“Reciprocal tariffs” are framed to sound like a simple matter of fairness. But there’s nothing fair about letting other countries make U.S. tax policy, and that’s what the Trump administration’s proposal amounts to.
The basic principle of national sovereignty on taxation was a major flashpoint during the Biden administration, when Secretary of the Treasury Janet Yellen was trotting around the world trying to create a global corporate-tax cartel. As NR’s editors said of Yellen’s attempt at creating a global minimum corporate tax, “Taxation and sovereignty are inextricably intertwined. Different countries have different taxing and spending priorities.”
“Reciprocal tariffs” would similarly outsource U.S. tax policy to other countries. The administration’s as-yet-unclear proposal would reportedly include considering non-tariff factors such as other taxes, subsidies, regulations, and exchange rates along with tariffs in setting the “reciprocal” rate for the U.S.
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The fundamental problem here is that Trump believes tariffs are paid by people in other countries, not the country imposing the tariffs. That’s the only way you can view it as “unfair” to one’s citizens to have a lower tax rate than another country. Foreign governments taxing their people more is a terrible reason for the U.S. government to tax Americans more.
Bob Graboyes does “a nautical-neurological exploration of Donald Trump’s support for tariffs.”
Scott Lincicome reports that the Inflation Reduction Act is a huge – to put it nicely – waste of money. Two slices:
As the Breakthrough report documents, the IRA’s subsidies have already become way more expensive than the already-high $383 billion price tag the Congressional Budget Office originally calculated (which itself was billions more than what Senate Democrats first claimed). “More recent estimates,” the report notes, “project the total cost of these programs to run closer to a trillion dollars, with the cost of wind and solar subsidies alone substantially exceeding the cost of the original estimates not only for the clean energy subsidies but for the entire cost of the package, inclusive of non-climate related spending.”
Even these revised totals, however, substantially undershoot the IRA’s actual costs because they stop counting after the 10-year budget window closes. Thus, as my Cato Institute colleague Travis Fisher discussed in 2023, energy firm Wood Mackenzie has estimated that the IRA’s energy subsidies could hit $3 trillion through 2050, and his own forthcoming estimates push the number even higher—to as much as $4.7 trillion over the same timeframe.
Even in Washington, that’s a lot of money.
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In short, an IRA focused on supply-side reforms alone may have done more for the environment than the subsidy-focused law we got, while saving American taxpayers trillions in the process. And the fact that, as noted above, no one in power in 2021-2022 even considered modeling this alternative approach is a policy failure of epic proportions.
Terry Anderson offers sound advice on what to do with federal lands in the U.S. A slice:
Federal agencies manage 640 million acres, 28% of U.S. land. The three largest federal land agencies—the U.S. Forest Service, the Bureau of Land Management and the National Park Service—together manage a swath of terrain almost the size of Argentina.
If Messrs. Musk and Trump owned the federal lands, they would have three options: raise the price of goods and services (timber, minerals, visits to national parks), reduce labor costs and liquidate money losers.
Mr. Musk should begin by asking the federal land agencies to submit profit-and-loss statements, as any business does. It took days for me to unearth this information from the government. I estimate that for 2023 (2024 data aren’t available yet) the Bureau of Land Management lost $734.6 million, the Forest Service lost $9.77 billion, and the National Park Service lost $2.82 billion.
In 2015 the Department of Commerce estimated that all federal lands were worth $1.8 trillion. Applying a simple long-term government bond yield of about 5%, a $1.8 trillion asset should yield $90 billion a year, not lose more than $13 billion.
The CFPB’s unusual governance structure—made up of a single director (who can initially only be fired for cause) and funding outside the normal congressional appropriations process—has been a lightning rod for controversy. The Democrats who wanted this agency thought it would be a great idea for the CFPB to get its funding from the Federal Reserve’s earnings (up to a cap) instead of annual appropriations from Congress, all while its director couldn’t be fired by the president. The irony is rich. Many of the same legislators who are complaining loudly right now about the lack of congressional oversight over the Department of Government Efficiency designed the CFPB to be insulated from congressional oversight and democratic accountability. And indeed, its aggressive agenda is evidence that the unaccountable structure enables the CFPB to pursue far-reaching policies that can burden businesses and the economy at large.
Juliette Sellgren talks with Cara Rogers Stevens about Thomas Jefferson and slavery.
