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      Crypto giant Tether CEO on cooperating with Trump administration: ‘We’ve never been shady’

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      Paolo Ardoino, CEO of the cryptocurrency company Tether, was flying over Switzerland last week as he contemplated the changing regulatory landscape.Tether used to be at war with the establishment. Now it is the establishment.The crypto giant – tether is the most traded cryptocurrency in the world – has had a strange trip. Four years ago, banks were dropping Tether as a client, and regulators in New York had the company against the wall over questions about commingled client and corporate funds. Treasury officials were complaining that dollar-backed cryptocurrencies enjoyed the international privileges of the dollar without the responsibilities of preventing its misuse. Federal investigators were looking into Tether for possible violations of anti-money-laundering and sanctions rules.The cryptocurrency industry anecdotally – and conspiratorially – describes the Biden administration’s posture toward crypto as a systematic effort to debank crypto in the form of tactics such as “Operation Choke Point 2.0”. Ardoino says Tether’s leadership needed to become globetrotters in search of someone to take their business.And it’s a lot of business. Tether currently is the 17th largest holder of US government debt, with nearly as much in treasury bonds in its digital vaults as Saudi Arabia. Tether’s value remains stable because it is pegged one-to-one to the dollar, meaning the value of each individual tether coin is $1. The company backs the total value of the cryptocurrency with dollar assets like treasury bonds in an American bank – in this case, $140bn deposited with Cantor Fitzgerald.Tether comes just behind bitcoin and ethereum as the most valuable cryptocurrency, and by most measures it is the most widely traded. Investors in countries with unstable currencies, like Turkey or Argentina with their 40%-plus inflation rates, use it to hold on to the value of their savings against the dollar. Crypto traders use tether to park their digital assets in a safe place.The degree of cooperation between Tether and law enforcement reflects an evolving shift in the government’s posture toward the company, even as federal agencies had been cracking down on cryptocurrency more broadly under Joe Biden.“We’ve never been shady,” Ardoino said. “The company has been great. It has been attacked. Debanked. You know, when you’re trying to be a disruptor – in a good sense – you are going to always be attacked by the establishment.”Previous administrations’ hostility to crypto – and perhaps to tether in particular – was the product of strategic mistakes the company had made, Ardoino said.“We were very naive. We thought: ‘Oh, we are going to keep our head down.’ We were not communicating. We were not telling what’s going on, and that was used against us,” he said. “And that’s fair, right? So, if someone is not communicating, or you feel is not transparent enough, then that is how people get to fear.”After settling its case with New York regulators in 2021, Tether began to come out of its shell, publishing quarterly statements and expanding its cooperation with the government. Today, things are different for Tether. Its banker – the Cantor Fitzgerald CEO Howard Lutnick – has been confirmed as secretary of commerce in the Trump administration. The company says it is proud of its cooperation with US law enforcement. Though Tether’s holding company is headquartered in crypto-friendly El Salvador, the cryptocurrency is expanding in a way that Ardoino says will help the United States secure its position as the world’s reserve currency.“We have 400 million users in emerging markets,” Ardoino said. “We are basically selling the US debt outside the US … We are decentralizing the US debt as well, basically pushing for dollar hegemony. That’s how the US can maintain its dominance when it comes to its currency.”It’s a line Lutnick might have written into his confirmation hearing speech himself. The Senate confirmed Lutnick on a party-line vote 51-45 in February. Ardoino said their relationship is at arm’s-length now, though.“Cantor [Fitzgerald], they are our custodian. So, we will continue to have this relationship with Cantor,” he said. “They have been a great custodian for us. They are primary dealers, so we can have basically direct access to the Fed[eral Reserve] to purchase [government] debt. With Howard, when he goes into government, we cannot talk to him.”Lutnick has been a vocal backer of cryptocurrency and tether’s position in the industry in particular. Senators had some sharp questions for him about tether at his 29 January hearing, with Senator Maria Cantwell pressing him about audited holdings.“Do you think the market needs to comply with audits about whether one-to-one ratios really exist on stablecoins?” Cantwell asked Lutnick.“I believe stablecoins, US dollar stablecoins, should be audited, should be completely backed by US treasuries 100%,” Lutnick replied.skip past newsletter promotionafter newsletter promotion“How do we prove that?” Cantwell then asked.“A US audit and one-to-one backed by US treasuries,” Lutnick continued. “And lastly, you can’t change the rules; meaning if someone has bought the stablecoin, you can’t change the price. If someone’s made a deposit with you, you can’t say: ‘I’m going to withdraw, you’re going to change the price.’”She also asked about reports that “as much as $19bn of Tether could be illicit activity by the North Koreans, the Russians, the Chinese. And so, what do we do about that? What is your solution?”“It’s like blaming Apple because criminals use Apple phones,” Lutnick replied. “It’s just a product. We don’t pick on the US treasury because criminals use dollars. So, I think it’s just a product … They are signed up with all US federal law enforcement. They follow all federal law enforcement instantly.”Ardoino rejects the suggestion of tether’s usefulness to criminals. “There is no financial institution – even the big banks, they don’t have this breadth of collaboration,” he said, citing more than 200 agencies in 50 countries that work with Tether.A Swiss bank might rebuff an American law enforcement agency coming for money in its accounts. Tether, however, touts its ability to return money stolen from others. For example, a notable “pig butchering” scam last year sent Shan Hanes, CEO of Heartland Tri-State Bank in Elkhart, Kansas, to a 293-month federal prison term for embezzling $47.1m and sending it overseas as cryptocurrency. Tether was able to recover $8.3m for the victims.The traditional banking system is more porous than a cryptocurrency wallet right now, Ardoino argued.“When [criminals are] finally trying to use blockchain and move money on the blockchain in USDT [tether’s trading symbol], we see them and we freeze them,” he said. “And it takes 15 minutes to freeze an address from our stock. We are much more granular and faster than any bank or any other financial institution. So, I’ve been saying very loudly and publicly that any criminal using USDT is a very stupid criminal, because we can see everything and we can catch it.”Ardoino does see a threat in an adversarial regulatory relationship toward crypto, both in the United States and Europe. Both Coinbase, the largest cryptocurrency exchange in the US, and EU-based exchanges removed USDT because it does not comply with the EU’s Markets in Crypto-Assets regulation, which went into effect at the end of 2024. Traders can hold Tether in non-custodial wallets but can’t trade it on an exchange that complies with European regulations.“I think that the US understands very well that they should very, very much avoid a DeepSeek moment for finance and crypto,” Ardoino said, suggesting that it is possible that some invention in a stealth-mode lab somewhere beyond the industry’s attention could radically change the competitive environment. Ardoino was referring to the Hangzhou-based startup DeepSeek, a large language model AI that emerged seemingly from nowhere in January that could compete with Meta and OpenAI’s offerings at a fraction of the cost. Its emergence is disrupting AI business plans by changing the competitive environment.Ardoino hopes the new administration will have settled on its approach to regulations – likely to be much friendlier than its predecessor’s – by September, he said. “I think that they want to get regulations done by June. June would be very aggressive as a timeline, but September is realistic.” More

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      Radical DeSantis plan for Doge-style cuts in Florida opposed by own party

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      Radical plans by Florida’s Republican governor, Ron DeSantis, to overhaul the state’s financial machinery have hit turbulent waters, with party leaders pushing back on his Doge-style efficiency taskforce, and economists dismissing a proposal to abolish property taxes as essentially unworkable.DeSantis touted his handling of the economy in his “state of the state” speech at the opening of Florida’s spring legislative session on Tuesday, during which he insisted: “We must continue to be a friend to the taxpayer.”It came a week after he formally announced the creation of a state department of government efficiency (Doge) to replicate the controversial federal operation helmed by Elon Musk.Reporting to the governor, its purported mission is to eliminate wasteful spending by rooting through various state boards and commissions, and auditing local government and university budgets.Despite Florida having cash reserves of $14.6bn, and the lowest number of government employees per capita of any state, by DeSantis’s own concession, he said he still wanted to cut 740 full-time jobs. DeSantis also said he wanted to, potentially, get up to 900 more associated positions “off the books” by scrapping 70 “redundant” entities such as advisory bodies.Democrats were quick to point out that Florida already has a voter-approved government efficiency taskforce, which was set up in 2006 with an almost identical mandate. DeSantis’s new efficiency team, they asserted, was itself an example of unnecessary spending, and a performative exercise of jumping on the Doge bandwagon to align himself with Donald Trump’s slash-and-burn approach to various taxpayer-funded federal agencies.“Republicans have been in total control of Florida’s government for nearly 30 years, and he wants to talk about government waste?” Nikki Fried, chair of the Florida Democratic party, said in a statement.“Ron has consistently passed the largest state budgets in Florida’s history, illegally spent millions of taxpayer dollars to run political campaigns, and just allocated $250m to fund his political stunt on immigration. Don’t lecture us on wasting taxpayer dollars.”Another level of perceived resistance came on Tuesday from an unexpected source: the leaders of both of Florida’s Republican-dominated legislative chambers.“Let’s focus on what matters. Let’s pass actual reforms rather than symbolic gestures,” Daniel Perez, the Florida house speaker, told members following DeSantis’s address.“Let’s repeal government programs instead of reshuffling them. Let’s swing for the fences and not just try to get on base.”Perez has previously noted that DeSantis, a self-styled fiscal conservative, benefited from a 70% budget increase for the executive office of the governor over his six years in office.He and the senate president, Ben Albritton, clashed with DeSantis in January over the governor’s demand for a special legislative session to advance his immigration agenda. The parties came together to eventually pass a mutually acceptable hardline bill, but observers say tensions remain.In remarks to the senate, Albritton, a member of the existing efficiency taskforce, said he was proud that Florida already “has a great framework for accountability”, and that he and other lawmakers had made a substantive number of recommendations “to improve flexibility [and] simplify processes”.“The fact is we are a state and nation of laws that should be created by elected officials accountable to the people who elected them, not appointed professional staff,” he said.Some observers noted that, after forcefully pushing both his Doge measure, and the related but unprecedented pitch to replace Florida’s $40bn-a-year property tax structure with an as yet unspecified alternative, DeSantis was relatively quiet about them during his Tallahassee address on Tuesday.He said “taxpayers need relief” from high property taxes, which he said made owners in effect tenants of the government, and that lawmakers were working on a proposal for “constitutional protections for Florida property owners” to place before voters in the 2026 election.“DeSantis’s latest scheme to eliminate property taxes threatens the very services that keep our communities safe and functioning. These taxes fund schools, fire departments, police, trash pickup, and safety on our roads and in our water, among other essential services,” said Jared Nordlund, Florida director of the civil rights and advocacy group UnidosUS.“Eliminating them will drive local governments into financial ruin, allowing the state to seize more control, a blatant attack on home rule and local democracy.“By the way, where was the update on his much-hyped Doge initiative? Just weeks ago, DeSantis promised a major push on this program, yet there was not a single mention. Was it just another empty headline grab? Floridians deserve answers, not political theater.”DeSantis’s office did not respond to a request for comment.On Thursday, the Floridian reported that Republican state representative Ryan Chamberlin was working on legislation to eliminate property taxes.The non-partisan Tax Foundation, meanwhile, questioned the advantage to Florida, which has no state income tax, of abolishing the traditional system by which state and local governments raise money.“The property tax is a relatively economically efficient tax. It corresponds better than most taxes to the benefits that people receive by paying it,” said Jared Walczak, the group’s vice-president of state projects.“The value of your home is not a perfect proxy for the value of local services you receive, but it is a far better approximation than you would get with, say, an income tax where sometimes you’re getting an inverse relationship between payment and benefits.“Most economists say property tax is a fairly good tax and therefore efforts to eliminate it are misguided. If Florida really had the revenue to eliminate the property tax, there are so many better things the state could do. If they don’t have that capacity, they would have to raise another tax or potentially dramatically reduce spending, and that could just be a very bad trade off.” More

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      Bloody Sunday: restored photos show the violence that shocked a nation

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      Sixty years ago, on 7 March 1965, civil rights leaders and nonviolent activists attempted to march from Selma to Montgomery in a fight for African Americans’ rights to vote. But as they crossed the Edmund Pettus Bridge in Selma, Alabama, they were met with unfounded brutal violence from Alabama state troopers. This day is commemorated as Bloody Sunday. Among the marchers was photojournalist “Spider” Martin who worked for the Birmingham News; he documented the violence firsthand, shocking the nation with his revealing images of the reality of voter suppression.Though the march occurred six decades ago, Doug McCraw, a native son of Tuscaloosa, Alabama, and producer of the exhibit Selma Is Now, on display in Montgomery, Alabama, until 1 June, argues that the fight for civil and voting rights continues today. McCraw writes in his co-produced book, Selma Is Now: The March for Justice Continues, “sacrifices made by the marchers in March 1965 paved the way for the liberties we enjoy today, but the struggle for social justice continues.”View image in fullscreenAs a result of Donald Trump and his supporters spreading false claims of voter fraud after losing the 2020 presidential race, many Republican lawmakers implemented voting laws that disproportionately affect African Americans’ ability to vote in the years to come.The new voting laws included redrawing district lines giving Black voters less power at the polls and reducing the number of ballot drop boxes for mail-in ballots. Additionally, states such as Ohio and Idaho imposed stricter ID requirements for in-person and mail-in voting. These restrictions reflect the injustices that marchers risked their lives to challenge.Martin’s newly restored photos, on view at the exhibit Selma Is Now, show his work as the only news photographer to capture the moments that occurred on Bloody Sunday and the subsequent marches from Selma to Montgomery. During the 1960s, the public primarily witnessed major events like Bloody Sunday through images in newspapers and magazines. Martin’s photographs were so influential that they sparked nationwide protests, prompting President Lyndon B Johnson to order 2,000 national guard troops to escort the marchers from Selma to Montgomery on 20 March 1965, to prevent another Bloody Sunday.View image in fullscreenKaren Graffeo, a photographer, professor of art at the University of Montevallo, and director of photo restoration for Selma Is Now, points to the importance of the photos today: “The photographs are particularly alive considering recent challenges to human rights and the rise of self-aggrandizing politicians in a warring world.”The images provoked Andrea Young, daughter of the civil rights activist Andrew Young – who marched across the bridge on Bloody Sunday and later served as executive director of the Southern Christian Leadership Conference, mayor of Atlanta, and US ambassador to the United Nations – to recall being nine years old when her parents brought her to the third and final march, 13 days after Bloody Sunday.View image in fullscreenView image in fullscreen“My parents believed so much in America that they brought their children,” Andrea notes. “See the hope emanating from the people in these photographs. The adults knew how ugly America could be, and they loved America enough to march in hope, to march in love, to march forward, letting their light shine.”Like Andrea’s parents, many African Americans faced disenfranchisement in the years leading up to Bloody Sunday. Jim Crow laws made it difficult for African Americans to vote; they faced poll taxes, literacy tests and intimidation tactics that prevented Black people from voting, despite the passage of the 15th amendment granting them that right. Meanwhile, Black people were being lynched by the Ku Klux Klan (KKK), and on 15 September 1963, the KKK bombed a Black church in Birmingham, killing four young girls. By 7 March 1965, less than 1% of Black people were eligible to vote in some counties in Alabama.John Lewis, who became a US congressman, is quoted in Selma Is Now: The March for Justice Continues as saying in 2018 that Martin’s photographs told the story of a people denied the right to participate in democracy. His “images made it plain and clear that hundreds, thousands, millions of people could not participate in the democratic process simply because of the color of their skin”.View image in fullscreenView image in fullscreenDuring the encounter with police, at least 58 people were injured, including several who were hospitalized after being struck with clubs, whips, cattle prods and teargas. Among those injured was Lewis, who suffered a fractured skull from a police baton.In spite of these injustices, an estimated 600 civil rights activists set out to march from Selma to Montgomery to protest racial discrimination in voting rights. Chevara Orrin, the daughter of James Luther Bevel, asked Andrew Young what inspired him to keep marching. “I once asked Ambassador Andrew Young if the civil rights movement’s ‘foot soldiers’ ever experienced what we now call ‘Black fatigue’. He responded, ‘Child, we didn’t have the luxury of fatigue. We had to press on.’”View image in fullscreenView image in fullscreenMartin’s images illustrate the fatigue and determination of all those who marched. Dr Martin Luther King Jr noted the powerful impact of his pictures, telling him, “Spider, we could have marched, we could have protested forever, but if it weren’t for guys like you, it would have been for nothing. The whole world saw your pictures.” He credited Martin’s images with influencing the passing of the Voting Rights Act signed by President Johnson exactly five months after Bloody Sunday.Tracy Martin, the daughter of Spider Martin and co-producer of the book, Selma Is Now: The March for Justice Continues, recalls her father’s courage, and the current importance of his work. “Daddy faced beatings and death threats while capturing through his lens the most iconic images of a movement that changed a region and a nation,” she writes. “As his daughter, I have the privilege and responsibility to continue disseminating his work around the country as a reminder to us of just what was at stake in 1965.” More

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      I lost my job at USAid. It’s devastating – but I still have hope | Christian Smith

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      When we rang in the New Year, I wasn’t remotely expecting politics to collide with my career, my family and me. In a matter of weeks, I had lost my job, my father and, I felt, my country.I spent a dozen years as a program officer for USAid, serving in countries in South America, Africa and Asia with my family. I loved my job working with governments and NGOs to improve the lives of those in need. Doing good and doing well, we said. I was helping to build an information system to improve aid transparency and efficiency when sudden news arrived.At 5pm on a Friday, we received an email saying our particular contract had been shut down. In all, 10,000 professionals were dismissed from their jobs, while Elon Musk called us a criminal organization and its staff – me included – a “ball of worms”. The wrecking had begun.At USAid headquarters, administrative assistants were ordered to take down all the pictures of the many people the agency helps around the world, as if it had been something shameful. Only clocks were left on the walls. More cravenly, the administration blocked access to the wall of names honoring those who had given their lives to the cause. Trump officials canceled USAid’s building contract and handed it over to US Customs and Border Protection.The same clocks on the walls that had once marked time over Americans helping people in need overseas may now mark time over Immigration and Customs Enforcement (Ice) agents deporting people to those countries and others.The Trump administration is abandoning millions of people around the world and cutting off life-saving services. We are losing goodwill and influence – diplomatic, economic and moral. A good sign that closing USAid was a mistake: China is already moving in to fill the void, and strongly rightwing leaders like Hungary’s Viktor Orbán are applauding.The destruction is also almost certainly unconstitutional in a number of ways, and aspects continue to be reviewed, blocked or upheld by courts lagging behind the speed at which laws are being broken. A showdown on the reach of executive power has begun.These changes hit me very close to home. A significant number of my family are conservatives who voted for Trump, fueled by two decades of misinformation promoting hate and anger. Despite this, in the interests of our family integrity, we have learned to talk to one another respectfully. We avoid topics related to politics and focus on our love for each other, jigsaw puzzles and American football (until even that became “woke”).Blindsided at work, I was next blindsided at home. Two days after USAid was lost, my father died unexpectedly. Thankfully, my dad and I had been able to say we loved each other before he died. The kids and I flew out and we spent a beautiful week together with the family grieving his loss.However, in a strange moment at the end of the week, my mother told me that I shouldn’t talk about USAid because I didn’t know what I was talking about (as if I had no idea about the organization where I had spent my career). Armed with details from her trusted websites, she informed me that USAid was performing sex changes on children and funding terrorist groups. We defused the moment, but it demonstrated how unchecked deception fomented by wealthy interests so gravely distorts people’s views.Obviously, all of these sudden losses have given me pause to reflect.Despite some people’s attempts to reshape the US and its place in the world, we have not seen the end of American generosity. Humans are successful because we cooperate. We have obligations to each other as living beings. We also know that we can’t make ideas go away, and the best ones – like kindness and caring for others – are actually what bind us.The dismantling of USAid as an institution does not mean that the US’s generosity of spirit has also been eradicated. USAid was a longstanding independent agency established by John F Kennedy, receiving consistent bipartisan support because it advanced America’s foreign policy objectives by helping others.Such values have not disappeared. We can be certain that, in one form or another, US aid will return.

      Christian Smith is an American citizen and former USAid officer who lives between Dublin and Spain More

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      There are 1,000 grotesque memes of JD Vance – and they’re all more likable than the real thing | Marina Hyde

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      You may well be aware that Backpfeifengesicht is the German word for a face that is worthy of being slapped. Even so, how has this not been internationalised? Or at the very least Americanised, where its dictionary definition would presumably be adorned by a picture of the face of US vice-president JD Vance – already faultlessly playing the role of worst American at your hotel. You can immediately picture him at breakfast, can’t you? Every single other guest on the terrace with their shoulders up round their ears, just thinking: “Where is he now? How unbearable is he being NOW?” Next, imagine breakfast lasting four years.I say the Backpfeifengesicht definition would be accompanied by JD Vance’s face … but then again, what is the face of JD Vance? The internet is awash with people suffering an acute case of not being able to remember it any more, having seen so many hideous comic distortions of Vance that those meme versions are not simply the only results on the first page of your own mental Google search, but stretch deep beyond the second and into the third. Somewhere on page four, where you might as well publish the nuclear codes or pictures of Taylor Swift giving cocaine to babies, is an unmodified snap of what JD Vance actually looks like. Or at least what he looks like with eyeliner.Before you get there – and you don’t, really – your synaptic filing systems throw up every variety of Photoshopped Vancefake: swollen manboy, face wearing a Minion suit, a bearded egg … I’m hoping that sooner or later, an American news outlet will accidentally use a modified photo, because even the picture editor has forgotten what the vice-president looks like, and then we can have one of those massively self-regarding legacy media-blow-ups, where the entire staff has to resign after a remorseless investigation by the executive editor reveals Vance isn’t actually a big purple grape. “This is a stain on our newspaper’s history. A big purple stain.”Vance is more meme than man, now, and it is, of course, something of a consolation that he is so extremely online that he can’t help but have noticed this. The VP is like a one-man government troll-feeding programme – please don’t cut him, Elon! – which is probably why people have become so heroically committed to taking the piss. The probability of the vice-president seeing you insulting him is basically one.Just as previous holders of his office like Teddy Roosevelt and Richard Nixon once did, Vance spent a notable amount of this week both denying he suggested Britain and France were random countries that hadn’t fought a war in 40 years, and replying to random X posters called things like “Jeff Computers” to counter the suggestion that he wasn’t loved and feted on his recent skiing holiday.View image in fullscreenOver on this side of the Atlantic, it must be said that the latter vignette in particular serves as a helpful reminder of the cultural differences between our great nations – and indeed between our great anti-elitists. British politicians would rather admit they’d sexually harassed an intern than gone skiing. (You can, of course, do both – and many do.) If a British cabinet minister were to sally forth on to social media like Vance did, and honk that actually, he had a great time on the ski slopes, it would probably be the end of him. Let’s face it, our rightwing politicians still make time twice a week to do a drive-by on “latte drinkers”, seemingly unaware that the only thing left in most high streets, and quite a lot of people’s lives, is a hot milky drink at a Costa. Yet in our country, would-be populists treat having the temerity to order a coffee like it’s Marie Antoinette skiing past a workhouse – which is a useful illustration of why we don’t have growth, and why our many political failures speak to near-empty rooms at conservative conferences in the US.Anyway: Vance. On or off skis – and I would prefer him to sod offski – the vice-president can be judged successful in his deliberately adopted mission to become mesmerisingly awful. On British army talkboards this week, I spent some very enjoyable time watching veterans of the US’s wars in Iraq and Afghanistan offer their thoughts on JD, who I believe was some kind of military journalist for about 15 minutes. Though that wasn’t quite how they put it, naturally. Real soldiers can be hilariously creative with their insults, while Vance is drawn towards the artless, perhaps most neatly embodied in his decision to whine at Volodymyr Zelenskyy: “Did you even say thank you?”Then again, while I’m sure that the memes will keep us warm in the event of an unscheduled nuclear winter, it must be said that other forms of digital manipulation are passing notably without the comment they used to, even until very recently. So perhaps the moral slippage has not been entirely one-sided.I noticed this week that people who only a couple of years ago were hand-wringing about the horror AI deepfakes could wreak upon democracy were now cheerfully sharing synthetic scenes of Zelenskyy slapping Donald Trump in the Oval Office, or Trump crying like a baby, or some other eerie piece of fakery that felt qualitatively different from a still of a lollipop-wielding kiddie Vance. I think people used to think this stuff was bad and corrosive and potentially politically dangerous? Maybe they still do – or maybe only when the other side do it.

      Marina Hyde is a Guardian columnist

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      If Britain must rearm, how to pay for it? Stiffen the sinews; summon up the taxes | Polly Toynbee

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      “A new era is upon us.” Ursula von der Leyen was not holding back. This is a world turned upside down, changed beyond recognition. Leaders across Europe are echoing the alarm sent out by the European Commission president, and rippling across the continent, Canada and elsewhere: that we face a “clear and present danger on a scale that none of us has seen in our adult lifetime”. She has proposed a plan that would offer €800bn (£660bn) for immediate rearming, with a European sky shield to protect Ukraine.The hooligan Russian asset in the White House has changed everything so profoundly that it is hard to keep track. The US, whose coat-tails we clung to, whose culture we revelled in, whose cleverness dazzled and stupidity confounded, is now the enemy. The shock feels viscerally personal because American culture is deep in our veins at all ages, from Sesame Street to Marvel, from Philip Roth to Philip Glass, the Oscars to Silicon Valley, like it or not. In Iraq and Afghanistan, we obediently followed their blunders, and 642 British soldiers died, as Keir Starmer adroitly reminded JD Vance in parliament. Our glamorous friend has turned fiend. How do we cauterise that off us? Or reconfigure the map of the world in terms of friends and foes?Former UK ambassadors to Washington ruminated over this “seismic” shift, which has shaken every norm from their Foreign Office days. “This is not a blip in the relationship, something fundamental is going on,” one old knight warned a Lords select committee, while another cautioned that the US giving up on Europe in favour of Russia was likely a “current reality”. Sir David Manning pinpointed Britain’s specific anguish at this moment, the downside of the so-called special relationship: as Europe galvanises to rearm, unlike our continental neighbours, we depend on the US for our defence.With every new shock wave, Britain feels this trauma in its marrow. Yet there is hesitancy in government about addressing the nation with a call to arms, as French president Emmanuel Macron has done, warning: “the innocence of these 30 years since the fall of the Berlin Wall is over.”Look at the remarkable response of Germany’s chancellor-in-waiting, Friedrich Merz, lifetime financial conservative and fiscal dogmatist, as he grasps the severity of the times: he will reverse all his previous fiscal policies and his nation’s usual dread over borrowing, breaking their “basic law” with a huge €500bn loosening of debt rules to rearm. This amounts to “one of the most historic paradigm shifts in German postwar history”, according to Deutsche Bank. German borrowing costs shot up, but so have predictions of German growth from a sluggish 0.8% to 2%, with investors sending industrial stocks soaring. But note this: in his fiscal sea change, rearming will not be accompanied by any cuts to German social spending.How about Britain? Our government has announced no change to fiscal policy. Living within our self-imposed straitjacket, our rearming will be paid for by cuts to aid, benefits and most departments, as Rachel Reeves this week sends her plans to the Office for Budget Responsibility to prove the books are balanced. Yet the promises the government has made are impossible to keep: no more borrowing, no more tax rises and no return to austerity. These are terrible choices – the aid cut already breaks a manifesto pledge – destroying trust whichever way Labour turns. But which is the least bad?A copy of Duncan Grant’s portrait of John Maynard Keynes hangs by my desk, a reminder to reach for his 1940 prescription How to Pay for the War, a book that spelled out the necessary financial sacrifices of the time. Emergency action needed then was draconian, rapidly increasing production while drastically reducing consumption, introducing rationing and diverting everything to the war effort. In comparison, what’s needed in this new emergency is a pinprick, to raise the 3% of GDP for defence spending that Starmer is aiming for. Take just this one measure: in a disgraceful (and failed) act of crude election bribery, Jeremy Hunt cut 4p off employees’ national insurance. Restoring that would cover the cost of this extra defence spending alone, says Ben Zaranko of the Institute for Fiscal Studies; so would 2p more on income tax for all.Labour’s Treasury team winces at the very thought of any further tax rises, after the walloping Reeves got for the £40bn tax rise in October’s budget. They are jumpy: remember Liz Truss’s mini-budget, maxi-catastrophe, they say. Look how even small tax changes such as the farmers’ inheritance tax can create a storm; some policies make absolute sense in economic and fairness terms, but crash politically. Besides, tax rises that cut people’s spending money risk stunting growth, they say – but then so do cuts to public spending. Borrow more? That adds to the mammoth £100bn a year we spend servicing existing debt, they say. But we are now on the hunt for the least-worst option – and Britain still pays less tax than similar countries.Starmer has risen to the needs of the hour. But he has yet to address his citizens on what rearming means, and what it requires of them. We like to think of ourselves as warlike, and at the ready. We are good at displays of national pride and national parades, with a four-day celebration planned for the 80th anniversary of VE day in May. But tax and financial sacrifice were essential parts of that victory. The alternative – miserable cuts to benefits for the weakest, and stripping yet more from threadbare stricken public services – is the worst of all the bad options. In our finest hour, Britain shed its traditional tax-phobia. If ever there was a moment to stiffen the sinews and summon up the taxes, it is now: for the defence of the realm.

      Polly Toynbee is a Guardian columnist More

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      Trump administration briefing: Trump changes tack on tariffs – again – as US plans to close consulates

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      Donald Trump has performed another reversal on tariffs, delaying duties on many goods from Canada and Mexico again. Trump said the reversal has “nothing to do” with turbulence in the stock market in recent days, as investors weighed his economic plans. On Wall Street, the S&P 500 fell 1.8% on Thursday. “I’m not even looking at the market,” he claimed.It was also a day where the focus fell on the power wielded by Elon Musk and the president’s plans for US consulates in Europe. Trump shelves Canada-Mexico tariffs – for a timeDonald Trump pulled back from his trade war with Canada and Mexico on Thursday, temporarily delaying tariffs on many goods from the two countries once again. Two days after imposing sweeping tariffs on all imports from his country’s closest trading partners, the US president announced that duties on a wide range of products would be shelved until April.Read the full storyElon Musk says he isn’t to blame for mass firings of federal workersElon Musk is telling Republican lawmakers in private meetings that he is not to blame for the mass firings of federal workers that are causing uproar across the country, while Donald Trump reportedly told his cabinet secretaries on Thursday that they are ultimately in charge of hiring and firings at their agencies – not billionaire aide Musk.The men appeared to be making parallel efforts to distance Musk from radical job slashing made over the last two months. This despite the tech entrepreneur boasting about cuts, recommending the US “delete entire agencies” and taking questions on the issue alongside the US president, then wielding a chainsaw at an event to symbolize his efforts – all amid legal challenges and skepticism from experts.Trump said on Thursday he has instructed department secretaries to work with Doge but to “be very precise” about which workers will stay or go, using a “scalpel rather than a hatchet”.Read the full storyUS plans to close European consulates and cut state department workforceThe US state department is preparing to shut down a number of consulates that are mainly in western Europe in the coming months and looking to reduce its workforce globally, multiple US officials said on Thursday.The state department is also looking into potentially merging a number of its expert bureaus at its headquarters in Washington that are working in areas such as human rights, refugees, global criminal justice, women’s issues and efforts to counter human trafficking, the officials said.Reuters reported last month that US missions around the world had been asked to look into reducing US and locally employed staff by at least 10% as Donald Trump and his billionaire aide Elon Musk have unleashed an unprecedented cost-cutting effort across the US federal workforce.Read the full story‘Not a king’: Trump is told firing of labor chief is illegalA federal court ruled that Trump’s abrupt firing of a former senior official at the top US labor watchdog was illegal, and ordered that she be reinstated. Gwynne Wilcox was the first member of the National Labor Relations Board to be removed by a US president since the board’s inception in 1935.The framers of the US constitution “made clear that no one in our system of government was meant to be king – the president included – and not just in name only”, the judge Beryl A Howell, wrote in the ruling.Read the full storyMusk and Texas governor celebrate after worker fired over pronounsThe Texas governor, Greg Abbott, and, later, Elon Musk showed support on Wednesday for the firing of a state employee who refused to remove his pronouns from his work email signature. Frank Zamora, 31, was let go from his job as a program manager at the Texas real estate commission.Abbott celebrated the move on X. Musk then replied to Abbott’s post with two fire emojis.Read the full storyUS attorney threatens top law school over DEIA Trump-appointed US attorney has told Georgetown – one of the country’s top law schools – to immediately end diversity, equity and inclusion (DEI) efforts, warning that his justice department office will not hire students or other affiliates associated with a university that utilizes DEI.In an extraordinary letter sent to the dean, the recently appointed interim US attorney for the District of Columbia, Ed Martin, said he was investigating the academic institution after it had come to his “attention reliably” that they were teaching and promoting DEI.Read the full storyDoJ investigating California universities over alleged antisemitismThe US Department of Justice is investigating the University of California system for possible antisemitic discrimination after demonstrations against Israel’s war in Gaza took place on campuses last year.Read the full storyDemocrats join in censure of Al GreenThe House voted on Thursday to censure Al Green for disrupting Trump’s joint session address, with a handful of Democrats voting to condemn the Democratic Texas representative along with Republicans.The House voted 224-198, with 10 Democrats voting in favor of the censure, which accuses Green of a “breach of proper conduct”.Read the full storyCanadians protest against US toxic wasteThe proposed expansion of a Quebec landfill that accepts hazardous waste from the United States has ignited a turf war between the Quebec provincial government and local leaders, who say they oppose putting US trash into a local peat bog. Local leaders are protesting against the move – saying the province is capitulating to a US company in the midst of a tariff war between Canada and the United States.Read the full storySmall US agency stands up to MuskMembers of Elon Musk’s so-called “department of government efficiency” (Doge) unit were barred from entering a small, independent federal agency promoting economic development in Africa on Wednesday after a tense standoff with federal staff they had been sent to fire.Workers at the US African Development Foundation (USADF), which Donald Trump has ordered to be closed, refused to allow Doge operatives to enter after they arrived at its Washington headquarters.Read the full storyWhat else happened today:

      In an escalation of his pressure campaign, Trump said the US will not fight for Nato allies who don’t spend enough on their own defense. “I think it’s common sense,” the president said. “They don’t pay, I’m not going to defend them.”

      The state department is hunting for evidence that foreign students who express support for Palestinians under Israeli occupation while studying in the US are “pro-Hamas”, and can have their visas revoked, based on an AI review of their social media accounts, Axios reports.

      Trump told reporters in the Oval Office that he will “probably” extend TikTok’s deadline to find a US buyer or face a ban.
      Catching up? Here’s what happened on 5 March. More