WSJ What’s News: Episode Summary Title: Biden’s Economic Legacy Under a Trump Presidency
Host/Author: The Wall Street Journal
Release Date: December 30, 2024

1. Trump Endorses Mike Johnson for House Speaker

Timestamp: [00:28] – [03:35]

In the opening segment, host Alex Osola announces that President-elect Donald Trump has endorsed House Speaker Mike Johnson for another term. This endorsement comes amidst internal pressures within the Republican Party, with some members advocating for new leadership.

Key Insights:

• Dependence on Trump’s Support: Lindsay Wise, a Wall Street Journal reporter covering Congress, explains the significance of Trump's endorsement for Johnson. “He’s very dependent on Trump's support as speaker” ([01:21]).

• Challenges Ahead: Despite the endorsement, Johnson faces a narrow Republican majority of 219-215 in the House. One dissenting vote from Kentucky's Thomas Massie adds to the uncertainty. Wise notes, “Johnson has to hold every single other member of his 219 majority in check” ([02:49]).

• Implications for Power Transfer: There’s a strategic consideration regarding the certification of Trump’s Electoral College victory scheduled for January 6th. Wise emphasizes the importance of a smooth speaker election to avoid delays in power transfer ([01:21]).

2. Record ETF Investments in 2024

Timestamp: [03:40] – [05:02]

Alex Osola highlights a significant milestone in the investment world, with investors pouring over $1 trillion into U.S.-based exchange-traded funds (ETFs) in 2024, surpassing the previous record set three years prior.

Key Points:

• Surge in ETF Assets: Total assets in U.S. ETFs reached $10.6 trillion by the end of November, marking a 30% increase from the start of the year ([03:40]).

• Market Performance: The robust inflow correlates with the S&P 500’s impressive year-end gain of approximately 25%, signaling strong investor confidence despite recent market volatility.

3. Market Movements and Global Developments

Timestamp: [05:02] – [07:37]

The discussion transitions to market fluctuations and international news.

Highlights:

• Tech Sector Downturn: A tech sell-off led major U.S. indices to decline, with the NASDAQ dropping about 1.2% and the Dow and S&P 500 each closing down approximately 1% ([05:02]).

• Syria’s Central Bank Leadership: Syria’s new rulers have appointed Maisa Sabrin, a former first deputy governor, as the head of the central bank in Damascu, marking a significant move towards gender inclusion in senior financial roles ([05:02]).

4. Biden’s Economic Legacy Under a Trump Presidency

Timestamp: [05:35] – [12:20]

The core of the episode delves into President Biden's economic legacy and how it may endure or be altered under Trump's forthcoming administration. Greg IP, Wall Street Journal’s chief economics commentator, and Lindsay Wise discuss the interplay between Biden's policies and Trump's anticipated actions.

Key Discussions:

• Biden’s Economic Achievements:

  • Macroeconomic Policies: Biden’s administration implemented the American Rescue Plan, injecting $2 trillion into the economy. Wise remarks, “It probably is one of the reasons job growth and economic growth were as strong as they were” ([06:19]).
  • Microeconomic Initiatives: Significant legislation includes the Bipartisan Infrastructure Act, the CHIPS and Science Act, and the Inflation Reduction Act. These laws represent substantial federal intervention in the private sector, particularly in renewable energy and semiconductor industries ([06:37]).

• Impact of Trump’s Policies:

  • Criticism of the Inflation Reduction Act: Trump has criticized the Act as a misallocation of taxpayer money. IP notes, “They believe it's been a waste of taxpayer money in pursuit of a set of technologies which consumers just don't want” ([07:37]).
  • Infrastructure and CHIPS Acts: While infrastructure funding enjoys bipartisan support, Trump’s stance on the CHIPS Act is nuanced. He prefers tariffs over subsidies for domestic semiconductor production, though existing contracts make rollback challenging ([08:07]).

• Potential Policy Shifts:

  • Tariffs and Tax Cuts: Trump is expected to implement higher tariffs, especially targeting Canada and Mexico, and pursue further tax cuts to stimulate growth. “He has already put out social media posts promising tariffs on day one against Canada and Mexico” ([10:37]).
  • Regulatory Changes: Emphasis on reducing federal regulations to promote business growth is a cornerstone of Trump’s economic strategy ([10:29]).

• Economic Projections:

  • Growth Expectations: Economists anticipate the U.S. economy to grow by slightly over 2% in the upcoming year. However, if Trump proceeds with aggressive tariffs or immigration policies, there could be negative repercussions. Wise suggests, “My starting assumption would be that the first year of Trump's term will be a very good year for the economy” unless significant policy deviations occur ([11:56]).

Notable Quotes:

• Lindsay Wise: “Johnson has very little margin for error” ([02:49]).
• Greg IP: “They definitely represented an important vision that will distinguish Biden's economic legacy from his predecessors” ([07:18]).
• Lindsay Wise: “Funding certain projects, the administration still has to implement them” ([09:45]).

Conclusion

President-elect Donald Trump faces the challenge of navigating and potentially reshaping the robust economic framework left by President Biden. While Biden’s policies have created a strong foundation in job growth and infrastructure, Trump's proposed shifts towards higher tariffs, reduced regulation, and tax cuts could significantly influence the U.S. economy’s trajectory in the coming year. The narrow Republican majority further complicates the implementation of Trump’s agenda, making the next steps critical for both political stability and economic performance.

Produced by Pierre Bienname with Supervising Producer Michael Kosmides. For more insights, subscribe to WSJ What’s News.