Are Tariffs and Buying American the Answer?

[Reason]

http://therealnews.com/t2/index.php?...4&jumival=5830

[Zippyjuan]

A weaker dollar would act as an effective tarrif and encourage more domestic production/ consumption.

[Brian4Liberty]

So basically we have a Keynesian Globalist arguing against tariffs (and buying American) and for massive government deficit spending. He also seems to be very concerned about global financial (banksters) interests. Nice.

Robert Pollin is Professor of Economics and founding Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. His research centers on macroeconomics, conditions for low-wage workers in the U.S. and globally, the analysis of financial markets, and the economics of building a clean-energy economy in the U.S. Most recently, he co-authored the reports “Job Opportunities for the Green Economy” (June 2008) and “Green Recovery” (September 2008), exploring the broader economic benefits of large-scale investments in a clean-energy economy in the U.S. He has worked with the United Nations Development Programme and the United Nations Economic Commission on Africa on policies to promote to promote decent employment expansion and poverty reduction in Latin America and sub-Saharan Africa. He has also worked with the Joint Economic Committee of the U.S. Congress and as a member of the Capital Formation Subcouncil of the U.S. Competiveness Policy Council.

[Jeez]

Best way to increase exports is to repel minimum wage and health care laws. And nationalize the right to work policy.

[denison]

And nationalize the right to work policy.

[Jeez]

^^^ Manufacturing sector has done quite well in states such as Alabama which has Right to work laws.

[Anti Federalist]

So basically we have a Keynesian Globalist arguing against tariffs (and buying American) and for massive government deficit spending. He also seems to be very concerned about global financial (banksters) interests. Nice.

And workers in other countries, just not here:

Pollin:And, moreover, I mean, if we are for benefiting working people in all countries, not just the United States, I don't really see thatI wouldn't gloat over creating a lot of jobs in the US by taking away jobs in other places. I mean, I think a fair question to ask for people who support this kind of approach is to say, okay, whose jobs are you taking away?

Just another cosmopolitan, "citizen of the world", globalist, "free trader", wanting to play fast and loose with the money supply for some short term gain.

Never mind that it bankrupts the nation, ruins millions who get taxed by inflation, and in the end destroys the nation, just let me make my quick buck.

[DFF]

Are tariffs the answer?

Lets examine the concept of "free trade"....

Asia has "free trade" with the US...they export all their wares (which could otherwise be produced in the US) here with limited tarriffs being imposed...whilst the US has "free trade" with Asia...yet US exports have the beejesus taxed out of them.

The ostensible conclusion?

Free. Trade. Is. A. Lie.

"Free trade" has permitted the strip mining of the US by foreigners (facilitated by the treacherous pen strokes of Woodrow Wilson, FDR, and Bill Clinton).

America, the old, great America, was a protectionist economy from it's inception until the early part of the 19th century...

Sooo...YES....tariffs are the answer...no "ifs", "ands", or "buts" about it.

[Romantarchist]

Heavy government regulation of the economy combined with free trade is a two-part recipe for disaster, deindustrialization and poverty.

Tariffs are probably one of the most moral forms of taxation because the person who pays the tariff does so out of his own free will. It's a voluntary form of taxation. I would like to see an America where the federal government is small enough to finance through tariffs alone, or maybe a 1% sales tax. Manufacturing, farming, mining, foresting, etc. NEED to employ larger percentages of Americans in the future. You can't base an economy around "education" or "health care".

[Zippyjuan]

Just to give you some idea of where things are right now, in the 2010 budget, estimated customs duties were only $23 billion and excise taxes were estimated to collect $77 billion. Interest on the debt alone was $164 billion. http://en.wikipedia.org/wiki/2010_Un...federal_budget A one percent sales tax would generate about $14 billion.

Total US imports in 2009 came to $1.56 trillion http://www.suite101.com/content/top-...s-2009-a204269 so if you wanted to keep the government spending where it is right now, you would have to have a tarrif of about 300% on everything we import- including oil. That would make it about $240 a barrel. Higher tarrifs would mean fewer imports so you would need to actually have a much higher tarrif in place. In responce, trading partners would raise tariffs on US goods so our exports ($1.06 trillion in 2009) would drop significantly as well- adding to unemployment. The tariffs would also raise prices in this country.

If you want a sales tax to pay for the total cost of the US government and again kept it at its current level, you would need a sales tax of about 25% on everything (using US GDP of $14.1 trillion and figuring that everything in it was subject to the sales tax). Under this system, the majority of tax payers would see the taxes they pay go up. Marginal tax rates are the rates of the next dollar earned but are not the same as average tax rates since portions of income are not taxed at all. Some people don't pay any income taxes at all. Suddenly they would be paying 25% of their income- the lower you are on the income scale, the harder this tax would hit you. Those in higher income levels would see their tax rates probably reduced (they also spend a smaller portion of their income purchasing things).

Marginal (not average) tax brackets for 2010. Based on these, taxes would likely be higher for anybody making under $200k a year if you instituted a 25% sales tax to replace all other taxes.

Federal Income Tax Brackets For 2010 – Based On Taxable Income Ranges


Tax Rate

Married Couples Filing Jointly Most Single Filers

10% Not over $16,750_________Not over $8,375
15% $16,750 – $68,000_____ $8,375 – $34,000
25% $68,000 – $137,300_____$34,000 – $82,400
28% $137,300 – $209,250____$82,400 – $171,850
33% $209,250 – $373,650____$171,850 – $373,650
35% Over $373,650___________Over $373,650

http://www.moneybluebook.com/2010-fe...irs-tax-rates/

[sratiug]

Just to give you some idea of where things are right now, in the 2010 budget, estimated customs duties were only $23 billion and excise taxes were estimated to collect $77 billion. Interest on the debt alone was $164 billion. http://en.wikipedia.org/wiki/2010_Un...federal_budget A one percent sales tax would generate about $14 billion.

Total US imports in 2009 came to $1.56 trillion http://www.suite101.com/content/top-...s-2009-a204269 so if you wanted to keep the government spending where it is right now, you would have to have a tarrif of about 300% on everything we import- including oil. That would make it about $240 a barrel. Higher tarrifs would mean fewer imports so you would need to actually have a much higher tarrif in place. In responce, trading partners would raise tariffs on US goods so our exports ($1.06 trillion in 2009) would drop significantly as well- adding to unemployment. The tariffs would also raise prices in this country.

...

So you are saying we take in 4.5 trillion in taxes now???

What is the current effective internal tariff of the US now? Do you know? This internal tariff raises prices of American goods sold to Americans, and prices of American goods sold to foreigners, causing more unemployment and less production here so taxes must keep rising. American companies move away for taxation benefits.

Why do you assume that competition only works from the outside in? Doesn't America produce oil? Wouldn't this oil be cheaper when there are no internal federal taxes. Won't the lowering cost of American production lower American prices to benefit both the American and world economies as we flood the world with cheap products?

[erowe1]

^^^ Manufacturing sector has done quite well in states such as Alabama which has Right to work laws.

I'm probably for right-to-work laws. But why nationalize them? And if we should nationalize them, then why stop there? Why not globalize them?

[erowe1]

Just to give you some idea of where things are right now, in the 2010 budget, estimated customs duties were only $23 billion and excise taxes were estimated to collect $77 billion. Interest on the debt alone was $164 billion. http://en.wikipedia.org/wiki/2010_Un...federal_budget A one percent sales tax would generate about $14 billion.

Total US imports in 2009 came to $1.56 trillion http://www.suite101.com/content/top-...s-2009-a204269 so if you wanted to keep the government spending where it is right now, you would have to have a tarrif of about 300% on everything we import- including oil. That would make it about $240 a barrel. Higher tarrifs would mean fewer imports so you would need to actually have a much higher tarrif in place. In responce, trading partners would raise tariffs on US goods so our exports ($1.06 trillion in 2009) would drop significantly as well- adding to unemployment. The tariffs would also raise prices in this country.

If you want a sales tax to pay for the total cost of the US government and again kept it at its current level, you would need a sales tax of about 25% on everything (using US GDP of $14.1 trillion and figuring that everything in it was subject to the sales tax). Under this system, the majority of tax payers would see the taxes they pay go up. Marginal tax rates are the rates of the next dollar earned but are not the same as average tax rates since portions of income are not taxed at all. Some people don't pay any income taxes at all. Suddenly they would be paying 25% of their income- the lower you are on the income scale, the harder this tax would hit you. Those in higher income levels would see their tax rates probably reduced (they also spend a smaller portion of their income purchasing things).

Marginal (not average) tax brackets for 2010. Based on these, taxes would likely be higher for anybody making under $200k a year if you instituted a 25% sales tax to replace all other taxes.


http://www.moneybluebook.com/2010-fe...irs-tax-rates/

It would be completely impossible to raise enough revenue for the current federal budget via tariffs alone, no matter what the rate. As rates increase, imports will decrease due to the higher cost. There's some optimal point (optimal in the mathematical sense, not the ethical sense) where total revenues would be maximized, so that continuing to raise the rate would only decrease revenue. But I'm pretty sure that would be well below 300%.

[StilesBC]

OP: Yes and no.

Fewer imports in some areas may be the answer. But we're not exactly sure which ones.

Buying more of some American made products may be the answer, but we're not exactly sure which ones.

If Americans want a "buy American" campaign, they should individually elect to buy more themselves. They may have to pay more for the American made equivalent, but that's the price their government-funded campaign would legislate upon them anyway. If they don't want to pay the price, then their bleating is just that. They've shown with their actions that the issue isn't really as important as they're making it.

[Zippyjuan]

It would be completely impossible to raise enough revenue for the current federal budget via tariffs alone, no matter what the rate. As rates increase, imports will decrease due to the higher cost. There's some optimal point (optimal in the mathematical sense, not the ethical sense) where total revenues would be maximized, so that continuing to raise the rate would only decrease revenue. But I'm pretty sure that would be well below 300%.

I agree with all of this except the "below 300%". I was assuming that you taxed all ouf our imports at a rate which would cover all of our current spending (replacing all other sources of income including income taxes, social security taxes, corporate taxes, etc).

[Reason]

oy vei...

[Zippyjuan]

So you are saying we take in 4.5 trillion in taxes now???

What is the current effective internal tariff of the US now? Do you know? This internal tariff raises prices of American goods sold to Americans, and prices of American goods sold to foreigners, causing more unemployment and less production here so taxes must keep rising. American companies move away for taxation benefits.

Why do you assume that competition only works from the outside in? Doesn't America produce oil? Wouldn't this oil be cheaper when there are no internal federal taxes. Won't the lowering cost of American production lower American prices to benefit both the American and world economies as we flood the world with cheap products?

Sure we produce oil. We used to be the largest oil exporting nation in the world. But not any more. We produce about 5.5 million barrels a day ourselves and import almost twice that amount to go along with it to satisfy our demand. That means about 2/3rds of our oil consumption is imported and oil/ energy imports are the largest segment of our total imports as well. $250 a barrel for oil would encourage more domestic production but that would take years to come online (most of our new sources for oil come from deep water wells in the Gulf of Mexico which is an expensive place to drill because of the depths the wells have to go and the pressure and low temperatures down that deep).

[sratiug]

Sure we produce oil. We used to be the largest oil exporting nation in the world. But not any more. We produce about 5.5 million barrels a day ourselves and import almost twice that amount to go along with it to satisfy our demand. That means about 2/3rds of our oil consumption is imported and oil/ energy imports are the largest segment of our total imports as well. $250 a barrel for oil would encourage more domestic production but that would take years to come online (most of our new sources for oil come from deep water wells in the Gulf of Mexico which is an expensive place to drill because of the depths the wells have to go and the pressure and low temperatures down that deep).

So our oil would drop in price and foreign oil would rise in price. We would buy more American oil and import less oil, lowering our trade deficit, and increasing the percentage of American versus foreign oil we consume, making us more energy independent. Tell me again how bad that is...

Foreign oil comes online quicker? Why is that?

[axiomata]

Are tariffs the answer?

No, now what was the question?

[Zippyjuan]

So our oil would drop in price and foreign oil would rise in price. We would buy more American oil and import less oil, lowering our trade deficit, and increasing the percentage of American versus foreign oil we consume, making us more energy independent. Tell me again how bad that is...

In the long run, yes, we would reduce our oil imports and seek more domestic energy sources. The problem is that we have used up a lot of our oil though. Our estimated proven reserves (the amount of discovered oil which can be extracted at a profit given the current price of oil) is 22 billion barrels. http://www.nationmaster.com/graph/en...y-oil-reserves Our current rate of consumption is 20 million barrels a day or 7.3 billion a year. http://www.nationmaster.com/graph/en...il-consumption That means that without more sources we can only supply ourselves for about three years without any imports (and that assumes that we can extract and refine the oil reserves that quickly which we can't so we will still have to rely on imports).

It takes years to go from exploration to test wells to getting an oil field into production.

Foreign oil comes online quicker? Why is that?

I don't say that anywhere.

In general, tarrifs raise domestic prices. They keep out competing lower priced goods from other countries and allow local producers to sell their goods for higher prices than if they did face competition. If they have to import things to make their goods with then their costs will be even higher.

Here is an example of what happened when a tarrif was instituted on tires from China. Prices for tires went up and supplies went down in the US.
http://www.allbusiness.com/chemicals...4884657-1.html

Prices rolling higher: New tariffs on tires reducing supply also

By Scott Waltman American News, Aberdeen, S.D.
Publication: LexisNexis
Date: Tuesday, August 3 2010

Aug. 03--Tariffs designed to make American tire manufacturers more competitive have lightened the pocketbooks of consumers.

Passenger vehicle tire prices have increased considerably in the past year or so, those who work at and oversee local tire and repair shops said.

A year ago, a motorist who needed a tire for a car could find one for 40 or 45 bucks, said Bill Elwell, division manager for Pomp's Tire, which has a location in Aberdeen. Now, the same tire costs $60 or $65, he said.

Before the tariffs were imposed about a year ago, Chinese tires were considerably cheaper than those manufactured in the United States. Now, the tires are pretty equitably priced.

"I wouldn't say it's a bad deal, either," Elwell said.

He likes that the tariffs have helped American manufacturers. But, he said, since the tariffs were put in place, fewer Chinese tires have been imported. As a result, there's been a supply shortage. That has also caused prices to tick up. And, he said, consumers have noticed.

Prices rose in fall and again in spring, said Wayne Glaser of Gary's Auto Body and Accessories in Aberdeen. He estimates that through the months tire prices for cars and pickups have increased about 15 percent.

In addition to the tariffs, he said, supply and demand has driven prices up. Chinese manufacturers are shipping more tires to Europe because the euro is stronger than the U.S. dollar, he said.

Customers who regularly buy tires have noted the price increases in recent months, he said. But a lot of people don't buy tires very often, he said.

For Roland Kary at Kary Tire in Eureka, passenger vehicle tire sales are only a small part of his business.

He sells more tires for agricultural vehicles. And, he said, their prices have nearly doubled in the past two or three years.

A large rear tire for tractors used to cost between $800 and $1,200. Now, the range is $1,300 to $1,500, he said.

"The farmers, they have a heart attack every time they call," Kary said.

[sratiug]

...
In general, tarrifs raise domestic prices. They keep out competing lower priced goods from other countries and allow local producers to sell their goods for higher prices than if they did face competition. If they have to import things to make their goods with then their costs will be even higher.
...

Let me fix that for you...
In general, internal taxes raise domestic prices keeping low priced domestic goods out of the market allowing multinational corporations to jack up prices of imports that face no competition. If they need imported or American things to make their goods then their costs will be even higher.

See, when you say there is no competition in America, that sounds really stupid like it does when I say there is no competition outside of America. You keep pretending there is no competition here in the US, it only exists elsewhere. I don't understand the logic involved in that position. It seems to me it should be obvious to anyone that taxes on American goods should NEVER exceed taxes on foreign goods, and in fact, it is far more desirable to have taxes on domestic products be lower than taxes on imports instead of the opposite suicidal tax structure we have today.