Bull in a China Shop

April 4, 2025

Doug Leyendecker

Welcome to This Week’s Leyendecker View

Conversation enriches the understanding, but solitude is the school of genius.
– Edward Gibbon

FAVORITE READ OF THE WEEK

There are no pure cultures

THINKING OUT LOUD

Bull in a China Shop

“Everyone” knows US annual government spending is out of control. We’re spending $1T to $2T more than the revenue the government takes in. And “everyone” knows that our federal debt is growing so fast we may soon not have buyers for it. Federal debt as a percentage of GDP has doubled in the last 20 years.

The obvious conclusion is that we need to stop overspending at the federal level, balance our budget as best we can and find ways to pay off our debt.

If only this were easy. Government spending flows through the private sector, which then finds its way into consumption, which represents about 70% of our GDP. Reduce government spending, reduce GDP.

But if we don’t reduce government spending and start getting serious about our government debt, we could get to a point where buyers of our debt will demand an interest rate so high we won’t be able to afford it. We might find ourselves with no choice but to cut back on our biggest expenses like Social Security, Medicare and defense or jack up taxes.

The Trump team has a plan to fix all this, but of course it will require tightening our government belt. Trump’s foes—government agencies, government workers, the politicized part of our judiciary, Democrats and media—are lining up to prevent Trump from reducing the size, scope and cost of government.

So what is Trump’s plan? In recent interviews on the All-In podcast, Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick laid it out.

To sum up, the Trump team believes we should use tariffs to generate government revenue. They also believe tariffs will inspire more capital investment into the country, which will grow GDP while also creating good paying jobs for our workers.

The team has looked at how tariffs were used to generate government revenue and build a sustainable domestic economy before income taxes were created in 1913. When income taxes were created, it was to help pay for the US involvement in WWI, not to pay for the whims of various federal government agencies.

The Trump team believes the government is highly inefficient and that a significant amount of what it spends is useless and/or not in the best interest of our citizens. DOGE’s goal is to reduce stupid spending and improve government’s productivity. Their goal is to cut $1T from our annual budget.

The Trump team also believes our country has enormous hidden assets. The Commerce Department’s goal is to find ways to monetize those assets such that they generate an extra $1T in annual revenue, which would allow us to reduce income taxes.

The Trump team wants to balance the budget and reduce government debt. They think doing so will cause interest rates to fall and create more and higher-paying jobs. And they want to eliminate income taxes for anyone who makes less than $150,000 a year.

The team is firmly committed to paying our Social Security obligations. But they want to find revenue generation opportunities beyond taxes that can fix the looming deficit in Social Security as well as fund future Social Security. They also want to eliminate taxes on Social Security and make life easier and more affordable for our elderly.

They want to find revenue generation opportunities beyond taxing that can help us pay down our rapidly growing debt.

The Trump team wants to make our country more self-sustainable. They want to return more manufacturing to the United States and create higher-paying jobs for our workers.

The Trump team wants to significantly reduce our trade deficit. They believe sending our dollars to other countries stimulates those countries’ economies rather than our own and, the team asks, why should our taxpayers subsidize other economies?

The Trump team doesn’t understand why we let the world take advantage of us. It doesn’t understand why we let illegal immigrants take advantage of us.

That is the Trump team’s thinking and goals. And on that team are many highly successful private sector leaders. Instead of staying in their legacy roles, where they could be earning more millions and billions, these leaders and many others are donating their time, capabilities and resources to improving our country.

The Trump team does not want to kick the can down the road anymore. They want to fix the country’s spending problems, they want to improve government productivity, they want to make life better and easier for all citizens, and they want to create a better future for our children and grandchildren.

To accomplish all these ambitious goals, the Trump team has four years. Or really just two years, given the midterms. So they have to cram all this massive change into a short period of time.

That’s why it feels like we’re living through a bull wreaking havoc in a china shop.

Things will get broken in this process. And we can be assured that Trump’s political opponents will constantly be critical of the effort. We can also be assured the mainstream media will continue to cast Trump as the antagonist in a high-stakes soap opera because everyone likes to see the bad guy eventually fail.

There are always winners and losers when US policy changes. And step changes, like those Trump is seeking to accomplish, are challenging to execute.

If MAGA succeeds, the winners will be the US economy and citizens. The short-term losers would be government workers who will need to find new career paths and the private sector parasites that feed off unproductive federal funding, if not outright fraud. The other short-term losers may be the rest of the world. But then, wouldn’t the American example of improving our self-sustainability teach the world how to better manage themselves?

Is it time for the Americans and the US government to stop subsidizing the world?

Shouldn’t the world want the American economy to be “fixed” rather than continue to sink in the quicksand of overspending and too much debt?

We shall see if the Trump team can thread the needle. And maybe we need to remember that before Argentina’s economy started growing again, controversial President Milei’s massive overhaul of their government and economy pushed the country into recession.

THE RANDOMS

Hey, world! If you don’t like tariffs, then send us your suggestions for how to fix the American economy, reduce our budget deficits, reduce our debt and lift up America’s shrinking middle class!!!

Given the big tariff announcement, we should remind ourselves that what attracts eyeballs, ears, and minds—which is what makes media money—is sensational articles and bad news. Keep this in mind when consuming “news” around the tariff situation.

Who will suffer from tariffs, America’s average Joe or America’s wealthy?

These are the calculations I’d like to see: How much money will these tariffs raise for the government? And how much money will the tariffs raise if we fall into a recession?

If there’s a communications mistake here, it is team Trump’s failure to remind the country they are going to cut income taxes, and that any tariff inflation will be offset by lower taxes.

It already looks like Trump jawboned OPEC into increasing production, which means lower fuel costs for American drivers.

In light of the tariffs on vehicles and vehicle parts, should we feel sorry for American car dealers? They haven’t been taking advantage of us with their add-on pricing and repair costs, right? Car dealers struggle to make money, right?

Because of tariff and NATO funding influences, will European vehicle manufacturers turn to weapons manufacturing?

Are the front-page stories about the Wisconsin and Florida special elections news, or are they just noise?

Are Trump’s MAGA policies going to drive Taiwan into China’s arms?

Given the tariffs coming for European vehicles, are we about to see more Cadillacs and Lincolns on the road?

Criticism is a lazy man’s game. Bring on the ideas to improve our country.

ECONOMIC NEWS

Economy

Trump upends legacy global trade
Everyone is anxious about the economy
Data center boom reaches rural America
Can Florida eliminate property taxes?

Labor

March hiring beats expectations
ADP reports job growth but lower wage gains
Is executive coaching worth it?

BUSINESS

Finance