Comment by palmotea
2 days ago
> The primary goal of the Trump administration is to destroy American manufacturing. They don't want factories, hence all the tariffs.
The goal of the Trump administration is to rebuild American manufacturing, but the impression I get is the people who they have designing the polices are kinda like stopped clocks: right about how free trade dogma was wrong, but lacking the competence to effectively move the needle in the other direction (and favoring bold, impulsive, and ultimately self-defeating action).
Also, I feel like there are weird echos of libertarianism here: they've become comfortable with some long-taboo sticks, but are still so psychotically opposed to government programs that the necessary carrots are nowhere to be found. Like tariff revenues should be getting plowed back into subsidies for new domestic manufacturing in strategic industries.
The US has a problem where government revenue has been increasing by the usual amount (i.e. as a percent of GDP it's within the same range it has been for 70+ years), and is therefore the highest it's ever been before in real dollars, but spending has increased by even more than that, and in particular spending has been increasing faster than GDP. But for the last few decades we've had people saying "deficits don't matter".
The trouble is, they kind of do, and now "interest on the debt" is eating a chunk out of the budget that rivals the entire Department of Defense. So not only is spending growing faster than GDP, a huge chunk of the money that had historically gone to cover even the traditional spending is now going to interest. And if the deficit stays how it is, that's only going to get worse.
The result is that there is no "tariff revenues" to spend on anything. Even with the additional revenue, spending still needs to go down just to tread water.
And then the question is, is the thing you're proposing worth more than the additional cuts it would take to cover it, i.e. what do you want to not have in order to have that?
> The trouble is, they kind of do, and now "interest on the debt" is eating a chunk out of the budget that rivals the entire Department of Defense.
Deficits do only sortof matter, but you people (I don't live in the US) are wildly undertaxed by big economy standards, and tax increases at the higher end could solve a lot of your fiscal problems.
The US uses private health insurance instead of a national health service, which explains more than all of the difference in taxation compared to the median country in Europe. If you added what people in the US are paying for health insurance to what they're paying in state and federal taxes, they're paying more than people in Europe do. But if you adopted a public insurance system in the US then the taxes would have to go to that rather than providing revenue to cover existing spending.
The US also has an incredibly cost-inefficient healthcare system, and despite constant attempts to pin it entirely on the insurance companies, the cost problems are primarily related to regulatory capture by healthcare providers and the AMA, which are independent of the funding model. Medicare pays more than countries in Europe do for people in the same age group, because the government can't e.g. limit the number of medical residency slots at the behest of the AMA and then magic away the doctor shortage when they're the ones paying. Which again points to it being a spending problem rather than a revenue problem -- if they'd address the efficiency issues then they wouldn't need such a large government budget.
US per capita government spending is the highest of any economy in the top 30 by GDP. There are only four countries that spend more per capita at all, the largest of which is Norway, which nor only has a public health system included in their number, it also has less than 6 million people and gets a significant proportion of the money from state-owned oil and gas reserves.
If you tried to close the gap with higher taxes then the taxes would come from people in the US, lowering US GDP unless there was a corresponding increase in productive government spending -- which there wouldn't be if you were using it to cover the deficit, because that money otherwise comes from the purchasers of US debt, who are foreign investors, the Fed (when they create new money to buy US treasuries), and large US institutions that buy treasuries to use them as collateral (and thereby result in an economically productive domestic use). Those are the arguments the "deficits don't matter" people make -- in any given year, lower deficits would e.g. reduce inflation a little, but not a lot else. The real problem is that every year's deficit gets recapitalized, and then the interest compounds and turns into a significant long-term problem.
But the "deficits don't matter" people are right in the sense that lowering the deficit wouldn't do much for the economy in the current year. Which means that taking money from economically productive things in order to close it would be bad. Whereas taking money from economically unproductive inefficiencies would be a lot better. Which brings us back to, why is US spending so high when substantially all other countries do it for less?
Your position assumes facts not in evidence. If the administration wanted to rebuild American manufacturing, the last thing they'd do is pile on additional taxes on manufacturing domestically—which is exactly what their tariffs do.
An administration that wants to rebuild American manufacturing would decrease tariffs, not increase them. They'd eliminate the chicken tax, the Buy America Act, the Jones Act, and every other regulatory instrument that encourages domestic manufacturers to milk captive customers for all they can rather than make products that customers want to buy.
They'd also finish metrication ASAP, increase investment in technical education, implement universal healthcare coverage, modernize payment systems, and so on. You'll note that the Trump administration wants none of the above.
> Your position assumes facts not in evidence. If the administration wanted to rebuild American manufacturing, the last thing they'd do is pile on additional taxes on manufacturing domestically—which is exactly what their tariffs do.
> ...
> They'd also finish metrication ASAP, increase investment in technical education, implement universal healthcare coverage, modernize payment systems, and so on. You'll note that the Trump administration wants none of the above.
I covered that with "[the people making the policy are] lacking the competence to effectively move the needle in the other direction (and favoring bold, impulsive, and ultimately self-defeating action)."
You can't infer intention from lack of competence.
> An administration that wants to rebuild American manufacturing would decrease tariffs, not increase them. They'd eliminate the chicken tax, the Buy America Act, the Jones Act, and every other regulatory instrument that encourages domestic manufacturers to milk captive customers for all they can rather than make products that customers want to buy.
Sorry, no. The 90s called and want their ideas back. You're not going to libertarian manufacturing back to the US with more free trade. The Chinese know how to exploit that, and eliminating the things you list will just lead to more manufacturing getting offshored.
What they need to do is "pile on additional taxes" strategically, based on a goal and the current status of industry (e.g. no tariffs on manufacturing equipment, yet). Then they need to pile more money into subsidies, etc. It would also be smart to require certain foreign manufacturers to form 50-50 JVs in order to access the American market (and force manufacturing tech/skill transfer).