Donald Trump has unveiled a slew of proposals aimed at making life more affordable for everyday Americans, but according to one top economist, there’s something that would make a bigger difference than anything the president has floated so far.
Trump has laid out plans to tackle everything from mortgage rates to credit card debt to energy costs. Yet, Nobel laureate economist Paul Krugman thinks those options pale in comparison to one move Trump could make with relative ease: reviving an Obama-era consumer watchdog.
In an analysis of Trump’s plans posted on his Substack, Krugman laid out the problems he sees with credit card lending practices in the US, noting that Trump’s move to dismantle the Consumer Financial Protection Bureau should be rolled back.
“This would immediately help Americans with credit card debt, and many other struggling American families as well,” he said. “No legislation would be required, since the CFPB was established by law. If Trump really wants to cap credit card interest rates, he should reach across the aisle and get legislation passed with Democratic support.”
Krugman said there’s a strong case for government involvement in the industry, and that such a move would directly benefit US consumers.
“In straight economic terms there is a valid case for government intervention to protect consumers by reducing credit card interest rates,” he wrote. “There is also a valid case for action to end other abusive credit card practices, such as exorbitant late fees.”
The economist said that while he agrees with the president’s plan to deliver relief from high credit card rates, he doesn’t think it will garner the support needed from Congress. Bringing back the CFBP, however, would require minimal effort, Krugman said.
Krugman’s perspective on the benefits of an interest rate cap runs counter to the views of other finance pros. Moody’s Analytics Chief Economist Mark Zandi recently told Business Insider that the plan would likely result in lower credit availability for many borrowers, particularly middle- and lower-income households.
Analysts from UBS had a similar view this week, arguing that Trump’s plan could also hit GDP growth by sparking a decline in consumer spending.
