Donald Trump has been president before, but his second term will thrust a suite of unorthodox new ideas into the economic policy debate.
And some pretty old ones, too.
From selling federal land for housing construction to special tax cuts for tipped workers, Trump’s campaign promises are already translating to policy work that would never have happened a decade ago — and likely wouldn’t have happened today under a different president. The fate of some of those ideas, like creating a “strategic reserve” of Bitcoin assets, might depend on who the president-elect puts into key roles. Momentum for others, like congressional action on tariffs, is already building.
“When Trump won in 2016, he opened the horizon for policymaking on the right, so there’s all sorts of new ideas floating around out there,” said Duncan Braid, coalition director at the conservative think tank American Compass. Some of them “are ready for prime time now.”
The new world of policy debate reflects Trump’s towering influence over a GOP that he has transformed, boosting ideas that previously would have been considered quixotic or ill-advised by the Washington establishment. Whether and how they are enacted will provide insight into the Republican Party’s emerging economic approach beyond its longstanding playbook of lower taxes and fewer regulations.
Trump advisers and important congressional players are already discussing the contours of a bill that would use tariffs as a way to partially fund tax cuts. That would be a particularly notable victory for protectionists responding to globalization, which has lowered consumer prices but also hurt domestic manufacturing workers.
Congress has not raised tariffs through legislation in almost 100 years — since the infamous Smoot-Hawley Tariff Act of 1930. In the century that followed, lawmakers have delegated much of their authority to the president, and legislative action has almost always leaned toward implementing trade deals lowering duties.
“There was basically a bipartisan consensus — certainly after World War II, less so in the 1930s — that we’re going to put the trajectory of tariffs on a lower level in conjunction with trying to reach trade agreements with other countries,” said Doug Irwin, an economics professor and trade historian at Dartmouth College. “If Congress gets back in the act and starts really changing things, that’s enormous.”
Here are some other ideas that are getting airtime under Trump:
A newly bipartisan proposal: no tax on tips.
“No tax on tips” was the first of a long list of tax policies that Trump made on the campaign trail, and economists and policy experts didn’t take it very seriously at first. They said it was poorly targeted relief for low-income workers since at least a portion of the tax break would end up benefiting employers as opposed to the workers themselves.
Economists also said savvy tax professionals would soon find ways for high-priced financial advisers and other high earners to classify their income as tips — creating new opportunities for tax avoidance.
Nonetheless, the idea proved politically potent, especially among hospitality workers in the swing state of Nevada. As a result, Vice President Kamala Harris also slipped in the idea of eliminating taxes on tips, almost in passing, during an August rally in Las Vegas.
Then there’s been a flurry of legislation: At least three different bills providing tax relief for tip income have been introduced by Republicans this year, in addition to one introduced by Rep. Steven Horsford, a Nevada Democrat and member of the tax-writing Ways and Means committee.
Because of Trump’s campaign pitch, some version of “no tax on tips” has a high likelihood of being included in a broad package that would extend trillions of dollars of the president’s tax cuts.
Wooing crypto supporters: a Bitcoin reserve.
Trump has backed the idea of stockpiling the billions of dollars in Bitcoin the government acquires through asset seizures, while at least one pro-crypto senator, Cynthia Lummis (R-Wyo.), is pushing for the U.S. to purchase 1 million of the crypto assets. At current pricing, that would represent more than a third of the federal government’s existing $250 billion in reserve assets, which include gold.
Lummis told POLITICO she hadn’t had any conversations with Trump about the Bitcoin reserve since the election but added: “I’m going to be pushing that harder than any other thing I work on.”
Still, there’s some skepticism on both on the Hill and within the transition that the reserve would serve much practical purpose, as Bitcoin doesn’t have the same type of strategic value as, say, oil.
Some policy advocates who are in favor of creating more legal certainty for the crypto industry have also argued that it’s more important to prioritize tackling regulatory barriers.
“I don’t know that there’s been much of a serious effort to put that together yet,” said Norbert Michel, director of the Cato Institute’s Center for Monetary and Financial Alternatives, of a strategic Bitcoin reserve. “I really do understand why Lummis and any other proponents of crypto would want to try to gain legitimacy in that way, but I really think it’s the wrong way of doing it.”
An old idea with a new purpose: solving the housing crisis.
The Republican National Committee included a proposal to sell federal lands to builders for the construction of homes in its 2024 platform — a reflection of how dire the housing affordability crisis has become, as increasingly desperate policymakers seek ways to blunt a historic supply shortage around the edges.
Utah Republicans Sen. Mike Lee and Rep. John Curtis, who was elected to become the state’s junior senator in the next Congress, have proposed legislation to enable the sale of federal lands to states and local governments to address housing shortages. Some 63 percent of Utah’s land is federally owned, as are vast tracts of Nevada (80 percent), Idaho (62 percent) and California (45 percent), among other states.
The Biden administration also floated a proposal to sell federal lands for housing in the summer. Thus, there’s room for bipartisan agreement on opening up parcels — approximately 28 percent of the land in the U.S. is owned by the federal government — to bidding for developers who commit to keeping a certain percentage of the units affordable for the local population.
Still, lots of federal land is unsuitable for residential construction, and the places where the government owns the most land — namely in the West — are not always near areas with the biggest housing needs. Infrastructure is sometimes lacking, and residential homes need access to water, roads and sewers.
The two parties also disagree on the scale and mechanics of a program to parcel off land, and environmentalists have staked out opposition to a potential giveaway to developers.
Doug Palmer and Jasper Goodman contributed to this report.
