What I've Been Up To
I am back in New York after an extended trip to California. Before I left town, I joined Scarlet Fu on Bloomberg Markets. We talked about the GOP plan to pass “one big beautiful bill” as quickly as possible and how much of it they’re going to try to offset/“pay for” (versus adding to the deficit).
While it’s true that republicans will have a trifecta come Monday morning, it could still prove difficult to get a package that does tax, border, deportation, and deregulation in one big reconciliation bill across the finish line. As Biden discovered when democrats had their own trifecta, having enough seats to pass legislation isn’t the same thing as having enough votes (think Sen. Manchin (D-WV) and Sen. Sinema (D-AZ). Could a handful of republicans thwart parts of Trump’s agenda? Sure. In fact, there are already reports of frustration brewing in the House. But as I told Scarlet, I would be surprised if they don’t end up passing something that does most of what President-elect Trump has called for.
Scarlet asked whether I could envision republicans “embracing the idea of Modern Monetary Theory and just printing the money needed to finance the deficits.” I knew we were reaching the end of the segment, so there was no time to walk through the mechanics of government finance (to explain that all government spending is already financed by keystroking new money into existence), but I did explain how the MMT lens could be applied to evaluate the GOP’s tax and spending ambitions.
I then travelled to California to attend the largest gathering of legal scholars at the 2025 AALS Annual Meetings. My panel (below) was moderated by my friend and former colleague William K. Black. I was joined by law professors Robert Ashford, Rohan Grey, Sandeep Dhaliwal. It’s always exciting to be in dialogue with scholars from other disciplines and to learn how they’re incorporating MMT into their teaching and writing.
After the conference, I spent a bit of time visiting my mother and sister. Fortunately, they’re in northern California, so not directly impacted by the heartbreaking fires that have ravaged communities in SoCal. While I was there, I played a bit of golf, saw Wicked (phenomenal), and got some good work done on my next book. Now that I’m home, I’ve got another week or so to work on the book (and update syllabi) before the spring semester starts.
Trump regime will be MMT for the oligarchs and hardcore Neoliberalism for the middle & lower class. The friends and financiers of Donald Trump will get unlimited favors - tax cuts, subsidies, government contracts & bailouts (if necessary). The size of deficit isn't a problem when it comes to helping the oligarchs (recall that deficits don't matter when funding Pentagon & war spending as Cheney admitted). This can be done under the veneer of trickle down slogans to boost economic growth.
But for middle and lower class, they must contribute in reducing national debt and deficits. I am sure Trump regime will create a boogeyman version of 'BLACKHOLE' which Rachael Reeves has invented in UK. DOGE will prescribe mindless & needless budget cuts and more calls for cutting legacy programs like medicare, medicaid, ACA subsidies & other social benefits.
So printing press will run in service of oligarchs and Wall Street interests, especially those close to Donald Trump. Even the filthy Cryptocurrency of Tech Bros may be bailed out of Trump decides to create a 'strategic reserves' of it. But the bottom class will bear the burden of austerity which will come in many forms, not just the budget cuts. The shock therapy if imposed on American people (broad tariffs, mass budget cuts, mass deportations etc) will create inflation. And this inflation may act as further instrument to demand more cuts in fiscal policy.
Corruption will also be rampant. Trump will swindle as much money as he can for interest of his family & friends. Recall that Trump charged secret services many times over for accommodation in his hotel. These kind of petty scams will also be common.
It would be interesting to get your synopsis of the meeting and if there was a discussion about how difficult making progress in these areas will be during the Trump administration. Jump guarantees and community investments don't seem to be topics that will get much prioritization over the next four years, even though both are increasingly critical given the impacts of climate change and the impending impact of AI. Maybe Trump will say something about the need for community investments when he visits LA next week...