Jason Furman and Janet Yellen have both suggested that cutting Trump's tariffs would be anti-inflationary. But most economists agree that the incidence of the tariffs is for the most part on US consumers, not foreign suppliers (pace the treasonous and ignorant former president, who crowed about all the revenues we were raising from China). So how is a tax cut anti-inflationary? There is a supply-side effect, which is all to the good, but the demand-side effects may well wash that out. So get rid of the tariffs but reverse the Trump tax cuts, which Manchin favors, through reconciliation. Taxes remain the same, so we've neutralized the effects on demand; and we still get the good supply side effects of a more rational global division of labor.
3 comments:
There are two things that Trump did that added to inflation that Biden has somehow not undone yet. One of them is reversing the Trump tariffs, which he clearly fears doing because of opposiion by Organized Labor and many white working class voters in the crucial Rust Belt states. Some of them even support tariffs that hurt them personally, such as the autoworkders who lost their jobs at the Lordstown assembly plant in Ohio partly due to Trump's steel tariff, but who reportedly supported it and him as well anyway.
The other thing is his failure to rejoing the JCPOA nuclear deal with Iran, which hs should have simply done immediately upon taking office. But he went along with the idea of makking demands on Iran to expand the deal such as limiting them from building missiles, which pretty much all experts warned they would not accept, and they have not. Now they are on the verge of having enough enriched uranium to make a bomb.
But rejoining the deal would have allowed for a relaxation of the economic sanctions against Iran, which have it producing only about half a million barrels of oil per day. Before sanctions were reimposed it was producing about two million more barrels per day than that, enough to really impact the global price of oil and help hold down gasoline prices. Instead we have Biden running hat in hand to MBS in Saudi Arabia to beg him to increase oil production, which I suspect he will not do or do very much.
agree on both Barkes
Great article,thanks for sharing with us!
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