Special Briefing: The Road Ahead for the Economy, States, and Localities as Donald Trump and the GOP Take Charge

Major policy shifts in immigration, taxes, trade, energy, health care, and pandemic-era programs passed under the Biden Administration look increasingly likely with Donald Trump capturing the White House and his fellow Republicans taking control of both houses of Congress for the first time in two years. Our panel of experts share their views on what this sea change may mean for the economy and Federal Reserve, as well as the impact on states, localities, and the $4 trillion municipal bond market, including the possible elimination of the federal tax exemption on most muni bond interest. Our panel of experts includes Torsten Slok, Partner and Chief Economist, Apollo Global Management; Annie Linskey, Wall Street Journal White House Reporter; Former US Representative Carolyn Bourdeaux (D-GA); Eric Kazatsky, Head of Municipal Strategy, Bloomberg LP; and Teryn Zmuda, Chief Research Officer and Chief Economist, National Association of Counties (NACo).

Notable Quotes:

“The short version of what’s happening is that the economy is doing really well. GDP growth for the last two and a half years has continued to surprise from the upside. The big issue in financial markets and policymaking continues to be why did Fed hikes not slow the economy down more, why was GDP growth in the third quarter 2.8, and why is GDP growth in the fourth quarter, according to the Atlanta Fed, going to be 3.3.” - Torsten Slok

“The primary program that they (the White House) are working on which impacts states and localities is getting money out of the door for the CHIPS Act. It was a $39 billion program, about $30 billion of that is tied up right now in complicated negotiations between the government and companies, and so the Biden administration is working very hard right now to get those negotiations finished.” - Annie Linskey

“This brings me to the DOGE effort, and you have Elon Musk and Vivek Ramaswamy out there pounding their chests about how they are going to make all these dramatic cuts. Well, most of us who have been around the block on budgeting know that it’s really easy to do this in the abstract, but it is very hard to do it when you are actually putting programs on the line.” - Carolyn Bourdeaux

“When we’re thinking about the effects of any administration and talking about policy changes, cost cuts could really be cost shifts. Sometimes programs are cut but you do have to think how the effect of that is carried out throughout communities.” - Teryn Zmuda

“Right now, state and local payrolls are at the highest levels they’ve been ever. We’ve had a 3% growth since the great financial crisis, and 2% growth since 2019. So, as efficiencies have come into the job market, technology has been embraced even by state and local governments, and payrolls has continued to expand.” - Eric Kazatsky

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Special Briefing is published by the Volcker Alliance, as part of its Public Finance initiatives, and Penn IUR.

The views expressed on this podcast are those of the panelists and do not necessarily reflect the position of the Volcker Alliance or Penn IUR.