Sanity Check: Does Government Know How to Spend Your Money Better Than You?

Do you think the government can spend your money wisely, better than you? Think carefully.

Sanity Check on Trade

Please think about that Tweet for just one second.

Sanity Check on Big Government

If Trump said that the government knew how to spend your money better than you do, you would likely think he has turned crazy.

But tariffs do the same thing. They are a tax on consumers and/or businesses that import goods.

When Trump raises tariffs, not only is he picking winners and losers, he is also spending your money by making businesses and/or you pay more for goods.

Trump even bragged about it!

Got that?

Trump proposed a tax on consumers or businesses to help pay down the national debt. That is big government in action.

Sanity Check on Your Positions

If you support Trump's tariffs and you are against big government, your positions are dramatically inconsistent.

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Mike "Mish" Shedlock

Comments (21)
No. 1-10
Ron Cataldi
Ron Cataldi

You mean "you" as me personally, or "you" as in the average American, who has no savings whatsoever and carries huge amounts of debt?

Kinuachdrach
Kinuachdrach

This is inconsistent with Chinese government statements that they are reducing taxes on exports to offset US tariffs -- i.e, the tariffs are in effect a tax on the Chinese government, not on the US consumer.

Most of us would like to see the elimination of tariffs and (more importantly) non-tariff barriers. How to get there from here, where the US has an unsustainable trade deficit?

  • Mish's idea of unilateral surrender would benefit the Chinese and some crony capitalists in the US, but would hurt US workers and US society as a whole. That is a non-starter.
  • President Trump's idea of brinksmanship on tariffs might work.
  • Doing nothing (a la Obama) leaves that unsustainable trade deficit, which will eventually get corrected by a massive drop in world trade, hurting the Chinese as much as the Americans.
pi314
pi314

Sanity check - The US govt debt is so huge that tariffs is like a drop in the ocean. This piece and the tariffs have nothing to do with US government spending.

everything1
everything1

LOL, they are not paying any debt down, these are politicians, they are mostly all narcissists, masters at believing their own lies, they have to be, it's the only way to get the rest to believe them. That next meeting with China diplomats? They are not going to meet with Trump, they are going to meet with U.S. corporations because they know that's who is really in charge here anyway. Politician is just a talking head that takes campaign donations which is really just bribe/kickback money.

jivefive99
jivefive99

80%+ of Federal spending is on Social Security (wildly popular), Medicare (wildly popular), Medicaid (popularish) Defense and Veterans (wildly popular), Interest on the Debt (wildly popular for the rich and foreign lenders). The people LOVE Federal spending. And if so, the revenue MUST be found to pay for this spending. Stop the borrowing and just admit it ... we are a socialist country, just like all the other countries we like to make fun of.

ML1
ML1

Tariffs are NOT a tax.

Tariffs are tariffs and the one who pays them is the company with lowered profit margins and therefore lowered profitability for the company and lowered stock price for the company.

Companies ALWAYS price their product for the MAXIMUM they can get per product when multiplied by the Maximum numbers of products sold with the most optimal pricing that moves most products with the highest profit margin for highest overall profits.

If Apple COULD charge 2000 per phone they already would. With tariffs Apple will have a smaller profit margin.

If a nail company could charge 1 dollar per nail they would but in the case of bulk products like nails the pricing decision is made by the store that buys the nails from the cheapest supplier that gives the store the highest profit so with tariffs their profits are also cut since the lowest priced nails will be a bit higher but if other hardware stores sell nails for cheaply they have to follow that too.

thimk
thimk

Trump negated the effects of the income tax cut. Also tariffs increase the cost of governments doing business.

yooj
yooj

Trump shrinking Apples margins through tariff is no different than what Sanders would do though taxes or also tariffs. Poulists - left and right - invariably go after corporate profits. Trump will bankrupt us by picking winners and losers just as surely as Sanders.

RonJ
RonJ

"Sanity Check: Does Government Know How to Spend Your Money Better Than You?"

People know best how they want to spend their money, not necessarily the best way to spend their money. People do a lot of stupid things with their money. A lot of people make a living off people doing stupid things with their money.

Blacklisted
Blacklisted

Trump is using tariffs as a temporary stick to change systemically corrupt behavior, which will be beneficial for US companies long term. As long as incomes increase more than costs, it's good. Reducing costs is not beneficial if incomes fall faster.