Apparently, nearly every economist in America is a communist now.
At least so says the Republican National Committee. Anna Kelly, an RNC spokeswoman, recently declared: “The notion that tariffs are a tax on U.S. consumers is a lie pushed by outsourcers and the Chinese Communist Party.”
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Kelly was responding to warnings from legions of economists that Donald Trump’s proposed tariffs would be paid by regular Americans. Their conclusion is based in part on the former president’s previous rounds of trade wars; multiple careful studies found that the costs of those tariffs were either mostly or entirely passed on to Americans in the form of higher prices. A more recent analysis estimated that his new tariff proposals would cost the median U.S. household an additional $1,700 per year.
But the modern GOP being what it is, party apparatchiks must defend every bone-headed idea their presumptive presidential nominee utters. Thus, critics must be “outsourcers” (which seems unlikely for most economists, who rarely own manufacturing plants) or, naturally, Marxists.
The expected costs of Trump’s recent tariff proposals would be staggering. For example, his plan for a universal 10 percent tariff coupled with a 60 percent tariff on Chinese goods would more than wipe out any savings most Americans would get from extending his 2017 income tax cuts, according to estimates from the Peterson Institute for International Economics. The bottom 80 percent of households would see a tax increase on net.
And that’s just for the somewhat milder version of Trump’s tax proposals.
In a closed-door meeting with Republican lawmakers last week, Trump proposed something even worse: repealing all income taxes and replacing them with tariffs.
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The math required for this to work would be nearly impossible. Right now, federal income taxes raise about $3 trillion per year. That means repealing them would leave a $3 trillion revenue hole to fill. But the entire value of all the goods we import each year is itself about $3 trillion. Not the tariffs, mind you, but the goods themselves.
Trump could try to levy tariffs of 100 percent on every import, but remember that imports would decline as taxes on them rose. So even a global 100 percent tariff wouldn’t raise enough money. It would, however, cripple the U.S. economy, worsen inflation, make the tax system much more regressive and invite retaliation from our allies.
Among other highlights.
There’s also a question of political feasibility. Even a GOP-controlled legislature seems unlikely to supply the votes to repeal the entire income tax. That does not mean Trump’s tariff threats are toothless, however.
Recall that Trump’s prior trade wars were waged unilaterally, i.e., through executive authority. His administration cited various bogus rationales for those tariffs, such as needing global steel duties under the guise of “national security.” What’s to keep him from similarly (ab)using his authority again — whether to impose global tariffs of 100 percent, or of “only” 10 percent?
ADVERTISING
Probably not much.
Lawmakers, including the few Republicans who meekly grumbled about Trump’s trade wars, did nothing to stop him last time. This time around, his co-partisans are even more docile. Some have already preemptively ceded other constitutional powers, such as the power to decide government spending levels, if Trump is reelected. Why not trade, too?
What’s more, President Biden has also greased the wheels for Trump to again abuse executive power on trade.
During their 2020 matchup, Biden (correctly) described Trump’s tariffs as harmful to consumers and workers. More recently, Biden has also criticized Trump’s proposed trade-war escalations. But actions speak louder than words; Biden has kept almost all of Trump’s prior tariffs in place, or swapped them out for alternative trade barriers.
http://www.washingtonpost.com/opini...c_magnet-op2024elections_inline_collection_17
Worse, Biden has vigorously backed Trump’s trade policies, and interpretation of trade law, in U.S. courts. The Biden administration has defended the “almost limitless discretion” that vaguely written trade statutes grant to presidents to impose tariffs, and worked “to ensure that the courts broadly defer to the executive branch’s implementation of these laws,” as Cato Institute scholar and trade lawyer Scott Lincicome has written.
Finally, consider the likely staff of a second Trump presidency.
During his first term, Trump wasn’t able to execute some of his worst policy ideas. This was partly because many of his incompetent underlings cut corners, leaving the administration vulnerable to litigation.
But even his competent aides often deliberately undermined their boss’s dumbest or most nefarious instincts. For instance, economic adviser Gary Cohn swiped trade documents from the Oval Office desk before Trump could see them. Treasury Secretary Steven Mnuchin convinced Trump that he lacked the authority to fire the Federal Reserve chair, which would have caused a market meltdown. Chief of Staff John F. Kelly blocked the president from directing the Internal Revenue Service to harass personal enemies.
These “adults in the room” won’t be there to obstruct him in a second term. Project 2025, a Trump-aligned group, is already screening a more professionalized army of second-term loyalists, all of whom will obediently execute Trump’s orders, and dot their I’s and cross their T’s — on trade and everything else.
Unless they’re also secret communists, of course.
At least so says the Republican National Committee. Anna Kelly, an RNC spokeswoman, recently declared: “The notion that tariffs are a tax on U.S. consumers is a lie pushed by outsourcers and the Chinese Communist Party.”
Sign up for Democracy, Refreshed, a newsletter series on how to renovate the republic.
Kelly was responding to warnings from legions of economists that Donald Trump’s proposed tariffs would be paid by regular Americans. Their conclusion is based in part on the former president’s previous rounds of trade wars; multiple careful studies found that the costs of those tariffs were either mostly or entirely passed on to Americans in the form of higher prices. A more recent analysis estimated that his new tariff proposals would cost the median U.S. household an additional $1,700 per year.
But the modern GOP being what it is, party apparatchiks must defend every bone-headed idea their presumptive presidential nominee utters. Thus, critics must be “outsourcers” (which seems unlikely for most economists, who rarely own manufacturing plants) or, naturally, Marxists.
The expected costs of Trump’s recent tariff proposals would be staggering. For example, his plan for a universal 10 percent tariff coupled with a 60 percent tariff on Chinese goods would more than wipe out any savings most Americans would get from extending his 2017 income tax cuts, according to estimates from the Peterson Institute for International Economics. The bottom 80 percent of households would see a tax increase on net.
And that’s just for the somewhat milder version of Trump’s tax proposals.
In a closed-door meeting with Republican lawmakers last week, Trump proposed something even worse: repealing all income taxes and replacing them with tariffs.
Follow Election 2024
The math required for this to work would be nearly impossible. Right now, federal income taxes raise about $3 trillion per year. That means repealing them would leave a $3 trillion revenue hole to fill. But the entire value of all the goods we import each year is itself about $3 trillion. Not the tariffs, mind you, but the goods themselves.
Trump could try to levy tariffs of 100 percent on every import, but remember that imports would decline as taxes on them rose. So even a global 100 percent tariff wouldn’t raise enough money. It would, however, cripple the U.S. economy, worsen inflation, make the tax system much more regressive and invite retaliation from our allies.
Among other highlights.
There’s also a question of political feasibility. Even a GOP-controlled legislature seems unlikely to supply the votes to repeal the entire income tax. That does not mean Trump’s tariff threats are toothless, however.
Recall that Trump’s prior trade wars were waged unilaterally, i.e., through executive authority. His administration cited various bogus rationales for those tariffs, such as needing global steel duties under the guise of “national security.” What’s to keep him from similarly (ab)using his authority again — whether to impose global tariffs of 100 percent, or of “only” 10 percent?
ADVERTISING
Probably not much.
Lawmakers, including the few Republicans who meekly grumbled about Trump’s trade wars, did nothing to stop him last time. This time around, his co-partisans are even more docile. Some have already preemptively ceded other constitutional powers, such as the power to decide government spending levels, if Trump is reelected. Why not trade, too?
What’s more, President Biden has also greased the wheels for Trump to again abuse executive power on trade.
During their 2020 matchup, Biden (correctly) described Trump’s tariffs as harmful to consumers and workers. More recently, Biden has also criticized Trump’s proposed trade-war escalations. But actions speak louder than words; Biden has kept almost all of Trump’s prior tariffs in place, or swapped them out for alternative trade barriers.
http://www.washingtonpost.com/opini...c_magnet-op2024elections_inline_collection_17
Worse, Biden has vigorously backed Trump’s trade policies, and interpretation of trade law, in U.S. courts. The Biden administration has defended the “almost limitless discretion” that vaguely written trade statutes grant to presidents to impose tariffs, and worked “to ensure that the courts broadly defer to the executive branch’s implementation of these laws,” as Cato Institute scholar and trade lawyer Scott Lincicome has written.
Finally, consider the likely staff of a second Trump presidency.
During his first term, Trump wasn’t able to execute some of his worst policy ideas. This was partly because many of his incompetent underlings cut corners, leaving the administration vulnerable to litigation.
But even his competent aides often deliberately undermined their boss’s dumbest or most nefarious instincts. For instance, economic adviser Gary Cohn swiped trade documents from the Oval Office desk before Trump could see them. Treasury Secretary Steven Mnuchin convinced Trump that he lacked the authority to fire the Federal Reserve chair, which would have caused a market meltdown. Chief of Staff John F. Kelly blocked the president from directing the Internal Revenue Service to harass personal enemies.
These “adults in the room” won’t be there to obstruct him in a second term. Project 2025, a Trump-aligned group, is already screening a more professionalized army of second-term loyalists, all of whom will obediently execute Trump’s orders, and dot their I’s and cross their T’s — on trade and everything else.
Unless they’re also secret communists, of course.
