Dementia Donny rides again!
Dean Baker is a Senior Economist at the Center for Economic and Policy Research (CEPR)
Cross-posted from the Center for Economic and Policy Research
“Nothing there anymore”
Photo licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license
Donald Trump’s mind is a scary place; no one really knows what goes on there. But it sometimes is interesting to speculate.
Trump is now proposing to give us all tariff rebate checks of “at least” $2,000 a piece and to use the rest of the tariff revenue to pay down the national debt. This arithmetic on this doesn’t work, as I noted yesterday. We’re on a path to take in around $270 billion this year in extra revenue due to Trump’s tariffs.
That number will fall somewhat if he makes deals or accepts bribes to lower some tariffs. It will rise some if he gets angry at foreign governments for doing things like refusing to nominate him for a Nobel Peace Prize or prosecuting one of his friends for trying to overthrow the government.
Doing the simple arithmetic, the country has 340 million people. If 10 percent of these people fit Trump’s definition of high-income, and therefore don’t get the rebate, roughly 300 million people would get the checks.
At $2,000 a piece it would come to $600 billion, more than twice what Trump is collecting from us with his import taxes. Since he’s already $330 billion short, how can Trump think he has money to pay down the national debt? Also, he seems not to know that our deficit this year is projected to be $1.8 trillion, so he is actually adding considerably to the debt and would be adding even more with his $600 billion tariff “rebate.”
While this all sound crazy, there is a possible explanation in the looniness that Trump endlessly spouts. Trump has been boasting about how we are getting trillions of dollars from foreign countries. Last I heard, his total was up to $18 trillion (60 percent of GDP), but he may have crossed $20 trillion in a speech or statement somewhere.
This figure has nothing at all to do with reality. The closest thing in the world to Trump’s crazy numbers are the investment commitments that various trading partners have made in exchange for favorable tariff treatment.
There are two points to be made about these commitments. First, they don’t sum to even one-tenth of Trump’s $18 trillion figure. But accuracy has never been a major concern for Trump.
More importantly, these are vague commitments of funds to be invested in the United States. Much — perhaps most — of the money would have been invested here anyhow. Furthermore, it is not money going to the US government; it is money going to build factories, research centers, or retail outlets in various places around the country.
This distinction should be pretty obvious to anyone, but apparently Trump has gotten into his head that some vastly inflated sum from these commitments is actually coming into the US Treasury. This is a rather pathetic confusion for a US president, but that’s actually the less tragic part of the story.
The more tragic part is that none of Trump’s aides is able to set him straight. People like Treasury Secretary Scott Bessent or National Economic Advisor Kevin Hassett may not be brilliant intellects, but they know that Trump does not have trillions of dollars from foreign countries to play with, and that we are still running deficits that would ordinarily be considered very large. But they are too scared of Donald Trump to explain this to him. The question is whether they will allow Trump to make the deficits $600 billion larger based on Trump’s belief in money that is not there.
This is not the first time Trump has based his policies on an imaginary world. His whole immigration policy is based on claims that Biden let in 20 million criminals and people released from mental hospitals. This hugely exaggerates the number of people who entered the country, and nearly all of them came here to work, not collect government benefits for which they are mostly ineligible. Very few had criminal records, and most of those were already in the deportation process.
But big money types mostly aren’t bothered by Trump’s wrongheaded policies, except the relatively small number of businesses that rely on undocumented workers. The big money types do get bothered by very large deficits.
This means they could have a real problem with Trump’s $2,000 rebates of money that isn’t there. It’s not clear that anyone could explain the issue to Trump even if they wanted to. But more importantly, it’s not clear anyone close to Trump has the courage to try.
This is the problem of having a president suffering from dementia.
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