We are seventy days out from the midterm elections.
The polling right now has a Democrat bias. My friend Patrick Ruffini has done the deep dive, and the pattern holds. Pre-Labor Day polling runs about five points friendlier to Democrats than the actual result, and after Labor Day that bias washes out. None of you trust the polling, and the pollsters have not exactly covered themselves in glory lately, but the averages remain a pretty good indicator of where things are, and they should start narrowing in a few weeks.
That is not great news for Democrats.
The good news for Democrats is that the President has started a trade war with Canada. He just imposed new tariffs and says more are coming in January. Mark Carney, the Canadian Prime Minister and an actual trained economist, which is more than you can say for the people whispering tariff policy into the President’s ear, says his country will reciprocate. He is not bluffing. He has twenty billion dollars in counter tariffs ready for the day after Labor Day, which is the day Americans start paying attention to the midterm election.
The President says we have a trade deficit with Canada and that this proves the Canadians are taking advantage of us. The truth is we import a lot of oil from Canada. Take the oil out of the ledger and Canada runs a deficit with us. American crude is light and sweet. Before the fracking revolution we could not get to most of it, so our refineries retooled to run heavy crude from elsewhere. Now we sell our light sweet crude abroad and buy heavy crude to feed refineries built for it. This is basic chemistry, not advantage.
Canada is going to retaliate. So look for gas prices to go up. Northern states like Michigan and Maine, where the GOP has two competitive races it cannot afford to lose, get electricity and a lot of trade from Canada. The power bills will go up as early voting starts in must-win states.
We are at forty trillion dollars in debt. It took two hundred years to run up the first trillion and ninety-five days to add the most recent one. The debt now exceeds our entire economy. Interest on it costs more than the entire United States military. The Social Security trust fund is empty in 2032, at which point Congress must cut benefits or raise the retirement age, and seniors vote, so Congress will do neither. The bond market can read. The bond market is unhappy.
Scott Bessent says we will grow our way out of it, and I like the man, but picture two buckets. One is the private sector, pure risk with a shot at ten to one. The other is Uncle Sam paying a guaranteed five or six percent backed by the full faith and credit of the United States. In a season of war and inflation, a rational man picks the government bucket every time, and every dollar in that bucket is a dollar not starting a business, hiring a plumber, or building a house. The private sector atrophies while the government sector expands.
Meanwhile, gasoline is the most expensive it has ever been in an August before an election. Grocery prices are high. The President has angered ranchers by suspending the beef tariff and bringing in Argentine beef, guaranteeing it will sell twenty-five percent below market, which only works as a guarantee because he set the tariff at twenty-five percent to begin with. The ranchers are right to be angry. There are also far more Americans who eat beef than raise cattle. This is mitigation of a policy that we never needed.
Home prices keep going up.
A builder friend of mine tells me that in addition to mortgage rates not coming down, and possibly getting worse, our tariffs on Canadian imports will hurt many of the products that go into homebuilding. Not only will mortgages go up if the ten year yield goes up, but lumber, aluminum, and steel from Canada will get more expensive. This is from my friend:
One of the big things that scares the death out of me is that the majority of our lumber for building houses in the United States comes through Canada. And if they’re talking about a huge tariff, we are already teetering on the edge not only with home affordability but just sales, especially with interest rates from some major economist that I was with last week saying we’re not gonna see an interest rate drop till, they predict, 2029. You couple these things, and it is going to cripple not only affordable housing, but I think housing in general. The cost to build prices are already through the roof. I just don’t know how we can sustain any higher, and then what does that do to the economy.
The GOP has convinced itself the far left cannot win. Aggravate people enough and spite becomes a motivating force. When I point out that the public went with Joe Biden in 2020, Trump voters have been so psychologically trained to believe it was stolen that they cannot conceive of voters actually choosing the left. Make things unaffordable and people just might demand midterm accountability from the party in power. Every Republican I talk to on the ground is pessimistic in a way I have not heard since 2018.
While all of this is happening, the President has launched what his Treasury Secretary calls “economic D-Day” against Iran. Through a series of yet-to-be-unveiled secondary sanctions on the countries, individuals, and businesses that enable Iran to trade, the administration intends to wipe out the Iranian economy and bring real pain. Bank Melli goes dark. Anybody laundering money for the mullahs loses access to the dollar.
As I wrote a few weeks ago, the mullahs can potentially outlast the GOP in the midterms because the GOP presides over an electorate that votes and the mullahs preside over an unarmed populace that suffers and endures. They will try to cause us pain before November. They may start shooting again.
None of it is possible except that the United States holds the world’s reserve currency. That is the whole ballgame. We do not merely get away with it, we bend other nations to our will with it, which is why the UAE has already shut down the crypto and dirham route Iran was using.
So remember that the next time you hear the Vice President and his allies talk about ending our reserve currency status. On this question the post-liberal right and the socialist left agree completely, arriving at the same place from opposite directions. Both want an America too weak to lead. They would take the most powerful non-military weapon this country has ever held, melt it down for scrap, and hand the world to Beijing.
Between Canada’s retaliation and Iran’s, the next seventy days could get really wild.
But understand what actually decides an election. Not a post on Truth Social and not a panel on cable news. A man in Grand Rapids doing arithmetic at a gas pump, a couple in Bangor opening an October electric bill, a young family here in middle Georgia learning the house they meant to build costs another forty thousand dollars because the lumber came through Canada. The socialist left believes Washington should decide what that family needs. The post-liberal right believes Washington should decide what that family needs, just with better manners about it. Both are wrong the same way. That family knows better than either party’s experts, and both parties are about to find out what happens when you take that judgment away and hand them the bill.
God has just never promised to save us from our own arithmetic.
Yesterday, in the comments, Bill asked for good news.
The good news for the GOP is that the Democrats have nominated some of the most batcrap crazy, insane candidates that voters who do not like the GOP might actually vote Republican to stop the Left. Michigan is very much in play for the GOP. Last night, Abdul El-Sayed had a disastrous interview on Fox with Jesse Waters where he, a medical doctor, equated circumcision to castration. He also refuses to distance himself from Hasan Piker.
The even better and really good news is this —
