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So the Donald and Elon are bros.

But which one is in charge? Heaven knows!

Their egos will clash.

Elon’s hopes will be dashed

When he sees from which way the wind blows.

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:

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

It would be absolutely ludicrous to have a debt ceiling crisis with a Congress controlled by the GOP a week or so before Trump takes office. Biden should tell the GOP leadership that he will sign one of two bills: either a clean short-term extension (say, six months or so) that permits the new administration to put its fiscal plans in order before the issue comes up again; or a complete repeal of the debt ceiling. Writing a blank check for Trump after his first few months in office should be off the table.

The GOP has used Carter as the archetype for the well-meaning but weak and ineffectual Democrat since 1980. In reality, he was more unlucky than anything else. Do you really think that George W. Bush or Trump would have handled the Iran hostage situation or rampant inflation better than he did?

The GOP has also portrayed him as a feckless liberal, as opposed to Ronald Reagan, who was determined to cut the cost of government. In reality, Carter was Reagan’s predecessor as a deregulator and added little to the welfare state. You could reasonably argue that, for better or worse, he was actually our first neoliberal president.

That said, Carter had limited political skills and lacked the incisive ruthlessness that the job demanded, which is why the country appeared to be spinning out of control during his single term. He made up for it by being our best ex-president. In that role, he will definitely be missed.

Due to Trump’s affinity for being unpredictable, my level of confidence in my predictions is lower than usual. Nevertheless, here goes:

1. NO IRAN WAR: Trump applies maximum pressure on Iran practically from the day he takes office. The Iranians stall for time; they pretend to negotiate in good faith, while working frantically on a bomb. Bibi pushes for war, but Trump ignores him, insisting that the negotiations will ultimately succeed. The Iranian gambit succeeds; they finish work on the bomb under Trump’s nose, and the landscape in the Middle East changes.
2. GAZA WINDS DOWN: Military action in Gaza diminishes, as there are few obvious targets left for the Israelis. Most of the troops go home. The rest, however, remain as an occupying force. The Israelis demand financial support for the reconstruction of Gaza from America, Europe, and the Arabs, all of whom snort derisively at the thought of indemnifying Israel from the logical consequences of its actions.
3. THE UKRAINE WAR ENDS: Trump cuts off aid to Ukraine but threatens Putin with escalation if the latter doesn’t accept his terms. Putin quite understandably blows off these threats but says he is willing to talk, given the economic strains within his country. The key issue in the negotiations is the nature of the security guarantee given to what is left of Ukraine. Trump refuses to participate in any guarantees, so the Ukrainians have to settle for promises from some, but not all, of the EU countries. Nobody believes the agreement that follows will last long.
4. CHINA RECOVERS: Faced with severe protectionist measures from both the US and the EU, Xi finally agrees to a massive stimulus program, which works. Domestic consumption recovers, and so does the Chinese economy.
5. MACRON RESIGNS: When polls finally indicate that the majority of French voters blame the far right for the prevailing instability, Macron picks his moment and leaves office.
6. AMERICAN IMPERIALISM: Trump takes military action against a country that he considers to be within America’s sphere of influence. Will it be Venezuela, Cuba, Mexico, Canada, Panama, or Greenland? TBD.

There were two–the American election and the Middle East. The first ended with a Trump victory; the second is still up in the air, but as a result of Israeli technical prowess in Lebanon and some unexpected developments in Syria, Trump and Bibi will have an opportunity to redefine the conflict with Iran during the first few months of 2025.

What will they do? Will it be war or peace? Will we have successful negotiations, failed talks followed by an Iranian bomb, regime change, or something else? For my prediction on that issue, see my next post.

The civil war within MAGA regarding visas for foreign tech workers is intensifying. Musk responded to complaints within the Reactionary camp by calling MAGA nationalists “contemptible fools.” Sounds like Hillary’s “deplorables,” no?

The CLs and Reactionaries were only held together by their disdain for the left and their mutual desire to burn it down. The split that any reasonable person would have predicted is taking place even before Trump takes office. So what happens next?

Trump will do his best to keep the factions working together, but for a variety of reasons, it won’t work in the end. When forced to choose between Musk and his base–it will probably occur within the budget negotiations– I would bet on the base.

You could call him lucky: the would-be assassin just grazed him; the Supreme Court bailed him out; Biden was sick the day of the debate; Bibi divided his opponents; and most of all, the American public had selective amnesia about his performance in 2020 and hated inflation. His performance during the campaign was more meandering than spellbinding. And yet, Trump took advantage of the opportunities thrown in his way, ran a reasonably disciplined campaign, and prevailed in the election. No one can take that away from him.

Today, we face a future in which the ceiling is Trump’s first term and the floor is as low as a meteor crater. For that–and this obviously does not represent a judgment on the merits of the man–Trump is the man of the year.

I made four predictions in December 2023. Two of them were unequivocally accurate; Labour won the election, and China did not invade Taiwan. I’m not entitled to many prizes for those. On Ukraine, I predicted that the stalemate would continue, and that both sides would scale down and wait for the American election. This was partly true; progress has been slow and bloody, but the Russians have clearly gained the upper hand, and they continued to escalate instead of waiting on events.

I also said the Middle East would seethe but not explode, with the war in Gaza continuing for no obvious reason except Bibi’s survival. I would call that mostly true, but I did not foresee the degree to which Israel would degrade Hezbollah’s forces and embarrass the Iranians. 2025 consequently has the potential for dramatic change–possibly for better, possibly for worse–with regard to the imperiled regime in Iran.

I declined to predict the winner of the presidential race in December of 2024, but I suggested that it would come down to about 100,000 voters in swing states, and that the polls would look better for Biden at that point than they did in late 2023. All of that came true. I also correctly predicted that the GOP would win a narrow majority in the Senate, that the margin of victory in the House would be microscopic, and that there would be no Trump trials until after the primaries were effectively over. I was right about all of those matters, too.

My subsequent predictions were less accurate. Trump did not pick either of my choices for VP, largely because, at that point, he no longer thought it was necessary. Given the tenor of the campaign, I figured a political figure of some sort would be the subject of an assassination attempt, but I never would have guessed it would be Trump. Finally, I was correct in concluding that inflation and interest rates would be coming down by the time of the election, but I was too optimistic in thinking that it would make much of a difference. The bottom line was that the American public was unalterably convinced, rightly or wrongly, that the economy had performed dismally during the Biden years long before November. That is the reason Trump won–period.

Jesus came from the sticks, not the big city. His associates were humble workers, not members of the self-satisfied, prosperous elite. When he chose to go to Jerusalem and take on the corrupt establishment, it retaliated by crucifying him. But he prevailed in the end.

It’s not hard to see why MAGA types see an analogy to a more contemporary figure here. But there are a number of important differences between Christ and Trump. First, Trump came from New York. Second, Christ’s kingdom was not of this world; he didn’t seek political power to boost his own ego or punish his enemies. Finally, Christ had Peter as his wingman, not Elon Musk. He was a real populist; he didn’t just play one on TV.

We went to a sort of holiday cabaret two weeks ago, during which the cast performed a song called “Christmas is Always the Same.” It resonated because it is true. Christmas is indeed always the same, which is why it makes such a great measuring stick for all of the change that swirls around us every day.

For the young, Christmas is a time of hope and opportunity. For someone my age, it is a time to mourn what has been lost, to feel the icy hand of mortality, and to be grateful for what remains.

Burke famously said society is a partnership between the living, the dead, and the unborn. This is the time of year when I really experience the truth of that statement.

Merry Christmas!

OPTION #1: RIGHT-WING NEOLIBERALISM: Cut regulations and taxes and enter into as many free trade agreements as possible. This will result in lower prices for American consumers and higher profits for American companies, which will then increase investment, which will lead to higher productivity, which will ultimately lead to higher wages. Strengthening the safety net and compensating workers for the impacts of globalization is a mistake, because it gets the incentives all wrong; we should be rewarding winners, not losers.

OPTION #2: LEFT-WING NEOLIBERALISM: The same as #1, except that workers need to be fairly compensated for the negative impacts created by globalization and technological change through an expansion of the safety net. This keeps the efficiencies (and the low prices) in #1 but prevents political backlash against the system.

OPTION #3: IMPORT SUBSTITUTION: Wall off America with tariffs, thereby encouraging the revival of dying or dead industries. Deport illegal immigrants and create labor shortages. Wages will rise as a result.

Option #3 is supported by reactionaries who want the Godly Society and are willing to overlook the inevitable undesirable results–higher prices, uncompetitive businesses, and reduced exports. Option #1 is essentially the status quo–a wealthy but highly unequal society with a declining middle class (i.e., the dollar store economy). Option #2 has only been tried to a very limited extent–Obamacare being the obvious example–because business interests and the GOP prefer Option #1 and have the McConnell Project operating in their favor.

The Trump team contains supporters of both Option #1 and Option #3; it remains to be seen which path the man on golf cart ultimately prefers. The tragedy of Option #2 is that it has been lumped in with Option #1 in the eyes of the public even though the blue team has never been able to implement it due to GOP and business opposition. As a result, the Democrats have been accused of being indifferent to the plight of workers, which is as far from the case as it can get; what they want is the benefits of globalization and technological change without their negative impacts.

Why do we have so many federal regulations? Three reasons. First of all, Congress has neither the time nor the expertise to provide legislative answers to every possible regulatory issue in a world in which conditions and technology are changing rapidly. Second, the filibuster and frequently divided government make it impossible for Congress to pass legislation to address regulatory issues that were not anticipated at the time the statute was enacted. Third, if agencies had to start from scratch every time they interpret a vague statute, it would require vastly more resources than they actually have; in addition, the decisions would probably be inconsistent, which would be unfair to the regulated public. Using rules rather than quasi-judicial decisions to fill in the gaps is efficient and fair for everyone.

Musk and Ramaswamy think we have too many rules, but that really isn’t the point; it is the content of the rules, not their number, that matters. From the perspective of the billionaires, the problems are that the agency decisionmakers are predisposed to regulate in a way that hurts business and that the current rules aren’t appropriately responsive to business interests. The logical way to solve these problems is not to refuse to enforce rules, or to mindlessly eliminate masses of them, but to put business-friendly people in charge and to change the Biden rules to ease any unnecessary regulatory burdens. Trump presumably is working on the former; the latter will be a grind, due to the requirements in the APA, and will take years.

Do Trump, Musk, and Ramaswamy have the patience to do what it takes to deregulate in a systematic way? I doubt it; they’re more into instant gratification.

(It’s 5:00 on December 24. Bob Cratchit is working in his cubicle at Scrooge, LLC when the boss, in “managing by walking around” mode, comes by.”

C: Mr. Scrooge, sir.

S: What is it . . . (he ostentatiously looks at the nameplate on the cubicle) . . .Cratchit?

C: Can I have tomorrow off, sir?

S: Why in the world would I do that?

C: Why . . . because it’s Christmas, sir.

S: Not in China, it isn’t. How am I supposed to compete with those people and their low labor costs if I give people like you unnecessary days off?

C: Actually, the Chinese get a whole week off for Chinese New Year. We should never have come back to the office, anyway. The pandemic might officially be over, but the virus is still out there, and I might get sick and give it to my child. He has special needs, you know.

S: (Sees a picture of Tiny Tim in the cubicle) Is that him?

C: Yes, sir.

(Scrooge walks around the office with an exaggerated limp)

C: There’s nothing funny about it, sir! He’s in really bad shape! If he gets the virus, it could kill him!

S: I don’t have time for that political correctness crap.

C: You sound just like Donald Trump, sir.

S: Well, Trump isn’t wrong about everything. That’s why he won the election.

C: And I suppose you voted for him.

S: With some reluctance, yes.

C: Why were you reluctant?

S: Because I hate the idea of his tariffs, and I know he’ll make people like me suck up to him every day of his life. He’s too capricious to be trusted. He does everything for the benefit of his own ego, not my bottom line.

C: Then why did you vote for him?

S: Because Biden and Harris were worse, and because he promised to keep my taxes low. I can trust him on that. Plus, the deregulation part is excellent, and keeping Elon around is a great idea.

C: Do you really think Elon cares about people like you?

S: He genuinely hates regulations. He may be more concerned about his own interests than people like me, but he’ll do his best for entrepreneurs in general. I’m confident of that. I just hope Trump doesn’t run him off before he can finish the deregulation job.

C: So what about Christmas?

S: Biden’s still in charge for now, and his regulations are still in place. If I don’t give in, he might use his last month in office to get you people to unionize. And Vance might go along with that. I don’t trust him, either. Why couldn’t Trump have picked someone like Rick Scott as his VP?

C: So I get the day off?

S: Sort of. There will be a Zoom meeting at noon. I’ll text you the password.

C: Thank you, sir!

S: And don’t even think about ghosting me!