Yesterday, I celebrated Biden’s exit from Washington.
We have 50-plus years of evidence showing he is a corrupt, big-government mediocrity. Good riddance.
But Biden being bad does not imply Trump being good.
Instead, he’s an incoherent mix. Some of his policies are good and some are bad. In today’s column, I’m going to outline my three biggest hopes and three biggest fears for the next four years.
Three biggest hopes:
- Trump aggressively curtails red tape: Simply having Biden out of the White House will be a big net plus since his administration generated a lot of new regulatory burdens. Hopefully the Trump appointees will undo and reverse many of Biden’s red-tape blunders and then go even farther with some regulatory rollbacks. If Jimmy Carter could do it, so can Trump.
- Trump gets religion on spending restraint: I’m not naive enough to think that Trump will morph into Javier Milei. But I’m hoping he might meet my minimum test of GOP fiscal rectitude, which would mean bringing spending back down to the pre-pandemic trendline. That would still mean government is far too big, but a bloated public sector is better that a super-bloated public sector.
- Trump defunds the OECD: Giving American tax dollars to a left-wing international bureaucracy is absurd. And it would be absurd even if the United States had giant budget surpluses. Given the actual perilous state of America’s public finances, sending money to statist bureaucrats in Paris is an exercise in economic masochism. Needless to say, I hope the OECD’s dirigiste scheme for corporate tax harmonization is derailed as well.
Three biggest fears:
- A global trade war: If his campaign rhetoric is any indication, Trump is going to to promiscuously impose higher trade taxes on American consumers. I’m open to the argument that targeted trade barriers might be okay because of China’s misbehavior, but there is no legitimate case for higher taxes on trade between people in free nations. To make a bad situation worse, most foreign countries will retaliate, thus hurting American exporters. This will be a giant unforced error. And if the European Union moves forward at the same time with its plan for carbon protectionism, we may be looking at a 1930s-level collapse in global trade.
- Republicans bungle tax policy: As I’ve already written, Republicans are trying to fit a size-18 tax agenda into a size-4 outfit because of the rules governing “reconciliation” legislation. This means they need deficit-reducing policies to offset deficit-increasing policies. Entitlement reform is the ideal way of complying with these rules. The second best way is to get rid of harmful tax preference such as the fringe benefits exclusion and the exemption for muni-bond interest. By contrast, resuscitating the border adjustment tax (what I sometimes call a pre-VAT) would be among the worst-possible offsets.
- Trump bungles an economic crisis: I can’t predict when a crisis will happen. But I can predict the factors that might help precipitate a crisis, including bad monetary policy, excessive red ink, and a global trade war (with bad monetary policy almost certainly being the top risk). We may get a perfect storm of all three in the next few years. The first indicator of a crisis presumably will be a big correction in financial markets, perhaps triggered by an uptick in interest rates. But whatever the trigger, I fear Trump will panic and get tricked into a tax-hiking budget deal.
P.S. At the risk of patting myself on the back, I think I accurately described Trump when appearing on New Zealand TV back in 2017. Simply stated, he’s the very opinionated but not necessarily well-informed Uncle at your family’s holiday dinner.
———
Image credit: DonkeyHotey | CC BY-SA 2.0.
