For many Republicans, this is one of the most exciting aspects of Trump 2.0. It brings together different parts of Trump’s expanding coalition of voters: the idea appeals equally to those who would overhaul the DC “elites” and the Republican elites themselves, who have been warning for years about the dangers of allowing spending and debt to spiral out of control.
But will Trump really make good on it? Some obvious contradictions already stick out. Trump has promised not to touch the two entitlements that are on course to bankrupt America: social security and Medicare health benefits. Meanwhile, he has promised a wide variety of tax cuts, including, another big drop in corporation tax and possibly in capital gains tax, too.
These are moves that will make the US more competitive. They also widen the already gargantuan hole in the public finances and further raise the deficit.
This isn’t a prediction: it’s exactly what we saw in Trump’s first term. The Tax Cuts and Jobs Act went a long way to reducing the tax burden on workers and families.
But it did not, as was suggested at the time, pay for itself. In his first term, Trump was responsible for adding $8.4 trillion to the national debt – the majority of which was racked up before the pandemic.
This wasn’t a surprise, either. Trump was referring to himself as the “king of debt” even before he arrived in the Oval Office.
Might he now crown himself the “king of fiscal responsibility”?
It feels like a reach, especially as Trump has avoided getting specific when it comes to the spending side of the ledger. He talks about slashing the size of the state in the broadest terms, but also offers up both more tax cuts and further protections for current public spending. Musk can identify all the cuts he wants, but if these are the parameters in which he can make change, it’s going to be difficult to make a dent.
Perhaps the changes in circumstance will help him change his mind. The era of ultra-low interest rates is long gone – and is not likely to return in the next four years. Trump championed debt when that debt was cheap. But the government is now forced to spend over a trillion dollars a year just to service the money already spent.
That’s nearly a fifth of the federal budget that Musk can’t touch – nor is it money Trump can claim is going to support his wide voter base. No tax cut or giveaway is funded by that money.
Those payments only get bigger as the debt rises – a figure which already sits at almost 125pc of America’s GDP.