We’re About to Have a Recession. Are Trump and Republicans Going to Do Anything About It?

The government usually works to cushion the blow. Maybe not this time.

Thank you for reading The Cross Section. This site has no paywall, so I depend on the generosity of readers to sustain the work I present here. If you find what you read valuable and would like it to continue, consider becoming a paid subscriber.

Six weeks ago, I interviewed UC-Berkeley economist Jesse Rothstein, who was an early voice warning that President Trump’s policies could plunge us into a recession. He pointed to two factors that at the time may not have been fully appreciated as a macroeconomic threat: Trump’s attack on the federal government (including both widespread layoffs and potentially drastic budget cuts) and the tariffs that he has been talking about forever but hadn’t yet taken shape.

Well congratulations America, here we are. The Trump trade war has begun, and like most of what he has done since taking office, it is far more aggressive in both its ambition and its stupidity than anything he did in his first term. While we might escape without a dramatic economic downturn, that seems less likely by the hour. We might even be in for a period of stagflation, the brutal combination of high unemployment and high inflation, which we haven’t experienced in half a century.

Which raises this question: If a recession comes, is the Trump administration and the Republican Congress going to do anything about it? And if so, what?

I asked a few economists what they thought; we’ll get to their answers in a moment. But let’s begin with some historical context.

How you deal with a downturn

We now have a fairly well-established procedure for dealing with recessions: When things start to go south, the federal government steps in by pouring money into the economy to cushion the blow. A recession produces all kinds of vicious cycles that have to be interrupted; for instance, when a lot of people lose their jobs, state governments simultaneously bring in less revenue and need to spend more money on aid, which quickly reduces their available funds. And since nearly every state is required by law to balance their budget every year, they have no choice but to cut services, which can make the recession even worse. So a common feature of federal stimulus bills is aid to states to alleviate that problem.

There are all kinds of other ways the federal government picks up the economic slack, from extending unemployment benefits to enhancing food stamps to simply sending people checks, which we’ve done many times. The details may differ in each recession, but the basic idea is the same.

But the politics of stimulus can get complicated. Generally speaking, Republicans only go along with it grudgingly. They don’t like to see government bailing ordinary people out, and they don’t like the increased deficits that result (at least that’s what they say). Yet when a recession hits, public pressure for government aid becomes irresistible, and if they’re in power, they know they’ll be punished if they don’t do enough.

We saw that when covid hit in 2020: Congress passed a series of stimulus bills, and every time, congressional Democrats argued that the bill should be bigger and more comprehensive, even knowing that if they succeeded it might improve Trump’s chances of being reelected. In the end, Trump signed over $3 trillion in pandemic relief spending.

Then Joe Biden took office and signed another big bill, the American Rescue Plan. The lesson he and other Democrats took from the response to the Great Recession that began in 2008 was that the Bush and Obama administrations didn’t give Americans enough direct help; the stimulus bills that passed were too small and too timid, and as a result the recovery was too slow. So they were determined to go big, which they did.

It was an enormous success; not only did we prevent the massive unemployment that could have occurred, we outperformed many of our peer countries in the way our economy recovered. But like the rest of the world, we experienced a period of inflation. So Republicans (and maybe some Democrats) took this lesson from that experience: If you do too much stimulus, you’ll drive up prices and voters will be mad (and yes, the inflation was overwhelmingly because of the supply chain shock, but facts don’t really matter).

In modern history, recessions are essentially a Republican enterprise; the last one that began with a Democrat in the White House was a brief one in 1980. But in almost every case, the Republican who oversaw it had to deal with a Congress in which Democrats controlled at least one house; those Democrats would reliably push for more stimulus. Today that is not the case. Republicans are in total control, and they’ve shown how indifferent they can be to people’s suffering. Combine that with the DOGE-mania that currently grips them, and a significant response to the coming recession seems unlikely.

The possible GOP recession response

But to get a better idea of what might be in the offing, I reached out to a few economists: Jesse Rothstein, Dean Baker of the Center for Economic and Policy Research, and Josh Bivens of the Economic Policy Institute. None was certain what Republicans might do, but they suggested some possibilities.

While Republicans might try traditional strategies such as expanding unemployment insurance and food stamp benefits — in other words, sending help to the people who need it most — none of them saw that as the first item Trump and the Congress would order off the menu. Bivens said, “There’s a small chance that some kind of boost to the Child Tax Credit might be possible in a recession,” since some Republicans have supported that in the past. Trump might also try “Cutting regulations on the argument that it will unleash job creation potential,” said Rothstein, along with attempting to “pressure the Fed to cut rates faster than it otherwise would.”

But they all agreed on one likely response. You guessed it: Tax cuts, with their magical power to create limitless prosperity, lift our hearts, improve crop yields, comfort the grieving, and clear up your moderate-to-severe plaque psoriasis.

“Republicans are always happy to do tax cuts, so I suspect they will push through some more in response to a recession,” said Baker. “Maybe they'll include some Trumpian gimmicks like a $2,000 credit if you buy a U.S. made car by the end of the year.” Rothstein also suggested they might “send out stimulus checks, likely with a letter making clear they are from President Trump.” Bivens agreed that if the recession is deep enough to compel Republicans to do something, “I’d guess that something will be entirely tax cuts. The best we could likely hope for on effectiveness/fairness grounds would be a repeat of COVID economic impact payments – the president gets to sign his name on them and all that. The worst would be some odd business tax cuts that would incentivize no actual investment but would just give windfalls for past decisions. Or more high-income cuts.”

The economists could be wrong, of course — and it’s possible there might not be a recession at all. But the administration is already trying to spin the coming downturn. Trump says there will be “a little disturbance” because of the tariffs. The Treasury Secretary says we need a “detox period,” which doesn’t sound like fun. And the Commerce Secretary says “It’s worth it” if we have a recession because of the economic glories that will follow. The message is: Suck it up and don’t complain, everything’s going to work out great.

Whatever strategy Republicans come up with to ease the pain of the recession, they’ll have to get this guy to agree to it:

You never know where his whims and delusions might take us, since that’s the reason we’re probably headed for a recession in the first place. But it’s safe to say that when the economy goes bad, this government’s response will be impulsive, inadequate, and misdirected.