Thanksgiving is a wonderful festivity. Unlike the great British Christmas, the American Thanksgiving has somehow eluded commercialisation. The formula remains the time-honoured one: get your family together, eat turkey, be thankful.
Yes, but thankful for what? The originators of the tradition, the early British settlers in Plymouth, were thankful for the survival tips the Wampanoag tribe had given them after the harsh winter of 1620-21. When George Washington proclaimed a day of thanks in 1789 it was to express gratitude to God for “affording [the people of the United States] an opportunity peaceably to establish a form of government for their safety and happiness”.
President Abraham Lincoln formalised Thanksgiving as a national holiday to thank the Almighty that, amid all the upheavals of the Civil War, “peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict”.
Asked on Thursday what he was thankful for, President Donald Trump replied he was thankful “for having a great family and for having made a tremendous difference in this country. I’ve made a tremendous difference in the country,” he went on. “This country is so much stronger now than it was when I took office that you wouldn’t believe it.”
Now not everyone in the United States thinks this ludicrous. In the most recent Economist/YouGov poll, 40% of respondents said they approved of the way Trump was handling his job as president. Among Republicans in the same poll, 62% expressed strong approval. He still has his base.
Yet it is impossible not to sense a change in the air. On the day that Brett Kavanaugh was confirmed by the Senate as the newest Supreme Court justice — a day many Republicans celebrated as a tremendous victory over their Democratic opponents — I offered the following thought to my wife: “This is peak Trump.” That was on October 6. Nothing that has happened since has led me to change my mind.
First, take another look at the results of the congressional mid-term elections. Now that all but a handful of races have been settled, it is clear that this was a serious defeat for the president’s party. In the House of Representatives, the Democrats gained 37 seats, more than enough to give them control for the next two years.
The most concerning trends for Republican strategists must be their poor performance with women, particularly those with college degrees, and younger voters. According to exit polls, clear majorities of voters aged 18-29 (67%) and 30-44 (58%) favoured the Democrats. Partly because of these demographic differentials, Republican candidates lost in key districts in two of the states that decided the 2016 presidential election in Trump’s favour: Michigan and Pennsylvania.
Second, let’s talk about the economy. By most standard measures, it’s in robust health. The International Monetary Fund expects that growth this year will be just under 3%, the highest since 2005. The official unemployment rate is 3.7%, the lowest since December 1969, when Richard Nixon was president. (More about him later.)
Yet only Republican voters give Trump any credit for the economy’s strength. According to the polls, about 70% of Democrats disapprove of his handling of the economy. That helps explain why the economy didn’t help Republican candidates. Immediately before the vote, pollsters found that healthcare beat the economy into second place as the most important issue. You may recall the Republicans’ epic failure to reform or repeal Obamacare.
Now ask yourself what would happen if the economy took a turn for the worse. For investors in both stocks and bonds, that has already happened. The Standard & Poor’s 500 closed on the day before Thanksgiving at just under 2,650, 1.3% below where it began the year. Bond yields have risen significantly this year, from below 2.5% to above 3%, inflicting losses on bondholders.
It is hard to see where respite could come from. The Federal Reserve seems on course to keep raising interest rates and unwinding the expansion of its balance sheet that occurred in response to the financial crisis. If, as most economists believe, quantitative easing mitigated the post-2008 contraction, it seems unlikely that quantitative tightening would not now have an equal but opposite effect on the recent expansion.
The Republicans gave the economy the fiscal equivalent of a sugar rush with the tax cuts they passed this time last year. The glucose level in the bloodstream is now falling and the full scale of the fiscal irresponsibility is beginning to sink in. The most recent Congressional Budget Office projections are eye-popping. Federal debt held by the public is now at its highest level since just after the Second World War: 78% of gross domestic product. If current laws are unchanged, it will be 100% by the end of the next decade and 152% by 2048 — a number without precedent even in time of world war.
Third, Trump and his inner circle are set to be hit not just by the report of special counsel Robert Mueller, but also by a barrage of attacks from congressional committees soon to be chaired by Democrats. Control of the House gives Trump’s political foes two powerful weapons. First, congressional committees have an arsenal of investigative tools that the majority party can wield. The key one is Congress’s subpoena power to compel the production of documents or the sworn testimony of witnesses in furtherance of a congressional investigation.
Moreover, owing to a 2015 rule change pushed through by the Republicans, most House committees can issue subpoenas on the authority of their chairmen or women alone, without consent from the minority party. That includes three of the committees most likely to go after Trump: oversight, intelligence and foreign affairs. Second, Congress has the power to make public the results of any investigation. In short, you can expect 2019 to feel a lot like 1973, as every liberal legislator and journalist sets out to re-enact Watergate, casting Trump as Nixon.
For a time, it seemed to me Trump might be able to transcend all these threats with foreign policy successes based on his primal, intuitive grasp of the relative weakness of America’s foes. I no longer believe he has the discipline or patience to exploit this advantage. Policy on North Korea is a mess: Kim Jong-un openly flouts the constraints that were supposedly placed on him in Singapore. Policy on Iran is an even bigger mess: the administration’s cack-handed defence of its Saudi ally’s murder of Jamal Khashoggi has been shameful. And policy on China may well become a mess if the president opts for a photo opportunity over meaningful concessions on trade this week when he meets Xi Jinping in Buenos Aires.
Finally, a caveat. I have called “peak Trump” before and been wrong. In January 2016 I foolishly predicted that he would flop in the Republican primaries. So I could be wrong again. One of the things that makes me thankful to live in America is that this country is so wildly unpredictable. Except, that is, on Thanksgiving.
An updated edition of Niall Ferguson’s book The Ascent of Money will be published early next year.