Can’t nickel and dime tariff impact
By RICH BARTELL
The Aug. 9 commentary by Scott Axelson and Michael Dee concludes that “tariffs are only a tax in uneducated minds suffering from Trump Derangement Syndrome.” I consider my mind to be reasonably well educated on business and economics, but I struggle to find any coherent argument in their commentary to justify that conclusion.
The writers are responding to another commentary on July 12 by Fred Larson which argued that “the United States has essentially imposed, for the first time, a 10% national sales tax on the wholesale value of everything imported into our country.” The only explicit objection I found offered to this by the duo is that a tariff being a sales tax only “would be true if tariffs directly affected consumers, but the point of a tariff is to affect the behavior of producers and governments, not consumers.”
Yes, tariffs and sales taxes differ in the directness of their impact on consumers and it would be a mistake to claim they are the same thing. But Mr. Larson doesn’t claim that the 10% base tariff is identical to a sales tax, but rather that it “winds up being similar to a 10% national sales tax at wholesale.” Perhaps Mr. Axelson and Mr. Dee didn’t read past the headline editor’s abbreviation.
I would agree that Mr. Larson’s analogy does overstate the effect of the general tariffs on consumers, since the burden of that 10% tax will be split between US importers, their customers, and foreign suppliers based on the specifics of each market. Thus, consumer prices for most imported products will rise by something under 10%. But if the writers are insisting that tariffs are not taxes because consumers are unaffected by them, then I must disagree. Rather than detailed explanations using terms from Econ. 101 like “indirect tax”, “tax incidence”, “supply and demand”, and “elasticities”, I’ll instead ask a simple question. Do the writers really believe that consumers will feel no effect from grocers and restaurants, for example, paying 10% more for fresh produce from Mexico or coffee beans from Central America? If so, I have an incredible, fantastic deal to offer them on a big, beautiful bridge in Brooklyn!
The authors devote the bulk of their commentary to arguing that “Trump’s retaliatory tariffs are bargaining chips to level the playing field for Middle America after years of being sold-out and de-industrialized by politicians who ‘fine-tuned’ the tariff structure to benefit Wall Street Billionaires.” I could argue that a 10% base tariff is neither the only nor the most effective way to address Middle America’s problems, but I think it is more important to compare our views regarding the root causes of those problems.
Aside from placing the start a couple decades earlier and widening the net beyond Wall Street to include media, tech, and other billionaires, I wholeheartedly agree with the authors that the overriding force behind the erosion of our middle class is that “war was declared on us by our own politicians starting in the 1990s” and that “Wall Street’s best investment was to purchase politicians.” I think they miss the mark, however, with their claim that “Two-thirds of Wall Street political money went to Democrats to ‘fine-tune’ this scheme.”
I don’t know whether the two-thirds to Democrats in the 1990s is true – my own search for data to confirm or refute it taught me mostly how difficult our politicians have made it to find complete and reliable information on the murky world of campaign finance. But if the writers consider that number sufficient proof that Democrats were primarily to blame for NAFTA, I suggest they have a look at the voting history. So far at least, the politicians can’t hide their votes.
In the House, 75% of Republicans (132/175) voted to ratify NAFTA, but only 40% of Democrats (102/258). (https://clerk.house.gov/Votes/1993575) In the Senate it was 77% of Republicans (34/44) voting approval, versus 48% of Democrats (27/56). (https://www.senate.gov/legislative/LIS/roll_call_votes/vote1031/vote_103_1_00395.htm) If Wall Street did spend more on Democrats than Republicans that decade, perhaps it was because Democrats proved more difficult to buy.
Even more revealing was following the decisions of the Supreme Court appointees of different Presidents on the cases that have steadily widened the floodgates for billionaires to buy our politicians with ever less transparency. Beginning with Buckley v. Valeo in 1976 that equated political spending with free speech, continuing through Citizens United v. FEC in 2010 which broadened that to include spending by corporations and unions, and on through other cases, the overriding trend is clear: keeping speech free for those who can afford it.
The details of these cases would fill another whole commentary, but a hint at what the voting record shows comes from a current pending case: National Republican Senatorial Committee v. FEC. In that case, Republicans, including current Vice President JD Vance, are asking the Court to remove limits on how much a political party can spend in coordination with its candidates, effectively removing limits on how much donors can contribute to any candidate.
If Mr. Axelson and Mr. Dee really want to address the problem of billionaires owning our politicians and level the playing field for Middle America, perhaps they should move beyond nonsensical claims that tariffs aren’t taxes and dismissive accusations of “Trump Derangement Syndrome.”
Rich Bartell is a Dunkirk resident.