Policy is so boring! Pass the stuffing

At the Thanksgiving tables this year, many Americans will be doing their best to steer the conversation away from politics, fearing discord when so much hospitable plenty surrounds them. If you want to shut down drama at the Thanksgiving table, talk about the math.

The “T” word One area where Donald Trump promises to break from the Biden administration—and indeed from Republican administrations since that of Herbert Hoover—is tariffs. Shortly before the election, Trump told the Economic Club of Chicago that he considered “tariff” to be “the most beautiful word in the dictionary.”

Tariffs on day one This week, President-elect Trump announced the intention to impose tariffs of 25% on goods from Mexico and Canada plus 10% additional tariffs on China unless they stop the flow of illegal immigrants and drugs into the US. Currently more than 40% of US imports comes from these three countries, in roughly equal amounts. While Piper Sandler argues Trump may not have authority to impose 10% across-the-board tariffs on all imports, the president-elect has a genuine argument that the flow of illegal drugs and millions of illegal immigrants represents a genuine national emergency. Goldman Sachs estimates the proposed tariffs would boost core PCE prices by 0.9%, while Barclays estimates 35-40bp on a y/y basis, over a 12​-​month period.

Parties to a trade war will retaliate The Chinese are not powerless in this dynamic. If they retaliated by refusing to sell to the US market, we could be quickly caught flat-footed. US companies with a large presence in China are particularly vulnerable. Mexico’s president threatened a response, referring to US automakers with plants there. Large caps only get 59% of their revenue domestically; for small caps that figure is 76%.

DOGE looks to cut some coin Elon Musk’s new Department of Government Efficiency (DOGE) has its work cut out for it if it is to reverse, or even slow, the growth of the government’s indebtedness. Musk has said that the group will have a “leaderboard” of wasteful projects. Among the potential candidates: benefit checks amounting to $1.3 billion paid out to those who are deceased and $171 million in benefits mistakenly paid to the imprisoned. When the government’s deficit over the past 12 months stands at $2 trillion, these are small matters. Larger sums may be found in unspent money previously authorized by Congress in measures such as Biden’s Inflation Reduction Act, though the current administration is feverishly attempting to spend these funds.

Reconciliation awaits Next year, with a very slender GOP majority, the Congress will need to negotiate the extension of tax cuts. It isn’t yet clear whether tariffs can be used as offsets in that process. Congress hasn’t passed a tariff since 1930’s ill-starred Smoot-Hawley Act. Any cuts from DOGE or elsewhere would need to go through the reconciliation process to count. The big money is in entitlements sent to the living, not checks sent to dead people. It seems improbable that DOGE or anyone in Washington has the appetite or the muscle to take that on.

Mr. and Ms. Smith go to Washington Trump’s request to make recess appointments would require the Congress to go into recess for more than 10 days. In the past, Congress has prevented such executive actions by going briefly into formal session even when they are otherwise on vacation. Even with unified government, it isn’t easy to see why Congress would want to play along. With their six-year terms and a staggered electoral schedule, members of the Senate are insulated from calls by Trump that they disclaim their powers. That said, there is a real problem presidents face. They have roughly 4,000 appointments, nearly a third of which require Senate approval. Given the burden of background checks and committee hearings, some of these jobs don’t wind up getting filled.

Give me a three, give me another three … One job that will certainly be filled is that of Treasury secretary. Trump’s Treasury nominee, Scott Bessent, has put forth what he calls a “3-3-3 plan,” whereby deficits would be limited to 3% of GDP by 2028, GDP growth would be pushed to 3% by deregulation and other measures, and oil production would be pushed higher by 3 million barrels per day. Whether or not it happens just as Bessent says, it’s interesting to see an administration playing offense on the economy.

Dept. of Red Tape As for deregulation, the federal government puts forth about 3,000 rules per year, perhaps 10% of which are deemed economically significant. In his first term, Trump put forth a rule that for every new regulation two would need to be eliminated. This time he said it would be 10 (!) regulations eliminated for each new one. We shall see how serious that promise was. As Americans, much has been given to us. May our tables be full of good cheer and our hearts full of gratitude. If I get my Christmas gift wish from Santa, politics will be boring again.

What Else

Who remembers the taste of turkey TV dinners? OK, be quiet and eat! The frozen dinner was born in 1954. Swanson’s had ordered far more turkey for Thanksgiving than they knew what to do with. An extra 260 tons of it, in fact, in 10 refrigerated train cars. So, faced with a very awkward situation, they made lemonade out of lemons, or at least TV dinners out of turkey.

Shut down the political heat with a quiz What do the US Presidents in 1997, 2007, 2017 and 2027 all have in common?  Each was born in 1946.

Shut it down with the go-to what does the average turkey dinner cost quiz The American Farm Bureau Federation says that a Thanksgiving dinner for 10 will cost $58.08 this year. That’s down from $61.17 last year and $64.05 in 2022. Still, it’s 19% above the 2019 price. Regionally, the feast is most affordable in the South, at $56.81, and most expensive in the West, where the tab comes to $67.05.