The Republican National Committee just released its 2024 platform. While calling it a platform is a stretch, the list of bullet points gives us a sense of what the next Trump administration’s potential goals might be. One issue should be front and center: ending inflation and making America affordable again.
To be sure, “making America more affordable” would be a great slogan and a great goal. This is similar to what many call the “enrichment agenda.” While there’s a lot to dislike about the platform, which can feel unserious and destructive at times, I love this part.
Wealth cannot be achieved by past special interest subsidies or tax breaks, price controls, or massive transfers of taxpayer funds. This is achieved by unleashing the supply side of the economy. That means freeing producers and innovators from excessive regulatory hurdles and burdensome tax burdens, including tariffs, so they can deliver what more Americans want.
The Trump administration’s platform assures us that it will move in this direction. For example, it wants to increase America’s dominance as an energy producer, which can only be achieved through a deregulatory agenda. In addition to providing counterproductive tax incentives for first-time homebuyers, it also expresses a commitment to lowering housing costs through deregulation.
The platform said it would “remove the electric vehicle mandate, cut costly and burdensome regulations” and “end the socialist Green New Deal.” I think this means ending the expensive subsidies and tax breaks in the Inflation Cut Act. Good idea, but be prepared to hear the recipients of all these handouts cry that they won’t be able to do the things they were already doing before they got the subsidies.
A deregulatory agenda would serve the Republican goal of boosting manufacturing better than tariffs, which former President Donald Trump still favored despite overwhelming evidence that they don’t do what he claims they do. Most tariffs raise the price of inputs used by U.S. companies, including in manufacturing, to produce products that serve their customers.
A similar story can be said about Republican attacks on immigrants. Reduced immigration will create labor supply shortages, hurt manufacturing and slow economic development.
Still, despite their trade and immigration agenda and the many conflicting goals the platform espouses, implementing the deregulation part of that agenda will still make some progress in freeing up supply, thereby lowering prices. In fact, President Joe Biden has not only maintained many of Trump’s tariffs but also added some of his own. He also systematically supports the need to subsidize certain goods—getting customers to buy what he wants them to buy—while taking action to limit supply. This is what causes affordability to fail.
But in terms of affordability, I’m less optimistic about the prospects for the next administration to end inflation. That’s because Trump and other Republicans staunchly embrace fiscal irresponsibility and excessive debt. The platform makes no mention of plans to rein in government debt. Instead, it pledges to “fight for and protect Social Security and Medicare without cuts, including without changes to the retirement age.”
Many voters liked hearing that promise. But maintaining these two objectively underfunded projects will inevitably exacerbate the debt burden over the next 30 years. To date, throughout the history of the United States, Uncle Sam has accumulated approximately $34 trillion in debt. Under Trump’s plan, the government would need to borrow an additional $124 trillion for these projects alone.
Putting aside the question of who will lend us all this money, when foreign buyers have reduced their purchases of Treasuries, remember that much of the inflation we have suffered recently is from the Biden administration’s massive spending on top of COVID-19 The product does not have any planned expenses. Therefore, announcing that the United States will go on a borrowing spree again would send a bad signal and could even increase inflation.
This becomes even more important as Trump looks to make permanent tax cuts that expire after 2025, eliminate the tip tax and more. If Congress and the president do this without any offsetting spending cuts, at least another $4 trillion will be added to the debt over the next 10 years. As inflation picks up, we could easily see the Fed raising interest rates again, making borrowing more expensive.
On top of that, Trump’s deregulatory agenda could lower some prices. But it will only be a game changer if he takes financial responsibility seriously. Right now, he hasn’t, so I wouldn’t count on it.
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