Nobel laureate economist Paul Krugman called this week for what he termed the demagification of America, explicitly comparing the effort to denazification in postwar Germany and calling for a thorough purging of the United States to defang Trump and anyone who might follow in his footsteps after the next two elections.
Stephen Moore, economist and co-author of The Trump Economic Miracle, joined Dan Proft on Chicago’s Morning Answer to respond to Krugman, assess the current economic picture, and weigh in on political developments in California and Florida.
Moore said Proft’s point that Krugman’s language is not as funny as it might initially sound is well taken. Comparing political opponents to Nazis and calling for purges has moved from the fever swamps to the Nobel Prize podium, and the destination of those re-education camps Proft and Moore joked about is not actually a punchline. He noted the timing with some satisfaction, observing that Krugman chose to intensify his attacks on Trump’s economic policies during a month in which the NASDAQ, S&P 500, and Dow are all at all-time highs, business investment is at record levels, the labor market is strengthening, job availability is increasing, and inflation is showing improvement even if consumer pain at the grocery store and gas pump persists.
On Bernie Sanders’s proposal that the federal government take a fifty percent stake in all major AI companies, Moore offered a characteristic rebuttal: between corporate income taxes, dividend taxes, capital gains taxes, and various other levies, the government already effectively controls nearly thirty percent of the profits of every American corporation. Adding explicit ownership stakes would push effective government control of private enterprise toward seventy-five or eighty percent. He also noted the proposal arrives just in time for Anthropic’s anticipated IPO.
On what concerns him economically in the near term, Moore listed three. First, the political backlash against AI and data centers is building across the country, including from some on the right, in ways that could undermine American technological leadership at exactly the moment when AI is producing breakthroughs in cancer detection, sight restoration for the blind, and medical diagnostics that he said will save millions of lives. Second, the Iran situation and its effect on oil prices, which he described as a persistent tax on the American economy while negotiations drag on with counterparties who say one thing and do another. Third, rising consumer and credit card debt creating the potential for defaults in the medium term.
On California gubernatorial candidate Steve Hilton announcing a day-one taxpayer fraud strike force executive order, Moore said the reason there is so much fraud in California is that the state’s political class views federal program money as free money and has every incentive to maximize enrollment rather than enforce eligibility. He said he hopes Hilton follows through because federal government estimates now put total government program fraud across the country at over a trillion dollars annually. He returned to the Medicaid exorcism reimbursement story from New York as an illustration of how thoroughly the welfare state has lost any connection to its original purpose, adding that while the deficit probably cannot be eliminated through fraud enforcement alone, the deficit could easily be cut in half by eliminating fraudulent, erroneous, and outright stolen payments.
On Ron DeSantis’s initiative in Florida, which has now passed the state legislature as a ballot question requiring sixty percent voter approval in November, that would eliminate property taxes on homesteaded properties up to the first two hundred and fifty thousand dollars in assessed value, Moore called DeSantis the best governor in America and said the policy would deliver zero property tax bills to approximately sixty percent of Florida homeowners. He contrasted this with Illinois, where the legislature is moving to require unionization of rideshare drivers, which he said will simply make Uber and Lyft more expensive for the low and middle income people who rely on them most.
On Brandon Johnson’s program offering up to seventy thousand dollars in down payment grants to Chicago homebuyers earning up to one hundred and twenty-seven thousand dollars as individuals or one hundred and eighty-two thousand dollars as a family of four, funded through the 1.25 billion dollar bond Johnson issued last year, Moore asked where the money would come from and predicted the foreclosure rate on homes purchased through the program would be very high within two to three years, characterizing the entire arrangement as borrowing against tomorrow to pay for yesterday.