Whatever the outcome of his presidency—whether two terms, one term or less—it’s likely 2018 will end up being the peak of Donald Trump’s foray into politics. What comes next will be denouement, if not disaster.
First, Trump’s accomplishments. Trump and his fellow Republicans spent 2017 working to turn their legislative goals into reality. There were setbacks, but the tax-cut law signed late in 2017, which went into effect at the start of this year, fulfilled a key Trump campaign promise. Businesses enjoyed large tax cuts this year, and about two-thirds of households got a tax cut averaging around $1,260.
The tax cuts helped goose the economy. GDP growth hit 4.2% in the second quarter, the best showing since 2014. The S&P 500 stock index hit an all-time high on Sept. 20. Trump’s approval rating hit its high point for the year on Oct. 22—43%, in the FiveThirtyEight composite survey. That was the highest level of Trump’s presidency, except for a few weeks shortly after his inauguration in 2017.
That might have been as good as it gets. Economic growth dropped to 3.5% in the third quarter and is running around 2.2% in the fourth quarter, according to forecasting firm Macroeconomic Advisers. Most economists expect GDP growth to drop below 3% next year, with a recession possible in 2020 or 2021. The economy is strong, but there are signs layoffs could pick up in coming months, with consumer and business confidence weakening.
Nobody knows where the stock market is headed, but stocks are now susceptible to worries about a slowing economy and the damage wrought by Trump’s protectionist trade policies. It’s notable that the S&P 500 is flat for 2018, when the Trump tax cuts sent profits surging. Many investors thought stock prices would surge. Since they flatlined during a year of strong growth and roaring profits, it’s not hard to foresee stocks sliding as growth and profits slow.
Midterm defeat
Voters also handed Trump a defeat this year by turning control of the House of Representatives over to Democrats. The tax cuts actually worked against Republicans, because voters felt they favored businesses and the wealthy over the middle class. Trump’s biggest legislative accomplishment turned out to be a bust with voters.
Vice President Mike Pence, center, listens as President Donald Trump argues with House Minority Leader Rep. Nancy Pelosi, D-Calif., during a meeting in the Oval Office of the White House, Tuesday, Dec. 11, 2018, in Washington. (AP Photo/Evan Vucci)
The midterm outcome means Trump will have to deal with divided government during the last two years of his term, including countless House investigations into alleged crimes and other controversies. GOP priorities, such as additional tax cuts or immigration restrictions, are dead. There’s some talk of bipartisan effort to pass an infrastructure bill, but there’s no money, and the idea that Trumpian Republicans and Resistance Democrats will somehow get along seems delusional. Trump is likely to see none of his preferred legislation passed during the next two years.
The most dangerous wild card for Trump is the probe by special counsel Robert Mueller into Russian interference in the 2016 U.S. elections, and other matters. Prosecutors have already linked Trump with campaign-finance crimes committed by his former lawyer, Michael Cohen. It’s possible Trump helped Cohen lie to Congress or prosecutors, and family members such as Donald Trump, Jr. could end up indicted.
Trump himself might escape prosecution while he’s in office, simply out of deference to the office of the president. And House Democrats seem to sense they could overplay their hand by impeaching Trump. Even so, allegations of criminality in Trump’s business or political campaign will weaken him politically, hurt his popularity and make it even harder to get anything done. The Trump Agenda is running on fumes.
The worst-case scenario for Trump would be a Mueller report that charges him with crimes and essentially dares the House to impeach him. The next-worse scenario would be a recession that forms in the run-up to the 2020 presidential election. Neither is a foregone conclusion, and Trump has survived many other jams. But by the middle of 2019, Trump may yearn for the relatively mild days of 2018.
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Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman