Friday Jan 31, 2025
Trump’s Real ‘To Do List’
There really is not much change in the oil and stock markets since last week. Looking at global indexes, the Global Dow Industrial looks like a large head and shoulders topping pattern. The Global Dow has made a new high and appears extended. The Global S & P is making its fourth high this year around 530. I am in the wait and see mode still preferring Treasury Bills.
Trump is trying to buy Greenland and take back the Panama Canal. Denmark’s seven ship Navy cannot defend Greenland. A Hong Kong company, read China, controls the Canal. A war in Indo Pacific might result in China closing the Canal.
His 25% tariffs on Mexico and Canada are set to start tomorrow. This sis the same mistake the Congress and Herbert Hoover made in 1930. 1,028 economists signed a letter urging Congress not to pass and Hoover not to sign. Both ignored and passed the tariff. The stock market had recovered 50% of its 1929 loss by Spring 1930. The cost of the tariffs in lower trade and higher prices helped get the Depression started in a big way. Phil Gramm and Larry Summers are now urging economists to join them with the same warning now. They are right. The notion that the US had only tariff revenue before 1913 is true. But the Federal government was miniscule in size them compared to today. This will only result in counter tariffs, reduced trade, and higher prices for the President who promised to fix inflation. Re-naming the Gulf of Mexico will not buy us any friends south of the border, more political capital wasted.
Given that he cannot run and again and is beholden to no lobby, here are three things he might try to fix.
Introduce a 15% flat income tax for individuals and corporations. Drop the scores of carve outs via deductions and credits. End the tax lobby.
Consider raising the entitlement age of social security. When it started 65 was the life expectancy. Now it is 78. Otherwise the pay as you go system will collapse in around 2035. The SS payment limit was raised from $168,600 last year to $176,100 this year. In 1976 it was $14,400. This is a zombie program.
Reduce the size of Federal student loans. Unless this happens there will never be an inducement for universities to cut back on expenses. Tuition and fees are higher every year yet the cost of information is cheaper than ever.
No doubt the next President of either party would be showered with donations to undo those three. But a lame duck who is not beholden to various lobbies could at least leave a real legacy.