Title: Trump’s Second Term Economic Agenda: Taxes, Social Security, Federal Reserve, and More
Former President Donald Trump could potentially face unfinished business from his signature achievement, the 2017 Tax Cuts and Jobs Act (TCJA), as he contemplates a second term in the White House. Provisions of the TCJA are set to expire, leading to potential tax increases on various sectors of the economy in 2025. Trump, a likely front-runner in the Republican presidential primary, would have to address this issue alongside other items on his economic agenda.
Revisiting the TCJA is just one aspect of Trump’s economic plans for a second term. Despite facing 91 criminal counts across four criminal cases, Trump’s popularity within the Republican party remains strong. President Joe Biden’s biggest liability for his reelection is the state of the economy, particularly the 16% increase in overall prices since he took office.
One of the key challenges Trump would face in a second term is the impending insolvency of Social Security by 2033. The ratio of workers to Social Security recipients has decreased significantly, exacerbating the problem. Trump has been known for resisting Social Security reforms, but without any action, a 23% across-the-board benefit cut is likely to occur within a decade, affecting newly retired couples by cutting their benefits by $17,400.
Another potential issue that a second Trump term could bring is renewed clashes with the Federal Reserve. In the past, Trump has shown little regard for the independence of the Central Bank, criticizing its interest-rate policy. If given the opportunity, Trump could consider replacing Federal Reserve Chairman Jerome Powell with someone like Larry Kudlow or economist Judy Shelton. Although Trump’s nomination of Shelton to the Fed Board was withdrawn by Biden, these individuals are respected conservative-leaning economists.
Trump’s industrial policy could also undergo significant changes in a second term. He may aim to reverse many of Biden’s green energy tax breaks and subsidies in favor of unleashing domestic energy production. Additionally, a potential expansion of Trump’s tariff regime could see universal tariffs imposed on the majority of foreign imports. The revenue from this consumption tax could be used to fund domestic tax cuts and simplify the federal tax code.
In terms of spending, Trump has expressed his intention to cut non-entitlement spending and challenge the Impoundment Control Act, which restricts a president’s ability to delay or cancel congressionally appropriated funding. Trump believes that reasserting the president’s historic impoundment authority would restore negotiating leverage with Congress and control spending.
In summary, Trump’s second term economic agenda would involve revisiting the TCJA, addressing Social Security’s impending insolvency, potentially clashing with the Federal Reserve, reversing Biden’s green energy policies, and cutting non-entitlement spending. Trump’s approach would prioritize economic growth and protectionist policies. With a focus on pro-business strategies, Trump aims to grow the economy and counter projected spending increases.
