The Problems With Trump: #1 – The Economy

I left on a two-week vacation on January 23.  It was hard to miss what President Trump was doing even while gone, and since we’ve been back, it’s been impossible – even with pitchers and catchers reporting.  So, I will be posting a few thoughts on Trump 2.0 in the next couple of weeks.  First, the economy.

Donald Trump got elected, in part, because some voters thought Joe Biden and the Democrats weren’t doing a good job on the economy.  The question is whether President Trump is going to do any better.  Which brings up one of my favorite quotes about the role of government and the economy.  It’s from Sir Bill English, then Finance Minister of New Zealand.  In 2014, he said: “Governments need to create an environment of stability and good incentives for [businesses] to grow the economy.  Businesses need confidence the rules will not shift and the Government is not one of the risks they have to manage.”

That’s pretty simple – and logical.  Business, and the people who run and invest in businesses, need to know the rules.  The rules should be clear, and they need to be stable.  If they do need to change, there should be plenty of advance notice, so people can plan and adjust.

But that’s not what I see happening in Washington.  Instead, we are seeing Donald Trump’s people coming in like a whirlwind, yet who knows where we are going to be when the dust settles.¹  The Republicans have incredibly thin margins in both the House and the Senate, especially the House, where even two members can stop anything from happening.  And the Republicans in the House have way more than two crazy members who can’t be trusted to do anything.  Will the tax cuts and reforms passed in 2017 be renewed?  Will a budget actually be passed?  Who knows.

And what is President Trump going to do with executive orders and more?  He may think “tariff” is a beautiful word (and it might be if you are a bully), but the way Trump threatens tariffs on friends and enemies (mostly friends, it seems), and then changes his mind the next day makes it impossible for businesses, for people, to plan for the future or know what is coming next.

When people don’t know what is going to happen, many of them will react like a turtle: they’ll pull in their heads and hide in their shells, doing nothing until, they hope, the danger, and uncertainty, passes. 

That is what I fear Trump 2.0 is going to do to the economy.  People aren’t going to know what will happen next, so they will do nothing.  They won’t invest.  They won’t buy new equipment or expand their businesses.  They will just pull in their heads and do nothing.  Our economy won’t grow.  Our people won’t get better off.  That is not what President Trump was elected to do, but I am afraid it is what might wind up happening.
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¹ Many of these things happened under Joe Biden, too, with his hard left turn and executive orders all over the place.  Rules that had been in place for decades were overturned.  It happened under Trump 1.0, too, and under Barack Obama.  It just seems like it is getting worse, with each succeeding administration going further than the prior one.
UPDATE (2/14/25 10:35 am): Corrected a couple of typos.

Comments

[Grace Willnerd]

And even us just simple folk like to have stability. I’m already regretting the trip we will be taking for Spring Break- I’d now rather have hay money in the bank or under my bed and not to mention that I’m concerned that he’s fired people who actually keep us safe to fly at the FAA. What do we do?

[Patrick Allen]

It's difficult. In my opinion, chnage is needed, but it would be nice if it could be less chaotic.