By Liz Truss
With a presidential rematch between Joe Biden and Donald Trump now all but confirmed, the world is focusing on what could be the most consequential election ever. If the disasters of the past three years have taught us anything, it’s that we need a conservative back in the White House. The West is succumbing to challenges from its enemies abroad while being undermined from within by the promotion of leftist ideologies, eco-extremism and wokeism. A Trump victory would provide much-needed leadership to the Western world.
But even if President Trump is re-elected, his battle will have only begun. Across the West—especially the English-speaking world—there has been a shift of power away from democratically accountable officeholders to unelected bureaucrats and technocrats. The administrative state undermined Mr. Trump’s first term and undermined my tenure as Britain’s prime minister, forcing me out of office after 49 days. I assumed that I would be able to drive through the agenda on which I was elected. How wrong I was. The opaque British bureaucratic state undermined my proposed reforms, and their American equivalents will have Mr. Trump in their sights if he is victorious in November. The deep state will attempt to undercut him even more than it did in his first term.
Conservatives need to understand that winning an election isn’t enough. The winner needs a concerted plan to dismantle the deep state, which seeks its own self-preservation. When I entered Downing Street in September 2022, growth in the British economy had been anemic for years, despite artificially low interest rates that served to accustom government and consumers alike to cheap money and inflation. Tax burdens and energy costs were high, and the expansive welfare state was bloated. The U.K. had left the European Union in 2020, but reams of burdensome laws remained on the British statute book. The economic establishment had bought into the high-tax, high-regulation, big-government European approach and had little appetite for supply-side policies or tax cuts. Too many conservatives went along with the establishment’s push for net zero and high immigration
As soon as I announced plans to institute a range of supply-side reforms, I was marked by the technocrats for political extinction. On the eve of the publication of our growth plan, the Bank of England raised interest rates, but not by as much as anticipated—a misstep that prompted a fall in the value of the pound, leading to higher yields on U.K. government bonds, known as gilts. The central bank also announced plans to sell £40 billion in gilts that evening, prompting private bond holders to pre-empt the sale by flooding the market with their own gilts.
Rising yields were a problem because of pension funds’ exposure to leveraged liability-driven investment funds, which are highly susceptible to interest rate risk. Due to failures in regulation and oversight, U.K. pension funds were uniquely exposed to the same kind of risk that caused several U.S. banks to collapse in early 2023. The liability-driven investment funds’ leveraged bets on gilt prices began to sour while the Office for Budget Responsibility—a U.K. version of the Congressional Budget Office—leaked its claim that our plans would create a £70 billion “fiscal black hole.” OBR forecasts like this one have consistently been wrong because they underestimate the Laffer curve effect of tax cuts and the benefits of supply-side reforms.
Unelected bureaucrats caused this market turmoil, but elected representatives were blamed. Neither I nor Chancellor Kwasi Kwarteng had been given any warning before the liability-driven investment fund situation blew up. When the Bank of England announced it would buy gilts to support the pension funds—a move that everyone knew would prompt investors to unload their government bonds—I knew they had me at gunpoint. We had to ditch our program or risk a market meltdown that would leave the government unable to finance its debt. There should be an independent investigation into what happened, but the establishment would never allow it.
The U.S. economic establishment already is arming against Mr. Trump and his economic program. After the disaster of Bidenomics—with its ballooning subsidies, tax hikes, burdensome regulation and more than $34.6 trillion of debt—a program of supply-side measures like oil and gas exploration, spending cuts and tax reform is desperately needed. In March, CBO Director Phillip Swagel explicitly warned that the mounting U.S. fiscal burden threatened a crisis of the kind that brought me down. Corporate borrowers are also reportedly preparing for market volatility. Jamie Dimon of JPMorgan has warned the federal debt is pushing the economy toward a financial cliff.
This isn’t a fight only to return to fiscal responsibility, but also to return power to the people’s elected representatives. My Republican friends must be ready for the fight of their lives.
