The political realignment has come for economics. At least since the days of Friedrich Hayek and John Maynard Keynes in the last century, the divide in economic thinking roughly corresponded to the political split. In the mainstream, everyone was a capitalist and saw some role for government. The right/left divide was mostly over exactly how big that role should be.

Now, in economics as in politics, it is no longer left versus right; it is moderates versus populists. The question isn’t so much the optimal size of government in a global market-based economy, it is whether the economy is positive or zero-sum and how it entrenches power.

The result is unlikely allies and enemies. The horseshoe theory of politics holds that extreme left and right partisans agree more with each other than they do with the centrists in their party. That theory now also applies to economics.

A decade and a half ago, economists and policy wonks were divided on things that in retrospect seem quite small — the structure of the Affordable Care Act, for example. More and more lately, I struggle to find disagreement with center-left economics pundits who used to make me shake my head.

It could be that we are all moderating with age. But I don’t think so. It’s that the conversation has changed. The debate is increasingly about questions we moderates have long seen as resolved, such as whether price controls work (no), globalization is a good thing (yes), or growth should be the primary objective (of course).

These questions are being revisited because populists have become a much bigger and more influential force in U.S. politics and policy — and as they do, centrists find that we have more in common with each other than the more extreme wings of our respective camps.

It’s not just me. Ezra Klein recently described a divide in the Democratic Party over the so-called “abundance” agenda, which argues that getting many regulations and special-interest groups out of the way can unlock more growth. So-called “abundance liberals” argue that, with the right policies, the government can increase economic growth and make everyone better off.

The more populist wing of the Democratic Party rejects this approach, because it sees the real problem as power. It has a more zero-sum view of the economy, in which the powerful (usually corporations and the rich) take most of the limited resources everyone should be entitled to.

I am closer to abundance liberals (let’s make a bigger economic pie) than I am to populist liberals (let’s make sure the pie slices are exactly even). I also support getting rid of wasteful regulations and favors to special-interest groups. The difference is that I think these barriers need to be removed to empower the private sector, not the government, to drive growth. This is not a trivial difference, and someday it will probably tear our fragile alliance apart. But for now, compared to the alternative, it feels semantic.

Conservatives are facing a divide similar to the one Klein describes among liberals. The populist strain of the right also sees the world as zero-sum and condemns the concentration of power — not of the rich, but among foreigners and institutions: universities, technology firms, government bureaucracies, international agencies, and so on.

President Donald Trump’s administration reflects this division. Its economic team includes representatives from the more traditional pro-growth wing of the Republican Party, with trained economists and people who worked in finance, as well as people from the more populist zero-sum wing, dominated by Yale Law graduates and their fellow travelers.

This realignment will shape America’s economic discourse and policies for the foreseeable future. Rather than a right/left divide on the role of government, the main debate going forward will be between centrists and populists.

One side is united by our love for a more efficient tax code and our desire to reduce regulations that favor special-interest groups, as well as our enthusiasm for growth. The other is obsessed with fighting powerful forces they say are preventing people from thriving in a world of increasingly scarce resources.

It is not clear to me how all this ends. If the post-Trump Republican Party reverts to economic centrism, then it may win over some old center-lefties, especially if the Democrats choose to pursue a more populist agenda. Or the reverse could happen: Democrats could run a centrist in 2028 and win over many disaffected center-right free-market types.

Another possibility is that both parties go populist, leaving us disaffected centrists to huddle together in the political and policy wilderness. Zohran Mamdani’s victory in last month’s New York mayoral primary suggests that left-wing economic populism still has room to grow.

What is clear is that populists are gaining more influence for a reason, and it is important to engage them and their ideas. We centrists had a good run. Now we need to work harder to understand why fewer people find our arguments persuasive.

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”

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The pledge by NATO members to spend 3.5% of gross domestic product on military capabilities and 1.5% on defense infrastructure is the alliance’s boldest commitment in decades. It concedes a basic truth: Russia’s war in Ukraine has exposed critical shortfalls in Europe’s defenses at a time when U.S. support has become less certain. The challenge now is to translate that ambitious target into deployable firepower fast enough to meet the threat.

The starting point is finding the money to meet the new commitments. France, Italy and the UK already run heavy budget deficits. Spanish Prime Minister Pedro Sanchez is claiming his country has eked out a concession to spend just 2.1% of GDP. Over time, Germany’s weak growth and fractious politics could undermine its resolve, despite the loosening of its debt brake. Discipline, and likely continued pressure from the U.S., will be required to ensure members don’t renege on their spending promises.

Even more important will be spending the money wisely. The first task must be to address Europe’s fragmented defense industrial base and the duplication of weapons systems. The region produces more than a dozen main battle tank variants and is pursuing two rival sixth-generation fighter programs — the Future Combat Air System (France, Germany, Spain) and the Global Combat Air Program (Britain, Italy, Japan).

Some progress is being made, such as the pooling of ammunition orders by Nordic states through Norway’s Nammo AS. And 19 EU countries are funding joint drone and electronic warfare projects through the European Defense Agency, an EU body. Yet these efforts are small-scale; fewer than 1 in 5 equipment purchases by European Union members (23 of 27 EU members are in the North Atlantic Treaty Organization) are made jointly. NATO members will need to launch more joint tenders, cap the number of platforms per class and insist that new gear be interoperable.

European members should also acknowledge where domestic production makes sense and where it doesn’t, rather than insisting on broad “buy European” provisions. Europe still relies on the U.S. for a range of critical needs from air and missile defenses to cyber and electronic warfare, as well as intelligence, surveillance and reconnaissance. Countries should continue buying critical capabilities from the U.S. and license production locally where possible. A new venture between Rheinmetall AG and Anduril Industries Inc., for European production of U.S. drone designs, shows how pragmatic technology sharing can bridge gaps while local industry scales.

Progress will need to be carefully monitored, not just in spending levels but also in weapons delivered. NATO’s classified capability reviews should be distilled into an annual public scorecard for taxpayers to review. Governments should also be forced to show that the funds designated for infrastructure are actually going to reinforce rail beds, widen tunnels and build logistics hubs — all essential to address shortcomings in military mobility ­— rather than politically driven projects rebadged as defense.

Finally, European leaders must be honest with themselves and, most important, with voters. While defense R&D can spin off useful breakthroughs that benefit the broader economy, military outlays rarely deliver the jobs boost that investments in health care or green energy can. Massive defense spending is and should be defended as insurance against Russian aggression, not as a quick fix for stagnant growth.

NATO leaders deserve credit for overcoming parochial concerns and political resistance to agree on the new spending targets. They should recognize, however, that their fight has only just started.

— The Bloomberg Opinion Editorial Board

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By LEAH ASKARINAM, Associated Press

WASHINGTON (AP) — The U.S. Senate on Wednesday confirmed Bryan Bedford to lead the Federal Aviation Administration, putting him in charge of the federal agency at a precarious time for the airline industry after recent accidents, including the January collision near Washington, D.C. that killed 67 people.

Bedford was confirmed on a near party-line vote, 53-43.

Republicans and industry leaders lauded President Donald Trump’s choice of Bedford, citing his experience as CEO of regional airline Republic Airways since 1999. Sen. Ted Cruz, the chairman of the Senate Commerce Committee, called Bedford a “steady leader with executive experience.”

But Democrats and flight safety advocates opposed his nomination, citing Bedford’s lack of commitment to the 1,500-hour training requirement for pilots that was put in place by Congress after a 2009 plane crash near Buffalo.

Bedford declined during his confirmation hearing to commit to upholding a rule requiring 1,500 hours of training for pilots, saying only that he would not “have anything that will reduce safety.”

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Sen. Maria Cantwell, the top Democrat on the Commerce panel, accused Bedford of wanting “to roll back safety reforms and unravel the regulatory framework that made the United States the gold standard” in aviation safety.

Congress implemented the 1,500-hour rule for pilot training and other safety precautions after the 2009 Colgan Air crash in Buffalo, New York. In that flight, the pilot had not been trained on how to recover from a stall in the aircraft. His actions caused the plane carrying 49 people to fall from the sky and crash into a house, where another man was killed.

Families of the victims of the Colgan crash pushed for the the stricter training requirements and remain vocal advocates for airline safety. They joined Senate Democratic leader Chuck Schumer at a press conference at the U.S. Capitol to express concern about Bedford’s nomination.

Marilyn Kausner, the mother of a passenger on the 3407 flight, said she and other families requested a meeting with Transportation Secretary Sean Duffy after Bedford’s confirmation hearing. Her husband, she said, was “discouraged” after hearing what Bedford had to say at his hearing

Pilot Chesley “Sully” Sullenberger, made famous for safely landing a plane in the Hudson River, also opposed Trump’s pick, posting on social media that “with the nomination of Bryan Bedford to be FAA Administration, my life’s work could be undone.”

Republican Sen. Todd Young, who is also on the committee, called the 1,500-hour rule an “emotional topic” but maintained that Bedford’s approach to safety is clearly “analytical,” prioritizing what “we ascertain leads to the best safety for passengers.”

“All you have to do is look at his credentials and his testimony to be persuaded that he’s the right person for the job,” Young said.

Bedford has support from much of the industry. The air traffic controllers union noted his commitment to modernize the outdated system.

Airlines for America, a trade association for major airlines, called Bedford a “superb choice.” And United Airlines CEO Scott Kirby said, having worked with Bedford, he had “total confidence in his ability to lead the FAA.”

By ANNE D’INNOCENZIO, Associated Press

NEW YORK (AP) — The first day of Amazon’s Prime Day event and competing retail sales that kicked off on Tuesday drove solid online spending compared to a year earlier, according to two data sources.

Adobe Digital Insights, which tracks visits to e-commerce sites, reported that U.S. consumers spent $7.9 billion at online stores on Tuesday, a 9.9% increase from the comparable day last year.

Retailers offered discounts in the range of 9% to 23%, on par with July 2024 sales events, Adobe said.

Shoppers appeared especially eager to take advantage of deals on appliances, electronics and home improvement products, the data company said. Online sales of appliances were 135% higher than last month’s daily average, according to Adobe’s data.

Back-to-school items also were popular. Spending increased threefold on school supplies like backpacks, lunchboxes and stationery, and was two times higher for college dorm fixtures like mattresses, mini refrigerators and microwave over, Adobe said.

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Amazon doubled the length of Prime Day to four days this year. Walmart also added two more days to its summer deals event, which started Tuesday as well.

Retail analysts are evaluating this week’s sales for clues on whether President Donald Trump’s trade policy and unpredictable tariffs affect prices and consumer behavior.

Adobe noted that strong deals drove many shoppers to “trade up” to higher-ticket items. Across all categories the company tracks, the share of the most expensive goods increased by 20%, compared to average levels year to date.

According to consumer data company Numerator, the average Prime Day order on Tuesday cost $58.37. However, the average household cost amounted to more than $106 as of 4 p.m. Eastern time because 42% of households participating in Prime Day placed more than two orders, the company said.

Numerator tracks U.S. retail prices through sales receipts, online account activity and other information from a panel of 200,000 shoppers.

Physical stores in the U.S. may see spillover traffic from online sales events this week as budget-minded customers comparison shop in search of the lowest prices, according to R.J. Hottovy, head of analytical research at Placer.ai. The location data company tracks people’s movements based on cellphone usage.

“We do still have a price-sensitive consumer that is actively monitoring price hikes and anything related to tariffs,” Hottovy said.

Despite ongoing economic concerns, Adobe said it expected online sales to spur a record $23.8 billion in spending from July 8 to July 11, which would represent 28.4% growth year over year.

Adobe’s numbers are not adjusted for inflation. However, the company said new demand, not rising prices, largely accounts for growing sales figures so far this year.

Seattle-based Amazon does not disclose how much it earns during Prime Day but said it would share some results from the four-day event on Saturday