Chris Whalen, chairman of Whalen Global Advisors and editor of The Institutional Risk Analyst, joined Dan Proft on Chicago’s Morning Answer to weigh in on the growing visibility of the Democratic Socialists of America within the Democratic Party, as well as the mounting fiscal pressures facing Washington heading into the midterms.
Asked to assess the threat posed by the DSA’s rise, particularly in Midwest races, Whalen said the movement is real but should be understood as riding a wave of inflation driven by federal debt and the Federal Reserve’s post-pandemic policies, which he said pushed home prices up sharply. He argued the Democratic Party has been drifting leftward for years, making recent primary upsets less surprising than they may appear. Still, Whalen predicted the party is more likely to fracture than be taken over outright, noting that many mainstream Democratic candidates have performed well this cycle. He said he watched the rise of progressive politics up close while living in New York, tracing its roots back to Franklin Roosevelt-era policies, and described himself as more amused than alarmed by what he called the movement’s underestimation of what genuine socialism entails.
Whalen tied the party’s leftward pressure to affordability concerns, pointing to rent control policies in New York as an example of short-lived political fixes that ultimately fail to deliver relief and erode housing supply. He predicted voters will eventually turn away from such promises once their effects become apparent.
The conversation turned to the federal deficit, which Whalen pegged at roughly six percent of GDP, a level he said leaves policymakers with only two real options: raising revenue or cutting spending. He said neither party in Washington is willing to have that conversation, even as bond markets have already pushed short-term interest rates higher on their own, without any Federal Reserve action. Whalen drew a comparison to debt crises he witnessed in Mexico and Brazil decades ago, warning that the current trajectory of frontloaded federal debt and near-term maturities is not sustainable indefinitely.
He also previewed a forthcoming book on gold’s historical role as a monetary asset, tracing its use back to Greek and Roman times and noting that central banks around the world are increasing gold holdings while reducing dollar reserves. Whalen linked this shift to decades of currency debasement dating back to the anti-gold policies of the Roosevelt era.
On trade, Whalen addressed the standoff between the United States and Canada, suggesting Canadian Prime Minister Mark Carney is reluctant to negotiate with President Trump for reasons rooted as much in personality clashes as policy disagreements. He noted the volatility of the relationship and Trump’s tendency to dominate the news cycle regardless of the reception his actions receive.
Whalen closed by noting the U.S. is heading into a lame-duck stretch of the administration that he expects will remain eventful, with markets likely to set new records barring major disruption.