Republican insider: Trump is creating Deep State 2.0, but it might crash the economy (EXCLUSIVE)

Republican insider: Trump is creating Deep State 2.0, but it might crash the economy (EXCLUSIVE)

Former GOP staffer says American president is a ‘mutation’ of unaccountable oligarchy pulling the strings of Democrats and Republicans alike

  • Nafeez M Ahmed
22 min read
Nafeez M Ahmed

Mike Lofgren is a former Republican Congressional aide who spent 28 years as a Congressional staff member before retiring in 2011. During the last 16 years of his career, he held a high level national security clearance as a senior analyst for the House and Senate budget committees. His position gave him a first-hand insider’s perspective on a wide range of US government policies, from the lucrative bank bailouts, to accelerating Pentagon spending; from botched disaster relief after Hurricane Katrine, to the contradictions of the ‘war on terror’.

Now Lofgren is speaking out about the Donald Trump administration, its dangerous relationship with the American Deep State — and what it means for the future of the American Republic.

Mike Lofgren, 28-year veteran GOP staffer. Source:


Last year, Lofgren released his second book, The Deep State: The Fall of the Constitution and the Rise of a Shadow Government, in which he drew on his insider experience on Capitol Hill to reveal the inner workings of the US government.

His chief contention is that the US political system has, for all intents and purposes, become an oligarchy — with different Democrat and Republican administrations pursuing policies that remain constrained within the same defunct paradigm of extractive finance in service to the burgeoning bureaucracies of private defense firms, giant corporations, and global banks — benefiting the few at the expense of the many.

I caught up with Lofgren to find out the former longtime Republican operative’s prognosis for how the Deep State will fare in the Age of Trump.

Media outlets supportive of the Trump administration, like Breitbart News, have attempted to paint the new president as a man at war with the Deep State, bravely taking on the establishment with a view to slay the corrosive authority of ‘secret government’ represented by the existing national security apparatus.

In a previous piece, we saw that this narrative made little sense, given the very characters Trump has appointed to his new administration: more billionaires than any previous US government in history, former Goldman Sachs executives, unabashed Big Oil shills, and military-industrial-complex insiders who have proudly cut their teeth fighting US dirty wars in Latin America, the Middle East and North Africa.

So how to make sense of the Trump regime, and the interests it represents? How to make sense of what appears less as a war on the establishment, as opposed to a war within the corridors of American power?

Uncovering the Deep State

My first question to Lofgren was about the Deep State itself. What is it, and how did you come across its existence?

“Well I discovered it in the run up to the war in Iraq after the 9/11 terrorist attack. It was pretty evident that the proximate cause of the problem was coming out of Afghanistan from a radical apocalyptic Islamic religious cult,” he said.

“And yet the George W. Bush administration was somehow tying this to a secular gangster-ish family business in Iraq known as the Saddam Hussein regime, which was at total loggerheads with Islamic extremism – all because the Bushes didn’t want Saddam cutting in on their business. And it was quite logical if you paid attention to the news that this was the case. We also had people like Scott Ritter, the American military person who worked for the UN weapons inspectors, who said ‘Our best estimate based on being on the ground and checking things out for a long time is there are no weapons of mass destruction’. But we had this huge organized campaign that swept the media along in favor of invading Iraq. And that’s what caused the little light to go on in my skull. Already in December of 2001, US forces were fighting the battle of Tora Bora and Osama bin Laden escaped because there were too few troops.”

As a senior budget analyst Lofgren had access to a lot of information. And what he couldn’t fathom was the contradiction between the professed aims of the ‘war on terror’ — to fight al-Qaeda — and the government’s obsession with Iraq and the Gulf. The associated WMD mythology that circulated around the world to justify the Iraq War was among the most egregious instances of global ‘fake news’. And yet it was officially sanctioned.

“At the same time [as the Tora Bora operation] budget documents were coming across my desk — budget supplementals — that indicated this huge build up going on in the Persian Gulf, a thousand miles away from Afghanistan,” Lofgren told me. “And that’s what made me realize there’s something seriously wrong. And Congress more or less sleepwalked right into it. If they weren’t cheerleading themselves, I saw the evidence. I had a security clearance. The WMD case wasn’t convincing to me. But somehow it convinced them.”

Lofgren saw first-hand that there were forces of influence “in the state and outside the CIA that push these things to fruition regardless of the evidence.” After eight years of what he describes as “a debacle” in Iraq, his view was reinforced when “the new President Obama allowed himself to be basically mouse trapped by his advisors into a silly and immoral invasion in Libya, which has caused no end of problems. So Obama was supposed to be the anti-Bush, but ended up having similar foreign policies. So I concluded there’s a definite continuity there.”

Insight: The Deep State is the overarching structure that overrides democratic process to determine policies, meaning that the two-party system offers little meaningful change of course from administration to administration.

So what is this structure that somehow makes decisions outside of the democratic process? What does the Deep State look like from inside?

What I had described when I’d talked to you about the run up to the war in Iraq and so forth sounds like what Eisenhower was saying about the military industrial complex,” said Lofgren. “Nevertheless, I concluded further after the 2008 crash that there was more to it.”

For Lofgren, the Deep State is not just the national security apparatus. It also includes Wall Street, think tanks, and other interlocking agents of influence.

“You had Hank Paulson, the secretary of the Treasury and Ben Bernanke, the chairman of Federal Reserve Board, come on – I think it was a Thursday or Friday afternoon – to Capitol Hill. I was there after work. Session was over, but there was something going on, there was kind of a buzz in the air. They were holding a meeting with the leadership of the House and the Senate, and telling them if you don’t do what we say — in other words just throw unlimited money at the banks, stop the crash — we won’t have an economy on Monday.

I would say that Trump’s cabinet has so many billionaires it makes George W. Bush’s cabinet look like a Bolshevik workers council.

“And it struck me as the same sort of fear-mongering that went on in the financial sector, as we saw with Saddam’s alleged weapons of mass destruction: to stampede Congress into giving them carte blanche. So it’s not like how the Glenn Greenwalds of the world seem to define it – as the intelligence agencies. It’s a much bigger thing. It’s a public private partnership, among the principal government agencies mainly in national security and finance, with Wall Street, the defense contractors, Silicon Valley is very important because it’s the biggest source of new wealth — as well as the technology that the NSA would be totally lost without. NSA and CIA provide seed-funding for a lot of what Silicon Valley has done for decades through front companies and little venture capital shops.”

So would it be fair to say that the Deep State is kind of like a system, it’s not just a secret dimension to the state?

“It’s a series of coalitions of people and it’s not a conspiracy. The names of the people we know. We know Lloyd Blankfein is the CEO of Goldman Sachs, who now has dozens of his alumni throughout the government, including in the president’s economic team. I would say that Trump’s cabinet has so many billionaires it makes George W. Bush’s cabinet look like a Bolshevik workers council. It’s just unbelievable. So to conclude it’s just the military is wrong. It’s a series of interlocking interest groups who coalesce the same way people with power, money and influence always gravitate to one another. Adam Smith said 225 years ago or more that there’s never a meeting among businessmen, a private meeting that takes place, but that sooner or later they get involved in some conspiracy against the public interest.”

Money has so dominated the operation, it takes so much money to run all this.

Insight: The Deep State is not just the military intelligence community, but also consists of transnational corporations, big business and Big Oil, Wall Street, Silicon Valley, and think tanks. Groups and institutions in this structure form various coalitions that can compete, but tend to seek agreement on certain fundamental policies that benefit their mutual positions of power.

I asked Lofgren whether the existence of the Deep State was widely understood or recognized by the people within it. He argued that in some cases yes, and in others, no.

“Now as Upton Sinclair said, it’s difficult to get a man to understand something when he’s being paid not to understand it. Unless you have a very keen sense of irony and eye for detail, you are simply lost in what Max Weber called the iron cage of bureaucracy. You just ‘character’ to the expectations of your peers and your superiors. And I think most people do, and they lose the perspective of the overall picture. I worked on Capitol Hill for three decades. There are a lot of bright ambitious people there. But a lot of them I came to view as essentially legislative mechanics. They knew how to write an appropriations bill for instance. But were they looking at the bigger picture of what is all this for, you know cui bono, who benefits, and at whose expense?

“Well the actors in this thing are not a cabal of illuminati hatching things in the dark of night. It’s mainly people who are trying to get their mortgage paid. That may be different for some senior operatives but for the most part they think of themselves as normal patriotic Americans trying to buy shoes for the kids.”

What about the more powerful members of the Deep State? Is there a sense in which they understand that there is a Deep State and that they are part of it, or do they still operate from within the sense that no that they are part of their own coalition or their own group?

“I suppose it varies with the individual. I mean they all know which side their bread is buttered on. And what is expected behavior and what is not. The American psychologist Irving Janis called this group-think and they indulge in that a lot.”

So in that sense would you say that actually one of the reasons that the Deep State is able to function the way it does, is because as you described, actually even some of the powerful and less powerful people within it, they don’t necessarily know that it exists in the way it does?

“It’s the group of blind men describing the elephant. They only see or sense what’s directly in front of them and not the whole picture. And again I stress that it’s not a conspiracy. A very big complex society like the United States is practically ungovernable – not because of any political or sociological peculiarities about the country, but just because of a structural thing — it’s so big, so complex, that underlying institutions become like your heartbeat or your breathing: they’re automatic. And this isn’t necessarily bad. You want federal aviation administration inspectors to show up to work regardless and inspect the airplanes you’re going to fly on. You want the Center for Disease Control, regardless of what directives come from Washington, to be on the look out for Ebola virus. You want the military to be on guard against a surprise attack.

“Of course you want those things, but then if you empower an organization like the military that’s so heavily funded, they go on to this auto pilot. They gradually self-organize their own agenda, which may be quite independent of what policymakers who are freshly elected may want…

The problem with looking at this as poor, poor innocent snowflakes Trump and Flynn are up against this terrible octopus — well, their actions today show if anything they’re reinforcing it [the Deep State]

“You can get into all kinds of definitional disputes, which I don’t really care to do, about which agency is part of the Deep State and shouldn’t you include this or exclude that. But that’s a definitional thing that is tangential to the main argument: That money has so dominated the operation, it takes so much money to run all this. Plus we have this horrible campaign finance system in this country, that means you cannot be a candidate for an important office of either major party unless you have big money behind you. And how do you get big money behind you? By making tacit deals.”

Insight: Part of the Deep State’s power comes from the fact that many of the agents of influence within it do not recognize themselves as as being part of this wider structure. This allows the structure to persist, grow and exert influence.

Trump’s Deep State 2.0

How do you think President Donald Trump, the self-styled King of Dealmakers, fits into all this, given as you’ve said that he’s got so many billionaires in his cabinet?

“Trump’s not Sir Galahad against the evil Deep State. Of course, they completely ignore the fact that, one, he’s a product of it – that whole New York high finance world is one adjunct of the Deep State. Second, Trump showed it to us with his cabinet picks for the economy. And third, he is advocating a 10 percent increase in military spending. How could this guy be opposed to the Deep State?”

On the other hand, Lofgren expressed sympathy with those in the intelligence community — the other adjunct of the Deep State — who are concerned about Trump’s ties with Russia.

“I can understand why somebody in the CIA or the NSA watching all these connections with Russia would be concerned. I’m kind of concerned, since [former National Security Advisor Michael] Flynn lied and obstructed for months, ever since the summer, when journalists figured out he was at that dinner with Putin in December 2015 — what was he paid? Now it just came out in the New Yorker according to David Remnick, forty thousand dollars. Is there an appearance of a tacit quid pro quo? I don’t know.

“The problem with looking at this as ‘poor, poor innocent snowflakes Trump and Flynn are up against this terrible octopus’ — well, their actions today show if anything they’re reinforcing it [the Deep State] with the wall building, the surveillance, the treatment of immigrants and so forth. This is stuff that the Deep State would never have tried to get away with, just for appearances’ sake. They thrive on a kind of normality, that this is just democracy, and everybody can go back to sleep. He’s heightening the contradictions.”

Cartoon by Bas van der Schot. Source:

Emperor with no clothes

So this whole narrative, this idea, that first of all Trump is separate to the Deep State — you’re saying, not really. If Trump is clearly not a stranger to the ways of the Deep State, then how does this explain his heightening these contradictions?

He’s kind of a mutated gene of the Deep State.

“It’s an appearance thing, in that, if you look at Bob Gates the former secretary of defense or John Brennan the CIA director. These guys come across as these very sober, thoughtful, technocratic types, who after considerable thought are coming out with well-considered opinions about what’s in the national interest. Nevermind that they stretched the truth to sometimes questionable lengths – they cover it with hedging and qualification and ‘well it might turn out this way’ and ‘it might turn out that way’. Whereas Trump, he lies so exuberantly and his whole persona is so vulgar. I can understand they’re upset — partly because it’s just not within the bounds of ordinary decorum in political life. But primarily because he threatens to give the whole game away.”

Even though there appears to be this conflict between Trump and the Deep State — what you’re saying is that Trump is not really outside of the Deep State but he represents a certain element of it, or certain faction?

“He’s kind of a mutated gene of the Deep State.”

So you’ve got this mutated gene of the Deep State which is now saying, ‘we need to change the way we do things’. And actually the rest of the Deep State is really upset about it, and saying ‘but why are you giving the game away’? You’re saying that the conflict is not really about what so much of the media says it’s about.

“These are people who in their own minds see themselves as patriotic custodians of the national interest. And they see Trump as this sort of golem, shambling through the marketplace, knocking over the stall.”

Trump is like the emperor with no clothes, then? He’s just giving the game away, he’s doing all the things as you’ve said that the Deep State would avoid, simply to preserve the status quo?

“He’s mobilizing opposition by various groups in this country, people who have not been politically active. My daughter went to a political rally on the Mall in Washington — the first political thing she’s really done, other than vote. And she says that her friends, using social media, what was the norm — the norm was snapping a selfie or a picture of what you ate at some hip restaurant in Georgetown and sharing that on Facebook. Now they are sharing articles about politics. She told me that unbidden. And I get that impression from a number of people, that there’s a lot of people stirring and getting worked up. Now I’m not going to predict what will happen. Activity isn’t the same as result. So we’ll have to see.”

Insight: Trump is not outside the Deep State, but he and those behind him have always been products of various adjuncts of the Deep State. But they have formed a specific, not necessarily very coherent, coalition which is now at loggerheads with other coalitions in the Deep State – whom they believe are endangering them, as well as the entire Deep State structure. Conversely, those coalitions are particularly upset not because they morally oppose Trump’s policies, but because they believe his approach is ‘giving the game away’ and endangering the entire Deep State structure.

Obviously much of the public, obviously not Trump’s own supporters, but most of the American public are concerned about Trump, but not necessarily aware of all the issues.

“They’re not aware of all the implications. But they know something is wrong. And another way to look at this is that the Deep State is kind of a mal-evolution of liberal democracy. It’s the illiberal elements of liberal democracy, such as our militarized foreign policy entrenchment of wealth, that causes us to be what The Economist now rates as a flawed democracy. But is it the worst of all worlds? No, most people go about their lives, most of the time and they’re not hauled up by the police on some transparently phony charge. I say most people, most of the time — it’s not North Korea, it’s not Somalia. There could be worse things than the Deep State as we have known it, and possibly we’re about to find out. We’re about to see Deep State 2.0, as modified by Donald Trump.”

I think he’s setting us up for something that looks like those old silent news reels of the roaring 20s with the rich people dancing the Charleston, and there’s going to be a terrible blowout.

How did we get to this point where we’re seeing this kind of breakdown happening inside the Deep State? Did anybody see this coming in some way? Were there signs of this on the horizon?

“I’m not sure I was a prophet, maybe I was just a little too premature. When I saw the 9/11 attacks, I joked that the planes tore a big hole in the fabric of the space-time continuum and kind of put it into a bizarro world, where people were terrified out of all proportion to the actual threat. I mean it wasn’t an existential threat like 4500 Russian nukes.

“And they allowed their fears to be played like a Stradivarius by the powers that be. Then we got into Iraq, which was this horribly disillusioning experience that we thought we were going to be the avenger who took out this evil Saddam Hussein. It turns out we were simply putting growth medium into a petri dish. And then came the 2008 crash, which I thought would have been a defining experience like the Great Depression. But nothing seemed to happen. The banks got bailed out. They returned to profitability. A lot of people got their houses foreclosed, but otherwise life continued. So I thought.

“But all these things must have built up into some sort of public mood of anger and resentment and a sort of blind lashing out. Someone with very great demagogic skills whose name I.D. was already about 100 percent could use that thin veneer of fake populism to create what appeared to be a populist movement — but what was really just entrenching further and in a more catastrophic way the very worst features of the status quo.”

Recently George W. Bush has been doing the rounds, essentially giving some kind of mild criticism of Trump and defending freedom of the press. What do you make of that?

“George Bush’s tax cuts combined with deregulation of the banks helped create the real estate and equities bubble that burst in 2008. Trump’s planned tax cuts are three times the size. He wants to get rid of regulations right, left and center. I think he’s setting us up for something that looks like those old silent news reels of the roaring 20s with the rich people dancing the Charleston, and there’s going to be a terrible blowout. Or at least I see a big potential of that…. I mean it shows you how far we’ve slid in eight years. If people thought nothing could be as bad as Bush, well it appears they spoke too soon.”

Trump: corporate globalist

Trump clearly situates himself on the right, but at the same time he’s even alienating traditional conservatives. We saw that with the downfall of Milo Yiannopoulos. But what about his stance against the corporate globalists? Do his policies match his rhetoric?

“I think there was a valid critique of free trade. But what he’s doing – taking a meat axe to the very complex interconnected supply chains that operate globally – he could really throw the economy into a tailspin. I mean I’m no free trader. I see that these free trade agreements over the last decades as basically a vehicle to empower investors, corporations and make them unaccountable to any sovereign power. But Trump’s just taking a meat axe to the whole situation and it’s going to be very bad for the economy.

“So he’s against free trade. I think that there’s a legitimate question — can the United States be the ultimate safety valve for anybody in the world who doesn’t like the economy of their country or the political situation or believe he’s being persecuted: do we have to take them in? That’s a legitimate debate. And how does it affect the living standards of lower skilled people in this country who are native born Americans. Does this disadvantage them? You could have a good, honest debate about that. On the other hand, building a wall and acting like you’re North Korea, the hermit kingdom, and demonizing foreigners is just awful.”

But is Trump really standing up to corporate power? What will be the impact of his policies on workers’ rights?

“I don’t know whether he has consciously thought this out as a strategy. But it appears he is introducing policies, bank deregulation, tax cuts for the rich, the top 1 percent gets 47 percent of his plan for tax cuts. All these things that hurt the average American. Getting rid of wage and hour laws, abolishing the minimum wage, and on and on. They hurt the average working American. Yet he uses this kind of hood ornament, the thing about free trade and how the Chinese are screwing us, and on and on as this one little shiny thing to make people forget about the rest of his economic agenda.”

Do you think Trump’s big thing about free trade is just about trying to keep out foreign companies? I get the sense that he’s not so much against corporate globalists — he’s just trying to protect the American corporate globalists, against foreign competition, and American workers.

“He’s probably legitimately an economic nationalist. Now of course that doesn’t necessarily apply when it’s his own business. He’ll have Trump ties made by sweat labor in Malaysia or wherever. He’ll hire undocumented workers at Mar-a-Lago. He’ll pay workers two dollars an hour less than they would get in any other casino on the strip in Las Vegas. So I am somewhat dubious that Donald Trump is the friend of the working man. He’s made his career screwing vendors, contractors and so forth. And the only people he pays lavishly and on time are his lawyers to scare ’em off yeah: They can’t get involved in years of long litigation — a plumbing and heating contractor with a tight margin can’t get involved in a lawsuit for five years.”

What’s your general feeling then about the next four years under Trump. Do you think things are going to get worse as a result, and is there a way out of it?

“I think there may be a kind of superficial bubble from the tax cuts or whatever it is that passes through the Republican Congress. That may have a stimulative effect. But again it’s like a sugar high — afterwards is the inevitable come down. And his economic policies all have the effect of ultimately reducing the consumption power of working Americans on behalf of the rich. And once the rich have bought their last Patek Philippe watch, or a hundred million dollar yacht, there is nothing for them to buy, they’ve reached satiation. So they’re not going to help the real consumer economy. They’re going to invest this stuff in Wall Street. So I see a big possibility of just a repetition of 2008.”

Insight: Trump is not against corporate globalism – he is himself a corporate globalist, along with many of his administration appointees and corporate backers. But the Deep State coalition he represents sees foreign companies as a threat to the American corporate class – equally it sees American workers as a threat to the American corporate class. But these policies won’t work – they will instead enrich the already rich even more, and create an unsustainable debt-bubble that will probably culminate in a 2008-style crash.

What next?

So do you think that there’s a chance that this Trump project will somehow unravel internally? In the context of all of this Deep State stuff, who’s going to win? Which coalition?

“As they say in basketball, it’s a jump ball. I don’t know. You see aspects where some of the more obviously Deep State-type institutions like law enforcement, these customs and immigration inspectors, Border Patrol and its union endorsed Trump. And now I see gradually occurring what happens in authoritarian states…

“Trump is kind of like Herman Goering telling the German police ‘your bullet is my bullet’. All this signalling that’s been going on has resulted in these customs and immigration people behaving in an extremely high handed and brutish fashion towards ordinary immigrants, not just people with Arab names, a white Frenchman, a white Australian woman, for the most trivial things. And I could see that really getting out of control with this kind of Gresham’s law of human behavior. The bad apples will sort of set the example. They’ll get promoted, they’ll get the plum assignment and everyone else will be swept along.”

Insight: Trump is escalating the repression of ordinary people. But this will make more people opposed to him – and to the Deep State structures he wields against them. This creates a heightening opportunity for people to wake up and step up.

What can people do? Is there anything that the American public can do in terms of dealing with this? I mean really they’re caught between a rock and a hard place. You’ve got Trump, you’ve got the Deep State — what can the average American do?

“Well I think Trump is partly the result of people thinking there’s nothing they can do. All politicians are the same blah blah. ‘Trump’s not a politician. He’ll shake things up.’ You know ‘we don’t know whether he’s going to do it, but it’s worth a try.’ And that’s how he got in there. People should realize though that they do have power. And part of the reason that the Deep State sort of embedded itself, is that election participation rates in the United States are among the lowest in western democracies. So people have simply taken themselves out of the game…

“We had a similar situation in the late 19th century. The railroad barons and the steel barons and so forth. They ran the state legislatures. They effectively ran the Supreme Court, which made all kinds of rulings that corporations are people, and so on, therefore giving them all the protections of the bill of rights, whereas workers didn’t seem to have any protections. But farmers, ironworkers, etcetera, they knew who was screwing them. The education level was much lower then, but they had a really good idea who was screwing them. And they agitated for reform. They formed a populist party. At that time populism was actually progressive. And over time, we got things like pure food and drug laws, wage and hour laws, the banning of child labor. We got women’s suffrage and other things that made life better for the average American. And people can do it, I believe, with sustained agitation and organizing.”

Insight: American history shows that popular movements to challenge oligarchic power structures have succeeded in the past, and therefore can succeed again. The Age of Trump is seeing a great awakening take place in which people with no previous interest in politics are seeing that something is deeply wrong. Here lies the opportunity to educate and train ourselves to create change.

Lofgren’s insights suggest one possible scenario: As the Republican Party rallies behind Trump, it is alienating not just liberals, but traditional conservatives, libertarians, and others from amongst its own support-base. But while the Republicans under Trump are agitating for Deep State 2.0, the Democrat Party and traditional Republicans are not offering a meaningful alternative, but instead harking back to the ‘good ol’ days’ of Deep State 1.0 – whose policies created the crisis leading to the Age of Trump.

But this will make both parties increasingly irrelevant to the majority of Americans – unless they change course and seek innovative ways to enfranchise themselves for the long-run.

The way forward is obvious: civil society has the opportunity to develop new strategies, cross-partisan coalitions and exploration spaces to disrupt the existing two-party structure, and either compel it to transform for the better, or be replaced by something better. US history shows that oligarchy can be challenged. But we need new tools, fit for the 21st century, to do so.

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This article was edited for clarity on 4 March 2017.

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