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Can You Trust Government Data Anymore? NO!

By dianeravitch
March 19, 2025 //
6

This may be one of the more ominous moves in a deeply troubling environment. Trump officials killed a low-cost statistical advisory committee at the Department of Commerce. This could be the beginning of a trend where MAGA is free to doctor economic data. Remember how Trump used to complain that he didn’t trust the government data, produced by nonpartisan statistical agencies like the Bureau of Labor Statistics? In the future, government data will be produced by MAGA partisans. Will we get regular reports showing that everything is great and getting better every day? Will statisticians who tell the truth be fired?

The title of the article is: “The War on Government Statistics Has Quietly Begun.”

Claudia Sahm is the chief economist at New Century Advisors and a former Federal Reserve economist. She is the creator of the Sahm rule, a recession indicator.

Claudia Sahm writes in Bloomberg News:

In a time of great economic uncertainty, President Donald Trump’s administration quietly took a step last week that could create even more: Secretary of Commerce Howard Lutnick disbanded the Federal Economic Statistics Advisory Committee.

I realize that the shuttering of an obscure statistical advisory committee may not strike anyone as a scandal, much less an outrage. But as an economist who has presented to the committee, known as FESAC, I know how it improved the information used by both the federal government and private enterprise to make economic decisions. Most Americans do not realize how many aspects of their lives rely on timely and accurate government data.

One of FESAC’s official responsibilities was “exploring ways to enhance the agencies’ economic indicators to make them timelier, more accurate, and more specific to meeting changing demands and future data needs.” In the complex and highly dynamic US economy, this is an ongoing effort — not a one-time task that has been “fulfilled,” which was the Commerce Department’s stated reason for terminating the committee.

The 15 members of the advisory committee, who were unpaid, brought deep technical expertise on economic measurement from the private sector, academia and the non-profit world. They were a sounding board for the Census Bureau, Bureau of Labor Statistics, and Bureau of Economic Analysis, which produce much of the nation’s official statistics.

If statistics fail to keep up with the changing economy, they lose their usefulness. When the committee last met in December, one focus was on measuring the use and production of artificial intelligence. Staff from the agencies shared existing findings on AI, such as from the Business Trends and Outlook Survey that began in 2022, and outlined new data collection efforts. AI’s current use among businesses has nearly doubled since late 2023, and even more businesses expect to adopt AI in the next six months.

Categories Data, Economy, Ethics, Lies, Trump

Heather Cox Richardson: Elon Musk Is Pillaging Our Government

By dianeravitch
March 14, 2025 //
8

Heather Cox Richardson reports on the depredation of Elon Musk, whom Trump has empowered to destroy government services. This destruction is the prelude to privatization. At the Department of Agriculture, his DOGE boys laid off bird flu experts. At the Departnent of Transportation, they laid off air traffic controllers. The story was repeated across the government. Nothing is off-limits from the DOGE vandals, other than the billions of dollars awarded to Elon Musk every year. One can’t help wondering, at least I can’t, whether this crippling of our government was Putin’s idea.

Richardson wrote:

Yesterday, Treasury Secretary Scott Bessent made it clear that the Trump administration’s goal is to slash the federal government and to privatize its current services. As the stock market has dropped and economists have warned of a dramatic slowdown in the economy, he told CNBC “There’s going to be a natural adjustment as we move away from public spending to private spending. The market and the economy have just become hooked, we’ve become addicted to this government spending, and there’s going to be a detox period.”

Bessent’s comments reveal that the White House is beginning to feel the pressure of the unpopularity of its policies. Trump’s rejection of 80 years of U.S. foreign policy in order to prop up Russia’s Vladimir Putin has left many Americans as well as allies aghast. Trump’s claims that Putin wants peace were belied when Russia launched massive strikes at Ukraine as soon as Trump stopped sharing intelligence with Ukrainian forces that enabled them to shoot down incoming fire.

The administration’s dramatic—and likely illegal and unconstitutional—cuts are infuriating Americans who did not expect Trump to reorder the American government so completely. While billionaire Elon Musk and President Donald Trump repeatedly say they are cutting only “waste, fraud, and abuse” from the government, that insistence appears to be rhetorical rather than backed by fact. And yesterday, new cuts appeared to continue the gutting of government services that generally appear to be important to Americans’ health, safety, and economic security.

On Friday night, employees at the Department of Health and Human Services (HHS)—about 80,000 of them—received an email offering them a buyout of up to $25,000 if they resign and giving them a deadline of March 14 to respond. Also as of Friday, nearly 230 cases of measles have been confirmed in Texas and New Mexico, and two people have died.

The secretary of HHS, Robert F. Kennedy Jr., is frustrating even allies with his response to the outbreak. Kennedy, who has long been an anti-vaccine activist, said last week that measles outbreaks were “not unusual,” and then on Sunday he posted pictures of himself hiking above Coachella Valley in California. On Monday the top spokesperson at HHS, a former Kennedy ally, quit in protest. As Adam Cancryn of Politicoreported, Kennedy has said that the measles vaccine protects children and the community, but has said the decision to vaccinate is personal and that parents should talk to healthcare providers about their options. He has also talked a lot about the benefits of nutritional supplements like cod liver oil, which is high in Vitamin A, in treating measles. In fact, vaccines are the key element in preventing people from contracting the disease..

“It’s a serious role, he’s just a couple of weeks in and measles is not a common occurrence, and it should be all hands on deck,” one former Trump official told Adam Cancryn, Sophie Garder, and Chelsea Cirruzzo of Politico. “When you’re taking a selfie out at Coachella, it’s pretty clear that you’re checked out.”

In another blockbuster story that dropped yesterday, the Social Security Administration announced it will begin to withhold 100% of a person’s Social Security benefits if they are overpaid, even if the overpayment is not their fault. Under President Joe Biden the agency had changed the policy to recover overpayments at 10% of monthly benefits or $10, whichever was greater.

Those who can’t afford that level of repayment can contact Social Security, the notice says, but acting commissioner Leland Dudek has said he plans to cut at least 7,000 jobs—more than 12% of the agency—although its staff is already at a 50-year low. He is also closing field offices, and senior staff with the agency have either left or been fired.

Dudek yesterday retracted an order from the day before that required parents of babies born in Maine to go to a Social Security office to register their baby rather than filling out a form in the hospital. Another on Thursday would also have stopped funeral homes from filing death records electronically.

One new father told Joe Lawlor of the Portland Press Herald that he had filled out the form for his son’s social security number and then his wife got a call saying they would have to go to the Social Security office. But when he tried to call Social Security headquarters to figure out what was going on, the wait time was an estimated two hours. So he called a local office, where no one knew what he was talking about. “They keep talking about efficiency,” he said. “This seemed to be something that worked incredibly efficiently, and they broke it overnight.”

The administration did not explain why it had imposed this rule in Maine. Senator Angus King of Maine, an Independent, said he was glad the administration had changed its mind, but added that “this rapid reversal has raised concerns among Maine people and left many unanswered questions about the Social Security Administration’s motivations.”

Trump has said that Social Security “won’t be touched” as his administration slashes through the federal government.

Trump also said there would not be cuts to Medicare and Medicaid, but on Wednesday the nonpartisan Congressional Budget Office, which figures the financial cost of legislation, said that Republicans will have to cut either Medicare, Medicaid, or the Children’s Health Insurance Program in order to meet their goal of cutting at least $880 billion from the funding controlled by the House Energy and Commerce Committee. Cutting the funding for every other program in the committee’s purview would save a maximum of $135 billion, Jacob Bogage of the Washington Post noted, meaning the committee will have to turn to the biggest ticket items: healthcare programs.

Also yesterday, the Department of Homeland Security said it was getting rid of union protections for the approximately 47,000 employees of the Transportation Security Administration who screen about 2.5 million passengers a day before they can board airplanes. A new agreement in May 2024 raised wages for TSA workers, whose pay has lagged behind that of other government employees. Union leaders say the move is retaliation for its challenges to the actions of the administration toward the 800,000 or so federal workers it represents.

As Jonathan Swan and Maggie Haberman of the New York Times have reported more detail about the Cabinet meeting Trump convened abruptly on Thursday, we have learned more about Musk’s determination to cut the government. As Musk appeared to take charge of the meeting, he clashed with Secretary of Transportation Sean Duffy, who complained that Musk’s team at the Department of Government Efficiency is trying to lay off air traffic controllers.

Swan and Haberman report that Duffy asked what he was supposed to do. He continued by saying: I have multiple plane crashes to deal with now, and your people want me to fire air traffic controllers? Musk said it was a lie that they were laying off air traffic controllers, and also insisted that there were people hired under diversity, equity, and inclusion initiatives working as air traffic controllers. When Duffy pushed back, Musk said Duffy should call him with any concerns, an echo of the message he gave to members of Congress. Like them, Cabinet members are constitutionally part of the government. Musk is not.

What Musk is, according to an interview published today by Aaron Rupar and Thor Benson in Public Notice, is a businessman who believes that there is waste wherever you look and that it is always possible to do something more cheaply. Ryan Mac and Kate Conger, who wrote a book about Musk’s takeover of Twitter, Character Limit, said that creating confusion is part of the point. Musk creates drama, Conger said, to scare away workers he doesn’t want and attract ones he does.

The pain that he is inflicting on the country is not making him popular, though. Protests at Tesla dealerships that handle his cars are growing, as are instances of vandalism against Tesla dealerships and charging stations, which now number more than a dozen, including attacks with bottles filled with gasoline and set on fire. Pranshu Verma and Trisha Thadani of the Washington Post report that Tesla’s stock has dropped more than 35% since Trump took office. Tesla sales have dropped 76% in Germany, 48% in Norway and Denmark, and 45% in France.

On Thursday, another of Musk’s SpaceX rockets exploded, raining debris near south Florida and the Bahamas. The Federal Aviation Administration said 240 flights were disrupted by the debris.

The New York Times editorial board today lamented the instability that Musk is creating, noting that the government is not a business, that “[t]here are already signs the chaos is hurting the economy,” and that “Americans can’t afford for the basic functions of government to fail. If Twitter stops working, people can’t tweet. When government services break down, people can die.”

The editorial board did not let Trump hide behind Musk entirely, noting that he has increased instability not only with DOGE, but also “with his flurry of executive orders purporting to rewrite environmental policy, the meaning of the 14th Amendment and more; his on-again-off-again tariffs; and his inversion of American foreign policy, wooing Vladimir Putin while disdaining longtime allies.”

One of the things that the radical extremists in power hated about the modern American state was that it was a nonpartisan machine that functioned pretty well regardless of which party was in charge. Now Musk, who is acting as if he is not bound by the constitution that set up that machine, is taking a sledgehammer to it.

In the Public Notice interview, Thor Benson asked Ryan Mac: “What’s something about Elon’s huge role in the Trump administration that people perhaps aren’t understanding?” Mac answered that Musk is the manifestation of the nation’s extreme wealth inequality. “What happens,” he asked, “when there is unfettered capitalism that allows people to accumulate this much money and this much power?”

Categories Accountability, Billionaires, Budget Cuts, Corruption, Democracy, Disruption, Economy, Ethics, Funding, Health, Ignorance, Musk, Elon, Privatization, Republicans, Trump

ProPublica: DOGE Cuts to the IRS Will Cost the Government Money, Not Save It

By dianeravitch
March 12, 2025 //
3

ProPublica is an amazing investigative organization. They report on abuses of power, without fear or favor. This story explains why the DOGE cuts of personnel at the IRS will be very costly. People with complex tax returns like Elon Musk and Donald Trump are unlikely to be audited, as if anyone would dare to do so.

Andy Kroll of ProPublica reports:

Dave Nershi was finalizing a report he’d worked on for months when an ominous email appeared in his inbox.

Nershi had worked as a general engineer for the Internal Revenue Service for about nine months. He was one of hundreds of specialists inside the IRS who used their technical expertise — Nershi’s background is in chemical and nuclear engineering — to audit byzantine tax returns filed by large corporations and wealthy individuals. Until recently, the IRS had a shortage of these experts, and many complex tax returns went unscrutinized. With the help of people like Nershi, the IRS could recoup millions and sometimes more than a billion dollars on a single tax return.

But on Feb. 20, three months shy of finishing his probationary period and becoming a full-time employee, the IRS fired him. As a Navy veteran, Nershi loved working in public service and had hoped he might be spared from any mass firings. The unsigned email said he’d been fired for performance, even though he had received high marks from his manager.

As for the report he was finalizing, it would have probably recouped many times more than the low-six-figure salary he earned. The report would now go unfinished.

Nershi agreed that the federal government could be more lean and efficient, but he was befuddled by the decision to fire scores of highly skilled IRS specialists like him who, even by the logic of Elon Musk’s Department of Government Efficiency initiative, were an asset to the government. “By firing us, you’re going to cut down on how much revenue the country brings in,” Nershi said in an interview. “This was not about saving money.”

Since taking office, President Donald Trump and his billionaire top adviser Musk have launched an all-out blitz to cut costs and shrink the federal government. Trump, Musk and other administration leaders not only say the U.S. government is bloated and inefficient, but they also see it as a bastion of political opposition, calling it the “deep state.”

The strategy used by the Trump administration to reduce the size of government has been indiscriminate and far-reaching, meant to oust civil servants as fast as possible in as many agencies as possible while demoralizing the workers that remain on the job. As Russell Vought, director of the Trump White House’s Office of Management and Budget and an architect of Project 2025, put it in a speech first reported by ProPublica and Documented: “We want the bureaucrats to be traumatically affected. When they wake up in the morning, we want them to not want to go to work because they are increasingly viewed as the villains.”

One tactic used by the administration is to target probationary workers who are easier to fire because they have fewer civil service protections. Probationary, in this context, means only that the employees are new to their roles, not that they’re newbies or underperformers. ProPublica found that the latest IRS firings swept up highly skilled and experienced probationary workers who had recently joined the government or had moved to a new position from a different agency.

In late February, the Trump administration began firing more than 6,000 IRS employees. The agency has been hit especially hard, current and former employees said, because it spent 2023 preparing to hire thousands of new enforcement and customer service personnel and had only started hiring and training those workers at any scale in 2024, meaning many of those new employees were still in their probationary period. Nershi was hired as part of this wave, in the spring of last year. The boost came after Congress had underfunded the agency for much of the past decade, which led to chronic staffing shortages, dismal customer service and plummeting audit rates, especially for taxpayers who earned $500,000 or more a year.

The administration doesn’t appear to want to stop there. It is drafting plans to cut its entire workforce in half, according to reports.

Unlike with other federal agencies, cutting the IRS means the government collects less money and finds fewer tax abuses. Economic studies have shown that for every dollar spent by the IRS, the agency returns between $5 and $12, depending on how much income the taxpayer declared. A 2024 report by the nonpartisan Government Accountability Office found that the IRS found savings of $13,000 for every additional hour spent auditing the tax returns of very wealthy taxpayers — a return on investment that “would leave Wall Street hedge fund managers drooling,” in the words of the Institute on Taxation and Economic Policy.

John Koskinen, who led the IRS from 2013 to 2017, said in an interview that the widespread cuts to the IRS make no sense if Trump and Musk genuinely care about fiscal responsibility and rooting out waste, fraud and abuse. “What I’ve never understood is if you’re interested in the deficit and curbing it, why would you cut back on the revenue side?” Koskinen said.

Neither the IRS nor the White House responded to requests for comment. Last month, Musk asked his followers on X, the platform he owns, whether they would “like @DOGE to audit the IRS,” referring to the U.S. DOGE Service team of lawyers and engineers led by him. DOGE employees have sought to gain access to IRS taxpayer data in an attempt to “shine a light on the fraud,” according to a White House spokesman.

For this story, ProPublica interviewed more than a dozen current and former IRS employees. Most of those people worked in the agency’s Large Business and International (LB&I) division, which audits companies with more than $10 million in assets and high-income individuals. Within the IRS, the LB&I division has the highest return on investment, and the widespread cuts there put in stark relief the human and financial cost of the Trump administration’s approach to slashing government functions in the name of saving money and combating waste and fraud.

According to current and former LB&I employees, the taxpayers they audited included pharmaceutical companies, oil and gas companies, construction firms and major technology corporations, as well as more obscure private corporations and high-net-worth individuals. None of the IRS employees who spoke to ProPublica would disclose specific taxpayer information, citing privacy laws.

With the recent influx in funding, employees said, the leadership of LB&I had pushed to hire not only more revenue agents and appraisers but also specialized employees such as petroleum engineers, computer scientists and experts in corporate partnerships. These employees, usually known internally as general engineers, consulted on complicated tax returns and helped determine whether taxpayers properly claimed certain credits or other tax breaks.

This work happened in cases where major companies claimed a hefty research tax credit, which is a legitimate avenue for seeking tax relief but can also be improperly used. Highly skilled appraisers have also recouped huge savings in cases involving notorious tax schemes, such as what’s known as a syndicated conservation easement — a break abused so often that both congressional Democrats and Republicans have criticized it, while the IRS has included it on its list of the “Dirty Dozen” tax scams.

“These are cases where revenue agents don’t have the technical expertise,” said one IRS engineer who is still employed at the agency and who, like other IRS employees, wasn’t authorized to speak to the media. “That’s what we do. We are working on things where expertise is absolutely necessary.”

Current and former IRS employees told ProPublica that the agency had expended a huge amount of resources to recruit and train new specialists in recent years. Vanessa Rollins, an engineer in the IRS’ Chicago office who was recently fired, said probationary employees in LB&I outnumbered full-time staffers in her office. Much of her team’s work centered on training and mentorship for the waves of new employees — most of whom were recently fired. “The entire office had been oriented around bringing us in and getting us trained,” Rollins said.

These specialists said they earned higher salaries compared with many other IRS employees. But the money these specialists recouped as a result of their work was orders of magnitude greater than what they cost. The current engineer told ProPublica that they estimated their team of less than 10 people had brought in $5 billion in adjusted tax returns over the past four years. (By contrast, a Wall Street Journal analysispublished on Feb. 22 found that DOGE had found savings of $2.6 billion over the next year, far less than the $55 billion claimed by DOGE itself.)

A former LB&I revenue agent added that their work didn’t always lead to the IRS recouping money from a taxpayer; sometimes, they audited a return only to find that the taxpayer was owed more money than they had expected.

“The IRS’ mission is to treat taxpayers fairly so they pay the tax they legally owe, including making sure they’re not paying any more than legally required,” the former revenue agent said.

Notwithstanding its return on investment and the sense of duty espoused by its employees, LB&I was hit especially hard by the most recent wave of firings, employees said. According to the current IRS engineer, the Trump administration appears to have eliminated the jobs of about 120 LB&I engineers out of a total of roughly 260. The person said they had heard more terminations were expected soon. The acting IRS chief and a longtime agency leader, Doug O’Donnell, announced his retirement amid the firings.

Several LB&I employees told ProPublica that the mass layoffs had been ordered from a very high level and that several layers of managers had no idea they were coming or what to expect. The cuts, employees said, did not appear to distinguish between employees with certain specialties or performance levels, but instead focused solely on whether they were on probationary status. “It didn’t matter the skill set. If they were under a year, they got cut,” another current LB&I employee told ProPublica.

The current and former IRS employees said the firings and the administration’s deferred resignation offer led to situations that have wiped out decades of experience and institutional knowledge that can’t easily be replaced. Jack McCumber was an LB&I senior appraiser in Seattle who got fired about six weeks before the end of his probationary status. He said not only did he lose his job, but the veteran appraiser who was his mentor took early retirement. McCumber and his mentor often worked on syndicated conservative easement cases that could recoup tens and even hundreds of millions of dollars. “They’re pushing out the experienced people, and they’re pushing out people like me,” McCumber said. “It’s a double whammy.”

The result, employees and experts said, will mean corporations and wealthy individuals face far less scrutiny when they file their tax returns, leading to more risk-taking and less money flowing into the U.S. treasury.

“Large businesses and higher-wealth individuals are where you have the most sophisticated taxpayers and the most sophisticated tax preparers and lawyers who are attuned to pushing the envelope as much as they can,” said Koskinen, the former IRS commissioner. “When those audits stop because there isn’t anybody to do them, people will say, ‘Hey, I did that last year, I’ll do it again this year.’”

“When you hamstring the IRS,” Koskinen added. “it’s just a tax cut for tax cheats.”

Categories Billionaires, Corruption, Economy, Ethics, Evil, Failure, Injustice, Musk, Elon, Stupid, Trump

Thom Hartmann: The GOP Plan to Cut Social Security

By dianeravitch
March 11, 2025 //
13

Despite the multiple pledges by Trump and Republicans that they would never custodial Security, don’t believe them. Republicans opposed Social Security when it was created by FDR, and many still thinks it’s socialism, even though it’s not a handout. People have paid for it throughout their working like.

Thom Hartmann says they are looking for ways to cut Social Security but to do it quietly, so you hardly notice. Trump’s Chief budget-cutter Elon Musk doesn’t understand why anyone needs Social Security. He was recently interviewed by Joe Rogan and said that Social Security is “a Ponzi scheme.” It certainly is not. It’s not a grifter’s scheme to take people’s money. It pays out to everyone. Without it, very large numbers of older people would be impoverished.

Why would the world’s richest man know or care?

Hartmann warned:

The plan to “demolish” Social Security is underway right before our eyes: who will stop them? 

The GOP’s plan to make Americans hate Social Security is well along in its execution. Their scheme — which they’ve been advancing in small increments for 44 years — is brilliantly simple: break the agency’s ability to respond to taxpayers, causing people to have to wait on the phone or travel for hours to stand in line for hours.

As complaints mount, Republicans will then point to the “broken Social Security Administration” and pitch a Medicare Advantage-like alternative: privatized “Social Security Advantage,” run by the big New York banks who are reliable GOP donors. Once a critical mass of seniors have moved from SS to the new privatized program, they’ll then just shut down legacy Social Security, arguing that “the free marketplace has spoken.”

The key to accelerating the process (Social Security’s administrative staff has been far too small for decades since Reagan first started cutting it) is a new demand from Trump’s acting Social Security Commissioner that the agency cut its workforce by fully fifty percent. Once that happens, all bets are off; the agency may not even be able to get checks out in a timely manner or process applications for new benefits, much less help SS recipients sign up or solve problems they may encounter.

As Congressman John Larson noted: “This is nothing more than a backdoor benefit cut and an insult to Americans who have paid into the system and earned their Social Security—all to pay for trillions in new tax cuts for the wealthy.” 

Social Security Works president Nancy Altman was blunt: “Field offices around the country will close. Wait times for the 1-800 number will soar.” Larson added: “Let me be clear—laying off half of the workforce at the Social Security Administration and shuttering field offices will mean the delay, disruption, and denial of benefits.”

Meanwhile, Idaho’s Republican Senator Mike Crapo blocked Bernie Sanders’ attempt this week to give all seniors on Social Security a $2400 annual raise. Noting that the raise would be paid for by having people earning more than $250,000 a year start paying Social Security taxes on all their income above that amount (which is currently exempt from Social Security taxes), Congresswoman Jan Schakowsky (a co-sponsor of the legislation) said, “The Social Security Expansion Act will protect the national treasure that is Social Security by extending the trust fund’s solvency for 75 years and expanding benefits by $2,400 a year so that everyone in America can retire with the security and dignity they deserve after a lifetime of hard work.”

But big banks and the morbidly rich object, and they own the GOP…

Categories Budget Cuts, Cruelty, Disruption, Economy, Ethics, Evil, Extremism, Funding, Musk, Elon, Poverty, Propaganda, Republicans, Trump

Heather Cox Richardson: Trump Cozies Up to Putin, Allows Musk to Take Over Role of Congress

By dianeravitch
March 7, 2025 //
13

Heather Cox Richardson sums up the dizzying events of the past few days. It’s hard to keep track of the array of court orders, overturned, affirmed, or Elon Musk emails, warning government employees to answer or resign, or tariffs, announced, then paused, then announced, then paused again. Is Trump’s intent to dazzle us with nonstop dung?

Trump has disrupted the Western alliance, having made common cause with Putin in his unprovoked and brutal war on Ukraine. Trump is destabilizing not only our alliances with other nations but our government as well. He has approved of draconian cuts to every department, ordered by Elon Musk or his team of kids. The determination to cut 80,000 jobs at the Veterans Administration, most held by veterans, may be a wake-up call for Republicans.

This country is in desperate trouble. When will Republicans in Congress stand up for the Constitutionand stop the madness?

She writes:

This morning, Ted Hesson and Kristina Cooke of Reuters reported that the Trump administration is preparing to deport the 240,000 Ukrainians who fled Russia’s attacks on Ukraine and have temporary legal status in the United States. Foreign affairs journalist Olga Nesterova reminded Americans that “these people had to be completely financially independent, pay tax, pay all fees (around $2K) and have an affidavit from an American person to even come here.”

“This has nothing to do with strategic necessity or geopolitics,” Russia specialist Tom Nichols posted. “This is just cruelty to show [Russian president Vladimir] Putin he has a new American ally.”

The Trump administration’s turn away from traditional European alliances and toward Russia will have profound effects on U.S. standing in the world. Edward Wong and Mark Mazzetti reported in the New York Times today that senior officials in the State Department are making plans to close a dozen consulates, mostly in Western Europe, including consulates in Florence, Italy; Strasbourg, France; Hamburg, Germany; and Ponta Delgada, Portugal, as well as a consulate in Brazil and another in Turkey.

In late February, Nahal Toosi reported in Politicothat President Donald Trump wants to “radically shrink” the State Department and to change its mission from diplomacy and soft power initiatives that advance democracy and human rights to focusing on transactional agreements with other governments and promoting foreign investment in the U.S.

Elon Musk and the “Department of Government Efficiency” have taken on the process of cutting the State Department budget by as much as 20%, and cutting at least some of the department’s 80,000 employees. As part of that project, DOGE’s Edward Coristine, known publicly as “Big Balls,” is embedded at the State Department.

As the U.S. retreats from its engagement with the world, China has been working to forge greater ties. China now has more global diplomatic posts than the U.S. and plays a stronger role in international organizations. Already in 2025, about 700 employees, including 450 career diplomats, have resigned from the State Department, a number that normally would reflect a year’s resignations.

Shutting embassies will hamper not just the process of fostering goodwill, but also U.S. intelligence, as embassies house officers who monitor terrorism, infectious disease, trade, commerce, militaries, and government, including those from the intelligence community. U.S. intelligence has always been formidable, but the administration appears to be weakening it.

As predicted, Trump’s turn of the U.S. toward Russia also means that allies are concerned he or members of his administration will share classified intelligence with Russia, thus exposing the identities of their operatives. They are considering new protocols for sharing information with the United States. The Five Eyes alliance between Australia, Canada, New Zealand, the United Kingdom and the U.S. has been formidable since World War II and has been key to countering first the Soviet Union and then Russia. Allied governments are now considering withholding information about sources or analyses from the U.S.

Their concern is likely heightened by the return to Trump’s personal possession of the boxes of documents containing classified information the FBI recovered in August 2022 from Mar-a-Lago. Trump took those boxes back from the Department of Justice and flew them back to Mar-a-Lago on February 28.

A CBS News/YouGov poll from February 26–28 showed that only 4% of the American people sided with Russia in its ongoing war with Ukraine.

The unpopularity of the new administration’s policies is starting to show. National Republican Congressional Committee chair Richard Hudson (R-NC) told House Republicans on Tuesday to stop holding town halls after several such events have turned raucous as attendees complained about the course of the Trump administration. Trump has blamed paid “troublemakers” for the agitation, and claimed the disruptions are part of the Democrats’ “game.” “[B]ut just like our big LANDSLIDE ELECTION,” he posted on social media, “it’s not going to work for them!”

More Americans voted for someone other than Trump than voted for him.

Even aside from the angry protests, DOGE is running into trouble. In his speech before a joint session of Congress on Tuesday, Trump referred to DOGE and said it “is headed by Elon Musk, who is in the gallery tonight.” In a filing in a lawsuit against DOGE and Musk, the White House declared that Musk is neither in charge of DOGE nor an employee of it. When pressed, the White House claimed on February 26 that the acting administrator of DOGE is staffer Amy Gleason. Immediately after Trump’s statement, the plaintiffs in that case asked permission to add Trump’s statement to their lawsuit.

Musk has claimed to have found billions of dollars of waste or fraud in the government, and Trump and the White House have touted those statements. But their claims to have found massive savings have been full of errors, and most of their claims have been disproved. DOGE has already had to retract five of its seven biggest claims. As for “savings,” the government spent about $710 billion in the first month of Trump’s term, compared with about $630 billion during the same timeframe last year.

Instead of showing great savings, DOGE’s claims reveal just how poorly Musk and his team understand the work of the federal government. After forcing employees out of their positions, they have had to hire back individuals who are, in fact, crucial to the nation, including the people guarding the U.S. nuclear stockpile. In his Tuesday speech, Trump claimed that the DOGE team had found “$8 million for making mice transgender,” and added: “This is real.”

Except it’s not. The mice in question were not “transgender”; they were “transgenic,” which means they are genetically altered for use in scientific experiments to learn more about human health. For comparison, S.V. Date noted in HuffPost that in just his first month in office, Trump spent about $10.7 million in taxpayer money playing golf.

Josh Marshall of Talking Points Memo pointed out today that people reporting on the individual cuts to U.S. scientific and health-related grants are missing the larger picture: “DOGE and Donald Trump are trying to shut down advanced medical research, especially cancer research, in the United States…. They’re shutting down medicine/disease research in the federal government and the government-run and funded ecosystem of funding for most research throughout the United States. It’s not hyperbole. That’s happening.”

Republicans are starting to express some concern about Musk and DOGE. As soon as Trump took office, Musk and his DOGE team took over the Office of Personnel Management, and by February 14 they had begun a massive purge of federal workers. As protests of the cuts began, Trump urged Musk on February 22 to be “more aggressive” in cutting the government, prompting Musk to demand that all federal employees explain what they had accomplished in the past week under threat of firing. That request sparked a struggle in the executive branch as cabinet officers told the employees in their departments to ignore Musk. Then, on February 27, U.S. District Judge William Alsup found that the firings were likely illegal and temporarily halted them.

On Tuesday, Senate majority leader John Thune (R-SD) weighed in on the conflict when he told CNN that the power to hire and fire employees properly belongs to Cabinet secretaries.

Yesterday, Musk met with Republican— but no Democratic— members of Congress. Senators reportedly asked Musk—an unelected bureaucrat whose actions are likely illegal—to tell them more about what’s going on. According to Liz Goodwin, Marianna Sotomayor, and Theodoric Meyer of the Washington Post, Musk gave some of the senators his phone number and said he wanted to set up a direct line for them when they have questions, allowing them to get a near-instant response to their concerns.” Senator Lindsey Graham (R-SC) told reporters that Musk told the senators he would “create a system where members of Congress can call some central group” to get cuts they dislike reversed.

This whole exchange is bonkers. The Constitution gives Congress alone the power to make appropriations and pass the laws that decide how money is spent. Josh Marshall asks: “How on earth are we in this position where members of Congress, the ones who write the budget, appropriate and assign the money, now have to go hat in hand to beg for changes or even information from the guy who actually seems to be running the government?”

Later, Musk met with House Republicans and offered to set up a similar way for the members of the House Oversight DOGE Subcommittee to reach him. When representatives complained about the random cuts that were so upsetting constituents. Musk defended DOGE’s mistakes by saying that he “can’t bat a thousand all the time.”

This morning, U.S. District Judge John McConnell Jr. ruled in favor of a group of state attorneys general from 22 Democratic states and the District of Columbia, saying that Trump does not have the authority to freeze funding appropriated by Congress. McConnell wrote that the spending freeze “fundamentally undermines the distinct constitutional roles of each branch of our government.” As Joyce White Vance explained in Civil Discourse, McConnell issued a preliminary injunction that will stay in place until the case, called New York v. Trump, works its way through the courts. The injunction applies only in the states that sued, though, leaving Republican-dominated states out in the cold.

Today, Trump convened his cabinet and, with Musk present, told the secretaries that they, and not Musk, are in charge of their departments. Dasha Burns and Kyle Cheney of Politicoreported that Trump told the secretaries that Musk only has the power to make recommendations, not to make staffing or policy decisions.

Trump is also apparently feeling pressure over his tariffs of 25% on goods from Canada and Mexico and an additional 10% on imports from China that went into effect on Tuesday, which economists warned would create inflation and cut economic growth. Today, Trump first said he would exempt car and truck parts from the tariffs, then expanded exemptions to include goods covered by the U.S.-Mexico-Canada trade agreement (USMCA) Trump signed in his first term. Administration officials say other tariffs will go into effect at different times in the future.

The stock market has dropped dramatically over the past three days owing to both the tariffs and the uncertainty over their implementation. But Trump denied his abrupt change had anything to do with the stock market.

“I’m not even looking at the market,” Trump said, “because long term, the United States will be very strong with what’s happening.”

Categories Accountability, Billionaires, Budget Cuts, Corruption, Cruelty, Democracy, Disruption, Economy, Ethics, Evil, Extremism, Fascism, Funding, Health, History, Stupid, Trump

Karen Attiah: Call the Attack on DEI What It Is: A Rollback of Racial Integration

By dianeravitch
February 17, 2025 //
25

Karen Attiah is Global Opinions Editor of The Washington Post and a columnist. She says in this column exactly what I have been thinking. The attack on DEI is intended to restore the days when women, Blacks, Latinos, and people with disabilities had little or no chance to rise in their field.

It’s ironic to hear Trump talk about the importance of merit when he has stocked his cabinet mostly with people who lack experience, knowledge, wisdom, or any genuine qualification for the position. His cabinet was not chosen based on merit. In what world would Pete Hegseth–no administrative experience, serial philander with an alcohol problem–be considered qualified to be Secretary of Defense? Or RFK Jr. qualified to be Secretary of Health and Human Services, having spent years fighting vaccines and having zero medical expertise? Or Tulsi Gabbard, Putin apologist, qualified to be Director of National Intelligence?

Attiah writes:

Across the United States, in government agencies and private corporations, leaders are scrambling to eliminate DEI programs. President Donald Trump is not only destroying any trace of diversity work within the government: He has ordered a review of federal contracts to identify any companies, nonprofits and foundations that do business with the government and keep their diversity, equity and inclusion programs, and he has warned that they could be the target of investigations.

Let’s call this what it really is: resegregation.
I don’t mean resegregation in the sense of separate water fountains. I mean it in the sense that a Black woman would never even be considered for a federal job or a management position at a big company — the way it was in, say, the 1960s. It is not “inclusion” the Republicans want to get rid of, it’s integration.

If you think I’m exaggerating, just look at a post made by Darren Beattie, who was just named an acting undersecretary of state: “Competent white men must be in charge if you want things to work,” he wrote on X — not 10 years ago but in October.

Trump’s GOP is also threatening private companies that are trying to level the playing fields for Black people, women and other groups. After Costco’s shareholders voted to keep its diversity programs in place, 19 Republican state attorneys general sent a letter to Costco asking it to explain why it was maintaining a policy of “unlawful discrimination.”

A number of other corporations have begun their cowardly capitulations. In a memo, Kiera Fernandez, chief equity officer for Target, said the company would be ending its diversity, equity and inclusion goals “in step with the evolving external landscape.” Amazon, Meta and Walmart have also announced rollbacks.

For anyone wondering why “inclusion” is still needed: Since the Supreme Court ended affirmative action in 2023, first-year Black enrollment at top universities has dropped by 17 percent. That’s the sharpest drop of any major racial group. (For comparison, White enrollment has fallen by 5 percent.)

Or look at the business world: Black people represent 13.7 percent of the population but Black-owned businesses generally get less than 2 percent of venture capital funding. Despite a smattering of promises from venture capital companies to do better after the murder of George Floyd, funding to Black companies dropped from $4.9 billion in 2021 to $705 million in 2023 — an astonishing 86 percent drop. Sounds like a segregated market to me.

These facts, taken together, point to the removal of Black people from academic, corporate and government spaces: resegregation.
People are vowing to push back with their wallets — to shop at Costco and boycott Target, for example. But I believe the fight starts with language. Journalists have a role and an obligation to be precise in naming what we are facing.

Frankly, I wish the media would stop using “DEI” and “diversity hiring” altogether. Any official, including the president, who chooses to blame everything from plane crashes to wildfires on non-White, non-male people should be asked whether they believe that desegregation is to blame. Whether they believe resegregation is the answer. We need to bring back the language that describes what is actually happening.

“The function, the very serious function of racism is distraction,” Toni Morrison said. “It keeps you from doing your work. It keeps you explaining, over and over again, your reason for being. Somebody says you have no language and you spend twenty years proving that you do.”
Black people have spent nearly 70 years “proving” ourselves. And in a flash, with a new administration, the gains of those decades are being washed away.

While Attiah focuses on the expansion of opportunity for Black people, the biggest beneficiaries of DEI policies–that is, efforts to diversify student bodies, the workforce, and corporate leadership–have been white women.

Thanks to DEI, white women now serve on corporate boards, as corporate leaders, and in positions that would have been closed to them in the past.

Categories Bigotry, Civil Rights, Democracy, Economy, Ethics, Gender, Race, Trump

Keith Barber: Making Sense of Tariffs

By dianeravitch
February 15, 2025 //
29

Keith Barber posted this point-counterpoint on Medium. Barber is a retired lawyer and lifelong Republican (pre-Trump). He presents the best arguments for tariffs, then explains why none of those claims make sense.

Keith writes:

A friend sent me a pro-tariff missive a MAGA friend of his shared. My friend wanted to know what I thought of it. Here is what he sent me.

“In its most basic form a tariff is a tax placed on imported goods. For instance, China sells widgets in the U.S. A 10% tariff on China would mean that for every widget China sells in the U.S., China must pay the U.S. federal government 10%.

Currently, foreign trade with the U.S. is extremely imbalanced. For example: the U.S. may charge China a 10% tariff BUT, China charges the U.S. a 50% tariff. This means more Chinese goods get sold in the U.S. than U.S. goods sold in China.

These grossly imbalanced tariffs (international tax) have encouraged U.S. manufacturers to move manufacturing OUT of the U.S., eliminating good paying middle class U.S. jobs. By raising tariffs on imported goods, U.S. companies are incentivized to return manufacturing to the U.S. because it will be more profitable to produce in the U.S. than to pay high import tariffs.

In the short term U.S. pricing will increase. HOWEVER, within 1 year those prices will decrease as manufacturers return to U.S. production. Not only will prices return to more affordable pricing but, 100’s of millions U.S. middle class jobs will become available hence, raising the standard of living for the American worker.

Prior to 1850 over 90% of all federal revenue came from international tariffs AND income tax did not exist and was deemed unconstitutional. In 1913, the U.S. federal government implemented the federal income tax scheme upon all U.S. workers. Today only 2% of all federal revenue comes from tariffs. The remaining federal revenue comes from income taxes, state taxes and borrowed money from the Federal Reserve, which weakens the U.S. dollar.

A strong and fair tariff system has the potential to not only reduce federal income taxes but, even eliminate them. Again, providing a higher standard of living for the American worker.”

I responded to my friend pointing out the numerous flaws, and flat out factual misrepresentations, of his friends arguments. What follows is a cleaned up version of that, along with some additional thoughts.

Let’s start with this: “For instance, China sells widgets in the U.S. A 10% tariff on China would mean that for every widget China sells in the U.S., China must pay the U.S. federal government 10%.”

Absolutely false. The American importer would pay the 10%, not China. Think about it. How would you, how could you, make China itself pay? This fundamental error of fact alone is sufficient to trash the rest of the arguments above. It also shows that whoever authored it is absolutely clueless regarding how tariffs work.

Nor is the 50–10 characterization of tariffs accurate. To be sure, China uses a variety of arguably unfair regulatory procedures to limit U.S. imports, but Chinese tariffs have generally been imposed as responsive to American tariffs. Cheap labor is why Chinese goods are less expensive compared to American products, not tariffs.

The entire notion of tariffs returning production to America ignores the economic concept of competitive advantage. It also ignores the realities of things as simple as geography and weather. You really think lost avocado imports from Mexico and Central America can be moved to the United States? That Colombian coffee can be grown here? And even if it could, which it can’t, Trump’s taking the cheap employment base out of this country to do it.

Things that used to be produced in America were moved out because they could be made less expensively elsewhere. Government intervention in the market with a tariff/tax to compel production in the United States means the product will be more expensive for the simple reason that it costs more to make it here (more on that in a moment).

Which gets to another ridiculous claim: “100’s of millions U.S. middle class jobs will become available hence, raising the standard of living for the American worker.”

First, in a nation of about 330 million there are not 100s of millions of workers to work in additional middle class jobs. Right now the United States has only about 7 million unemployed.

Further, most of these jobs would not be middle class. Does the idiot who wrote this really think China is paying American middle class wages to the workers doing it now? Made in America will only be as cheap if we pay our workers what China pays its workers. If you think the price of your iPhone is high now, try paying American middle class wages to the workers who make it.

This proposed government market intervention/manipulation operating against the free enterprise model conservatives falsely claim to love. We would understand it be exactly that sort of government powered market manipulation (dare I call it “socialism”?) if, for example, the state of Florida attempted to tax cars made in Michigan in order to use this governmental power to compel the development of a Florida auto industry. And Florida would get to say this state “tariff” is also to raise revenue and reduce the tax burden on Floridians. But the truly nonsensical nature of this can be understood when Michigan retaliates by imposing a tariff/tax on Florida oranges. As if oranges can be grown in Michigan.

I also got a laugh at the “within 1 year” the production will magically shift to the America, which is simply made up. How long does it take to build a steel mill? An auto plant? The highly sophisticated factories where microchips are made? What divorced from reality lunatic thinks that can be done at scale in less than a year? Oh, and when you build those microchip factories, you need the raw materials, coming from . . . well not here.

That tariffs could ever make near enough money to eliminate federal income taxes is just another flat out absurdity. A comparison to 1913 when the federal budget was 2% of GDP (it’s well over ten times that now) reflects the dishonest approach involved. U.S. military spending alone now is nearly double that 2%. Even getting close to the 1913 standard would require eliminating social security, medicare, medicaid and much more. Of course, maybe that is the real objective.

Further, this use of tariffs to substitute for income taxes involves an obvious Catch-22. If tariffs won’t financially harm Americans because of increased domestic production, then tariffs can’t make much money either. It is only by transferring the expense of tariffs on still imported goods to American consumers that tariffs can make any money at all. Whoever wrote this rubbish completely disregarded that the benefit they claim, of tariffs increasing domestic production, totally destroys their argument that tariffs will make so much money we can eliminate income taxes.

To the extent tariffs would substitute for income tax that substitution would be to create what amounts to a regressive sales tax to reduce progressive income taxes. Which means the entire tax substitution argument is shell game trying to sneak a benefit for the wealthy at the expense of the poor and middle class.

I’d like to conclude with a truncated version of the last paragraph: “A strong and fair tariff system has the potential to . . . [provide] a higher standard of living for the American worker.”

If this argument is valid, then it would be valid for every nation. Supposedly the standard of living for everyone in the world would be better if every nation in the world had “a strong and fair tariff system.” The workers of the world would be better off if every nation just hunkered down its entire manufacturing and agricultural and energy bases to make everything it needs so every country imports nothing and exports nothing.

For reasons of competitive advantage, that include everything from geography to labor costs to climate, this notion is simply not true. As but a single extreme example, how is landlocked Mongolia to get fish? How is America to get inexpensive coffee? And so on.

Whoever wrote this simple minded garbage could not pass the most basic course in economics, or for that matter, common sense.

I would add another bonus point. Trump isn’t even trying to justify the tariffs with the bogus economic arguments presented in the “point” piece above. Rather, Trump is trying to claim that it’s all about stopping illegal immigration and fentanyl.

Neither argument legitimately applies to Canada, and the fentanyl argument does not apply to either Canada or Mexico. The vast bulk of fentanyl is smuggled into the United States through legal ports of entry. Further, it is Americans who bring 86% of the fentanyl across the border. As it turns out, the drug lords pushing fentanyl don’t want to trust so valuable a product to some desperate middle aged mother trying to cross the border with her five year old daughter to escape political persecution in Venezuela.

Blaming immigrants for fentanyl tells me you are not serious about that problem. You don’t want to solve it, you just want to blame it on people you already don’t like.

Categories Economics, Economy

Politico: Is There a Cure for Stupidity?

By dianeravitch
February 9, 2025 //
18

Peter Navarro is an economist who currently serves as a trade advisor to Trump. In Trump’s first term, Navarro was also an aide on trade issues. When the January 6 commission asked him to testify, he refused. He was eventually sentenced to four months in prison for contempt of Congress.

Navarro claimed in an event sponsored by Politico that Trump’s plans to create an External Revenue Service to collect tariffs were brilliant. He predicted that tariffs would produce so much money for the government that they could eventually replace income taxes as the primary source of revenue.

Currently, Politico points out, tariffs are collected by the U.S. Customs and Border Protection Bureau. But the tariffs are paid not by the country selling the goods, but by the company importing them. Most economists predict that the price increases will be passed on to consumers, which is another way of “taxing” them.

In other words, tariffs increase inflation.

Categories Economy, Stupid, Trump

Wall Street Journal: “America’s Dumbest Trade War”

By dianeravitch
February 2, 2025 //
25

The Wall Street Journal, owned by Rupert Murdoch, is known for its admiration for Donald Trump and its commitment to the best interests of big business and capitalism. On Friday, it published this editorial about Trump’s determination to impose tariffs on our trading partners. This action, said the editorial, is just plain dumb.

The editorial said:

President Trump will fire his first tariff salvo on Saturday against those notorious American adversaries . . . Mexico and Canada. They’ll get hit with a 25% border tax, while China, a real adversary, will endure 10%. This reminds us of the old Bernard Lewis joke that it’s risky to be America’s enemy but it can be fatal to be its friend.

Leaving China aside, Mr. Trump’s justification for this economic assault on the neighbors makes no sense. White House press secretary Karoline Leavitt says they’ve “enabled illegal drugs to pour into America.” But drugs have flowed into the U.S. for decades, and will continue to do so as long as Americans keep using them. Neither country can stop it.

Drugs may be an excuse since Mr. Trump has made clear he likes tariffs for their own sake. “We don’t need the products that they have,” Mr. Trump said on Thursday. “We have all the oil you need. We have all the trees you need, meaning the lumber.”

Mr. Trump sometimes sounds as if the U.S. shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home. This is called autarky, and it isn’t the world we live in, or one that we should want to live in, as Mr. Trump may soon find out.

Take the U.S. auto industry, which is really a North American industry because supply chains in the three countries are highly integrated. In 2024 Canada supplied almost 13% of U.S. imports of auto parts and Mexico nearly 42%. Industry experts say a vehicle made on the continent goes back and forth across borders a half dozen times or more, as companies source components and add value in the most cost-effective ways.

And everyone benefits. The office of the U.S. Trade Representative says that in 2023 the industry added more than $809 billion to the U.S. economy, or about 11.2% of total U.S. manufacturing output, supporting “9.7 million direct and indirect U.S. jobs.” In 2022 the U.S. exported $75.4 billion in vehicles and parts to Canada and Mexico. That number jumped 14% in 2023 to $86.2 billion, according to the American Automotive Policy Council.

American car makers would be much less competitive without this trade. Regional integration is now an industry-wide manufacturing strategy—also employed in Japan, Korea and Europe—aimed at using a variety of high-skilled and low-cost labor markets to source components, software and assembly.

The result has been that U.S. industrial capacity in autos has grown alongside an increase in imported motor vehicles, engines and parts. From 1995-2019, imports of autos, engines and parts rose 169% while U.S. industrial capacity in autos, engines and parts rose 71%.

As the Cato Institute’s Scott Lincicome puts it, the data show that “as imports go up, U.S. production goes up.” Thousands of good-paying auto jobs in Texas, Ohio, Illinois and Michigan owe their competitiveness to this ecosystem, relying heavily on suppliers in Mexico and Canada.

Tariffs will also cause mayhem in the cross-border trade in farm goods. In fiscal 2024, Mexican food exports made up about 23% of total U.S. agricultural imports while Canada supplied some 20%. Many top U.S. growers have moved to Mexico because limits on legal immigration have made it hard to find workers in the U.S. Mexico now supplies 90% of avocados sold in the U.S. Is Mr. Trump now an avocado nationalist?

Then there’s the prospect of retaliation, which Canada and Mexico have shown they know how to do for maximum political impact. In 2009 the Obama Administration and Congressional Democrats ended a pilot program that allowed Mexican long-haul truckers into the U.S. as stipulated in Nafta. Mexico responded with targeted retaliation on 90 U.S. goods to pressure industries in key Congressional districts.

These included California grapes and wine, Oregon Christmas trees and cherries, jams and jellies from Ohio and North Dakota soy. When Mr. Trump imposed steel and aluminum tariffs in 2018, Mexico got results using the same tactic, putting tariffs on steel, pork products, fresh cheese and bourbon.

Canadian Prime Minister Justin Trudeau has promised to respond to U.S. tariffs on a dollar-for-dollar basis. Canada could suffer a larger GDP hit since its economy is so much smaller, but American consumers will feel the bite of higher costs for some goods.

None of this is supposed to happen under the U.S.-Mexico-Canada trade agreement that Mr. Trump negotiated and signed in his first term. The U.S. willingness to ignore its treaty obligations, even with friends, won’t make other countries eager to do deals. Maybe Mr. Trump will claim victory and pull back if he wins some token concessions. But if a North American trade war persists, it will qualify as one of the dumbest in history.

Categories Accountability, Disruption, Economy, Stupid, Trump

Umair Haque: America’s Brexit Moment

By dianeravitch
February 2, 2025 //
7

Umair Haque, a London-based economist, is pessimistic about the direction of our economy., He wrote this a day before Trump announced that he was imposing 25% tariffs on Canada and Mexico, our neighbors and largest trading partners, and 10% tariffs on Europe and China. Haque predicts that the economic consequences for the U.S. will be devastating.

He wrote on his blog, The Issue:

Hi guys. I’m going to keep it short and sweet, because this one’s urgent. Friends, gather round, you will need to understand what I’m about to discuss.

Trump just announced tariffs of 25% on Canada and Mexico and a little less on China…

What’s going to happen?

Americans don’t have much experience with tariffs, with macroeconomic changes and transformations in general. So it’s OK not to know. And I’d expect the country to be wayyyyy more alarmed, but it isn’t, because it doesn’t understand what’s about to hit it, which is going to be…

Absolutely catastrophic.

See how people are already “shocked” and “surprised” by what’s happening (all over again)? They aren’t listening and learning. Please, take a second to understand all this, urgently and seriously. This is why I write these long essays. You are going to be affected, and I don’t want you and your loved ones to get hurt.

Chaosterity

What do tariffs of 25% mean? 

They mean that everything that’s imported from Canada and Mexico is going to rise in price, many things by a lot more than 25%. What’s imported from there? Food, vegetables, fruit, lumber, all kinds of basics. Why will it rise, in some cases more than the tariff rate? Because of course distributors and the entire value chain needs to make money in order to operate.

So we are going to see a ruinous wave of inflation. When I say ruinous, I mean it. 25%? That’s an enormous rate for a tariff. Normally, if want to discourage trade or investment, we’d set that rate at maybe 5 or 10%. Not only do these guys have no idea what they’re doing, they have no idea what kind of ruin they’re about to unleash.

In short order, Americans are going to be catastrophically more for nearly everything on the shelves. They already can’t afford it, which we know because of course credit balances are skyrocketing and living standards are falling.

But that’s only sort of the small story. This isn’t just “about tariffs,” but an approach to the economy which also appears to include attempting to lay off the entire government.

I called it Chaosterity the other day. Tariffs hurt people, and the people they hurt the most are those who have the least. In this regard, while attempting to lay off the entire government is austerity, deciding you’re going to have 25% less stuff (which is another way to think about 25% tariffs, at an equivalent price level), is going to result in chaos, a kind which most living Americans have never really seen. We’re talking 1930s level consequences.

Because what all this does next is…what blunders like this do next…they accumulate and begin cascades, vicious spirals. Let me continue.

The best lens to understand what just happened is what Britain did to itself via Brexit.

What Brexit Did to Britain

Today, just 3 in 10 Brits think it was a good idea. Back then, when it happened, the nation was gripped by this weird mania.

Economists and intellectuals would try to warn people about the effects of tariffs. Of breaking up with your biggest trading partners. For a country that imports nearly everything.

Sound familiar?

What happened next to Britain? It suffered the longest, steepest, sharpest fall in living standards in history.

But even that’s not really the worst part. It’s economy is shrinking, and it will never recover. To what it was before Brexit. That is because of course now it has to reach a much smaller equilibrium, since it has less investment, capital of all kinds, whether financial or human, less trade, less commerce.

Sound familiar?

Today, British incomes have stagnated so long and hard that people wonder why they’re earning such pittances. The differences are stark, and almost unbelievable. The same jobs in America will pay 3 to 5 times as much, and in Europe, 2 to 3 times as much.

Britain turned itself into a much, much poorer country. It will never recover. The losses are now permanent.

Meanwhile, because it’s economy now has had to become much smaller, it’s once vaunted social contract is in tatters. The NHS is dying. The BBC is already dead. The streets are full of trash and crime, local authorities are bankrupt, and there’s a sense that nothing works, and there is no future. 

There isn’t.

The government’s plan, to “kickstart growth”? To build…another runway at Heathrow. Go ahead and laugh. This is what’s left—this level of incompetence and this paucity of vision.

Brexit cost Britain everything. It destroyed its future so severely that we don’t have a wordfor “rich country that made itself poor and a pariah.”

Go to Paris, compared to London, and the streets are clean, people are happy, and things are generally flourishing. In London? People dress in modern-day rags, the pain and despair are etched on their faces, and the poverty is everywhere.

This is what happens next.

Open the link to continue reading.

Categories Disruption, Economy, Extremism, Inequality, Stupid, Trump
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