Trump’s Authoritarian Agenda Poses Real Economic Risk
The full economic effects of his anti-democratic actions will take years to feel, but the alarms are ringing.
Donald Trump’s latest effort to take over the Federal Reserve poses an immediate threat to the U.S. economy. But it’s also part of a larger, more pernicious problem too often ignored in the headlines: Trump’s anti-democratic actions are eroding the very building blocks of America’s economic prosperity.
Democracy and its institutions — like free and fair elections and rule of law — are proven to be the most important factors in long-term economic progress. Checks and balances, deliberation, and citizen feedback are not just niceties; they do critical economic work. Nobel Prize-winning research reveals that democratic institutions lead to better governance, more helpful public investments, and less economically damaging policies, giving businesses and workers the opportunity to build and create.
Undermining these institutions causes significant long-term economic damage by increasing corruption, fostering less reliable government data, increasing government debt, decreasing funding for education and health, and reducing international trade. And — just like authoritarians around the world — this is what our president is doing.
Trump’s anti-democratic actions are fueling a sharp rise in economic risk factors.
Corruption increases under authoritarian leaders, stunting productive economic activity. Trump has pushed through boundaries to solicit contributions from major corporations that increase his political power and financially benefit his family. He’s used the same coercive tactic to secure concessions from foreign governments. He trades the possibility of favorable government treatment for cash. At the same time, he pardons corrupt allies and effectively blocks anti-corruption efforts — further exacerbating the problem.
Businesses in non-democratic countries have a hard time getting the reliable information they need to make sound investment decisions, because their leaders commonly manipulate or hide data. Trump is now doing the same. He has taken several steps to limit the availability of quality government data, including by censoring climate information and firing the Bureau of Labor Statistics commissioner for releasing politically damning employment figures.
Autocratic leaders generally focus on short-term stimulus while taking on more debt, which can cause harm by increasing borrowing costs, spiking inflation, and potentially even leading to financial crisis. Though government debt can sometimes be economically beneficial — such as to help smooth out consumption during a recession — Trump’s debt-increasing tax cuts focus mostly on producing a temporary sugar rush.
Anti-democratic rulers blunt the development of human capital by investing less in education and healthcare. Trump has cut funding for elementary and secondary education, colleges, student loans, and university research and development. He has also weakened efforts to protect public health, and his healthcare coverage cuts will lead to about 10 million more uninsured Americans by 2034. Many of these cuts have been accomplished through legally problematic means.
International trade commonly decreases under anti-democratic leaders, limiting growth by weakening competition and slowing productivity improvements. Trump has reduced American imports and exports by stretching legal authority to impose near-record levels of tariffs based on his personal whims. Estimates suggest Trump’s tariffs will reduce U.S. GDP by an 0.5 percent in 2025 alone. Unfortunately, there is little sign that Trump’s trade actions will create a better trade regime for the United States and its workers.
The full economic effects of our president’s anti-democratic actions will take years to feel. But alarm bells are already ringing. Increased corruption, bad data, higher debt, fewer investments in education, and less competition will wreak long-run economic damage on the United States.
David Madland is a senior fellow and senior adviser to the American Worker Project at the Center for American Progress.
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bankrupt 6 times
This article explains it well. The tampering with institutions and the economy which Trump appears to know or care little about is going to eventually sink him as the promises made are not kept and peoples' personal economy gets worse. The problem with this is that the lack of prosperity sinks all boats, including businesses. It will take a while, but when purchasing stops, business profits go down, and their leaders are smart enough to know the cause. They too will react.