President Trump has floated the idea of replacing the income tax with tariffs. As he correctly notes, tariffs were the primary funding source for the federal government until the 16th Amendment was ratified in 1913, which allows Congress to levy an income tax. However, attempting to return to tariffs to raise government revenue over a century later will encounter a practical difficulty, namely the federal government is much, much larger now than it was then.

Last month, I discussed the Median Voter Theorem and how voter concerns with the economy pointed to a Trump win. This presented a puzzle, as economic indicators leading up to the election were strong. Economic growth was a healthy 3%, the unemployment rate was below 4% and inflation was 2.4%, which was above the Federal Reserve’s 2% target but falling. Why did the economy dominate voters’ concerns, which spelled trouble for the incumbent Democratic Party?

Donald Trump’s victory in the November presidential election was a surprise to some, but not to me. I was certain that Trump would win, and that we would know the outcome by Wednesday morning. The reason for this confidence was the Median Voter Theorem, one of the more famous (and underappreciated) theories in political science and public choice economics.

A family member recently sent me a post from the Reddit Subreddit, r/wallstreetbets. The post was written by a McDonald’s worker who received a shipment of special coins at his restaurant. These coins allow the bearer to exchange a coin for one Big Mac. The post asks, “Since the U.S. dollar is no longer backed by gold, does this mean that the Big Mac coin is more stable than the dollar, since that coin is backed by Big Macs?”

When the price of something rises, allegations of price gouging inevitably surface. Vice President Harris claims that she will “make groceries more affordable by cracking down on price gouging on food.” What exactly is price gouging and what should be done about it? Simply put, price gouging is a meaningless concept and fighting it makes the situation worse.

A few weeks ago, the Harris campaign proposed using price controls to address the high cost of groceries. The cost of groceries is indeed 25% higher than at the start of the pandemic. Addressing this through price controls would be counterproductive and damaging.

In the world of baseball cards, the most valuable is Honus Wagner’s rookie card that sold at auction for $6.6 million in August 2021. Known as the “Flying Dutchman,” Wagner played for the Louisville Cardinals and Pittsburgh Pirates from 1897-1917. His 3,420 career hits put him 1,000 hits behind Pete Rose.

The 40-year high inflation the United States has experienced post-COVID has resulted in substantial hardship for Americans. Rising prices have reduced Americans’ purchasing power and standard of living.

In last month’s column, I discussed how trust in government is at an all-time low. The Gallup Organization finds that trust in private institutions is similarly low. The only institution that enjoys widespread trust is small business, where 68% of Americans’ trust it a “great deal” or “quite a lot.” Trust substantially decreases for other institutions. Only the medical system and organized religion are trusted by more than 30% of Americans. Twenty-to-thirty percent of Americans trust unions, banks, tech companies and newspapers, while big business and television news are only trusted by 10%-20% of Americans.

An underappreciated risk in the U.S. economy is that Americans have lost confidence in the federal government. The Gallup Organization has tracked Americans’ trust in government since the 1970s. It is striking how much Americans used to trust the government compared to now. When Richard Nixon was president in 1972, 75% of Americans had a “great deal” or “fair amount” of trust that the government could solve international problems compared to 44% now. Seventy percent had this amount of trust that the government could solve domestic problems compared to 37% now.

My March column discussed the challenges involved in balancing a federal budget that is currently $1.5 trillion or so in deficit. The necessary tax increases and spending cuts would far exceed what Americans have ever experienced. A natural question might be why the budget deficit and the national debt, which is the accumulation of all the past deficits, is even a problem. The government has consistently run a budget deficit since the 1980s without an issue. Why should we worry about it now?

At the end of 2023, inflation appeared to be falling to the Federal Reserve’s 2% target. Inflation was 3.3% in December 2023 and was expected to be below 3% in January. However, inflation was higher than expected at 3.1% in both January and February. There is a strong possibility that inflation will continue to run above 3% rather than falling to the Federal Reserve’s 2% target.