Polumbo on Lutnick

Brad Polumbo critiques Commerce Secretary Howard Lutnick on the heels of his recent remark that tariffs and trade wars would be "worth it," even if they cause a recession.

The column does a fine job of succinctly explaining just how bad Lutnick is in terms any intelligent, thoughtful adult can understand.

He does this by staying high-level and skipping the math, which is fine here since he has so much territory to cover.

Lutnick: "Let the dealmaker make his deals. Let the best negotiator and the best person who cares about America, let him make the deals." Me: How on earth did anything get done at all in America before the coming of Donald Trump?

Here, for example is his demolition of the ridiculous claim that the United States can replace its income tax revenue with payments to an "External Revenue Service:"

The idea here is simple. Americans can stop paying taxes, and we can instead fund our entire federal government by forcing other countries to pay us through tariffs. It also happens to be utterly absurd and numerically illiterate.

First and foremost, the math here simply doesn't add up. Even astoundingly high tariff rates could not raise half as much revenue as the income tax currently does, according to the Peterson Institute for International Economics, meaning that even if Trump significantly slashed government spending, which is difficult to do without touching entitlement programs that he insists he won't cut, you still couldn't fund the government with tariffs.

And even if you could, that still wouldn't make Lutnick's fantasies possible! Because, as economists across the spectrum acknowledge, a huge portion of the economic cost of tariffs is borne not by foreign businesses but by American consumers. So even if you called your new department the "External Revenue Service," it would still essentially be taxing Americans -- with regressive taxes that disproportionately harm poor and working-class people.

All of this is stuff you would expect any 200-level economics student to understand. But the Commerce secretary either doesn't get it or is simply saying things to the public he knows to be untrue. [bold added]

Many regulars here will already know most of what Polumbo explains, but there are some unpleasant surprises, such as Lutnick's dismissal of a volunteer committee of businessmen who had been advising the government on policy over the past quarter century.

Even without the additional information, the column is worth reading as a review, and as good material to pass along to any persuadable adult.

-- CAV