By Erik Wallbank - March 25, 2025
We are being told, once again, that tax cuts for rich corporations will kick-start this economy for a mission to bring manufacturing home. However, the Trump Administration, backed by 8 or 9 of the world's richest men (corporations), except for Musk, are Wall Street guys who made their billions in finance. They allot few dollars to research and development. Instead they fluff up balance sheets, buying back their shares.
Tax-cutting Silicon Valley will not re-industrialize the US. Cutting taxes on the rich tends to increase government debt. Wharton School of Economics projections see Trump's economic plan to reindustrialize America, as raising debt levels $5.8 trillion. The government has no money. Funding for its mission (whether good or bad) comes from our tax dollars or dollars borrowed ahead - in our name.
Tariffs are also taxes. Plans to make an economy sustainable, not thought-out, only make it worse. Consider the basics: for the US to re-inter the world of productive manufacturing requires a paradigm shift. The US would have to abandon aspirations of empire in order to retool from weapons production to a service and manufacturing base. Because the exorbitant privilege dollar reserve currency requires deficits, that also would have to go.
To make it in this world, the US would have to take the world on competitively. Some actors within the Trump Administration are antithetical to this. The guy behind JD Vance (who funded his rise), Peter Thiel, seeks monopolies: Competition is for losers.
What is the evidence that tax cuts can get us where we need to go? When the US was most productive, when we were producing 2 ships every three days, much manufacturing was done in confluence with government. The production was done in government military plants, by retooled private American companies. This, at a time when the highest nominal US tax rate was between 90/94%. The highest rate now is 37%.
If Trump gave a hoot about Americans or the economy, he would put a stop to Jared Kushner crawling out from under the rug, to raise 100s of billions from wealthy Saudis UAE, Emirates, to invest in West Bank, Israeli settlements. Instead, Trump would understand that Bibi is the biggest threat, anywhere, to world peace/human existence.
If Trump can't come to terms with Russia/Iran/China, there's no hope for the US economy. The US cannot afford to take on China, economically or militarily. China is not a classic socialist nation. They dropped price control in favor of letting markets set prices. China is socialist capitalism where government owns 1/3 of all manufacturing, along with many banks, and the government controls large swaths of communication and transportation. In 1820 China was responsible for 1/3 of global GDP. Subjected to Western humiliation, by 1950 China represented just 5% of global GDP. In 1990, China was poorer than Haiti or Honduras. But, by 2017, China had overtaken the US in manufacturing. Since 1990, when the US had 25% of global manufacturing, and China represented 5%, China has grown its manufacturing sector by 6X, to 30%. It is now responsible for 1/3 of global manufacturing while the US has regressed to 15% of global manufacturing.
Can we afford to tell China to go home? We can't, but they might tell us to go home. Comparing purchasing power (the best way to judge an economy), China has 19% while the US has 15%. And China's trade with the US is now only 3% of its total trade. Even under threat, companies will not leave China with domestic supply chains lines for all products made in China. And, Chinese workers, though paid more, are highly skilled and more productive. As a consequence, businesses do not want to repatriate, anywhere.
Trump's increasing war drums could doom both his administration, and the economy. Weapons inspector Scott Ritter worked on plans for the invasion of Iran, a plan that involved vast numbers of aircraft, ships, personal, and dollars that we no longer have. Our remaining option is nuclear bunker buster bombs to get to deep tunnel Iranian defenses. Looking at Trump's ultimatum/Iran memorandum it is a declaration of war. Iran, according to Trump's memorandum, cannot maintain a capacity to create nuclear weapons, defend itself against missile attack or show support for Hamas/Hezbollah. Has Trump lost it? Was he ever for peace? Do we wake up one morning to find we have 2 less aircraft carriers? Is Trump correct that Jolani (our ISIS Syria implant), is a changed man (no longer a beheader) and that all backers of Iran qualify as terrorists?
No amount of Gaza slaughter seems to affect Trump's base. Are we in a state of war? Has Trump suspended habeas corpus? 80% of Trump's base (like Biden's) supports free speech, but 23% of MAGA think that criticism of Israel should be criminalized and an other 50% do not support Israel criticism. Will Trump create millions of new migrants? To save the US economy we need huge defense cuts that cannot possible be attained with the US backing all Israeli loans. Our kids will be on the hook for madman Bibi's actions.
Trump has to back off about BRICS not using the dollar. And stop the BS about students speaking out against mass murder/genocide. In 1946 the Supreme Court affirmed the guarantee of 1st Amendment protection for legal permanent residents. Will critics such as myself be more subject to threat under Trump than we were under Biden? After 4 years of persecution (some for merely expressing his opinions) it would seem the President would know better than to persecute others. Where are the constitutionalists to tell him the Constitution mandates Congress, not him, to set trade tariffs? And who is he to cut off university funding to facilitate Bibi's need for slaughter?
Something interesting happens. I assumed I would lose readers for my critique of Trump but I only lose the uninformed, those incapable of reasoned argument and devoid of understanding that leadership is more than rallying troops, it needs wisdom. Good is good/bad is bad and with a little reason and compassion we know the difference.
Each day it appears more that Trump has been playing us and his stated desire for peace ends at power and profit. Yemen is to let Iran know what's coming. Iran is to let China know what is coming. In the end, Ayn Rand will get him: 'It is possible to avoid the truth, but it's not possible to avoid the consequences of having avoided the truth'.
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