With the economy flattened by the pandemic, Trump has turned increasingly toward touting the stock market as a reflection of his reliable stewardship of the economy.
by Nihal Krishan
Just a few months ago, President Trump’s handling of the economy was his best argument for reelection. Now, thanks to the coronavirus pandemic wiping out much of its post-2016 gains, it remains unclear how Trump would handle the economy during a second term.
Recent campaign speeches give one a sense of Trump’s confident, albeit vague, direction for the future of the economy. Not surprisingly, the president often sums up his economic message as: “Buy American and hire American,” as he stated earlier this month during a speech at a Whirlpool plant in Ohio. In that speech, Trump articulated six campaign promises related to the economy: He wants to defeat the coronavirus; rise from the pandemic-induced recession “more prosperous and resilient” than ever; make America the “premier medical manufacturer”; bring pharmaceutical and medical supply chains to the United States and end reliance on China; push back against globalism by bringing back jobs and factories using every available tool, including tariffs; and uphold the commitment to put American workers first.
But these promises offered little in the way of detail. Neither did Trump spokesman Judd Deere offer much when asked last month about the president’s agenda for a second term. “The White House is engaged in an ongoing policy process for a bold second-term agenda that continues the ‘Transition to Greatness’ that ensures we are a safer, stronger, more prosperous America,” Deere told reporters.
Instead, as the Associated Press's Jonathan Lemire put it, Trump’s messaging has almost entirely relied on the notion that because he presided over a strong economy once, he is the right person to lead the recovery. Using the once-booming economy as evidence, Trump argues that he should be reelected because he’s kept all of his promises from the 2016 election. Of course, this is not entirely true. Trump did succeed in renegotiating the North American Free Trade Agreement, slashing a number of regulations, and enacting tax reform, but he failed at repealing the Affordable Care Act and making any progress on decreasing the national debt. Trump has also not been able to enact a five-year ban to keep White House and congressional officials from lobbying, part of his “drain the swamp” agenda.
By and large, Trump’s campaign has focused less on his own positive agenda and much more on the disastrous future he says would ensue if Democratic rival Joe Biden is elected. “Our entire economy, and our very way of life, are threatened by Biden’s plans to transform our nation and subjugate our communities through the blunt-force instrument of federal regulation at a level that you haven’t even seen yet,” Trump said at an event in July at the White House. His campaign and the Republican National Committee have repeatedly attacked Biden’s tax proposals, which have been released in stages. “[Biden’s] plan to raise taxes by $4 trillion would stifle the American economy, and it would devastate the recovery that we are beginning to see under the president’s leadership, even in the midst of this pandemic,” Vice President Mike Pence said on a campaign call with reporters last month. (Biden’s campaign disputes this message, maintaining that ads put out by the Trump campaign falsely claim that the former vice president’s proposals will heavily raise taxes on middle-class families. Instead, Biden’s campaign says his tax plans will target the wealthy and corporations. Biden has said he won’t raise taxes on people making under $400,000.)
Even before the pandemic, the president’s economic agenda was a bit murky. Before the 2018 midterm elections and then again late last year, Trump said he wanted to work toward a middle-class tax cut that would go into effect if he was reelected and Republicans controlled Congress. Trump even went so far as to promise in January that the tax cut plan would be unveiled within 90 days.
This did not happen, perhaps due to the arrival of the coronavirus pandemic. Yet Trump’s State of the Union address in February, before the pandemic hit, suggested a second term that would be far less deferential to the GOP’s traditional priorities and the wishes of businesses and donors. While the speech was not particularly focused on new policy initiatives, the lack of attention paid to taxes was noteworthy. Beyond crediting his 2017 Tax Cuts and Jobs Act for helping to “rapidly revive” an already growing economy, there was no mention of new tax breaks, including no mention of the promised middle-class cut.
Yet in the face of the pandemic, the president this month signed an executive order seeking to defer payroll taxes. Trump had been advocating for a payroll tax cut throughout most of the pandemic, unsuccessfully lobbying for lawmakers to include it in economic relief plans back in March. Finally, Trump decided to go around Congress with his executive order, which would reduce the amount of taxes taken from workers’ paychecks to fund federal entitlement programs such as Social Security and Medicare.
It is unclear whether this move and other coronavirus-related economic stimulus measures reflect the emphases of a second-term economic agenda or whether they are simply reactions to an unprecedented nationwide lockdown. Lest we forget, it is an election year, and Trump is currently trailing Biden both nationally and in several swing states. Actions such as the Congress-skirting executive order, as well as the president’s memoranda earlier this month extending the temporary suspension of student loan payments, could easily be seen as near-term vote-getters rather than as elements of a predetermined plan for economic growth.
With the economy flattened by the pandemic, Trump has turned increasingly toward touting the stock market as a reflection of his reliable stewardship of the economy. As such, Trump offered one of the few specific second-term policy promises earlier this month, telling Fox Business’s Maria Bartiromo, “I’m going to do a capital gains tax cut to 15% in the second term.” Cuts to capital gains are a far cry from the populist economic message he ran on in 2016, when Trump blasted the “hedge fund people” who “make a lot of money, and they pay very little tax.”
Whether a true plan or simply a campaign promise, it does represent something of a departure, at least in terms of the voters Trump is targeting. Otherwise, Trump’s economic plans have remained vague yet confident, save his specific outburst at Goodyear on Twitter. “Don’t buy GOODYEAR TIRES,” he tweeted last Wednesday. “They announced a BAN ON MAGA HATS.” This pushing of boycotts against companies he feels slighted by is at least much more in line with Trump’s traditional economic messaging.
Indeed, the Trump camp’s lack of policy details and the president’s growing tendency to issue unilateral policy changes get to the heart of what his reelection campaign is promising, both on the economy and everything else. And that is simply Trump himself. Four years ago, accepting the Republican nomination, Trump said: "I alone can fix it." His economic policies heading into a second election appear to follow that same theme.
Nihal Krishan is an economic policy reporter for the Washington Examiner where this piece first appeared.
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