Now that we know who will be the president for the next four years, it’s time to separate fact from campaign rhetoric and give some context to the realities of what is being promised. While bold ideas and sweeping reforms make for good headlines, the practicalities of governing are far more complex. Let’s dive into some key areas where rhetoric meets reality.
The Department of Government Efficiency (DOGE)
During his campaign, Trump introduced the idea of the Department of Government Efficiency (DOGE) to tackle excessive federal spending. On the surface, it seems straightforward: cut $2 trillion and bring fiscal discipline to Washington. However, let’s look at the realities of the federal budget.
- 70% of the federal budget is allocated to entitlement spending: Social Security, Medicare, and Medicaid.
- 6-8% goes toward interest payments on the national debt.
- The remaining 25-30% covers discretionary spending—education, infrastructure, military, and other smaller categories.
The reality? Entitlement spending is virtually untouchable. Trump campaigned on protecting Social Security and Medicare, and many of the same states that voted for him rely heavily on these programs. That locks up 70% of the budget from cuts. DOGE’s efforts will likely focus on immaterial reductions in smaller federal programs, which, while symbolic, won’t move the needle.
Education may be pushed back to the states, which could lead to substantial cuts. However, even with significant reductions, it’s going to be tough to reach the ambitious $2 trillion target.
Grocery Prices
Trump promised to bring down grocery prices by reducing energy costs—a key input to food production and distribution. His plan involves increasing domestic oil production to lower prices across the board.
The reality: Oil prices are dictated by global supply and demand dynamics. Producers will stop drilling if prices drop below profitable levels. While prices may dip temporarily, external forces like OPEC can cut supply to bring prices back to equilibrium.
Additionally, regions like Texas depend on stable oil prices to support their economies. If oil prices collapse, it could devastate local economies, particularly in energy-dependent states.
And as for groceries? Prices won’t fall significantly. If they did, we would risk entering a deflationary environment, something no policymaker desires. In short, the grocery aisle isn’t going to get cheaper anytime soon.
Immigration
Trump has vowed to address immigration immediately upon taking office. His plan includes reviving an immigration bill sidelined during the Biden administration and deporting millions of undocumented individuals.
The reality: Trump will likely follow through, as immigration has become a bipartisan concern. It’s important to note that this isn’t unprecedented. Both Obama,Bush, and Clinton oversaw millions of deportations during their administrations.
The real question is how this will impact housing affordability and the labor supply:
- A large-scale deportation effort could drive up wages in construction and related industries as labor becomes scarcer.
- Developers and homebuilders would likely pass those increased costs onto buyers, pushing home prices even higher.
This could exacerbate the already challenging issue of affordable housing in many parts of the country.
Tariffs
Tariffs are a hot-button issue. Trump has threatened to increase tariffs further, a move intended to bring business back to the U.S. and make American manufacturing more competitive.
The reality: While tariffs may help domestic industries in the long run, they come with a cost.
- Tariffs are essentially a tax on consumers. Companies pass those costs down the supply chain, leading to higher prices for goods.
- We saw this play out between 2018 and 2020 when small farmers faced significant challenges. Bankruptcies increased, and relief payments were required to prevent further economic fallout.
If tariffs are raised again, short-term pain is almost guaranteed. Consumers, farmers, and small businesses will feel the squeeze, with grocery prices likely climbing higher.
Conclusion
Trump’s campaign promises reflect a bold vision, but the realities of governing will present significant challenges. This is for informational purposes only and meant as an apolitical look within policies. From entitlement spending and energy prices to immigration and tariffs, the outcomes may differ sharply from the rhetoric. As always, the devil is in the details—and in the fine balance of economics and politics.