In a stunning election victory, Donald Trump has once again captured the presidency, defeating Kamala Harris in the 2024 election. Despite Democratic efforts to highlight their “economic successes,” the American public’s dissatisfaction with the state of the economy proved insurmountable at the polls. Trump’s victory is historic—not only does he reclaim the White House, but he also appears poised to win the popular vote, a feat no Republican has achieved since George W. Bush in 2004.
With Republicans likely to control both the Senate and the House, Trump’s administration is set to enjoy unprecedented legislative support. Yet, amidst this triumph, challenges loom. The Biden administration, approaching its “lame-duck” phase, still holds the power to enact policies that could potentially complicate economic recovery efforts. Even with a Republican Congress, can four years under Trump’s leadership truly remedy America’s economic woes? Trump himself remains optimistic, declaring, “America has given us an unprecedented and powerful mandate…Promises made, promises kept.” His words resonate with hope, yet they also underscore the monumental task ahead.
How Biden’s Lame-Duck Decisions May Impact America’s Recovery
Despite its waning influence, the final months of the Biden administration could have a major impact on Trump’s ability to deliver on his promises. As the president-elect prepares to take office, the outgoing administration is still at work, and midnight rulemaking is notoriously common during this time. As history has shown, the final months of a presidency often see a flurry of regulatory activity aimed at cementing policies before the new administration takes over.
Take the final months of the Obama administration as an example. In the run-up to Trump’s inauguration, President Obama issued a record number of regulations, 41 of which were considered economically significant. These regulations covered a range of issues, from financial reform to health care, many of which were aimed at solidifying Obama’s legacy and implementing policies that the incoming Trump administration was expected to oppose. In its final stretch, the Obama administration kept up the whirlwind pace of regulatory activity. During just 12 working days in January, it issued 65 new rules, creating an estimated $13.5 billion in long-term costs. Put another way, each day during those last days of Obama’s presidency, the administration issued over five new rules, equating to $1 billion in new regulatory costs during each working day.
Economists say the lame-duck period also poses a risk for fiscal policy. As Congress typically operates under a continuing resolution at the end of the year, it often faces a deadline to pass a budget or risk shutting down the government. This deadline pressure can lead to hastily passed legislation with less scrutiny than is typical. Outgoing lawmakers may also use this time to push through spending or tax measures they could not pass earlier in their terms, increasing the fiscal burden on the incoming administration and future taxpayers.
With this precedent in mind, there is a legitimate concern that politicians seeking to advance their agendas could abuse the lame-duck period rather than focus on the country’s best interests. From executive orders to last-minute policy changes, President Biden could face pressure from within his own party to take advantage of the limited time before the party turns over control of the White House. Given the contentious relationship between the two major parties in recent years, it is not far-fetched to imagine a scenario where Biden’s successor faces a deluge of new policies and regulations rushed through during the lame-duck period.
Preparing for a ‘Midnight Surge’
Any number of midnight regulations from the Biden administration could be expected in the last days of his presidency as he seeks to cement his legacy and fulfill campaign promises. Under the guise of tax compliance, the IRS could issue new regulations that subject taxpayers to more scrutiny and potentially higher tax bills. With close to $80 billion in new funding already in the pipeline following the passage of Biden’s Inflation Reduction Act, an emboldened IRS could push through even more regulations before time runs out. These last-minute changes have the potential to saddle the incoming administration with a heavy burden as they are left to deal with the fallout and potential legal challenges that may arise.
Another controversial issue is student loan forgiveness, a key campaign promise of President Biden. Despite being deemed unconstitutional by the Supreme Court in 2023, efforts to forgive massive amounts of debt continue, shifting financial burdens to taxpayers. The Biden administration has already forgiven $175 billion in loans for 4.8 million borrowers. With pressure mounting from progressive lawmakers, further loan forgiveness is possible before the end of his term. With the student loan payment pause recently extended and close to another $100 billion outside of the Public Service Loan Forgiveness (PSLF) relief approved, taxpayers could be on the hook for billions more in loan forgiveness. Should the trend continue during Biden’s remaining time in office, the implications for the national debt and future generations are hard to ignore.
The influx of undocumented immigrants at the southern border has also become a hot-button issue for the Biden administration, with their handling of the situation under intense scrutiny. With record numbers of individuals crossing the border, President Biden’s immigration policies have contributed to a massive surge in federal spending—money that is coming directly from taxpayers’ pockets. According to The Federation for American Immigration Reform (FAIR) estimates, the cost of illegal immigration to taxpayers has swelled to over $150 billion, with other figures placing it above $400 billion. With an influx of undocumented migrants—over 2.7 million inadmissible aliens released since January 2021—the financial strain only worsens as additional resources are diverted to support them. If Biden uses his final months in office to push for more lenient immigration policies, experts say the financial consequences for American taxpayers could be catastrophic.
Adding to the fiscal chaos is the potential introduction of Central Bank Digital Currencies (CBDCs) or a “digital dollar” that has been in talks for some time now. Despite Republican resistance, the Federal Reserve’s continuing research into CBDCs has stirred fears surrounding the government’s use of negative interest rates and its control over citizens’ finances. If interest rates were to shift into negative territory, holders of a digital dollar would be charged to keep their money in the bank, creating a disincentive for saving and further increasing the burden on taxpayers. And if that wasn’t already enough, the state could monitor every digital transaction with the potential for financial censorship and loss of privacy.
Despite this, discussions largely out of public view continue to gain momentum. “Given the dollar’s important role, it is essential that the Federal Reserve remain on the frontier of research and policy development regarding CBDC,” said Lael Brainard, Federal Reserve governor, in a recent speech. Biden, who signed the 2022 Executive Order 14067 to “Explore a U.S. Central Bank Digital Currency (CBDC),” among other initiatives, may be laying the groundwork for widespread digital currency usage in the United States. With his administration’s support of progressive economic policies, some experts say they may be inclined to use their final months in office to push further for adopting a CBDC. If successful, “central banks would have a backdoor directly into your bank account, as well as the means to monitor every digital transaction made,” as Dante Disparte, Chief Strategy Officer at Circle, aptly put it.
Meanwhile, our national debt continues to soar. The Congressional Budget Office has projected a $1.9 trillion deficit for 2024, a figure expected to increase to $2.8 trillion by 2034. Public debt is also set to rise from 99% of GDP to 122%—surpassing post-WWII levels. The current administration’s policies have come at a hefty price, from billions spent on additional funding for federal agencies to a litany of proposed social programs that could cost trillions more. And with interest payments consuming a growing share of the federal budget, any midnight push to squeeze more money from taxpayers could set off a chain reaction of economic consequences that may be too great to bear.
America’s Economic Woes: Why Four Years May Fall Short
The American economy is like a colossal ship, slow to turn and resistant to change in a mere four-year period. Trump’s upcoming presidency faces a host of daunting challenges that could render even the boldest plans ineffective. One of the most significant hurdles is the economic lag effect. Policies such as tax reforms or infrastructure spending need time—years, in fact—to show tangible results. Experts agree that economic initiatives often bear fruit long after their inception, with some effects only being felt a decade or two later. Thus, any new initiatives could remain seedling concepts during Trump’s term and even his successor’s, if they’re allowed to sprout at all.
But it’s not just about time; global economic influences also play a substantial role. The world is interconnected, and international affairs can severely affect domestic progress. Take supply chain disruptions or trade tensions, for instance. They can overshadow local policies, no matter how well-intended, as was the case during the COVID-19 pandemic. With container shipping accounting for 90% of global trade, even minor congestion can escalate into a massive bottleneck that chokes economic growth. External factors are an ever-present risk, especially when economies are as intertwined as they are today. Even the most meticulously crafted economic strategies can fail due to unexpected global events, adding a layer of complexity to any effort aimed at reviving the economy. With the current situation in the Middle East and the ongoing conflict in Ukraine, analysts predict that any escalations could force a redirection of resources toward emergency measures, further delaying economic recovery.
Then, there are structural issues deeply embedded in the fabric of the American economy. Rising national debt, income inequality, and healthcare costs are not problems with quick fixes. They demand comprehensive, multi-administration strategies, often involving difficult decisions and painful compromises. Balancing the national budget will require more than just deep cuts—it demands a long-term, bipartisan commitment. Here lies the rub. With a divided Congress often at odds with the White House, achieving such a consensus is a Herculean task. While it’s easy for politicians to promise quick solutions, reality often proves otherwise amid today’s polarized political landscape.
Even if Trump succeeds in reducing federal spending through the newly established Department of Government Efficiency, experts suggest that the impact will likely be a drop in the bucket compared to the overall national debt. Standing at almost $36 trillion, we would need decades of stringent fiscal discipline to bring the nation’s debt under control. Yet, the spiraling interest payments stand as imposing barriers to making any meaningful headway. And this does not consider the potential of another economic downturn, which some analysts warn could be just around the corner. This is not to say that Trump’s efforts are in vain, but rather to highlight the immense challenges that lie ahead for any administration in tackling these complex issues.
Adding to these concerns is the potential for policy reversals. A subsequent administration could undo changes implemented in Trump’s term, leading to a back-and-forth struggle with no material progress. This could limit any long-term impact and make it difficult to gauge the effectiveness of short-term measures. In the end, Trump’s presidency may not have the time or scope to address America’s economic woes fully. While it may be a step in the right direction, four years might only scratch the surface of what needs to be done. An ocean of challenges lies ahead for the U.S. economy, and if history is any indication, one administration alone won’t be able to turn the tide.
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