Trump’s Tariffs Could Gobble Up Trump’s Tax Cuts

Plus, the cost of the Mueller investigation By Yuval Rosenberg and Michael Rainey Trump’s Tariffs Could Gobble Up Trump’s Tax Cuts The tariffs on steel and aluminum that the Trump administration plans to impose on foreign trade partners including Canada, Mexico and the European Union are inspiring a round of retaliatory measures that will drive up costs for American manufacturers and, ultimately, American consumers. "Anything that's manufactured — prices will rise," Mark Zandi, chief economist at Moody’s Analytics, [told]( CNBC’s John Harwood. Harwood [pointed out]( that rising prices will eat into the modestly larger paychecks many American workers are seeing as a result of the tax cuts. The Trump administration’s trade policy, Harwood noted, ironically offers “an unorthodox follow-up to cutting the taxes American families pay: raising the prices of goods they buy.” Add in ever-rising health care costs and sharply higher gas prices, and many American consumers may see all of their tax cut windfalls accounted for, and then some. Middle-income workers are getting a tax cut of $930 per year on average this year, but pricier fuel could claim about $320 of that, health care premium hikes about $612, and tariff-related costs about $210, according to Zandi’s estimates. “At best, breaking even,” Harwood [concluded](. And lower income workers — the bottom 20 percent of households will get a tax cut worth $60 on average — will be worse off just from the tariffs alone. Howard Gleckman of the Tax Policy Center [said]( Friday that the Trump administration’s trade policies, combined with its stance on immigration, could have negative effects on the economy as a whole. Citing analyses by the Federal Reserve Bank of Dallas, Gleckman said that a trade war could reduce U.S. GDP by 3.5 percent in the long run — more than enough to wipe out any positive growth flowing from the tax cuts. Investors Look Beyond the Corporate Tax Cut Windfall In a research report released on Friday, Goldman Sachs says that the “passage of tax reform in December 2017 caused the strongest surge of S&P 500 earnings revisions on record,” but the reduction in the tax rate was largely a “one-time benefit” in terms of earnings growth. Goldman analysts are focused now on competitive pressures and rising costs for labor and materials that threaten to erode profit margins. “As the margin tailwind from tax reform passes, firms with the ability to sustain or grow profit margins will become increasingly scarce and should be rewarded by investors,” Goldman said. Companies that can’t defend their margins are likely to lose both their tax cut windfall and investors’ favor. Putting the $17 Million Price Tag of the Mueller Investigation in Context Special Counsel Robert Mueller’s investigation into whether the Trump campaign coordinated with Russia to interfere in the 2016 election (and related matters) cost the government [more than $16.7 million]( over its first 10.5 months, according to figures [released by the Justice Department]( on Thursday. The investigation has cost nearly $10 million from October through March, including about $4.5 million that went toward salaries, rent, travel and equipment. The DOJ said that about $5.5 million of the cost from October through March was spent by investigators who do not report to Mueller and those expenditures would have been spent on the investigation irrespective of the special counsel’s appointment. President Trump referred to the total cost in a [Friday morning tweet]( that seemed to inflate the total slightly, and once again labeled the probe a hoax. Trump also brought up the cost of the investigation in a May 20 [tweet]( that asked, “At what point does this soon to be $20,000,000 Witch Hunt, composed of 13 Angry and Heavily Conflicted Democrats and two people who have worked for Obama for 8 years, STOP!” Some context: - “The cost is not necessarily out of line with prior special investigations, and the documents note that Mueller is reporting what his work has caused other Justice Department components to spend — which previous special counsels have not,” [The Washington Post]( says. - The Whitewater and Monica Lewinsky investigation of President Bill Clinton cost [more than $52 million]( over half a decade. More than $40 million was spent on other Clinton-era independent counsel investigations. The Reagan-era Iran-Contra investigation cost more than $47 million over eight years. And those figures are not adjusted for inflation. - “The federal government is expected to spend [about $4.1 trillion]( in fiscal 2018,” writes The Washington Post’s Philip Bump. “To put it into more tangible terms, spending $16.7 million of $4.1 trillion is like making $50,000 a year and spending 20 cents.” Bump calculates that President Trump has spent more taxpayer money on trips to his Mar-a-Lago home in Florida than Mueller has spent investigating his campaign activities. Price Transparency in Health Care Has Gotten Worse, New Study Finds The push for increased pricing transparency in health care over the past decade or so has been a flop, judging from new research published in the [Journal of the American Medical Association](. The researchers called 120 hospitals “posing as a granddaughter seeking information on the price of a primary hip replacement for her 62-year-old grandmother.” In 2012, 14.2 percent of hospitals were unable to provide any pricing information. In 2016, the number rose to 44.2 percent. “We found no evidence of improvement in hospitals’ ability to provide price estimates or reductions in the estimated price for [hip replacement] between 2012 and 2016,” the researchers write. “Our results provide sobering evidence that substantial efforts from government and industry to improve pricing transparency have had little tangible effect on availability of prices.” In a related JAMA [commentary]( Anna D. Sinaiko of Harvard’s T. H. Chan School of Public Health writes: How do we get more traction with price-transparency efforts? One important step will be to broaden price-transparency initiatives to focus on more than just patients. Physicians can be thought of as “buyers” of health care services on behalf of their patients when ordering tests and procedures, making referrals, or prescribing drugs. Physicians are a trusted source for patients, and efforts should be made to increase physician-patient cost conversations and to improve physician-directed price transparency so that physicians and patients understand tradeoffs and make better decisions about care together. This outcome will not be achieved without also realigning physicians’ own incentives so they are rewarded for choosing lower-priced and higher-value care. Your Prize for Making It Through the Week After what seemed like months of conference playoffs, the NBA finals are finally here. Be sure to tune into Game 2 of the fourth annual Warriors-Cavaliers matchup on Sunday night. Game 1 turned out to be a thriller — though a frustrating one for fans of Team LeBron. J.R. Smith's gaffe as time ran out has already been inducted into the Great Hall of Sports Blunders, inspiring a [meme]( that all but took over Twitter Friday. For a look at other memorable championship gaffes, check out this [roundup]( at The Washington Post. News - [We Ran Out of Words to Describe How Good the Jobs Numbers Are]( – The Upshot - [Trump Breaks Protocol and Jolts Markets by Teasing Secret Jobs Numbers]( – Politico - [IRS to Spend Nearly $300 Million on IT in Tax Overhaul]( – Wall Street Journal - [IRS Chief Says Trump’s Budget Would Sharply Cut Taxpayer Service]( – Washington Post - [How Trump's Budget Plans Affect the National Debt]( – Council on Foreign Relations - [Why the Trump Administration Made It Easier for Virginia Republicans to Expand Medicaid]( – Washington Post - [Nevada's Legislature Just Passed a Radical Plan to Let Anybody Sign up for Medicaid]( – Vox - [The Race to End America’s Opioid Crisis May Be Creating Another One, Experts Warn]( – Washington Post - [Leading Oncology Group Wary of Trump Drug Price Proposals]( – Reuters - [Coal Lobby Fights Black-Lung Tax as Disease Rates Surge]( – Reuters - [Geisinger's Truth About Health Care's Status Quo]( – Axios - [Japan's Fiscal Discipline Wavers as Aging Pressure Mounts]( – Bloomberg - [U.S. Population Keeps Growing, but House of Representatives Is Same Size as in Taft Era]( – Pew Research Center - [EPA’s Pruitt Spent $1,560 on 12 Customized Fountain Pens from Washington Jewelry Store]( – Washington Post - [Mass. Businesses Want to Reduce Unnecessary ER Visits by 20 Percent]( – Boston Globe Views - [The Nation’s Partisan Divide Is Infecting Tax Policy]( – Howard Gleckman, Tax Policy Center - [Donald Trump's Steel, Aluminum Tariffs Lift Low and Moderate Income Families]( – Peter Navarro, USA Today - [America Declares War on Its Friends]( – New York Times Editorial Board - [Trump’s Trade Policy Is Stuck in the ’80s — the 1680s]( – Catherine Rampell, Washington Post - [The Trump Administration Is Paying Off His Supporters]( – Paul Waldman, Washington Post - [Goodbye, Newspapers. Hello, Bad Government.]( – Noah Smith, Bloomberg - [Trump Administration Gets Trumpian In Boasting About Its Tax Cuts]( – Dean Baker, Center for Economic and Policy Research - [A Democratic Majority in the House? Don’t Bet on It Yet]( – Jonathan Bernstein, Bloomberg - [CHIP, CHIMPs and Trump’s Budget-Rescission Request: A Guide to the Debate]( – Glenn Kessler, Washington Post Copyright © 2018 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book](//thefiscaltimes.us1.list-manage.com/vcard?u=40d2c5373681f5cd830b6d823&id=714147a9cf) If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](