Trump’s Claim
..Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!
— Donald J. Trump (@realDonaldTrump) August 5, 2018
Data for the above chart downloaded from US Government Debt, not an official government website. There are lots of excellent charts one can view already made or create from downloaded data.
Budgeted vs. Actual Deficits
I created the above chart showing budgeted deficits vs what actually happened. I calculated actual deficits by subtracting the year-over-year national debt from the year-over-year national debt from the prior year.
Projections vs Reality
In nearly all cases, the actual deficit is way higher than projected. Why?
Because the projected deficit does not include all of the amount owed to the Social Security Trust Fund. That amount is called off-budget. But when the calendar year rolls over, the difference magically appears as a bigger than projected increase in the national debt.
Trump Projected Deficits
Deficits under Trump are expected to range from $666 billion to $987 billion, increasing every year. The total projected sum is about $3.47 trillion.
Tariff Study
CNBC reports US Reaps More than $1.4 Billion from Steel and Aluminum Tariffs.
The obvious problem with the study is that it does not include any losses.
Let’s ignore the losses and assume there are only gains. In fact, let’s assume the gains will be 100 times greater annually, without any losses.
Question of the Day?
Even if the deficit actually comes in at the projected rate (trust me, it will underperform expectations), what is the likelihood tariffs will reduce the national debt?
The answer of course is ZERO.
Trump’s budget will add a minimum of $500 billion every year to the national debt.
Mike “Mish” Shedlock
Trump is spending like a drunken sailor and increasing the US government debt at a much higher rate than Obama did…
Without the continued increase in US government debt, US state debts and US company debts and US consumer debts the offshoring of well paying jobs to China, India and Mexico and the importation of millions of illegal immigrants and millions of legal immigrants to USA to lower wages would have led to a complete collapse in demand and consumption in USA crashing markets and crashing profits.
This means the only way offshoring of well paying jobs and importing millions of illegal immigrants and millions of legal low wage immigrants to USA could have happened is through continued increases of debt.
If there was no continued increase of debts companies offshoring jobs or giving illegal immigrants jobs or importing low wage legal immigrants would have had to eat the consequences of their actions by crashing demand in USA for their products and services so they would NOT have offshored production and they would NOT have hired illegals or imported low wage immigrants.
The problem with the huge debts is that since increases in debts have been used to hide the hollowing out and destruction of US economy these debts can NEVER be repaid and there is a huge FALSE demand for things and services caused by increases in debts that are not sustainable.
When the crash comes it will be worse than 1930’s…
Debts will NOT be repaid because they can NOT be repaid.
Stock prices are a mirage based on a false demand for products and services.
Advertising based businesses like Facebook and Google have stock prices that are based on inflated prices and inflated demand for advertising caused by consumption enabled by continued increase in debts.
That’s a lot of if’s…
Ultimately, the consumer must pay the tariff. Guess whose taxes just got raised ?
That description of the tariffs is completely bogus.
Companies ALWAYS price their products at the maximum level they can get maximizing the overall profits through having a profit margin on products that is as high as possible while still leading to most demand for product possible to create a maximum overall profit.
Tariffs will lead to LOWERING of the profit margin for companies and that is why companies are furiously lobbying against tariffs.
For workers tariffs are good because it will mean more things are produced in the USA and this will mean more jobs for Americans and for government and US states tariffs are good because this will lead to more tax revenue from workers.
Somebody buying Chinese made crap from Walmart will still get that crap by buying American made crap since Walmart is NOT a charity so they get the maximum price they can per product.
However Walmart will have less profits since the Chinese made crap was cheaper for Walmart than American made crap and Walmart might have to raise their wages since employees will have more choices in employment since more products will be made in USA so they can work in manufacturing instead of Walmart being the only option in some places.
Also US states in the interior will have more jobs moving to them because there are workers there that can be used to make that Walmart crap in USA.
If the illegal immigrants would be deported interior of USA would also get many production facilities currently in California, Texas, Arizona since those states would NO longer have plentiful illegal immigrants doing jobs cheaply so businesses would have to go seeking workers from cheap wage areas inside of USA helping republican states hugely in employment.
The tariffs are taxes meme is FAKE and spread by companies wanting to keep their profit margins as high as possible.
Companies ALWAYS charge the maximum amount they can per product while maximizing the amount of products they sell to maximize their overall profit.
ML1, note Trump and rich friends buy essentially zero Chinese goods, so a win win for them. Dumbass base will be hit hard short term.
Note you absurdly assign all costs of tariffs to retailer margins. Price increases will instead be passed onto consumers that buy cheaper goods. Massive bias on your part to think those consumers wont be pressured most. Such workers will have higher prices and jobs that pay less in order to compete with imports. All inherent but not truthfully advertised in MAGA-land.
I really enjoy the data analysis on here; it is woefully lacking in the msm. Questions I think of with tariffs: “What does the economy and deficit look like if we are even slightly nudged back towards a manufacturing vs service sector McJobs one?” “If Trump goes into 2020 somehow without a recession, does this stop being portrayed as the Obama Economy by the msm?” “What is a good trade off ratio of high paying manufacturing job gains vs Mcjobs losses if the administration’s prognostications on tariffs/mercantilism somehow prove accurate?”
We just add a bunch of taxes to lower the taxes on “our” people! And abandon free market principles to save the free market! And go to war for peace! Heck, why not? The idiots lap it up uncritically every time….
There is NOTHING free market in buying lots of products produced by slave wage labor in communist China which destroys environment as competitive advantage while working their workers 12-hour days 6-days a week and having nets around the dormitories where employees sleep inside the factory area to stop suicides by Chinese workers…
A Free Market is nothing more than freedom, for any two INDIVIDUALS, to voluntarily enter into any trade with anyone else. Without interference from any third parties.
If Joe Blow in Nebraska wants to trade something he has for something Ching Chong in Shenzhen has, those two are the only participants whose opinion matters even the tiniest iota..
Not those of some dimwit army of self righteous “it takes a village” self appointed “stakeholders” insisting on inserting their useless selves into the lives of others, under one childish pretext or another.
Kudos to Mish for looking at the year-to-year difference in debt instead of the fiscal deficit. The tariffs are of course not in the place of taxes, but are a very uneven, underhanded, and opaque form of taxation (of American consumers & companies). Pity you did not also explore the relationsip between fiscal and trade deficits from a national accounts point of view: For a businessman and business graduate, Trump is showing yet again how little he grasps of the actual mechanics of the real world.
deficit running quarter trillion per quarter in a “booming” economy!Subtract the phony,manipulated bait n switch accounting scams DC uses to pretend the deficit is “only” a trillion per year,real deficit is more than double that,So no,sorry nothing is gettin paid down (ever)!Inflated away/defaulted on sure,but paid down….lol!
Considering obama added $10 trillion to the deficit – this looks like a step in the right direction. And we are not even discussing the Great QE Unwind.
Tarrifs AND the raise he’s asking the troops to forgo. What a warrior!
Troops GOT their raises.
Government bureaucrats working for federal government did NOT get their raises on top of their already over-inflated wages that are almost double higher than comparative jobs in the private sector.
Please do NOT fall for Democrat talking points.
There is enough stupid to criticize Trump and Sessions and Kirstjen Nielsen and other incompetents chosen by Trump’s “advisers” to work for Trump administration without repeating FAKE Democrat talking points…
I think most of the channel’s subscriber criticizes any admin that is has an unsound fiscal policy. Any raises to public employees will add to the debt. Just focusing on the existing debt balance itself is enough to not warrant any increases. Adding tariff will basically create a fiscal shock to the system.