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Fifteen Great Ways to Damage an Excellent Economy [1]

['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.']

Date: 2025-02-16

Although you wouldn’t know it if you spent your time watching Fox, Newsmax, etc., the economy turned over to our current President has been in solid shape. We have good growth, low unemployment, and inflation trending toward long-term averages. We have a stock market at record levels. We have investments in process to support future growth in infrastructure, chips, and renewable energy. It’s a scenario that most would love to inherit. A recipe for an easy and successful 4 years.

But if you really didn’t like any of that, or you just had incredibly incompetent ideas and advice, how would you go about squandering your inheritance? Here are a few thoughts:



Artificially constrain the labor supply. Reduce immigration, legal or otherwise, and you reduce a key component that drives growth. Increase deportations, reduce acceptance of migrants, and create a climate of fear to discourage those already here from reporting to work. This also boosts inflation by bidding up the cost of the remaining labor pool.

Increase the cost of other factors of production, by applying taxes to raw materials. Tariffs work nicely. Steel, aluminum, wood, chips, etc. The broader and higher the tax, the bigger the impact. This will give you a further boost in inflation.

Borrow a few trillion more. The US Treasury will need to auction debt to raise that money, bidding up the cost of 10-year bonds, which set the benchmark for mortgages. Higher mortgage rates are an excellent way to suppress the housing market. Periodically threaten to default on the debt as an additional tool to bid up borrowing costs. Shut down the government for a while, reducing stimulus and increasing uncertainty.

Discourage education and research. Reduce government support, ensure loans are expensive for college, berate teachers and professors. This is a longer-term investment to reduce productivity and innovation.

Pull back investments in infrastructure. Ensure ports, airports, roads, railroads, and utilities are unable to compete globally. This will make it more expensive to do business in the USA. Kill wind energy since it represents 10% of US generation.

Create an atmosphere of uncertainty, so that consumers pull back on their spending, which is the bulk of the US GDP. Fear is an excellent way to decrease the marginal propensity to consume.

Reduce support for health care in general. Decrease vaccination rates. A less healthy workforce is a less productive workforce. Put more of the cost of health care on companies doing business here and on consumers. This will make it more expensive for companies to operate in the USA, and will reduce consumer demand for other products. The fully-burdened cost of US labor will be substantially higher than in countries with public health care systems.

Reduce other social services, such as SNAP, support for childcare, and Medicaid. This will affect communities everywhere, including rural communities who will already be dealing with reduced demand for US farming products from reciprocal tariffs.

Significantly reduce the federal workforce. This will reduce stimulus to the economy that will carry through to the places those workers spend money. The remaining workforce will then be less efficient, which will be reflected in the services provided.

Reduce exports, via retaliatory measures other countries take against US tariffs. The total reduction in trade will have a worldwide impact.

Reduce taxes collected by cutting IRS staff, thus reducing compliance. Pretend that tariff income comes from abroad by creating an “External Revenue” department to collect internal revenue.

Encourage offshoring of work by ensuring a constrained domestic labor pool, tariffed raw materials, and poor domestic infrastructure. Shifting manufacturing offshore, especially for goods intended for outside, will enable companies to avoid those tariffs.

Exit international trade agreements, increasing trade friction with the US, and ensuring greater trade growth between our global competitors.

Ensure any tax relief is disproportionately directed to the highest incomes, who are more likely to retain the savings than they are to spend it. This will help to avoid stimulating economic growth.

Artificially support stock prices by encouraging share repurchases, deregulation, and mergers and acquisitions vs. new investment. This could work for a while, covering some of the deeper problems. But not forever.



Those are just a few thoughts. There may be worse things to come, but I’m sure that renaming the Gulf of Mexico will help offset some of these impacts.

Cheers.

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