Why I Fear Trumponomics

a Current Thing post. Policies that I fear are bad for Republicans, and bad for the country

Daniel Davies writes,

GENIUS [a bill to regulate stablecoins] makes the product more convenient and better for a subset of users (crypto speculators, crooks, and people who really really want to save a little bit of time and effort on correspondent banking by taking a small but significant risk). But it makes it much worse for a key set of decision makers; the stakes are now that as well as all the other grabby extraterritorial power claims, you now have to agree that your financial system is letting in a bunch of unregulated and untransparent shadow banks.

I say that ordinary banks are adjacent to government and crypto is adjacent to criminal enterprises. If you try to mix the two, you will get more regulation of crypto and/or more government backing for criminal enterprises. Davies is expecting the latter.

In a WSJ op-ed, Stephen Moore writes,

Though these predictions so often fail, relying on terrible assumptions, Congress is still largely a slave to the CBO’s authority on the cost of a bill. The media brandish estimates from it and the JCT to frighten off legislators interested in growth-focused policy. Too often, it works. That’s no way to run a country.

Congress a slave to the CBO? If only. Notwithstanding Moore’s methodological critique, the CBO forecast made ten years ago was reasonably accurate for Federal revenues this year. They projected $5.0 trillion and the current outlook is for $5.2 trillion. But for outlays (i.e., spending), CBO forecast $6.1 trillion and the current outlook is $7.0 trillion. This is double the level of outlays in 2014, when spending was already elevated by Obama Administration policies. We have a spending problem that supply-side economics cannot solve.

Meanwhile, The Tax Foundation writes,

the bill spends far too much money on political gimmicks and carveouts, resulting in a package that provides a modest boost to the economy but at a huge fiscal cost.

That refers to the tax provisions in the “big, beautiful bill.”

Scott Sumner writes,

This tax bill is almost unimaginably bad. If you are a progressive it’s bad because there are massive tax cuts for the rich while the poor are hit by tariffs and benefit cuts. If you are a supply-sider the bill is bad because it reduces economic efficiency. The SALT deduction alone is an engine for massive wasteful spending in high tax states. If you like simplicity the bill is bad because it makes the tax system far more complex—we are back to itemizing deductions. I don’t think even Kamala Harris would have produced something quite this bad, and any other GOP president would have delivered a far better bill.

I wish that President Trump’s economic policies were defensible. This week, I was reminded of one of my concerns with the Biden Administration and the progressive wing of the Democratic Party.

The Biden security team treated conservative Christians as the key threat to address in looking out for domestic terrorism. But we saw in the murder at the Jewish Museum who the real terrorists are. They are socialist Israel-haters who believe in “death to America.”

No leading Republican has justified terrorist violence the way that Senator Warren justified the assassination of the health care CEO. She and other Democrats responded to the cruel murder at the Jewish Museum by denouncing “all forms of hate,” which comes across to me as downplaying the ideological attack against Jews.

One of the consequences I fear about Trumponomics is that we could end up with a President from the Warren faction in 2029.

substacks referenced above:

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The fiscal equivalent of war

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a century late and a hegemony short