DOGE

Part of the recent experiment called DOGE the USAID program was dismantled and part of it transferred to the state department. USAID had grown from $16 billion in 2001 to $44 billion last year. Following the major restructuring of foreign aid, the remaining active USAID awards managed under the State Department hold approximately $8.3 billion in un-obligated funding. Out of roughly 6,200 evaluated project awards, over 5,300 were terminated, leaving about 900 active. Many of these projects were specious in nature with things like a $2 million initiative aimed at sex changes and LGBT activism in Guatemala. Many question just where this money really went. While DOGE ended, it sparked an interest in waste in other areas and now fraud is popping up all over.

Public assistance

There are two food assistance programs. The first is SNAP, formerly known as food stamps, and it uses EBT cards to distribute $102 billion per year to those in need. The second is TANF which distributes $37 billion in cash and $9 billion of that is spent on food. The rest is spent on childcare, job training and pre-K childcare. The TANF program money can be used for any purchase including fast foods like McDonalds. EBT purchase are limited to grocery stores which until recently included pop and sweets like candy. Certain groups like people 60 and older, people living with disability and homeless people can use EBT cards for any purchase. Today about 40% of adults are obese and a disproportionate number of those are in the low-income groups. One thing the government is trying to do is to limit what kind of food can be purchased under programs like SNAP and TANF. Currently 38 million people get SNAP and 2.8 million get TANF. Under TANF the maximum benefit is $2,600 per month or $31,000 per year. A family of four in MN with incomes under $18,000 per year qualifies for $11,200 in TANF funds. They also receive $8,000 in Earned Income Tax Credit. They are also eligible for $20,400 from SNAP. The state will also help with childcare expenses paying about one half. The family is also eligible for rent assistance which means paying 30% of their income or in this case $5,400 per year in rent, utility assistance up to $1,600 per year, school lunches and free healthcare under Minnesota Care. A typical family can earn $18,000 per year offering childcare for one child. This means no cost to the family for childcare for their two children if one spouse stays home. The second spouse can earn $18,000 by working part time at Walmart.

Iran bomb

Western countries are at a loss when it comes to negotiating with Iran. First off, Iran thinks long term like generations but the west thinks short term. The Iranian government is continuous and dictatorial while the US president is replaced every four or eight years. The Iranian strategy is based on using negotiations to stall while they complete their long-term objectives. Western countries will not attack an enemy they are negotiating with and thus talks lead to talks lead to talks while Iran continues with its plan. Many times, they have agreed to stop producing nuclear material and offered inspections while they secretly started up new production in some other location. All the Western negotiators want to bring home a good deal and they are periodically allowed to do just that. Then the negotiations continue and Iran continues along its path. The 2015 Joint Comprehensive Plan of Action (JCPOA) that Obama arranged with Iran is a case in point. Iran agreed to not have a bomb for ten years but meanwhile they continued their plans in secret areas. For their cooperation the sanctions were dropped, they were allowed to sell more oil and $150 billion in assets was unfrozen. This was viewed as a great accomplishment by the Wester world. Even today as the war is temporarily halted, Iran is restock piling their rockets to get ready for the next round. Iran’s nuclear program was started in 1957 and the West has been negotiating and end to the program since that time. Each new president starts with a clean slate and a plan to stop the program but to no avail. They use the threat of the bomb more effectively than they could ever use the bomb.

US economy

The US represents the great consumer market and countries around the world want to compete for their share. The US with 4% of the world’s population produces 26% of the world’s GDP. This is particularly true in countries like Japan and Germany where the population is aging. It is the young people who both produce and consume production. Japan decided some years ago that they would manufacture goods in the US to sell in the US and bring home the profits to care for the elderly. Further promoting this concept is the cost of shipping which for a standard 40-foot container has increased from $2,000 to $20,000. Germany has the added incentive of low energy cost in the US which is a third less. In addition, goods produced in the US will avoid the 15% tariff. Because of this and added to the increase in domestic production, the US industrial base is rapidly increasing, sometimes faster than the energy supply. This will put additional pressure to fast-track small nuclear reactors. The US economy is poised for expansion.

China tariffs

When China entered the WTO in 2002, they lowered their tariffs on the US from 24% in 1997 to 9% in 2005. Their overall tariff rate dropped from 15% in 2001 to under 10% by 2005. By 2010 the rate declined to 8%. During these years the US charged less than 2% tariffs on imported Chinese goods. The US trade deficit with China increased from $100 billion in 2002 to over $400 billion in 2018. With recent changes in tariffs the deficit with China fell to $200 billion in 2025 down by $130 billion from the previous year. The US has moved to buying from other Asian countries and away from China as the cost of goods from China increased due to tariffs. The overall trade deficit in the US has grown as the economy expands but with far fewer purchases from China.

Europe GDP

There were several articles in the news this week expressing dissatisfaction among US allies mostly from Europe and Canada. What are the reasons for this change of heart? For years the US has run a negative balance of trade with these countries because they charge higher tariffs than the US and this led to almost a one trillion-dollar annual deficit. The US is adjusting their tariffs to offset some of this deficit. Europe spends 1.75% of their GDP on defense while the US spends 3.75%. The US has been providing for the defense of Europe so they used the extra funds to provide social programs for their citizens, things like national healthcare. The US is now reducing spending toward Europe’s defense and Europe is asked to increase their spending up to 5% of GDP. The US was giving military equipment to Europe to send to Ukraine but now the US is selling this equipment to Europe. There are 32 countries in NATO and the US pays 20% of the cost and provides 40% of the troops. The EU is now being asked to invest more in NATO. The US with $39 trillion in national debt cannot afford these payments and our allies must begin to pay their fair share. Europe, with this help from the US, has grown lazy. They have shorter work weeks, longer vacations, more holidays and earlier retirement than Americans. The average GDP per person in Europe is $54,000 vs $94,000 in the US. The US supplied gravy train is coming to an end and they are unhappy.

Cuba

The situation in Cuba is beginning to look like a precursor to what may occur in Iran. The Cubans have lived under a communist dictator since the 1950’s and if the people try to revolt the military will kill them so they can’t do much. If it gets to the point where their children are going hungry, they may overcome their fear of death and rise up against the guns. If by some miracle they succeed the US will be on the hook for billions to try and revitalize their economy. Will the Cubans be willing to risk death for freedom. The same situation is happening in Iran. If the Iranian government is overthrown will the world come to their aide to help them rebuild.