{"id":174954,"date":"2025-09-22T23:21:08","date_gmt":"2025-09-22T23:21:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/174954\/"},"modified":"2025-09-22T23:21:08","modified_gmt":"2025-09-22T23:21:08","slug":"the-us-economy-has-a-new-problem-democracy-is-under-siege-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/174954\/","title":{"rendered":"The US economy has a new problem: Democracy is under siege"},"content":{"rendered":"

The nation\u2019s top economic statistician was fired<\/a>. Central bank independence is being undermined<\/a>. The federal government is buying chunks of private companies and demanding cuts of revenue streams<\/a>. Presidential power to lob tariffs has been wielded in unprecedented fashion. And federal regulators are threatening media companies over late-night comics.<\/p>\n

These events all took place this year, and not in a third-world country, but in the world\u2019s preeminent democracy under President Donald Trump.<\/p>\n

Some political scientists see a pattern that suggests American democracy is being undermined in real time. The stakes are massive for the US economy and the business world.<\/p>\n

\u201cI have never been this concerned about democracy in the United States,\u201d Vanessa Williamson, a senior fellow of governance studies at the nonpartisan Brookings Institution, told CNN in a phone interview.<\/p>\n

CEOs are growing alarmed \u2014 even if they\u2019re publicly staying quiet to avoid the wrath of the White House.<\/p>\n

Business leaders are \u201cquite alarmed\u201d in private about the state of democracy in the United States, according to Jeffrey Sonnenfeld, the Yale professor known as the \u201cCEO Whisperer\u201d<\/a> due to his extensive rolodex in the business community.<\/p>\n

\u201cWe\u2019ve had a serious erosion of the foundations of democracy,\u201d Sonnenfeld, founder and president of the Yale Chief Executive Leadership Institute, told CNN.<\/p>\n

Research shows that democracies tend to thrive financially.<\/p>\n

\u201cDemocracy is just good for the economy. And autocracy is bad for the economy,\u201d Williamson said. \u201cAutocrats are just not good at managing economies. Policymaking tends to be erratic as democratic institutions decline.\u201d<\/p>\n

Democratizations increase GDP per capita by about 20% in the long run, according to a 2019 study<\/a> titled \u201cDemocracy does cause growth\u201d that was published in the Journal of Political Economy, a University of Chicago peer-reviewed journal.<\/p>\n

Researchers said the positive effects of democracy \u201cappear to be driven by greater investment in capital, schooling and health.\u201d<\/p>\n

\u2018Rapidly\u2019 eroding democracy<\/p>\n

On the other hand, scholars have found countries governed by populists are worse off.<\/p>\n

\u201cPopulist leaders leave a long-lasting negative imprint on the economic and political pathways of countries,\u201d researchers concluded in a 2023 study<\/a> published by the American Economic Review.<\/p>\n

They studied 51 populist presidents and prime ministers who were in power between 1900 and 2020 and found that after 15 years, GDP per capita was 10% lower when compared with a plausible nonpopulist counterfactual.<\/p>\n

\u201cPopulists typically assume office as antiestablishment politicians who claim to represent \u2018the common people\u2019 and to improve their economic fortunes,\u201d the authors wrote. \u201cHowever, they typically do not deliver.\u201d<\/p>\n

Williamson, the Brookings fellow, argued the United States \u201cexperienced democratic erosion slowly\u201d in recent years and \u201crapidly this year.\u201d<\/p>\n

\u201cWhat\u2019s troubling is we\u2019re trending in the direction of the worst-case scenarios I\u2019ve envisioned,\u201d she said.<\/p>\n

In a statement, White House spokesman Kush Desai argued the Trump administration is \u201crestoring confidence and economic dynamism\u201d by pointing to \u201ctrillions\u201d of dollars of investment commitments from Apple, Nvidia, Merck and other global corporations.<\/p>\n

\u201cThese political \u2018scientists\u2019 should\u2019ve spoken up during Joe Biden\u2019s presidency, when Biden officials eroded American democracy by pressuring social media companies to censor Americans\u2019 free speech, by flooding our country with tens of millions of illegal aliens, and by weaponizing the justice system against political opponents \u2013 on top of inflicting the worst inflation crisis on everyday Americans in decades,\u201d Desai said. \u201cThe Trump administration is correcting government overreach, incompetence, and weaponization while implementing the most aggressive pro-growth economic agenda in modern American history.\u201d<\/p>\n

\u2018Horrifying\u2019 pressure on media<\/p>\n

The latest flashpoint: Brendan Carr, the Trump-nominated chairman of the Federal Communications Commission, suggested the regulator would make life difficult for Disney and ABC if they didn\u2019t take action to address on-air remarks comedian Jimmy Kimmel made about the murder of conservative activist Charlie Kirk.<\/p>\n

Kimmel\u2019s show was later suspended indefinitely by ABC in a move that was hailed by Trump.<\/p>\n

\u201cThat\u2019s what you would expect to see in an unfree country. It\u2019s straight from the autocratic playbook,\u201d Williamson said.<\/p>\n

\"A<\/p>\n

A demonstrator holds a sign reading “Protect Free Speech” outside the El Capitan Theatre, home of “Jimmy Kimmel Live!,” on Hollywood Boulevard in Hollywood, California on Thursday. – David Pashaee\/Middle East Images\/AFP\/Getty Images<\/p>\n

Sonnenfeld said Trump\u2019s threats to pull broadcast licenses over critical coverage of the administration is \u201chorrifying.\u201d<\/p>\n

\u201cThe erosion of free expression in the media is really alarming,\u201d Sonnenfeld said.<\/p>\n

Trump has surprised some by the intensity of his attacks on the Federal Reserve, which is designed to be independent from political interference.<\/p>\n

Last month, Trump fired Fed Governor Lisa Cook, who has fought back in court.<\/p>\n

After a brutal jobs report<\/a> on August 1, Trump fired the leader of the agency that compiles the report and accused her, without evidence, of cooking the books.<\/p>\n

Erika McEntarfer, the fired commissioner of the Bureau of Labor Statistics, said last week the firing \u201cmade no sense.\u201d<\/a><\/p>\n

\u201cFiring your chief statistician is a dangerous step,\u201d she said. \u201cThat\u2019s an attack on the independence of an institution arguably as important as the Federal Reserve for economic stability. It has serious economic consequences.\u201d<\/p>\n

State ownership of private business<\/p>\n

Trump has also surprised some by taking a heavy-handed approach with private businesses.<\/p>\n

For instance, Trump demanded the resignation of Intel CEO Lip-Bu Tan<\/a> over his ties to China.<\/p>\n

Trump later praised the Intel CEO and presided over a controversial decision to invest taxpayer money in the $8.9 billion in the beleaguered chipmaker.<\/a><\/p>\n

Although the Intel investment won praise from Sen. Bernie Sanders, some Republicans are troubled.<\/p>\n

\u201cWe\u2019ve been teaching the world that state-owned enterprises are unfair. But now Intel is a state-owned enterprise,\u201d Douglas Holtz-Eakin, a former economic adviser to President George W. Bush, told CNN in a phone interview.<\/p>\n

Holtz-Eakin, the president of center-right think tank American Action Forum, told CNN the government is \u201coverstepping boundaries\u201d by taking stakes in private companies.<\/p>\n

\u201cNow Intel has deeper pockets than anyone else. And politically, we\u2019re never going to let Intel fail. We can\u2019t admit it was a bad idea,\u201d he said. \u201cThe government should stay out.\u201d<\/p>\n

The Intel investment came months after the Trump administration approved Nippon Steel\u2019s takeover of US Steel in a deal that granted the federal government a \u201cgolden share\u201d<\/a> that could give US officials a say in how the private enterprise is run.<\/p>\n

In July, the Department of Defense became the largest shareholder<\/a> in MP Materials, a publicly traded company and the nation\u2019s largest rare earths miner.<\/a><\/p>\n

\u2018MAGA has gone Maoist\u2019<\/p>\n

Mike Pence, Trump\u2019s former vice president, noted on CNBC<\/a> last week that \u201cstate ownership of business is very common in China and Russia\u201d \u2014 two nations that are far from democracies.<\/p>\n

Such moves have \u201ctaken our country to a very perilous place and I think we need to resist that very strongly,\u201d Pence said.<\/p>\n

Sonnenfeld, the Yale professor, went a step further by describing the federal government\u2019s \u201cintrusion\u201d into the private sector.<\/p>\n

\u201cIt\u2019s as if MAGA has gone Maoist, if not Marxist,\u201d Sonnenfeld said.<\/p>\n

Publicly, most business leaders have been relatively quiet about these issues.<\/p>\n

CEOs know that if they speak up, they risk drawing the ire of the president.<\/p>\n

In May, Trump threatened to slap a 100% tariff<\/a> on all of Mattel\u2019s imports after the toymaker\u2019s CEO acknowledged it would have to consider price hikes due to tariffs.<\/p>\n

But in private, Sonnenfeld says, CEOs have expressed major concern about pressure on democracy in the United States.<\/p>\n

The Yale professor said the business community is \u201csplintering,\u201d meeting with the president sector by sector instead of speaking with one voice.<\/p>\n

\u201cWe\u2019re not seeing those forceful voices come together,\u201d Sonnenfeld said. \u201cBut they need to. They are very much alarmed.\u201d<\/p>\n

Updates with White House comment.<\/p>\n

For more CNN news and newsletters create an account at CNN.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"The nation\u2019s top economic statistician was fired. Central bank independence is being undermined. The federal government is buying…\n","protected":false},"author":2,"featured_media":174955,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[104321,95168,28,23473,104324,104323,101,104318,17114,104320,942,13002,21,104322,104319,3123],"class_list":["post-174954","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-american-democracy","tag-brookings-institution","tag-business","tag-central-bank-independence","tag-economic-dynamism","tag-economic-statistician","tag-economy","tag-jeffrey-sonnenfeld","tag-jimmy-kimmel","tag-political-scientists","tag-president-donald-trump","tag-the-federal-government","tag-united-states","tag-us-capitol-police","tag-vanessa-williamson","tag-white-house"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/174954","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=174954"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/174954\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/174955"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=174954"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=174954"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=174954"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}