Tax cuts

How was your Liberation Month? It’s been almost 30 days since Donald Trump stood in the Rose Garden of the White House and announced a shocking set of massive tariffs on the world. The event caused huge convulsions in the economic universe: trillions were wiped off the stock market and, under huge pressure, Trump did agree to a 90-day pause on reciprocal tariffs. After that he exempted electrical goods, though his standard 10 percent remains, and the heads of most financial analysts are still spinning trying to figure out what it all means. Yet for all the angst and the apoplexy, yesterday the S&P 500 index closed just 1 percent down from where it was at the beginning of the month.

By almost every historical indicator, the US is clearly approaching a debt crisis. The federal government’s aggregate liabilities now exceed its gross domestic product. The annual interest required to service federal obligations is greater than what Congress spends each year on defense. And projected annual deficits for the next decade are well ahead of estimated revenues by more than $2 trillion. Many state legislatures are deeply underwater as well, despite receiving generous Covid related bailouts from President Biden’s 2021 American Rescue Plan Act. California’s temporary $100 billion surplus in 2022, for example, has morphed into a projected deficit of $68 billion over the next two years.

A transatlantic tiff is in the works. During a recent visit to an ice cream shop in Oregon, President Joe Biden lit into British prime minister Liz Truss and her recent (and recently withdrawn) tax proposals. Because this is how we do foreign policy in this country now: spouting off at random while the Chunky Monkey melts all over our hands. "I wasn’t the only one that thought it was a mistake," said Biden of Truss's tax cuts, brandishing a vanilla cone all the while. "I think that the idea of cutting taxes on the super-wealthy at a time when…I disagree with the policy, but it’s up to Britain to make that judgment, not me." And lest the Brits think they were being singled out, Biden also had tough words for the globe's other 193 countries.