Richard Wolff: U.S.-Israel Divorce as U.S. Economy is on the Brink of Collapse

Overview

Richard Wolff (discussed with host Glenn) argues that the U.S. is entering a period of “decline of the American Empire.” In this view, geopolitical commitments are becoming harder to sustain and are increasingly entangled with domestic economic vulnerability.

He connects several developments—Middle East escalation, oil/logistics shocks, shifting U.S. political attitudes toward Israel/Palestine, and U.S. fiscal stress—to suggest the U.S. may be losing leverage just as internal instability is mounting.

Middle East Escalation and Oil/Logistics Impacts

• The discussion begins with how expanding conflict (from Iran to Yemen) could affect:

  • Oil prices
  • Shipping routes, especially if Yemen disrupts the Red Sea

• Wolff downplays a simplistic claim that higher gas/diesel prices automatically determine elections. Instead, he emphasizes that Americans are structurally exposed because the U.S. is:

  • built around automobiles
  • underinvesting in public transit

• He argues the harm from energy price increases is especially acute through diesel, which affects:

  • Mechanized farming (diesel for tractors)
  • Fertilizer costs (oil-based inputs)
  • Downstream food prices, which can become politically destabilizing because farming has outsized influence in U.S. politics

Domestic U.S. Economic Fragility (Inequality, Housing, Political Risk)

Wolff attributes U.S. vulnerability to a broader system rather than one energy factor:

• Long-term worsening inequality
• Decline of affordable housing construction for middle- and lower-income people (as wealthier investors capture housing development)
• Resulting pressure on rents and the cost of living

He suggests that if pressures from inflation, food, and energy persist, they could create electoral danger for Trump/Republicans in the midterms—though not solely because of oil prices.

U.S. Role in the Middle East: “Trigger and Then Dump”

Wolff claims the U.S. has acted as a principal instigator of conflicts (first in a Europe-analog and now in the Middle East) and then leaves allies to absorb consequences.

He argues current dynamics suggest a possible radical reorganization of Western Asia, including:

• Adjustments in global trade routes (e.g., shifts from ocean shipping toward rail/truck)
• New pressures on shipping alternatives such as Arctic routes
• Changes in oil supply and demand patterns
• Longer-term pressures on fossil-fuel use and corporate planning by major oil firms (e.g., Exxon/Chevron mentioned)

Israel, U.S. Support, and Changing American Public Opinion

• Wolff states that U.S. public opinion is shifting quickly from “pro-Israel” to “more pro-Palestinian,” creating an electoral problem for politicians and media interests.
• He argues that the debate is moving from:
  • “how to protect Israel”
  • to “how to extract the U.S. from the mess,” while maintaining the appearance of support.

He suggests Israel could worsen dramatically if the U.S. reduces commitment:

• Europe is described as moving toward constraints on settlements
• Wolff claims Israel could be left “on its own,” which he frames as strategically unsustainable

Israel’s Potential Collapse vs. the Nuclear “Red Line”

When asked whether Israel could “go under,” Wolff argues that collapse is difficult to imagine straightforwardly—but that Israel’s strategic position is described as among the worst he has seen.

• He rejects nuclear use as a viable escape route, arguing the world would likely unite against Israel if it used nuclear weapons first.
• His implied conclusion is that a “withdrawal plus conditions” model (analogous to U.S./Iran-style dynamics) may become the path forward—leaving Israel vulnerable to enforcement realities.

Non-U.S. Power Vacuum and the “Middle Countries”

Wolff argues that if the U.S. declines, “middle countries”—states that want to escape U.S. dependence—face a dilemma:

• They want out from one patron
• But worry replacing it with another dependency (e.g., China/Russia) could create new costs

He discusses India as an example of maneuvering among major powers, suggesting similar “wobbling” behavior elsewhere. He believes China/Russia are willing and able to fill parts of any vacuum, but smaller states may hedge until cost tradeoffs become clearer.

U.S. Bond Market and Fiscal Risk

Wolff offers a two-sided view of U.S. bond-market concerns:

• Short run: higher borrowing demand tied to data centers and AI-related electricity/infrastructure investment pushes interest rates up
• Long run: structural debt risk is growing because economic growth does not match rapidly rising debt

He criticizes the idea that proposals like Trump’s $5,000-for-adults plan can be funded without more borrowing, warning that it would increase deficits and eventually lead to political and financial breakdown.

He compares U.S. dynamics to the U.K. (Liz Truss) case, arguing that if markets refuse to buy government debt, governments can end rapidly—implying the U.S. may face a similar stress point later.

Closing Themes

The episode frames the moment as a potential global order transition that could be destabilizing, with U.S. leadership portrayed as theatrically focused while systemic pressures intensify—both economic and geopolitical.

Wolff reiterates the danger of U.S. decline on two fronts:

• Domestically: debt, inequality, and cost pressures
• Internationally: reduced ability to manage Middle East outcomes

Presenters / Contributors

• Glenn (host)
• Professor Richard Wolff (guest)