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1) Trump’s Trade Dilemma

President Trump is boasting that as part of his trade deals, the EU and Asian nations have committed to invest hundreds of billions of dollars in the U.S.

Great. More foreign investment on these shores means more jobs and increased valuations of American companies.  

But to obtain the dollars, foreigners need to invest more here; they will have to sell more merchandise to us than they buy from us. Or the dollar will rise in value. Either way, the trade deficit will increase as the foreign investment flows in. The chart below, which we have shown before, is a useful reminder that our trade deficit is the mirror image of our capital import surplus.

On “liberation day” back in April, the White House cited the size of each country’s trade deficit as a highly-suspect measure of whether nations were engaged in unfair trade practices. Tariffs were to be assessed based on those deficits.

We’re all for Trump’s often successful trade deals, forcing nations to reduce their unfair tariffs and non-tariff trade barriers. But the unavoidable dilemma facing the Trump administration is that his policies of attracting capital are likely to make the U.S. trade deficit RISE!  

And that will be a valuable lesson in why trade deficits don’t matter.  

2) The Revolt of the Texas Democrats

Texas Governor Greg Abbott has ordered the arrest of Texas House Democrats who fled the state on Sunday. The Democrats are attempting to deny the House the one-third quorum needed to allow Republicans to approve a new gerrymandered Congressional district map.

This scheme by the Texas House Democrats may politically backfire and alienate voters because critical legislation, such as aid to flood victims and property tax relief gets stymied.

What is ironic about this gambit is that the fleeing House members have escaped to Illinois where the Governor JB Pritzker has granted them political asylum. No state has abused the gerrymandering process more than Illinois, where the partisan district line-drawing has been elevated into a science.

In 2021, Pritzker led the fight to jam through the following monument to abstract art he called Illinois' Congressional map. In 2024, Democrats won 14 seats (82%) and Republicans only three (18%), even though Democrats won only 52.8% of the popular vote. You can’t believe the map (below) they drew!

Gerrymandering is an undemocratic practice which allows incumbents to pick the voters who elect them and steal seats from the minority party. Both parties are guilty.

The solution is simple: take politics out of redistricting and let computers draw the lines by using objective criteria and drawing tight and contiguous districts, absent of politics.

3) Court Delivers Big Blow To Government Unions

Congress should have never allowed federal employees to unionize. It's the reason that federal workers are paid salaries and benefits about 30% more than comparably skilled private workers.

It's also why it's been near-impossible to fire even the most incompetent federal bureaucrats.

Trump is finally changing all those rules. He's been laying off thousands of unnecessary government workers and has challenged the collective bargaining arrangements of nearly 75% of federal employees, according to the National Right To Work Foundation.

Predictably, six (!) federal employee unions sued to make him stop.

So this Newsmax headline brought joy to our hearts:

A Ninth Circuit appeals court panel lifted a judge's prior order to prevent Trump's administration from allowing hundreds of thousands of federal workers from engaging in union bargaining with federal agencies.

This case could be headed to the Supreme Court, where we hope these collective bargaining agreements are ended altogether. We can't have politicians negotiating with the very labor bosses who elected them in the first place.

The New York Post, the brashest and most boisterous “tell it like it is" tabloid, is launching a California edition with a full locally-based staff early next year.

5) America’s Tax Hell Holes and Tax Havens

We're very proud of our new VoteWithYourFeet.net website that tracks the flow of people and capital from highly taxed and regulated states to more free ones. We hope you’ve given it a spin. It’s fun to use. And tell your friends.

Some HOTLINE readers say they'd like a short, simplified video version.  

Thankfully, our friends at Kite & Key Media have done just that with a two-minute video on which states place the highest and lowest burdens on taxpayers. The spoiler is that the worst is New York (which taxes everything), and the least burdensome is Wyoming. The most infuriating fact is that California requires non-residents who earn income in the state, even if it's for a single day of work, to file an income tax return.  

No wonder everyone is fleeing the state, from podcaster Joe Rogan to Lynsi Snyder, the owner of In-N-Out Burger.

6) Learning from the Best

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