Editor’s note: As a follow-up to the venerable Rick Franza’s 2024 prediction outcome article, we wanted to ensure you didn’t miss what he believes will impact your business in the coming year. Grab some libation and dive into 2025!
After wrapping up my grading for 2024 (both for my Augusta University/Hull College students and for my 2024 Predictions for the Augusta Business Daily), I am sitting on an oceanfront balcony on Hilton Head Island contemplating the year ahead. Unlike last year, when my prognostications spanned multiple areas (national economy, local economy, workplace trends, and the business of sports), this year, the scope of my predictions will be more limited. Given the election of Donald J. Trump as our President, I thought I would tackle predicting how President Trump might implement some of his campaign promises and what the impacts of those policies might be on our economy. So, without any further ado, let’s break out the crystal ball and see what might happen next year.
Show Me the Money: Let’s first look at two of President Trump’s economic promises and see if and how he might try to implement them, with the understanding that it will take Congress to approve them.
Extending the 2017 Tax Cuts: President Trump wants to stimulate growth and believes this can be done partially by continuing the tax cuts implemented in 2017 and by also further lowering the corporate tax rate and eliminating taxes on tips and overtime. He will argue that lost revenues will be offset by stimulated growth. Prediction: The 2017 Tax Cuts will be extended, rather than let expire. However, many of the promised enhancements will go by the wayside. Corporations are happy that their tax rate will remain at 21% (vs. a potential increase to 28% under Harris) and too many games can be played with tips and overtime.
Social Security and Medicare: During the campaign, President Trump promised not to touch Social Security and Medicare, and to make matters worse, he indicated that he would stop taxing Social Security benefits. Unfortunately, taking no action will lead to Social Security insolvency in about a decade. Prediction: Given the issues with entitlements and how much of the national budget they consume, Trump will choose to initiate major Social Security reform in 2025. He could not say that in the campaign as that would have been used against him, even if it is the right thing to do (which it is!). Fortunately, there is solid bipartisan support for such reform in Congress and this could be an important early win and legacy builder for the President.
While both of these predictions may be seen in some ways as short-term negatives, they are longer-term positives. Although the 2017 Tax Cuts could be an early negative relative to needed national revenues, I believe that they will stimulate growth along with some of what is addressed below. Social Security and Medicare reforms cannot be kicked down the road any longer, although some of the changes may seem punitive to some. The three other Trump policies addressed below will each impact the economy but deserve their own separate discussion.
Hasta La Vista, Baby: Immigration has clearly been a hot-button issue for President Trump. His rhetoric has been highly anti-immigration, which clearly struck a chord with his base. He has talked about “mass deportations” of illegal immigrants. Prediction: President Trump will do some important and needed things on immigration right out of the box. He will secure the southern border and attempt to deport those illegal immigrants who have committed crimes. However, mass deportations are impractical, both economically and logistically. More than anything, President Trump is pro-growth, so his immigration efforts will be more surgical than broad-based. If handled this way, immigration policy will be an economic positive, whereas mass deportations would likely negatively impact economic growth.
There’s a New Tariff in Town: President Trump has pledged to impose 20% tariffs on all imports. Prediction: President Trump understands such policy is highly inflationary and has already tipped his hand that most of his tariff rhetoric is merely an opening salvo to negotiate favorable deals with allies with respect to the border (i.e., Mexico) and trade (e.g., Canada). Like immigration, I predict President Trump will use these tariffs more surgically to cut such deals or to address security issues with countries like China. Across-the-board tariffs are not only inflationary, but also anti-growth. If President Trump acts as predicted, selected tariffs can be beneficial to the economy.
Git Along Little DOGE: President Trump has charged Elon Musk and Vivek Ramaswamy to co-lead his Department of Government Efficiency (DOGE) to trim government spending. Much of this has been anticipated to be done through the elimination of bureaucracy and waste. Prediction: Victory will be declared, but primarily due to a significant reduction in regulation. While much has been made of Musk and Ramaswamy applying business techniques to solve government inefficiencies and potentially eliminating whole departments (e.g., Education), it will be relief from overregulation that will lead to the most savings and positively impact economic growth.
While I would like to come off as prescient as the recently departed “Amazing Kreskin,” President Trump has tipped his hand on some of these issues in recent weeks, such as his tariff negotiations with Mexico and Canada and his plans to compassionately deal with DACA “Dreamers.” In addition, President Trump has demonstrated himself to be a master politician and negotiator. While his promises were attractive to the electorate, they also are excellent first negotiating steps to good policy, at least according to my predictions. Hopefully, my venue had a positive effect on the accuracy of my predictions!
Wishing you all a blessed holiday season and a happy and healthy New Year!
