The problem with Trump’s idea to replace income taxes with tariffs

Make Me Smart June 14, 2024 Transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kai Ryssdal 

Start. Don’t start. Do whatever you want. Whatever.

Kimberly Adams 

Make yourself happy, Charlton. Live your life, your best life.

Kai Ryssdal 

Once again. Sorry, I’m just frustrated having to watch YouTube ads. It’s ridiculous. Hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where we make today make sense. It is Friday today, 14th of June. Happy Flag Day, everyone.

Kimberly Adams 

Yes, and I’m Kimberly Adams. Welcome everyone and thank you for joining us on the podcast if you’re listening later on or on the YouTube live stream if you are watching now. It is Friday, and that means it’s time for our weekly happy hour Economics on Tap.

Kai Ryssdal 

We are going to do what we always do. News. We’ll take a break and then play a game. Before we do though, we want to see what everybody’s drinking. What Ms. Adams, are you drinking today in the New York bureau?

Kimberly Adams 

Courtesy of our wonderful producer, Courtney Bergsieker, I am drinking red wine that is Italian, that is biodynamic natural wine, and you can look at it. I’m showing the label simply because I don’t think I’m going to be able to say this. Montepulciano, is how you suggest I say it earlier?

Kai Ryssdal 

That was perfect. That was great. Yes.

Kimberly Adams 

Thank you. D’Abruzzo. It’s a certified biodynamic, which is interesting. I haven’t had this kind of wine before, but it is tasty. And because Courtney recommended it, I’m very happy. She was kind enough to bring it for me today. So, thanks, Courtney. What are you drinking?

Kai Ryssdal 

That is very nice. That is very nice. I’m having a cup of coffee in the Starbucks mug that I found on the street in front of my house, which I think I’ve told that story before, because we have theater tickets this evening, and I need to stay awake.

Kimberly Adams

What you going to see?

Kai Ryssdal 

Yes. We are seeing StrangeLloop down at the Ahmanson downtown.

Kimberly Adams

I saw that in New York.

Kai Ryssdal

Oh, it’s supposed to be really good.

Kimberly Adams 

Yeah, it is. It’s intense, though. So, yeah, stay awake for sure, but it’s good.

Kai Ryssdal 

Well, that’s, you know, I don’t want to nod off. I was up late last night coming back from a reporting trip, so I need a little fortification

Kimberly Adams

Fair, fair, fair. Okay, let’s get to some news. What you got?

Kai Ryssdal 

Okay, all right. So, look, this frustrates me, and it frustrates me for a lot of reasons, but it’s just about the idiocy that we’re going to have to deal with for the next either five months or four years and five months. So former President Trump met with the House GOP on Capitol Hill yesterday. I’m sure you’ve all seen the pictures and he said many, many things inside the room. One of which was he brought up the idea this is, this is quoting now from Emily Wilkins, who reports for CNBC. She covers the District of Columbia.

Kimberly Adams 

And is the president of the National Press Club.

Kai Ryssdal 

Oh well, good for her. That’s awesome. That’s great.

Kimberly Adams 

Yeah, I emceed her inauguration. She’s awesome.

Kai Ryssdal 

Oh, there you go. That’s very cool. She’s awesome, and she’s a good reporter. Here’s what she says in this tweet yesterday: “Trump brought up the idea” to that GOP meeting of “‘an all tariff policy’ that would lead to getting rid of the income tax, per sources in the room.” So, this. This frustrates me so deeply. Number one, because it’s just idiotic and economically illiterate, which I’ll explain in a moment. But number two, it is an example of the, I don’t want to say chasing our tails, but the knocking down of idiocy that the economic and financial media is going to have to do if the former president wins because facts matter. So, super quickly. I looked up these numbers. We generate $2.2 trillion in revenue from the income tax every single year. We import about $3.8 trillion worth of stuff into this economy every single year. So, in order to get $2.2 trillion to replace the income tax from a tariff on $3.8 trillion worth of income, you’d have to have a tariff of nearly 60% across the board, just to start, right? But what happens when you tax things? That is to say when you put tariffs on them, because tariffs aren’t taxed on imported goods that consumers pay so. When you tax things, people buy less of them, so our imports will go down, but we’ll have to still make that $2.2 trillion nut. So, our tariff rates are going to have to increase. As the tariff rates increase, the amount of stuff we’re going to buy is going to go down because when you tax stuff more, the amount of stuff you buy that is taxed goes down. And so on and so forth, until you get to a tariff rate of infinity. It’s just stupid. I can’t tell you how annoying this is to me, that we’re going to have to chase our tails on idiotic stuff like this because it’s being bandied about by a guy who, this isn’t me, this is Janet Yellen, does not understand the economy. It just. I can’t tell you how absolutely fried my brain gets when I think about this. That’s it. That’s all I’ve got.

Kimberly Adams 

I remember when Trump first came to office, and we spent so much of our time just trying to break down the things that he was saying and explain why it didn’t work, or it wasn’t real, or it wasn’t true, or why it wasn’t going to work. And it was exhausting then and having like, dramatic flashbacks, right? I remember doing a story once because Trump kept saying that we have the highest corporate taxes in the world over and over and over and over again. And I did a whole story simply explaining why we don’t have the highest corporate taxes in the world. And on the campaign trail, I have heard his people saying that we have the highest corporate taxes in the world. Still. And I just.

Kai Ryssdal 

What do you do with that? Truly, what do you do with that? I don’t, I don’t know. Anyway, sorry. Go ahead. What do you got?

Kimberly Adams 

You know, what though?

Kai Ryssdal

What?

Kimberly Adams

We are lucky that we still have jobs, that people like Emily still have jobs in this very difficult media environment, because it means that we can do the work. There are a lot of our peers in the industry who wish they still had their jobs to do this work. And so, we’re going to grit our teeth and we are going to do it, and we are going to be fine. We are going to be fine. Yes, as I think drink more.

Kai Ryssdal

There you go. All right, what do you got?

Kimberly Adams

Yeah, I have two stories. One is about a needed come up. So, headline from the AP: “Alex Jones’ personal assets to be sold to pay 1.5 the $1.5 billion Sandy Hook debt. Company bankruptcy is dismissed.” A judge is allowing, “ordered the liquidation of conspiracy theorist Alex Jones’ personal assets but dismissed his company’s separate bankruptcy case, leaving the future of his Infowars media platform uncertain as he owes a $1.5 billion for his false claims that the Sandy Hook Elementary School shooting was a hoax.” I am glad that his personal wealth is going to be taken for this. I hope that the company that profited off of these lies and the absolute emotional torture he put those families through should also be subject to this, and it’s a consequence of the lies and the dissonance, the disinformation, and I am glad to see it. And, you know, my heart goes out to those families and all the families of the mass shootings, which God help us, we may see more of with the bump stocks decision this week from the Supreme Court. But I was glad to see that a judge was willing to cross over from, to not separate that out. So, I saw that, and I wanted to note it, because we’ve talked about that before, and Alex Jones and Infowars and how he was trying to weasel a lot of those payments.

Kai Ryssdal 

I’m sure you saw this. Well, I was just going to, just a holy cow addendum to that. Those kids who were the survivors of that massacre graduated high school or graduate high school this year, which is just wild. Can you imagine?

Kimberly Adams 

Yeah, and you know, I still remember when that happened and just watching. And I’ll admit, I had probably not the kindest reaction at the time because I saw all of these people on cable news and in media saying that gun violence has become real in America, and now it’s a real problem, and all of the sudden this is an issue. And I was like, we have to kill children, specifically white wealthy children in the suburbs of Connecticut before this becomes an issue, when it had been an issue for a long time, but apparently that didn’t change anything either. So, yeah. So that is one story that is depressing, but I have another story also depressing, because why not go out on a Friday with all of the joyful news? We have also been talking on this show about in the past, this research that’s been coming out in bits and pieces about chemical relaxers and what they’ve done to Black women. And I have such a personal relationship to this because I started getting chemical relaxers on my hair when I was eight years old, and I remember the pain and the burning and just then trying to maintain it, and burning my neck with curling irons and having to get up an hour early every day to maintain these white beauty standards, right? And now we’re learning more and more thanks to really groundbreaking research from a lot of amazing people about just how bad this stuff really was, and especially the relaxers marketed to children that have these, just extremely dangerous chemicals. It’s starting to be linked now to early puberty in Black girls and ovarian cancer and possibly other cancers. And yet, a lot of these products are still being sold, and the FDA still isn’t restricting it in the way that a lot of people would like the agency to. There’s a big, long story about this in the New York time, very well researched. Would highly recommend that folks read it. Yeah, excuse me. Karen Johanna says in the chat, grew up chemical relaxers. Grew up with them, and it sucked. Yes, they were bad, but at the same time, man, the backlash in my family when I decided to stop chemically straightening my hair. Oh my gosh, everybody was furious.

Kai Ryssdal

Really?

Kimberly Adams

Furious. Because it was very much seen as what you needed to do to be socially acceptable. You’re not going to be able to get a job if you don’t straighten your hair. You’re not going to be viewed as clean if you don’t straighten your hair, like and it was, it’s been so ingrained into the culture, and especially at that point, because we’re talking about 2000, 2002, 2003 when I was making these decisions, and I’m a teenager. And so, also not doing what my mother was telling me to do. You know that too. But yeah, no, the family was upset. People at church were upset. It was a big drama. Yes, but that’s the story for another day. We should get on with the show.

Kai Ryssdal 

We will get on with it. So, we’re done with the news. Quick break. Coming back to do some Half Full/Half Empty. Here we go.

Kimberly Adams 

All right, we are back. It is time to play Half Full/Half Empty hosted by the wonderful Drew Jostad. Take it away, Drew.

Drew Jostad 

All right. Is your mug half full or half empty for the growing buzz around decaf coffee?

Kimberly Adams 

I feel like we did this.

Kai Ryssdal 

We did decaf last week. I think Drew and or the producers of this podcast need a little caffeine in their coffee, baby.

Kimberly Adams

Okay, not just me.

Kai Ryssdal

Yeah. All right, any who. Look, I think you know, caffeine is good, but it’s nice to have a cup of coffee. If caffeine gives you up, then have a good cup of decaf. And apparently, it’s getting like artisanal, too. Anyway, I think we talked about this last week. Anyway, half full, so be.

Kimberly Adams 

Sure, half full. I’ve actually had two cups of coffee today, plus tea, which you know, very unusual for me.

Kai Ryssdal 

Oh no. Seriously? You’re never going to sleep.

Kimberly Adams 

Never. Never. I’m so tired. I’ve been having difficulty sleeping in New York. It’s very noisy here.

Kai Ryssdal 

Yeah, yes, it is. Might I recommend the white noise app on your phone? I live and die by that when I’m traveling. Yeah, for reals.

Kimberly Adams 

Okay. I’ll try it. I’ll try it.

Kai Ryssdal 

All right, Drew, what’s number two?

Drew Jostad 

Okay, at the developer conference, Apple has announced its entry into the AI race. Are you half full or half empty?

Kai Ryssdal 

I don’t know. I was traveling and reporting, so I only tangentially tuned into the, you know, developments in AI this week. I guess I’m more resigned than anything else. It’s coming. One hopes companies and individuals will be responsible with it, but one doubts that that will be the case. I don’t know. I don’t know. Kimberly?

Kimberly Adams 

I’m really, I’m really, I’m really torn on this one. Like, I’m half empty on it just being inescapable so quickly, like going from here and there to everywhere so fast. But on the other hand, it’s kind of like, all right, we’re all in. Let’s just do it. Let’s just go through the growing pains, figure it out. It’s on all the platforms. You know what? Let’s just figure out what our world with AI is going to be, so I guess half full, because we may as well get going. We got to do it.

Kai Ryssdal 

Yeah. I mean. I mean, that’s right, and it comes with a giant dose of caveat emptor, right? Be smart out there because AI makes mistakes. It hallucinates, as you’ve heard, right? It’s not the gospel for sure. So, be smart.

Kimberly Adams

Yeah. All right, what’s next?

Drew Jostad 

Okay with Apple News and even LinkedIn releasing new word games, are you half full or half empty on the trend of media sites using puzzles to attract subscribers?

Kai Ryssdal 

So, this is so funny. So, yeah, so we, I’m just back from a reporting trip. Tuesday, Wednesday, Thursday, in Carolina, in North Carolina, and Kentucky. Lot of time in the car with a couple other folks from Marketplace, and we got to talking about this, specifically about the New York Times now has a quiz that you can take, and it will tell you what kinds of games you should play. The New York Times was early in this, right? They got Wordle, and then they went all the heck in, and they own practically that game space for newspapers, right? Washington Post is trying to keep up. Everybody’s trying to keep up. I’m not a game guy, but props to the New York Times for leaning in early, because games and food are where they make a chunk of their money. So, you know.

Kimberly Adams 

I believe it because what did I get my best friend for Christmas this year? A gift certificate to New York Times cooking because she kept. Like, I think she’d been saving, like, all of the emails, and so she didn’t want to delete any of the emails because she didn’t have access. And I was like, girl, I got you. But, you know, I was pretty proud of myself. I thought I was like, on it. I’m not the best gift giver, but every so often, I get it right. I am going to be half full on games. I’m not a big gaming person, but I’m trying to be better. Every so often I’ll go through a phase of board games. When I was at Broadway the other night with my family, I looked over and while we were waiting for the show, I see my niece on her phone playing chess. And I was like, okay. I guess I’ll get a chessboard before you come to DC this summer, and we’ll figure it out. Half full.

Kai Ryssdal 

Yeah, totally. Games are where it’s at.

Drew Jostad 

Okay. Sony Pictures Entertainment has acquired Alamo Drafthouse movie theaters, which breaks a long-standing prohibition that was lifted in 2020 against studios getting back into the theater business. Are you half full or half empty?

Kai Ryssdal 

I think it’s really interesting. So, it’s good to see that that movie theater chains are, once again, sort of a viable investment for other companies, but I’m going to go half empty just because consolidation and conglomeration never works out well for consumers.

Kimberly Adams 

Have you talked to your movie theater owner lately?

Kai Ryssdal 

No, that’s a good idea. We should call her. That’s a great idea. The lady in Nashville whose name I can’t remember.

Kimberly Adams 

Yeah, yeah, I’d be interested to hear which she thinks about that. I’m going to go, what Kai said. Consolidation, conglomeration, all the things. Is it time for the poll?

Drew Jostad

It is indeed.

Kimberly Adams

It’s time for the poll. All right, folks in the YouTube chat, let’s get ready.

Drew Jostad 

Are you half full or half empty on using your phone in public, either on speaker or without headphones?

Kimberly Adams 

My speaking as a no, let me not make that comment. That wouldn’t have been nice.

Kai Ryssdal 

Let me. Let me just well, you know, this is our podcast. We can do whatever we want. Um, it never ceases to amaze me when people do that, and I’m going to reveal my bias here, but that’s okay. Because it’s like, it’s rude and insensitive and nobody needs or wants to hear your conversation or your music, and I just don’t get it. I don’t. I don’t get it.

Kimberly Adams 

I will take your on a speakerphone without headphones conversation annoyance and raise you full on FaceTime conversations in public. I was in a nail salon a while back, and this woman sitting next to me, even though there was like, the please don’t be on your phones and all the signs that are up in salons. She had propped her phone up, and it was like facing me and she was looking the other direction, on speaker, no headphones on FaceTime, having a loud conversation and using all this profanity and things like that. And finally, I was like, excuse me, do you mind? You know, toning it down, and I didn’t want to be that person, but I was really, oh, she got so mad.

Kai Ryssdal 

Yeah, I was just going to say. Her reaction probably was to get angry with you, right?

Kimberly Adams 

She got angry with me. She started using profanity with me. She got like, super intense, basically. And I just, yeah, I just ignored it. But yeah, it ruined the experience for me.

Kai Ryssdal 

Totally. I’m going to, I’m going to go way out on the limb here as we close the poll and say this might be the only unanimous poll we ever get. 100% half empty, 0% full, empty. We got 175ish votes right now. We’re going to, we’re going to see. I don’t know. I don’t know. Polls close. Oh no, come on. Wait. Hold it.

Kimberly Adams 

Somebody must have misunderstood the question. Somebody misunderstood the question for sure.

Kai Ryssdal

All right. All right. Okay.

Kimberly Adams

Oh my gosh.

Kai Ryssdal 

Here’s Maggie, Margie Kletch or Margie Kletch wins. I don’t even like my husband using it in the same room with me, so I hear you.

Kimberly Adams 

So, my other favorite annoying thing that people do is when they are on their speakerphone while the TV is on, and also trying to talk to you. Because this has happened to me. This has happened to me where someone has tried to say things to me with the television on while also on speakerphone on their phone. And I’m just like, this is too much audio intensity, and my brain cannot process that many like, totally tracks of audio at once.

Kai Ryssdal 

All right, I know we went over her name pronunciation last week or two weeks ago, whenever it was, but Sarah Himelein, or Himalayan. I forget, sorry. I apologize.

Kimberly Adams 

Himelein. Himelein. Like, him a line. Because it helps people realize that she quilts.

Kai Ryssdal 

Standard deviation never adds to 100% or zero, so we’re just going to take this as 100% that’s working.

Kimberly Adams

All right, good.

Kai Ryssdal

There you go.

Kimberly Adams 

All right, that’s it for us today. Thanks everybody for tuning in. We will be back on Monday. And in the meantime, you know where to reach us. We are at 508-U-B-SMART. You can email us at [email protected]. For what it’s worth, Kristin Schwab would dance with me to the music.

Kai Ryssdal 

Yeah, Kristin’s cooler and hipper than me. I’m not cool and hip enough. We all know that. That’s not news to anybody who listens to this podcast. Make Me Smart, dancing or not, is produced by Courtney Bergsieker. Today’s episode was engineered by Charlton Thorp. Our intern is Thalia Menchaca.

Kimberly Adams 

Our team behind our Friday game is Emily Macune, Jamila Huxtable, Antoinette Brock. Marissa Cabrera, who is our senior producer. Bridget Bodnar is the director of podcasts. And Francesca Levy is the executive director of Digital and on Fridays, On-Demand as well.

Kai Ryssdal

There you go. Just on Friday.

Kimberly Adams

Just on Fridays.

Kai Ryssdal 

Neal Scarbrough only works one day a week around here, just for the record. Only Tuesdays.