Trump's Economics

Elon Musk has taken control of the U.S. Treasury

Elon Musk has taken control of the U.S. Treasury’s payment system, worth six trillion dollars annually, without opposition. Social Security, Medicare, tax refunds, and federal salaries are now at his mercy. David Lebryk, a veteran Treasury official, fled rather than witness Musk’s takeover, which began with Trump creating the fake Department of Government Efficiency (DOGE) to give Musk unchecked power.

Musk has locked out government employees, replaced civil servants with tech bros, and turned federal operations into a chaotic, privatized dystopia. His control means potential paywalls for tax refunds, Social Security, and federal salaries, forcing citizens to interact with X (formerly Twitter) to access their money. The White House is panicking, but Congress lacks the will to stop him.

With no oversight, Musk’s influence could expand to the IRS and Federal Reserve, turning government functions into X Premium features. America is now X Pro: Government Edition, and there’s no escape.

Trump’s negotiation approach

Prof. David Honig of Indiana University critiques Donald Trump’s negotiation approach, arguing that Trump relies solely on distributive bargaining—where there is always a winner and a loser—rather than integrative bargaining, which allows for mutual benefit and long-term relationships. While this approach may work in real estate deals, it is ineffective in international negotiations, where multiple players and ongoing relationships complicate the landscape.

Honig explains that Trump’s failure to recognize these complexities, as seen in his tariff policies, weakens the U.S. by pushing other countries (e.g., China) to form alternative alliances (e.g., buying soybeans from Russia). Furthermore, Trump’s rejection of expert advice leaves him at a disadvantage against foreign leaders who leverage strategic, multi-dimensional negotiation tactics. In Honig’s view, Trump is playing a simplistic, binary game in a world that requires strategic expertise, making his negotiation tactics ineffective and ultimately harmful to U.S. interests.

The cost of global warming versus the cost of cutting global warming: 

Cost of Global Warming:

1. Economic Losses from Natural Disasters: Global warming intensifies hurricanes, floods, wildfires, and droughts, leading to massive economic losses. For instance, the U.S. alone faced $165 billion in damages from climate-related disasters in 2022.

2. Global GDP Loss: Climate change is projected to reduce global GDP by up to 18% by 2050 if temperatures rise by 3.2°C above pre-industrial levels.

3. Health and Agricultural Costs: Increased temperatures result in health-related expenses (e.g., heatwaves and respiratory diseases) and reduced agricultural yields. The World Health Organization (WHO) estimates that climate change will cause an additional 250,000 deaths per year between 2030 and 2050, leading to significant healthcare costs .

4. Migration and Infrastructure Damage: Rising sea levels and extreme weather may displace millions, leading to infrastructure damage and large migration costs. For example, climate-induced migration could cost $200 billion annually by 2050 .

Cost of Cutting Global Warming (Mitigation)

1. Transitioning to Renewable Energy: Global investments in renewable energy and energy efficiency need to reach about $4 trillion annually by 2030 to meet the Paris Agreement goals .

2. Energy Transition and Job Costs: Shifting to low-carbon technologies will involve retraining workers, restructuring industries, and phasing out fossil fuel industries, potentially causing $1-3 trillion in losses for fossil fuel-dependent sectors.

3. Costs of Decarbonization: The International Energy Agency (IEA) estimates that achieving net-zero emissions by 2050 will require an additional $131 trillion in investments through 2050, covering energy production, infrastructure, and electrification.

4. Cost of Adaptation: Even with mitigation, adaptation measures (like building resilient infrastructure) will cost $140-$300 billion annually by 2030.

Conclusion

• Costs of inaction (global warming impacts) are estimated to be far higher than the costs of mitigating climate change. Long-term, failing to cut emissions could lead to a cumulative loss of $23 trillion by 2050 .

• Mitigation investments are substantial but provide long-term savings, avoiding future damages and creating opportunities through the transition to a green economy.m and ⬤

Global warming is real and caused by Human production of CO2 regardless of what Trump claims to suck up to his base:  

Key points of Donald Trump’s plans to reduce inflation:

• Increased Tariffs: Proposes raising tariffs on Chinese imports to 60% and creating a universal tariff on all imports, aiming to boost domestic production.

• Cutting Government Spending: Plans to eliminate unspent funds from the Inflation Reduction Act, particularly targeting climate initiatives, which he views as wasteful.

• Energy Production: To increase supply and lower energy costs, use emergency powers to expand oil drilling, refinery construction, and other energy projects  . source

• Government Efficiency Commission: A proposed audit of federal programs to eliminate fraud and waste, possibly led by Elon Musk  .

• Lower Taxes: Proposes extending tax cuts, including exemptions for Social Security payments and tips  .

sources 

 Raising tariffs historically has increased inflation or may add to the effects of a depression. 

Here’s a condensed summary of the effects of tariffs .

Economic Effects:

• Protects domestic industries by reducing foreign competition.

• Increases consumer prices for imported goods, leading to potential inflation.

• Provokes retaliatory tariffs and can result in trade wars (e.g., Smoot-Hawley Tariff of 1930 See below under Historical examples).

• Reduces international trade and economic interdependence.

• This can lead to economic growth for some domestic sectors, but economic decline can occur if retaliation occurs.

Political and Social Effects:

• Encourages populism and nationalism by appealing to domestic industries and workers.

• Exacerbates class divides by favoring industrialists over consumers or farmers.

• Causes international tensions and conflicts between trade partners (e.g., U.S. North-South tensions over tariffs).

Long-Term Structural Changes:

• Shifts global trade patterns by encouraging reliance on domestic production.

• Leads to forming trade blocs (e.g., the EEC) to counteract tariffs and facilitate regional trade.

Historical Examples:

• Mercantilism: European countries used tariffs to promote exports in the 17th-18th centuries.

• Smoot-Hawley Tariff (1930): Contributed to the Great Depression by reducing global trade.

• Post-War Trade Liberalization: Led to reduced tariffs and decades of global growth under GATT and WTO frameworks.

Stopping migrants at the border will increase Inflation: 

Stopping or significantly reducing the flow of undocumented immigrants across the U.S. southern border could lead to increased costs in several areas, particularly in sectors that rely heavily on immigrant labor. Here’s a breakdown of how this might impact different areas. 

1. Food Costs

• Agriculture: A large portion of the U.S. agricultural workforce, particularly in harvesting crops, consists of undocumented or seasonal immigrant labor. Reducing the availability of this labor would likely lead to labor shortages. This could result in:

• Higher wages to attract domestic workers, leading to increased production costs. It is almost impossible to hire White labor to do the toughest farm work.

• Rising prices for fruits, vegetables, and other crops as farmers pass on the increased labor costs to consumers.

• Potential labor shortages, causing some crops to go unharvested, reducing supply and further driving up prices.

2. Services

• Construction, Landscaping, Hospitality: These industries depend heavily on immigrant labor. Reducing the number of available workers could lead to:

• Higher wages needed to attract domestic workers, increasing the costs for construction projects, landscaping services, and hospitality (e.g., hotels, restaurants).

• Delays in projects and potential service disruptions due to labor shortages, further driving up costs.

• Increased service fees passed on to consumers as companies face rising labor costs of Manufactured Goods

• Manufacturing: Some sectors of the U.S. manufacturing industry, especially in lower-wage or less-skilled segments, rely on immigrant labor. Reducing this labor force could result in:

• Higher production costs due to increased wages and potential inefficiencies from a reduced labor pool.

• Increased prices for goods, as manufacturers pass on higher production costs to consumers.

• Potential shift of manufacturing operations to other countries with lower labor costs, leading to job losses in the U.S.

Additional Considerations:

• Inflationary Pressure: Across all these sectors, higher labor costs would likely contribute to overall inflationary pressure, raising the cost of living for U.S. consumers.

• Automation: In response to labor shortages, some industries might invest in automation, which could mitigate the long-term effects but would involve short-term costs and job displacement.

• Increase in tariffs on Mexican manufacturing:  The people trying to get across our southern borders are desperate financially. Killing jobs in Mexico and Central America will only give them more incentive to Cross into the US and will press them into drug trades out of desperation.

Conclusion: 

Restricting immigrant labor at the southern border would likely result in higher costs for food, services, and manufactured goods in the U.S., particularly in industries that rely heavily on immigrant workers. Labor shortages and wage increases could push up prices, affecting consumers and potentially the broader economy.

Donald Trump’s policies, particularly in trade, immigration, and fiscal spending, contributed to inflationary pressures

The main factors by which his policies influenced inflation. 

1. Trade Wars and Tariffs • Tariffs on China and Other Countries: Trump’s administration imposed tariffs on billions of dollars worth of imports, especially from China, as part of a trade war. Key tariffs were applied to various goods, including steel, aluminum, and consumer electronics.

• Higher Costs for Businesses: U.S. companies that rely on imported goods or raw materials faced higher costs due to the tariffs. This led to increased production costs, often passed on to consumers through higher prices.

• Increased Consumer Prices: Products like electronics, household goods, and even some food items saw price increases because of tariffs. As a result, inflation rose in sectors directly affected by these tariffs.

• Supply Chain Disruptions: The trade war also caused disruptions in global supply chains, leading to delays and shortages, which further pushed prices up.

2. Deregulation and Energy Prices

• Deregulation of the Energy Sector: While deregulation aimed at boosting domestic energy production and lowering costs, it also led to some volatility in prices. For example, Trump's energy policy encouraged greater reliance on fossil fuels, while tensions in the Middle East and other geopolitical factors contributed to fluctuations in oil prices.

• Impact on Transportation and Manufacturing: Rising energy costs often increase the price of goods across the economy because transportation and manufacturing become more expensive, further fueling inflation.

3. Immigration Restrictions

• Reduced Labor Supply: Trump’s policies aimed at restricting both legal and illegal immigration, particularly at the southern border, led to labor shortages in key sectors such as agriculture, construction, hospitality, and manufacturing. These industries heavily depend on immigrant labor.

• Higher Wages and Increased Costs: With fewer workers available, companies had to raise wages to attract domestic workers, increasing production and service costs passed on to consumers.

• Rising Food Prices: Labor shortages in agriculture directly contributed to higher food prices, one of the key components of inflation.

• Most economists do not believe that immigrants have been a major driver of the recent run-up in housing prices. Rents and home costs started to surge in 2020 and 2021, before the flow of newcomers began to pick up in 2022 and 2023. Foreign-born workers make up a quarter of the construction labor force, and they are primarily concentrated in trades like plastering, hanging drywall, and roofing. From NYT

4. Fiscal Stimulus and Deficit Spending

• Tax Cuts and Increased Government Spending: Trump’s administration passed the Tax Cuts and Jobs Act (TCJA) in 2017, which reduced taxes for corporations and individuals. At the same time, the government increased spending on defense and other sectors.

• Short-Term Economic Boost, Long-Term Debt: While the tax cuts provided a short-term economic boost, they also increased the federal deficit. In times of economic growth, such fiscal stimulus can lead to overheating of the economy, increasing demand and contributing to inflationary pressure.

• Higher Demand in a Tight Labor Market: The tax cuts and increased spending further stimulated demand in an economy that already had low unemployment, which can lead to rising prices as businesses struggle to keep up with increased consumer demand.

5. COVID-19 Pandemic Response

• Relief Packages and Economic Stimulus: During the COVID-19 pandemic, the Trump administration signed several large stimulus packages, such as the CARES Act, to provide relief to businesses and individuals. While this was necessary to prevent a complete economic collapse, the massive injection of money into the economy contributed to increased demand for goods and services.

• Supply Chain Bottlenecks and Increased Demand: The pandemic also caused significant disruptions to supply chains, which, combined with the stimulus money, created a supply-demand mismatch, further fueling inflation.

• Labor Shortages and Higher Wages: Enhanced unemployment benefits and pandemic-related disruptions reduced the available workforce, forcing businesses to raise wages, which contributed to higher costs for goods and services.

6. Impact of Protectionism

• Limited Competition: Protectionist policies, such as tariffs and restrictions on foreign competition, can reduce the availability of cheaper goods from abroad. With less competition, domestic producers may raise prices, contributing to inflation.

Summary of Trump’s Inflationary Policy Effects:

• Trade wars and tariffs Lead to higher production costs and consumer prices.

• Immigration restrictions created labor shortages, increasing wages and production costs.

• Tax cuts and increased spending boosted demand but also increased the deficit, potentially leading to long-term inflationary pressure.

• COVID-19 relief measures injected large amounts of money into the economy, causing demand to outstrip supply, leading to inflation, particularly as supply chains were disrupted.

While these policies were not solely responsible for inflation, they contributed to specific inflationary pressures during and after Trump’s presidency.