Long before Donald Trump first ran for president, he expressed concern over U.S. trade deficits. It has been a consistent position for him, running from the late eighties through his 2016 presidential run all the way to now. His stated belief is that nations selling the U.S. more products than they buy from it are acting in bad faith. To even the playing field, he’s suggested those nations either buy more from the U.S. or face severe tariffs. I called this Trump’s “stated belief” because it’s unclear whether or not his tariff threat is a negotiating tactic — I suspect to some extent it is. But today’s columnist says none of that matters because Trump is focused on the wrong deficit altogether.
I’m not going to get too deep in the weeds on the federal government’s debt — everyone knows it’s too high and everyone knows that’s not ending anytime soon. Yes, President-elect Trump has set up the Department of Government Efficiency (run, rather ironically, by two people instead of one), but the theoretical cuts they’ve proposed — trimming the federal workforce, eliminating the Department of Education — are more a Republican wishlist than a serious effort at trimming government spending. I’ve linked to columns about this before, but it bears repeating: if Trump doesn’t have a plan — if he’s looking at that deficit over there instead of this one right here, this one’s going to get us.
At the moment, hard as it may be for some to hear, Trump doesn’t have the record to tackle government spending. The deficits of his first three years in office exceeded those of President Obama’s last three years in office. His 2017 tax cuts may have spurred growth, but the revenue generated didn’t decrease deficits. This doesn’t necessarily make tax cuts a bad thing, but it doesn’t make them a panacea either.
So, to go back to the beginning, what is dogging us more? The trade deficit or the federal deficit? The numbers — and today’s link — have an answer. And please note, this answer is coming from the conservative American Enterprise Institute.