Watching Trump's Economic Policy Preferences in 2018

(Bloomberg View) -- One thing you could say for Donald Trump in 2017 was that his economic policies seemed fairly consistent. When orthodox conservative doctrine called for measures likely to help the economy in the short run, Trump was on board; when orthodox conservative doctrine called for restraint, Trump would choose policies likely to help the economy in the short run. The president was all in on tax cuts and larger deficits, just as Ronald Reagan and George W. Bush had been in the first years of their presidencies. Trump also, however, ignored tight-money conservatives and nominated a mainstream, well-regarded moderate, Jerome Powell, as the new Federal Reserve chairman.

Things are already changing in 2018. For one thing, Trump plunged into a government shutdown without any apparent plan to get out of it, risking an economic hit for, well, whatever he thought he was up to over the last week. As it turned out, the shutdown ended before it really kicked in. But there's every possibility that the weekend shutdown was just a dress rehearsal for a longer government closure, perhaps at the Feb. 8 deadline or perhaps a bit later. That's what happened in 1995-1996, when a weeklong shutdown in November 1995 resolved nothing, leading to a three-week main event beginning in December after four weeks of continued negotiations with a temporary spending measure in place failed to produce a deal. It also could hint at trouble when the debt limit needs to be raised, probably in March. It's not that Trump instigated the shutdown; I'd place him well down the list of those responsible, behind Chuck Schumer, Paul Ryan, Mitch McConnell and others. But he sure didn't provide any useful leadership to prevent it, and it's easy to see him as a problem in future rounds of negotiations. 

And now we have a round of Trump tariffs. Bloomberg Gadfly's Liam Denning has the particulars for the solar industry. The big danger isn't so much to solar, but to the overall economy if China retaliates. Moreover, this may be an indication that Trump really is willing to risk ending Nafta, as he's threatened to do, and otherwise ramp up protectionist policies. I suspect Trump actually believes that trade wars can be won by the U.S., contrary to what most economists believe. He could, of course, be correct -- but again, this seems like a case where Trump is willing to take actions even if they carry large economic risks. 

Granted, these are just two hints of the president's preferences and future actions. Perhaps when push comes to shove, his instincts favoring growth will kick back in and overcome any other preferences he has. And I'm not arguing that quick-growth policies are good ones (or bad ones), just that he seemed to favor them in 2017. It seems like something worth watching in his second year in office.

1. Excellent item from Daniel Nexon on why Trumpism is disturbing, even if it isn't what some alarmists think. 

2. Erica Chenoweth and Jeremy Pressman at the Monkey Cage on anti-Trump protests, one year into this presidency.

3. Paul Beck, Richard Gunther and Erik Nisbet at Mischiefs of Faction look at voter contacts in 2016

4. Dan Drezner on what foreigners think of the U.S. and Trump.

5. Seth Masket on changes to the Democratic presidential nomination rules

6. Jack Goldsmith and Benjamin Wittes on the latest about Trump and the FBI

7. My Bloomberg View colleague Timothy L. O'Brien on Trump and the shutdown.

8. Alyssa Rosenberg on the Women's March

9. And Gallup's Jeffrey Jones on the historical context for Trump's awful first year in public opinion

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Jonathan Bernstein is a Bloomberg View columnist. He taught political science at the University of Texas at San Antonio and DePauw University and wrote A Plain Blog About Politics.

To contact the author of this story: Jonathan Bernstein at jbernstein62@bloomberg.net.

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