nomination for the presidency, he lost to McKinley in the general election. Interestingly, this is the same President McKinley with whom Donald Trump has drawn comparisons. In my opinion Mckinnly was pushed by Bryan toward isolationism, trade tariffs and expansionism, but settled back to being a Republican in the second half of his presidency, How this affects our nation fiscally is the reason for this post.  

Today, we face a similar dilemma. Credit is at risk of drying up due to a potential U.S. dollar crisis. Since Alexander Hamilton established our nation's foundation on credit, the U.S. has remained reliant on it—even when we were not a wealthy country and depended on foreign wealth. In 1896, we relied on the British Empire. Today, as the richest country in the world, our financial system remains credit-based, but now tied to the U.S. dollar rather than the gold standard. The dollar, essentially just paper, represents the goods and services produced domestically. When we spend beyond our production, we borrow—primarily by selling bonds based on our ability to repay them. These treasury bonds finance our deficit spending. When domestic and foreign investors lose confidence in these bonds, they stop buying them, which can lead to a credit crisis and devaluation of the dollar.

In the early years of the United States, John Adams negotiated loans with the Netherlands when the country was young, poor, and in need of financial support. The Dutch, known for their prudent lending practices, saw potential in the young republic’s ability to grow and repay its debts. Today, the U.S. holds a similar position to the Netherlands back then—wealthy and strategically positioned to lend. By offering credit wisely, we can leverage our economic strength, maintain the dollar’s value, and potentially avoid the pitfalls of excessive debt.

Can Populism solve the debt crisis?

It is doubtful. Fiscal austerity is inherently unpopular. When Treasury Secretary Bessent suggested purchasing savings bonds, I bought $1,000 worth, hopeful that someone in government was taking a practical approach. Recently, a new trade deal with the UK was signed, but I doubt tariffs will generate enough revenue to offset the federal deficit. The deficit itself represents the growing debt caused by spending more than we earn. Without changes, Social Security and possibly the government itself could become insolvent by 2033, leading to benefit reductions, increased retirement ages, and higher taxes. Sovereign default could occur by 2045, triggering inflation, reduced services, unemployment, recession, and a banking crisis. Raising taxes, cutting Social Security, and increasing interest rates are all unpopular yet potentially necessary measures. The Committee for a Responsible Budget estimates that both House and Senate versions of the Trump Administration’s budget would increase the deficit.

Can Populism resolve the Gaza conflict?

There has been discussion about the United States taking over governance of the Gaza Strip—a mistake, in my opinion. India’s attempts to govern Kashmir, a contentious region between India and Pakistan, have been met with ongoing conflict. Similarly, the U.S. is not perceived as a neutral party in the Arab-Israeli conflict, which could result in a Middle Eastern version of Kashmir. A more neutral, Muslim-led investment in Gaza—perhaps from Qatar or the United Arab Emirates—could foster prosperity, reducing tension. If Gaza transformed into a thriving economic hub, the benefits might outweigh historical animosities.

Can Populism bridge the gap between labor and management?

President Trump’s success in traditionally Democratic, blue-collar regions highlights a shift. Once solid union strongholds, these areas have responded to Trump’s promise to revive manufacturing through tariffs. While some see this as a Republican realignment, it may indicate the emergence of a new Populist Party driven by market dynamics and public sentiment. These changes however, are likely to be short lived. Management will always be in conflict with labor, and over time the contenders will surrender to their designated cornors. 

Conclusion

This new movement harks back to the populism of William Jennings Bryan, characterized by isolationism, restricted trade, and economic nationalism. Yet, it diverges from the traditional Republican commitment to free trade. The foundational economic principles established by Alexander Hamilton and John Adams emphasized leveraging debt when the country lacked wealth. Today, as a wealthy nation, these tactics warrant reassessment. Rather than confronting China over trade practices, we should take advantage of our financial strength, lending strategically to maintain the dollar's global status. If the dollar loses its reserve currency role, the American economic model may face unprecedented challenges. Reducing the federal deficit is the answer to putting our fiscal house in order.