As a conservative and a student of economics for over 40 years, it’s been downright painful to witness the economic malfeasance of the Trump Administration. Were it not happening in real time, it would be hard to believe any President would intentionally initiate trade wars with our allies, reduce the pool of labor needed to sustain growth, dismantle teams of experts working on our most pressing problems, reduce funding for public and higher education that underpin future economic prosperity, cut the overseers of our fiscal integrity, and damage the confidence our economy is built on. Tragically, it’s inevitable that these actions will create more uncertainty, stoke inflation and push us into a recession.
One has to wonder, what is motivating President Trump. Is it to feed the cultural war he’s cultivated in his political base? Perhaps it’s also to win the prize Republicans most desire, a large tax cut for the wealthy?
While it’s true that America’s large and growing trade deficits are a serious problem, one of President Trump’s most damaging economic policies is the way he’s going about remedying these imbalances. The tariffs he’s imposed, and the resultant decline in the value of the dollar, are raising the price of every product brought into America. Businesses and consumers across America, are already reeling from the President’s tariff chaos, and they’ve barely begun.
Plunging consumer and business confidence are suppressing purchases which will cause the economy to contract. While some businesses have announced plans to invest in news plants, perhaps to ingratiate themselves with the Trump Administration, or believing that these tariffs are going to last, most businesses and consumers are hoarding cash in anticipation of an economic downturn.
Beyond the suppressing effect of President Trump’s trade war, his many disparaging comments about other countries is suppressing demand for American products from peoples that were once our friends.
President Trump’s derogatory and insulting comments about allies has also resulted in declining tourism in the US, costing rental property owners and US businesses billions.
Deportation threats against foreign students are also reducing cash flows into the US and pressuring the financial well-being and cultural richness of many colleges and universities.
President Trump’s disparaging and callous treatment of immigrants, and experts once employed by the federal government, is also putting us at risk of a brain drain. After WWII we were the great beneficiary of people immigrating into the US. President Trump’s cultural war has now put us at serious risk of that being reversed.
The Trump Administration threats against immigrants is also sapping the labor force of employees needed in many segments of the economy, especially agriculture and services. Without workers to fill these positions, businesses will continue to be hamstrung with labor shortages.
As we consider the factors driving our economy, it’s essential to remember that President Trump and Republicans in Congress are pushing a massive tax cut to rescue us from the economic decline they’re creating. Were the policies suppressing the economy constructive, that would be one thing, but sadly for all, they’re not. Furthermore, and most importantly, the massive tax Republicans are pushing will cut the healthcare and education resources the poor and middle class need to lift themselves up and be more productive members of society.
While our need to reduce healthcare costs in America is acute, Republicans plan to try to save money by creating red tape that will likely bump eight million people off Medicaid. Republicans are also planning to bump another six million off their ACA affiliated insurance by eliminating premium tax credits for that insurance. Not only is this cruel, it will increase costs by forcing people to forego healthcare until their conditions worsen and they have to seek expensive emergency room treatment. One has to wonder when Republicans are going to learn that the best way to reduce costs and make America more prosperous is to provide healthcare, not take it away.
The “Big Beautiful Bill” Republicans are pushing is also highly skewed toward enriching those already wealthy. The Yale Budget Lab recently found that the average bottom 20% of households will see their annual income decline by $800/year by 2027. Meanwhile, those in the top 20% of households will see their income grow by an average of $9,700/year. For those in the top 1%, their annual income will grow by $63,000/year. And for those in the top 0.1% their annual incomes will grow by $444,600. Republicans know this, but don’t seem to care that they are further stoking income inequality and damaging the social and economic fabric of our country. The Republican Party, that once proudly defended the little guy, has become the Party of taking from the poor and giving to the rich.
Another gross exercise of economic malfeasance, was when President Trump fired 19 US Inspector Generals that oversee audits and investigations of government contracts. These government watchdogs saved the $93 billion in 2023(3c) and another US $71 billion, but President Trump fired them anyway.
Sadly for all, President Trump chose to improve government efficiency through Elon Musk’s DOGE program. DOGE has not only seriously rattled the lives of roughly three million civilian federal employees, it fell far short of its $2 trillion savings goal, and “may actually cost taxpays $135 billion”.
Under the guise of saving money, the Trump Administration has also driven out 31% of IRS audit agents. The Trump Administration can claim they’re saving money, but the facts are that these auditors largely focus on auditing the wealthy, and “for every $1 spent on auditing the top 0.1% of earners returns about $26 in tax revenue”.
In addition, the Trump Administration is cutting 2,300 agents responsible for policing Wall Street institutions. After the “great financial crisis” of 2008, which happened under President George W Bush, one would think that Republicans would have learned their lesson not to slack off on oversight of banks and other financial institutions.
Sadly for all, including future generations, the tax cuts in the Republican tax bill will increase our national debt by $2.8-5.0 trillion. Just the potential of this bill passing has already driven up interest and mortgage rates, precipitated a downgrade of the US debt, and caused the value of the US dollar to fall by approximately 10%.
President Trump was right to focus on trade imbalances, controlling immigration, healthcare costs, and government efficiency. However, his threats and attacks on those he should be collaborating with, and his uninformed, rapid chain-saw approach to addressing complex problems is seriously damaging our economy and the lives of everyone. In Q1 of this year, for the first time since 2022, non-farm productivity in the US, a foundational element of our economic prosperity, declined by 0.8%, while unit labor cost increased by 1.6%. Even “America’s most powerful banker”, JP Morgan’s CEO, Jamie Diamond, recently “warned that the US economy faces a greater threat than a recession….stagflation”.
Tragically for all, except the wealthy, the breadth and depth of the economic malfeasance Trump Administration is stridently executing, will damage our economy, and many lives, for years to come. While none of us know precisely how all of the above will play out, it is axiomatic that alienating our allies, taking from the poor and giving to the rich, taking from future generations to feed consumption today, and taking away well established economic guardrails will, at best, create significant hardships for the American people.