Of Course He Did This On Purpose!
Just not for the reason you think.
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Over the last week, several people have asked me some variation of this question: “Is Trump wrecking the economy on purpose?” More often than not, they then proceed to offer up their own theory of why the president seems hell bent on destroying the world economy.
Several folks said something to the effect of, “He’s probably manipulating the stock market so he and his billionaire friends can buy everything up cheaper.” We can’t put anything past a person who is essentially a one-man crime wave. Still, if Trump’s goal is simply to line his pockets with cash, he has plenty of options that don’t include crashing the global economy. Like his meme coin grift.
I think what happened last week is the result not so much of a grift, but of pure, unbridled greed. Sure, driving their companies into a ditch is probably not what billionaire tech bros thought they were signing up for when they decided to capitulate to Trumpism.
Mark Zuckerberg, Tim Cook, Jeff Bezos, and Elon Musk lead companies that are part of a group known in financial circles as the “Magnificent Seven.” On Thursday alone, Cook’s Apple lost $312 billion in market capitalization—comparable to the entire market value of Coca-Cola. Tesla, a company whose stock has already fallen because of general hatred for Elon Musk, lost about 10% of its value last week.
But there’s a reason they’re willing to absorb the pain of a few billion in lost market value. It’s not part of some three-dimensional strategy, it’s the only way they can get what they really want: a massive tax cut. Without offsets known as “pay fors,” the full array of Republican tax proposals could increase deficits by $9.1 trillion over the coming decade, according to the Peter G. Peterson Foundation.
Republicans think sustained tariffs will offset the massive increase in lost revenue an extension of the Tax Cuts and Jobs Act (TCJA) will cause. But don’t take my word for it. Treasury Secretary Scott Bessent said as much in an interview with Bloomberg News following the president’s Rose Garden announcement (emphasis added):
BLOOMBERG: So if we could put both these stories together today, the president comes out with tariffs. You're working on the tax plan. He talks about tariffs being revenue raisers to offset the tax bill you're working on at the same time. You and the president also talk about a negotiation you're willing to do to get reciprocity when it comes to other trading partners. How can it be both revenue raising and a negotiation?
BESSENT: Well, to the extent that the tariffs are higher than what we have, it will raise revenues. And, you know, as far as the negotiations, we'll see. And, you know, I can tell you, though, it's not going to be possible to include the tariffs in the CBO scoring. So that will be something we're running in the background. And as the president said, we've taken in several hundred billion dollars on the China tariffs, but those don't get scored.
BLOOMBERG: Do you feel that you need to have enough revenue raised from these tariffs before this reconciliation package comes to play in Congress?
BESSENT: Well, I don't think we have to have the revenue raised. And look, you know, we're doing two things. Tariffs are going to raise revenues. And then we're also the government stamping out waste, fraud and abuse in the government and bringing down the expenses and spending. And we're not going to get credit for either of those with the CBO scoring. So, you know, when your audience when the American people see these CBO scores, there could be the large but there is a substantial amount of tariff income, there's a substantial amount of savings.
The nonpartisan Tax Foundation says the Trump tariffs are the largest non-wartime tax increase in history. On the other hand, they will increase federal tax revenues by $258.4 billion this year alone, making tariffs the largest tax hike since 1982, larger than tax increases instituted under George H.W. Bush, Bill Clinton, or Barack Obama. Tariffs, plus whatever Elon Musk steals from Medicare, Medicaid, and Social Security, is the “pay for” Republicans will use to justify a tax cut for billionaires.
And in case you haven’t realized it yet, you’re paying for all of this in more ways than one. Sure, you might save a little on your tax bill, but with your 401(k) declining rapidly and prices soaring, that will be little consolation. During my conversation last week with
on his Egberto Off the Record Substack, I brought up this aspect of the tariff debacle (You can watch our conversation in full here):Inexplicably, neither legacy media nor many Democrats are talking about this. But for the foreseeable future, just about everything you buy—be it a new iPhone or a pair of Nike sneakers—will go towards paying for the Republican’s tax boondoggle. As I’ve said before, we’ve officially entered the “find out” stage of Trumpism.
So strap in, folks. It’s gonna be a rough ride.
Over my lifetime, it seems that tax cuts are paid for by the people who can least afford it. No matter how hard some have tried to explain how trickle down doesn’t happen, it seems many people still believe it. Those who believe in tax fairness know that it is possible, and the 1% would still be the 1%. Few of the 1% seem to be interested in fairness. Money is power, after all. But the difference it would make for the rest of the country would be monumental, and the theory is everyone would benefit socially from this.
Another way Bezos, Cook and the other Magnificents might be looking at the stock market is downturns are a part of doing business. They are to be expected and can be recovered from. Tax cuts can be forever.