The simple answer is that Trump wants to replace the progressive income tax with regressive tariffs. We know this because he said so before the election and repeated it in his inaugural address. The business press downplays this rationale because it’s so transparently stupid. The numbers don’t add up. As the financial services company First Trust explains, the total dollar amount that Treasury collected last year in individual and corporate income taxes, $3.29 trillion, exceeds the total dollar amount of all goods imported last year, $3.23 trillion. Ergo, replacing the income tax with tariff revenue would require imposing tariffs in excess of 100 percent on all foreign goods. That would eliminate most imports, depriving the treasury of anything close to $3.29 trillion in tariff fees. It would also destroy what’s left of the United States manufacturing sector as foreign nations retaliated with tariffs of their own.
What is this make-believe rationale that’s rapidly evolving into what we’ll be bound to call Trumponomics? Here are its major precepts.
Bessent concedes that the Biden economy “exhibited some reasonable metrics” but argues that it was “brittle underneath” because it was too reliant on government spending, and that if you factor out “government and government-adjacent sectors” the private economy was in recession the day Trump entered office. Bessent puts his thumb on the scale by counting as a “government-adjacent sector” the health care industry, which happens to be the largest single industry in the United States.
The economy is in detox. “The market and the economy have just become hooked,” says Bessent, “and we’ve become addicted to this government spending, and there’s gonna be a detox period.” Reality check: government spending was 30.6 percent of GDP during Trump’s last year in office and 23.1 percent during Biden’s last year in office. If we were addicted to government spending that percentage would have gone up under Biden rather than down.
Tax cuts increase revenues. No serious person believes this, but Republicans are obliged periodically to pretend that they believe it, and Bessent has quietly fallen in line. “Once we get this tax bill done,” Bessent says, “[we] can change the trajectory, up revenues, up economic growth….” He looks a little embarrassed when he says it.
Inflation doesn’t matter. “Access to cheap goods is not the essence of the American Dream,” says Bessent. Tell that to the 76 percent of Trump voters who on Election Day said inflation was a source of “severe hardship” (as opposed to only 23 percent who saw inflation as “severe hardship” and voted for Kamala Harris). It’s interesting to compare Trump to Bessent on inflation. “Tariffs don’t cause inflation, they cause success,” says Trump, in his signature up-is-down, black-is-white fashion. A Treasury secretary can’t get away with denying reality quite so nakedly, so instead Bessent says tariffs are inflationary and that he’s okay with that. “We could get a one-time price adjustment, he says,” but “across a continuum, I’m not worried about inflation.”
Stock market dips are good for you. “I’ve been in the investment business for 35 years,” says Bessent, “and I can tell you that corrections are healthy. They’re normal. What’s not healthy is straight up. You get these euphoric markets. That’s how you get a financial crisis.”
In sum: Trumponomics dictates that economic growth based on government spending is evil; that cutting taxes reduces government deficits; that what Bessent sneeringly calls “cheap baubles from China” corrupt the soul; and so does a rising stock market.
Now Bessent is trying 25 years later to revive Prosperity Sucks Conservatism. Like Bush’s version, it’s vulgarized and partisan, holding that prosperity is good but that Democratic prosperity is cheap and tawdry. Bush used Prosperity Sucks Conservatism to attack the prosperity overseen by President Bill Clinton and his opponent, Vice President Al Gore. Bessent is similarly using it to disparage Biden, but he’s also and more urgently using it to justify prosperity’s imminent destruction under Trump. That’s a new wrinkle, and I don’t expect Republican voters to lend it much credence. After all, they have 401ks, too.
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