OPINION:
The Congressional Budget Office projected in August that the tariffs imposed by the Trump administration would raise nearly $4 trillion over 10 years. That’s a big number, and it should help reduce the projected $24 trillion in additional debt that the federal government will likely run up in the next decade. All good, right?
Well, not quite. Despite what you may have heard, tariffs are paid, at least in part, by consumers. They act, in essence, as a tax on things people buy. Do the companies that make the tariffed products pay some of the cost? They do, but so do the American consumers of tariffed products.
In other words, some of the $4 trillion that the federal government intends to bank in the next 10 years is coming right out of the pockets of American families.
Are American companies and products subject to unfair tariffs in other countries? Yes, they are. Higher tariffs on imported goods should be, and were sold as, prefatory to reducing tariffs on imported and exported goods. Tariffs are taxes. As such, Americans of all stripes should be concerned about the burdens tariffs impose on working families. Republicans especially should be worried about the damage being done to their brand, which consists primarily (if not entirely) of being the party in favor of smaller government and lower taxes.
About that smaller government: Last week, President Trump announced that the federal government would, as a result of taxpayers’ investment in the company through the CHIPS Act, take a 10% ownership share in Intel. It’s not a big surprise. The federal government has been propping up and/or bankrolling companies in all kinds of sectors — automobiles, energy, defense, computers, etc. — for decades. The cash dished out to the large, well-capitalized companies such as Intel and TSMC through President Biden’s CHIPS Act was especially egregious.
Just because Mr. Biden made a mistake doesn’t mean that Team Trump has to double down on it. What happens if Intel starts to lose money? Alternatively, if Intel makes a bunch of money, will the taxpayers see any of that cash? Now that the feds are their partners, will the company get first dibs on the best government contracts? Who from the federal government will sit on Intel’s board?
The notion that bureaucrats and politicians will be able to run a company in an intensely complex and competitive industry is crazy. Moreover, a fortnight ago, Mr. Trump specifically called out Intel’s new CEO for being too cozy with the communist, slaving, genocidal regime in Beijing. Is that kind of entanglement acceptable now that we own a chunk of the company? Or is Lip-Bu Tan still a bad guy?
Finally, our federal government, almost $40 trillion in the hole, announced a few months ago that it is considering creating a sovereign wealth fund. This is the same government that invested tens of billions of dollars in a railroad that has never broken ground, couldn’t get electric vehicle chargers built, poured trillions of dollars into foreign adventurism and misguided nation-building, bought school buses that don’t work, invested in Solyndra and spends billions of dollars on failing schools, unsafe neighborhoods and transit systems no one uses. I could go on more or less indefinitely, but you get the point.
The federal government is the most broke outfit in the history of the world. Where is the cash for this magical wealth fund going to come from, and if we do get our hands on any of it, why wouldn’t we use it to buy down the debt?
Last year, the federal government spent about $6.8 trillion and ran a deficit of about $1.9 trillion. In the current fiscal year, fiscal 2025, it is on track to spend a little more than $7 trillion and run a deficit of about $1.9 trillion. This despite the Homeric efforts of Russ Vought and his team at the Office of Management and Budget to put a leash on some of that spending.
The problem is not getting better, and buying companies and creating a sovereign wealth fund are not likely to help.
• Michael McKenna is a contributing editor at The Washington Times.
Please read our comment policy before commenting.