May01

electoral-vote.com

Dem 47

   

GOP 53

Trumponomics Is Filled with Internal Contradictions

Donald Trump's economic policies do not have any consistent vision behind them. In fact, they are contradictory in numerous ways. Here are some of those:

• Are Tariffs Permanent?: Trump has long been a big supporter of tariffs but his reasons keep changing. Worse yet, he claims they are the solution to all (economic) problems, even when the goals are contradictory. On "Liberation Day," Trump claimed that the big beautiful tariff wall (that Mexico would pay for) will bring jobs home. In theory, if done right, that could be true. Then the markets tanked. Trump quickly changed his tune and said the tariffs were merely a negotiating tool to get other countries to reduce their tariffs on American products, even though most countries have almost no tariffs on American products.
  
  These two theories are deeply in conflict. In order to get American companies to build big factories in the U.S. to make iPhones and all kinds of other stuff, they will have to invest billions of dollars and wait 5 years to get them up to speed. If they know the tariffs are permanent (for example, are written into law that no president can change) they might go for it. But if they see tariffs as a temporary bargaining tool that could vanish as soon as the other side makes an adequate concession, no company is going to build a new factory only to see it fail as soon as the tariffs are lifted. Either the tariffs are permanent, to block foreign products for decades to protect investments in new factories, or they are a bargaining tool that will soon be gone. They can't be both.
  
  
• Are Tariffs for Revenue?: Similarly, are tariffs for getting new factories built or for revenue? If Trump makes the tariffs permanent, then U.S. companies may onshore production. But if they do that, there won't be any imports anymore and thus no revenue from tariffs. Getting big revenue from tariffs long term works only if imports continue long term. If American companies build factories in America that can compete with foreign products, then people will buy the American-made products, there will be no imports, and thus no revenue. You can't have products made in America by American workers and also collect tariffs on the foreign imports. Jobs and tariff revenue are inherently in conflict. You can have either one, but not both. What does Trump want, actually, jobs or revenue?
  
  
• The Deficit vs. Spending: Tariffs aren't the only place where Trumponomics has deep conflicts. Trump wants to eliminate the federal deficit. But there are only two ways to do that: spend less or tax more. Trump said he will protect Social Security, Medicare, Medicaid, and defense. If he does, there is not enough spending to cut, so the deficit can't be cut. There is no way to cut spending to eliminate the deficit if all the big items are off the table.
  
  
• The Deficit vs. Tax Cuts: The other way to eliminate the deficit is more tax revenue. But Trump wants to cut taxes, not raise them. He specifically promised to eliminate taxes on tips and overtime. So that approach doesn't work either. In other words, reducing the deficit is impossible if both cutting spending and raising taxes are off the table.
  
  
• Will DOGE Save or Cost Money?: The DOGEys have saved very little so far and one of the cuts they made will probably make the budget deficit worse. They cut IRS staff by 40%. A small IRS will collect a lot less in taxes due to greater cheating and less enforcement. This will increase the deficit.
  
  
• Whither the national debt?: During his 2016 campaign, Trump promised to pay off the entire national debt of $19 trillion. During his first term, he added $8 trillion MORE to the debt. In order to pay it down, the government has to run a massive surplus for years on end. Given that doing it for even a year will be nearly impossible, paying down the debt will be impossible.

It is probably a safe bet that most of Trump's "principles" will be thrown out the window in the end. Tariffs will be reduced to back where they were mostly and the deficit will still be there. Few manufacturing jobs will come back to America and those that do will be in fully automated factories, so labor costs are irrelevant. Taxes will be cut and the deficit will go up. Then Trump will declare victory and go home. (V)