If he voted for Donald Trump last November because he believed he would increase economic freedom, it is safe to say he was deceived. After a reckless tariff alluvion, the White House and its allies are preparing a new wave of tax code tricks that have more in common with progressive social engineering than reform in favor of growth. And do not forget a fiscal imprudence that reflects the mistakes of the left.
Defend these policies if you wish, but let's be clear: the administration does not show a coherent commitment to the principles of free market and, in fact, they are actively undermining them. Its approach is best described as a central planning disguised as economic nationalism.
This week's example is an attempt to control prescription prisoners, similar to the past proposals of the Democrats. If it is inevitably implemented, it would reduce R&D and pharmaceutical innovation.
The tariffs are still the most visible economic sin of the administration after Trump launched the most extreme escalation of protectionism from the infamous Smoot-Hawley law of 1930. Unlike the 1930s, however, the current economy is deeply integrated with global supply chains, which makes the damage extensive and much more immediate. Tariffs are only nominally imposed on imports. Ultimately, they are taxes on US consumers, workers and companies.
The president has made it clear that he is limiting the election of the consumer, saying happily to parents who could have to “settle” for two dolls instead of 30 for their children. The conceited pronouncements on how much we should buy (not much) or in which sectors we must work (manufacturing) are economic authoritarianism.
They are also indicative of a deeper government rot. The policy formulation is now carried out by executive orders such as Comatose Republicans of Congress, such as some democrats of the Biden era, allow the president to rule as if it were a monarch.
An assertive and complete throat congress would remind any president that manufacturing jobs were mainly lost by technologies that also create jobs and opportunities in the districts of the members. Prosperity increases only through innovation and competition and is not restored by dragging people back in lower productivity work.
Now, even Trump's fiscal agenda, once considered a brilliant point by many free market defenders, is being corrupted. Instead of defending the broad base and pro-process basis reforms we expected, the administration is doubling with tricks: exempting overtime advice and salaries, expanding fiscal credits for children and entertaining the idea of increasing marginal tax rates.
These movements could probe well, but they are not incorporated and unproductive. They undermine the 2017 tax and job cuts law, which pointed (however imperfectly) simplify the code and encourage growth, and not micrognition of workers' behaviors and home through the internal tax service.
And then there are the populist and deceptive conversation points of the administration on collecting taxes on the rich to reduce taxes to low and medium -sized income workers. The United States income tax system is already one of the most progressive in the developed world. According to the latest IRS data, the 1% higher of the winners pay more in federal taxes on income than the 90% lower combined. These high winners Provide 40% of federal income of income taxes; The lower half of the winners constitutes only 3% of that income. Fortunately, the House of Representatives moved away from that error in its bill.
Meanwhile, some Republican legislators are pressing to extend 2017 tax cuts without significant compensation, preparing the scenario for a disaster fed by debt. As Scott Hodge pointed out, previously the president of the Tax Foundation, the proposed cuts of the Republican party could add more than $ 5.8 billion to debt for more than a decade. That is almost three times the cost of the 2021 American rescue plan, which many Republicans correctly criticized inflation and tax instability.
To be clear: the tax reform in favor of growth is essential. But not all tax networks are pro-reception, and no tax reduction justifies greater fiscal deterioration. Extend the 2017 cuts, which generally support, should not be confused with True tax reform.
Some of the provisions that are made (extended credits, exclusions for extra tips and hours, towing the deduction limit of the state and local tax (salt), are not growth policies. They are the redistribution of the wealth executed through the Tax Code, indistinguishable in substance of the type of the demand, the Republicans of Keynesian stimulus once denounced.
Hodge points out that these measures would make more to imitate the US rescue plan than to reverse their expensive mistakes. And with the Federal Reserve that still fights inflation, adding billions in non -financed liabilities to the main book is deeply irresponsible.
None of this should surprise someone paying attention. This administration is full of advisors and substitutes that glorify union power, stand out against globalization and make fun of the idea of the limited government. Some sound more like Bernie Sanders than Milton Friedman. Whether you are directing industrial policy or distorting the fiscal code to reward your favorite behaviors, they are hostile to the competition and freedom of the free market.
Unfortunately, this hostility has real consequences: higher prices, greater economic uncertainty, slow investment and less opportunities for middle and low class families.
Veronique de Rugy He is a senior research member at the Mercatus Center of the George Mason University. This article was produced in collaboration with the creators Syndicate.
