A fiscal emergency could come to light because of Donald Trump's ongoing economic policies, a former Director of the US Management and Budget has claimed.
Mitch Daniels believes the first year of tariffs is enough to see where the economy is headed, and it could lead to millions paying more than they already do. Writing in The Washington Post, the former director suggests that everyday Americans are going to foot the bill for the Trump admin's financial shortcomings.
He wrote, "Boneheaded as economic policy, they represent a clumsy, unintentional first step into national sales taxation. Though it’s unclear exactly what portion of the tariff tax is falling on consumers, no one asserts that it’s small.
"With estimates of about $289 billion in tariff collections last year, the administration claims a positive effect on the deficit. Another cloudy computation will be needed to identify the net effect, after damage to economic growth is factored in.
"Consider it a dry run. Even less transparent to the victim than a state sales tax or a VAT, taxation by tariff constitutes a step into consumption taxation, of people at all income levels.
"Everyone will have to chip in to the fiscal emergency plan that the country’s procrastinating, irresponsible national leadership, of both parties, has made inevitable.
"Taxation of consumption, regrettable as it will be, at least has the virtue of weighing less heavily on work and investment, and therefore growth, than further taxation of income. It is likely to be part of the safety-net rescue."
Daniels went on to say that there was some appeal to the current policies, but that their implementation is at the cost of common sense economics.
"Excusing 40 percent of Americans from income taxation has made for appealing social policy and jolly politics," he wrote. "But it has had the deleterious side effect of anesthetizing its beneficiaries against the true costs of Big Government.
"When the promises of Social Security and Medicare can no longer be kept, or when the world’s bond buyers take their money elsewhere, millions of Americans will have to be reintroduced to the reality that the lunch is never free.
"Their sense of social betrayal at being misled all these years, about the trustworthiness of the trust funds, will be compounded by the burden of sharing the tab for their past leaders’ dereliction of duty."