As we were wrapping up this issue, the president-elect announced the creation of an “External Revenue Service” (ERS). It will, as he put it, demonstrating his idiosyncratic understanding of trade, “collect our Tariffs, Duties, and all Revenue that come from Foreign sources. We will begin charging those that make money off of us with Trade….” Almost no one aside from him and his circle of advisers thinks that foreigners, rather than US consumers, pay tariffs, but let’s set that aside for now.

Instead, let’s look at tariffs over the long sweep of history. According to a useful factsheet from the Congressional Research Service, tariffs were an easy way to collect revenues in the early history of the country, which didn’t have a developed administrative structure. There were only so many ships sailing to unload goods in so many harbors, so taxing those goods was not much of a technical challenge. The government was small and didn’t need that much revenue anyway.

The tariff and revenue histories are illustrated in a quartet of graphs below. From 1792 to 1930, federal revenue averaged less than 3% of GDP. (Obviously those old GDP figures are guesses, but let’s take them as a decent approximation of reality.) From 1792 to the eve of the Civil War, 1860, tariffs provided an average of 86% of total federal revenue. (There were some bumps before the Civil War, notably the War of 1812, which juiced expenditures and savaged imports.) Besides borrowing heavily, the federal government increased excise taxes, reducing dependence on tariffs and leaving them accounting for just over half of federal revenues in the last third of the 19th century. With the introduction of the personal income tax (PIT) in 1913, tariffs receded in importance; since 1945, the PIT has accounted for 45% of federal revenues.

(Speaking of federal revenues, the popular notion that taxation has been growing like Topsy can’t survive fact-checking. As the graph shows, federal revenue as a share of GDP has been nearly flat for the last seven decades; in fact, the 2024 share, 17.1%, is below the 1951 share, 18.4%.)

With the growth of the PIT, and federal revenues generally, tariffs (or customs duties, to use the technical term) have largely disappeared as source of federal revenue. (In the graph on the lower left, you can see a spike around 1930, the time of the infamous Smoot-Hawley Tariff, which many, though not all, economists believe contributed to the Great Depression.) Customs receipts barely cracked 1% of total revenue in the 1990s and 2000s. With the tariffs imposed during the first Trump administration, and preserved by Biden, that share doubled to 2% in 2019–2022, but they’ve eased back to 1.6% in 2024. That looks poised to change

Since Trump has floated the idea of replacing the PIT with tariffs—switching from “taxing our Great People using the Internal Revenue Service,” as he said in the Truth Social announcement of the ERS—it’s interesting to experiment with how large those tariffs would have to be to plug the revenue gap. In the first three quarters of 2024, goods imports were $3.3 trillion at an annual rate, and the PIT brought in $2.5 trillion. Matching that would require a tariff rate of 70%. The effective tariff rate last year—revenues divided by the value of goods imports—was under 3%. Obviously a 70% tariff would decimate imports, but we’re not even considering that.

It all seems like a stretch.

Montana grizzly bears forage in the dusk

We came across a survey covering public support for the Endangered Species Act, including among different demographics, over roughly the last twenty years.

Jeremy Bruskotter and Ramiro Berardo, who teach at Ohio State, and John Bruskotter, at University of Michigan, compiled polls taken over the last twenty years and found support of the Act to be remarkably stable.

As background, visible declines in game species and those taken for millinery use, like the Carolina parakeet whose flocks once darkened the skies, led John Lacey, a Republican representative from Iowa, to introduce the Lacey Act of 1900, the first legislation regulating commercial animal markets. Later came the Migratory Bird Treaty of 1929, between the US and Canada, and others leading up to the broader Endangered Species Act of 1973.

Some animals protected by these acts have recovered, like our iconic bald eagle, bison, manatee and grizzly bear, while others, like the whooping crane, remain endangered with slowly recovering populations. That’s not so shocking: science-based conservation science is often effective and takes time.

What is shocking: the broader Endangered Species Act of 1973, written at Richard Nixon’s request, passed with a 355-4 vote. And the public likes it.

The authors compared  results of the base survey conducted in 1996, and those conducted in 2011, 2014 and 2015 and found them “statistically indistinguishable.” Overall, four in five American support the Act, and one in ten oppose it, while some don’t know what they think. And, while gun control and climate change have become increasingly polarized, the majority of self-identified liberals, 90%, moderates, 77%, and conservatives, 74% support the Act. No surprise that 92% of environmentalists support the Act, as do 73% of hunters, who often partner with ecological conservation groups, but it is stunning that 71% of farmers and ranchers support protecting vulnerable species, as do 69% of property rights advocates, who have been among the most verbal opponents.

Another surprise: Some supporters of the Act have expressed concern that protecting “controversial” animals, like gray wolves, may turn people in wolf territory against the Act, but both trust in the Fish & Wildlife Service, which administers the Act, and opinions about wolves within and without wolf territory are equivalent.

If this all seems odd given the unflagging pressure in Congress to weaken the Act, other research, specifically this study of wolf reintroduction in Scotland, shows that leaders of special interest groups often hold more extreme views than their members.

S&P’s Howard Silverblatt is out with a preliminary reading on 2024Q1’s stock buybacks. In a phrase, they were big, if not quite the biggest.

Buybacks for S&P 500 stocks totaled $237 billion in the quarter, up 8% from the previous quarter and 9% from a year earlier. At an annualized rate, that equaled 3.4% of GDP, up from 2.9% last year and above the 3.1% average since 2005. Firms devoted over half their operating earnings—51.4% to be precise—to purchasing their own shares, slightly below the average since 2012. The buyback sum equaled a third of nonresidential fixed investment.

Call us old-fashioned, but maybe a larger share of earnings should be devoted to capital spending. Note how much lower the share devoted to buybacks were in the late 1990s, a time of high investment and rapid productivity growth.

Noting that consumers access a range of sources for information about the economy—discussions with friends, their own experiences, and what they read or hear—Dr. Joanne Hsu, who directs the University of Michigan’s survey of consumers—recently broke out the sources that go into the “news heard” component of the survey. Apparently prompted by that fact that consumers reporting that they had heard bad news about inflation was “much higher,” in 2022 than it was during the “objectively worse” inflation periods of the 1970s, her team asked respondents open-ended questions about news sources from January through April.

NB: Unfavorable news about prices hit just 20% in the 1970s, and topped out at 35% in 2022. 

Top sources, all over 30%, were mainstream news, general/other news, and general/other internet, followed by discussions with friends, family and co-workers, about 20%. Business news was mentioned by about 18% of respondents, and partisan sources by about 15%. Social media followed at about 13%, and just 10% of consumers mentioned the stock market, or their own experiences as sources.

Consumers who rely on their own and friends’ experiences have the lowest favorability ratings, which Hsu points out may well be because they are the most vulnerable, with fewer holding college degrees, and lowest median incomes. Those who read mainstream or business news, or follow the stock market, have highest levels of educational attainment and median incomes, and report most favorably on what they read. Those who rely on what Hsu calls the “catch-all” categories are close to the average, which she believes is because the sources are diverse.

But if you break out Democrats, Independents and Republicans, all hell breaks loose. Half of Democratic respondents, 27% of Independents, and just 16% of Republicans follow the mainstream news. Although shares by party for those who follow general sources and the internet are within the same range, those are the most common sources among Republicans, 38% and 37%. About 20% of Republicans follow partisan sources, as do 15% of Democrats. As you might guess, Independents are least likely to follow such news.

Although hearing more upbeat news is tied with higher sentiment, Hsu suggests the need for follow-up research on whether that is the product of bias confirmation. In any case, assessing partisan sources is associated with lower net favorability of news heard, and lower sentiment, among Republicans, and higher levels among Democrats. Among Democrats who mention partisan sources, net favorability of news heard is 143, and sentiment 110, among Republicans who mention partisan sources, net assessment is 31, and sentiment, 53. Democratic assessment and sentiment falls among those with no mention of partisan sources, 123 and 99, and rises among Republicans, 47 and 65.

AllSides Media Bias Chart: Read it and weep.