ORLANDO, Fla. – As President Trump lays out his new economic policies, CBS News business analyst, Jill Schlesinger, says there are five things to keep an eye out for: immigration, trade/tariffs, the debt ceiling and the deficit and finally taxes.
News 6 anchor Lisa Bell spoke with Schlesinger to see how these issues will affect consumers.
Bell: Let’s talk about the first items on that list because they are all somewhat connected: immigration and trade and tariffs. Right after President Trump was sworn in, he signed executive orders on those issues so what does that actually mean for the average person?
Schlesinger: Okay, so we’re talking about the economy. I’m not talking about anything else. No social commentary here. Economists are laser-focused on how President Trump’s immigration crackdown might impact sectors that specifically do rely on undocumented workers. So think about those industries like agriculture or food processing or construction. So if there are fewer employees or potential employees to pull from those industries, there could be a labor shortage in those. Now, separately, the President said that on February 1st, he plans to impose a 25% tariff on our close trading partners to the north and south, Canada and Mexico, and that might extend to more countries, by the way. Now, the question really is because United States importers, companies that actually import goods from those two places, because they pay for the tariff, will they pass along that extra cost to us, the consumers? If they do, we might see the inflation rate tick up. So those are the issues that in the early days of this administration, those are the things that economists say are likely to move the needle on what’s going on throughout the economy.
Bell: When we talk about some of those imports that could be coming in from Mexico or Canada that could be affected by potential tariffs, what items are we actually talking about?
Schlesinger: I know that we kind of hyperfocus on avocados and I love avocados. Don’t get me wrong. But there are a lot of different kinds of things that come in through those two countries that are very important to American businesses. So that could mean anything from lumber to metals to parts and supplies for cars and electronics. So I think that, you know, it’s very easy to say, “just don’t eat avocados, but there are so many businesses that rely on that. You know, I spoke to a small bicycle manufacturer who said, “look, I love that I make this stuff here in the U.S., but I rely on parts from other places and a lot of those things go through Mexico.” So things you may not actually think matter, they really do.
Bell: We know one of the other issues is the debt ceiling. It’s a key point and it was a key point during the election. It seems like we hear the phrase debt ceiling more and more these days. So what does that actually mean for, again, the average person and what is the difference between the debt ceiling and the deficit?
Schlesinger: The debt ceiling is a legal limit on the total amount of debt that the federal government can carry and that level is currently $36.1 trillion. Now, let’s say that the Treasury Department kind of moves around some money and, you know, we can sort of muddle through. Once we actually get to the point where we hit that debt ceiling, Congress has to do something. So Congress has to raise or suspend the debt ceiling. Otherwise, the U.S. would default on its legal obligation to pay its bills. Before you say no big deal, that would mean bills to us also like Social Security checks or Medicare reimbursements. So we don’t want to default. Now, here’s the thing. Raising the debt ceiling does not authorize new spending. All it does is actually say we’re going to borrow the money that we need for the obligations that Congress has already voted to actually do. So therefore, because it’s not new spending, there is no impact on the federal deficit. What’s the federal deficit? That is the amount of money the government spends, minus the amount of money it collects from taxes each year.
Bell: Speaking of how much money the federal government collects, President Trump has promised to extend the 2017 tax cuts, which are set to expire at the end of this year. Who would that impact the most and what impact would that have on the deficit?
Schlesinger: The most critical impact is on individuals because we had both individual and corporate tax cuts in 2017. Most of the corporate tax cuts were actually enshrined in the code. The individual tax cuts, which as you mentioned, they were due to expire or sunset at the end of this year. Now, if we were to extend those federal tax cuts, that would actually have a big impact on the deficit. Why? We just said that the deficit is, you know, a very easy calculation. The money the government spends minus the amount of money it collects. If we’re saying the government is going to collect less money, it could have a pretty negative impact on the deficit. According to the Congressional Budget Office, the extension of those tax cuts of 2017, would add about $4 trillion to the federal deficit over the next ten years. That’s why this is going to be a big negotiation in Congress. It’s not started just yet, but you can already hear murmurs from some of the Republicans who call themselves deficit hawks. They hate the deficit and they don’t like a plan to extend these tax cuts.
You can watch Jill Schlesinger regularly on CBS Mornings and the CBS Evening News with Norah O’Donnell.