- Donald Trump is the champion of the working class, but his policies are bad news for them, says Paul Krugman.
- The Nobel Prize-winning economist says tariffs and deportations will hurt rather than help the poor.
- “A lot of people are going to be grossly misled,” Krugman said.
Donald Trump cruised to victory in the US presidential race vowing to put America first and fight for blue-collar workers. Paul Krugman says he will only make their lives more difficult.
The economist, who won the Nobel Prize in Economic Sciences in 2008, criticized the president-elect’s plans to raise tariffs and cut taxes during Tuesday’s episode of “The Daily Blast with Greg Sargent” podcast.
He told The New Republic show that those and other policies would lead to the working class paying higher prices while high-income earners keep more of their money.
“Even more than usual for a Republican, he seems to have an extremely regressive economic program in mind, one that will really redistribute income from working-class voters to the top,” Krugman said.
American households are already being hit by inflation, which rose to a 40-year high of more than 9% in the summer of 2022 and remains above the Federal Reserve’s 2% target.
In addition to higher prices for food, fuel, rent and other basics, many consumers are also paying more on their credit cards, car loans and mortgages.
That’s because the Fed, in an effort to curb inflation, raised its benchmark rate from zero to north of 5.25% in less than 17 months and has held it up to 4.5% for now.
Battle for groceries
Krugman, a former MIT and Princeton University professor and New York Times columnist, focused on food prices. Trump said during his campaign that he would reduce them, but he has retracted that claim in recent weeks.
However, recent polls show his supporters still expect him to do so, Krugman said, despite the fact that broader prices are still rising and deflation is almost universally considered undesirable for an economy.
A CBS News/YouGov poll conducted in late December of a nationally representative group of 2,244 American adults found that 40% of Americans expect Trump to lower food and grocery prices, outpacing the 36% who expect him to raise them.
“A lot of people are going to be grossly misled,” Krugman said. Not only is Trump fooling people into thinking they’ll be better off once he’s in office, he also doesn’t seem to know how he’s going to follow through on his promises, Krugman continued. “So the trick is that there is no plan.”
Trump said last year that lowering food prices would be difficult, but improving supply chains and increasing domestic energy production could lower costs for farmers, who could then pass those savings on to consumers. .
Tariffs and immigration
Separately, Krugman nodded to the fact that tariffs are a tax on imports, and businesses typically pass on their increased costs by charging higher prices to consumers.
He described their impact as “really bad” and said the fallout from Trump’s proposed mass deportations would be “much, much worse.” They would be extremely disruptive and raise prices in industries such as agriculture, food processing and construction, Krugman said, leaving the U.S. short of workers for large-scale programs like rebuilding Florida after a hurricane.
The author and blogger also sounded the alarm about Trump and his allies’ harsh criticism of colleges and skepticism toward higher education.
“We’ve moved ahead in technology, but an administration that is extremely hostile to universities and education will undermine that source of advantage as well,” Krugman said.
“Trump wants to turn the clock back to 1896, and that’s not good for the American economy.”
