The day Trump shuts the valve: The quiet economic blow heading for Israel

The American public is furious and the real economy is bleeding: where are trillions of dollars disappearing to while citizens groan under the economic burden? How is this frustration translated into hostility toward Israel, and why has the Iranian nuclear threat been pushed to the margins of Washington's priorities in a way that could leave the Israeli economy vulnerable and exposed without international protection? Dr. Eli Cook, a lecturer at the Eretz Israel Museum and head of the American Studies program at the University of Haifa, explains.

It seems that the world's largest economy is currently being run by moods. On one hand, Donald Trump is perceived as a capitalist businessman, and on the other, he imposes himself as a partner and takes percentages from private companies that have received support, which sows panic among CEOs. How can one understand this economic zigzag, and who ends up paying the price?

The possibility that the United States government will demand percentages or shares in private companies in exchange for granting subsidies, tax breaks, or investments is not without foundation. Donald Trump's steps in this direction do indeed raise concerns among many about the corruption of the system — concerns that cannot be dismissed out of hand, but it should be remembered that this is an industrial policy that has already been implemented in the past. The United States has a historical precedent for such moves; moreover, in an era characterized by enormous economic gaps, the argument is strengthening that it is appropriate for the broad American public to also enjoy the fruits of the stock market's rise.

A similar approach to solving the artificial intelligence issue is proposed by Bernie Sanders, who is considered a distinct left-wing marker in the economic discourse in the United States. Sanders argues that since artificial intelligence systems are based anyway on collective historical human knowledge, there is no justification for their profits to flow into the hands of a small handful. Therefore, he proposes that a significant portion of the shares of AI companies be transferred to the American public. It should be emphasized that the intention is for public, not government, ownership, in order to prevent politicians from having the possibility to control these resources or exploit them. Although these moves are accompanied by clear complexities and absorb criticism from neo-liberal elements who argue for damage to free-market principles, in a broad view, it is doubtful that this is the most problematic aspect of Donald Trump's policy.

Donald Trump treats the rises in the stock market as the exclusive indicator of his success, but the reality on the ground is much more complex. A median house costs $434,100. To finance this with an interest rate of about 6.5%, one needs to earn 110 to 120 thousand dollars a year, far above the median income (estimated at about $87,500). Does this obsessive focus on Wall Street prove that the administration is completely disconnected from the real economy?

90% of the wealth in the stock market is concentrated in the hands of the top decile. The broad public does hold some investments, but in negligible amounts, so that in practice it remains outside the Wall Street party. The president's disconnection from this reality explains why his approval ratings have currently dropped even below those of George W. Bush. While citizens are groaning, his preoccupation with vanity projects like renovating the White House and building a ballroom illustrates the gap from the ground much more than any dry data. This frustration is well reflected in polls: when American citizens are asked today about their economic future, their confidence indices are at a historical low reminiscent of the days after the 2008 crisis. Food prices have jumped and remained high, and this is the real engine behind the public anger.

From January 2025 to August 2026, the national debt jumped from 36.2 to 39.8 trillion dollars, but on the other hand, the real economy is recording growth of only 1.5%. This gap raises an obvious question: where are these huge budgets flowing, and does the tax-paying public really benefit from this investment, or is it left out of the equation?

The problem with the deficit is not just the debt itself, but what the money is being wasted on. Is it being channeled into investments in education, public housing, or lowering the cost of living for the citizen? Not at all. The money is sucked into two main pits: the first is the healthcare system. The USA never bothered to establish a normal system like in the rest of the Western countries, and therefore an absurd situation has been created where funding is in many cases public, but control is in the hands of predatory private corporations. Huge capital moves directly from the taxpayer's pocket to the corporations' coffers and into the doctors' pockets, which explains the crazy percentage of American doctors in the top percentile. The second pit is security, into which about a trillion and a half dollars are poured. So when people ask where the public money disappears to, that is where it goes.

If you connect the dots, on one hand a citizen who is suffocating from the cost of living, and on the other hand the realization that the state treasury is being sucked upward to the corporations, security, and a small handful of elites, you get a powder keg of public anger. When the frustrated American citizen looks for those to blame for this economic 'robbery', where is the anger directed?

Of course, at the corporations, but not only; this frustration is often connected to the Israeli issue. There are many Americans who are convinced that it is their tax money that is funding the national health insurance in Israel. It is clear that this is complete bullshit, but here you see how the two worlds collide: the economic frustration of the simple American is translated into anger over the aid to Israel, and from there the road to antisemitism is short. When economic gaps grow and people are suffocating, they look for a scapegoat, and instead of blaming the corporations that are milking them, there are those who blame the Jews. From the perspective of the frustrated mob, the Jeffrey Epstein affair encapsulates the whole story; for them, it is the 'proof' that confirms the conspiracy theories about who is really pulling the strings and controlling them.

The Islamic demon

In the past, the alliance between Israel and the USA relied heavily on a common threat of terrorism and radical Islam. Does the American public still share with us this existential fear of the Iranian axis, or has the gap between us widened?

The gap is huge, and this threat has almost disappeared from the American radar. If you look at recent polls that check what the American citizen is really afraid of, you will see that only about 2% place Islamic terrorism at the top of their priorities. America has changed; today there are strong Muslim communities and Muslim representatives in key positions in local and national politics.

When we talk to them about the danger from Iran, it simply doesn't scare them. The average American citizen asks themselves: 'What have the Iranians actually done to us directly in recent years?'. The classic Israeli argument of 'if we don't stop them here, the terrorism will come to your home' no longer resonates and doesn't work on them. America's focus has moved to completely different places, both in internal politics and in foreign policy. The common fear that once connected us has simply evaporated.

You describe an American street that has developed a real hatred toward us. But the instinctive reaction of very many Israelis today is simply to shrug and say: 'It doesn't matter what we do, it's just blind antisemitism, we will always be hated anyway, so at least let's do what is good for us'. Are this disconnect and hostility really a fate of antisemitism, or do we have direct responsibility for this situation?

This is a direct result of Israeli policy. It started with the decision to identify Israel completely with the Republicans and rely on the support of the evangelicals. These are conscious decisions that we made, and because of them we lost the support of large parts of the liberal camp. The message that comes today from large parts of Israeli society is that 'it doesn't matter what we do, we will be hated anyway'. This is simply a convenient position intended to shirk responsibility, and it is bullshit. I am not talking at all about the left or the extreme right in the USA; the American mainstream hates what it sees in Gaza, and hates the perception that Israel is a warmonger. They even blame Israel for the rise in fuel prices, because in their view, it is Benjamin Netanyahu who is dragging Donald Trump into an escalation. This approach of 'I will do what I want because I am hated anyway' is dangerous and destructive, because the reality is not like that at all.

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The bottom line

Let's move to the bottom line for us. The isolationist approach of 'America First', in which the administration disavows traditional global commitments, is also reaching us. Everyone is talking about the fear of cuts in security aid, and it is clear that this will be a hard blow to the budget. But beyond the billions that might be cut directly, does the economic danger to Israel stop there? What is the indirect economic price we will pay the moment the USA takes a step back and stops serving as our international 'flak jacket'?

American military aid is about to be reduced dramatically. The billions we have become accustomed to receiving will be cut, and this is going to create a huge budget hole. But the damage does not stop there. The real danger in the long term is that if the American administration signals that the USA is no longer interested in the world order and is largely removing the protective umbrella over Israel, the economic consequences could be dramatic. For example, we currently have exceptional and unique free trade agreements with Europe, which no country outside the bloc has, and they rely quite a bit on the American back. As soon as the USA retreats, the Israeli economy remains completely exposed and vulnerable.