Donald Trump has been president before, but his second term will bring a slew of unconventional new ideas to the economic policy debate.
Some of them are rather old.
From selling federal property for home building to special tax breaks for tipped workers, Trump’s campaign pledges are already resulting in policy work that would never have happened a decade ago — and very likely would not have done today under a different president. The fate of some of those ideas, such as establishing a “strategic reserve” of Bitcoin assets, may be determined by who the president-elect appoints to critical positions. Momentum for others, such as legislative tariff action, is already rising.
“When Trump won in 2016, he opened the horizon for policymaking on the right, so there’s all sorts of new ideas floating around out there,” said Duncan Braid, coalition director at the conservative think tank American Compass. Some of them “are ready for primetime now.”
The new universe of policy debate underscores Trump’s towering power over a GOP that he has altered, bolstering ideas that were previously judged unrealistic or ill-advised by the Washington establishment. Whether and how they are implemented will shed light on the Republican Party’s growing economic strategy beyond its traditional playbook of lower taxes and fewer regulations.
Trump advisers and key congressional figures are already negotiating the details of a bill that would use tariffs to partially fund tax cuts. That would be a particularly significant success for protectionists responding to globalization, which has reduced consumer costs while harming American industrial jobs.
Congress has not raised tariffs through legislation in nearly 100 years, since the infamous Smoot-Hawley Tariff Act of 1930. In the century that followed, lawmakers handed much of their authority to the president, and legislative activity has nearly always been geared toward enacting trade agreements that reduce duties.
“There was basically a bipartisan consensus — certainly after World War II, less so in the 1930s — that we’re going to lower the trajectory of tariffs in conjunction with attempting to reach trade agreements with other countries,” said Doug Irwin, an economics professor and trade historian at Dartmouth College. “If Congress gets back in the act and starts really changing things, that’s enormous.”
Here are some such concepts that are gaining traction under Trump:
A new bipartisan proposal aims to eliminate the tip tax.
“No tax on tips” was the first of many tax measures proposed by Trump throughout his campaign, and economists and policy experts first dismissed it. They argued that it was poorly targeted help for low-income workers because at least some of the tax breaks would benefit employers rather than workers.
Economists also predicted that astute tax professionals would quickly find ways for high-paid financial advisers and other high-income workers to designate their earnings as tips, opening up new avenues for tax avoidance.
Nonetheless, the concept was politically effective, particularly among hotel workers in the swing state of Nevada. As a result, during an August rally in Las Vegas, Vice President Kamala Harris briefly mentioned removing tip taxes.
Then there has been a frenzy of legislation. Republicans have sponsored at least three proposals this year that provide tax relief for tip income, in addition to one introduced by Rep. Steven Horsford, a Nevada Democrat and member of the Ways and Means committee.
Because of Trump’s campaign pitch, some version of “no tax on tips” is likely to be included in a wide package that extends trillions of dollars in the president’s tax cuts.
A Bitcoin reserve is appealing to cryptocurrency fans.
Trump has supported the concept of hoarding the billions of dollars in Bitcoin that the government gets through asset seizures, while at least one pro-crypto senator, Cynthia Lummis (R-Wyo.), is advocating for the US to buy 1 million of the cryptocurrency assets. At current prices, that would amount to more than a third of the federal government’s existing $250 billion in reserve assets, which include gold.
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Republicans suddenly believe the economy is great and the election was not rigged.Lummis told HEADLINESFOREVER that she hadn’t spoken with Trump on the Bitcoin reserve since the election, but that “I’m going to be pushing that harder than any other thing I work on.”
Still, there is still skepticism on Capitol Hill and within the administration that the reserve will serve a practical purpose, as Bitcoin does not have the same strategic worth as, say, oil.
Some policy advocates who support increasing legal clarity for the cryptocurrency business have also advocated that addressing regulatory hurdles should be prioritized.
“I don’t know if there’s been much of a serious effort to put that together yet,” said Norbert Michel, head of the Cato Institute’s Center for Monetary and Financial Alternatives, regarding a strategic Bitcoin reserve. “I really do understand why Lummis and any other proponents of crypto would want to try to gain legitimacy in that way, but I really think it’s the wrong way of doing it.”
An ancient notion with a new purpose: to resolve the housing problem.
The Republican National Committee’s 2024 platform included a proposal to sell federal lands to builders for home construction, demonstrating how dire the housing affordability crisis has become, as increasingly desperate policymakers seek ways to mitigate a historic supply shortage around the edges.
Utah Republicans Sen. Mike Lee and Rep. John Curtis, who was chosen to be the state’s junior senator in the next Congress, have introduced legislation that would allow federal lands to be sold to states and local governments to alleviate housing shortages. The federal government owns 63% of Utah’s territory, as well as large portions of Nevada (80%), Idaho (62%), and California (45%), among other states.
The Biden administration also proposed selling federal lands for housing this summer. Thus, there is opportunity for bipartisan consensus on opening up parcels — the federal government owns around 28% of the property in the United States — to bidding for developers who agree to keep a specific number of the units affordable to the local population.
Still, much of federal land is unsuitable for residential development, and the areas where the government controls the most acreage — primarily in the West — are not generally close to areas with the greatest housing needs. Infrastructure is sometimes insufficient, and residential properties require access to water, roads, and sewage.
The two parties also disagree on the scope and procedures of a land parceling program, and environmentalists have expressed concern about a potential gift to developers.