Billionaire Ken Griffin cast doubt on two of President-elect Donald Trump's most loudly heralded economic policy plans: tax cuts and tariff hikes.
Republicans should be mindful of the effect of tax cuts on the growing national debt and the impact of tariffs on the long-term competitiveness of American businesses, Griffin said in an interview with Bloomberg Television's Sonali Basak at the Economic Club of New York.
"The big problem is we've got to get productivity growing," Griffin said.
The Citadel founder on Thursday suggested the opposite course might be needed: "There's a real question about where do we need to raise taxes to start to put our house in order."
He also said Republicans, who will control the White House and both chambers of Congress in January, will need to look at cutting spending as well. He acknowledged that doing so will be difficult, saying that "these are really unpopular decisions for politicians to make."
Trump has pledged to extend his 2017 tax cuts and eliminate other levies on tips for service workers and Social Security benefits. He's also pledged to impose a 10% or 20% tariff on all imported goods — with even higher duties on Chinese products — and argues that they will increase revenues while bringing manufacturing operations back to the US.
"I am gravely concerned that that rise of tariffs puts us on a slippery slope towards crony capitalism," Griffin said. Tariffs give a short-term benefit for domestic companies that produce goods, but in the long term, they harm productivity, he added.
"Those same companies that enjoy that momentary sugar rush of having their competitors removed from the battlefield soon become complacent," Griffin said.
Griffin said tariffs will ultimately hurt the U.S. economy, which needs to rapidly increase productivity if it wants to meet all its obligations, including paying benefits promised to retiring Americans through programs like Social Security and Medicare.
