Ambrose Evans-Pritchard
The Republicans have not lost a Senate seat in Kansas for almost a century. The last time was during the farm foreclosures of the Great Depression in 1932, when Franklin Roosevelt crushed Herbert Hoover in a tectonic landslide.
“I don’t want to be a president with a depression on his résumé. I don’t want to be Herbert Hoover,” said Donald Trump in June, explaining why he was again pulling back from talk of annihilating Iran.
But Hoover is what he risks becoming across the Prairies, where the Iran war has pushed farmers to the brink and a flock of Trump 2.0 chickens are coming home to roost.
The Cook Political Report says a once rock-solid Republican Senate seat in Kansas is starting to look like a “dead heat” in the midterms. The Democratic rival was ahead in the last two polls. RealClearPolitics polling has moved neighbouring Nebraska from “lean Republican” to “toss-up”.
Iowa’s Republican senate candidate is eight points behind in the latest poll. She is calling for a “successful and immediate” end to the war in Iran – a contradiction in terms and one that also confounds the White House. Trump announced a subsidised $US15 billion ($21.6 billion) steel plant in Iowa to try to save the seat.
The US constitutional quirk is that agrarian states are vastly overweighted in the Senate due to the Connecticut Compromise of 1787. What happens to them will determine whether Trump loses control of both chambers of Congress in five weeks.
It will determine whether he succeeds in breaking America’s public and private institutions and establishing, perhaps irreversibly, an authoritarian, winner-takes-all, clan-based state in alliance with a hubristic tech oligarchy.
It will tell the world whether the American people are finally going to rein in the belligerent fabulist that they so recklessly unleashed a second time.
Did Trump ever imagine that his masked immigration “ICE” agents would cause such chaos in the rural economy and meat-packing industry of a state like Kansas?
“These ICE operations are having a massive chilling effect on the legal, documented, skilled workers that put beef on the table and keep the cattle supply chain moving,” said the Kansas Livestock Association last week.
Did he imagine that his attacks on Canada might cost him a state so far from the border? It turns out that Bombardier has large operations in Wichita and the workers are scared after he threatened to ban sales of Canadian aircraft in the US.
Grain farmers saw a collapse of sorghum and soybean sales last year – to Brazil’s advantage – after China retaliated against Trump’s trade war. US cattle farmers fared better because of high beef prices.
Then came Trump’s tariff waiver on 300,000 tonnes of imported beef, flooding the US market with meat in time for the midterms – much of it from Argentina, which US taxpayers had earlier rescued with a $US40 billion bailout.
“A betrayal of the American rancher,” protested Farm Action. “After crashing the soybean market, he is now poised to do the same to the cattle market.”
The American Farm Bureau Federation says Chapter 12 bankruptcies across the rural Midwest rose 70 per cent last year as farmers were squeezed by the rising cost of farm machinery, chemicals and inputs.
Large numbers are sinking deeper into debt to stay afloat.
“On a per-acre basis, every crop analysed is projected to remain below break-even in 2027,” warns Faith Parum, of the American Farm Bureau.
She projects losses of $US131 an acre for corn, $US114 for wheat and $US80 for soybeans in 2027. The bureau has called for a rescue package.
The killer is diesel at $US6.53 a gallon (about $A2.48 per litre). That’s an 80 per cent rise in the cost of the workhorse fuel that powers tractors, combines, grain trucks, irrigation pumps and the farm economy.
The Iran war has also hit fertilisers through two channels.
A third of the world’s traded supply comes from the Gulf. IMF-PortWatch data say shipments have dropped to near zero after a summer rebound. In parallel, a 150 per cent jump in seaborne gas prices has raised production costs in Europe and Asia, tightening the global fertiliser market. All told, US farmers are now paying $US10 to $US20 an acre extra for fertilisers.
Total US farm debt has hit $US605 billion. Roughly $US120 billion has to be repaid or rolled over each year. This is now colliding with another of Trump’s creations: spiralling borrowing costs due to a) implied future inflation from the Iran war, b) US fiscal degradation and c) global suspicion that US Treasuries could be weaponised and are no longer a safe strategic asset.
Most operational farm credit is on maturities of one-year or less, often at floating rates, and is currently averaging over 8 per cent.
Kevin Warsh, the Federal Reserve’s chairman, says borrowing costs are rising because the US economy is growing so fast. Hard data show that the US has grown more slowly than the UK over the last three quarters. Re-acceleration is under way but with a mangled supply-side and a high propensity to leak into inflation.
The farm belt is already reeling from another year of heat and drought. The US agriculture department forecasts that 32 per cent of winter-wheat acreage will have to be abandoned, the second-worst outcome since the Dust Bowl of the 1930s.
It is already too late for Trump to do much about the cost of oil before the midterms, given shipping times and postal voting this month. Nor is there any off-the-shelf option other than accepting a US strategic defeat that leaves Iran in charge of the Gulf.
The White House is betting – or hoping – that its economic blockade will force the regime to its knees, achieving what Washington failed to achieve by weeks of bombing.
Danny Citrinowicz, the former head of the Iran desk for Israel military intelligence, says this commits the cardinal error of failing to fathom the mind of the enemy.
“Iran is not going to offer additional significant concessions. If Washington does not return to the existing agreement, Tehran is likely to escalate,” he says.
Will Iran endure the blockade meekly and let Trump ride out the midterms, only to renew his attacks later? There must be a high risk that it will launch further missile and drone havoc on energy infrastructure in the Gulf while it can exact the most political advantage.
What Trump can still do in time – and is clearly thinking of doing, despite warnings from his energy secretary – is to bludgeon down diesel prices with a US export ban.
‘I don’t want to be a president with a depression on his résumé. I don’t want to be Herbert Hoover.’
Donald Trump in June
This would compound the global refining crisis already caused by the Gulf war and Ukrainian drone strikes in Russia.
It would cut the immediate cost of diesel in middle America but push costs even higher on the West Coast and in New England, which are linked to the world market.
It would not be long before refiners slashed output, reducing the US supply of petrol, jet fuel and other products refined from the same barrel. The price shock would rotate from diesel to petrol. The shares of US refiners would crash.
US credibility as a supplier of fossil energy to the world would crash too, accelerating the global dash for Chinese electrotech.
In short, it would backfire horribly. Might Trump take such a gamble to gain a sliver of momentary electoral advantage? It would be in character.
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