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Trump, Congress, U.S. Government Lack Discipline To Take Advantage of Window of Opportunity Provided by Trump Tariffs

(SCW 4.4.25) Across both of his administrations, President Donald Trump has sometimes talked about tariffs as if they are temporary, serving, at least in part, as devices to bring leverage in negotiations.

Yet, when confronted with criticisms of tariffs in his most recent presidential run, he observed that, once a funding stream was in place, Congress and a Democratic president found the revenue too attractive to give up.

In the face of a massive national debt, Trump has voiced aspirations for a balanced budget, at the as economic revitalization. One might hope that, in the best of all possible worlds, even temporary tariffs might bring an infusion of cash as long as sufficient trade continues, to help bring down deficits.

If that cash helps offset tax cuts that stimuate a domestic economy, and if tariffs cause the domestic economy to be reoriented towards "home-grown" products and supply chains, perhaps the overall dynamic might provide a combination of a "bandage" on the fiscal bloodletting and runaway national debt, while also seeing domestic economic revitalization.

However, a more likely result might be that, as with the Joe Biden continuation of some Trump tariffs, any infusion of cash might simply be regarded as a welcome windfall to bolster spending aspirations. And there might continue to be a ratcheting effect where the new cash, and new spending, gets characterized as something wrapped into a new baseline, to be supported by ongoing taxing, borrowing, expansion of the debt ceiling, and refusals to curb spending to avoid government shutdowns.

The cliche in Washington, for decades, has been to take efforts to curb government excess and "turn them upside down" to fuel greater government excess.

Temporary tariffs

Longstanding conventional wisdom holds that tariffs are counterproductive and frustrate or impair the global fruits of free enterprise.

Nevertheless, as mentioned there are several potential benefits from the latest round of tariffs from President Donald Trump. Although Trump, Congress, as well as government and politics generally, seem unlikely to have the discipline to follow through.

Temporary tariffs

For one thing, Trump, across both iterations of his regime, usually has spoken of tariffs as if they are temporary, providing negotiating leverage. Trump seeks to coerce or force some new deal with foreign negotiating partners.

If they are only temporary, and produce a change favorable to the United States, then perhaps some of the negative effects can be mitigated.

National Debt and Budget Deficits

U.S. National Debt has been climbing past $37 trillion, or $100,000 per person, so extreme that debt service, payments on interest and existing debt, surpassed military spending.

By one measure, some might speculate that Trump's tariffs might be an act of desperation as he scrambles to address what has become a debt of mind-boggling magnitude.

If some substantial level of trade continues even despite tariffs, the tariffs might provide at least at some added infusions of cash into federal coffers.

If they also help finance tax cuts, and private sector adustments are made to place greater emphasis on domestic suppliers and supply chains, perhaps there could be

Yet if they stifle trade and other economic activity so much that any cash from tariffs are surpassed by broader losses due to economic lethargy, that would not be the case. And the stifling effect on the economy could undermine other tax revenue, if there was less economic activity and prviate sector income or gross revenue to tax.

Trump, with his usual blustery hyperbole, has promised a federal balanced budget, even while seeking large tax cuts.

He also has a past history, during his first administration of adding massively to the national debt.

Some significant portions of his deficit spending were due to efforts to offset the impact of the Covid pandemic. Yet, even without Covid, he marked himself as a tax-and-spend, or borrow-and-spend profligate big spender.

The deficit spending did seem to start bearing fruit with economic recovery away from the Second Great Depression spawned by the Obama-Biden regime. But Covid hit before the country got to see whether the economic revival would ever be enough to help cover the massive deficits used to stimulate it.

Perhaps he hopes that, in some interim time frame where trade lurches on, large temporary infusions of cash will provide a partial stopgap measure to start reining in at least part of the budget deficits, while also helping to finance tax cuts that he hopes will stimulate economic activity at home.

Adjustments made by private parties in reaction to the tariffs, such as switching to U.S. sources, might help make sure that greater amounts of spending or investing spawned by tax cuts ends up in American coffers, stimulating the domestic economy.

Lack of Discipline in White House, Congress, Government Generally

However, as mentioned above, Congress and the federal government in general have shown not only a lack of discipline in fiscal matters, but a perverse impetus to treat runaway spending, borrowing and taxation as a norm to be preserved.

When the government runs out of money, runs out of other people's money, and runs out of the ability to borrow against other people's money, those who caused the emergency will disregard consideratins of what caused the emergency and that it is their fault.

Instead, they will use the emergency of their own making as an excuse to reaffirm their behaviors that caused the emergency in the first place. They will argue that those who demand a reining in of the problem behaviors are the ones who are a danger if they fail to respond to the emergency by simply raising the credit limit to allow the cycle to continue.

In recent years especially, it has become common practice for Congress to treat spending like a social media post, with heavier borrower like a "thumbs up." If they see an issue, and want to act as if they are addressing it, they will pass a bill spending money on it and then get a headline.

The media will trumpet, "Congress Addressing [Compelling Issue,] Spending $100 Million" to celebrate the calling of attention to something and what seems like action. The headline, of course, is deceptive, because Congress is actually borrowing $100 million that it expects other people to pay off, plus interest.

There undoubtedly are whole "laundry lists" of issues, pork barrel or otherwise, that Congress would like to spend money on, or spend more money on.

There also is a longstanding tradition of "cooking the books" with regard to public image, such as "raiding" social security fund surpluses to present more favorable accounting numbers for overall budgeting than is actually the case.

One surmises that, if there are fresh infusions of cash from Trump tariffs, Trump and Congress might not force the funds to go towards retirement of debt or tax cuts, and a more solid financial footing.

Congress and special interests likely will come to regard the cash as a welcome windfall to satisfy longed-for spending aspirations, while also "massaging" the accounting numbers to claim that the budget is in stronger shape than its fundamentals would suggest. All of the above point towards weaving temporary cash windfalls into a new baseline that is treated as a new norm, rather than an emergency stopgap measure.

DOGE Reductions Window-Dressing

Trump's would-be Department of Government Efficiency (DOGE) has proven good at producing catchy anecdotes that translate into catchy headlines, but any savings related to DOGE are a "drop in the bucket." And even minor ripples of would-be reforms, even firings and downsizings, end up turning into an unstable ebbing and flowing of reversals and lawsuits.

One can certain that neither Trump nor Elon Musk and DOGE are very serious about bureaucratic reform because they have never brought up the phrase "locality pay increase" or the need to send federal jobs, wholesale, away from the District of Columbia region.

Even though the District of Columbia and its environs would largely be comparitively unproductive backwaters without the presence of the federal government, grabbing so much money from the rest of the country and dumping it on one spot creates a massive economic distortion.

Pay to federal employees in the area has to be increased by nearly a third just to account for the locality pay increase.

Presumably something similar gets translated into payments for the massive shadow bureaucracy of de facto full-time bureaucrats classified as supposed "contractors."

Yet, despite the movement of some federal jobs away from Washington in Trump's first regime, and despite the billions that would be saved by relocating inflated salaries to lower-cost regions, there seems to be no mention by Trump, Musk, or DOGE of shutting down the bloated footprint in the Washington area in favor of moving jobs to places with a low, or nonexistent locality pay increase.

If federal jobs were made remote, and locality pay were taken into account, that might enable the shifting of jobs elsewhere.

If, for example Sen. Joni Ernst of Iowa were to stop emphasizing one colorful anecdote about a fraudulent pay increase for one dishonest civil servant, perhaps she could have brought more jobs to Iowa, by helping Iowans grab D.C.-based jobs to perform them remotely from Iowa.

Given the costs, time wastage, and public health dangers of concentrating federal jobs in Washington, and forcing daily commutes for onsite work, the only rationale for shutting down remote work would have been if the onsite jobs were then moved across the heartland, emphasizing locales with a low, or zero, locality pay increase.

Yet Trump, Musk, and DOGE, seem oblivious to such economic realities.

Turning Reforms Back Against Themselves

One recurring theme for irresponbly bloated federal spending and sprawl has been the effort to turn attempted reforms "upside down," and Trump has not demonstrated the will or ingenuity to reverse that aspect of what he calls "The Swamp."

When Speaker Newt Gingrich pushed for more federal work to be switched to a contractor basis, thinking that contracting would be more agile and "cancellable" than a fully rooted bureaucracy, the longterm response was to retain a civil service while creating a massive shadow bureaucracy of contractors. The contractors are de facto bureaucrats who show up at the agencies daily, doing bureaucratic work, albeit with, perhaps, less accountability and more layers of administration.

More of what goes on, and more of the decisionmaking can occur withing the private halls of the private sector contractor, not subject to FOIA, and more hiring can become less transparent, even with third-party "headhunters" help fill the positions, getting their own "cut" from the "cash cow."

The author recalls one program, encountered in the past, where a federal agency was trying to duplicate work performed at the local and state level, using 10 civil servants and 40 or 50 contractors. Instead of making federal government more agile, all were considered part of the agency's "turf," the civil servants risked becoming more like aristocrats with a status as "feds" above the other bureaucrats doing the work, but designated as contractors. And they were all doing things that were redundant and duplicative of local and state governmental functions, even while having letterhead and memos celebrating the goodness of the program's goals.

When there was supposed to be a "peace dividend" for the hoped-for end of the Cold War, the BRAC Commission and related base closures were supposed to reduce military spending by eliminating some of the self-fulfilling organizational inertia associated with ongoing facilities still being in place.

In the end, when military spending was boosted anyhow, due to 9/11 and other national security concerns, large amounts of spending were dedicated to overseas deployments, weapons, and supplies. Yet the base closures, and loss of facilities, also simply meant that, when facilities were needed, the closure of scattered facilities meant more spending could be concentrated in a District of Columbia that already would be the wealthiest state in the country, if it were a state.

So Trump might be well-intentioned, there might be wishful thinking about making them temporary, and DOGE assertiveness might create anecdotes that are newsworthy and legitimize bits of bluster.

Yet, considering some of the traditional cultural pathologies and manipulative inertia associated with the federal government, and the sleepy but exhorbitant backwaters of the District of Columbia region, if there is any way for the Trump tariffs and associated activities to be morphed into a bloated, entrenched "business as usual," that is what will happen.

— Steven C. Welsh 4.4.24 - SCW

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Key Words: President Donald Trump, Tariffs, Trade, Budget, National Debt, Congress, Government