RPT-BREAKINGVIEWS-Tariff refund spigot leaves Congress tapped out

By Gabriel Rubin

WASHINGTON, Nov 24 (Reuters Breakingviews) - Tariffs are to the White House what alcohol was to Homer Simpson: the cause of, and solution to, all of life’s problems. President Donald Trump’s latest quick-fix for cost-of-living gripes has been to cut levies on food and muse about distributing $2,000 checks from the $200 billion-plus collected thus far. Congressional Republicans earmarking those funds for deficit reduction might want a say. As the Supreme Court weighs striking down the centerpiece of his trade war, though, the money might not be there anyway. All of this makes a bad, inflation-boosting idea even worse.

When pleading its case for the legality of unilaterally imposed tariffs to the nation’s top court, the administration has leaned heavily on the twin challenges of revenue and refunds. If the justices strike down so-called reciprocal levies, roughly $90 billion of funds collected during Trump’s trade war may need to be returned, judging from customs figures. The solicitor general warned of a “1929-style” financial calamity in the event of forced repayments and forfeited future collections. The justices also wondered about how to structure such a massive unwinding. Former Acting Solicitor General Neal Katyal, arguing for the toy retailer and wine importer that are suing the government, reasoned that the difficulty of scrapping potentially unconstitutional policy has no bearing on its legality.

Meanwhile, congressional Republicans find themselves embroiled in their own disagreements over the use of the funds. Trump, facing increasingly grim approval ratings according to Reuters/Ipsos surveys, has mused of cutting “rebate” checks without consulting them at all. Increasingly emboldened legislators, perhaps eyeing a future beyond the current presidential term, have resisted.

They’re right to do so. The United States’ fiscal house is kept standing by the thin reeds of legislative safeguards and tariffs, which at least somewhat paper over massive tax cuts and continuing profligate spending. A one-time, $2,000-per-person payment with an income limit of $100,000 would cost $450 billion, the Yale Budget Lab calculates, twice the expected revenue from tariffs in 2026. If sent out by presidential fiat, they would in a stroke sever the remaining threads holding the budget together.

Instituting a parallel system of taxation and spending may prove a bridge too far, threatening to render both Congress and the courts increasingly irrelevant as checks on executive power. That’s to say nothing of investors in U.S. government debt, or the almost-certainly inflationary consequences of a massive fiscal stimulus at a time when rising prices are front-of-mind. The idea is best stopped here.

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CONTEXT NEWS

U.S. President Donald Trump has raised the possibility of using tariff revenues to send $2,000 checks to Americans making less than $100,000. Some Republicans in Congress have pushed back on the plan, suggesting the funds be put towards deficit reduction instead.

The Supreme Court heard arguments on November 5 on the legality of Trump’s tariff policies, with a ruling expected in the coming weeks.