Where We're At

Things are looking bleak for Democrats. The nominee, the current sitting President, isn’t lively enough to push back on Republican nominee Trump’s parade of lies at the first debate, while sounding significantly older and more worn-out than he did during the 2020 campaign. Donald Trump was just shot in the head, which usually would be bad news for the person who got shot in the head, but walked out of his assassination attempt only after doing a final bit of crowd-work, leading to lauding plaudits from all forms of media. 

If you were going by economic signals, it would seem like Biden would be fairly well-positioned. While inflation raged out of control in the United States for much of 2021 and 2022, as it did across the world, Biden’s push to increase US productive capacity with the Inflation Reduction Act did well to help cool off inflationary pressures in the US months earlier than countries the EU and Canada. All of this enabled a tight labor market to continue, contributing to rising real household wages (i.e. inflation-adjusted) especially for low income workers. The solar & electrification revolution is here, thanks in large part to Joe Biden’s IRA bill. But American people still feel worse off — which is fair; for some, inflation has outpaced wage growth. If your household hasn’t seen at least a 20% increase in wages since 2019, you are poorer in real terms.

But the logic for Trump is so abhorrent & confusing, I have to point out what no one seems to be saying: electing a President with nothing to lose is going to cost us a lot. The idea that by virtue of him being a narcissist with nothing to lose, he’ll be better able to govern: he just wants acclaim, he’ll try whatever to be revered. The problem is America’s a series of fragile institutions. We already saw that from his first term, where he was close to achieving a full on insurrection after attempting to lobby the secretary of state of Georgia to throw out thousands of ballots to secure his victory. There wasn’t much we could do except hope that the elected Secretary of State was up to hold his ground or capitulate to the sitting President. In 2020, Brad Raffensperger, but in 2024, who knows whether other key personnel will have the same sense of ethics. Once that happens, once Trump personally voids an election because he’s unhappy with the results, we’ve lost our democracy, and there will be no recourse. 

Why Trump's Presidency Would Be So Destructive

And beyond democratic institutions, Trump’s temperament and empty husk of policy rhetoric implies that he’ll prioritize short term gains (or short term losses for his perceived “enemies”) over long term, sustainable policy. And further, he doesn’t understand how to run a country of institutions reliant on trust. As a many-times-reimagined failed businessman, Trump is reliant on his “nothing-to-lose” attitude: he takes moonshots, promotes them as if they cannot fail, and when they do, he files for bankruptcy and refuses to pay contractors. In the United States, the cornerstone of international economic stability, this cannot happen. 

Setting aside Trump’s fascist tendencies — clear evidence that he tried to overturn the 2020 election through pressuring election officials, attempts to sway the judicial system and install loyalists in key positions, and top policy advisors & campaign officials calls for journalists and progressive activists to be jailed or killed if he becomes President — he’s going to implode the US economy.

1. Manufacturing & Production

Trump’s primary talking point is about bringing down inflation, but his proposed policy do not align with that goal. Trump’s campaign, apparently allergic to evidence that could be subpoenaed, has released little in the way of policy proposals. But Trump has routinely stated at rallies he will impose a general tariff on all goods that come into the United States. He claims this will help American producers (only partially true) and lower prices (categorically false). He does not explain the mechanism by which prices fall. His theory is that American producers will simply produce more for cheaper, which violates basic economics & empirical evidence when tariffs are imposed. Further, most American manufacturers rely on imports of some kind for raw materials: there are many raw materials that simply aren’t mined or created in the United States. For these manufacturers, tariffs will only drive up prices, and they’ll pass on these costs. For US consumers, costs will skyrocket. Other countries will lose as well, but US consumers & manufacturers who import tools and goods from other countries (read: nearly all of them) will be on the hook. Where’s Jim Farely, CEO of Ford leading the charge against Trump & communicating how much car costs will rise because of the tariffs? Where’s the CEO of Subway talking about how this will increase the cost of a footlong? They need to speak up.

2. Inflation

Trump has no sense of budgeting for a household, muchless budgeting for a superpower with control over their own currency. The two are not the same, as much as “fiscal hawks” would like to claim they are. But there is an amount of unfunded government spending at a given time that leads to increasing inflation: that is, when the productive capacity of an economy is reached, additional spending will crowd out private sector spending and lead to higher costs and rising inflation. Trump is hyper-focused on both restoring multi-trillion dollar tax cuts to the wealthy, while also retaining all Medicare and Social Security benefits and increasing military spending to fund his domestic use of the military for “crime prevention” in blue cities (a truly chilling & terrifying proposal on its own). 

So what will Trump do if he overheats the economy? Biden did so at the start of his term through 2022, and he’s paying for it now. Biden responded to rising inflation by focusing on increasing the productive capacity of the economy. During a tight labor market & rising inflation, additional deficit spending is only going to supercharge the economy further. So the (somewhat erroneously named) Inflation Reduction Act ensured the bill was paid for through tax incentives, grants, and loans, along with a minimum tax on corporations with over a billion dollars in revenue and a tax on stock buybacks for companies. None of Trump’s spending was ever paid for. He doesn’t know how to balance a budget. He makes decrees, and hope they work out. That doesn’t work for the US. 

3. Interest Rates

Trump doesn’t like high interest rates. He thinks the Federal Reserve should set interest rates at “0% or lower”. He pushed for negative interest rates for borrowers when he was President, and wants to exert pressure & control over whoever he appoints to the Fed. If they don’t, he has plenty of policy advocates in his corner telling him to abolish the Federal Reserve in its entirety. If Jerome Powell’s replacement takes the wrong tone, Trump would abolish an American institution that has decreased the frequency and impact of recessions that occurred multiple times a decade for much of the 18th and 19th centuries. This throws the worldwide economy into disarray. This leads to a global recession, and more frequent, deeper recessions thereafter. Trump will throw it away on a whim. We will have to deal with the consequences forever. 

The bottom line:

Trump has clear plans to install sycophants at every level of government and purge any non-loyalists who will not follow his orders. But setting that aside, his policies are incredibly dumb & will destroy the global financial economy. He’s going to drive up costs, drive up inflation chasing higher and higher GDP production, and destroy the integrity of our monetary system, increasing the frequency and length of domestic and worldwide recessions. And it might look good for the first year or two. But Trump’s pathological incapability to think long term & work within institutions rather than against them, along with his prescribed policy solutions, will inevitably lead to this outcome. If you saw that picture & thought Trump looked cool, please, think about what he actually wants to do. And get worried — we need everyone to understand just how bad this would be. I’d gladly take a sleepy President over an economy in crisis, run like a business with a bankruptcy in its future.