Based on exit interviews, focus groups and data about the 2024 election, Trump won this election because Americans were angry about the cost of living and they saw Trump as the “change candidate” who would upend the status quo. They compared how they were doing when Trump was in office before the pandemic happened to the time when Biden was in office after the pandemic subsided, and they figured they were better off when Trump was president. During the pandemic, inflation surged across the entire globe, and even now that it has subsided, overall prices are still somewhat higher than before. That has led to many of those governments being voted out of power in countries across the globe, not only in the United States.
Consumers still bear the scars of the inflationary surge. Prices on average are still 19 percent higher than they were before inflation began to accelerate in 2021. Grocery bills and rent hikes are still causing hardships, especially for lower-income households. Though inflation-adjusted hourly wages have risen for more than two years, they’re still below where they were before President Joe Biden took office.
Voters took their frustration to the polls. According to AP VoteCast, a sweeping survey of more than 120,000 voters nationwide, 3 in 10 voters said their family was “falling behind’’ financially, up from 2 in 10 in 2020. About 9 in 10 voters were at least somewhat worried about the cost of groceries, 8 in 10 about the cost of healthcare, housing or gasoline.
In short, voters thought back to the good old days with Trump running the show and recalled that the cost of living was lower which led to their choice for president. They either forgot about the chaos we had with Trump as president or didn’t know about it. They forgave him for the pandemic because that was beyond his control or maybe they were unaware of how badly he botched that crisis- which resulted in millions of Americans dying needlessly. In short, Americans voted for the “change candidate”, the guy who would shake it all up and make their lives better.
Or so they hoped.
Shaking everything up doesn’t always get you what you want.
With their votes, tens of millions of Americans expressed their confidence that Trump can restore the low prices and economic stability they recall from his first term — at least until the COVID-19 recession of 2020 paralyzed the economy and then a powerful recovery sent inflation soaring. Inflation has since plummeted and is nearly back to normal. Yet Americans are frustrated over still-high prices.
“His track record proved to be, on balance, positive, and people look back now and think: ‘Oh, OK. Let’s try that again,’ ” said Douglas Holtz-Eakin, a former White House economic adviser, director of the Congressional Budget Office and now president of the conservative American Action Forum think tank.
WHAT TRUMP PROMISED TO DO in his next term
Trump is about to take office again. Let’s look at what he has promised to do and how that will affect you if you are an average American, not a super wealthy American.
Here are Trump’s three big promises:
- He plans to impose huge tariffs on foreign goods.
- He plans to cut taxes for individuals and businesses.
- He plans to deport millions of undocumented immigrants currently working in the US.
Since Election Day, the Dow Jones Industrial Average has skyrocketed more than 1,700 points, largely on expectations that tax cuts and a broad loosening of regulations will accelerate economic growth and swell corporate profits.
Maybe so. But even if corporations and the wealthy do better, it does not mean that average Americans will do better. Many economists warn that Trump’s plans are likely to worsen the inflation he’s pledged to get rid of, drive up the federal debt and, over time, slow growth.
THE BIDEN/HARRIS ECONOMY TRUMP JUST GOT IS GROWING FAST AND INFLATION IS CURRENTLY SLOWING
Trump is inheriting an economy that, despite frustratingly high prices, is fundamentally strong. Growth came in at a healthy 2.8 percent annual rate from July through September. Unemployment is 4.1 percent — quite low by historic standards.
Among wealthy countries, only Spain will experience faster growth this year, according to the International Monetary Fund’s forecast. The United States is the economic “envy of the world,” the Economist magazine recently declared.
The Federal Reserve is so confident that U.S. inflation is slowing toward its 2 percent target that it cut its benchmark rate in September and again this week.
Last month, 23 Nobel-winning economists signed a letter warning that a Trump administration “will lead to higher prices, larger deficits, and greater inequality.”
“Among the most important determinants of economic success,” they wrote, “are the rule of law and economic and political certainty, and Trump threatens all of these.’’
The Peterson Institute for International Economics, a leading think tank, has estimated that Trump’s policies would slash the U.S. gross domestic product — the total output of goods and services — by between $1.5 trillion and $6.4 trillion through 2028. Peterson also estimated that Trump’s proposals would drive prices sharply higher within two years: Inflation, which would otherwise come in at 1.9 percent in 2026, would instead jump to between 6 percent and 9.3 percent if Trump’s policies were enacted in full.
1. TARIFFS
The centerpiece of Trump’s economic agenda is taxing imports. It’s an approach that he tells us will shrink America’s trade deficits and force other countries to grant concessions to the United States. In his first term, he increased tariffs on Chinese goods, and he’s now promised much more of the same: Trump wants to raise tariffs on Chinese goods to 60 percent and impose a “universal’’ tax of 10 percent or 20 percent on all other imports.
READ MORE: Trump favors huge new tariffs. How do they work?
Trump insists that other countries pay tariffs. That’s wrong. The truth is that American companies pay them — and then typically pass along their higher costs to their customers with higher prices. Which is why taxing imports is normally inflationary. But other countries don’t just sit by and take it when tariffs are imposed on their country. They usually retaliate with tariffs on American goods, which in turn hurts U.S. exporters. In other words, Trump is probably going to start a trade war. Average consumers in America will pay for that trade war.
Kimberly Clausing and Mary Lovely of the Peterson Institute have calculated that Trump’s proposed 60 percent tax on Chinese imports and his high-end 20 percent tariff on everything else would impose an after-tax loss on a typical American household of $2,600 annually.
The economic damage would likely spread globally. Researchers at Capital Economics have calculated that a 10 percent U.S. tariff would hurt Mexico hardest. Canada, Germany and China would also suffer.
2. TAX CUTS
Trump has proposed extending 2017 tax cuts for individuals that were set to expire after 2025 and restoring tax breaks for businesses. He’s also called for ending taxes on Social Security benefits, overtime pay and tips as well as further reducing the corporate income tax rate for U.S. manufacturers.
The University of Pennsylvania’s Penn Wharton Budget Model estimates that Trump’s tax policies would increase budget deficits by $5.8 trillion over 10 years. Even if the tax cuts generated enough growth to recoup some of the lost tax revenue, Penn Wharton calculated, deficits would still increase by more than $4.1 trillion from 2025 through 2034.
The federal budget is already out of balance. An aging population has required increased spending on Social Security and Medicare. And past tax cuts have shrunk government revenue. Is this a way for Trump to damage the social safety net for Americans without directly dismantling Social Security and Medicare?
3. DEPORTATIONS
Trump has threatened to deport millions of undocumented immigrants, undermining one of the factors that allowed the United States to tame inflation without falling into recession during the pandemic and its aftermath.
The Congressional Budget Office reported that net immigration — arrivals minus departures — reached 3.3 million in 2023. Employers needed these new arrivals. After the economy rebounded from the pandemic recession, companies struggled to hire enough workers, because so many baby boomers were retiring.
WATCH: The potential economic impact of Trump’s mass deportation promise
Immigrants filled the gap. Over the past four years, 73 percent of those who entered the labor force were foreign born.
Economists Wendy Edelberg and Tara Watson of the Brookings Institution’s Hamilton Project found that by raising the supply of workers, the influx of immigrants allowed the United States to generate jobs without overheating and accelerating inflation.
The Peterson Institute calculates that the deportation of all 8.3 million immigrants believed to be working illegally in the United States would slash U.S. GDP by $5.1 trillion and raise inflation by 9.1 percentage points by 2028.
WILL TRUMP DO WHAT HE PROMISED TO DO?
Campaign promises do not always come true. Trump’s promises to deregulate and cut taxes have excited the tech world and ultra wealthy titans of industry. They will want him to make good on those two promises.
But there is trouble between two big factions in the Trump base that got him elected. The fight is over the issue of immigration.
THE FIGHT BETWEEN The TECH BROS AND The MAGAS
Musk and Ramaswamy want to be sure that visas (they are called H-1B visas) for highly educated foreign talent are still widely available so that these immigrants can continue to work in American companies. They insist that highly educated tech savvy immigrants are needed if America hopes to be a leader in tech.
Ramaswamy ignited this “war” when he tweeted the following:
The reason top tech companies often hire foreign-born & first-generation engineers over “native” Americans isn’t because of an innate American IQ deficit (a lazy & wrong explanation). A key part of it comes down to the c-word: culture. Tough questions demand tough answers & if we’re really serious about fixing the problem, we have to confront the TRUTH: Our American culture has venerated mediocrity over excellence for way too long (at least since the 90s and likely longer). That doesn’t start in college, it starts YOUNG. A culture that celebrates the prom queen over the math olympiad champ, or the jock over the valedictorian, will not produce the best engineers. [X]
Those were fighting words for Steve Bannon and Laura Loomer and others who are, let’s face it, white supremacists.
The latest: Musk vowed last night to “go to war” to defend the H-1B visa program for foreign tech workers, branding some Republican opponents as “hateful, unrepentant racists,” Axios’ Ben Berkowitz writes.
- Why it matters: The MAGA-DOGE civil war that erupted over the last 48 hours has hit a tipping point, with President-elect Trump’s new techno-libertarian coalition of billionaires taking full aim at his base.
Trump faces a deepening conflict between rich, powerful advisers — and the people who swept him to office.
- Steve Bannon, one of the longest-tenured voices in Trump’s orbit, had multiple guests on his show this week to talk about his hardline anti-H-1B views.[Axios]
Far-right activists (including Laura Loomer) clashed online with billionaire Elon Musk and other supporters of President-elect Donald Trump over the need for a skilled-worker immigration program that has long been a lifeblood for Silicon Valley — signifying a potential rift between Trump’s core nationalist base and technology executives who have come to support him. [Washington Post]
COULD ELON MUSK BE DEPORTED?
In a strange twist of fate, Musk himself may be one of those immigrants who could face deportation for working in this country without an employment visa. Newsweek reports:
Elon Musk is facing immigration problems for allegedly working in America without an employment visa and could arguably be deported, a legal expert told Newsweek.
On October 26, The Washington Post alleged that Musk had worked illegally in the U.S, citing “former business associates, court records and company documents.”
Stephen Yale-Loehr, a professor at Cornell Law School and faculty director of its Immigration Law and Policy Program, told Newsweek that Musk could be in legal trouble for his alleged immigration violation.
“Working when not authorized is a clear violation of immigration law and would make Mr. Musk deportable,” said Stephen Yale-Loehr, an immigration law professor at Cornell. “Moreover, if he failed to mention his illegal work when he applied for naturalization, his citizenship theoretically could be revoked.” Yale-Loehr said.
It is not likely that Musk will be deported, however. He is currently on Trump’s good side. Trump came out in favor of what Musk and Ramaswamy are saying about the need for immigrant talent to continue to get H-1B visas and work in the United States. But that doesn’t mean this fight is over. The MAGA base and the tech bros are not done attacking each other.
This is just one of the many fights that will erupt with Trump in charge again. Some of these fights will come about because Trump has chosen a cadre of cabinet leaders whose backgrounds do not qualify them for the job and whose ideas are often at odds with science, facts and sanity including: RFK Jr. for Health, Tulsi Gabbard for National Intelligence, Pete Hegseth for Defense, Kristi Noem for Homeland Security.