President Donald Trump has always been a mixed bag on policy, especially on economic policy. In his first term, the president made several fiscally sound moves to stimulate growth and ease the burden on taxpayers, particularly the 2017 Tax Cuts and Jobs Act, which provided a tax cut to most families and made America more competitive via a sizable reduction in the corporate tax rate. Trump also slashed regulations, unleashed American energy production, and appointed judges who are skeptical of broad administrative power.
On the flip side, he instituted tariffs, which led to a farm bailout, blew out spending at levels that would make Presidents Barack Obama and George W. Bush blush, and, of course, printed enough money during the early days of the COVID-19 pandemic to kickstart an inflationary cycle that exceeded any period of price increases in the last 40 years.
The president has racked up some accomplishments since his second inauguration in January. The southern border was immediately closed, reducing illegal crossings to next to zero. He negotiated an end to the Gaza war and crippled the Iranian nuclear program in the shortest and least militarily detrimental engagement in the Middle East since the fall of Jericho.
Trump’s actions and proposals in the economy this year, however, have been almost universally bad, and they appear to be getting worse.
In a move that defies logic, Trump promised to send $2,000 “tariff dividend” checks to non-high-income Americans. “People that are against Tariffs are FOOLS! We are now the Richest, Most Respected Country In the World, With Almost No Inflation, and A Record Stock Market Price. 401k’s are Highest EVER,” Trump posted on Truth Social. “We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion. Record Investment in the USA, plants and factories going up all over the place. A dividend of at least $2000 a person (not including high-income people!) will be paid to everyone.”
For starters, the math doesn’t add up. Assuming the roughly 150 million American adults making under $100k/year qualify for the stimulus check, the $300 billion being paid would nearly double the income brought in by the federal government via tariffs. In an economic environment already mired in uncertainty, and a political environment that sees the administration dogged by still too high inflation, printing hundreds of billions in cash and pouring it into the economy would be insane.
Sure, the president’s approval rating could see a small temporary bump, but the blowback both economically and politically would be catastrophic. Furthermore, the Supreme Court appears likely to rule that most of Trump’s tariffs are unconstitutional, making the entire exercise futile.
Perhaps an even worse proposal, which makes even less sense at face value, is the president’s insistence on the institution of 50-year mortgages. Federal Housing Finance Agency Director Bill Pulte confirmed that the agency is indeed working on a “complete game changer,” claiming that a 50-year mortgage would help make housing more affordable.
Again, the math is not on the administration’s side. Due to the structuring of long-term mortgages, this proposal would cost homeowners a fortune in interest while doing little to reduce monthly expenses. For example, if you took out a 30-year, $400,000 loan at 6.25% interest, you would pay the bank over $400,000 in interest, while you would end up paying north of $800,000 in interest with a 50-year loan, all to reduce your monthly payment by around 10%.
To make matters worse, increasing the demand for housing without drastically cutting regulations and eliminating tariffs on building materials in order to increase supply would send housing prices through the roof, making homes even more unaffordable for younger Americans.
TRUMP PROMISES $2,000 TARIFF DIVIDEND CHECKS: HOW THE REBATE PAYMENTS COULD WORK
The president’s approval rating has been slipping over the last couple of months, largely due to a stagnant economy, and with the shellacking the GOP received in last week’s off-year elections, it is understandable that the president would attempt some big moves in order to turn the tide.
But unfortunately, the laws of economics are undefeated. You stimulate economies through deregulation and tax cuts, and you make housing affordable by reducing the cost and time necessary to build more housing, whether the increasingly economically illiterate factions within the GOP and the White House like it or not.
Brady Leonard (@bradyleonard) is a musician, political strategist, and host of The No Gimmicks Podcast.