Summary of 135. Has the Military Turned on Trump?

Overview of 135. Has the Military Turned on Trump? (The Rest Is Politics U.S.)

Hosts Katty Kay and Anthony Scaramucci discuss recent political signals about the health of the Republican coalition under President Trump. The episode covers two headline stories: fallout within the military and political class over recent strikes and public disputes involving Pete Hegseth (and related reactions from retired military figures and senators), and the significance of the Tennessee 7th District special election as a bellwether for Republicans ahead of the midterms. The second half of the episode shifts to markets and crypto—how Trump-era politics (and the Trump family’s crypto activity) affected Bitcoin and the regulatory outlook for digital assets.

Key topics discussed

• Military controversy and political fallout

  • Public criticism from six ex-military/ex-intel Democrats urging service members not to obey illegal orders.
  • Friction around Pete Hegseth’s role, handling of Southern Command leadership (Admiral Horsley), and strikes in the Caribbean (Admiral Bradley referenced).
  • Broad concern in military and some parts of Washington about perceived breaches of military ethos and professional norms.
  • Political weaponization: Democrats’ video put Trump on the defensive; Hegseth’s suggestions of penal action against Sen. Mark Kelly created further controversy.

• Tennessee’s 7th Congressional District special election

  • District includes part of Nashville plus large rural/suburban areas; Trump won it by ~22 points in 2024.
  • Democrats invested heavily (reported $2M) and Republicans spent more (~$3M). Turnout ~180,000.
  • Republican held the seat, but margin shrank from a 22-point 2024 advantage to about 13 points in the special—interpreted as a warning sign for Republicans.
  • Voter concern centered on affordability and prices; Democrats ran a progressive candidate who still performed strongly on economic messaging.
  • Lessons for Democrats: opportunity exists but candidate selection matters (match candidates to districts).
  • Constraints and caveats: special-election dynamics, gerrymandering, fundraising trade-offs across districts.

• Crypto, Bitcoin, and political effects

  • Bitcoin volatility since Trump’s election: moved from ~65–70k pre-election to a peak ~126k (Oct 6), then fell to ~80k after tariff rhetoric and other shocks, returning to ~93k around the time of the episode.
  • Trump family’s high-profile involvement: meme coins launched by the Trump camp (and funds raised) created reputational and regulatory complications.
  • Regulatory outlook changed: pro-crypto signals from Paul Atkins (SEC chair) under Trump vs. concerns about self-dealing, cronyism and partisan backlash that slowed bipartisan progress.
  • Market behavior: retail leverage and speculative borrowing pushed volatility; Scaramucci’s investor warning—don’t borrow to buy crypto.

Main takeaways

• The Hegseth/Mark Kelly episode and military reactions are more than a media fracas: it has rattled some professional military and political actors and exposed a risk of alienating military leadership and veterans—potentially politically costly for Republicans.
• Tennessee’s special election is a useful signal—Republicans held the seat but with a materially reduced margin. Affordability and prices are resonating with voters and can swing traditionally safe Republican territory.
• Democrats have momentum but must be strategic about which candidates they run where; a one-size-fits-all progressive strategy risks wasted opportunities in swing/red-leaning districts.
• Crypto’s near-term path is highly political as well as technical: favorable regulation under a pro-crypto administration can drive gains, but blatant self-dealing and political theatrics (meme coins, pay-to-play optics) can provoke bipartisan backlash and slow legislation—adding volatility.
• Practical policy levers for the White House to blunt voter anger on prices: revise tariff policy, influence interest rates through a Fed-friendly appointment (longer-term), and more empathic public messaging. None are guaranteed nor immediately effective.

Notable quotes & insights

• “Christmas, a time for family, friends, and reflection... If you're shopping for the politically obsessed this Christmas, give them something calmer than cable news.” (promo opener)
• “Affordability, affordability, affordability.” — repeated as the defining political message hitting voters in suburban and rural districts.
• “It is still the economy, stupid.” — framed as the enduring political reality that economic pain (prices) drives voting shifts.
• On crypto politics: meme coins and presidential self-dealing can sour bipartisan regulatory progress and harm market credibility.
• Investment caution: “Please don’t borrow money to buy things that are this volatile.”

Timeline / context (as discussed in the episode)

• Early September: incidents/strikes in the Caribbean referenced as a root cause of later controversy.
• Mid-October: Admiral Horsley steps down from Southern Command (controversial personnel changes noted).
• A few weeks later: six ex-military/intel Democratic lawmakers publish a video urging service members not to follow illegal orders; that becomes a focal political flashpoint.
• October 6: Bitcoin peaks around 126k.
• Mid-October to early-November: Bitcoin dropped substantially following tariff announcements and meme-coin fallout; later partially recovered.

Implications & recommended next steps (political and investor guidance)

For political actors:

• Republicans: shore up messaging on affordability and consider moderation in policies (tariffs, Fed relations) that directly affect household costs. Address military-professionalism concerns to avoid alienating veteran communities.
• Democrats: prioritize candidate fit for each district—use economic messaging to press advantage but avoid mismatched nominees (e.g., candidates openly disparaging their own districts).

For crypto investors & industry:

• Expect regulatory uncertainty tied to political behavior; bipartisanship is fragile.
• Avoid leverage/borrowing to buy extremely volatile assets.
• Industry should push for neutral, consumer-focused regulation rather than partisan or self-interested bandwagoning.

Caveats & nuance

• Special elections have unique dynamics; a single race is not definitive proof of a nationwide trend but, along with other special elections, can indicate momentum changes.
• Much of the military-related story is evolving with competing narratives; the episode reports on Washington gossip and perspectives from retired military and insiders—some claims are framed as contested or speculative.
• Market and regulatory outcomes can shift quickly; political signals are influential but not determinative for long-term asset fundamentals.

Hosts: Katty Kay and Anthony Scaramucci. Episode focus: political signaling from military/White House controversies, Tennessee special election as a canary for Republicans, and the political-financial interplay shaping crypto and Bitcoin.