Listen to the full episode, here.
Summary: This is a conversation between John Norris and Sam Clement, discussing recent events and policies related to the Trump administration, including: [00:31]
- The court ruling against the administration’s tariffs [11:06]
- The failure of the “Doge” government spending review initiative
- The passage of the “big beautiful bill” and its impact on the budget deficit [02:02]
Key Points
- The court of international trade ruled that the administration’s tariffs did not meet the definition of an economic emergency. [11:06]
- The “Doge” government spending review initiative led by Elon Musk failed to identify significant cuts. [03:53]
- The “big beautiful bill” passed by Congress is not expected to significantly reduce the budget deficit. [02:54]
- There is concern that continued deficit spending and government debt will crowd out private investment. [07:50]
- John and Sam are critical of the lack of serious efforts to address government inefficiency and reduce the deficit. [06:43]
John Norris (00:30):
Well, hello again, everybody. This is John Norris at Trading Perspectives. As always, we have our good friend, Sam Clement. Sam, hello!
Sam Clement (00:36):
Hey John, how are you doing?
John Norris (00:37):
Sam, I’m doing fantastically—and I imagine I’m doing a little better than the President right now. Want to know why?
Sam Clement (00:42):
Why’s that?
John Norris (00:43):
Well, this week, the U.S. Court of International Trade ruled that the administration’s tariffs didn’t meet the definition of an economic emergency, contrary to what the President claimed. And then, we had Elon Musk walking away from the government after pledging to find $2 trillion in budget cuts—he supposedly identified $1 trillion, but to my knowledge, none of the cuts have materialized. And then, of course, there’s the whole “big beautiful bill” that passed. So, a lot has happened. And those first two things? Probably not the President’s finest hour.
Sam Clement (01:25):
It hasn’t been the best week of headlines. There’s been pushback from Harvard and some other universities. While the court’s ruling didn’t apply to all tariffs, the broad-based ones from “Liberation Day”—as it’s called—are largely being rolled back. And yes, that “big beautiful bill,” as he likes to call it…
John Norris (01:57):
That’s one big beautiful bill.
Sam Clement (01:58):
It’s not solving the deficit problem. It may not be increasing it as drastically as some feared, but it’s certainly not reversing the trend. It’s really just another example of kicking the can down the road—a theme the administration promised to avoid.
John Norris (02:18):
I’d argue that Doge and the “big beautiful bill” are more intertwined than most people care to admit. If we’re going to cut taxes and try to make them permanent, we have to do one of two things: either grow the economy significantly faster than anyone is projecting, or get serious about cutting government fat. No ifs, ands, or buts. You can’t cut marginal tax rates, keep the same growth trajectory, and expect to close the deficit. You just can’t.
I happen to think that what’s outlined in the big beautiful bill will spur economic activity more than raising taxes. So, if my choices are to extend the 2017 tax cuts and a few others versus adding more taxes, I’d prefer the cuts. But we still have the issue of government overspending. If we don’t get a handle on it, deficit spending will eventually crowd out everything—probably within five years.
Sam Clement (03:36):
What disappoints me is where the bills try to offset revenue loss. The cuts target things like SNAP and Medicaid—programs that have been among the most successful in U.S. history. That’s not the kind of change Doge promised. It’s not about improving government efficiency across the board—it’s just removing services that help people.
John Norris (04:12):
Agreed. I don’t think most Americans want to see legitimate programs cut. We’d all love to see the government make a good-faith effort to cut obvious waste, but trimming too quickly could cause serious disruption. And if Elon Musk walks away from Doge, and Washington shrugs it off, what was the point? If we’re not taking this seriously, then Washington’s dysfunction is only going to deepen.
Sam Clement (05:08):
It makes the whole “Uniparty” idea feel more real. People used to joke about it, but now it seems like there’s truth to it.
John Norris (05:20):
A lot of truth.
Sam Clement (05:24):
No one in Washington seems interested in changing how things are done.
John Norris (05:28):
Exactly. Some policies that started in the Trump administration were once Bernie Sanders campaign issues. It’s like a political horseshoe—the ends are curving back around to meet.
Sam Clement (05:33):
And programs like SNAP have strong return on investment. Cutting those to balance tax reductions just doesn’t solve the real problems. It’s shortsighted.
John Norris (06:09):
Maybe the strategy is to cut successful programs so that people protest. Then they can say, “Hey, we tried.” Instead of going after real inefficiencies—consultants, duplicate agencies, bloated defense contracts—they target what’s politically easiest.
Sam Clement (06:32):
Defense contractors, too.
John Norris (06:33):
Exactly. And it’s not just federal—it happens at the local level too. I won’t call it corruption, but there’s a lot of questionable behavior.
Sam Clement (06:43):
I’ll call it corruption.
John Norris (06:43):
Fair enough. People say, “That’s just how things get done,” but it protects the power base. Meanwhile, cutting EBT or SNAP affects people who can’t fight back. It’s politics.
Sam Clement (07:21):
Not a great week.
John Norris (07:24):
How’s that for cynical?
Sam Clement (07:26):
A little cynical.
John Norris (07:28):
But true. If we don’t address the deficit—and Europe doesn’t either—growth will slow, and no one benefits from that.
Sam Clement (07:50):
Crowding out is simple economics. More government debt means higher yields, which diverts capital from private investment. That’s been proven. And unless things change, that’s what we’re facing.
John Norris (08:34):
Exactly. And I’m not talking about growing GDP from 2.4% to 2.6%. That’s not enough. We need real growth—3.4% or more.
Sam Clement (08:44):
Incremental growth doesn’t change the trajectory.
John Norris (08:55):
No, it doesn’t.
Sam Clement (08:57):
It’s like a bank’s efficiency ratio—we’re not using our dollars effectively.
John Norris (09:07):
We’re doing a poor job. It takes $1.12 to generate $1 of output. That’s not sustainable. So yes, we sound pessimistic. Let’s shift gears and talk about tariffs. Do we agree with the court’s decision? And will the administration take it lying down?
Sam Clement (09:33):
I don’t think the Trump administration is going to roll over. And there’s a legitimate debate around presidential powers. The same people who were fine with national emergency declarations before are pushing back now. And vice versa.
John Norris (10:14):
Right—and if you’ve read the Constitution, it’s clear: the power of the purse doesn’t reside in the Oval Office. Yet, the President’s power has grown far beyond what was intended.
Sam Clement (10:27):
Exactly. It’s not that Congress accidentally gave away power—it’s that the rules aren’t being enforced. I’ve had issues with this under both the previous and current administrations.
John Norris (11:01):
That makes sense. I think the court made the right call in this case. It’s hard to justify broad tariffs as an “economic emergency” when the economy is growing. But if the administration reframes its argument—say, focusing on national defense supply chains—it could have a stronger case.
Sam Clement (12:44):
The court didn’t rule all the tariffs unconstitutional. Some tied to national security are still in place. People ask why courts get to tell the President what to do—but it’s because these powers were claimed under emergency declarations, not normal legislative channels.
John Norris (13:32):
So, what do you think the President will do?
Sam Clement (13:35):
I think he’ll double down. A reporter asked him about what some traders are calling the “TACO trade”—short for “Trump Always Chickens Out.” And I think that comment hit a nerve.
John Norris (14:24):
It’s like someone held up a mirror to him—and he didn’t like what he saw. I heard someone joke, “I’m going to make money. It’ll be huge. I’ll put a 1000% tariff on something Friday, the market will drop 75 basis points, and by Monday I’ll walk it back. Market’s up 2.5%. I buy low, sell high.” That’s kind of how things have been going.
Sam Clement (14:53):
The market’s reaction to tariff rollbacks has been bigger than the reaction to the tariffs themselves.
John Norris (15:02):
And by the way, that was a terrible Trump impression.
Sam Clement (15:05):
No argument here.
John Norris (15:07):
So, looking at everything from the past week—it hasn’t been great for the President. But the ball’s still in Washington’s court. I think the administration will double down on certain countries, reduce the noise on others, and try to present a clearer case. Right now, the arguments have been pretty weak—almost cavalier—which made the court’s ruling a lot easier.
Sam Clement (15:53):
Yeah, just throwing around numbers like 45%, then changing it to 145%—that’s not a sign of economic emergency. That’s just reactionary.
John Norris (16:01):
Exactly. If the administration wants to be taken seriously, it needs to use a scalpel, not a sledgehammer. Be strategic. If they focused on national security, industrial supply chains, defense materials—made the case thoughtfully—they might have had a better shot.
Sam Clement (16:44):
And remember, the court didn’t say all tariffs are illegal. Just the ones not backed by a legitimate emergency or strategic rationale. If the administration had made a focused case, it might’ve held up.
John Norris (17:06):
Right. Instead, we got brash rhetoric and vague plans. On the Doge side of things, I was initially excited. But the rollout was too loud, too arrogant. They uncovered too much inefficiency and then… just backed off. It was demoralizing.
Sam Clement (17:54):
And everyone seemed fine with that.
John Norris (17:56):
Exactly. I’m okay with extending the 2017 tax cuts—I don’t want to pay more for inefficiency. But unless that sparks real GDP growth, we’ll have to make cuts. If we don’t, we’re going to be looking at $2 trillion a year in debt service alone.
Sam Clement (18:26):
The problem is, no one wants to be the one blamed for the pain of fixing it. And it’s not just about government spending—it touches every part of the economy. Government dollars become salaries, spending, consumption. So when you cut contracts, you cut jobs, then restaurants lose customers—it ripples.
John Norris (19:42):
But if we don’t get a handle on this, it won’t matter. We’re borrowing more than we’re generating. Debt-to-GDP is rising. We’re using leverage inefficiently.
Sam Clement (20:14):
That might work short term—everyone feels good for a while. But long term? It’s a recipe for failure.
John Norris (20:26):
It’s like feeding a starving man nothing but ice cream sundaes. He puts on some weight, feels better. But eventually he develops serious health issues. You can’t fix malnourishment with sugar.
Sam Clement (20:56):
And when someone tries to intervene, they get accused of wanting him to starve.
John Norris (21:01):
Exactly. It’s a flawed logic. Maybe not a perfect analogy, but it helps explain why we need smarter fiscal planning. Looking at everything from tariffs to Doge to the “big beautiful bill”—it’s clear the administration needs to tighten up, get serious, and focus on long-term growth.
Sam Clement (22:02):
I agree.
John Norris (22:03):
Alright, folks—thank you so much for listening. As always, we welcome your feedback. Drop us a line at . And don’t forget, you can leave us a review on your podcast platform of choice.
For more insights, head to oakworth.com and check out the Thought Leadership tab. Please note, everything discussed today reflects the opinions of me and Sam at the time of recording and does not necessarily represent the views of Oakworth Capital Bank, its directors, shareholders, or employees.
Nothing you heard today should be considered an offer to buy or sell any investment products or services.
Sam Clement:
That’s a wrap.
John Norris:
Take care, everyone.
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