President Trump: Making America Great Again...

[BlueK]

Could the trumpster actually get Mexico to pay for the wall?

http://money.cnn.com/2017/01/25/news/economy/mexico-remittances-trump/

Remittances to Mexico is the largest contributor to their economy. This would be a huge hit to their economy if he started taxing the remittances at 20%.

which they would pass on to American consumers. Then American suppliers of the same product would gladly raise their prices as well just because they can. Then Mexico can respond by sticking tariffs on our products. Trade war = everyone loses.

[pelagius]

Oh, so Americans are going to pay for it through higher taxes. Brilliant!

This one you have to be a little more careful on. The language is weird from the Trump camp but it looks like they are talking about Ryan's destination based tax that is meant to replace the current corporate tax system. It's basically a VAT (although Ryan goes to great lengths to argue it's not a VAT ... that strikes me as spin ... it's very VAT like). Trump was against that plan last week but it looks like he is on board now. It's a pretty big change in the tax code, but it's not a tariff and it shouldn't trigger a trade war. It could very well lead to higher prices to consumers for many goods, but prices of other goods could fall. The new equilibrium isn't obvious to me.

[Northwestcoug]

This one you have to be a little more careful on. The language is weird from the Trump camp but it looks like they are talking about Ryan's destination based tax that is meant to replace the current corporate tax system. It's basically a VAT (although Ryan goes to great lengths to argue it's not a VAT ... that strikes me as spin ... it's very VAT like). Trump was against that plan last week but it looks like he is on board now. It's a pretty big change in the tax code, but it's not a tariff and it shouldn't trigger a trade war. It could very well lead to higher prices to consumers for many goods, but prices of other goods could fall. The new equilibrium isn't obvious to me.

So Americans will end up paying for the wall. Hilarious.

[pelagius]

So Americans will end up paying for the wall. Hilarious.

More or less. Essentially, this plan is going to have weird marketing. To Trump supporters they will talk about it as if its a tariff. Hardcore conservatives will pretend its not a VAT (Ryan and company), and the rest of the world will understand it as the U.S. implementing something very VAT like (which hopefully will avoid trade retaliation problems). So it's a bit like pretending the penalty for Obamacare is a tax sometimes, but not a tax at all in other contexts.

[PaloAltoCougar]

These are useful insights. Do you know what our asylum processes are? I do not. Your claim appears to suggest you have intimate familiarity with the process and difficulties.

I don't know the specifics of the vetting process, but various sources (one link here) I've read say that refugees must go through a process that takes up to two years and it's immensely thorough. I may be wrong, but I think the number of terrorist acts or crimes committed by refugees (and distinguish here between refugees and immigrants, something people often fail to do) is very small, suggesting the process has been very effective.

I don't think a temporary hold on immigration is any of those things. With that said I'd like to make sure the people provided for while they wait.

This stuff happens all the time in the corporate world. I'm working on a spin-off/acquisition at the moment. Certain practices are temporarily shut down until new management or purchaser can analyze and either keep the current practices or implement change. It sucks for some of the people on the ground but ultimately it usually works out for the better.

In this case Trump is the new manager who is temporarily stopping a practice while he takes a look to see if it can be better managed. I feel for those who have to wait. Hopefully Trump adjust things to his satisfaction and then we move on quickly.

I'd be more persuaded by this argument if the new guy were a thoughtful manager with experience coming into the position, as most would be in the corporate world. But Trump is a total nincompoop on these matters. Despite claiming he knows more than the generals about ISIS, and that he alone can fix our system, he is remarkably ignorant on the subjects of terrorism, immigration and foreign intelligence. For example, let's recall his prediction that if Hillary won hundreds of millions of immigrants would immediately start streaming across the border (of course, I suppose we'll never know, perhaps he was right!). The current vetting process for refugees is painstakingly thorough. To declare we're shutting down all immigration not only delays the process unnecessarily, it kills hope among the desperate and feeds into the ideology that America hates Islam.

[Maximus]

lol

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[Topper]

which they would pass on to American consumers. Then American suppliers of the same product would gladly raise their prices as well just because they can. Then Mexico can respond by sticking tariffs on our products. Trade war = everyone loses.

By depressing the peso and assessing a VAT, the costs of goods from Mexico will be less despite the VAT.

[Uncle Ted]

This one you have to be a little more careful on. The language is weird from the Trump camp but it looks like they are talking about Ryan's destination based tax that is meant to replace the current corporate tax system. It's basically a VAT (although Ryan goes to great lengths to argue it's not a VAT ... that strikes me as spin ... it's very VAT like). Trump was against that plan last week but it looks like he is on board now. It's a pretty big change in the tax code, but it's not a tariff and it shouldn't trigger a trade war. It could very well lead to higher prices to consumers for many goods, but prices of other goods could fall. The new equilibrium isn't obvious to me.

As I understand Ryan's destination-based tax is replacing the origin-based tax. Therefore, items that are exported wouldn't be taxed as they are now. But items that are imported, that weren't taxed before, would get taxed. I could see how some countries could view this as a tariff, however.

[Topper]

As I understand Ryan's destination-based tax is replacing the origin-based tax. Therefore, items that are exported wouldn't be taxed as they are now. But items that are imported, that weren't taxed before, would get taxed. I could see how some countries could view this as a tariff, however.

But aren't tariffs origin's based even though they may be collected en route to the destination?

[byu71]

You're assuming 50 with zero precedent. I hope you're just as vigilant against those from places with similar rap sheets, such as Canada!

I think you are reading me wrong. I have concern. I hope and pray your analysis of no worries proves correct. I will be even more comforted when I hear the secretaries of defense, homeland security and the CIA agree with you, which they may.

[pelagius]

But aren't tariffs origin's based even though they may be collected en route to the destination?

Yeah, Tariff has a particular meaning and a quasi-consumption based tax doesn't fit that definition. It might be fair to say the the new system does imply a tax disadvantge for imports relative to the old system (but thinking through the equilibrium isn't as obvious as most think given how big of a change we are talking about and all the features of the current system... I think ). That said, the new tax code changes the incentives for other things as well. You essentially move the incidence of the tax higher up the income statement. That will have a first order effect on incentives. There will be winners and losers.

[PaloAltoCougar]

Would someone please make sure Trump reads this piece from George Will about why protectionism is a bad thing? Because it has a lot of big words, someone may need to translate it for him. It's spot on. A sample:

Reactionary liberalism has long held, and today’s faux conservatism agrees, that existing jobs should be protected by policies that reduce the economic dynamism that threatens those jobs. Such protection means a net decrease in jobs but an increase in the self-esteem of blinkered protectionists who see the jobs “saved” but not those that, as a result of dynamism, are lost or never created.

[Topper]

Yeah, Tariff has a particular meaning and a quasi-consumption based tax doesn't fit that definition. It might be fair to say the the new system does imply a tax disadvantge for imports relative to the old system (but thinking through the equilibrium isn't as obvious as most think given how big of a change we are talking about and all the features of the current system... I think ). That said, the new tax code changes the incentives for other things as well. You essentially move the incidence of the tax higher up the income statement. That will have a first order effect on incentives. There will be winners and losers.

As always, you provide a lot of food for thought. Thank you.

[Topper]

Would someone please make sure Trump reads this piece from George Will about why protectionism is a bad thing? Because it has a lot of big words, someone may need to translate it for him. It's spot on. A sample:

Very good find.

A challenge to the board.

Trump is an easy target, and most of us don't like him. He's not very likeable, at least not his public persona. As a result, we don't really want him to succeed because some might see that as a validation of his very repugnant style. Most of us mouth the words, we want him to succeed, but many of us don't really mean it.

Thus, given our collective understanding it will be easy to identify policies which seem absurd or incapable of "working" or being successful. I've never been a fan of protectionism, as I've read many of the things the rest of you have.

Here is the challenge: Are there any set of circumstances where some of the policies might work? By working, I mean increase domestic production, increase high paying jobs while maintaining a non-hyperinflationary incentive on prices?

That challenge will be much more difficult that the current shooting fish in a barrel task PAC and others are currently pursuing. Come on, man up and take on the tougher task.

[PaloAltoCougar]

...Here is the challenge: Are there any set of circumstances where some of the policies might work? By working, I mean increase domestic production, increase high paying jobs while maintaining a non-hyperinflationary incentive on prices?

I don't think anyone can weigh in on this as his policies are very undefined at this point. I like many of his objectives, so there's that. I get the impression he's just spitballing at the moment (we've been given multiple ways of financing The Wall just in the past 24 hours). Rather than conduct Policy by Tweet, I'd like him, his staff and his cabinet to go behind closed doors for awhile, come up with a comprehensive plan/policy, and present it to us, "Here's what we're gonna do..." Perhaps I'll pee all over it then, but for now, who knows?