Given the tiny Republican majority in the House, the diverging priorities of the GOP factions, and Trump’s capriciousness, it is easy to predict the flash points of 2025, but harder to guess how they will be resolved. With some hesitations, here goes:
- TAX CUTS: The 2017 Trump tax cuts will be extended in full. Few of Trump’s other promises on the campaign trail will get serious consideration in Congress. More on them in future posts.
- SPENDING CUTS: CLs in the House will propose drastic cuts to domestic programs, including entitlements, to the dismay of Trump and more mainstream members. In the end, Social Security and Medicare remain untouched, but IRA spending, Medicaid, Obamacare subsidies, and a variety of discretionary programs are cut significantly, albeit not to the extent that the Freedom Caucus would like. The Senate goes along, and Trump signs the bill. Due to the cost of the tax cuts, however, the deficit continues to increase.
- TARIFFS: Trump throws out proposals for new tariffs virtually every day. No serious attempt is made to enshrine them in statute law. The proposal for universal tariffs is put on hold in order to avoid inflation, but Trump hits Chinese products very hard. Mexico and Canada have no idea what will happen next. Growth suffers as a result of the uncertainty.
- DEPORTATIONS: Trump continues with his anti-immigrant rhetoric but quietly tamps down the scale of his deportation efforts. Fearing inflation and negative reactions from key supporters, he tells ICE not to deport agricultural and construction workers and only to focus on serious criminals. Family separation and the wall return, however, and Stephen Miller starts working in earnest on vast deportation camps. Trump chooses to ignore court orders enjoining some of his initiatives. A constitutional crisis ensues; it will not be resolved until 2026.
- POLITICAL PROSECUTIONS: Trump orders the DOJ and the IRS to harass his opponents, but in a way that will not result in much negative press coverage. They comply; the pain is felt primarily by small fry.
- END OF THE BROMANCE: Due to clashing egos, divisions within the GOP, and the demands of Musk’s other jobs, the Trump/Musk relationship peters out fairly quickly.