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TRUMP AND HIS CRYPTO CRONIES HAVE BIG PLANS. BE AFRAID.  
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Sam Gustin
January 10, 2025
The Nation
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_ The incoming president and his Bitcoin-loving acolytes want to turn
the government into their personal ATM. _

Donald Trump visits a cryptocurrency-themed bar called Pubkey in the
West Village on September 18, 2024, in New York City., Spencer Platt /
Getty Images

 

Donald Trump hasn’t yet been sworn in as president, but one aspect
of his second term is already coming into focus: self-dealing,
patronage, and corruption on a scale that will dwarf that of his first
stint in the Oval Office. From tax cuts to tariffs to digital
currencies, Trump is building a government designed to redistribute
wealth from working people to rich people in ways not seen since the
Gilded Age. The result, experts say, will be higher prices, reduced
consumer protections, and deeper economic inequality in the United
States.

The danger of graft is real. The incoming Trump administration has the
potential to be the most corrupt in more than a century, Joseph
Stiglitz, the Nobel Prize–winning economist and professor
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Columbia University, told _The Nation_.

“There’s an enormous risk of self-dealing here,” Stiglitz said.
“The danger is not only conflicts of interest, but a mindset among
Trump and his cronies in which they don’t even understand
the _concept_ of conflicts of interest. The irony is that here you
have a president who was elected on an allegedly ‘populist’
platform engaging in the most massive pro-billionaire, pro-wealth
redistribution in US history.”

Trump has tapped no less than half a dozen
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his fellow billionaires to serve in and around his administration,
including Elon Musk, who spent more than $250 million
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elect Trump. Many of these oligarchs, who boast a combined net
worth north of $450 billion
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have no government experience. Their only qualifications appear to
be huge Republican campaign contributions
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of course, slavish fealty to Trump.

Many of these latter-day plutocrats are peddling cryptocurrency, the
highly volatile, speculative digital “money” that’s not backed
by any physical asset but rather “mined” by
expensive, energy-intensive
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servers and then traded largely based on Internet rumors. Wealthy
crypto executives and investors supported Trump and other Republicans
with millions of dollars
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campaign donations. Now, they aim to cash in
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Newly emboldened crypto bros are hawking
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Senate proposal to establish a federal crypto reserve fund
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in which the US government would buy $100 billion worth of Bitcoin
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then hold it in a “strategic reserve,” like a digital version of
gold or oil. The bros insist that crypto will soar in coming
years—Bitcoin recently hit a record $100,000, presumably in
anticipation of the favors that Trump and GOP lawmakers will shower on
the industry—and so they claim a US crypto reserve will help the
federal government pay down the deficit without costing taxpayers a
dime.

Dean Baker, senior economist at the Center for Economic and Policy
Research, says that’s nonsense. In fact, the Trump plan appears to
be a brazen scheme to artificially pump up the price of crypto at
taxpayers’ expense, allowing wealthy crypto holders, including the
Trump family
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to cash out into US dollars, according to Baker. In the process, the
US government—really, US taxpayers—will inflate the price of this
otherwise worthless digital asset by creating artificial demand. In
other words, US taxpayers will be artificially subsidizing an
industry-based-on-nothing whose financial gains flow disproportionally
to wealthy asset holders.

“Crypto has no inherent value, so why would the government want to
buy it?” Baker told _The Nation_. “There is literally no
rationale other than to give money to Trump and Musk and their crypto
buddies. If they can tap into the government, they’ve found the
ultimate sucker. And very soon, they will control the government.”

Meanwhile, Musk says his new nongovernmental Department of Government
Efficiency (DOGE) will cut $2 trillion in “waste” from the $6.75
trillion federal budget. It’s a fairly shameless project for a
billionaire whose companies over the last decade received
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than $15 billion in federal contracts from the Department of Defense,
NASA, and other agencies. Now, the unelected tech mogul wants to slash
trillions in spending, beggaring the concept of conflicts of interest.

Musk’s “DOGE” plan to make the government more “efficient”
is just a new spin on the decades-long Republican crusade to eliminate
or privatize government agencies and cripple consumer protections to
pay for tax cuts for the wealthy. Economists call it the “starve the
beast
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strategy, and by now, the playbook is familiar: Step One: Create a
budget crisis by passing tax cuts for the wealthy. Step Two: Declare
that the budget crisis requires massive cuts to government programs
because they’re unaffordable. Step Three: Shut down the government.
Or try to, anyway.

“I don’t think Elon Musk is going to propose cuts to the billions
of dollars he receives in government contracts,” said Stiglitz. The
Tesla CEO may benefit from other regulatory rollbacks, however, such
as the recent proposal by Trump’s transition team to eliminate
autonomous vehicle safety reporting rules opposed by Tesla, whose
electric vehicles are the deadliest cars on the road, according to a
recent study
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The main driver of economic inequality moving forward, of course, will
be Trump’s plan to extend his $2 trillion 2017 tax cut,
which disproportionately
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rich people and corporations. Expect more of the same in 2025—only
at a much greater cost—perhaps $5 trillion or more, according
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the Bipartisan Policy Center. Despite what Trump administration
economic officials insisted at the time, the 2017 tax cut did not
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in fact, pay for itself. Instead, it was “skewed to the rich,
expensive, and failed to deliver on its promises,” according
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a recent report by the nonpartisan Center for Budget Priorities.
“Like the Bush tax cuts before it, the 2017 Trump tax cut was a
trickle-down failure,” the report’s authors concluded.

Meanwhile, Trump’s proposed tariffs could cost the average US family
$2,600 per year, according to
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economist Kimberly Clausing
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That’s because US importers, not foreign countries, will bear the
costs of the tariffs and transfer most of those costs
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consumers, despite Trump’s bogus claims
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the contrary. Clausing and her colleagues argue
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Trump’s plan to impose new tariffs will amount to a regressive tax
that will “cost jobs, ignite inflation, increase federal deficits,
and cause a recession. It would also shift the tax burden away from
the well off, substantially increasing the tax burden on the poor and
middle class.”

There’s also a serious risk of self-dealing and patronage in US
tariff policy. Trump’s first administration granted tariff
exemptions to companies “associated with greater campaign
contributions to Republican politicians and with smaller contributions
to Democrats,” according
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a recent paper in the _Journal of Financial and Quantitative
Analysis_. The study’s authors concluded that this process
“worked—at least partly—as a very effective spoils system
allowing the administration of the day to reward its political friends
and punish its enemies.”

It’s a stark warning about cronyism and corruption heading into
Trump’s second term. If past is prologue, Trump’s tax cuts will
favor the rich, his tariffs will hurt the poor, his crypto policies
will help his friends, and his trade policies will benefit the highest
bidder—this time on a scale that will make his first term’s
ill-gotten gains look like chump change. “I don’t think there’s
been a period in my lifetime with more potential for a massive
government role in increasing inequality than what Trump is
proposing,” said Stiglitz. “I think you’d have to go back a
century or more to find anything like this.”

_SAM GUSTIN is a New York-based journalist focused on the
intersection of business, technology, media, and public policy._

_Copyright c 2024 THE NATION. Reprinted with permission. May not be
reprinted without permission
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Distributed by PARS International Corp
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* Donald Trump
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* cryptocurrency
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* corruption
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* financial speculation
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* privatization
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* Elon Musk
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* taxes
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* Tariffs
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