Podcast Summary: WSJ What’s News – "Trump, Tariffs and Taxes: How He’ll Turn Campaign Promises Into Policy"

Release Date: November 10, 2024
Host: Luke Vargas
Guests: Brian Schwartz (Economic Policy Reporter), Richard Rubin (Tax Policy Reporter)
Podcast Title: What’s News Sunday

Introduction

In the November 10, 2024 episode of What’s News Sunday, host Luke Vargas delves into the economic agenda of newly elected President Donald Trump. The discussion centers on how Trump plans to translate his campaign promises—particularly regarding tariffs, taxes, and regulatory reforms—into actionable policy. Vargas is joined by Wall Street Journal reporters Brian Schwartz and Richard Rubin, who provide expert insights into the feasibility and potential impact of these initiatives.

Tariffs: Strengthening Economic Nationalism

Trump’s Tariff Promises

The episode opens with an overview of Trump’s campaign promises related to tariffs. Vargas cites Trump's bold statements:

Donald Trump ([01:15]): "I will pass gigantic tax cuts for workers and keep their jobs here in the United States. There will be no tax on Social Security. We're going to stop it. We're going to have 10 to 20% tariffs on foreign countries that have been ripping us off for years. Some might say it's economic nationalism. I call it common sense."

Implementation and Authority

Brian Schwartz elaborates on Trump’s capacity to implement these tariffs:

Brian Schwartz ([02:31]): "He is going to have broad authority. He can basically just do it. I mean he could just make the call as an executive order effectively to move ahead with these tariffs."

Schwartz explains that with Republicans likely controlling both chambers of Congress, Trump may have the necessary support to impose tariffs unilaterally, continuing the protectionist policies that significantly influenced his first term.

Overcoming Industry Pushback

Vargas raises concerns about potential opposition from businesses and retailers. Schwartz responds by referencing Trump’s previous actions:

Brian Schwartz ([03:20]): "He did that easily in his first go-around as precedent... he just pressed forward anyway."

Schwartz suggests that Trump's experience and the backing of influential business leaders, including Elon Musk, may help him navigate and dismiss objections from various industries.

Congressional Dynamics

Richard Rubin adds context about the legislative landscape:

Richard Rubin ([04:14]): "A lot of members of Congress don't like tariffs... But I think there's basically not enough clout within Congress to pull back the tariff authorities that Congress has already granted to the president."

Rubin indicates that while some congressional members may oppose the tariffs due to concerns over their constituencies, the existing authorization from previous legislation limits their ability to effectively stop Trump’s tariff initiatives.

Taxes: Extending and Expanding Tax Cuts

Current Tax Landscape and Proposals

Shifting focus to taxation, Vargas prompts a discussion on Trump’s tax agenda. Rubin outlines the primary drivers:

Richard Rubin ([05:04]): "The one big thing that's driving this train on taxes is the expiration at the end of 2025 of many of the tax cuts that he signed into law in 2017."

Rubin highlights that Republicans aim to extend these existing tax cuts but face challenges in integrating Trump’s further promises, such as eliminating taxes on tips, overtime, and Social Security benefits.

Congressional Challenges

When asked about the necessity of congressional approval for these tax measures, Rubin explains:

Richard Rubin ([06:24]): "Some of those are really expensive... The overtime and Social Security benefits are expensive... there's a handful of Republicans from high tax states who see this as an existential issue."

Rubin emphasizes the difficulty in garnering consensus among Republicans, particularly those representing high-tax states, to adopt Trump’s extensive tax cut proposals.

Deficit Concerns and Fiscal Responsibility

Vargas references Trump’s victory speech focusing on debt reduction alongside tax cuts:

Donald Trump ([08:29]): "We're going to be paying down debt. We're going to be reducing taxes. We can do things that nobody else can do."

Rubin addresses the tension between tax cuts and deficit reduction:

Richard Rubin ([08:53]): "Can you take those annual deficits and start making them smaller somehow?... The US spent $1.8 trillion more than it collected in fiscal 2024 to start paying down debt. That would need to go the other direction."

He underscores the potential for conflict within the Republican Party between those prioritizing tax cuts and those focused on reducing the deficit, noting that historically, lower taxes have taken precedence over significant spending cuts.

Regulatory Reforms: Deregulation Across Industries

Scope of Deregulation Efforts

Vargas transitions to Trump’s regulatory agenda, querying about the breadth of potential deregulation:

Luke Vargas ([10:46]): "We have to move along, though, to the final pillar of Trump's economic agenda, which concerns cutting regulation."

Brian Schwartz responds by identifying key sectors likely to be targeted:

Brian Schwartz ([11:28]): "You got it. And look... deregulation, particularly... the crypto space is going to be an agency to watch."

Schwartz points to the SEC and the cryptocurrency industry as primary targets for deregulation efforts, given their significance and Trump's previous support.

Mechanics of Deregulation

When questioned about the President’s authority to deregulate, Schwartz clarifies the process:

Brian Schwartz ([12:23]): "Congress has some role in that, but also when you look at the agencies themselves, they do have some broad authority when it comes to regulations."

Rubin adds that deregulation requires formal processes and is not instantaneous:

Richard Rubin ([12:39]): "On regulations, you do have to go through some process... But deregulation will happen for sure."

He mentions the possibility of a regulatory "seesaw" with future administrations reversing deregulation efforts.

Immediate Regulatory Actions

Vargas asks the reporters to identify specific regulations Trump might target immediately. Rubin suggests modifications to the Inflation Reduction Act (IRA) regulations:

Richard Rubin ([13:35]): "You may see the administration at least try to change how those credits operate."

Schwartz highlights the cryptocurrency sector as an immediate area of focus:

Brian Schwartz ([14:01]): "What I'm going to be watching for is how the crypto space is treated on day one and in the weeks ahead."

He anticipates significant changes in how the SEC interacts with the cryptocurrency industry under Trump's administration.

Conclusion

In wrapping up, the episode underscores the complexity of turning Trump's ambitious economic promises into tangible policies amidst legislative constraints and internal party dynamics. While Trump possesses considerable authority to implement tariffs and initiate deregulation swiftly, the extension and expansion of tax cuts present a more intricate challenge, especially in balancing fiscal responsibility with populist tax policies.

Vargas closes the discussion by highlighting the ongoing debates and potential infighting within the Republican Party, emphasizing that the coming months will reveal how Trump navigates these economic initiatives amid varying priorities within his own party.

Notable Quotes:

• Donald Trump ([01:15]): "I will pass gigantic tax cuts for workers and keep their jobs here in the United States... We’re going to have 10 to 20% tariffs on foreign countries that have been ripping us off for years."

• Brian Schwartz ([02:31]): "He is going to have broad authority. He can basically just do it... He just been emboldened by the business leaders that are around him right now."

• Richard Rubin ([05:04]): "The one big thing that's driving this train on taxes is the expiration at the end of 2025 of many of the tax cuts that he signed into law in 2017."

• Donald Trump ([08:29]): "We're going to be paying down debt. We're going to be reducing taxes. We can do things that nobody else can do."

• Richard Rubin ([08:53]): "It's really about, can you take those annual deficits and start making them smaller somehow?"

• Brian Schwartz ([11:28]): "If Elon Musk even has some form of an outside role... you are going to see some sort of effort in moving to deregulate certain industries."

This comprehensive summary encapsulates the critical discussions from the What’s News Sunday episode, providing listeners with a detailed understanding of the potential pathways through which President Trump aims to implement his economic policies, the challenges he may face, and the implications for various sectors of the economy.