What Trump Can Do To Juice the Economy

With Democrats in control of the House, more fiscal stimulus is likely off the table.

- Cristina Lindblad

Governments up for reelection typically do what they can to nudge the economy into high gear just as voters are starting to pay attention. On that front, things already look pretty good for Donald Trump. One problem for the president ahead of the vote in November is that his most powerful tool is now in the hands of his enemies.

Fiscal stimulus is the main reason for faster growth on Trump’s watch. In 2018 tax cuts coupled with higher spending helped the U.S. economy match its best performance in the years since the financial crisis. But Republicans lost control of the budget machinery in Congress last year, when the House convened under its new Democratic majority.

Ever since then, with his own options for juicing the economy having narrowed, Trump has been on a crusade to lower interest rates—a lever that’s controlled by the Federal Reserve and its chairman, Jerome Powell. “The idea that a Democratic House is going to sign off on another Trump tax cut seems extremely far-fetched,” says Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities. “I don’t think there’s much stimulus there in any recognizable sense that doesn’t require legislation.”

Bernstein is personally familiar with Trump’s predicament: In 2011, as chief economist to Vice President Joe Biden, he was part of a team tasked with finding ways to boost the economy that could bypass the House. Republicans had just seized control there, led by members of the Tea Party movement who opposed new government spending. The list the group came up with was “uncomfortably short,” he recalls.