The Economics of Trump 2.0
The blueprint is starting to take shape.
Bubba
10 Feb
The Economics of Trump 2.0
President Trump’s blueprint for the economy is starting to take shape, but putting it into action won’t necessarily be easy. (WSJ)
The latest: A new Wall Street Interview with Steve Bannon, one of the most influential figures in the “MAGA” movement, revealed some of the economic tensions bubbling beneath the surface of the president’s coalition.
The former White House chief strategist urged Elon Musk, the driving force behind DOGE’s budget-slashing campaign, to take aim at military spending first—a suggestion unlikely to sit well with the GOP’s defense hawks.
He praised trustbusting former Federal Trade Commission Lina Khan, who Trump replaced with Andrew Ferguson, one-time chief legal advisor to Mitch McConnell.
Bannon suggested trimming Medicaid might be necessary to reach deficit targets—a move that could alienate working-class Trump backers who are growing increasingly dependent on the program.
Big picture: A major challenge for the president, Bannon said, would be to balance the clashing economic interests within his movement.
Case in point, the outlooks of tech “oligarchs” like Musk and Marc Andreesen seem to conflict with Bannon’s own economic populist instincts.
Bannon:
The editorial page of the Wall Street Journal is here and [Bannon’s populist podcast] War Room is here. But I think that's a positive tension, and it's kind of this coalition. It's President Trump's balancing act, right? He's got the oligarchs on one side … and you've got Paul Gigot and the guys on [The Wall Street Journal] editorial page that have kind of a more of a neoliberal way of looking at things.
Bannon to The New York Times last month:
[Tech oligarchs like Musk] are hard-core technofeudalists. They’re not populist. … These are not dumb people. But they’re not with us when it comes to the little guy.
Treasury Secretary Scott Bessent’s vision for the economy: Bessent’s 3-3-3 Plan aims to bring the federal deficit down to 3% of yearly GDP, reduce inflation to 3% and achieve 3% economic growth.
Reducing the deficit to 3% would mean finding $870 billion worth of cuts, or roughly half of the United States’ $2 trillion deficit last year.
By some estimates, DOGE is on pace to cut just $17 billion a year.
Note: Elon Musk disputes these figures, claiming the agency is reducing costs by more than $4 billion per day.
Manufacturing: In contrast to his predecessor, Joe Biden, the Trump administration is particularly focused on boosting private sector manufacturing—doubling down on tariffs, slashing regulations and targeting inflation reduction.
Trump and Biden have both championed U.S. manufacturing, but Biden leaned heavily on government subsidies to drive growth, creating a sharp contrast in their strategies.
During some months, government-created jobs under Biden accounted for over half of new positions.
The treasury secretary told the Daily Wire last year that only 250,000 of the jobs created in 2024 were in the private sector.
How Bloomberg summed up the president’s economic vision following an interview with then-candidate Trump in July:
“Trumponomics,” he says, equates to “low interest rates and taxes.” It’s “tremendous incentive to get things done and to bring business back to our country.” Trump would drill more and regulate less. He’d shut the Southern border. He’d squeeze enemies and allies alike for better trade terms. He’d unleash the crypto industry and rein in reckless Big Tech companies. In short, he’d make the economy great again.”
Bubba’s Two Cents
Trump’s coalition is a mish-mash of competing interests and philosophies. In classic Trumpian fashion, the president is trying to dish out something for everyone. “No tax on tips” for the little guy. He’s throwing Silicon Valley and Wall Street a bone with his emphasis on heavy deregulation. Tariffs for the protectionists. Tax cuts for the free marketeers. Throw in a campaign to balance the budget for good measure.
Will it work? There are lots of people telling us what will happen, but I’m going to wait to see what happens and judge from there.
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