The actual plan

[u/AlarmedGibbon]

A lot of people are confused about why the current Republican administration would be willing to crash the economy for these dumb tariffs. I've seen Redditors proposing various ideas for what they think is The Plan, trying to get all of this to make sense. They think surely it must make sense somehow because he has people like Musk around him who they think are smart.

Then I've also seen other people saying there is no plan. He just likes feeling powerful, he likes that tariffs are something he can do unilaterally (in truth he actually still needs Congress' consent, but the Republican Congress spread their cheeks for his dick long ago), and that's the extent of it. No plan, just a narcissist and whatever impulses or crazy ideas he wakes up with that morning.

If you look at the current facts and the Republican party's history and ideology, I actually do think there's a plan. It's just not one anybody's currently talking about, not publicly anyway, but it is a plan that has the benefit of making sense given everything we know.

The first thing to understand is this is not happening in a vacuum. As the administration is raising taxes on everyone, particularly the poor and middle class who spend a disproportionate amount of their income on now-tariffed products as compared to the wealthy, they have also been talking in the background about eliminating federal income taxes for people and corporations. Just Google 'eliminating income taxes' and you'll see many recent articles about figures in the administration talking about this. So they effectively want to get rid of income taxes and various other federal taxes and replace that tax revenue with tariff revenue instead.

But here's the thing about tariff revenue - it tends to naturally go down over time. As many have noted, tariffs incentivize domestic production of previously imported goods, which reduces import volume over time and thereby reduces tariff revenue. Another way is that tariffs incentivize smuggling, misclassification of goods, and other forms of evasion that erode the revenue base, especially when combined with reduced government oversight due to layoffs and downsizing. There are more reasons than this but you get the idea. Tariffs by their nature encourage their own dwindling returns.

So we'd be replacing a reliable revenue source that grows over time, income taxes, which even if you leave at the same rate nonetheless grows in dollars with inflation and economic growth, with one that instead dwindles over time and could even all-but disappear eventually.

Which brings us to Republican party ideology and a tactic they pioneered many decades ago known as 'starve the beast'. Google it. In the case of this analogy, the government is the beast. This strategy dates back to the Reagan era. The basic idea is, Americans don't easily give up their government. Eliminating what they call entitlements, your Social Security, your Medicare, that would be politically unpopular, right? But what you can do is, every time you're in office, you lower taxes. And then again. And again. And again. And you never, ever, vote to raise them back up.

So the idea goes, eventually, the government, starved of money, will simply have to downsize, right? Eventually we just won't be able to afford programs like Social Security and Medicare, and the Republicans will take no blame, they'll just say we have no choice but to tighten our belt now. From their perspective, they can finally get the citizens off the government's teat, and they'll probably manage to blame the Democrats for the whole situation to begin with using their right wing media machine. It's a good plan.

But here's the thing. It's been 45 years since they started this plan, and instead of tightening the belt, we've just decided to go further and further into debt instead. The day they pined for, that they long envisioned, has just never come. It probably would eventually come if they kept up this strategy, but it's taking much, much longer than they ever expected, and in the meantime we just keep going deeper into debt.

So now, Trump and his cohorts have found a new strategy. Get us off steady revenue, shift over to a source that's basically disappearing ink, they'll finally collapse the entire federal government and we'll live in the pure corporate oligarchy conservatives have long been trying to move us into. That's the plan. If they have to crash the economy to initiate it, so be it.

[u/gibbonsgerg]

Thanks. I’d been coming to the same conclusions.

But if they really do collapse the government via the federal debt, we will be unable to service the debt, then default, crashing the dollar, and killing it as the world currency.

Why won’t that turn us into a third world country? With no infrastructure, and no federal revenue and a destitute populace unable to buy any products, what’s the upside?

[u/n9neteen83 → u/gibbonsgerg]

That's the conundrum isn't it? You have to crash the dollar hard to make US labor costs competitive vs China, Vietnam, etc

But that would turn USA into a 3rd world economy. And how many decades would it take to rebuild the manufacturing infrastructure? At the same time China will leapfrog 10X in technology

This tariff thing is DOA. No way the middle class / corporate class will allow themselves to give up their cushy way of life.

I think come midterms the Democrats will have easy win if they campaign on status quo neoliberalism