A Roundup on Trump’s First Address to Congress

“America is back,” President Donald Trump declared confidently, prompting chants of “USA! USA!” from the senators and representatives assembled to hear his address. Continuing for roughly an hour and half, President Trump’s speech a wide range of policies and an optimistic view of the American future. He covered economics, immigration, foreign policy, and more.

Here is the Taxpayers Protection Alliance’s breakdown of the good and bad of Trump’s announced economic proposals, explaining how they will affect American taxpayers, consumers, and businesses.

The Good

Withdrawing from World Health Organization (WHO): This is an unequivocal good. The WHO has overstepped its boundaries to micromanage consumers and businesses alike. The organization has been on a crusade against tobacco harm reduction products that save lives. It is the job of Washington to push back against the overreaches of international organizations to protect the freedoms and interests of American citizens. The withdrawal from the WHO is an important step on this front.

Ending “the Green New Scam”: Trump has indeed done much to roll back the Biden administration’s anti-market, anti-energy policies. He trotted out one of his favorite lines — “Drill Baby Drill!” — signaling that his administration will allow American energy companies to flourish and provide consumers with cheap and abundant energy. This will lower costs for all energy consumers, both individuals and businesses alike. The president also touted a new pipeline in Alaska. He noted that this activity is attracting investment from several foreign nations, which will further infuse the U.S. economy with energy and capital. He also noted an effort to unleash America’s natural reserves of rare earth minerals, which will be a boon to America’s continued technological innovation and economic dynamism.

However, it should be noted that truly rolling back Biden’s disastrous agenda will require congressional action. For example, although Trump says he ended the promotion of electric vehicles (EVs), this will only be truly accomplished once Congress rescinds the copious subsidies enacted in the Inflation Reduction Act (IRA). Indeed, the IRA offered an estimated trillion dollars or more of subsidies for EVs and other green energy projects. These have distorted markets and misallocated capital away from productive products to environmentalist projects that cannot survive without subsidization.

TCJA Extension: President Trump said that Congress will soon renew the provisions of 2017’s Tax Cuts and Jobs Act, to provide tax relief to individuals and American businesses. As TPA has argued, this is critical to protecting taxpayers and making America an attractive place to do business. The president gave a shoutout to full expensing in the tax code, a great pro-growth position.

DOGE Rooting Out Waste: Elon Musk’s DOGE team has worked to root out waste. While it sometimes seems to follow a “shoot first, ask constitutional questions later” strategy, DOGE is doing its best to shed light on all manner of government waste, fraud, and abuse. The constitutional issues at play will have to be litigated. DOGE should certainly take a more transparent and careful approach going forward. However, it seems likely that the federal government will be far leaner going forward. This is undoubtedly a positive development for the nation.

The Mixed

Balance the federal budget: Trump planned to balance the federal budget. This is perhaps one of the most positive proposals from the speech. Balancing the budget would be a historic accomplishment. TPA has supported proposals like Sen. Rand Paul’s (R-Ky.) “Six Penny Plan” that would accomplish just that.

However, unless the president reverses course and decides to pursue serious Social Security, Medicare, and Medicaid reform, this promise will be hollow. As a matter of basic math, only trimming discretionary spending simply cannot get the task done. It is of utmost importance to the fiscal health of the nation that Republicans — led by Congress — reclaim their mantle as a party of true fiscal responsibility before it is too late.

The Bad

Doubling down on tariffs: Unfortunately, Trump recommitted himself to tariffs, saying they will boost American industry. This is based on a fundamental misunderstanding of the economic issues at play. Tariffs are taxes, paid by American businesses and consumers. As the first Trump administration demonstrated, ballooning costs caused by tariffs raise input costs for American businesses. This then results in reductions in productivity, employment, capital investment, and GDP. Even in the manufacturing sector, Trump’s tariffs killed many, many more jobs than they saved. Likewise, despite claims that tariffs will help American farmers, they do the opposite; protectionism limited their access to export markets that are critical to their success. fact, Congress felt compelled by the harms imposed by the First Trump administration’s tariffs to pass additional subsidies for the agriculture industry.

Trump’s focus on “reciprocal” tariffs, which he said will go into effect on April 2, is similarly misguided. Although policy makers should work to lower tariff barriers erected against American exporters, retaliatory tariffs will accomplish little besides further harm to Americans. Indeed, Trump’s own administration in 2019 admitted that the president’s tariffs failed to achieve their stated aims.

It’s telling that Trump has pivoted from saying that tariffs won’t harm Americans to admitting they might cause a “little disturbance.” This backpedaling seems to signal that the president has begun to grasp the economic realities and is beginning to hedge. Unfortunately, if protectionism is pursued, the pain for Americans will only grow.

No Tax on Tips: On the downside of President Trump’s tax proposals, he also said that he will proceed with his plan to exempt tips, Social Security checks, and overtime pay from taxation. Not only will this lower revenue, but it will create unfair distortions in the tax code. Two workers making the same amount each year should not have a different effective tax rate if one of them happens to make a percentage of their paycheck from tips. This cuts against the TCJA’s objective of simplifying the tax code.

Made in America Incentives: President Trump announced that he will use tariffs and subsidies to promote products made in America. As Joe Biden discovered, such mandates are fruitless and raise the costs of manufacturing and federal products. For example, Trump said he will subsidize American-made ships. The current law that aims at this goal — known as the Jones Act — has gutted domestic ship manufacturing, and doing more on this sort of failed policy will do nothing besides achieve more of the same destructive results. Congress should repeal the Jones Act, not double down on it.

The MAHA Movement: Trump endorsed Robert F. Kennedy Jr.’s Make America Healthy Again (MAHA) agenda. While regulators should ensure that foods and medicines are safe for Americans — of course! — RFK has a history of pushing nanny-statism and rejecting scientific findings. If he gets his way, regulatory burdens on things like safe vaccines and safe food products will skyrocket. This will not bolster American health. Instead, it will deny consumers’ access to the products they want and need. Republicans should reject RFK anti-freedom Democrat regulatory micromanagement. It is not the job of the federal government to regulate the sovereign choices of free Americans. 

Analysis

Trump’s goal of unleashing the American economy and lowering prices for consumers will depend largely on his commitment to free market principles and his willingness to abandon his protectionist instincts and desire to act like a central planner. His basic framework is very strong, but if he indulges ideas like protectionism and out-of-control entitlement spending, his plans will be derailed. What balance he strikes between these two impulses will shape the economy of the second Trump administration.