Hendrickson’s View

Mark W. Hendrickson

Mark Hendrickson is an economist who recently retired from the faculty of Grove City College, where he remains a Fellow for Economic & Social Policy for the college’s The Institute for Faith and Freedom.

The Hollow Protests about a “Constitutional Crisis”

We currently have a “good news, bad news” situation. The good news is that many Americans are questioning whether actions taken by the Trump administration to rein in federal spending are constitutional. The bad news is, they have a warped, incorrect understanding of the Constitution.

Multiple voices in Congress, the media, the Swamp, etc. are howling in protest against President Trump’s vigorous efforts to reduce federal spending. Their accusations of unconstitutionality can be broken down into three primary assertions: That once Congress appropriates funds, those funds are untouchable, sacrosanct; that Trump is upsetting the balance of power between the legislative, judicial, and executive branches of government; and that Donald Trump is the first president (allegedly) riding roughshod over our Constitution. None of these assertions are true.

Those accusing Donald Trump of violating the Constitution were conspicuously silent when Joe Biden repeatedly showed his utter disregard for the balance of power. They invoked no “constitutional crisis” when Biden usurped the congressional power of the purse by unilaterally decreeing hundreds of billions of dollars of forgiveness for student debt owed to the federal government. They uttered nary a peep when he blatantly defied Supreme Court decisions like West Virginia v. EPA (2022) by continually advancing bureaucratic overreach in his insanely expensive “green” war against fossil fuels, freedom of choice, and standards of living. Not only did today’s brand-new defenders of the Constitution make no objections when Biden expanded executive authority at the expense of the other two branches of government, they often approved of Biden’s threats to increase the number of Supreme Court justices as a means of neutering the current majority on the Court.

Joe Biden, of course, was far from the first president to expand executive power in disregard of constitutional strictures. Barak Obama hated the various restrictions that the Constitution placed on the power of the federal government. In that way, he was much like Franklin Roosevelt. Obama openly bragged about the power of his pen to expand government.

Obama was merely one in a long line of presidents who have progressively transformed our original constitutional order. For more than a century, progressive presidents from both parties have forsaken the constitutional framework of a limited government tasked with protecting the general welfare and the inalienable rights of citizens. In its place, they have devised a massively intrusive, powerful, oppressive government that wages war against private property and practices special interest politics by taking from some Americans to bestow benefits on others. This has been the progressive road to socialism — a road that can only be traveled by trampling on the U.S. Constitution.

Today’s newfound concern about the Constitution is cynical and hypocritical. Those protesting Trump’s actions on constitutional grounds both acquiesced in and eagerly supported past violations of the constitution because those policies fulfilled their own ideological preference for ever-larger government. Now that the political shoe is on the other foot, and Trump is trying to undo past infringements on the Constitution by shrinking government, the Big Government crowd is having fits. For anyone today to suddenly be concerned about the integrity of our Constitution while ignoring the progressive erosion of constitutional strictures over the past century-and-a-half is evidence of a deep-seated ideological bias, not of a principled concern for constitutional integrity.

At the moment, the Left’s fury is trained on the efforts of President Trump, Elon Musk and his DOGE team to slash government spending. The problem here is that the critics assume that if spending has been authorized by Congress, that it must be constitutional. But is it?

The entire bureaucratic model of government that has evolved over the decades is itself unconstitutional. The traditional balance of power between the legislative, executive, and judicial branches has been fundamentally altered. The federal government today has a fourth branch — a branch not even mentioned in the Constitution — namely, the bureaucracies.

The way it works is this: Congress passes vaguely worded laws that often express aspirations rather than specifically defined functions. Then Congress abdicates its legislative prerogative and abandons its oversight responsibility by letting those unelected bureaucrats craft the specific rules we must obey. (Technically, Congress may review proposed bureaucratic regulations, but they seldom do.)

Presidents often direct the bureaucracies to implement favored policies. Exercising such executive authority is a president’s constitutional prerogative — subject to limitations imposed by the Supreme Court or when Congress cancels funding and/or authority.

Those claiming that it is unconstitutional for President Trump to cut spending have a blatant double standard: Why is it constitutional for the chief executive (like Biden) to order bureaucrats to take positive actions and implement certain policies, but unconstitutional for Trump to order bureaucrats to refrain from implementing certain policies? The Constitution does not say that a president can only expand government’s scope, but not reduce it. Today’s protestors who are invoking the Constitution haven't explained why it is unconstitutional for Trump to block expenditures that are wasteful, counterproductive, not specifically authorized by Congress, or of dubious constitutionality.

Cutting Big Government is going to be a messy, contentious, protracted fight, but I wish President Trump and Elon Musk much success in cutting spending and reining in the unconstitutional power currently being wielded by federal bureaucrats.

America First or America Alone?

President Trump and his team proudly proclaim an “America First” agenda. “America First” is a slogan that has resonated with Americans for over a century. And why not?

The America First message is simple, straightforward, and commonsensical. As it pertains to public policy, America First means that the primary duty, the very raison d’être, of our federal government is to protect the rights and advance the interests of Americans, not of anyone else.

The America First sentiment was widespread in 1914 when Europe plunged into war. Americans did not want to become embroiled in a European war; after all, many Americans of the day remembered vividly that one reason they or their ancestors came to the U.S. from Europe was to escape Europe’s repeated bloody squabbles. President Woodrow Wilson successfully campaigned for reelection in 1916 by reminding American citizens that he had kept us out of the European war. After the election, though, Wilson reversed his stance. Historians still debate today whether that was the right thing to do.

In the late 1930s, polls showed that an overwhelming majority of Americans believed in America First and were strongly opposed to participating in another overseas war. Then Pearl Harbor was attacked, and America Firsters united with other patriotic Americans to fight fascism, Nazism and imperialism.

After World War II, American leaders concluded that it was in our national interest to maintain a peaceful order based on national sovereignty and peaceful commerce between nations. Human nature being what it is, it was perhaps inevitable that some of the non-Americans benefiting from the costly protective umbrella that the U.S. provided for this peaceful order lapsed into freeloader behavior, or that they fudged on trade commitments to benefit special interests in their own countries. That eventually gave rise to Trump and the MAGA movement, and the America First motto, which had lain semi-dormant for decades, was dusted off and proudly reaffirmed.

The new-old philosophy of America First hearkens all the way back to our Founding Fathers. It is the spirit that animated George Washington’s Farewell address when he urged future generations of Americans to strive for “peace, commerce and friendly relations with all nations, entangling alliances with none.” Is this the version of America First that prevails today?

In his State of the Union address, President Trump compared himself somewhat immodestly with Washington. Let us, then, ask how the 47th president measures up to the first president’s sage counsel to preserve friendly relations with all while avoiding entangling alliances.

Indeed, Trump deserves a grade of A-plus for abiding by the second half of Washington’s formula. He obviously distrusts and despises alliances, and seems to be shedding them as fast as possible. But what about the first part, about maintaining friendly relations with all?

Jimmy Carter was notorious for often treating America’s enemies better than he did some of our allies. Donald Trump has surpassed Carter, taking the latter’s bizarre approach of “be kind to enemies, and stern with friends” to an unprecedented level. He has scorned NATO while trying to mollify Vladimir Putin. He has repeatedly insulted and belittled our next-door neighbors, Canada and Mexico. He has openly threatened Panama and Greenland with annexation. On the Washingtonian principle of maintaining “friendly relations with all nations” Trump earns a grade of F. His motto seems to be not just America First, but America Alone.

Trump’s intemperate rhetoric toward other countries already has created a massive global backlash against America. Examples: Canadian hockey fans booed the U.S. national anthem in February’s 4 Nations Face-Off hockey tournament. Canadian voters have rallied behind Davos insider Mark Carney as their new prime minister when before, Pierre Poilievre, the un-woke leader of Canada’s Conservative Party, looked like a shoo-in to replace the feckless Justin Trudeau. Polls show that more than half of Europeans now have a negative attitude toward us. Countries like Sweden and Denmark are seeing spontaneous boycotts of American goods.

I think the following analysis from Thitinan Pongsudhirak, a professor of international relations at Chulalongkorn University in Bangkok, best summarizes the current situation: “Now is actually the worst time to be a U.S. ally, because Trump and his people think that the allies have been ripping them off more than the adversaries.” He said:

The U.S. will get away with this in the short term, countries will have to concede. But in the medium and longer term, it’s alienating itself from its partner countries. Trump is giving China a golden opportunity.

The massive loss of good will toward the U.S. is sad and tragic. Earlier generations of Americans who fought and died to defend Europeans from brutal conquest, and who were magnanimous to the defeated countries, earned a reputation for our country as “the good guys” in an otherwise cruel, dangerous world. Now Trump has exploded those residual positive feelings by essentially telling the rest of the world that they are inferior to us. “No More Mr. Nice Guy” seems to be his theme song.

What we see from Trump in foreign relations and geopolitics carries over to the economic realm. His promiscuous threatening and application of tariffs may blow up countless complex supply chains, trigger a global economic debacle, and alienate long-time friends. In Carter-like fashion, in early April Trump proposed higher tariffs on friendly countries like Japan and Taiwan than on hostile nations like Iran and Venezuela before thankfully suspending those tariffs for 90 days.

At present, Trump seems willing to withdraw into a mythical Fortress America. But that is highly problematical, if not unviable, either economically or geopolitically. In today’s interconnected world, unfortunately still plagued with atavistic brutes (e.g., Putin, Xi, and Kim) hostile to the ideals of national sovereignty and individual rights, we should be nurturing friendships with other countries, rather than rejecting them. America First is wise; America Alone, not so much.

Confusion About Tariffs in the Trump Administration

Tariffs will increase prices and impact Americans already struggling with high inflation.

All the talk about tariffs so far this year has created massive uncertainty. All of a sudden, complex supply chains that have taken decades and billions of dollars to develop face possible destruction. Business investment has slowed to a crawl. No wonder financial markets have been panicking.

The uncertainty has been exacerbated by President Trump’s on-again, off-again rhetoric. That is confusing to observers, but perhaps not as confusing as tariffs seem to be to the president, his team, and proponents of tariffs.

A primary confusion is due to mixed signals regarding the precise goals of the tariffs. Here, we need to make a distinction between proposals for tariffs and actual tariffs. Several times over the past couple of months, President Trump stated that his goal in threatening to impose tariffs on goods imported from abroad was to persuade foreign governments to reduce their own tariffs and other trade barriers blocking or impeding American exports to those countries. Indeed, a mutual reduction of trade barriers would have been economically beneficial to both sides.

Now, however, with little success in getting other countries to reduce their trade barriers, Trump seems committed to imposing high tariff rates on a vast range of imports. So, what is his goal now? Is it to curtail imports to protect American businesses from foreign competition? Or is it to raise significant revenue for Uncle Sam? These two goals work against each other. To the extent that tariff rates are high enough to keep goods from entering the country, tariff revenues from those no longer imported goods will be zero.

The confusion from President Trump about tariffs runs even deeper. Last week the president said, “We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth.” It is one thing to object to foreign countries blocking the importation of American goods, but quite another to accuse foreign businesses that supply goods that Americans want of “taking our wealth.”

Did any of those supposedly thieving foreigners put a gun to the head of American consumers and force them to buy their goods? Of course not. Americans freely paid for those goods because, in accordance with the basic economic law of voluntary exchange, both sides benefit from the exchange (positive sum), or the exchange wouldn’t have taken place.

To this, you might reply, “Maybe so, Hendrickson, but the larger point is that they are ‘taking our jobs.’” Indeed, one of the main arguments made by proponents of tariffs is that American consumers should be willing to suffer some economic inconvenience (some “pain,” as the president truthfully characterized it) for the sake of the patriotic goal of saving American jobs. Let’s examine the job-saving angle.

Several weeks ago, Treasury Secretary Scott Bessent, advocating for tariffs, declared, “Access to cheap goods is not the essence of the American dream. The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security.” This comment is manipulative and condescending.

In the first place, it is a straw man. Nobody asserts that the “essence” — the primary focus — of the American dream is access to cheap stuff. That is a tawdry assertion. The true crux of the American Dream is individual liberty; that is, the right to pursue one’s sense of success and well-being, in whichever way one chooses, as long as the rights of others are not infringed.

One basic liberty is the freedom to buy the goods and services of one’s choice from the vendor of one’s choice — a decision that, for any cost-conscious individual (i.e., most of us), involves obtaining the most value possible (that is, the most benefit for the lowest cost) for each dollar spent. Tariffs diminish this freedom of choice. It is worse than ironic that President Trump has labeled the day his tariffs will start as “Liberation Day;” that is positively Orwellian.

In the second place, Secretary Bessent apparently thinks it is virtuous for Americans of modest means to suck it up and feel proud to pay the higher prices that tariffs will impose in the name of preserving or adding American jobs. But higher consumer prices don’t guarantee more jobs. If consumers face higher prices due to tariffs, that means that they will be able to afford fewer purchases. Overall, consumer demand is impaired. Less consumption equals less demand for goods equals less demand for the labor that produces goods.

The higher prices that tariffs will produce are inconsequential to wealthy people like Secretary Bessent, but to the tens of millions of Americans who are just getting by, higher prices will put downward pressure on their standard of living. Indeed, as research done by economists at the Peterson Institute for International Economics shows, new tariffs involve “a massive shifting of the tax burden from rich taxpayers toward lower-income Americans,” with the losses being “greatest for those at the bottom of the income distribution.”

So much for President Trump’s claim that he wants to deploy tariffs to reverse the rise of inequality in the United States. (More confusion!) Prediction: Higher prices will be no more popular under President Donald Trump than they were (albeit for different reasons) under President Joe Biden, and they will come back to haunt Republicans in the 2026 mid-term elections.

But do tariffs save jobs? Yes. And no. Advocates for tariffs can point to the tariffs that President Trump placed on foreign steel during his first term and truthfully claim that jobs were saved in domestic steel manufacturing. The whole truth, though, is that many more jobs — American jobs — were lost in domestic manufacturing companies that used steel as an input.

The economic reality is that tariffs do not reduce unemployment, but rather, they redistribute it, and frequently increase unemployment on an overall basis.

Incidentally, multiple studies spanning the last seven decades have calculated that the annual cost of U.S. jobs saved by tariffs ranges from $600,000 each to over $900,000. Doesn’t that sound like the kind of wasteful government policies that DOGE was created to eliminate?

One other argument invoked in favor of tariffs is that they will restore America’s industrial base. This is a backward-looking perspective. At best, this is a nostalgic desire to recover a golden past.

In reality, patterns of production and employment have been evolving constantly and rapidly over the past two-plus centuries. Employment on farms and employment in factories both have been falling long-term. Those trends involve much individual pain and much social progress as new technologies enhance productivity and force shifts in labor patterns. We end up producing more with less, and we are wealthier as a result.

To imagine that the government can recreate a golden past is the socialist conceit that the political powers have supernatural knowledge and abilities to create a better society through a central plan in which those in power pick the winners and losers. What that translates to in America today is a mad scramble of special interests. Those with the best political connections will profit at the expense of the rest of us.

The best way for the federal government to “protect” American industry is to not cripple American businesses with harmful policies so as to maximize their competitiveness. That means, let’s have more of the economically wise policies of the first Trump administration, namely, lower taxes and less regulation.

As for tariffs, if President Trump can succeed in knocking down foreign barriers to American exports by threatening to impose tariffs, more power to him. But if our trading partners refuse to lower their trade barriers and Trump insists on increasing domestic tariffs, he will be inflicting more economic pain on Americans. He and the Republican Party will not find the American people grateful for such a costly error.

Why USAID Should Be Shut Down

One of the more stunning exposés so far of bureaucratic malfeasance by Elon Musk and the Department of Government Efficiency has been the egregious misuse of taxpayer dollars by the U.S. Agency for International Development (USAID). Spending billions of dollars on quirky programs that have nothing to do with economic development, USAID has become the poster child for waste, corruption, and the harm done by unaccountable bureaucracies.

Nevertheless, USAID has its defenders. Not all of its expenditures are outrageous abuses. At least some of the tens of billions that USAID spends every year are, its defenders say, providing vital aid to people in desperate need. They warn of dire, even lethal, consequences if USAID is abruptly and completely shut down.

I disagree. USAID should be dismantled and shuttered. Let me hasten to add that Team Trump should not pull the plug on emergency aid. The United States has a long history of helping to rescue people abroad in times of emergency, such as in the aftermath of the destructive 2004 tsunami that struck Indonesia. We should never cease giving humanitarian aid. Whatever emergency aid programs that are currently being administered by USAID should be rolled over into other government departments (e.g., the State Department) ASAP.

The fundamental problem with USAID is that it has rested on a flawed premise from the very beginning — specifically, the false assumption that government aid is an essential and effective tool in helping poor countries to develop economically. That is not how the world works.

Foreign aid has a poor track record when it comes to economic development. In fact, as development economists, such as Zambia’s Damisa Moyo, have documented, poor countries that receive foreign aid often experience slower economic growth than poor countries that don’t receive such aid.

There are multiple reasons why that happens. One is that foreign aid often is diverted so that it never reaches the people in the recipient country. Some of the aid is used by the incumbent government to keep itself in power. In some cases, billions of dollars of aid pile up in Swiss bank accounts owned by the governing elite in those countries. Other billions are recycled to politically connected American multinational corporations that profit greatly from building white elephants or vanity projects favored by the foreign ruler.

A more basic reason is that the bureaucrats populating USAID usually have minimal business experience and even less entrepreneurial ability. Look, give me a few billion to spend, and I can put some people to work. But whether the enterprise so funded can stand on its own two feet and be profitable in the marketplace is a much higher and more difficult bar to clear. The institutional incentive bureaucrats face is to spend more money. That is how their bureaucracies grow. And, since it is not their own hard-earned money, it is no surprise that they aren’t as particular about where they “invest” it as a private entrepreneur would be.

The notion that bureaucrats can wisely manage money by making economically viable investments is another version of the old socialist myth that governments have the wisdom to build a stronger economy from the top down. If economic growth were that simple, the whole world surely would have adopted socialism by now.

But don’t poor countries need foreign aid to get various enterprises up and running? Alas, the evidence is overwhelming that once government funding is initiated, the recipient rarely, if ever, outgrows the need to continue receiving such aid. Foreign aid is very much like domestic subsidies — they just go on and on and on. Think of wind and solar power here in the States. Uncle Sam has been subsidizing them for decades, but in spite of much-ballyhooed improvements in technology and costs, the subsidies continue unabated. So, it is with most foreign projects funded by American tax dollars: They simply are not economically viable without government subsidies (aid).

The question that most needs to be answered, if our desire is for poor countries to develop and prosper, is to understand how economic development happens. Take a look at the world’s most famous national success story: Us. The United States went from undeveloped in 1800 to the richest country in the world a century later. What foreign governments gave us grants for economic development? None. Does that mean that Americans created all this wealth by ourselves? Not at all. Foreigners contributed greatly — not by gifts of aid, but through trade and investment.

Today’s poor countries need to produce things that people in the global marketplace value. They also need investments of foreign capital. According to Marxist dogma, greedy capitalists would do anything to exploit the poorest of the poor. Why, then, does most capital investment go to the already developed countries where wages are so much higher? It is because capital is safer in the wealthy countries due to political stability, strong property rights, and impartial systems of justice whereby contracts are honored and protected.

If Country A wants to make progress on the road toward prosperity, the primary need is to replace corrupt governments with the rule of law. The onus is on them. We, the developed world, cannot do it for them. Their fate is in their own hands, and as soon as they make the necessary political and legal reforms, they will find that they don’t need foreign aid to develop. And developed countries will realize that they don’t need to dissipate precious capital in possibly well-intentioned but certainly wrong-headed government programs mislabeled “aid.”

It’s time to shut down USAID.     *