No. of Recommendations: 4
As most know, I'm not a fan of our current fiscal position and have written extensively about if for 25 years now. My first vote in a Presidential election was for none other than Ross Perot, who preached that fiscal solvency was of the upmost importance.
Well. Here we are, 30 some years later and the debt to GDP ratio has doubled since Perot ran for President: in 1992 is was roughly 60% and today in 2025 it's ~124%. Way to go, us. How to address it? democrats won't even ack there is a problem and why should they? Their entire electoral strategy revolves around giving things away. The Republicans in my view are even worse: you send supposed fiscal hawks to DC like Paul Ryan and give them power and you get...nothing. Nothing but more of the same. The same old Charlie Brown and the football approach to governance.
Neither party has shown a real willingness to address our spending problems or re-align taxation to address the debt. The GOP is content to hand out tax cuts and the democrats as I mentioned won't acknowledge there's a problem.
So what to do? Perhaps we're already doing it.
A targeted tax increase that puts a defined stream of money into the general fund only allows the next democrat to redirect it towards more boondoggles or the next GOP President to cut it back. Net gain of nothing, plus politically unpopular. Cutting spending is a mixed bag: House Republicans are all for it, Senate Republicans are reluctant to cut anything and the democrats fight every spending reduction tooth and nail. That's a very hard slot.
Lots of pain for little gain. So what else can be done?
Some economists tend to favor consumption taxes as the way to go. Rather than taxing income you tax activity. That gives the taxpayer some amount of flexibility in terms of managing spending. Governments don't like being exclusively tied to consumption taxes because as they're downstream of businesses and consumers...they have to manage their spending wisely. Government hate that.
Which brings us to tariffs. Tariffs are the ultimate consumption tax. A stealth VAT tax based on the wholesale price of production inputs that on the surface acts as an incentive to onshore production of certain items...but in areas where that doesn't happen another cash flow for the government is generated. A cash flow that can't be earmarked for any new program or other because the flow is variable.
But it CAN be used to bring down the federal deficit and, ideally, start paying down the debt.
Maybe this was the goal all along.
