Chinese Curse

What should we expect from the second Trump administration?

The phrase “may you live in interesting times” is often referred to as a “Chinese curse”, for reasons I don’t understand. The attribution seems to be apocryphal, without a clear source. But whatever its origins, this phrase will likely have great resonance over the next four years. In just a matter of days, Donald J. Trump will once again become President of the United States, to the celebration of perhaps half the country and to the dismay of the other half. And if our new POTUS acts on even a fraction of the many promises and threats made during the campaign, the coming four years are going to be quite ‘interesting’ to say the least.

I don’t think anyone really knows exactly what to expect from the second Trump administration, not even Donald Trump himself. If we learned nothing else about the President-elect over the past decade—four years spent in office and six years running for office—we should have learned that he is a master of Thimblerig, and there is not always a pea under his many fast-moving shells. Experience suggests that we would all be well advised to ignore much of Trump’s bluster and focus less on what he says and more on what he actually gets done, which is far from the same thing and which is not always easy to do. Let’s face it, the first Trump administration was fascinating and oddly compelling even for those of us who did not support him or his policies, but it was often a bit like watching a train wreck in process. And I suspect we will have more of this to come in the second Trump administration, with perhaps much greater consequence than the last time around.

Over the coming weeks and months, Donald Trump and his allies will likely be at the peak of their political power and we should expect that they will attempt to take full advantage of their self-declared electoral ‘mandate’ to launch a flurry of executive and legislative activity unprecedented since the early days of the first FDR administration. And while Trump is no FDR, and the Republicans’ control of Congress today is a mere shadow of what FDR had to work with in 1933, the next few months have the potential to be among the most consequential in modern US political history. We are living not only in interesting times, but truly historic ones, and we should all be paying close attention.

As I said in my last post, Who Let the DOGEs Out?, Trump and his allies would like to incinerate much of what American citizens have come to expect from their federal government over the past ninety-plus years. The Trump reform agenda may well include some initiatives which even moderate Democrats can support—as with the bipartisan immigration reform bill which Trump personally torpedoed in order to press his own electoral advantage—but it will likely consist predominantly of more extreme proposals such as those promoted by Project 2025, which a majority of Americans either do not support or do not trust Trump to implement in an acceptable manner. (Read here and here.)

And so it is that the Trump-appointed Elon Musk and his Department of Government Efficiency (the “DOGE”) are about to embark on a bold experiment to determine whether the “move fast and break things” ethos of Silicon Valley can be successfully employed to radically reform and restructure the federal government. There is little doubt, in my mind at least, that the Trump administration will move very fast and break a lot of things along the way, as they did during their first term in office, but it is an open question whether this time they will be able to put any of it back together again.

Banking & Beyond is not a political blog, and so I will not be writing about much of what happens in Washington over the next four years, however important it may be. Instead, I will continue to focus on matters with a particular relevance to the economy and our financial system, including topics such as tariffs, federal fiscal policy, entitlement reform, financial deregulation and housing finance, all of which appear to be high on the Trump priority list. The goal, as always, will be to help my students understand some of the ‘finance’ behind topical news stories, not only those relating to the financial services industry and corporate governance (my specialties), but also those relating to public finance, which I consider important to the promotion of civic financial literacy.

And with that taste of things to come, let me belatedly send to all my B&B readers best wishes for the new year. I don’t know if 2025 will turn out to be a happy year for most of us, but it will certainly be an ‘interesting’ one, for better and/or for worse.

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