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Your guide to what the 2024 US election means for Washington and the world
The writer is director of economic policy studies at the American Enterprise Institute
Wall Street’s confidence in US technological leadership was shaken this week with the unveiling of DeepSeek’s latest artificial intelligence model. The Chinese start-up seemed to come out of nowhere.
This episode should highlight the wisdom of President Donald Trump’s approach to AI. His executive order on the technology is admirably clear: “It is the policy of the United States to sustain and enhance America’s global AI dominance.” He revoked the policies of the Biden administration, which were “to advance and govern the development and use of AI” in accordance with several goals, including “advancing equity” and ensuring that AI does not “worsen job quality” or cause “harmful labour-force disruptions”.
I am glad to have a president who prioritises AI’s importance to economic prosperity and national security. And this is not the only good move by Trump among the blitz of activity since his inauguration.
His efforts to deregulate the energy sector and to expand geothermal and nuclear energy production are similarly laudable. They will increase the reliability of electricity supply and reduce energy costs for households and businesses. The new president has already reversed Biden’s foolish pause on new export permits for liquefied natural gas.
Meanwhile, ending Lina Khan’s reign as head of the nation’s antitrust enforcement agency has breathed new life into the business community.
All this is unleashing animal spirits — and not just among top bankers and chief executives. Sentiment is surging on Main Street as well. In December, the National Federation of Independent Businesses’ small business survey recorded the largest monthly increase since 1983 in the net percentage of companies expecting the economy to improve. This positive sentiment could translate into expansion, innovation and investment, quickening productivity growth and increasing wages.
Elsewhere, the new Department of Government Efficiency should be applauded for attempting to increase the efficiency of the federal government. Ronald Reagan remarked that “a government bureau is the nearest thing to eternal life we’ll ever see on this earth”. He made that observation in 1964. Since then, federal government spending as a share of annual GDP has grown by more than 30 per cent. If Doge is able to work with Congress to prove Reagan wrong, all the better.
Public sector employees hold positions of public trust, and some of Trump’s efforts to hold government workers to higher performance standards are to be welcomed. For example, the vast majority of them should be expected to go to work in their offices five days per week, where they will be most productive and able to generate the highest return on taxpayers’ dollars.
Trump has a different approach on tax, too. The Biden administration wanted to sign up to an international corporate tax cartel, known as Pillar Two, in order to keep other nations from reducing business taxes. Trump wants to further reduce corporate taxes in the US. I’m with him.
The president was also right to halt the disbursement of $300bn in green energy funding. It would be better to use those funds to finance business tax cuts like full expensing, which would increase investment, productivity and wages.
Trump has been president for less than two weeks, and the ultimate success or failure of all of these initiatives will depend on their specific design, implementation and execution. This is especially true of immigration. Deporting, say, 200,000 illegal immigrants this year who have committed serious crimes would be good for the nation. But attempting to deport, say, 2mn illegal immigrants in 2025 would hurt workers, businesses and communities.
Similarly, if done properly, efforts to roll back diversity, equity and inclusion schemes could increase focus on merit and reduce racial discrimination in the job market. But they could also exacerbate discrimination if handled poorly.
There’s plenty about the new administration to criticise, to be sure. For example, Trump’s decision to pardon violent January 6 insurrectionists was appalling. On economics, among other examples, his threats to increase tariffs on America’s allies could reduce business investment and weaken international alliances. And he is likely to continue to refuse to cut Medicare and social security spending, which is driving the nation’s unsustainable fiscal trajectory.
But the president’s critics won’t do themselves any favours by not being open to the good things his administration will do — and has already done.
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