This Dangerous Team
This dangerous team. Joseph E. Stiglitz, an American economist and Nobel laureate in economics in 2001, presents Donald Trump as offering a vision of crony capitalism and rent-seeking that has attracted many industry and financial leaders.
By catering to their demands for further tax cuts and deregulation, he will make the lives of most Americans poorer, harder, and shorter. 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. Ultimately, it is mathematically impossible to reduce taxes for corporations and billionaires, maintain essential programs like defense and social security, and also reduce the budget deficit. Some of the more absurd promises of Trump’s campaign have been made by Elon Musk, who claims he can cut $2 trillion from the federal budget.
This claim is particularly strange coming from someone whose companies heavily rely on government contracts and subsidies. Without the $465 million loan received from the Obama administration, Tesla might have gone bankrupt.
Musk’s claims demonstrate his astonishing ignorance of economics and politics. His proposals imply cutting about a third of total government spending, which is eight times more than what the Government Accountability Office estimates as waste or fraud.
In the meantime, the U.S. would have to cut all discretionary spending, including defense, health, education, and the Treasury and Commerce Departments, 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 failed to do so.
Now he is making populist promises that will not only fail to reduce the deficit but will increase it by more than $75 trillion over the next decade. Such severe cuts would have devastating effects on the U.S. economy and society. Destructive policies always fail.
Just as the austerity policy of Andrew Mellon, the U.S. Treasury Secretary under President Herbert Hoover, led to the Great Depression, the austerity policies of 14 years of conservative rule in Britain have resulted in a decade and a half of stagnation.
The difference between the economic programs of Trump and Kamala Harris could not be more stark. 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, effectively a tax on imported goods, will lead to higher prices for Americans, especially middle- and low-income families.
In almost every area where the country faces a challenge, Trump’s policies will make matters 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, the U.S. ranks highest among advanced economies in inequality, and Trump’s tax cuts for the wealthy will widen this gap further.
In contrast, Harris’s policies directly focus on improving the living standards of the middle class.
Besides health and inequality crises, climate change is accompanied by significant human and financial losses for Americans. Yet Trump has promised to roll back environmental regulations to attract campaign contributions from fossil fuel giants.
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 endorsing Harris. It’s 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 justice in our country and is significantly superior to Trump’s unfavorable economic program.
Economic issues have a significant impact on this election, and we Nobel economists have concluded that without a doubt, Kamala Harris will be a much better steward of our economy.
Many Americans rightly want to forget all the chaos and excess deaths caused by 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 the economic power of the United States is based on the foundations of science and technology, Trump has repeatedly proposed significant cuts to federal research funding, which would have negative consequences for fundamental scientific advancements and many key economic sectors.
When he was in power, even Republicans recognized the dangers of these proposals and opposed them, but now the party’s complete subservience to him is evident.
In another public letter, my fellow Nobel laureate economists and I, along with more than 80 Nobel-winning scientists, emphasized that the massive increases in living standards and life expectancy over the past two centuries have largely been 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 the fundamental science done by others, hasn’t 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 presenting a kind of crony capitalism and rent-seeking that, even if good for Musk and other billionaires, will not be good for the rest of us.
But Harris at least offers hope for creating a more resilient, inclusive, and faster-growing economy, one that performs better than crony capitalism and distributes the benefits of growth more equitably.