Why may be a Trump tariff plan and its inflation

Arrows fluctuate. The inflation is expected to be enlarged again, then Perhaps only in the short termIf President Trump follows widespread tariff threats against commercial partners around the world. The messages from Trump and the most important economic consultants are that he is planning To do this on April 2Any market correction is short -term or economic “getting rid of toxins” The price is worth paying To reset the American economy.

Trump renewed his pressure on the federal reserve To reduce interest rates to help relieve definition pain because more Americans are concerned again about their financial position.

There is at least another way for management to weaken the audience.

As the so -called government efficiency (DOGE) continues in Elon Musk, the idea was put forward that savings may end in the checks sent by mail to the taxpayers. This idea came and went in the main headlines, but it is that idea Trump expressed his support In the recent past. “I love it.” Distributions of profits are 20 %, so to speak, for the money we save by following waste, fraud, abuse and other things that happen, “Trump told reporters at some point.

The exact amount of any DOGE profit distribution scan is unclear, but some analysts have reached 20 % profits to $ 5,000 for per family taxes (20 % of “savings” from cuts may reach that). Even James Fishak, CEO of an investment company Initially suggested the idea of ​​distributing profitsI am not sure of the final profit distributions.

“Look now, for people who want to criticize this plan and say, well, Dog will never offer $ 2 trillion in total savings, and do not agree, but let’s assume that they are right in that,” Tell Fishback NBC News “Let’s say it is only 1 trillion dollars. Well, then, the check ranges from $ 5,000 to $ 2,500. Suppose it is only $ 500 billion … then the check is $ 1250. This is real money.”

While the idea of ​​examining the lack of threads may seem attractive, many economists warn that it is a bad idea.

“Driving $ 5,000 per person in the economy looks great on paper, but it mainly pour gasoline on a hot fire,” Aaron Kersina, CEO of MDRN Capital, warns.

Checks can lead to the return of inflation.

Cirksena said: “If people spend this, ask for nails, and follow inflation.

The head of the National Economic Council, Kevin Haysit, said in an interview with him recently in CNBC that the examination of DOGE distributions makes a “great amount of meaning”, and he has argued that anyone says that he will perform inflation does not understand the economy.

“Everyone says that it is inflationary if we are sending these checks to these people by mail. Well, think if the government spends money, they spend a dollar and get any double effect you think that if they do not spend money, and he says party points.”

But economists are concerned that proposed payments are not a sound financial policy.

John W. Diamond, CEO of tax policy consultants, and assistant professor of economics at Rice University, recently argued in a Wall Street Journal Participated in writing the joints with former Foreign Minister James Baker that reforming the entitlement associated with a dose of Doug could help in obtaining the federal deficit-but Dog alone cannot do so. For this reason, Diamond says he is a supporter of a fight (although it is clear in saying that he is not a fan of the entire methodology), but sending money to taxpayers is meaningless.

“I cannot fail to distribute Doug’s profits,” Diaond said. ” “I think 100 percent should go to reduce the deficit, there is no reason to return the money to the current taxpayers when we impose an invoice on future taxpayers,” Diaond added.

Alice Kasins, director of the Economic Freedom Center and economics professor at Ronuk College, says many of them are related to what the recipient does with any possible batches. “The declared plan is that the profits go to the income taxpayers only. Hope is that it does not act as an incentive (such as stimulation examination during the epidemic, which was directed to help maintain consumption) and instead it is preserved by these families of the largest mile to provide.”

In such cases, the distribution of DOGE profits will increase the national savings rate, which in turn will help in investment and economic growth in the future.

“The plan is to use most of the DOGE savings to pay the national debt, with only a small share – 20 percent – tending towards profits to taxpayers. This would reduce debt less than if the full amount of this purpose has been set, but this may be partially compensated in the long run by personal savings, investment and economic growth.”

Anxiety about “sugar rush, adrenaline” snapshot of the economy

Economists and many in the market are not convinced.

Cirksena from MDRN Capital said that although part of a new government check for the public can save, as did some money from Covid checks, it will also provide immediate demand, and people spend it on goods and services. If the offer cannot keep up with, the prices rise. Meanwhile, spending on infrastructure can also be cheerful, but it spread over time and its investment in economic productivity, making it more sustainable.

“It is related to how money is trading,” he said.

There is a difference between sending taxpayers $ 5,000 and the government spends money on programs such as the law to reduce inflation.

CIRKSENA said, “The spending on infrastructure is slower-it is distributed over time and goes to wages, materials and productivity projects. It builds value,” while direct stimulation strikes the economy such as sugar rush-rapid spending, rapid demand, and greater risk of inflation without other economic growth. “One of them is a snapshot of adrenaline in the short term, and the other is a long -term strength program,” he added.

Currently, the administration does not give priority to distributing DOGE profits in public comments. Beyond the definition policy as an economic institution, Trump’s latest speech in front of Congress Priority tax cuts and infrastructure spending. If the administration is concerned about the customs tariff policy that puts pressure in the short term to inflation on the economy, then this will be logical. The dropping of $ 5,000 per person in this mixture will be like throwing fuel on a fire that is already burning.

CIRKSENA said that the administration tends to economic growth through investment and tax incentives, not direct cash bulletins, adding that Trump’s focus on domestic definitions and production indicates that he is looking to transfer money towards industries, and not directly in people’s pockets.

“So it seems inappropriate,” said Cirksena.

Jonathan Ernest, a professor of economics at the University of Kis Western Reserve, says that it will now be an extraordinary time to inject stimulation because all indicators show a strong economy. It may be a good political strategy, if not economic, but in the end, Ernest says it may slow the efforts of the Federal Reserve to tame inflation and reduce interest rates.

Ernest said that the stimulus examination is now while inflation is still higher than the place where the federal reserve wants to risk demand, which would lead to an increase in prices, adding that it may reduce the possibility of achieving its goals. “The motivation now does not go along with the current monetary policy, which led the soft landing to this point,” he said.

Federal Reserve Chair Jerome Powell said after his meeting at FOMC On Wednesday, a large part of any inflation will come higher than the definitions, but the decrease in economic growth will balance it, although it may “delay” the Federal Reserve’s progress in reaching the target of inflation by 2 %.

Ernest also believes Payment of deficit As the administration’s priority, with the disposal of the stimulus.

“Motivation will be a confusing strategy because we manage a deficit, and instead of using savings to pay the deficit, we will return to consumers,” Ernst said.

The Treasury put the country National debt at 36.22 trillion dollars.

This does not mean that the idea may not be presented again, especially if the economy slows down and the election approach in the middle of the period.

Currently, the Federal Reserve says that external survey studies on the risk of recession are not a worker in caring for them, and economic data is still relatively strong. but Fears of stagnation In the back of the year it rises, at least, The slowest growth of GDP It is expected from the markets. Meanwhile, the discounts of jobs throughout the federal government, as well as deportation plans, contribute to uncertainty about the national labor market that appears so far, despite the slowdown of employment.

Ernst, one of the paradoxes in Diaweeig distributions, says that the management policy, such as the reduction of jobs at the government level, will claim the stability of the economy enough so that there is justification for the motivation boost.

“Usually, when we think about these things, we are in an economic stagnation, and we want to do a little stimulating demand by putting more money in people’s pockets so that they can support the economy.”