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“Trumpflation” is reawakening unease about Republicans and the Florida man [1]

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Date: 2024-06-21  

Trumpflation was a topic during the 2016 elections as economists took closer looks at many of Trump’s policy promises. Fortunately some of his plans found enough opposition in Congress to be stopped. Still a lot of damage was done, so can we avoid more in 2025? We need as many wins as we can get - not just the White House but both chambers of Congress for this and of course a host of critical reasons. (And do not forget the states that are fighting gerrymandering. Check out the National Democratic Redistricting Committee efforts in Pennsylvania.)

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This Yahoo Finance article cites advice from Goldman Sachs, and lists three potential causes for higher inflation under Trump. The nature of these suggest some very concrete dangers, that may have have visceral impact upon voters. (The article was written by Senior Columnist Rick Newman.)

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Tax cuts for billionaires and national debt

We all know the Republicans increased the debt during Trump’s admin through reckless tax cuts in a time of stability (well before the pandemic). He wants more:

Trump also wants to extend a set of tax cuts from 2017 that are due to expire at the end of 2025. That would raise the national debt by $4 trillion to $5 trillion, something Trump doesn’t seem to care about. But markets do. At some point, excessive amounts of debt flooding the market becomes “money printing.” That's another factor that can fuel inflation.

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Tariffs and their cost burdens

But he also wants to jack up tariffs so high it would put significant cost burdens upon American families:

Trump wants to impose a new 60% tariff on all imports from China and a 10% tariff on all other imports. Since tariffs are taxes paid by Americans, that would raise a typical family’s costs by $1,700 a year, according to the Peterson Institute for International Economics. Shoppers would be spending more for the same stuff, which is basically what inflation is.

These Trump tariffs were analyzed by Kimberly Clausing and Mary Lovely at the Peterson Institute for International Economics. There are some excellent charts on the main points of the paper that are fairly clear, and worth a quick look. One main message is that Trump’s proposed tariffs create both tax increases and tax cuts, but the problem is that both those are very regressive. For lower incomes, the tax changes are based upon consumption so the impact on those families is disproportionally much heavier.

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Control of the Fed

And for Trump’s obvious goal of making wealthy people even wealthier, at the expense of everyone else, he often stated his craving for more presidential control over the Federal Reserve to jack up equity markets. He would pressure the Fed to untimely and aggressively reduce interest rates, thus creating more inflationary pressures:

Trump also thinks the White House should have more control over the Federal Reserve, a prospect that would alarm financial markets if it ever happened. The Fed has a tough enough job as it is trying to keep inflation and employment at optimal levels, and political interference from the White House could make that a lot harder.

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[1] Url: https://www.dailykos.com/stories/2024/6/21/2247808/--Trumpflation-is-reemerging-with-growing-unease-about-Republicans-and-the-Florida-man?pm_campaign=front_page&pm_source=trending&pm_medium=web

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