What Is Trumponomics? Part 1: How Donald Trump Is Breaking American Capitalism

Plain English with Derek Thompson

Today is the first of two interviews this week trying to answer this question: What is Trumponomics?

From the 1980s to the 2010s, it was generally assumed that Republicans and Democrats had settled differences in economic policy. Republicans wanted lower taxes and less spending on welfare. Democrats wanted higher taxes and more social spending.

Reality didn’t always conform to those differences. George H.W. Bush famously raised some taxes, and Bill Clinton famously reduced some welfare spending. But generally speaking, the socialists voted for Democrats and the corporate libertarians and free-market folks found their home in the GOP.

What’s interesting about Trump's theory of power and economics is that he doesn’t just scramble this divide. He obliterates it.

Some of Trump’s measures are so classically Republican, you could imagine the ghost of Ronald Reagan signing off on them. After all, his signature legislative accomplishment in both terms are two huge corporate income tax cuts. But when Trump announced that the government was taking a stake in Intel, Bernie Sanders cheered the news and Gavin Newsom called him a socialist.

Trump has single-handedly instituted the biggest tariffs in 100 years—tariffs that are so unusual and extralegal that a federal court just ruled that most of them are, in fact, against the law. He’s waging war on the Federal Reserve, grabbing at an institution that has historically enjoyed independence when it comes to setting interest rates and managing monetary policy.

Trumponomics is capitalist and socialist; it’s obsessed with defeating China and also obsessive about copying China; it’s sometimes focused on keeping America from getting ripped off and sometimes focused on issues so personal they have nothing to do with the national interest at all.

Today’s guest is Greg Ip, the chief economics commentator at The Wall Street Journal. According to Greg, the best way to see clearly what Trump is up to is to see his economic policy as what he calls “state capitalism.”

If you have questions, observations, or ideas for future episodes, email us at [email protected].

Host: Derek Thompson

Guest: Greg Ip

Producer: Devon Baroldi

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