The Great Big Devil is Often in the Small Details

 

The Great Big Devil is Often in Small Details

Details so small you could compare them to a fleet of aircraft carriers on a small lake. They’re only small details to the members of Congress who did not read them, are woefully unprepared to read financial legislation in the context of global macroeconomics or are so terrified of Donald “me and only me” Trump that they cannot do their jobs.

For example, let’s note the global marketplace for debt is not infinite. When demand for loans rises, lenders smile. Under the most basic law of supply and demand – like when the largest economy in the world needs to finance trillions and trillions of dollars of new deficit debt, that limited supply of lending capital tends to raise its interest rates… across the board. Add a growing perception of higher risk from a nation perceived to be increasingly unstable, and that interest rate rises further. The problem for folks borrowing to buy a car or take on a mortgage, or using credit cards, the overriding increase in interest rates, caused by their own government’s profligate ways, also slams them the teeth. The big US pig at the finite debt trough is sucking all that money from the potential of other borrowers, like US consumers.

Picture this other scenario: you punish (with big government fines) retailers who are selling discounted products, on sale or simply priced low, with the government’s claiming that only full-price sales are fair. Pretty stupid, huh? But that’s the frailty of the argument maintaining that anyone causing a balance of trade deficit in US deals… they sold too cheap… is abusing and “making suckers of American consumers.” We got the cheaper goods! So as Donald Trump tries to use tariffs (ok, unlikely as TACO Trump does not have the stomach for standing firm on tariffs) to address trade imbalance, effectively punishing those who gave Americans a good deal by slamming them with higher tariffs. And while Donald Trump admits that tariffs are taxes, he mistakes these as taxes paid by seller nations, missing the point that they really are sales taxes on US importers and consumers. Seller nations do not pay tariffs!!!! Ever!!!

In the world of tariffs, there is now zero question that Trump’s TACO tariffs are NOT remotely related to any “emergency.” His direction to his Commerce and Treasury Secretaries to send cut-and-paste “new tariff rate” letters to dozens and dozens of nations is one unsubtle proof of this reality. And if there is no emergency, Trump’s taking the initiative by setting tariffs is an unlawful usurpation of the Constitution’s according only to Congress with that right.

However if you want irrefutable proof of “whim vs emergency,” look at this effort (regardless of the ultimate result): in early July when one particular democracy had legitimately charged and wass trying a former president for attempting a coup d’etat, circumventing election results he clearly lost, a nation with which the US actually has a trade surplus (a major net importer of us goods)… Trump has threatened unless that ex-president were released and all charges dropped with prejudice… the United States wrote that it will up its tariff to 50%! Which we will pay! That ex-President has been called the “Trump of the Tropics,” a man with Trump-like autocratic proclivities from a nation that produces and is the major exporter of coffee (we only grow a tiny amount in the US) and cocoa which does not compete with us. The Trump-bro is Jair Bolsonaro; and the country is Brazil.

Trump is acting out his fantasy that he expressly stated back on April 28th when he told The Atlantic: “The first time [first term], I had two things to do ‒ run the country and survive; I had all these crooked guys. And the second time, I run the country and the world.” Effectively, between Project 2025 and DOGE, Trump’s utter failure to understand government and macroeconomics is destroying the country, perhaps irretrievably.

I now turn to an excerpt from the New York Times (July 8th) from this opinion piece by former Treasury Secretary Lawrence Summers (under Clinton) on the hard knocks and fiscal impact of Trump’s “Big Beautiful Bill” cutting taxes for the rich and deeply cutting survival-level benefits for the poor: “I am plenty negative about this president and this moment. Even I was unpleasantly surprised by what I learned.

“This round of budget cuts in Medicaid far exceeds any other cut the United States has made in its social safety net. The approximately $1 trillion reduction, over 10 years, represents about 0.3 percent of gross domestic product. Previously, the most draconian cuts came with President Ronald Reagan’s 1981 tax law. But they were far smaller — $12 billion over 10 years and 0.03 percent of G.D.P. The Trump law will remove more than 11 million people from the rolls, compared with about three million under the Reagan cuts. Other noteworthy reductions to the social safety net, such as the Clinton-era welfare reform, were even smaller.

“Because Medicaid is a state-level program and varies widely across the country, economists can evaluate the impact of alternative policies. A number of studies suggest that removing one million people from the rolls for one year could result in about 1,000 additional deaths. It follows that removing more than 11 million people for a decade would probably result in more than 100,000 deaths. Because this figure fails to take account of the degradation of service to those who remain eligible — fewer rides to the hospital, less social support — it could well be an underestimate.

“The administration claims its policies, such as adding work requirements for Medicaid eligibility, bear only on the able-bodied. I have supported the general idea of work requirements for cash welfare based on a common-sense idea of fairness. But a careful evaluation of an experiment in Arkansas confirms what common sense also suggests — imposing work requirements on a population in need of health insurance does not increase work and does inhibit necessary care.

“The cruelty of these cuts is matched only by their stupidity. Medicaid beneficiaries will lose, but so will the rest of us. The cost of care that is no longer reimbursed by Medicaid will instead be borne by hospitals and passed onto paying patients, only at higher levels, because delayed treatment is more expensive. When rural hospitals close, everyone nearby loses. Hospitals like the one where my daughters practice can no longer accept emergencies by air because those beds are occupied by patients with chronic diseases and no place to go.” We are only one-eighth into Trump’s second term, and to use a quote from Star Trek engineer, Scottie, “I’m givin’ her all she’s got, but I don’t know how long she can last.” The nation is unraveling, our enemies are delighted, and our allies are aghast.

I’m Peter Dekom, and reality does not conform to the wishes of idealogues believing in misguided “principles” and conspiracy theories; as I often say, “it is what it is, whether you like it or not.”