Trump Promises a 10 Percent Cap on Credit Card Interest

Plus, Rand report sparks a rift on the right; Trump on Claudine Gay

Trump is promising a “temporary cap on credit card interest rates.”

President Trump is now promising to limit the interest rates that banks charge to customers with credit card debt.

 “While working Americans catch up, we’re going to put a temporary cap on credit card interest rates, we’re going to cap it at around 10 percent, we can’t let them make 25 and 30 percent,” Trump said Wednesday night in Long Island.

The proposal is generating some pushback. A policy analyst at the libertarian Cato Institute, Nicholas Anthony, wrote that because Trump has been criticizing Vice President Harris for “communist inspired price controls,” the Republican’s “endorsement of price controls for interest rates on credit cards comes as quite the surprise.” Anthony warned that “politicians on both sides of the aisle are in dire need of a better understanding of economics.”

A spokesperson for the American Bankers Association told CNBC that the group “has opposed similar proposals in the past, including one from Rep. Bernie Sanders and Rep. Alexandria Ocasio-Cortez during the 2020 campaign, because they would result in the loss of credit for the very consumers who need it the most.”

Trump has been somewhat unusual as a politician for the way he keeps businesses going alongside his campaign. He has a publicly traded social media network, he has a new cryptocurrency venture, he’s hawking Hulk Hogan’s beer. If Trump thinks a business can make money in consumer lending with unsecured debt at ten percent interest rates, maybe he should skip the command-and-control, centralized government regulation approach, and get into the credit card or consumer lending business himself, on his own. Instead of telling Jamie Dimon or Brian Moynihan from the White House or the Treasury how much Chase or Bank of America are allowed to charge customers, Trump could compete with them on price by rolling out his own credit card with lower rates. Let consumers seeking lower rates transfer their balances over to the Bank of Trump.

Doing this while serving as president, or even as a presidential candidate, poses some conflict-of-interest and distraction issues. Yet if Trump loses, the credit-card business might be an option, assuming the Democrats pardon him so that he doesn’t end up in prison. 

The best price regulation is free-market competition.

Rand report sparks rift on the right: The report of the Commission on National Defense Strategy, released July 29, 2024, has gotten a new burst of attention this week. And deservedly so, because the congressionally chartered commission, led by Chair Jane Harman and Vice Chair Eric Edelman, issued a powerful warning that “The threats the United States faces are the most serious and most challenging the nation has encountered since 1945 and include the potential for near-term major war.” America “is not prepared,” the report warns, recommending doubling defense spending to Cold War levels.

More from the report:

The U.S. public are largely unaware of the dangers the United States faces or the costs (financial and otherwise) required to adequately prepare. They do not appreciate the strength of China and its partnerships or the ramifications to daily life if a conflict were to erupt. They are not anticipating disruptions to their power, water, or access to all the goods on which they rely. They have not internalized the costs of the United States losing its position as a world superpower. A bipartisan “call to arms” is urgently needed so that the United States can make the major changes and significant investments now rather than wait for the next Pearl Harbor or 9/11. The support and resolve of the American public are indispensable.

You might expect a negative reaction to the report from the Senator Sanders progressive peacenik left. But what’s a remarkable statement about the current moment is that the report is getting attacked from the right.

The Daily Signal, a digital newsletter spun out of the Heritage Foundation in its new anti-defense-spending incarnation, faulted Senate Republican Leader McConnell for bringing in the report’s authors to talk to Republican senators at a lunch. “McConnell devoted the Senate GOP’s Tuesday luncheon to discussing the merits of raising taxes to increase Pentagon funding,” the Daily Signal report says, reporting that “one senator” voiced dismay at raising taxes to “fork over more taxpayer dollars to the Pentagon when the public’s confidence in its leadership is at an all-time low.”

And the Committee to Unleash Prosperity, a free-market-oriented group led by Steve Forbes, Arthur Laffer, Steve Moore, and Phil Kerpen, published a September 18 item that was sharply negative on the strategy report, which was done with the help of Rand Corp.

“This report is particularly boneheaded in not understanding that unlike in the 1960s and 1970s, the most important global power is economic – not military,” the Committee to Unleash Prosperity said in an unsigned newsletter item. “We hope this Rand pitch received a dismissive reception from Senate Republicans.”

The item called the report “Reaganism in reverse,” noting, “It was Reagan’s CUTTING those 70 and 50% tax rates that fueled the 1980s economic boom that played the vital role in winning the Cold War – without firing a shot. How would disabling the U.S. economy with higher tax rates increase American national security?”

I admire the Committee to Unleash Prosperity’s opposition to tax increases, but the idea that “the most important global power is economic – not military” seems overly confident. When a Democratic former member of Congress like Jane Harman basically agrees with President Trump that we’re at risk of a world war, and that the public had better wake up to the danger, dismissing the alarm would be a big mistake.

Michael Mandelbaum wrote (“America the Unprepared”) shortly after the report came out: “The United States was not prepared for the Civil War or either of the two World Wars. The Korean War, which began in 1950 and which the country promptly entered, also came as a surprise to the public at large. In each case, the country managed, over time, to muster the military force necessary for success on the battlefield, but only after having paid a price in territory lost and casualties suffered. In the next war, the cost of unpreparedness could be painfully, even tragically high.”

One can say that it was a tactical error for this commission to mix up its strategic warning with a call for tax increases bound to alienate Republicans. But my own sense is that the divide here is deeper than any inartful language about returning to Cold War marginal rates. There’s a faction in the Republican Party that, like the socialist Sanders wing of the Democrats, really believes the threats would somehow recede or diminish if America pulled back overseas, or that national security spending could take deep cuts without adverse consequences. In a second Trump administration or a 2028 Republican primary, this will be a fractious issue. The temptation is to paper the conflict over with deficit spending, so the defense hawks get the spending and the low-tax people get the low taxes. Yet that approach has its limits, which are drawing near.

Trump revisits the Claudine Gay congressional hearing: Speaking earlier today at the Israeli-American Council’s “Fighting Antisemitism in America” event Trump acknowledged, “A spectacular person, Elise Stefanik.” He said, “What she did to that woman at Harvard with the big fat glasses. That woman had no idea what was happening. That was beautiful to watch, actually.” 

“My first week back in the Oval Office, my administration will inform every college president that if you do not end antisemitic propaganda, they will lose their accreditation and federal taxpayer support,” Trump said. “You do that, it’s going to work miracles.”

“Chuck Schumer is Hamas all the way. I don’t know what happened to him,” Trump said. “If I do win, Israel will be safe and secure…. But if I don’t win, Israel will be eradicated…In Israel, they love me. I could run for prime minister.”

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