After the devastating Wall Street Journal report a couple days ago that pointed to an economic catastrophe if Trump’s plans are ever enacted, someone on team Trump decided the candidate could handle sitting down and talking about his economic agenda. And then decided he couldn’t. He suddenly cancelled an appearance with right-wing suck-up Joe Kernen on Squawk Box. If you can’t handle Kernen’s softballs… wow!
Yesterday, he did sit down with John Micklethwait, the editor-in chief of Bloomberg, at the Economic Club of Chicago— and that was a disaster… but at least not on TV. Nikki Ramirez and Ryan Bort reported that “It was a total mess… Micklethwait did not take it easy on Trump, and it quickly became clear that the former president has no conception of the mechanics of or the potential ramifications of the economic platform he’s running on. Bluntly, the former president was incoherent when pressed with real questions about his policies… The grilling exposed Trump’s total cluelessness with regard to his own economic policy, and led Trump to attack Micklethwait as biased.”
When Micklethwait asked Trump about his widely-derided tariff proposal— the center of his economic plans— “Trump seemed ignorant of basic economic principles, insisting that other countries, not American consumers, would pay for the tariffs. Micklethwait tried to explain the actual impact. ‘Three-trillion worth of imports and you will add tariffs to every single one of them, and push up the cost for all of these people to buy foreign goods,’ he said. ‘That is just simple mathematics.’ Trump countered that he was ‘always good at mathematics,’ and that high tariffs— and thus costs— would force companies to move production into the United States. ‘That will take many, many, many years,’ Micklethwait said, to which Trump replied that high enough penalties would make the move immediate as if companies could simply wand wave production plants, orchards, wineries, factories, and the like into existence. The former president also insisted that his tariff proposal would not result in the loss of jobs that are dependent on trade, because companies that moved to the U.S. would not be subject to the tax. ‘All you have to do is build your plant in the United States and you don’t have any tariffs,’ he said.”
Jaw-dropping? Not for the average MAGAt, who wouldn’t understand the difference between aa tariff and a bag of glue. Trump quickly turned into attack mode against Micklewait for daring to contradict him and asking him to comment on the Wall Street Journal report that estimates his economic proposals would raise the national debt by over $7 trillion, Trump said “What does the Wall Street Journal know? They’ve been wrong about everything, and so have you by the way, you’ve been wrong. You’ve been wrong all your life on this stuff,” he added.
“One theme of the interview,” wrote Ramirez and Bort, “was Trump totally avoiding giving straight answers to the questions Micklethwait asked him. The most egregious example came when Micklethwait asked Trump if he believes the Justice Department should break up Google. Trump responded by sighing and ranting about Virginia’s voter rolls. ‘The question is about Google, President Trump,’ Micklethwait replied. Trump then went on a spiel about how Google is unfair to him and doesn’t show users any positive stories about him… When Micklethwait noted that Trump’s plan to deport 11 million undocumented workers would have a large impact on the American economy— as many undocumented migrants participate in the labor force— Trump immediately pivoted to crime.
As for the Wall Street Journal article that is causing panic in the Trump camp, Paul Kiernan and Anthony DeBarros wrote that “Most economists think inflation, interest rates and deficits would be higher under the policies Trump would pursue in a second administration than under those proposed by Vice President Kamala Harris.”
The results of the Oct. 4-8 survey echoed those of The Journal’s survey in July… Since then, both Harris and Trump have released significant new policy proposals. Harris, for example, has called for new credits for newborn children and home buying, while Trump has proposed tax cuts on overtime pay and Social Security benefits, and breaks for auto-loan interest and state and local taxes.
The upshot: Economists still say Trump’s policies are more likely to add to inflation, deficits and interest rates. If anything, the margin has grown since July.
Of the 50 economists who responded to the survey’s question on inflation, 68% said prices would rise faster under Trump than under Harris. That was up from 56% in July. Only 12% of the economists thought inflation would be higher under a Harris presidency, while the remainder saw no material difference between the candidates.
“Both candidates have policies that are inflationary,” said Dan Hamilton, director of the center for economic research and forecasting at California Lutheran University. But in a change from their July forecast, Hamilton and his colleague Matthew Fienup now see a second Trump term producing faster price increases because of the former president’s tariff plans. “Since July, it became apparent to us that Trump is even more anti-free-trade than Harris,” Hamilton said.
Since July, Trump has pledged across-the-board tariffs of 105 to 20% on imported goods, up from his earlier plan to impose 10% tariffs. He has also proposed a 60% or higher tariff on imports from China.
Studies of tariffs imposed in his first term found they were often passed through to importers or consumers as higher costs or prices and hurt industries that depend on imported inputs.
“If the tariffs work the way economists think they work, I think people are in for a very nasty surprise,” said Philip Marey, senior U.S. strategist at Rabobank.
…The Journal’s survey asked economists how Trump’s proposed broad-based tariffs would affect domestic manufacturing employment within three to five years, relative to a scenario with no such policy. Of the 44 economists who responded, 59% said employment would be lower, while only 16% said it would be higher. The remainder said employment would be the same.
While neither Trump nor Harris has expressed much appetite for fiscal rectitude [Austerity], 65% of economists see Trump’s proposed policies putting more upward pressure on the federal deficit, up from 51% in July.
On the campaign trail in recent weeks, Trump has proposed eliminating taxes on Social Security income and overtime pay, and lowering them on American citizens who live abroad. He has also vowed to step up deportations and immigration enforcement, which could reduce the number of people working and paying taxes in the U.S.
As a result, the Committee for a Responsible Federal Budget estimates Trump’s plans would widen federal budget deficits by $7.5 trillion over the next decade, more than twice the expected increase under Harris.
A likely consequence of higher deficits and inflation is higher interest rates. The Journal’s survey showed 61% of economists saw rates being higher under a hypothetical President Trump than under Harris.
Economists saw less daylight between the two candidates on overall economic growth: 45% said output would expand faster under Harris, 37% said the economy would grow faster under Trump, and 18% saw no material difference.