Trump’s victory means Project 2025. Can our economy survive?

Trump’s 2018 tariffs pushed the Midwest to the brink of recession in 2019. Get ready to learn more.

Michael J. Hicks
| Opinion contributor

President-elect Donald Trump will inherit what I believe to be the strongest national economy in 50 years. Job growth, wage growth, and GDP growth are all strong, and inflation has returned to normal. We could be in the middle of a long expansion.

It is not difficult to assess which policy choices Trump will prefer. Project 2025, which I have written about, will tell us what we need to know about economic and fiscal policy. This is a detailed roadmap that will guide much of what happens in the executive branch in the years to come. A large part of the 2025 project, but not all, will have to be respected by the House and the Senate. This seems unlikely, at least until the next election.

Project 2025 leads us to expect a sharp increase in the number of political appointees in public service, from 4,000 to 20,000, which seems possible without support from Congress. With this, we will see efforts to pressure states to expand universal school vouchers, reduce environmental regulations, and increase energy production on federal lands.

Much of this will not happen because it falls under the purview of state governments or will be tied up in the courts for years. Whether we like these changes or not, don’t expect them all in four years.

Of course, this depends on the next administration’s compliance with the Constitution, an admittedly dubious proposition.

Trump cannot achieve Project 2025 alone

Bill 2025 also contains various proposals that would roll back benefits to veterans of the wars in Iraq and Afghanistan, restrict access to abortion-related medications, abolish the Department of Education, and tie federal funding for classrooms to schools that follow an approved curriculum.

Virtually all of Project 2025 builds a bigger, broader, more intrusive federal government. Most of this comes from laws aimed at developing socially conservative ideas, using the strong arm of government. We should expect much more from this administration.

The US economy will not be significantly affected by the slow pace of change in these types of policies and the tough political fights they entail. Nothing in Project 2025 addresses the real fiscal challenges – debt, taxes and social spending. Trump also has no plan to tackle the national debt. As during his first term, we can expect a substantial increase in public debt during his second.

There were also a flurry of statements during the election campaign pointing to a more immediate risk to the economy. Trump has been disapproving of an independent Federal Reserve. That would require a compliant Congress, which it won’t have, but appointing a different Board of Governors and president could significantly reduce its independence.

Trump’s deportation plans and the economy will cost Americans dearly

Trump has promised mass deportation of illegal immigrants. Illegal immigration to the United States is down from its peak of 12.2 million people in 2007 to about 11 million today. In the absence of misleading claims, the challenge of illegal immigration diminishes over time.

The costs of eviction are enormous. The costs of voluntary bus and train evictions would total more than $50 billion and take well over a year. In the United States, we simply don’t have the buses needed to transport 11 million people to, say, Mexico in a year. Additionally, the cost of mobilizing tens of thousands of National Guard troops to assist in the deportation would be well over half a trillion dollars.

Deportation and mobilization would also remove millions of workers from an economy already starved of workers. This would increase the deficit, because undocumented immigrants pay far more in taxes than they receive in services. It would also slow economic growth.

On this issue, we can expect much of what Trump has shown a propensity for: bold assertions and little action.

Trump also said he would raise tariffs, perhaps dramatically. Here, Congress gave the president enormous latitude in setting rates for national security claims. Presidents of both parties have abused this power, so Trump will be able to impose virtually any tariffs he wants, on anyone he wants.

These tariffs would be expected to increase employment in the American manufacturing sector. One of the main problems with this claim is that there is overwhelming evidence that tariffs reduce employment in domestic factories. Indeed, the tariffs imposed by Trump in 2018 pushed the Midwest – whose factories were particularly sensitive to tariffs – to the brink of recession in 2019.

Today, Midwest factory employment is below levels in January 2017, when Trump first took office.

A 10 to 20 percent tariff on all imported goods, as Trump is proposing, could plunge the United States into recession. Prices for all manufactured goods would increase, and we expect retaliatory tariffs to also reduce demand for U.S. goods and services abroad. It’s a difficult lesson to relearn, but we seem to be a stubborn people.

The American economy relies on our reputation

Admittedly, many of Vice President Kamala Harris’ economic proposals have also not contributed to long-term economic growth. His prices were more modest, but still short-sighted and counterproductive.

Democrats also lacked an effective debt reduction plan and had a ridiculously optimistic view of their local economic development programs.

But there was a big difference between the 2024 presidential candidates.

The American economy dominated the world for most of the last century and continues to do so today. During this period, we endured some very bad economic policies, but we continued to prosper.

Our two pillars of strength lie in our national reputation in two areas: First, we are a center of attraction and creation of human capital – educated people with skills, drive and entrepreneurial talent. Second, we respect the rule of law in the conduct of our elected officials, in commerce and in international affairs.

Trump’s policies seriously endanger the first of these, making the United States an unwelcoming and risky country for foreign nationals. Trump’s conduct, whether in office or out of office, makes a mockery of the rule of law. If its anarchy persists, as is to be expected, a weakened and underperforming economy will be one of our least concerns.

Michael J. Hicks, director of the Center for Business and Economic Research, is the George and Frances Ball Distinguished Professor of Economics at the Miller College of Business at Ball State University. This column first appeared in the Indianapolis Star.