On the Political Economy of Mendacity in 21st Century America
Yes. The algorithm serves me up Kevin Hassett this morning. The pretense of economic analysis as a form of performance art; a press corps—even an élite meritocratic press corps—that pretends to take him seriously; and no attention to the cold reality of war-on-immigrants demographic headwinds and chaos-monkey governance…
Passing 50,000 total subscribers sale, for two days only:
The next such deal will have to wait until this newsletter passes 100,000…
Oh God! The algorithm (When am I going to get a computer smart enough to switch my feed back to “following” before I glance at it, no matter how often Mark Zuckerberg switches it to “for you”? Mark: I am injured by these cognitive DDOS attacks you keep making on me; I hold you responsible, personally; and if I ever have the chance to do you injury, I will do so) has vomited things up for me this morning. One of those things is none other than Kevin Hassett:
Kevin Hassett: ‘If we get 3% [per year real output] growth, then that increases revenue by $4T, which is WAY more than the deficit increase that CBO estimates for the cost of the bill. So, this bill by itself is going to reduce the deficit, but we're also coming after spending BIG with rescissions packages…
With respect to rescissions: DOGE was the card they were playing there: Elon Musk was to take the heat for actually destroying programs that people rely on. He was then to exit back to Tesla, SpaceX, and xAI. And in return for taking the heat, plus being the largest contributor to Trump, plus being the biggest cheerleader for Trump—well, Musk thought he had a deal with Trump, whereby he would get:
tariff carve-outs for Tesla so that it could continue to function as a globalized value-chain economy production network,
EV subsidies continued so that actually buying Teslas would make benefit-cost sense for some people, and
NASA’s budget transferred over to SpaceX.
Actually, Musk did not have a deal with Trump. Or, at least, he did not have a deal with Trump that Trump would keep. But, on the other hand, DOGE did not deliver anything except the destruction of USAID and some state-capacity hollowing-out that will be very expensive to deal with. (Parenthetically, does anyone understand the fantasy logic behind the destruction of USAID?)
Thus Kevin Hassett is lying about the big rescissions packages.
How about Kevin Hassett’s 3% per year growth forecast?
He is lying about that too.
Under Joe Biden U.S. population growth was 0.8% per year, with 0.6%-points per year of that coming from net immigration. Under Joe Biden potential output growth—potential labor productivity growth (due to technology, investment, and deepening of the division-of-labor benefits of global economic integration) growth plus population growth—was 1.8% per year.
Trump’s war on immigration is sending U.S. population growth negative. TRUMPXIT—chaos-monkey tariffs and sanctions throwing large amounts of sand in the gears of globalized value chains—is going to apply a headwind of perhaps 1% per year to U.S. economic growth, but it could be half that, and it could be double. The war on universities is going to curb technology growth. Chaos-monkey policy uncertainty is going to reduce investment as well.
Thus we have a potential output growth rate of 0.2% per year as an upper bound for the United States over the next decade if Trumpist policies continue.
Now Kevin Hassett knows all this as well as I do.
He knows the benefits of immigration, attracting go-getting entrepreneurial people willing to profoundly change their lives for economic benefit who are great assets to the country.
He knows that this holds whether immigrants are rich and well-educated or poor with few assets other than their hands, eyes, ears, mouths, and brains.
He knows the benefits of the international division of labor just as well as I do.
He sees the consequences of BREXIT, and the analogies between BREXIT and TRUMPXIT, as well as I do.
And he looks back at the consequences of the Trump-McConnell-Ryan 2017 tax cut and sees that its macroeconomic effects boosting U.S. growth were zero just as well as I do.
Moreover, back in the day, Kevin Hassett was a YUUUUGGGGEEE booster of the idea that “policy uncertainty” was a major factor that could easily hobble American economic growth, in my view overselling that point, but it did seem to be a sincerely held belief, to the extent that he has any. And he knows what the chaos-monkey administration he is part of has done:
Thus Kevin Hassett’s personal forecast of U.S. potential output growth should Trumpist policies continue over the next decade is even lower than my 0.2%-year upper bound. I know this with high confidence. I know this as well as I know that the sun here in Berkeley, California is highly likely to rise about 30° north of due east tomorrow.
And yet journalists—even excellent journalists—will continue to pretend to believe him, and report as though they pretend to believe that his words are informed takes rather than lies. And he will have a post-government career. I have seen the wicked in great power, and spreading himself like a green bay tree. Yet he passed away, and, lo, he was not: yea, I sought him, but he could not be found…