So What Will Trump's Policies Mean For The Cost Of Living?

Summary

The NPR Politics Podcast: So What Will Trump's Policies Mean For The Cost Of Living?

In this insightful episode of The NPR Politics Podcast, hosts Deepa Shivaram and Mara Liasson engage with Scott Horsley to dissect the potential economic implications of former President Donald Trump's policy proposals following his election victory. The discussion delves into how Trump's strategies might influence the cost of living in the United States, touching upon key areas such as tariffs, mass deportations, and tax reforms. This comprehensive analysis offers listeners a clear understanding of the possible short-term and long-term effects these policies could have on the economy and everyday consumers.

---

Key Takeaways from the Election

Deepa Shivaram opens the conversation by reflecting on the recent election outcomes, emphasizing the electorate's frustration with the rising cost of living:

"People really, really hate it when the cost of living goes up, when they have to pay more for rent or groceries or insurance. They really don't like that, and they tend to take it out on whichever person or party is in charge at the moment."
— Scott Horsley (02:41)

Scott Horsley highlights that inflation has consistently proven to be a formidable challenge for incumbent administrations worldwide, leading to political upheavals in countries like Pakistan, the UK, Brazil, and Italy. He attributes the current inflationary pressure to pandemic aftershocks, supply chain disruptions, and the war in Ukraine, which has particularly impacted energy and food prices.

Inflation and Presidential Impact

Mara Liasson probes the role of presidential actions in managing inflation, questioning what concrete steps presidents can take to mitigate rising prices:

"What can presidents do to lower prices? I mean, Donald Trump told people he would get this fixed as soon as he won."
— Mara Liasson (02:52)

Scott responds by acknowledging the limited tools available to presidents in combating inflation directly. He notes that while Trump has advocated for increased oil production, the current oil output is already at record levels, and gasoline prices have decreased from their 2022 peak. However, other prices remain high, and past stimulus measures by both Democratic and Republican administrations have contributed to the inflationary environment.

President Elect Trump's Economic Policies

1. Tariffs

A significant portion of the discussion centers on Trump's stance on tariffs and their potential economic repercussions:

"I think we're going to have to wait and see exactly what form the tariffs take. If he actually did that, it would have huge inflationary impact in this country."
— Scott Horsley (08:17)

Trump has proposed universal tariffs ranging from 10% to 20% on all imports, with a staggering 60% tariff specifically targeting Chinese goods. Horsley warns that such measures could significantly increase consumer costs, echoing the effects observed during Trump's first term. Additionally, retaliatory tariffs from trading partners could harm U.S. exporters and agricultural sectors, as seen in previous administrations.

2. Mass Deportations

The episode also examines Trump's rhetoric on mass deportations and its potential economic impact:

"If you're worried about the high cost of groceries, deporting the people who pick and process our food is probably not, not the best response here."
— Scott Horsley (10:54)

Horsley argues that mass deportations could exacerbate inflation by disrupting labor-intensive industries such as agriculture, construction, and hospitality. He emphasizes that the U.S. relies heavily on immigrant labor to sustain job growth and address labor shortages, especially as the native-born population ages.

3. Tax Cuts

The conversation shifts to Trump's tax cut proposals, exploring who would benefit and the broader economic implications:

"If in fact that came to be, it would save some people some money. It would take money away from the government. It would worsen our federal deficit, which is already large."
— Scott Horsley (13:00)

Trump has suggested extending the 2017 tax cuts and implementing targeted tax reductions, such as making tips and Social Security benefits exempt from taxation. While these measures could provide financial relief to specific groups, Horsley cautions that they might increase the federal deficit and potentially hinder efforts to control inflation by injecting more money into the economy.

Uncertainty and Economic Volatility

Deepa Shivaram raises a broader question about the uncertainty surrounding Trump's policy implementations and their effects on economic stability:

"How much that volatility or relative volatility, like how chaotic does that kind of make the ground that we stand on not exactly knowing what might happen in January, February, March, etc."
— Deepa Shivaram (14:40)

Scott Horsley acknowledges the inherent uncertainty that comes with a new administration, especially one that may pursue aggressive economic policies. He notes that while the business community is resilient, the lack of predictability can pose challenges. However, he remains optimistic that businesses will adapt, even if some of Trump's policies might unintentionally worsen inflation.

Voter Behavior and Future Projections

Mara Liasson reflects on voter motivations, suggesting that economic frustrations led to Trump's resurgence:

"People were just very frustrated with the high cost of living as it is now. And they just said I'm going to vote with my gut. And my gut doesn't like the cost of living the way it is now. And I want to try something different."
— Scott Horsley (15:53)

Liasson speculates on how voters will hold Trump accountable for economic outcomes, contrasting it with the electorate's muted response to his handling of the COVID-19 pandemic. She posits that sustained high prices could test Trump's ability to shift blame onto the previous administration.

Conclusion

As the episode wraps up, the hosts summarize the key points, emphasizing the complex interplay between presidential policies and economic indicators like the cost of living. They underscore the challenges that lie ahead in anticipating how Trump's proposed measures will unfold and impact everyday Americans.

"The economy is not crazy about uncertainty, and certainly there will be lots of uncertainty in the Trump administration. But US Business community is pretty resilient. They'll find ways to work with it."
— Scott Horsley (15:07)

Overall, this episode provides a thorough examination of the potential economic trajectories under Trump's leadership, offering listeners a nuanced perspective on what to expect regarding the cost of living in the coming years.

---

Notable Quotes:

• "People really, really hate it when the cost of living goes up, when they have to pay more for rent or groceries or insurance."
  — Scott Horsley (02:41)

• "If you're worried about the high cost of groceries, deporting the people who pick and process our food is probably not, not the best response here."
  — Scott Horsley (10:54)

• "If in fact that came to be, it would save some people some money. It would take money away from the government. It would worsen our federal deficit, which is already large."
  — Scott Horsley (13:00)

• "People were just very frustrated with the high cost of living as it is now. And they just said I'm going to vote with my gut."
  — Scott Horsley (15:53)

• "The economy is not crazy about uncertainty, and certainly there will be lots of uncertainty in the Trump administration."
  — Scott Horsley (15:07)

---

This comprehensive summary encapsulates the critical discussions and expert insights shared in the episode, providing readers with a clear understanding of the potential economic impacts of Trump's policies on the cost of living in the United States.

Transcript

[Deepa Shivaram]

This message comes from Carvana.

[Scott Horsley]

With Carvana Value Tracker, you can track.

[Deepa Shivaram]

Your car's value anytime, anywhere.

[Scott Horsley]

Carvana will even let you know when your car's value changes with updated emails.

[Deepa Shivaram]

However you value your car, know its.

[Scott Horsley]

Worth with Carvana Value Tracker.

[Deepa Shivaram]

A quick word before the show. The 2024 election is over, and as a new administration prepares to assume power, it's our job across the entire NPR network to report on what they do with that power. That's why we're here, because information is power, too. Your support makes it possible for us to break down big stories, to fact check and to make sure you understand what's going on. When you donate, you make a difference in our ability to do this work tomorrow. If you're already a supporter, we're taking this moment to say thank you. And if you're not, go to donate.NPR.org to give donate.NPR.org all right, here's the show.

[Ted Arthur]

Hi, this is Ted Arthur at the Winter Garden Theater in New York City about to conduct another performance of Back to the Future on Broadway. This podcast was recorded at 1:39pm on.

[Deepa Shivaram]

Monday, November 11, 2024.

[Ted Arthur]

Things may have changed by the time you hear this, but we'll still be going back in time thanks to our Flux Capacitor, an incredible cast, musicians and crew. Here's the show.

[Deepa Shivaram]

I'm thrilled. Must see.

[Mara Liasson]

I'd like to go back in time with the Flex Capacitor.

[Deepa Shivaram]

Hey there. It's the NPR Politics Podcast. I'm Deepa Shivaram. I cover the White House.

[Mara Liasson]

I'm Mara Liasson, senior national political correspondent and npr.

[Deepa Shivaram]

Scott Horsley is here to talk about the economy. Hey, Scott.

[Scott Horsley]

Good to be with you all.

[Deepa Shivaram]

Thanks for coming. So big takeaways from this election. Kind of hard to be an incumbent when the last four years have been, you know, years of people struggling with the cost of living and trying to afford basic needs like groceries, childcare, etc. How are you thinking about how the election played out last week?

[Scott Horsley]

I think you can think of lots of different reasons people had to vote the way they did. But one clear takeaway is that people really, really hate it when the cost of living goes up, when they have to pay more for rent or groceries or insurance. They really don't like that, and they tend to take it out on whichever person or party is in charge at the moment. We've seen that through the decades and we've seen it across national boundaries. Governments have been toppled from Pakistan to the UK To Brazil and Italy because of the inflationary spike we saw all over the world in the wake of the pandemic. And that was a very difficult environment for Democrats and Kamala Harris.

[Mara Liasson]

So, Scott, obviously we know that inflation defeats presidents. Inflation is the most important political economic indicator. And we know that if Biden could have reversed prices and gotten them down, he would have. What can presidents do to lower prices? I mean, Donald Trump told people he would get this fixed as soon as he won.

[Scott Horsley]

That's right. He hasn't really offered a prescription to get prices down. He has talked about increased oil production, but of course, we're already producing oil at record levels. And actually gasoline prices have come down quite a bit from their peak in the summer of 2022. Lots of other prices have stayed high, even though they're not still going up really fast. You are seeing a lot of Democratic economists questioning the decisions that were made early in 2021 to really go big with the American rescue. Now, of course, the government also went very big with economic stimulus under the Trump administration back in 2020 to counter the effects of the pandemic. But those aggressive efforts to cushion the blow from the pandemic continued into 2021, and that may have put some further upward pressure on prices. The main causes of inflation were the aftershocks of the pandemic itself and all the resulting supply chain snarls. And then, of course, the war in Ukraine, which supercharged energy prices and food prices. But the 1.9 trillion DOL American Rescue Plan may have also put upward pressure on prices at the margins. And you know, the reason Democrats did that was they were burned by the experience coming out of the great financial crisis when they didn't think the government had done enough. You might remember Treasury Secretary Janet Yellen saying, it's better to do too much than to do too little. And in fact, doing perhaps too much did it really helped to boost job growth and made for a very tight labor market where wages went up pretty rapidly. But it also maybe affected prices and people really, really hate those high prices.

[Mara Liasson]

So it sounds like you're saying that there are things presidents can do that will exacerbate inflation, but there isn't anything they can do to bring prices down, is that what you're saying?

[Scott Horsley]

It's pretty tough. I've not seen any magic wand that's going to work. What they can do is try to boost wages so they keep pace with inflation and event overtake it. And over time, we have seen wages start to catch up with these high prices and they will presumably overtake it. And people see real increases in their buying power. We've seen wage growth outpacing price growth for well over a year now, but people are still really unhappy with those cumulative price increases of the last few years.

[Deepa Shivaram]

And, Scott, part of this is also that people, consumers, voters, etc. Were looking maybe for a faster fix here. There was a lot that the Biden administration tried to do. Obviously, we know there's no magic lever that the president can pull to fix the economy overnight. But a lot of these efforts and initiatives took time and will have continued to take a lot of time. We'll see what President Trump does with some of these things. But is part of what you are seeing is that voters wanted a faster solution here?

[Scott Horsley]

Yeah. People wanted prices to come down, and we're probably not going to see prices come down for the most part. What we hopefully will see is prices level off or go up only slowly and eventually wages catch up with that. Now that's what you can really do in real economic terms. There are certainly other questions about messaging. Could the administration have done a better job of messaging what it was doing? Could it have done a better job of explaining why prices were high? Possibly. But the facts are it's really tough in an inflationary environment for incumbents to hold onto their jobs. And we've seen that whether the incumbent party is left, right or center all over the world, inflation is just a killer of incumbent politicians. And Kamala Harris had that incumbent label wrapped around her neck.

[Deepa Shivaram]

Yeah, definitely. All right. We're going to take a quick break and more in a moment.

[Ira Glass]

This message comes from NPR sponsor Saatva. You hear a lot of statistics during elections, but one number isn't getting enough attention. Over a third of Americans suffer from sleep deprivation. Saatva plans to change that with mattresses crafted to lull you to sleep and keep you sleeping soundly. And they cost just a fraction of the price of retail. Visit s doubletva.com NPR to save $200 on orders of $1,000 or more.

[NPR Sponsor]

This is Ira Glass of this American Life. Each week on our show, we choose a theme, tell different stories on that theme. All right, I'm just going to stop right there. You're listening to an NPR podcast. Chances are you know our show. So instead I'm going to tell you we've just been on a run of really good shows lately, some big, epic, emotional stories and some weird, funny stuff, too. Download us this American Life.

[Mara Liasson]

Okay, so does this sound like you?

[Scott Horsley]

You love NPR's podcasts.

[Mara Liasson]

You wish you could get more of all your favorite shows and you want to support NPR's mission to create a more informed public. If all that sounds appealing, then it is time to sign up for the NPR plus bundle. Learn more at plus.NPR.org.

[Deepa Shivaram]

And we're back. And I want to turn to what's coming next. President Elect Trump's policy plans when it comes to the economy on his end, starting off with his plans on tariffs. He's talked a lot about this, Scott. How will that impact the economy both in the short term, like the coming months after he sworn in in January, but also, you know, potentially years down the line?

[Scott Horsley]

Well, I think we're going to have to wait and see exactly what form the tariffs take. You know, the president elect talked about universal tariffs on all imports of 10 to 20% and then a much higher tariff, maybe 60%, on imports from China. If he actually did that, it would have huge inflationary impact in this country. But there's some thinking that, you know, maybe that's all talk and he's going to use this as a bargaining chip and that the actual tariffs that take place won't be that large or that costly. In general, when you slap a tariff on on a product, it's a tax on imports. It drives up the price. Trump likes to say that the foreign suppliers pay that price, but in general, it's the US Importer that pays the price and in many cases then pass that cost on to the ultimate consumer. Now, when we had tariffs, we had a lot of tariffs imposed during the first Trump administration that did raise costs for consumers. It certainly raised costs for businesses. Some of those costs were passed on to ultimate consumers. The Trump administration the first time around didn't slap tariffs on a lot of consumer goods from China. They stopped short of doing that. So we didn't necessarily see the full brunt of tariffs on consumer prices. But if he actually went through with a 10 or 20% tariff on all imports, that would sharply raise costs for consumers.

[Deepa Shivaram]

Yeah.

[Mara Liasson]

One of the things about covering Donald Trump is there's often a very big difference between what he says he wants to do or what he says he is doing and what he actually does when he starts to decide how he's going to put tariffs on things. Maybe these tariffs will not be as broad, sweeping and draconian as he has described them during the campaign.

[Scott Horsley]

And if he does go through with tariffs, you can certainly expect our trading partners will retaliate with tariffs of their own on US Exports. That's not good for US Companies that try to sell products overseas. It's not good for our farmers who tend to rely heavily on export markets. We have very productive farmers who make a lot more food than we can eat in this country, so they sell a lot of it overseas. We saw farmers lose a lot of market share the first time around when other countries retaliated against US Tariff.

[Deepa Shivaram]

Another thing that the president elect has campaigned on, talked about a lot, is this concept of mass deportations, carrying these out in areas all over the country. There are a lot of people, Scott, who have echoed a lot of concern about this, of course, and the impacts on groups like agriculture and things like that. How does something like that, a plan like that, potentially play out for how that would also impact consumers?

[Scott Horsley]

Yeah, I mean, if you're worried about the high cost of groceries, deporting the people who pick and process our food is probably not, not the best response here. Again, we don't really know what the reality of policy under a Trump administration will be in comparison to the way he's talked about it. But mass deportation is potentially inflationary. Now, Trump and his running mate, J.D. vance, have said, well, if you deport a bunch of people who are living in the country illegally, that will free up housing and lower rents. And I suppose there are pockets of the country with high concentrations of undocumented, committed immigrants where, you know, a mass deportation might actually put some downward pressure on rents. But for the most part, mass deportations would drive up the cost of living and it would certainly make it hard. It would hurt the agricultural industry, it would hurt the construction industry, which, you know, we need to build more housing. It would certainly hurt hospitality, any industry that depends heavily on immigrant labor. The other thing is that the large number of immigrants we've seen in the last few years certainly have caused strains on schools and hospitals and all sorts of government infrastructure. But they have also allowed the United States to add a whole lot more jobs than it otherwise would have been. You know, our native born population is aging. Many baby boomers are retiring. If it weren't for the high levels of immigration that we've seen in the recent years, we would not have been able to add nearly as many jobs, and we would be facing a worse labor shortage, which would also be inflationary.

[Deepa Shivaram]

And the other thing Trump has talked about, of course, is, and this came up on both sides between Democrats and Republicans in this presidential race, tax cuts. Who's getting them, who isn't getting them? How does that impact what's coming down the line in a Trump administration?

[Scott Horsley]

Right. Well, of course, the big part of the tax cuts that have been talked about is the extension of the 2017 tax cuts that were passed during the first Trump administration. Of course, Vice President Harris had also talked about extending most of those individual cuts for everyone making up to $400,000. So there, what we're really talking about is avoiding a tax increase when those tax cuts were set to expire next year. Trump has also talked about cutting the corporate tax further, which is one reason we've seen, you know, lots of celebration on Wall street of his election. And then he has talked about some other targeted tax cuts for specific constituencies, like making tips exempt from taxation. That was, of course, very popular with a lot of tipped workers in Nevada and elsewhere. He's talked about exempting Social Security benefits from taxation. That would be certainly popular with a lot of seniors. He's also talked about exempting overtime income from taxation. Now, all of those things would be complicated and would probably invite some gamesmanship in the tax business. People trying to get more of their income classified as tips. You might see teachers asking to have some of their income classified as tips so that it would be tax free. Lots of gamesmanship going on there. But if in fact that came to be, it would save some people some money. It would take money away from the government. It would worsen our federal deficit, which is already large. It could drive up long term interest rates and mortgage rates as the government has to borrow more money, and that makes it more expensive for everyone else to borrow money. And the extra money circulating in the economy as a result of those tax cuts could make it harder to get inflation under control.

[Deepa Shivaram]

Scott, I have kind of like a loosey goosey question that I wonder if we end on here, which is like we were talking about all of Trump's potential plans and policy ideas with the context of knowing that we don't actually know if he's going to enact any or all of these things and in the exact way that they shake out. And I'm curious how much that volatility or relative volatility, like how chaotic does that kind of make the ground that we stand on not exactly knowing what might happen in January, February, March, etc.

[Scott Horsley]

Well, the economy is not crazy about uncertainty, and certainly there will be lots of uncertainty in the Trump administration. We learned that the first time around. But US Business community is pretty resilient. They'll find ways to work with it. We've talked about a lot of the ways that if Trump's policies were carried out, it could actually make inflation worse rather than better. I don't think. I think by and large voters were going over a checklist of Trump policies and Harris policies and really nickel and diming and saying which of these is going to be better for my pocketbook. I think they were just very frustrated with the high cost of living as it is now. And they just said I'm going to vote with my gut. And my gut doesn't like the cost of living the way it is now. And I want to try something different.

[Deepa Shivaram]

People were voting for change and they got that with a president elect Donald Trump to kind of close the loop on what we were saying in the beginning, choosing the person who isn't the incumbent.

[Mara Liasson]

There were a lot of factors that motivated voters behavior in this race. I think the economy is always number one. But in this case, prices were what drove people and they remembered that during Trump prices were lower. And they were there were also other things. I think that this was a clear defeat for the cultural left. But what's not clear is what else was motivating this. And, and we're going to be picking through the entrails of this election for a long time. And one of the things that I'm interested in going forward is how much Donald Trump will be held responsible for the economy. People in retrospect pretty much gave him a pass on how he handled Covid. They didn't give him a Pass in 2020. That's one of the main reasons that he lost. People thought he had bungled the response to the pandemic, but then they kind of gave him a pass. And I wonder if prices stay high, will he be able to get away with saying, hey, that's Joe Biden's fault, not mine. We'll see.

[Deepa Shivaram]

All right. We're going to leave it there for today. Scott Horsley, thanks so much for joining us.

[Scott Horsley]

Great to be with you.

[Deepa Shivaram]

I'm Deepa Shivaram. I cover the White House.

[Mara Liasson]

I'm Mara Liasson, senior national political correspondent.

[Deepa Shivaram]

And thank you for listening to the NPR Politics podcast.

[Mara Liasson]

If you need a moment to catch your breath and calm your nerves, listen to the latest All Songs Considered from NPR Music. We've got an all new mix of songs to slow the blood and recalibrate your day. Plus reflections on gratitude, joy and the power of kindness. Listen to new episodes of All Songs Considered every Tuesday. Wherever you get podcasts, the Code Switch team spent election Day talking to folks about how the outcome might impact them. It's a time capsule of people's hopes and fears before they knew the results.

[Deepa Shivaram]

One way or another.

[Mara Liasson]

There's a change coming. I wanted to vote for Trump, but I voted for her. Gays for Trump.

[Deepa Shivaram]

I cried this morning. I been crying on and off.

[Scott Horsley]

I'm terrified.

[Mara Liasson]

Listen to Code Switch the podcast about race and identity from npr.