Commerce Secretary Howard Lutnick is off to a terrible start

Lutnick also brazenly claimed that the constantly shifting trade policies of the Trump administration are “not chaotic” and people who think they are chaotic are “being silly.” 

In reality, many of America’s top CEOs have told the media that they are disturbed by the instability and uncertainty of Trump’s policies, which he keeps delaying, reversing, pausing, and expanding, and are unwilling to make large investments in the economy as a result. Everyday Americans seem to agree, too, with 57% of the public saying Trump’s economic moves are “too erratic.” Are they really all just “being silly”?

Lutnick’s media blitz further reveals that he either knows very little about basic economics or is willing to say things that simply aren’t true to please his boss. (Neither of which is very reassuring for the U.S. Commerce secretary!)

For example, in a recent Fox News interview, the secretary boasted about how tariffs are “going to drive America better,” offering a rather novel explanation of how that’s going to work.

“We pay taxes into the Internal Revenue Service,” Lutnick said. “Wouldn’t it be amazing to stop paying taxes to the IRS and have the External Revenue Service? Make America great again; replace our taxes.”

The idea here is simple. Americans can stop paying taxes, and we can instead fund our entire federal government by forcing other countries to pay us through tariffs. It also happens to be utterly absurd and numerically illiterate. 

First and foremost, the math here simply doesn’t add up. Even astoundingly high tariff rates could not raise half as much revenue as the income tax currently does, according to the Peterson Institute for International Economics, meaning that even if Trump significantly slashed government spending, which is difficult to do without touching entitlement programs that he insists he won’t cut, you still couldn’t fund the government with tariffs.

And even if you could, that still wouldn’t make Lutnick’s fantasies possible! Because, as economists across the spectrum acknowledge, a huge portion of the economic cost of tariffs is borne not by foreign businesses but by American consumers. So even if you called your new department the “External Revenue Service,” it would still essentially be taxing Americans — with regressive taxes that disproportionately harm poor and working-class people.

All of this is stuff you would expect any 200-level economics student to understand. But the Commerce secretary either doesn’t get it or is simply saying things to the public he knows to be untrue. 

He’s also making some highly questionable moves inside the federal government. 

For instance, Lutnick made waves by terminating an expert committee, the Federal Economic Statistics Advisory Committee, that helped the federal government improve its data collection and fostered direction collaboration with the chief data officers at major American companies such as Amazon and Google. Federal agencies don’t have a profit incentive to give them feedback on their work, but this kind of collaboration helped them get some kind of market feedback on the work they were doing, so you’d think it’d be something that pro-market, pro-capitalism Republicans would appreciate. What’s more, the committee was made up of outside experts who were volunteers.

“I was just informed that the Federal Economic Statistics Advisory Committee (FESAC), of which I was a member, was terminated abruptly and all upcoming meetings are also canceled,” committee member and economics professor Avinash Collis wrote on X. “This was a committee that has been around since at least 2000.”

“We were a group of experts from academia and policy who met twice a year to advise BEA, BLS, Census, and the Commerce department on matters related to federal economic statistics,” he explained. “We were all volunteers serving on the committee without any compensation because we wanted to help federal agencies who were already facing serious issues due to budget cuts. I fail to see how this will result in any cost savings.”

TRUMP DIRECTS LUTNICK TO INVESTIGATE US LUMBER IMPORTS

So, this move will have negligible cost savings but dismantle a useful public-private partnership for no real reason. Is that really making government more efficient? And, it further feeds into concerns — sparked by comments from Lutnick himself — that the Trump administration might try to skew apolitical federal economic data in its favor.

All in all, Lutnick’s first month has been a disaster. If he continues like this, the next step toward improving government efficiency should be sending him a termination email. 

Brad Polumbo is an independent journalist and host of the Brad vs Everyone podcast.