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Podcasts > Rachel Maddow Presents: Déjà News > Lawrence: Donald Trump is proposing the ‘worst economic policy in U.S. history’

Lawrence: Donald Trump is proposing the ‘worst economic policy in U.S. history’

By Rachel Maddow

The Rachel Maddow Presents: Déjà News podcast delves into the potential economic ramifications of Donald Trump's proposed tariff policy. Prominent economists like Larry Summers and Robert Reich express grave concerns, warning that replacing income taxes with extreme tariffs could lead to catastrophic inflation, global retaliation, and severe harm—especially to lower-income Americans.

The episode also examines the Senate's pivotal role in enabling or obstructing presidential agendas, addressing the representation inequities stemming from the disproportionate influence of smaller states. Additionally, Lauren Miller's testimony sheds light on how Senator Ted Cruz's absence exemplifies his indifference to the suffering caused by restrictive laws, highlighting the core Texas values he fails to defend.

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Lawrence: Donald Trump is proposing the ‘worst economic policy in U.S. history’

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Lawrence: Donald Trump is proposing the ‘worst economic policy in U.S. history’

1-Page Summary

Economists Warn Against Trump's Proposed Tariff Policy

Economic experts are raising grave concerns about Donald Trump's proposal to eliminate income taxes in favor of tariffs.

Replacing Income Tax Revenue with Tariffs Would Cause Severe Economic Harm

Larry Summers calls Trump's idea to use tariffs instead of income taxes "potentially the worst macroeconomic policy in U.S. history." Summers suggests the tariff levels needed to replace even half of income tax revenue would be six times higher than the Smoot-Hawley tariffs, potentially leading to economic catastrophe.

Extreme Tariffs Would Spur Inflation and Global Retaliation

The tariffs required would drastically raise prices on consumer goods, according to Summers, hitting poorer Americans hardest. Reich adds that such tariffs could provoke global economic retaliation and warfare.

Trump's Other Dangerous Economic Proposals

Reich also denounces Trump's proposals to politicize the Federal Reserve, warnings this would undermine its credibility. Further, mass deportation of undocumented immigrants could create severe labor shortages, while Trump's past tax cuts for the wealthy ballooned deficits, Reich says.

Senate Elections Are Critical for the Country's Direction

The Senate's ability to block or enable the President's agenda makes its partisan control crucial in shaping national policy.

Senate Power Over Presidential Agendas

O'Donnell emphasizes the Senate's profound influence, through actions like approving judges and enabling or obstructing legislation. Shapiro argues the Republican-led Senate critically failed to check Trump, even after January 6th.

Potential Reforms for More Representation

To address representation inequities, like small states having outsized influence, Shapiro proposes electing some senators nationally. This could make them answer to all Americans rather than just state interests.

Lauren Miller Highlights Cruz's Failure to Represent Texans

Lauren Miller, harmed by Texas' abortion ban, testified before Congress but found Ted Cruz absent, showing an "indifference to his constituents' suffering," says Colin Allred.

Cruz Skipped Hearing on Harms Caused by Texas Abortion Law

Miller was denied a medically-advised abortion despite health risks. Cruz's absence from her testimony highlighted his lack of concern for those hurt by laws he supports, Allred says.

Cruz Obstructs Texans' Rights and Freedoms

Allred condemns Cruz's role in enabling "extreme" policies that infringe on Texans' personal freedoms and healthcare decisions, core Texas values that their Senators should defend.

1-Page Summary

Additional Materials

Counterarguments

  • Economists warn against Trump's proposed tariff policy
    • Some economists might argue that tariffs can protect domestic industries from foreign competition and potentially create jobs within the country.
  • Replacing income tax revenue with tariffs would cause severe economic harm
    • Proponents of tariffs might suggest that the policy could encourage domestic production and reduce reliance on imports, potentially leading to a more self-sufficient economy.
  • Extreme tariffs would spur inflation and global retaliation
    • It could be argued that strategic use of tariffs might lead to trade negotiations that could benefit domestic industries without necessarily causing global retaliation or inflation.
  • Trump's other dangerous economic proposals
    • Supporters might contend that politicizing the Federal Reserve could make it more responsive to the needs of the electorate, and that deporting undocumented immigrants could open up jobs for citizens.
  • Senate elections are critical for the country's direction
    • Some might argue that the Senate's current structure ensures that smaller states are not overshadowed by larger states, maintaining a balance of power.
  • Senate power over presidential agendas
    • There could be a perspective that the Senate's role in checking the President is functioning as intended, allowing for the representation of a broader range of political views.
  • Potential reforms for more representation
    • Opponents of electing some senators nationally might argue that this would undermine the federalist system that values state sovereignty and local governance.
  • Lauren Miller highlights Cruz's failure to represent Texans
    • It could be argued that Senator Cruz is representing the views of his constituents who support the Texas abortion law, reflecting the democratic process.
  • Cruz skipped hearing on harms caused by Texas abortion law
    • There may be a valid reason for Senator Cruz's absence, such as prior commitments or scheduling conflicts, which does not necessarily indicate indifference.
  • Cruz obstructs Texans' rights and freedoms
    • Supporters of Senator Cruz might argue that he is upholding the rights and freedoms of a significant portion of Texans who share his views on policies like the abortion law.

Actionables

  • You can educate yourself on the impact of tariffs by simulating a personal budget with and without increased costs due to tariffs. Create two versions of your monthly budget, one with your current expenses and another with a 5-10% increase in the cost of imported goods. This exercise will help you understand the potential effects of tariffs on everyday expenses and the broader economy.
  • Engage in community discussions by starting a book club focused on economic policies and their social impacts. Choose books that explore the consequences of different economic strategies, including tariffs, and invite friends or community members to discuss. This can foster a deeper understanding of economic policies and their real-world implications.
  • Advocate for representation by writing to your local representatives about the importance of attending critical hearings. Use specific examples of missed hearings and the issues they addressed, like the Texas abortion law, to emphasize the need for active participation by elected officials. Personal letters can be a powerful tool to remind politicians of their responsibilities to their constituents.

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In this often-cited book, Henry Hazlitt gives a clear, concise explanation of the secondary consequences of a range of economic policies—including rent control, inflation, and tariffs. In this summary, you’ll learn how labor-saving technology actually creates more jobs, why minimum wage laws increase unemployment and decrease collective wealth, and how saving money supports the economy more than spending it.

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Lawrence: Donald Trump is proposing the ‘worst economic policy in U.S. history’

The dangers of Trump's economic policies, especially his proposal to replace the income tax with tariffs

Experts sound the alarm over Donald Trump's proposed economic policies, particularly his radical plan to substitute income taxes with tariffs.

Trump's tariff proposal would be extremely damaging to the economy

Economic experts critically assess Donald Trump's proposition to abolish both personal and corporate income taxes and replace them only with tariffs. Larry Summers dubs this as potentially "the worst macroeconomic policy in U.S. history."

Replacing income tax revenue with tariffs would result in much higher prices on consumer goods, creating severe inflation

Summers suggests that implementing tariffs at the level necessary to supplant income tax revenue would hit the middle class and the poor hardest, as they would face heightened costs on internationally sourced goods. This could induce harsh inflation due to increased prices.

Specifically, tariffs at the levels required to replace half of the income tax revenue would be six times higher than the notoriously harmful Smoot-Hawley tariffs, leading to a critical economic downturn.

Tariffs at the level needed to replace income tax revenue would be far higher than the disastrous Smoot-Hawley tariffs, potentially causing a downward economic spiral

The Smoot-Hawley Tariff Act of 1930, enacted by Reed Smoot and Willis Hawley, executed some of the highest tariffs in U.S. history on thousands of imports, exacerbating the Great Depression. Economists agree that Trump's proposal is far worse and could provoke global economic retaliation leading to an economic warfare.

Trump's other reckless economic proposals

Reich adds to the chorus of concerns, denouncing Trump's potential for exorbitant tariffs that would "wreck the economy."

Exerting political control over the Federal Reserve would ...

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The dangers of Trump's economic policies, especially his proposal to replace the income tax with tariffs

Additional Materials

Counterarguments

  • Tariffs can protect domestic industries from foreign competition, potentially leading to job creation and industry growth within the country.
  • Some economists argue that tariffs can be a tool for correcting trade imbalances and protecting national security by reducing dependency on foreign goods.
  • The proposal to replace income tax with tariffs could be seen as a simplification of the tax system, potentially reducing the administrative burden on individuals and businesses.
  • Political oversight of the Federal Reserve, while controversial, could be argued to increase democratic accountability for an institution that has significant influence over the economy.
  • The argument for mass deportation of undocumented immigrants overlooks the potential for immigration reform that could provide legal status to these individuals, thus maintaining the labor force while add ...

Actionables

  • Educate yourself on the basics of economic policy by reading introductory books or using free online resources to understand the potential impacts of changes like those discussed. By gaining a foundational knowledge, you can form your own informed opinions and engage in discussions with a base of understanding about topics such as tariffs, inflation, and monetary policy.
  • Practice conscious consumerism by researching the origins of the products you buy and considering the effects of tariffs on these goods. This might involve choosing locally made products to avoid the impact of potential tariffs on imported goods, thereby understanding the real-world implications of such economic policies on everyday purchases.
  • Develop a personal budget ...

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A Warning
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A Warning is an inside look at the chaotic Trump administration by a senior Trump administration official writing anonymously. It’s a follow-up to the author’s September 5, 2018, New York Times op-ed piece describing internal efforts to control Trump’s impulses. This is no longer working, “Anonymous” writes. The book depicts an impulsive and corrupt president, who puts his self-interest above the country’s interest, in the process undermining the foundations of democracy and putting national security at grave risk.

“Anonymous” describes the increasingly futile efforts of a handful of principled White House officials to stave off disastrous, often illegal actions. The author warns that the “guard rails” have come off—the principled staffers have mostly been driven away and Trump is uncontrollable. If he wins another four years, he may sink the ship of democracy.

The Deficit Myth
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This guide adds perspective from other economic experts—including voices from outside the MMT community who question Kelton’s theories—in order to present a more nuanced and balanced view of the economic ideas in the book.

The Wealth of Nations
Adam Smith

In The Wealth of Nations, Adam Smith laid much of the groundwork for the field of economics. Published in 1776, this seminal book makes the case for free markets and individual self-interest as the best ways to grow a nation's economy.

Smith was an 18th-century Scottish philosopher who taught moral philosophy and is widely considered one of the founding fathers of capitalism. In this guide to The Wealth of Nations, we’ll explore his ideas on how markets regulate themselves through supply and demand, the importance of international trade, and the proper role of government in fostering a prosperous society. You'll also learn why wages vary so much by region and how governments can accidentally encourage smuggling. Throughout this guide, our commentary will compare Smith's ideas to modern economics and incorporate the perspectives of present-day economists and theorists, while grounding Smith’s arguments in their proper historical context.

Get access to the context and additional materials

So you can understand the full picture and form your own opinion.
Get access for free
Lawrence: Donald Trump is proposing the ‘worst economic policy in U.S. history’

The importance of Senate elections and the Senate's role in shaping the direction of the country

Understanding the balance of power and the Senate's pivotal role in shaping national policy is essential, as the Senate elections can determine whether the President's agenda will be supported or obstructed.

The Senate has the power to block or enable the President's agenda

The Senate’s role is critical regardless of who wins the presidency, with its capacity to pass bipartisan legislation or block various agendas. O'Donnell emphasizes the significance of the Senate in governing and addressing constitutional crises, drawing attention to the body’s profound influence in either advancing or obstructing a presidential agenda. The Senate's control, including committee chairmanships, is identified as crucial in enabling or blocking policies and thus has a major impact on the country's trajectory.

Irish Shapiro critiques the Senate's role, particularly under Republican leadership during Trump's presidency, arguing that it failed to fulfill its purpose as a check on the executive branch, even after events like the January 6th attack on the Capitol. This period exemplifies how partisan dynamics within the Senate can influence the governance of the country and affect constitutional democracy. A historical example of significant Senate influence is provided with the mention of Reed Smoot, who, as Chairman of the Finance Committee, had considerable impact on federal revenue policies.

Reforms to address the Senate's representational inequities

The segment discusses the Senate's structural inequities, such as the disparate population sizes of states and equal Senate representation, which can skew national decision-making. To address these inequities and reduce partisanship, Shapiro proposes the election of some senators, possibly 15, on a national ...

Here’s what you’ll find in our full summary

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The importance of Senate elections and the Senate's role in shaping the direction of the country

Additional Materials

Counterarguments

  • The Senate's role as a check on the executive may sometimes be perceived as obstructionist, but it can also be viewed as a necessary balance to ensure that legislation is thoroughly considered and debated.
  • While the Senate has the power to block or enable the President's agenda, this is part of the checks and balances system designed to prevent any single branch of government from becoming too powerful.
  • The assertion that the Senate under Republican leadership failed to act as a check on the executive branch is a matter of perspective; some may argue that the Senate was acting in accordance with the will of the voters who elected them.
  • The idea of electing senators nationally to address representational inequities could undermine the principle of federalism and the representation of smaller states as intended by the Founding Fathers.
  • Electing senators nationally might not necessarily reduce partisanship; it could potentially introduce new biases or concentrate power among certain demographic or interest groups.
  • The proposal to elect some senators nationally could be seen as a radical change to the Constitution, which would require widespread consensus and might be difficult to achieve.
  • The notion that the Senate is overly partisan is subjective and may not acknowledge the complex motivations and principles that guide senators' decisions beyond party lines.
  • Some may argue that the focus on state interests is a critical aspect of the Senate's function, ensuring that l ...

Actionables

  • You can deepen your understanding of the Senate's influence by tracking a specific piece of legislation from introduction to final vote. Follow the bill's progress on Congress.gov, noting which senators support or oppose it, and how their decisions align with their party or state interests. This will give you a firsthand look at the Senate's power dynamics and the impact of partisanship.
  • Engage in a thought experiment where you imagine how electing senators nationally might change your state's representation. Consider the current political priorities in your state and how they might shift if senators were elected on a national scale. Reflect on whether this would align more with your personal views or diverge from them, providing insight into the potential effects of such a reform.
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Lawrence: Donald Trump is proposing the ‘worst economic policy in U.S. history’

The failure of Republican Senators like Ted Cruz to represent all their constituents

Lauren Miller, an eighth-generation Texan, testified to the Senate Judiciary Committee about the extreme consequences of Texas's restrictive abortion laws, emphasizing the lack of representation from officials like Senator Ted Cruz.

Cruz failed to engage with or listen to constituents like Lauren Miller who were harmed by Texas' abortion laws

Miller faced severe health risks and was still denied an abortion in Texas. She attended a Senate hearing to share her ordeal, only to find Senator Cruz, her own senator and a member of the subcommittee, absent. His nonattendance signals to constituents like Miller a possible mix of cowardice or indifference to the real-world impact of the laws he supports. Miller's story, which involves risking organ damage due to the stringent abortion laws, highlights the gap between policymakers and the citizens they represent.

Cruz's absence showed a lack of concern for the struggles of his constituents

Miller's experience underscores Congressman Colin Allred's criticism that Senator Cruz seems to lack the willingness to represent all Texans or to take responsibility for extreme policies that have direct, damaging consequences for constituents. Miller, from Allred's district, had to go out of state for medical help because of the ban on abortion in Texas – a significant burden that Cruz didn't acknowledge by his absence.

The contrast between Cruz's actions and Texas' values of freedom and democracy

Allred has taken a strong stance against Cruz, suggesting a contradiction between Cruz's actions and the Texan values of freedom and personal choice. Texans, says Allred, deserve a senator who will work to protect their rights, including making their own healthcare d ...

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The failure of Republican Senators like Ted Cruz to represent all their constituents

Additional Materials

Clarifications

  • Texas's restrictive abortion laws, specifically Senate Bill 8 (SB8), prohibit abortions once cardiac activity is detected in the embryo, typically around six weeks into pregnancy. This law is unique as it empowers private citizens to enforce it by suing anyone who performs or aids in an abortion after the specified time limit, with potential rewards for successful litigants. The law effectively bans most abortions in Texas, even in cases of rape or incest, and has faced significant legal challenges for its enforcement mechanism and strict provisions. Additionally, SB8 does not provide exceptions for pregnancies resulting from rape or incest, making it one of the most restrictive abortion laws in the United States.
  • Lauren Miller is a constituent from Texas who faced health risks due to the state's restrictive abortion laws. Senator Ted Cruz represents Texas as a U.S. Senator but was absent when Miller testified about her ordeal related to the abortion laws. This absence raised questions about Cruz's engagement with constituents like Miller who are directly impacted by the policies he supports.
  • The Senate Judiciary Committee is a key Senate committee responsible for overseeing the judicial system, including nominations to the federal judiciary and considering legislation related to the federal courts. It plays a crucial role in shaping the legal landscape of the United States and addressing issues related to the judiciary and legal matters. Committee hearings provide a platform for individuals like Lauren Miller to testify and share their experiences or expertise on specific issues, such as the impact of state laws like Texas's restrictive abortion laws. These hearings allow for public scrutiny of policies and provide a forum for lawmakers to engage with constituents and experts to inform their decision-making processes.
  • Senator Ted Cruz is an elected official representing the state of Texas in the United States Senate. As a senator, his responsibilities include crafting and voting on legislation, representing the interests of his constituents, and participating in Senate committee work. Senators like Cruz are expected to engage with constituents, listen to their concerns, and advocate for policies that align with the needs and values of the people they represent.
  • Congressman Colin Allred criticized Senator Ted Cruz for failing to represent all Texans and take responsibility for extreme policies, particularly regarding Texas's restrictive abortion laws. Allred highlighted Cruz's absence during crucial discussions on issues like ...

Counterarguments

  • Senator Ted Cruz may argue that his stance on abortion is a representation of his constituents' values, particularly those who are pro-life and believe in the sanctity of life from conception.
  • It could be argued that Cruz's absence at the hearing was due to other commitments or responsibilities inherent to his role, which may not have been mentioned in the text.
  • Some constituents might believe that Cruz is indeed representing their views and that the restrictive abortion laws align with their moral or religious beliefs.
  • Cruz and his supporters might argue that upholding Texas's abortion laws is an expression of democratic values, reflecting the will of the voters who elected officials with pro-life platforms.
  • There may be a perspective that Cruz's actions are not out of step with Texan values, but rather a different interpretation of what those values mean in terms of policy and lawmaking.
  • The idea that Cruz is enabling extremism could be countered by the argument that he is adhering to a principled stance on a contentious issue, which some Texans may see as a defense of the unborn.
  • It could be argued that the issue of abortion is complex and that representation does not necessarily mean aligning with all views, but rather making difficult decisions based on one's principles and the perceived will of the majority ...

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“Anonymous” describes the increasingly futile efforts of a handful of principled White House officials to stave off disastrous, often illegal actions. The author warns that the “guard rails” have come off—the principled staffers have mostly been driven away and Trump is uncontrollable. If he wins another four years, he may sink the ship of democracy.

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