Dow Jones & NASDAQ Keeps Dropping. Does Trump Want to Replace the IRS with Tariffs Like it was 1913?

Major indexes on the stock market began down more than 3% today when, as Allison Morrow of CNN reported, a rumor that Trump was considering delaying his tariffs by three months sent stocks surging upward by almost 8%. The rumor was unfounded—it appeared to begin from a small account on X—but it indicated how desperate traders are to see an end to President Donald J. Trump’s trade war.

As soon as the rumor was discredited, the market began to fall again, although Treasury Secretary Scott Bessent’s announcement that he is opening trade negotiations with Japan and looking forward to talks with other countries appeared to reassure some traders that Trump's tariffs will not last. The wild swings made the day one of the most volatile in stock market history. It ended with the Dow Jones Industrial Average down by 349 points and the S&P 500 and the Nasdaq Composite staying relatively flat. Futures for tomorrow are up slightly.

Foreign markets fared badly today, suggesting that the reality of Trump’s tariffs is beginning to sink in. Sam Goldfarb of the Wall Street Journal notes that Hong Kong’s Hang Seng took its biggest dive since the 1997 Asian financial crisis, losing 13%, and that other markets also fell today.

Goldfarb reports that in the U.S., traders are deeply worried about losses but also anxious about missing a rebound if the administration changes its policies. Hence the extreme volatility of the market. Generally, values over 30 are considered indicators of increased risk and uncertainty in the Chicago Board Options Exchange (CBOE) Volatility Index, the so-called fear gauge. Today, it spiked to 60.

Business leaders are speaking out publicly against Trump’s tariffs. Today, Ken Langone, the co-founder of Home Depot and a major Republican donor, told the Financial Times: “I don’t understand the goddamn formula.”

Senate Republicans are also starting to push back. Seven Republican senators have now signed onto a bill that would limit Trump’s ability to impose tariffs. The power to levy tariffs belongs to Congress, but Congress has permitted a president to adjust tariffs on an emergency basis. Trump declared an emergency, and it is on that ground that he has upended more than 90 years of global economic policy.

Trump has threatened to veto any such legislation, but he will not need to if Senate majority leader John Thune (R-SD) and House speaker Mike Johnson (R-LA) refuse to bring the measure to a vote. Jordain Carney and Meredith Lee Hill of Politico report that while Republicans express concern about the tariffs in private, leaders will stand with the president because they must have the votes of MAGA lawmakers to pass any of their legislative agenda through Congress, and to get that they will need Trump’s support. Others are worried about incurring Trump’s wrath and, with it, a primary challenger.

“People are skittish. They’re all worried about it,” Senator Rand Paul (R-KY) told Carney and Hill. “But they are putting on a stiff upper lip to act as though nothing is happening and hoping it goes away.”

But so far, it does not look as if it’s going to go away. Today the European Commission has announced 25% countertariffs in retaliation for Trump’s tariffs. [But their retaliatory measures are more modest than its initial threats. “Officials are moving slowly and deliberately, avoiding a single sweeping set of retaliatory moves, in hopes of giving the United States time to come to the table to make a deal,” reports the NYT]

Trump’s response to the crisis has been to double down on his tariff plan. This morning he wrote on his social media network that he will impose additional 50% tariffs on China effective on Wednesday unless it drops the retaliatory tariffs it has placed on U.S. products. Rather than backing down, China said it would “fight to the end.”

[For now, most world leaders are trying to bargain their way out of the sweeping new American tariffs. Just two of the 20 largest exporters to the United States have countered them with new tariffs of their own.  

How major trade partners are responding

Status	Trading partner	New tariff	Exports to U.S.	Note
Possible retaliation	European Union	+20%	$606 bil.	Preparing to retaliate with wide-ranging levies this week, even as officials also offer concessions and seek to negotiate.
No retaliation	Mexico	+25%*	$506 bil.	Faces 25 percent tariffs on some imports, but was exempted from the latest round.
Retaliated	China	+34%	$439 bil.	Matched new tariffs by levying an extra 34 percent duty on U.S. imports.
Retaliated	Canada	+25%*	$413 bil.	Imposed retaliatory tariffs against a number of U.S. goods as it faces duties on some Canadian goods.
Trying to negotiate	Japan	+24%	$148 bil.	Has few options to retaliate, and depends on U.S. military commitments.
Offered concessions	Vietnam	+46%	$137 bil.	Offered to reduce tariffs on U.S. imports to zero.
Trying to negotiate	South Korea	+26%	$132 bil.	Sending its trade minister to Washington for talks.
Offered concessions	Taiwan	+32%	$116 bil.	Offering zero tariffs as a starting point for discussion.
Offered concessions	India	+27%	$87 bil.	Approved a few concessions in March, like reducing tariffs on bourbon, but has since been relatively silent.
Trying to negotiate	United Kingdom	+10%	$68 bil.	Seeking discussions, while drawing up a list of U.S. products it could potentially hit with retaliatory tariffs.
Trying to negotiate	Switzerland	+32%	$63 bil.	“Switzerland cannot comprehend” the tariff calculations, its president said — but officials say they will not retaliate.
Offered concessions	Thailand	+37%	$63 bil.	Offered to increase imports of energy, aircraft and farm products from the United States
Trying to negotiate	Malaysia	+24%	$53 bil.	Seeking engagement with the United States, while calling on Asian nations to organize a collective response.
Trying to negotiate	Singapore	+10%	$43 bil.	Officials said they would try to understand U.S. areas of concern.
Trying to negotiate	Brazil	+10%	$42 bil.	Brazil’s president said that the country would try to reach an agreement but that it is preparing possible retaliatory measures.
Offered concessions	Indonesia	+32%	$28 bil.	Offered to buy more U.S. products such as cotton, wheat, oil and gas.
Offered concessions	Israel	+17%	$22 bil.	Israel had sought to avert the higher rate by voiding duties on American products — seemingly to no avail.
Trying to negotiate	Colombia	+10%	$18 bil.	Colombia’s president said he would respond to tariffs only if they harm job creation in the country.
Trying to negotiate	Turkey	+10%	$17 bil.	The trade minister said his country hoped to get the additional tariff lifted.
Trying to negotiate	Australia	+10%	$17 bil.	The tariffs have “no basis in logic,” the prime minister said. But he said Australia would not retaliate.

The New York Times]

Today, in a press conference convened in the Oval Office, Trump explained his thinking behind why he has begun a global tariff war. "You know, our country was the strongest, believe it or not, from 1870 to 1913. You know why? It was all tariff based. We had no income tax,” he said. “Then in 1913, some genius came up with the idea of let’s charge the people of our country, not foreign countries that are ripping off our country, and the country was never, relatively, was never that kind of wealth. We had so much wealth we didn’t know what to do with our money. We had meetings, we had committees, and these committees worked tirelessly to study one subject: we have so much money, what are going to do with it, who are we going to give it to? And I hope we’re going to be in that position again.”

Aside from this complete misreading of American history—Civil War income taxes lasted until 1875, for example, tariffs are paid by consumers, the Panics of 1873 and 1893 devastated the economy, few Americans at the time thought the Gilded Age was a golden age, and I have no clue what he’s referring to with the talk about committees—Trump’s larger motivation is clear: he wants to get rid of income taxes.

Congress passed the 1913 Revenue Act imposing income taxes to shift the cost of supporting the government from ordinary Americans, especially the women who by then made up a significant portion of household consumers, to men of wealth. Tariffs were regressive because they fell disproportionately on working-class Americans through their everyday purchases. Income taxes spread costs more evenly, according to a man’s ability to pay. The switch from tariffs to income taxes helped to break the power of the so-called robber barons, the powerful industrialists who controlled the U.S. economy and government in the late nineteenth century.

To get rid of income taxes, Trump and his Republicans have backed the decimation of the government services that support ordinary Americans.

Today, in the Oval Office press conference, Trump and Defense Secretary Pete Hegseth suggested where they intend to put government money, promising a defense budget of $1 trillion, a significant jump from the current $892 defense budget. “[W]e have to be strong because you’ve got a lot of bad forces out there now,” Trump said.

Allison McCann, Alexandra Berzon, and Hamed Aleaziz of the New York Times reported today that the administration also intends to spend as much as $45 billion over the next two years on new detention facilities for immigrants. In the last fiscal year, the total amount of federal money allocated to the Immigration and Customs Enforcement was about $3.4 billion. The new facilities will be in private hands and will operate with lower standards and less oversight than current detention facilities.

Alex Ovechkin passes Wayne Gretzky as NHL all-time goals leader with No. 895

By Sean Gentille


ELMONT, N.Y. — For the 895th time in his NHL career, Alex Ovechkin scored a goal, then celebrated with his teammates.

Nobody in the history of professional hockey has been better at either.

The Washington Capitals superstar, a once-in-a-lifetime fusion of incomprehensible skill, uncommon consistency and unrestrained joy, broke Wayne Gretzky’s career record for goals on Sunday at UBS Arena.

Ovechkin scored on the power play 7:26 into the second period to cut Washington’s deficit to 2-1. Ovechkin beat Islanders goalie Ilya Sorokin on a shot from the top of the left circle after a pass from Tom Wilson, and then, as the crowd went wild, Ovechkin dove to the ice and slid toward center ice before rising and being mobbed by teammates.

After the post-goal celebration slowed, and Ovechkin was congratulated by members of both teams, carpets were rolled out for a ceremony that included Ovechkin’s wife, his two sons and his mother, plus Gretzky, commissioner Gary Bettman and others.

“What a day, huh?” said Ovechkin, who focused on thanking his teammates and family during brief comments. “We did it, boys. It’s history.”

Demonstrators took to the streets in cities and towns across the U.S. to protest Trump. Also More Trump News

Demonstrators took to the streets in cities and towns across the U.S. to protest Trump.


They came out in defense of national parks and small businesses, public education and health care for veterans, abortion rights and fair elections. They marched against tariffs and oligarchs, dark money and fascism, the deportation of legal immigrants and the Department of Government Efficiency.

Demonstrators had no shortage of causes as they gathered in towns and cities across the country on Saturday to protest President Trump’s agenda. Rallies were planned in all 50 states, and images posted on social media showed dense crowds in places as diverse as St. Augustine, Fla.; Salt Lake City and rainy Frankfort, Ky.

While crowd sizes are difficult to estimate, organizers said that more than 600,000 people had signed up to participate and that events also took place in U.S. territories and a dozen locations across the globe.

On Fifth Avenue in Manhattan, the protest stretched for nearly 20 blocks. In Chicago, thousands flooded Daley Plaza and adjacent streets, while, in the nation’s capital, tens of thousands surrounded the Washington Monument. In Atlanta, the police estimated the crowd marching to the gold-domed statehouse at over 20,000.

Mr. Trump, who was playing golf in Florida on Saturday, appeared to be largely ignoring the protests. The White House did not immediately respond to a request for comment.


The Department of Justice building in Washington. Sarah Silbiger for The New York Times

The Trump administration suspended a senior Justice Department immigration lawyer after he questioned the decision to deport a Maryland man to El Salvador.

President Trump’s firing of the head of the National Security Agency, on the advice of Laura Loomer, a far-right conspiracy theorist, has rattled some lawmakers.

The ousting of the N.S.A. chief is one of several moves that have eroded U.S. cyberdefenses at a moment of rising danger.

Trump administration officials have fired workers for the main American aid agency who were sent to Myanmar after the deadly earthquake there.

Trump Tariffs

Trump’s tariffs will wound global free trade, but the blow may not be fatal: Other countries could find a way to maintain the system without the U.S., Mark Landler writes.

Vietnam, a manufacturing destination for U.S. brands, faces a potentially devastating 46 percent tariff. Its leader is asking Trump for a delay.

Trump’s political strength is built on the economy. If it sinks, he could drag Republicans down with him, Nate Cohn writes.

TRUMP'S REVENGE

President Trump Eric Lee/The New York Times

By Michael S. Schmidt

When President Trump returned to office, his rivals feared he would seek revenge by using the Justice Department and the F.B.I. to investigate and even imprison his perceived enemies.

But the retribution effort is far more expansive, efficient and creative than that — and less reliant on the justice system. Trump has found new ways to use his power against foes. And his actions, or just the prospect of them, have led some of his antagonists to fall in line.

Trump has filed lawsuits, signed executive orders, drafted regulations, fired people from government jobs and withdrawn security details to battle those who he believes stood in his way. In many cases, rather than turning to the courts or federal agencies to carry out his demands, he has asserted unilateral executive power. His defenders say the Constitution should be interpreted to give a president centralized, untrammeled control of government.

Trump appears to hold a maximalist view of his powers even if they are disputed or untested. Can he deport people without due process, impound money allocated by Congress or remove appointees from independent agencies like the National Labor Relations Board? He is not waiting to find out. He has imposed costs on those who fail to heed his demands at universities, news organizations and executive agencies. Most recently, major law firms have buckled rather than endure punitive executive orders or fight in court. “They’re all bending and saying, ‘Sir, thank you very much,’” Trump said last recently.

The administration has struck at perceived adversaries in many realms.

Attorneys general in blue states, lawyers and advocacy groups have filed many lawsuits to stop Trump’s policies. In the face of those challenges, Trump issued an order directing the Justice and Homeland Security Departments to “seek sanctions against attorneys and law firms who engage in frivolous, unreasonable and vexatious litigation against the United States.”
The law firm Paul Weiss is home to many former Democratic officials. Its managing partner is a major Democratic fund-raiser, and another partner prepared Kamala Harris for her debates. Trump barred it from dealing with the government and suggested that its clients could lose their government contracts. Despite believing that what Trump was doing to the firm was wrong and illegal, Paul Weiss made a deal with the Trump administration to reverse the order.

Many alumni of Trump’s first administration later spoke out against him in the 2024 election, including John Bolton, his national security adviser, and Mark Esper, his defense secretary. Both had security protection because, the government believed, Iran might target them for their roles in helping Trump kill a top Iranian general. Trump revoked their security protection. Defense Department officials also withdrew protection for Mark Milley, a former top military officer who worried Trump was staging a “Reichstag moment” during the Capitol riot, and removed Milley’s portrait from the Pentagon.

The Trump administration is investigating government lawyers who prosecuted Jan. 6 rioters — and will do the same for prosecutors who refused to dismiss corruption charges against Mayor Eric Adams of New York.

The White House blocked Associated Press reporters from the Oval Office and Air Force One because the wire service refuses to use “Gulf of America,” Trump’s preferred term for the Gulf of Mexico.

Trump sued an Iowa pollster who underestimated his support before the election. A Trump appointee has also announced an investigation into the San Francisco radio station KCBS for its coverage of immigration enforcement actions.
Facebook suspended Trump’s account after the Jan. 6 riot. During the campaign, Trump threatened to imprison the company’s founder. After he took office, Meta, the parent company, agreed to pay $25 million to settle a lawsuit on the matter.

Read a list of Trump’s other retributive actions here.

In his first term, Trump tried to get the Justice Department, the F.B.I. and the I.R.S. to investigate his rivals. Many of them came under scrutiny, but he was furious that none were charged. When he tried to revoke a former C.I.A. director’s security clearance, for instance, his aides stopped him.

This time, with a more compliant staff, the only people holding him back are judges. Dozens of lawsuits have been filed (The Times is tracking them here), but it is impossible for courts to keep up. A good example came last month at a hearing about an executive order punishing the law firm Perkins Coie. The judge acted immediately with a temporary restraining order. But some of Perkins’s clients had already fled to other firms, and they are unlikely to return to lawyers blacklisted by the president. In other cases, Trump has said judges who rule against him should be impeached.

Claims of executive power follow a pattern, experts say. When one president finds a new and different way to flex it, the next ones follow suit. The next Democratic president, for instance, might decide to fire government lawyers affiliated with the conservative Federalist Society. He or she could end all government contracts with Elon Musk’s companies — or hold back emergency aid from red states that resist new climate regulations.

In the end, Trump’s actions may empower future presidents to use the executive branch as a cudgel of revenge.

Baseball is enjoying a sort of renaissance.

Shohei Ohtani Darryl Webb/Associated Press


A new baseball season is underway, and the sport is enjoying a sort of renaissance.

Baseball is making more money than it ever has. The addition of a pitch clock has made games quicker and created more action on the field. Attendance and ratings are on the rise.

But the sport also faces a possible long-term problem: the widening gap between its haves and have-nots.

Baseball’s future, both good and bad, is on display in California.

It’s a glorious moment for the Los Angeles Dodgers, who won the World Series last year and have baseball’s biggest star, Shohei Ohtani. After winning the title, the Dodgers added even more talent to their roster — the team will spend well over $300 million this year on player salaries.

A few hundred miles up Interstate 5, in Sacramento, that kind of money feels almost unfathomable. There the Athletics, who left Oakland after 57 years, are playing their home games at a minor-league ballpark as they prepare to move to Las Vegas in three years. The A’s entire payroll is only slightly more than what Ohtani alone is owed each year.

Money doesn’t win games. It’s baseball, after all. And the A’s are scrappy. Even if they aren’t as well compensated, they can beat anyone on any given day. But the imbalance of resources, over time, tends to offer richer teams an advantage.

For today’s newsletter, The Times spoke with the commissioner of Major League Baseball, Rob Manfred, about the state of the game.
Payroll disparity

Unlike other major American sports, baseball does not have a salary cap, which is used to narrow the gap between the richest and poorest teams. Some M.L.B. owners are pushing the league to adopt a salary cap as part of their next contract with the players’ union.

Manfred told us in an interview at his office in New York that he believes the financial imbalance is an existential problem for the sport. “We sell entertainment that’s based on competition,” he said. “If people don’t believe there’s competition, you’ve got a product problem.”

The problem: Players vehemently oppose a salary cap and many insist that they would never agree to play under one. Their union argues that players deserve to be compensated, without restriction, for the work they do.

Last time the owners made a real push for a cap, in 1994, it resulted in a 232-day strike, a canceled World Series and years of fan frustration. The current contract is set to expire after next season. If the owners make another push for a cap, another painful work stoppage could follow.
Baseball’s future

In his interview with The Times, Manfred also spoke about a range of other topics concerning the present and future of the sport, including:

Torpedo bats: The new, oddly shaped bats that caused a frenzy when the Yankees used them to hit several home runs are legal and “absolutely good for baseball,” Manfred said.
Robot umpires: “The experiment was really successful,” Manfred said about the computerized challenge system for balls and strikes that the league tested during spring training. He hopes to use it in the regular season as soon as next year.
Pitching injuries: Manfred warned that pitching “is getting taught in a way that emphasizes velocity and spin rate,” which puts additional strain on pitchers’ elbows. “By the time we get guys,” he said, “they’re already damaged goods.”
What would make the game better: Recent rule changes have led to more action on the field, which Manfred thinks is key to the sport’s future. “Action, movement, the ability to show how athletic you are,” he said. “Any changes that allow the showcasing of the athleticism of your players is huge.”


Read the full interview with Manfred here.

Adams will run for re-election as an independent instead of as a Democrat.

Mayor Eric Adams of New York City said on Thursday that he would not run for re-election in the Democratic primary in June, an acknowledgment of the growing backlash against his embrace of President Trump and his record-low approval ratings.

Mr. Adams said he would instead run as an independent in the general election in November — an uphill battle in a city where Democrats outnumber Republicans by six to one.

His announcement comes a day after the five-count federal corruption indictment that he faced was dismissed by a judge, following the Trump Justice Department’s decision to abandon the prosecution.

Mr. Adams released a six-minute video saying that the case had made it difficult for him to run in the June 24 primary. He said that he was still a Democrat but that he would “appeal directly to all New Yorkers” as an independent in the general election.

In the video, Mr. Adams again denied the corruption allegations, but acknowledged that he had made mistakes.

“I know that the accusations leveled against me may have shaken your confidence in me and that you may rightly have questions about my conduct,” he said. “Let me be clear, although the charges against me were false, I trusted people that I should not have and I regret that.”

The collapse of the mayor’s primary campaign was a stunning setback for a charismatic leader who once called himself the “future of the Democratic Party.” But in recent months, as Mr. Adams publicly avoided criticizing Mr. Trump, he began to distance himself from party orthodoxy.

“People often say, ‘You don’t sound like a Democrat. You seem to have left the party,’” Mr. Adams said in a January interview with Tucker Carlson, the former Fox News personality. “No, the party left me, and it left working-class people.”

The decision by Mr. Adams to abandon his bid for the Democratic ballot line, which was first reported by Politico, would seem to significantly dampen his hopes for a second term.

Trump insists in the long-term tariffs will be worth the pain. The S&P 500 dropped nearly 5 percent Worst since the pandemic.

China announced a 34 percent tariff on American imports, matching Trump’s 34 percent tariff.


Markets fell for a second day in Asia and Europe. The S&P 500 dropped nearly 5 percent yesterday, its deepest retreat since the height of the pandemic.


Shares of Apple, which makes most of its iPhones, iPads and Macs overseas, fell 9 percent. Other big tech stocks, including Microsoft and Amazon, also slumped.


Trump insisted that the long-term payoff of the tariffs would be worth the pain. “The markets are going to boom,” he said. “The country is going to boom.”


Trump’s tariffs are estimated to cost American importers nearly $800 billion. These charts explain the costs.


Countries that built their economies on manufacturing goods for the U.S., like Bangladesh and Sri


Lanka, face the greatest risk from the tariffs. See where tariffs will hit hardest.

Canada introduced a 25 percent tariff on cars and trucks made in the U.S. in response to Trump’s auto tariffs, which took effect yesterday.

Trump’s tariffs could slow the shift to renewable energy: They affect most components of clean-energy production, from wind turbines blades to electric vehicle batteries.

Trump closed a loophole that had allowed retailers like Shein and Temu to ship Chinese goods directly to American shoppers without paying tariffs.

He imposed tariffs on Antarctic islands with more penguins than people.

Trump has been angry for decades about trade. He started talking publicly about tariffs in 1988, when he lost an auction for a piano used in the film “Casablanca” to a Japanese trading company. Read the story from 2019.

Natalie Allison, Jeff Stein, Cat Zakrzewski, and Michael Birnbaum of the Washington Post reported how Trump came to impose the tariffs. After aides from a number of different government agencies came up with options for Trump to review, he decided instead on a different option, one that has drawn ridicule because it is crude and has nothing to do with tariffs at all. He reached the amounts of tariff levies by dividing the trade deficit of each nation (not including services) by the value of its imports and then dividing the final number by 2.

The reporters note that Trump didn’t land on a plan until less than three hours before he announced it, and made his choice with little input from business or foreign leaders. Neither Republican lawmakers nor the president’s team knew what Trump would do. “He’s at the peak of just not giving a f*ck anymore,” a White House official told the reporters. “Bad news stories? Doesn’t give a f*ck. He’s going to do what he’s going to do. He’s going to do what he promised to do on the campaign trail.”

While right-wing media and Republican lawmakers have worked hard to spin the economic crisis sparked by Trump’s tariffs, Financial Times chief data reporter John Burn-Murdoch used charts on social media to show that Americans are not happy. Consumers give Trump’s economic plan the worst ratings of any administration’s economic policy since records began. He has had the same impact on economic uncertainty as the global coronavirus pandemic did. Almost 60% of Americans expect the economy to deteriorate over the next year, and they are very worried about job losses.

Federal Reserve Chair Jerome Powell said today that Trump’s tariffs are “highly likely” to increase inflation and risk throwing people out of work. Economists at JPMorgan now place the odds of global recession at 60% unless the tariffs are ended.

Burn-Murdoch noted that despite the attempt of right-wing media to hide the crisis, more than half of Americans have heard unfavorable business news coverage of the government’s policies. While MAGA continues to approve of Trump, he’s rapidly losing support among the rest of the coalition that put him into office.

In Europe, Welfare Vs. Warfare

Secretary of State Marco Rubio Maansi Srivastava for The New York Times

	By Katrin Bennhold I cover international politics from London.

As the United States deserts Ukraine, and Europe with it, leaders on the continent are closing ranks and arming up to defend their democracies against Russia. In Britain, Prime Minister Keir Starmer elicits comparisons to Winston Churchill. In France, President Emmanuel Macron is channeling Charles de Gaulle’s argument for independence from Washington. Germany changed its strict budget rules to spend more on defense. Marco Rubio, the U.S. secretary of state, came to Brussels yesterday to urge them on.

But Russia isn’t the only threat to democracy in Europe. Far-right and autocratic parties here have gained ground for a decade. They’re already part of the government in six capitals. And the impulse to ramp up defense may energize their voters.

Europe is rearming to battle fascism and autocracy abroad. Unfortunately, this may also empower fascism and autocracy at home.

Welfare vs. warfare

To understand why, remember the state of European politics: Economies are stagnating, governments are unpopular and efforts to keep the far right out of coalition governments are barely holding. Now, as critics see it, leaders want to spend money containing Russia instead of helping their citizens.

In Britain, Starmer plans to increase military spending from 2.3 percent of the economy today to 3 percent early in the next decade. At the same time, he plans to cut Britain’s annual welfare bill by some 5 billion pounds (about 6.5 million dollars) a year. It’s a risky proposition after the economy shrank in January and at a time when the hard-right Reform U.K. party is snapping at Labour’s heels in some working-class regions. British voters say welfare spending is more important than military spending. “Welfare Not Warfare,” read a banner at protests last week.

Outside Parliament in central London. Benjamin Cremel/Agence France-Presse — Getty Images

Macron faces similar headwinds in France. Voters say they support a stronger military but don’t want to pay for it by increasing taxes, decreasing social spending or raising the retirement age. Macron has already promised not to raise taxes, so some cuts to social spending seem likely. Now parties on the far right and the far left smell blood: Macron is using the Ukraine war to “justify the destruction of the welfare state,” wrote one right-wing lawmaker on X. Cutting back the social services in favor of defense is “psychosis,” said the leader of one of France’s most powerful unions.

Already, France’s deadlocked Parliament struggles to govern. The political dysfunction — and the notion that it might slash popular programs — will only help the extremes. No wonder Marine Le Pen, leader of the National Rally, retains a comfortable lead in polls for the next presidential election. (An embezzlement conviction means she can’t run, but she is appealing it.)

Daring or deceptive?

The critique from the right isn’t just about unpopular budgetary choices. There is also a sense that mainstream politicians don’t listen to voters — and don’t keep their promises.

Before his conservative party came first in Germany’s snap election last month, Friedrich Merz said he wouldn’t alter the budget rules. But after the election, he pushed through a constitutional amendment that will let his future government spend nearly a trillion euros on the military and other things. He had to rush it through the outgoing Parliament because, in the newly elected chamber, pro-Russian parties on the left and the right gained enough seats to block the move.

The right-wing Alternative for Germany, or AfD, in particular has spent years arguing that mainstream parties adhere to a sort of elitist, trans-Atlantic centrism that gives voters little say in how their country is governed. Then Merz used departing lawmakers to enact a policy he had campaigned against. The AfD quickly branded the maneuver as “gigantic voter deception.” Three in four German voters agree, as do almost half of the supporters of Merz’s own conservative camp.

The political cost was immediately apparent: Approval ratings for the conservatives fell, while those of the AfD, already the second-biggest party in Germany, rose.

Ten years too late

If Europe’s rearmament push had come a decade ago — if Russia’s 2014 invasion and annexation of Crimea had served as a wake-up call — the trade-offs would have looked different. Back then, Europe’s economy was growing twice as fast as it is now. Barack Obama was in the White House. Brexit had not happened. The AfD was a one-year-old fringe party. Le Pen was nowhere near as popular. Europe’s big liberal democracies were in fighting shape.

Rearmament is still the only way Europe can deter Vladimir Putin at a time when Washington has abandoned it. But now governments are fighting for democracy at home as well as abroad.

Leaders hope that voters will ultimately rally behind them in the face of threats from Putin and President Trump. They also hope that rearmament will boost growth and manufacturing jobs. (Experts say that this is plausible but far from certain.) Yet because they waited, they may pay a steep price: Voters may punish those who push for a stronger military. Leaders may need to backpedal.

There’s another possibility, too. Rearming in the name of democracy today could leave the far-right governments of tomorrow — many with close ties to Moscow — in charge of big, muscular militaries.

America Has Never Been Wealthier. But It Doesn’t Feel That Way.

A surge in U.S. wealth has been driven by stock and home values. But the gains are concentrated at the top, leaving others in a sour economic mood.

America is more prosperous than ever.

U.S. household net worth reached a new peak at the end of 2024. The unemployment rate has levitated just above record lows for three years. The overall debt that households are carrying compared with the assets they own is also near a record low.

But even a land of plenty has its shortcomings, influencing both perceptions and realities of how Americans are doing.

The U.S. economy remains deeply unequal, with vast gaps in wealth and financial security persisting even as inflation has ebbed and incomes have risen. And data designed to capture the overall population may be obscuring challenges experienced by a broad range of Americans, especially those in the bottom half of the wealth or income spectrum.


The share of wealth held by families in the top 10 percent has reached 69 percent, while the share held by families in the bottom 50 percent is only 3 percent, according to the latest reading from the nonpartisan Congressional Budget Office. (When future income claims from Social Security benefits are included, the bottom 50 percent hold 6 percent of total wealth.)

And while wealth has risen for the less wealthy half of the population in recent years, much of the uptick has been locked up in what financial analysts call “illiquid assets” — gains in home prices and stock portfolios — which are not easily translated into cash to pay for bills and expenses that are much higher than they were a few years ago.

Although the bottom 50 percent holds only a 1 percent share of all financial market wealth, six in 10 adults report owning some amount of stock. A broad range of Americans may be frustrated by the inaccessibility of this illiquid wealth, said Daniel Sullivan, research director at the JPMorganChase Institute, which tracks the finances of millions of U.S. bank account holders.

“‘Massive home equity gains, and my 401(k) is way up, but I can’t touch that, either!’” Mr. Sullivan explained, channeling the tension many people feel.“Higher-income people drive most of aggregate spending,” said Joanne Hsu, an economist and director of the Michigan survey. “They were on an upward surge of sentiment between 2022 and 2024, and that’s consistent with their strong spending.”

Part of the disconnect may stem from the tendency among economists to track income progress primarily through percentage change rather than dollar amounts.

Even when inflation was peaking around 9 percent and diluting income growth, Ms. Hsu explained, “a 10 percent boost to middle and especially higher incomes is money that feels real, like you can do something with it.”

For someone making $100,000, that means a $10,000 raise. But a 10 percent increase at the bottom, perhaps to an hourly wage of $16.50 from $15, “means you’re still living hand-to-mouth,” she added.

In a recent report, Matt Bruenig, the president of the People’s Policy Project, a liberal think tank, evaluated the long-running question in U.S. economics of how many adults are living paycheck to paycheck — a term plagued, he said, by “inherent ambiguities.”Drawing on data from the Survey of Household Economics and Decisionmaking, conducted annually by the Federal Reserve Board, Mr. Bruenig noted that “if we define someone as living paycheck to paycheck if they either say they do not have three months of emergency savings or say they cannot afford a $2,000 emergency expense,” then 59 percent of American adults are “living paycheck to paycheck.”