I. Trump is Inheriting a Goldilocks Economy
A. The Great Recession Recovery vs. the COVID-19 Recovery
From the moment Obama won election in 2008, Congressional Republican leadership made it clear their singular objective was to make Obama a one-term president and obstruct his agenda at all costs. And obstruct they did with filibustering and fear mongering. During the Obama years, Republicans also pretended to care about national debt and budget deficit. The end result of this gridlock and obstruction was an economy that was starved of the spending to pull the nation out of the crater of the Great Recession in 2008, leading to a slow and steady recovery throughout much of the Obama years.
There is a decent argument that the backdrop of this anemic recovery in the wake of such a disaster set the stage for Trump’s win in 2016. Although there were headwinds for the Democratic Party in 2016 running for a third consecutive term for the White House, it was a winnable race for them. Trump won while losing the popular vote, and by clinching the electoral college by less than a hundred thousand votes in critical states. Had the recovery from the Great Recession been more rapid and complete before 2016, it is not hard to imagine a small switch in voters delivering a win for Clinton.
Republicans also won Congress in 2016. With this power, they dropped the fake pretense of concern for the debt or deficit. The core legislative achievement of the first Trump Administration was a budget busting tax give away primarily for wealthy individuals and corporations. On top of this, the GOP threw care to the wind and let domestic and military spending flow freely during the Trump years. The stimulus effect of tax cuts and spending that was deprived during the Obama years was in full bloom from 2017 to 2020 prior to the pandemic, sustaining the good economy and low unemployment that Trump inherited from Obama. It was government on easy mode for Trump the first time.
Then Trump blew this inheritance (something he is used to doing in his personal affairs) with a botched response to COVID (though there likely would have been major economic effects anyway). Congress then (rightly) greenlit massive spending without reservation to hold the economy up. The result of these differing responses between 2008 and 2020 to economic calamity makes a stark picture. The emergency spending during 2020 under Trump, combined with the Biden Administration’s American Rescue Plan, infrastructure bill, and Inflation Reduction Act (all passed without GOP support since they started to pretend to care about spending again) all helped create a booming economy by 2023-2024 that outclassed the rest of the world. And while this likely contributed to underlying inflation, economically speaking, bringing the U.S. back up to full speed so quickly had significant benefits (less unemployment + related effects, better tax receipts, and best use of employment capacity) that outweighed the downsides of inflation, notwithstanding its politically toxic effects.
B. The Constraints of a Goldilocks Economy
Biden is leaving Trump a Goldilocks economy going into 2025. The economy is near full employment, growth is solid, and inflation is tamed. Unlike during the Obama and early Trump and Biden years, the economy does not have a slack in demand that can cushion an expansive agenda and whimsical budgeting with few trade offs. Massive tax cuts and spending in this environment are less effective and run the risk of ramping up inflation.
There are endless ways the MAGA agenda might blow up the tranquil economic situation. A few possibilities based on the 2024 campaign planks include: opening the floodgates to crypto currency speculation being integrated into the financial system; aggressively pursuing mass deportation to deprive critical sectors of hard to replace labor; imposing widespread tariffs; purging the federal government of employees to bend the institutions to his will; playing hack and slash with the budget in the name of “efficiency.” Who knows what combination of crisis and mismanagement might unfold!
With a good economy, Trump could play it smart with a light touch at destabilizing actions, coasting on his inherited economy like in 2016 and playing up propaganda to make modest efforts seem monumental. For example, given the enormous logistical hurdles to deporting millions of undocumented immigrants, Trump’s team might be tempted to do flashy publicized raids in liberal centers that don’t accomplish much but sound tough. The first Trump Administration had lots of instances of minor policy tweaks being promoted as game changers.
But Trump, now unconstrained, surrounded by sycophants and ideologues, and having received the spineless loyalty of the GOP, wants to do big, dramatic things to glorify himself in history with a bang to match the faux successful rich guy narrative he spent his life cultivating. It is why he muses about imperialist ambitions like taking the Panama Canal and Greenland and threatening our allies. He is simply incapable of anything but transgressive actions (except against dictators he has a crush on) because everything in the MAGA world is zero-sum.
And thus, the ways in which Trump—the mad captain bent on conquest at the helm with a pre-existing good course and favorable winds—could steer the proverbial ship aground are endless and always near.
II. The Faux Populist Bubble Will Burst Quickly (Again)
Coverage surrounding the Trump transition and GOP after 2024 has a layer of explosively naïve optimism about the “populist” potential of the incoming administration and its ability to usher in good government. This I think stems from several factors. First, the 2024 Trump campaign assembled a broad coterie of political misfits and cranks who talk big game about reform and breaking the establishment. RFK Jr. and Tulsi Gabbard, for instance (previously ostensibly liberal persons ostracized from the Democratic Party), were picked for cabinet level positions, giving the uninformed a vibe of a grand cross-appeal coalition.
Another component is the full endorsement of the business and tech communities, including prominent billionaires that have thoroughly capitulated to MAGA. Elon Musk’s intimate involvement with the campaign and transition have been heralded by some as a coup for the country, now so lucky to have such a genius businessman putting his mind to “government efficiency.” This is reminiscent of arguments for Trump in 2016 as a successful rich guy as seen on “The Apprentice”.
Third, the Trump campaign was a non-stop Hail Mary of gaudy bravado and delusional fantasy pitches. He has now won a second term after facing down criminal indictments, and has total capture of the Republican Party and conservative ecosystem. To his devotees, this surely feels like divine fate. This cultural “vibeshift” has heaped mountains of groveling submission and unearned deference to the incoming administration.
After Trump’s 2016 win, similar to today, there was an excited curiosity about a political outsider winning the presidency, imagining a Trump government as renegade and transformative. Many now, just as then, look to excuse Trump and give him the benefit of the doubt at every turn.
Just after the 2016 election, I wrote The Wolf and His Pack, in which I think I correctly identified the overall trajectory of the first Trump term policy. Trump had (and still has) no interest or intellectual capacity for the work of government. As such, aside from the bluster and general directives he might have had, the true work of legislation and government was at the feet of GOP ideologues and the conservative movement both in and out of Congress. The two big legislative pushes from Congress were GOP wish list items: the previously mentioned big tax cut for the rich, as well as an attempt to repeal Obamacare to gut healthcare for millions of poor Americans. The first Trump term was a shit show of corruption, incompetence, and criminality. But in terms of true policy, it was little different than a cookie-cutter Republican administration.
Trump is no different in 2025 except in his new lack of institutional constraints. Those who surround him are subservient true believers. He will try to wield authoritarian levels of executive power to do as much as he can. But the government is vast, and the MAGA coalition left to its discretion will execute the conservative movement’s radical agenda, some of which is seen in Project 2025, whenever possible.
The exact details of the next four years are uncertain because of the chaotic unpredictability and incompetence of the MAGA coalition. There are several factions united only in their love for Trump, and with slim majorities in congress, have little wiggle room to negotiate complex bills. Indeed, Congressional Republicans over the past decade have gutted their staffing to assist in developing laws because they don’t actually do that much when in office. It turns out anti-government hacks aren’t great at running government.
What is more certain is that what is to come will be awful for most Americans, and it is utterly laughable to pretend that the substance of the second Trump administration will be anything more than a worse version of what was during the first time around: a cesspool of corruption and self-serving grift, bent to plutocratic interests, and reactionary ideologues rotting from the head of Trump on down. This time there is also the fun added flavor of open fascist impulse.
It is foolhardy to think we are on the cusp of a “populist” or reformist agenda, though it is amusing watching persons within Trump world flirt with pro-social and natalist ideas that taken seriously would logically require intense government involvement and spending. Much of MAGA’s machinations are culture war chum that mask the bread and butter of the conservative movement’s clear, unifying designs of pushing for tax cuts and gutting health care and benefits for the poor and less fortunate. To disregard that simple truth is like looking at an apple and believing it must taste like an orange.
In the realm of limitless possibilities and magical thinking that ignores historical context and political economy, it is always conceivable that I am wrong, and we will instead see the renaissance of the United States some are imagining that brings about some vision of greatness Trump harkens to. In the same vain, it is also possible that one of my dogs sprouts wings and flies to the moon. It feels a bit like Déjà vu to hope for swift backlash to the cold reality of unchecked MAGA governance, and no less frustrating when that hard lesson should have been obvious the first time around. So it goes. With a resurgent authoritarian inbound, a new layer of anxiety is whether our democracy holds together enough that a backlash can still mean something.
As AJ Thinks 