220. The Truth Behind Trump’s $5000 Midterm Bribe

0:01Trump's plan to give every American$5 ,000 if Republicans win the midterms is dead on arrival. We'll get into why and discuss whether this is a blatant attempt to buy votes or an empty promise from a man who fears he's going to lose. And it's official. We are in a trade war with Canada. Their retaliatory tariffs have come into effect and Trump has hit back, threatening to ban certain Canadian imports. This is bad, not just for the economies of Canada and the U.S., but for the politics and Trump's prospects in the midterms. This episode is brought to you by eToro. A tariff, a spending plan, a regulatory change.

0:40It can all start just as the first line of a speech, but it sets in motion things that can reach far beyond Washington and unfold for years to come. That's right, Katty. Markets move on expectations, not just events. investors are constantly weighing what a decision could mean for company sectors and the wider economy. So eToro is an investing platform where you can access a wide range of markets and explore how political and economic developments could affect them. You could also learn from the global community of investors and see how people around the world are interpreting the same news. As with all investing, your capital is at risk.

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2:02Welcome to The Rest is Politics US. I'm Katty Kay. And today I'm joined by our friend, the co-host of ProfitU Markets podcast, Ed Elson. Ed, thank you for coming back. Thank you for having me. Good to be here. I'm so glad we didn't scare you away last time. I know that you had to run off to the Alps for a quick holiday after you did it. That's not exactly why. No, it was excellent. I'm glad to be back. And I'm glad to see that you and Anthony have been on stage. I was looking at photos of Rest is Fest, which looks incredible. So congratulations on that. Thank you. Thank you. It was really fun.

2:36Live show. Yeah. How was that? It was great. The live shows went great. Anthony and I then took part in a quiz, like a game show quiz with all of the other Rest is podcasts, and we didn't win. You didn't win. We didn't win. In fact, we didn't even come close to winning. But I think we were robbed, actually. We are lobbying now. It's a bit like FIFA. We're kind of lobbying the judges to see if we can get an override. I'll keep you posted on that one. Let me know how that goes. I mean, I've had some experience with live events because we did a live tour for our show. Our final stop was in New York and we had two incredible guests.

3:13The first guest was Hillary Clinton, which people were very excited about. The second guest was even more exciting, Scaramucci. And he made headlines for us in that live tour. So a lot of people loved him. Well, he's very good on stage. I hate to tell you this, he's not quite so good at trivial knowledge quizzes, especially when it's British pop culture, which I think was part of the reason we were robbed and we could have tried to pay off the judges. And talking of paying off people, I wanted to ask you what you made of Donald Trump's promise at this weird kind of midterm Republican convention that they're holding down in Texas and this promise that he's made to give every voter$5 ,000 if the Republicans win in the midterms.

4:03I have this image of Kevin Walsh kind of listening to this vaguely in the background like an old fashioned radio and he's it on in the background and he hears this and suddenly drops his plate and his jaw drops to the floor as well. And there's a clattering as he kind of, you know, fume comes out of his ears. There is Donald Trump threatening to blow up the deficit even further as his economics team and his new Fed chair is desperately trying to think, how can I bring down inflation rates? So what's going on? Well, I think the first thing that he would probably think if he has his head screwed on straight, the first reaction he would have to that announcement is that it's just a gigantic lie once again.

4:41Because let's just be clear, Trump has made these promises multiple times during his second term as president. Remember, he promised a$5 ,000 Doge dividend, which never came through. He promised a$2 ,000 tariff dividend because of all of the money we were going to bring in for the tariffs, which of course, we then had to refund and we sent it all back to corporations, more than$100 billion worth of tariffs back to corporations. So Walmart, got nearly$3 billion. Apple got more than$2 billion. That was after they had raised prices, which was ultimately a tax on consumers, i.e. the American people.

5:20So the cost of the tariff goes to the American people, but the benefits of the refund goes to the corporations. Exactly. But that's after he promises that the benefits of the tariffs will go to the American people with the$2 ,000 tariff dividend, which never happened. There was also the $1 ,000 dividend that we were going to get from the savings of the expiring ACA subsidies, which was, of course, just gutting health care in America, making it more expensive for American households to get health care. That didn't happen either. So he's promised to send out these dividends, these checks, this free money promise multiple times, and it never actually comes through.

6:01So this is the same thing again. He's promising$5 ,000 if the Republicans win the House and the Senate, which is one, a lie. Two, it's illegal. And three, it's just another example of what a complete joke this president has become at this point. And to me, like this is kind of the nail in the coffin. I think it's just a huge red flag if anyone still takes him seriously. There are so many things that we could talk about, but this is just so beyond the pale, especially, as you say, having also made it his whole platform to balance the budget and then exploding on the deficit to nearly$2 trillion.

6:41And that, in fact, might even be more than that this year. I could go on. I'm sort of beyond words at this. So it's interesting. I mean, a couple of things that strike me. One, I think I agree with you. There is not a good track record of Donald Trump making these promises, whether it's around health care subsidies ending, whether it's around tariff refunds, whether it's around Doge payments and then actually delivering on them. It did happen, of course, once, and that was during COVID. And in retrospect, quite a lot of analysis was done on the number of percentage points that those COVID checks that had Donald Trump's name on them and that he actually signed and were very popular after COVID.

7:21And obviously, it was an economic crunch and lots of people had lost their jobs and we didn't know how long this was going to last for. And it was a crisis. And people got those$1 ,200 checks. And it did then, of course, produce a spike in inflation, which this administration and the Federal Reserve and Scott Besson are all now trying to grapple with. And we can get to the kind of politics of why he does this and why he stood up there in Texas and said this. I mean, maybe it's because they've really got just not very many other cards to play. And so you try with a blatant bribe and the kind of polling on this is interesting.

7:51We can get into that. But in your world, Ed, and you speak to people in the markets a lot and kind of, you know, hardheaded investors on Wall Street. When they hear something like this, what do they make of it? Because all the people I speak to tend to be kind of Republicans and Democrats in the political world. And I'm just wondering what people in the financial world, what investors make of a statement like that, of a promise like that, that they know is not going to happen, but which is so counter effective in dealing with America's economic problems anyway. Yeah, I think for a while at the beginning, you heard a lot of excuses or a lot of it's not that big of a deal.

8:33He's just kind of he's kind of funny. He's just saying stuff. But ultimately, it's about American businesses. He's the pro business president and everything's fine. I think that we saw that reflected in the stock market. There was obviously the giant hiccup of the original tariffs where everyone went, oh, my God, maybe this guy is truly off his rocket. He's truly insane. And then he started to walk things back when he saw the market's reaction. And then the stock market slowly went up. And I think there was a period of time there where investors were like, I think it's fine. I think he's just going to protect my interests.

9:07He's going to protect American corporations, American companies, and everything will be good. In the past month, I would say, we've started to see investors realize just how crazy he is. And it hasn't been the equity investors, the investors in the stock market that have been saying this. It's been the investors in the bond markets. And the bond investors are a slightly more sensitive bunch because I talked to Katie Martin from the Financial Times about this. What they're looking for as a bond investor is they're thinking about all the things that could go wrong. So they're by nature a little bit more pessimistic and they're a little bit more wary of the mistakes that we make.

9:48That's different from a stock investor who's thinking about all of the ways in which the world could go right. So they're granted a bit more sensitive. But we have seen an unbelievable sell-off in the bond markets over the past few weeks. We've seen the 30-year Treasury yield climbing back above 5.3%. The 10-year yield closed at 4.83%, which is the highest number since 2023. And the reason they're so worried about this is because it has become abundantly clear over the past few weeks that this administration, that this White House doesn't seem to care at all about one, inflation, and two, debt, because we have done nothing to resolve the fact that oil is now at more than$100 a barrel, the price of Brent crude, which is going to trickle down into the prices throughout the economy.

10:37It's going to be a real problem for inflation. Meanwhile, you have the president saying that actually, no, we need to lower interest rates, despite the fact that we are actually battling an inflation crisis right now, showing that he doesn't believe or seem to care that this is actually an issue. And then you have the fact that we continue to issue unsustainable, totally reckless, irresponsible debt. We're up to$40 trillion in total national debt. And meanwhile, Scott Besant, the Treasury Secretary's response to that is, I think that it's a problem that yields are too high. And so what am I going to do?

11:11I'm going to spend more money to buy even more bonds to try to bring yields back down. And what happens? Yields keep going up after he spends$6 billion. They didn't believe it. That's why I think this is an interesting thing that the president has done because, okay, you might think$5 ,000 to every voter, it's not going to happen. It might be, even as you suggest illegal, there isn't actually any money earmarked for this. So it makes it different from that tariff dividend that he spoke about. I think the total cost would be $1.3 trillion if he were to do it, which is maybe a drop in the ocean.

11:48But still, I mean,$1.3 trillion between friends, what's that? But it's still nothing, right? But it's the signal of unseriousness around policy. I mean, you've got that combined with the crazy see memes around Canada and we're going to talk about Canada after the break. But there is generally, I think, a growing awareness of either a lack of competence. I actually think Kevin Walsh and Scott Besant know better, particularly Kevin Walsh who I know better than Scott Besant. But this is not serious American government policy to just suddenly say, we're going to buy votes. I mean, that's Banana Republic stuff.

12:31This is the stuff of you know I grew up all over the world in countries where people actually did literally try to buy votes from people and I've lived and worked in countries as a reporter where people I've seen people try to hand out wads of cash to get people to come to the polling station this is not far off that and it just makes the the rot in the system combined with a kind of lack of competence and a lack of seriousness and I was wondering if that is also why you've got people in the kind of market thinking, hold on a second, are the grownups in charge here? Yeah, because as you say, we've seen this before.

13:07This has happened in plenty of societies throughout history. You get a corrupt guy in charge because he's charismatic and sort of magnanimous and talks a big game. And then suddenly you realize that he's a fraudster and in many ways he's a criminal. And then suddenly the rot starts to begin in your nation from the top down. And we're seeing all of the telltale signs of what that administration would be. I mean, yeah, bribing people in order to vote for you. We could talk about the U.S. Mint producing a gold coin with Trump's face on it. I mean, that's something that very few sitting political leaders have ever done in history.

13:44But there are a few of them, and I can name some of them. Some of them have been Saddam Hussein, Muammar Gaddafi, Francisco Franco, Kim Il-sung. There have been plenty of leaders who have done this kind of thing. There have been plenty of leaders who have decided that what I'm what am I going to do in order to enrich myself? I'm going to completely gut the regulatory agencies, the police essentially in my government. And in this case, it's the police that go after white collar crime. So I'm going to go cut the DOJ headcount by 4 ,000. I'm going to bring white collar crime prosecutions to a record low.

14:18I'm going to cut the SEC headcount by 15%. I'm going to reduce enforcement actions by 30%. I'm going to cut monetary settlements in half. I mean, we're seeing all of the things that you see when a corrupt leader is in charge. And so as smart as Scott Besant might be, and as smart as he might have been doing his trades with Stanley Druckenmiller back in the day, and yes, he was a successful investor and a successful trader. The reality is he is still running cover for a corrupt president who is with every day losing his mind. And so to me, I can't I can't use he's smart as an excuse. It goes beyond it at this point.

15:02Talk about the legality. And I realize the whole concept of kind of rule of law and what is legal is not legal is being tested in America at the moment. and we are, I still maintain the courts are doing their job. They are there acting as the most essential backstop against, you know, all of the attempts to expand presidential power in a way that courts keep repeatedly calling illegal. And Democratic senators have told me repeatedly, look, we've brought, you know, hundreds of cases against the White House during the course of the last year and a half, and we are winning 70 to 80 percent of them, depending on which courts are ruling, but they are winning the vast majority because the courts are ruling, no, this is legal, this is not legal.

15:46But when it comes to something like this, which sounds like a blatant bribe, and I said earlier, well, it doesn't have tariff offset money against it. Is this legal? If it had money offset against this, is this something that a president could do? You said at the beginning, it's illegal. Talk me a little bit through the legality of this and why it may be a very clear case of it being illegal. From my understanding, it's not legal to bribe US voters in order to vote for you. There are still sunny days out there, Ed. Still good times. So that is my understanding. Now, I think what usually happens with these cases when Trump does something that is illegal is that he gets his cabinet together and they figure out, OK, how can we get around this?

16:35How can we make this happen either way. That's what they tried to do with the tariffs. But to the Supreme Court's credit, the Supreme Court said, no, this is illegal. This doesn't make sense. You don't have the right to use emergency powers here to put a tax on the American people, which is what this is. So what do we have? The tariffs were ruled off,$100 billion in refunds. We've got about$66 billion more to go. And as I said, that'll all go back to the companies who paid those tariffs, but it's not going to go back to the US citizens for whom the tariffs were ultimately trickle down to. So I think it could probably be another case of that where they have a long legal battle.

17:13Ultimately, the courts rule, no, you can't do this. And then Trump tries to find some other way around it. I don't think that he will actually pursue this because I think it is so stupid and so antithetical to everything that the Republican Party stands for. I mean, talk about fiscal conservatism,$1.3 trillion. You said drop in a bucket. That's a big number, to be honest. I mean,$2 trillion deficit is where we're at, which is incredible. This would explode it to three. I mean, if he were to actually do this, the crisis that you would see in the bond markets as investors truly grapple with the fact that this runaway train of debt and deficits and therefore inflation, that it's never going away.

17:58I mean, it would be incredible. We'd see just a huge blow up. So I doubt that it would ever actually happen. But to me, the most important thing is the fact that he's willing to say it. Yeah, exactly. And somebody in the White House said to him, yes, Mr. President, why don't you go and stand on that stage and make a promise of$5 ,000 to every voter if the Republicans win? By the way, American voters are not stupid. They did watch what happened in 2025 when there was that tariff version of this of$2 ,000. And on that, the polling was interesting. 71 % of voters liked the idea, of course, but only 37 % actually believed the government would deliver it on the day.

18:38that and only half of Republicans believed the government was going to deliver on it. But maybe you only just need a few people to believe the government is going to give you$5 ,000 to persuade them to go to the polls. And this idea just has to live until November the 4th, the day after the election. And perhaps it changes a few votes somewhere or it motivates a few people to get into the poll. And you've got a very cynical promise that is never going to materialize. But perhaps somebody in the White House political office, James Blair's office, thinks, oh, well, maybe this will work. I thought it was really interesting.

19:11I think that just more broadly on this whole Trumperpalooza thing, which seems to have been very badly planned because it coincides with the first two days of American football on television and the new football season. So I don't think many people were watching. It also coincides with the first anniversary of the killing of Charlie Kirk. And so you've got Turning Points USA basically boycotting the whole thing, not sending people there and saying, we are going to focus on our own programming and making it very clear that they're not happy about this whole midterm rally mini convention thing happening in the first place.

19:44But if you are a Republican in a tight seat at the moment, and there are not very many of those tight seats, but let's say you are a Republican in a competitive district and you need money to try and help you win. If you do not show up this week at Trumpapalooza down in Texas and listen to the president and cheer the president, somebody is going to take note of it when they decide who to give the money to, right? So it's always follow the money. And the irony of all of that is it's the people in the tight seats, which tend to be the more moderate seats, who are the most in need of distancing themselves from Donald Trump.

20:22Exactly. So you've got people like Congressman Mike Lawler, a fairly moderate Republican from New York area, who won his seat in a fairly democratic neighborhood of New York, but won anyway, because he is a pretty much a centrist. He has had to go down to Texas for two days to cheer the president because otherwise he's not going to have access to all of Trump's$400 million that he's sitting on. And so he's actually, Trump is putting control of Congress in even more jeopardy by making these moderate Republicans sit there and cozy up to him when that is the last thing they really want to be doing to win their districts.

21:02Exactly. I mean, the whole thing politically just makes no sense to me. Can you see a reason for this? Well, he wants to make this whole thing about him because he has it in his head that everyone still loves him. And by the way, there were plenty of Republicans who skipped this event who are running for re-election. And so, as you point out, I mean, there could be other consequences down the line. And just your point about how poorly run this is, they are actually offering free tickets to this convention to fill the seats. So this was not a successful event. I don't think most people actually know that it's even happening.

21:38Like, just to clarify for our listeners, like, Trump is doing this convention for the midterms to, like, get everyone excited and make it a television event. And he's speaking. He spoke last night. He's going to speak again. He's trying to just rile everyone up. But to your point, it's a very bad idea to make the midterms about you, to make the midterms about Trump, because Trump's approval rating is in the toilet right now. I mean, Reuters poll has him at 33%. It's an all time low for him. UMass Amherst has him even lower. So, I mean, the American people are fed up with Trump. If the midterms are a referendum on Trump, then the Republicans are going to lose very, very badly.

22:21And we already see this in the polling numbers where the Dems have an 85 % chance of winning the House, at least on the prediction markets. For the Senate, it's kind of a toss up. But going, you know, a few months ago, people assumed that it was a lock for the Republicans in the Senate. That's no longer the case because of how toxic Trump has become because of all of his terrible decisions from the tariffs, which did not work and increased inflation by a full percentage point to, of course, the Iran war, which is still going on. we're actually entering month seven at this point. We're coming up on 200 days of the Iran war.

22:57The thing that they said was going to last a couple of weeks. As we record this, we're on day 194. So we're going into a direction that everyone understands was the fault of the president. And that's a very rare situation. A lot of times, presidents, of course, make mistakes. and usually what happens is there are some external exogenous event that happens and they react poorly to it. Like, you know, you could look at COVID as an example, whether you think Biden handled it well or he handled it badly. The reality is that happened and then Biden had to deal with the situation. Right. Trump has invented these problems.

23:35He invented the tariff inflation. He invented this war. So he has to separate himself from these elections, but he cannot do it because it's too much ego. it's too much pride and he's just I I think he's going to I think he's going to tank it for them I think that's why a person close to the White House told Politico's playbook the quiet part out loud saying my only hope is that no one watches it since it's competing with NFL opening games no one knows about it no enthusiasm and it's during football only DC people care when you have somebody close to the White House saying I hope no one watches it I think that tells you all that you need to know about it okay we're going to take a break and come back and talk about Canada and what impact are those tariffs actually going to have on the midterm races.

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