“No drug, not even alcohol, causes the fundamental ills of society. If we're looking for the source of our troubles, we shouldn't test people for drugs, we should test them for stupidity, ignorance, greed and love of power.” ― P.J. O'Rourke
Surprisingly, at a time when it is generally accepted that Republicans have no policies beyond bullying people, Trump — a man who never met a bad idea he did not like — has formulated an economic plan he believes will beat Biden in 2024. To wit: a “universal baseline tariff” on virtually all imports to the United States. Last Thursday, on Fox Business, the 2020 loser called for setting this tariff at 10 percent automatically for all countries.
He told Larry Kudlow,
“I think we should have a ring around the collar” of the U.S. economy. “When companies come in and they dump their products in the United States, they should pay, automatically, let’s say a 10 percent tax … I do like the 10 percent for everybody.”
Beyond failing to grasp that ring around the collar has nothing to do with economic policy, this is a supremely bad idea. He is right to call it a tax. However, as he did before, he lies about who will pay it. It makes as much sense to say that foreign producers pay tariffs as it does to say domestic manufacturers pay sales tax. The consumer will pay for any added product cost.
In essence, Trump’s policy would require the consumer to pay 10% additional on consumer goods manufactured abroad while also adding 10% to the cost of the raw materials used by domestic manufacturers.
In addition, raising tariffs on American imports will be swiftly matched by other countries increasing tariffs on American exports. The net result is that goods will get more expensive globally. General tariffs make as much sense as flooding your basement to abate termites in the foundation.
Dumping — the practice of a manufacturer selling goods for less than they cost to make — does exist. But fighting it with quotas or tariffs needs to be targeted. The cost of economic carpeting bombing is ruinous.
Trump has supporters for his idea. And who they are tell you all you need to know. The Washington Post reported that, at a dinner last week,
Trump and top aides, including former senior White House officials Larry Kudlow and Brooke Rollins, as well as outside advisers Stephen Moore and former House speaker Newt Gingrich, spent the dinner discussing how Trump could attack President Biden in the 2024 election on the economy, amid a recent spate of positive economic news that has buoyed Biden’s fortunes, according to three people familiar with the meeting, who spoke on the condition of anonymity to describe the private event.
Trump is legend for surrounding himself with incompetents. Take Kudlow. He is a man who has been spectacularly wrong in economic prediction:
- In December 2007, the month before the Great Recession, he said, “There’s no recession coming. The pessimists were wrong. It‘s not going to happen. At a bare minimum, we’re looking at Goldilocks 2.0.”
- In February 2008, he claimed the economy would rebound that summer, “if not sooner.”
- In July 2008, he declared that the housing market was as healthy as it had ever been and that it was “a pity [that] the mainstream media” was just “searching for more and more pessimism” to sell newspapers.
Kudlow was unabashed. In March 2018, Donald Trump appointed him Director of the National Economic Council. Larry dutifully toed the party line that Trumponomics was a magic bullet. In 2018, Vanity Fair reported on another round of Kudlow’s fanciful imaginings when he said,
“The deficit . . . is coming down, and it’s coming down rapidly,“ several weeks after the Treasury Department reported the budget deficit had increased 66 percent year over year, and right around the time the Congressional Budget Office said the deficit is likely to hit $804 billion in 2018 and $981 billion in 2019, after coming in at $666 billion in 2017.
And in March 2020, as COVID morphed into a global pandemic Kudlow said it was far too early for the Trump administration to be panicked into a significant economic stimulus package.
We can dismiss Kudlow as a serious man.
As for the rest, Brooke Rawlings is a lawyer, so God only knows her expertise in economics and trade policy. Newt Gingrich is a smug gadfly convinced he walks on intellectual water. And Stephen Moore learned his trade at the feet of Arthur Laffer, who was responsible for Reagan’s “trickle-down” voodoo economics.
Reputable economists have scorned Trump’s tariff plan. Adam Posen, president of the Peterson Institute for International Economics, a Washington think tank, called the idea “lunacy” and “horrifying.” Adding it would lead the other major economies to conclude the United States is an untrustworthy trading partner.
Posen also pointed out that it would give Trump enormous opportunities for influence-peddling as he could unilaterally excuse countries, such as Saudi Arabia, from the general tariff. “It is a recipe for corruption,” he said. “They will decide that whoever cozies up to Trump, or whoever his commerce secretary is, will get the exception.”
Even former Trump administration officials such as Paul Winfree, an economist who served as Trump’s deputy director of the Domestic Policy Council, think the idea is nuts.
“A tariff of that scope and size would impose a massive tax on the folks who it intends to help. It would get passed along through higher prices at a time when the Federal Reserve has had difficulty limiting inflation.”
It is sad to think that a great country, grounded by thoughtful men in freedom from religion, could be brought down by one dumbass moron and his mindless cult.