This Team is Dangerous
Joseph E. Stiglitz, an American economist and Nobel laureate in economics in 2001, presents Donald Trump as offering a vision of crony capitalism based on rent-seeking that has attracted many industry and financial leaders.
By meeting their demands for further tax cuts and deregulation, he will make life poorer, harder, and shorter for most Americans. As the crucial U.S. presidential election approaches, the competition has reached its peak, and Trump and his allies are making increasingly extreme promises about what they will do with power.
However, these promises, especially regarding fiscal policy, will inevitably be broken. In the end, it is mathematically impossible to cut taxes for corporations and billionaires, maintain essential programs like defense and social security, and also reduce the budget deficit. Some of the more ridiculous promises of the Trump campaign have been made by Elon Musk, who claims he can cut $2 trillion from the federal budget.
This claim is very strange coming from someone whose companies heavily rely on government contracts and aid. Without the $465 million loan he received from the Obama administration, Tesla might have gone bankrupt.
Musk’s claims indicate his astonishing ignorance of economics and politics. His proposals mean cutting about one-third of total government spending, which is eight times more than what the Government Accountability Office estimates as waste or fraud.
In the meantime, America would have to cut all discretionary spending, including defense, health, education, and the Departments of Treasury and Commerce, as well as widely popular programs like Social Security and Medicare.
Such severe cuts suggest that Trump will try to persuade Congress to make major changes to these programs, but don’t hold your breath. Trump had four years to dismantle the administrative state but did not do so.
Now he is making populist promises that will not only fail to reduce the budget deficit but will increase it by more than $75 trillion over the next decade. Such severe cuts would have devastating impacts on the U.S. economy and society. Destructive policies always fail.
Just as Andrew Mellon’s austerity policies under President Herbert Hoover led to the Great Depression, 14 years of conservative rule in the UK have resulted in a decade and a half of stagnation.
The difference between Trump’s and Kamala Harris’s economic programs could not be clearer. Harris’s program reduces the cost of living by leveraging the Inflation Reduction Act to lower drug and energy costs and make housing more affordable.
In contrast, Trump’s tariffs, which act as a tax on imported goods, will raise prices for Americans, especially for middle- and low-income families.
In almost every area where the country faces a challenge, Trump’s policies will make the situation worse. Even before the pandemic, life expectancy in the United States, which was the lowest among advanced economies, had declined during Trump’s tenure.
By aiming to eliminate the Affordable Care Act and parts of the Inflation Reduction Act that lower drug costs, Trump will worsen the situation.
Additionally, America ranks highest among advanced economies in terms of inequality, and Trump’s tax cuts for the wealthy will widen this gap.
In contrast, Harris’s policies directly focus on improving the living standards of the middle class.
Besides health crises and inequality, climate change is accompanied by many fatalities and financial losses for Americans. Nevertheless, Trump, to attract campaign contributions from fossil fuel giants, has promised to roll back environmental regulations.
This policy will not only set America back in the transition to a clean energy economy compared to other countries but will also turn the country into an international pariah once again.
These are among the reasons why 23 American Nobel laureate economists recently signed a public letter in support of Harris. It is hard to find two economists who agree on anything, but we concluded that, overall, Harris’s economic program will improve investment health, sustainability, resilience, job opportunities, and fairness in our country and will be significantly superior to Trump’s undesirable economic program.
Economic issues have a significant impact on this election, and we Nobel economists have concluded that Kamala Harris will undoubtedly be a much better guardian of our economy.
Many Americans rightly want to forget all the chaos and excess deaths from COVID-19 that prevailed during Trump’s presidency, but we should not forget these events. With Trump openly seeking revenge on what he calls domestic enemies and with the Republican Party having turned into nothing more than a personality cult, there is no doubt that a second Trump presidency would be worse than the first.
While America’s economic power is based on the foundations of science and technology, Trump has repeatedly proposed massive cuts to the federal research budget, which would have negative consequences for fundamental scientific advancements and many key economic sectors.
When he was in power, even Republicans understood the dangers of these proposals and opposed them, but now the party’s complete submission to him is evident.
In another public letter, my Nobel laureate economist colleagues and I, along with over 80 Nobel laureate scientists, emphasized that the massive increases in living standards and life expectancy over the past two centuries have been largely the result of scientific and technological advancements. Kamala Harris understands this and recognizes that maintaining America’s leadership in these areas requires federal government budget support, independent universities, and international cooperation.
Harris also acknowledges the key role of immigrants in advancing science.
Unfortunately, even Musk, whose companies rely on fundamental science done by others, has not fully considered what a Trump presidency would mean for his business. Short-term greed, focusing on tax cuts and deregulation, has attracted many industry and financial leaders to Trump’s team. Trump is offering a kind of crony capitalism that, even if good for Musk and other billionaires, will not be good for the rest of us.
However, Harris at least raises the hope of creating a more resilient, inclusive, and faster-growing economy, one that performs better than crony capitalism and distributes the benefits of growth more equitably.