Trump can do better than tariff 'dividends' and 50-year mortgages

Time is short for the Trump administration. Last week's elections were a setback, but not a devastating one. New Jersey is still a blue state, and while Virginia went red four years ago, it's been trending Democratic for more than a decade. Republicans also fared poorly in Pennsylvania, however, an all-important presidential battleground. Democrats even made inroads deep into the South, taking two state senate seats in Mississippi — ending a GOP supermajority — and picking up city council spots in South Carolina and Florida. With results like these, the Republicans' razor-thin majority in Congress won't survive the midterm elections a year from now. And that means the Trump administration, which came roaring back to power in January, will face implacable legislative opposition in its final two years. Decisions the president makes now will determine not only the Republican Congress's fate and how his own last years in office play out, but also whether the GOP goes into 2028 prepared to hold onto the White House. With the stakes the highest they will ever be, Trump has to focus on voters' most basic measure of happiness: the state of the economy. Is 3% annual inflation satisfactory, or does that make Americans feel like Joe Biden never left? Beef prices are well above the inflation rate, and while home prices are rising more slowly than inflation, the elevated interest rates needed to keep inflation under control make taking on the debt to buy a house more burdensome. To address the latter, the administration has floated the idea of creating 50-year mortgages, as if what Americans really want is to spend an extra two decades paying off a home with lower payments month by month. A half-century mortgage would turn homebuyers into something closer to renters, with their banks as their landlords — only maintenance and home repairs won't be the landlord's responsibility, they'll be the mortgagor's. That's not the American dream. That's 21st-century serfdom: laboring for a lifetime without owning property of your own free and clear. The president wants the Federal Reserve to lower interest rates even at the risk of sparking more inflation, in the hopes a growth boom fueled by easy credit will generate real prosperity that outstrips the rise in prices. He's even promising to send Americans $2,000 stimulus checks as "dividends" from tariff revenue. That, too, would give an impetus to inflation. Yet the administration is making some wise moves, including opening parts of the vast Arctic National Wildlife Refuge for resource development. With China aggressively using its rare-earth metals as leverage in trade negotiations, the need for America to develop its own natural resources is urgent. Even the Barack Obama administration reaped the benefits of expanding domestic energy production during the fracking boom. Escalating electricity bills, which voters associate with the rush to build new AI data centers, are one source of Americans' present discontents, and that's all the more reason for the administration to prioritize energy and natural resources. Paring back regulation is one step in that direction — but extracting and refining rare-earth metals and other valuable commodities is a messy business. The answer is to make research and development of cleaner processing methods a priority alongside cutting red tape. Can the artificial intelligence industry that contributes to the problem of higher energy costs also bring about breakthroughs that provide a solution? That's a question the administration should be asking Big Tech. America supplies the conditions that AI needs to flourish — and AI has to start reciprocating, providing the nation with new means to prosper, sooner rather than later. Trump's tariffs have given American companies powerful incentives for developing industry at home — and they've given foreign nations reason to invest here to secure better trade terms with the administration. The next step is to build up advanced industrial capacity in the sectors we need most, starting with energy and environmental protection to be achieved through technology that aids development, rather than regulatory bureaucracy that holds it back. Not only will well-paid new jobs spring up quickly, as they did when fracking techniques first matured, but more energy will make possible more economic activity of all kinds, a virtuous cycle of growth and technological improvement. That approach promises to generate real-world returns that will not only overcome the ill effects of inflation but also lower prices for everything, as production methods become more efficient and are made cheaper by abundant energy. "Drill, baby, drill" were some of Trump's favorite words on the campaign trail last year. But they also imply "learn, baby, learn" and "build, baby, build," with science supporting energy, energy supporting industry, and industry turning science into applications. Financial finagling, whether in the form of 50-year mortgages or tariff stimulus checks, isn't the answer — a rebirth of industry, enabled by American energy, is what the nation needs. Daniel McCarthy is the editor of Modern Age: A Conservative Review.