'Trump is not a magician'—Ex-president may actually make things worse, warns economic expert

Voters prefer Trump over Biden on the economic front, but one economic expert argues that trust is misplaced.

Matthew Yglesias wrote in Bloomberg on Sunday that if Trump is re-elected, the U.S. may see inflation worsen due to increased military spending and extended tax cuts.

He highlights that Republican leaders are pushing for a budget that includes these measures, adding $10 trillion to the national debt.

Yglesias contends that in the current economic climate, marked by persistent inflation and high interest rates, these policies could lead to fiscal instability.

“Lax fiscal policy worked just fine for Trump during his previous stint in office. But circumstances have changed, and re-running that play — as he is currently promising to do — risks genuine fiscal catastrophe,” writes Yglesias.

Republicans are advocating for the full extension of the 2017 Tax Cuts and Jobs Act, set to expire in 2025.

The Joint Committee on Taxation recently reported that extending these cuts would cost 50% more than initially estimated. Additionally, Senate Republicans propose increasing defense spending to 5% of GDP.

“If Republicans have an actual plan to make this math work with offsetting cuts elsewhere, people deserve to know what it is,” writes Yglesias.

Biden was dealt a tough hand, and Trump will be, too

Though the majority of Americans prefer Trump’s economic policies to Biden’s by a 10-point margin, Yglesias contends we can’t entirely blame Biden for our economic conundrum.

There have been many events during Biden’s presidency that put unprecedented pressure on the economy.

They include trillions in economic relief spending, the pandemic, and a laundry list of geopolitical events that disrupted supply chains, including Russia’s invasion of Ukraine.

Trump, if re-elected, would face challenges of his own, including an economy that seems less sensitive to rate hikes than previously thought.

Some of Trump’s supporters seem to think he can make inflation disappear, but that’s not the case, says Yglesias. “Trump is not a magician, and he can’t turn back the clock,” he says.

He calls Trump’s policies during his presidency "macroeconomic populism," which he defines as tax cuts and increased military spending.

According to him, such policies could exacerbate inflation without significant spending cuts elsewhere, and it’s still not clear if and where those cuts would be made.

“To be fair, there are no feel-good answers to the question of how to address the budget deficit amid rising international tensions and an aging population. But a gigantic tax cut is not going to help,” Yglesias writes.

There’s been a lot of talk lately about what Trump may or may not do if he gets re-elected.

The Wall Street Journal reported some of Trump’s allies have begun drafting policy proposals that would reimagine the Fed as we know it.

Former Trump advisors told Politico that the administration may devalue the US dollar to make trade more competitive.