(Daily Mail)

Warren Buffett breaks silence on Trump's tariff plans

The Trump camp argues that tariffs will boost government revenue, lower taxes, and spur domestic manufacturing. But most economists and investors - including Buffett - warn they're more likely to drive up consumer prices and strain international trade relationships.

Well, Trump wants to make the US the world's manufacturing powerhouse again, to counter China's rise.

He reckons the increase in prices for American consumers will be more than offset by increasing the number of better paying manufacturing jobs in America, but he is forgetting that higher-priced US goods will be uncompetitive in global markets.

Trump should stick to investing to maintain the Pentagon's position as 'chief enforcer of peace' (in the absence of a UNSC which was supposed to fulfill that role), by engaging the US's 'comparative advantage' in tech research and development, while ensuring US agriculture remains a world leader, to prevent a loss of confidence in the US dollar in global markets.   

And since the US treasury can't run out of US dollars, the US domestic deficit need not be a concern; the government can subsidize the wages of low income groups without increasing taxation or borrowing.   

Unless China manages to catch up and even surpass US tech prowess...

But in any case, Trump won't have long enough to see sufficient better-paying manufacturing jobs return to the US, to offset higher cost-of-living-prices for workers in America.

A growing revolt against Trump's policies is already evident in America.

(AP)

Protesters in cities across the US rally against Trump’s policies, Project 2025 and Elon Musk

Demonstrators gathered in cities across the U.S. on Wednesday to protest the Trump administration’s early actions, decrying everything from the president’s immigration crackdown to his rollback of transgender rights and a proposal to forcibly transfer Palestinians from the Gaza Strip.

Protesters in Philadelphia and at state capitols in California, Minnesota, Michigan, Texas, Wisconsin, Indiana and beyond waved signs denouncing President Donald Trump; billionaire Elon Musk, the leader of Trump’s new Department of Government Efficiency; and Project 2025, a hard-right playbook for American government and society.

The protests were a result of a movement that has organized online under the hashtags #buildtheresistance and #50501, which stands for 50 protests, 50 states, one day. Websites and accounts across social media issued calls for action, with messages such as “reject fascism” and “defend our democracy.”

(Unfortunately, the Dems are still banging on about side issues such as 'transgender rights' likely affecting <1% of the population, but inflation is a real concern among many protestors). 

Stay tuned.....

   

Europe removing the 'debt brake' (see previous post), in contrast with Trump's America:

(Alternet)

DC insider explains why Trump could hit an economic slump — and soon

Opinion by Robert Reich, professor of public policy at Berkeley and former secretary of labor.

Quick reminder: Trump was put into office mainly to rescue an economy that most voters thought was lousy.

So what’s been Trump’s biggest economic initiative so far?

As of midnight Monday, he imposed 25 percent tariffs on imports from Canada and Mexico and 20 percent on imports from China. This is a big deal. Canada, Mexico, and China are America’s three largest trading partners. They account for more than 40 percent of U.S. imports and exports.

What’s the likely result?

1. Trump and his lackeys believe (or say) that the most likely result is a positive one for American workers. Global corporations (including American-based ones) will relocate their operations from Canada, Mexico, and China into the United States in order to sell their goods at a competitive price here — resulting in more and better jobs for Americans.

But the Trump view doesn’t take account of Canada, Mexico, and China retaliating against the United States with tariffs on American exports, thereby reducing the number of jobs for Americans in export industries.

Tariffs on their own do not create more American jobs or lead to more U.S. production. In fact, Trump's last trade war cost roughly 300,000 jobs.

2. A second view holds that the biggest impact will be a negative one — for American consumers. Although American importers pay the initial tab for tariffs on goods from Mexico, Canada, and China, importers will pass on much of the costs to their U.S. customers.

As a result, American consumers will pay more for thousands of products — cars assembled in Canada and Mexico, stoves and refrigerators assembled there, crude oil, beer, chocolate, cucumbers, timber, toilet paper, and hot-rolled iron, to name a few.

The biggest negative impact will be on lower-income Americans who will have to shell out a larger portion of their paychecks for all these things.

3. A third view is that, because so many final goods (as well as services) will be affected across the entire economy, the biggest impact of the tariffs will be on overall inflation — pushing all prices upward.

The tariffs will give big corporations cover to jack up prices and pad their profits at our expense.

4. A fourth view holds that the biggest impact of the tariffs will be to slow economic growth in the U.S. — as all buyers, including corporations and foreign consumers, pull back from spending.

This could cause the U.S. economy to contract. Two quarters of contraction means recession. Recession plus inflation is called “stagflation.” That’s particularly bad.

Stock markets have plunged on news of the tariffs. The S&P 500 has now dropped below its Election Day level, erasing any Trump-related gains.

The rich get richer, while the poor tread water, as deluded governments think they have to balance their budget.

(Daily Mail)

Reeves scrambles to balance books with plan to cut '£5bn' from welfare

Rachel Reeves is scrambling to find billions of pounds in spending cuts as the economy stalls and defence demands rise.

The Chancellor is set to present the Treasury watchdog with draft proposals for trimming the government's outlay - said to include up to £5billion from welfare.

Despite the huge tax-raising package in the Autumn Budget, Ms Reeves' plans have been thrown into chaos by downgrades to the prospects for the UK economy.

Many blame the stuttering performance on the extra burden placed on businesses, while Ms Reeves has acknowledged that Britain will be hit by Donald Trump's tariffs even if only indirectly.

The Office for Budget Responsibility estimated in October that the government had headroom of around £10billion for meeting its fiscal rules.

However, that is believed to have been wiped out by dismal growth and higher costs of servicing debt - raising fears about even more tax hikes.

It will present the latest provisional figures to officials privately later.

Touring broadcast studios this morning, Justice Secretary Shabana Mahmood said it was right in principle to target the welfare budget for savings.

She told BBC Radio 4's Today programme: 'Well, this is the Labour Party. The clue is in the name. We believe in work. We know that there are many people who are currently receiving state support for being out of work, who want to be in work.

"We know that we have too many of our young people currently out of work, not in education, employment or training.

'It is right that a Labour Government strains every sinew to make sure that the support is available to prevent people from leaving the labour market, or, if they have left the labour market, to help them get back into it.

'The Welfare Secretary (Liz Kendall) has been very clear that this has got to be a clear focus for our Government. There's a moral case here for making sure that people who can work are able to work and there's a practical point here as well, because our current situation is unsustainable.

'So, on both of those measures, I think the Welfare Secretary is looking at the right area of policy, and she will be setting out, you know, in a matter of weeks, in the very near future, her plans.'

Speaking at a manufacturing conference yesterday, Ms Reeves pointed to Mr Trump's threats of tariffs against China and even long-time allies.

'It's absolutely the case that even if tariffs aren't applied to the UK we will be affected by slowing global trade, by slower GDP growth and by higher inflation than otherwise would be the case,' she said.

There have been claims that welfare savings worth up to £5billion are being pencilled in, with the long-term sick set to face more work conditions.

One government insider told the BBC: 'Clearly the world has changed a lot since the autumn Budget. People are watching that change happen before their eyes.

'The Office for Budget Responsibility will reflect that changing world in its forecasts later this month and a changing world will be a core feature of the chancellor's response later this month.'

Ms Reeves insisted yesterday that having nearly a million young people not in employment, education or training was a 'stain on our country'.

She said it was 'crucial' that the Government tackles the issue of 18-24 year-olds wasting the 'best time of their lives' at home 'doing nothing'.

The comments came after grim figures last week showed more than one in eight 16-24 year-olds are so called 'NEETs'.

The numbers surged to 987,000 in October to December, up from 877,000 a year earlier.

That is equivalent to 13.4 per cent of the total population in the age bracket, an increase of 1.3 percentage points.

The rise fueled alarm about the impact of Labour's Budget tax hikes, with businesses warning they are cutting back on staff even before they take effect.

Meanwhile, UK and European allies are scrambling to make a step change in military capabilities as the US distances itself from the Ukraine war.

Keir Starmer announced last week that the UK will be spending 2.5 per cent of GDP on defence by 2027, with the aid budget being slashed to free up the money.

But far more money will be needed to reach the ambition of spending 3 per cent of GDP, and many experts say the level must go even higher. 

The Chancellor declared at the weekend that she is changing the remit of the £27.8billion National Wealth Fund so it can be spent on defence.

Previously the public-private investment vehicle has been focused on infrastructure projects such as green energy schemes.

....

Q: why are there so many young people unemployed or not in training?

A: because the private sector doesn't want to employ them, and the government doesn't want to train them....

A good move from The Greens, so long as currency-issuing governments are forced to tax or borrow from the private sector to fund essential public services AND 'balance the budget'.

(Econostrum English)

Greens Target Tech Giants With New 3% Tax in Billion-Dollar Policy Push

The Australian Greens have unveiled a new policy proposal aimed at imposing a 3% digital services tax on major technology corporations operating in the country. If implemented, the tax is expected to generate $11.5 billion over the next decade, targeting multinational firms such as Meta, Google, Microsoft, Amazon, and Uber.

Taxing the Digital Economy

Under the proposal, the tax would apply to global companies that earn more than€750 million (AU$1.275 billion) in international revenue and make at least AU$20 million in Australia through digital services like advertising, social media, user data, and online marketplace transactions.

This means that food delivery platforms like Menulog and DoorDash, job marketplaces such as SEEK, and e-commerce sites like eBay could also be affected by the tax if they meet the revenue threshold.

Meta, which owns Facebook, Instagram, and WhatsApp, reported $US164 billion (AU$264 billion) in revenue for 2024, while Amazon made $US638 billion (AU$1.017 trillion) and Uber generated $US44 billion (AU$70.1 billion)—figures that would place them squarely within the proposed tax’s scope.

Greens Call for “Fair Share” Contributions

Speaking ahead of the policy launch, Greens communications spokeswoman Sarah Hanson-Young said the tax would ensure that “tech giants and billionaire tech bros” contribute to the Australian economy.

“Companies that trade in Australia need to pay tax on the money they make in Australia. Global tech giants are making billions of dollars in revenue in Australia while paying very little in tax,” she stated.

The Greens argue that the revenue generated could be used to fund essential services, including their $200 billion proposal to expand Medicare by incorporating dental care.

Potential Industry Pushback

A Parliamentary Budget Office analysis has warned that multinational companies affected by the tax may restructure their Australian operations to minimize exposure. However, the Greens remain committed to pursuing the tax as a key policy demand in the event of a power-sharing parliament following the upcoming federal election, scheduled by May 17.

“These big foreign-owned corporations make huge profits off Australians and resist regulation at every turn. It’s time they paid their fair share of tax,” Senator Hanson-Young stated.

She also framed the policy as part of a broader fight against the influence of U.S. tech billionaires, saying: “We need to stand up for our national interest against Donald Trump’s billionaire oligarchs like Zuckerberg, Musk, and Bezos.”

Broader Regulatory Efforts
The Labor government has also signaled an increasingly aggressive stance towards major tech platforms. In 2024, Meta withdrew from the AU$200 million News Media Bargaining Code, which required social media companies to pay news outlets for content.

In response, Labor proposed the News Bargaining Incentive, which would impose a tax on platforms that fail to strike payment agreements with Australian news organizations.

With mounting pressure from both Labor and the Greens, major tech corporations may soon face a tougher regulatory and taxation environment in Australia. The extent of industry pushback—and potential legal or structural responses—remains to be seen.

.....

Trouble is - most people seem to prefer the government to reduce taxes, rather than increase spending, even if it's the super-rich who are targetted for higher taxes. 

And I expect the mainstream media won't debate the issue. 

Keen's conclusions (in previous post) confirmed rather more succintly in Prof Bill Mitchell's exposure of the absurdities of  mainstream economics:

So the fiscal rules are set in stone and something else has to give – which is spending, given they promised no significant tax changes.

The justification is that the government has to “maintain credibility with financial markets”.

So there are layers of absurdity that build on each other to get to this point.

The train of spurious logic is obvious and goes like this:

Absurd proposition 1: The government which is the only institution in Britain that issues the pound has to get the pound from the non-government sector via taxation or borrowing in order to spend it.

Reality: The British government spends by typing numbers into bank accounts – no taxes or borrowing are required.

Absurd proposition 2: Recurrent spending (whatever that is) must be matched at all times by tax revenue.

Reality: This is a self-imposed constraint with no basis in economic theory.

Absurd proposition 3: Any additional capital spending must be matched by issuing debt.

Reality: This is a self-imposed constraint with no basis in economic theory and constitutes corporate welfare to the gamblers in the financial markets.

Absurd proposition 4: If Absurd proposition 2 and Absurd proposition 3 are endangered then the financial markets will stop buying the debt that the government issues.

Reality: So what? The choice would not alter the spending capacity of the government at all.

Absurd proposition 5: To avoid Absurd proposition 4 occurring, the government has to cut spending dramatically.

Reality: the end of the chain of absurdity.
...

The entire article is available here:

https://billmitchell.org/blog/?p=62410

British government spending cuts will probably increase the fiscal deficit and make the ‘non negotiable’ fiscal rules impossible to achieve