Decision 2024 is just around the corner, and the American people have two very different visions of the future to choose from. In this two-newsletter series, we will be examining what the economy will likely look like if shaped by President Donald Trump or by President Joe Biden from 2024-2028.

Today, we begin with Former President Donald Trump.

The Track Record

The first three years of Donald Trump’s presidency boasted a roaring economy. Taxes were slashed, making everyday life easier on the middle class, corporate profits were up (in part due to a corporate tax rate cut from 35% to 21%), wages rose, the stock market rose a lot, and GDP grew at a rate of over 3%.

Business was booming, and economic confidence was very high.

Trump was not afraid to use tariffs as a bargaining tool against foreign players such as China and Mexico, and in most cases, that approach paid off. Illegal immigration slowed down, unemployment dropped, and 65% of Americans today call the Trump economy “good.”

Then… there was that pesky fourth year.

During COVID-19, President Trump shut down the economy and then extended the shutdown again.

The numbers, naturally, were excruciating. Because workers were told to stay home, massive stimulus payments were sent out, which sent our already-over-leveraged currency down an inflationary tumble that we are still seeing the effects of today, four years later.

Some argue that the numbers for 2019-2020 were not totally a result of Trump’s policies, because individual states, in many cases, instituted even harsher regulations on economic activity. Others say that as the executive, he is responsible.

What is uncontroversial, however, is that the stats were impressive for the first three years – Larry Kudlow called it “an economic boom most folks thought was impossible.” And that fourth year, wherever you lay the blame, had terrible, terrible numbers.

The Agenda

Nevertheless, it’s a new day, and the Trump campaign has made a series of promises regarding what Donald Trump will do, if elected, for another term. Here are the highlights:

• Trump will extend the 2017 Tax cuts which are due to expire next year, protecting the much higher standard deduction and child tax credit, as well as avoiding the additional tax burden on small businesses that Jack Sells spoke about in Sent to Win last month.
• Trump promises to use executive action to limit congressional waste and overspending, using a now-defunct power called “impoundment.” He has also floated the idea of eliminating the federal income tax and replacing it with tariff revenues – but as of yet, this is not an official campaign promise.
• Reciprocal tariffs for countries that try to limit American exports, thereby closing the trade imbalance.
• Trump promises to prioritize drilling and to produce the cheapest energy on earth.
• Trump will end Joe Biden’s electric vehicle mandate and protect the American auto manufacturing industry.
• He promises to secure the borders.

The Good

Naturally, politicians are not always able (and not always willing) to fulfill all of their campaign promises, but as we look at the positive possibilities, a few things stand out:

Trump has a track record for getting the economy moving and bolstering market confidence. When people feel optimistic about the economy, they are more likely to take that business loan, start a company, take a risk, and stir up the market. This can produce real growth in production, which is sorely needed to counteract the years of high inflation we are still dealing with. Inflation is fundamentally “Too many dollars chasing too few goods.” Therefore, Trump’s dedication to upping domestic production could, in part, have a positive impact on inflation.

Part of the good of Trump’s economy would be the undoing of some of the more economically damaging policies of President Biden, including an unrealistic regulation on the auto industry that would force them to continue producing high numbers of EVs that the market does not seem to want. Oil production is record high right now, but if Trump can produce even more, we may see prices for everyday goods and groceries begin to fall since fuel costs factor heavily into the supply chain and inflation.

And finally, extending the Trump tax cuts is going to prevent a significantly higher tax burden on the middle class and others.

The Bad

Sometimes, Trump speaks very boldly on things that just aren’t so, and his economic agenda contains some of that.

For instance, his campaign has touted “impoundment” as a presidential power Trump could use to limit the worst excesses of Congressional spending. This is simply a falsehood. Congress passed a law called the “Impoundment Control Act” in 1974 in order to stop presidents from unilaterally usurping their power of the purse. Unless SCOTUS sees fit to take this power from Congress and give it to the executive branch – which is extremely unlikely, given Train v. City of New York (1975) and Clinton v. City of New York (1998) – Trump will not be able to wave a magic wand and cancel wasteful spending.

Furthermore, though Trump has branded himself an enemy of inflation, many pundits have concluded that much of Trump’s program will have the unintended effect of increasing inflation. Unfortunately, putting dollars back in Americans’ pockets can devalue the currency in an already inflationary environment if it is not met with a corresponding (or greater) increase in production and real economic growth. Former Treasury Secretary Larry Summers, for his part, referred to Trump’s economic plans this way: “There has never been a presidential platform so self-evidently inflationary as the one put forward by President Trump.”

Finally, the national debt is a problem. Last year, the government paid $658 billion in interest on our national debt, which has only continued to balloon at an alarming rate. Interest payments on our national debt now take up more of the budget than defense. The primary drivers of our ongoing deficits are Medicare and Social Security, but Trump has promised not to touch those programs. In a very real way, Trump’s attempts to cut spending in some areas is really just trimming around the edges. Entitlements and non-discretionary spending take up over 70% of the annual budget.

Conclusion

It’s a mixed bag, and some secondary factors could have an effect on the economy as well. If Trump is better for global stability than Biden, that will contribute to our economic benefit. If Trump is able to leverage tariffs to open up foreign markets, the growth could offset the inflationary aspects of his plans. Most Americans will appreciate the relief from Trump’s tax cuts, but without serious economic growth or a new taxation scheme to pay off our out-of-control deficit, the national debt disaster will only hasten.
Trump may be just what this economy needs, or he may accidentally set off another inflationary spiral. Either way, the Trump economy, if there is one again, will certainly be deregulatory, protectionist, and pro-business.
What will the Biden economy look like in 2024 if the incumbent wins in November? Tune in for our next issue to find out.

Quick Hits

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• Influential evangelical megachurch pastor Tony Evans steps down, citing unnamed sin as reason.
• CNN releases a list of the top 10 “impossibly unaffordable” cities.
• The Economist gives Donald Trump a 2 in 3 chance of winning the presidency in November, according a new statistical forecast.
• Housing expert Kirsten Jordan warns that housing prices could fall 10% in some areas this summer.