Are Americans victims of political bait and switch? Immediate pain isn’t what Republicans promised voters.
Donald Trump promised immediate benefits, much of it on “day one” — cheaper eggs, lower inflation, peace in Ukraine. The war rages on. Egg prices have increased. Inflation, fueled by tariffs, is on the way up.
But stocks, including Americans’ 401(k) retirement accounts, are way down.
Mr. Trump is now saying that Americans will suffer pain, but that it will pave the way for long term gains: “Sometimes you have to take medicine to fix something.”
The immediate pain is real, but the gains will come slowly if at all. “Reshoring” cannot be done overnight. It takes years to develop skilled workers, create supply chains and build new factories.
New factories require investments, but with constantly changing rules investors cannot know whether new factories will be profitable.
Accepting less now in order to get a better future is a classical definition of investment. An individual could work but chooses further education, living on very little in order to earn a better future living. Instead of spending all our income, we buy stock or bonds, increasing our future purchasing power.
But when people invest, they personally bear the costs of their better future — a lower short run standard of living. The current national “investment” is being made at other people’s expense, not at the personal expense of our wealthy leaders.
Indeed there is speculation that some leaders, or friends with whom they shared inside information, became even more wealthy buying stock options minutes before announcement of the 90-day tariff “postponement” set off a one-day surge in the markets.
There is now pain all around the country. Thousands of federal workers are losing their jobs. Projects around the country and world are being discontinued, causing additional unemployment. When people lose jobs, they also usually lose medical insurance.
There are threats to eliminate medical care for millions of other Americans. Research into disease treatments and avoidance of future epidemics is being reduced.
Reindustrialization — encouraged by tax reductions for the rich and tariffs — will supposedly produce benefits that will trickle down to the men and women in the street. But trickle down benefits have been doubtful in the past, and could well be pure “vaporware.”
A more certain way to improve the economy would distribute dependable government benefits — jobs, research, health insurance, even cash — right now, and allow consumer expenditures to bubble up to benefit industries that cater to people’s actual wishes.
Cutting taxes for the rich, or giving the rich more ability to cheat on their taxes by whacking the IRS enforcement budget, is trickle-down economics run wild.
These tax decreases for the wealthy will be partially paid for with income from higher tariffs. These tariffs will not be paid by foreigners, but by average Americans who purchase the imported goods. Tariffs are an indirect sales tax.
When private corporations employ bait-and-switch advertising, Americans are rightfully indignant and government regulators may try to outlaw it. Why should we accept similarly dishonest marketing by political entrepreneurs attempting to win elections?
Donald Trump clearly loves tariffs and would like to be considered a second President McKinley — McKinley II. But the recent stock and bond market behavior, reflecting investors’ cold-blooded analysis of Trump’s policies, suggests that he could instead become Hoover II. (Republican president Herbert Hoover led the country into the great Depression after signing a major increase in tariffs.)
Congressional Republicans should remember that after Hoover their party did not capture the White House again for 20 years. It was nearly that long before they again controlled Congress.
This is too bad. American political parties are both rife with bad ideas at the moment. Like Republicans, Democratic politicians have some bad ideas that need to be opposed by a responsible opposition party that can sometimes win elections.
Paul F. deLespinasse is Professor Emeritus of Political Science and Computer Science at Adrian College. Read Professor Paul F. deLespinasse’s Reports — More Here.
