China’s “Balance Sheet Recession” Has Already Started | Richard Koo

The U.S. trade deficit is a problem, and the best way to solve it is by a weaker dollar. Free trade is good, broad tariffs are bad, and the trade deficit is best dealt with by a weaker dollar.

https://www.youtube.com/watch?v=KRSpfG6hRTQ

Trump’s Deportation Plan Would Cost Nearly $1 Trillion

“Former President Donald Trump’s promise to carry out “the largest domestic deportation operation in American history” would not only be a moral calamity requiring an enormous expansion of government—it would also be hugely expensive and ruinous to the American economy.
The governmental infrastructure required to arrest, process, and remove 13 million undocumented immigrants would cost nearly $1 trillion over 10 years and would deal a “devastating” hit to economic growth, according to a report published last week by the American Immigration Council (AIC). The think tank estimates that a mass deportation plan would shrink America’s gross domestic product by at least 4.2 percent, due to the loss of workers in industries already struggling to find enough labor.”

“The costs of mass deportation would rebound into the economy in several ways. The economy would shrink and federal tax revenues would decline. The construction industry, where an estimated 14 percent of workers are undocumented migrants, would be particularly hard hit, but the effects would be felt throughout the economy.”

“Immigration restrictionists often assume that deporting millions of undocumented workers would allow more Americans to fill those jobs, but the economy is not a zero-sum game. A shrinking economy would be bad news for many workers who aren’t directly impacted by Trump’s deportation plan.”

https://reason.com/2024/10/07/trumps-deportation-plan-would-cost-nearly-1-trillion/

Trump’s Proposed Tariffs Would Add Nearly $250 to the Price of New Gaming Consoles

“The Republican presidential nominee’s threat to impose new tariffs on nearly all imports into the United States would make video game consoles 40 percent more expensive, according to an analysis published this month by the Consumer Technology Association (CTA), an industry group best known for its annual Las Vegas conference showcasing the latest tech for home and personal use.
The report assumes that Trump can carry out his threat to hit all imports from China with a 60 percent tariff, along with a baseline tariff of 10 percent or 20 percent on all other imports. (Trump has been unclear about which level he’d prefer, and recently suggested a “thousand percent tariff.”)

If that happens, the retail price of video game consoles will increase by nearly $250, according to the CTA. Retail price would also grow for laptops (up $357), tablets (up $201), smartphones (up $213), and televisions (up $48).”

“The theory behind Trump’s push for more tariffs is that making imports more expensive will spur more domestic manufacturing. Instead of importing Xboxes and PlayStations from China, those products would be made in the United States, his supporters claim.

But hold on. If Trump’s tariffs are sufficient to drive consumer technology manufacturing out of China, those jobs won’t all shift to the United States—they’ll go to other countries instead. If that happens, consumers in the U.S. will still bear the cost of the universal tariffs on their game consoles and smartphones.

CTA does project a 31 percent increase in domestic production of video game consoles—but that would not be enough to offset the other consequences. Ultimately, the group comcludes, the economy would shrink by an estimated $4.9 billion, due to the combination of higher costs and lower consumer spending power.

The vastly increased availability and affordability of tech like TVs and video game systems shows what free trade can achieve. Americans should be cautious about taking it for granted.”

https://reason.com/2024/10/14/trumps-proposed-tariffs-would-add-nearly-250-to-the-price-of-a-new-video-game-console/

Donald Trump and Kamala Harris Keep Making Economically Illiterate Promises

“Trump fans applauded when he said he’ll eliminate taxes on tips. Then Harris proposed that, too. Her audience applauded. Trump then proposed not taxing overtime. More applause.
But narrow tax exemptions are bad policy.

In my new video, economist Allison Schrager explains how they create nasty, unintended consequences.

“No one likes tipping,” says Schrager, “but all of a sudden, you’ll have to pay tips for everything.…More people will be paid in tips.””

“Trump’s proposal to eliminate tax on overtime would reduce hiring.

“Employers may hire fewer people so they can give more overtime to employees they have already,” says Schrager.”

“rent control is destructive. “Sounds really good,” says Schrager. “But all it means is that people are less inclined to rent to you.”

“Why would you enter a market where it seems like the government is actively trying to hurt you?” Adds Mercatus Center economist Salim Furth. “You’re providing an essential service, something human beings need to live, and the government views you as a hostile outsider. I wouldn’t want to bring any service into a market like that.”

Argentina’s new libertarian president just scrapped rent controls. The supply of rental apartments doubled, and prices declined by 40 percent! That’s good policy.

But Harris proposes the opposite!”

“Trump’s (and Joe Biden’s) tariffs don’t just punish China, they reduce choice and raise prices in America.

“Free trade is good!” says Schrager. “It brings lower prices, making our own industries more dynamic, raising our income.”

“But trade does take away some Americans’ jobs,” I point out.

“But it creates a lot of other new jobs,” she replies.

It sure does. More and better jobs than those lost through trade.”

“She proposes giving “first-time homebuyers” $25,000. Again, her fans applaud.

Schrager explains, “free” money from government doesn’t increase the supply of homes. When every buyer has $25,000 more, “they just bid up prices even higher!””

https://reason.com/2024/10/16/donald-trump-and-kamala-harris-keep-making-economically-illiterate-promises/

The big lie about Project 2025

“In reality, Project 2025, an initiative put together last year by the right-wing Heritage Foundation to plan for the next GOP administration, was shaped by longtime close allies of Trump. Detailed planning for a second Trump term agenda along these lines is very real, and though the Project 2025 initiative itself has seemingly fizzled out, other groups have picked up the slack.
Furthermore, many of Project 2025’s key proposals — to centralize presidential power, crack down on unauthorized immigrants, deprioritize fighting climate change, and eliminate the Department of Education — are fully and openly supported by Trump.

Yet Trump’s intentions are less clear on a vitally important issue where Project 2025 made some particularly extreme proposals: abortion.

The project’s plan called for using presidential power to aggressively restrict abortions in several ways. Trump, wary of these proposals’ unpopularity, has said during the campaign that he won’t support some of them. He also evidently feels hesitant to outright disavow the social conservatives who have long been a key part of his base.”

https://www.vox.com/politics/373485/project-2025-abortion-ban-trump-comstock-mifepristone

Leave U.S. Steel Alone

“the four most prominent politicians in the country (sorry, Tim Walz) agree: U.S. Steel, a private company, should not be allowed to conduct a transaction with another private company unless the federal government agrees.
This is absurd—particularly because the deal is obviously in the best interest of U.S. Steel.

“We’ll admit that the competition for the dumbest economic policy is fierce these days—with prices controls on food, a 10% across-the-board tariff, and national rent control on the table,” opined The Wall Street Journal’s editorial board this week. “But opposition to the Nippon deal deserves careful consideration for this distinct dishonor given the deal’s manifest benefits and nonexistent harm.”

Indeed, Nippon’s plan to buy U.S. Steel gives the legacy steelmaker something that Trump’s tariffs and Biden’s blather about blue-collar jobs never could: A chance to actually become more competitive in the global marketplace. Among other things, Nippon has promised to invest $2.7 billion in revamping U.S. Steel’s plants.”

https://reason.com/2024/09/04/leave-u-s-steel-alone/

Why Trump’s Child Care Policy Incoherence Matters

“It may be tempting to simply write this off as “Trump being Trump” and move on. But the Republican presidential nominee’s consistent inattention to the details of policymaking does matter—even if it has no bearing on the election—and the child care issue is a perfect example of why.
This sort of issue is a liability for Trump because he can’t just bluster or pander his way through it. Trump excels when he can turn complex policies into simple, partisan us-vs.-them arguments that allow him to avoid any attention on the specifics. On issues like taxes and immigration, this technique works because one party broadly wants the policy to shift in one direction, so Trump can simply promise to do the opposite—never mind the details.

But no one wants higher child care costs. Both sides want to reduce them. The argument, then, must turn on which side can offer the better plan for accomplishing that goal. As Thursday’s answer makes obvious, Trump has no such plan.”

https://reason.com/2024/09/06/why-trumps-child-care-policy-incoherence-matters/

Trump and Harris Both Favor Tax Hikes That Would Hurt Ordinary Americans

“The Tax Foundation estimates that a 10 percent general tariff “would raise taxes on American consumers by more than $300 billion a year,” “reduce the size of the U.S. economy by 0.7 percent,” and “eliminate 505,000 full-time equivalent jobs.” Retaliation could “further reduce U.S. GDP by 0.4 percent and eliminate another 322,000 full-time equivalent jobs.”

Trump’s proposed tariffs, including a 60 percent levy on Chinese goods, “would reduce after-tax incomes by about 3.5 percent for those in the bottom half of the income distribution,” the Peterson Institute for International Economics estimates. They “would cost a typical household in the middle of the income distribution at least $1,700 in increased taxes each year.”

Just as Trump ignores those costs, Harris wants voters to believe that raising the corporate income tax rate from 21 percent to 28 percent is simply a matter of “ensur[ing] the wealthiest Americans and the largest corporations pay their fair share.” But that is true only if you overlook the broader economic impact of that change, which would hurt non-wealthy Americans as employees, consumers, and investors.

“Studies have shown that the corporate income tax is the most harmful tax for economic growth,” the Tax Foundation warns. On the flip side, recent research indicates that the Trump-backed 2017 reduction in this tax rate, which moved the U.S. from the high end among industrialized countries to the middle of the pack, “significantly boosted domestic investment.”

By raising the cost of doing business in the United States, a higher corporate tax rate inhibits investment, drives down wage and benefit growth, encourages offshoring of jobs, and reduces the return on retirement savings. “Under a 28 percent corporate rate,” the Tax Foundation estimates, “GDP would fall by $1.84” for “every $1 of higher revenue.””

https://reason.com/2024/09/11/trump-and-harris-both-favor-taxe-hikes-that-would-hurt-ordinary-americans/

Fixing Social Security means raising taxes — and not just on the superrich

“””Trump also recently proposed cutting taxes on Social Security payments. That might sound good because people will net more money when they receive their benefits. But the reality is more complicated. The poorest households wouldn’t see any change under that plan because Social Security benefits for those making below $32,000 are already untaxed, while the richest recipients would be more likely to see a tax cut.”

“There’s no way around it: Lawmakers have to raise taxes on many families, including those who aren’t millionaires. Right now, any income that someone makes above $168,000 is not taxed for Social Security. That means that higher earners pay a smaller share of their income toward funding Social Security than lower- and middle-income earners.”

https://www.vox.com/policy/377666/social-security-reform-solvency-trust-fund-trump-harris-plans