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The author serves as the director of economic policy studies at a leading think tank.
This week, the release of DeepSeek’s new artificial intelligence model raised concerns about the stability of US technological leadership among investors. The Chinese startup emerged unexpectedly in this competitive landscape.
This situation underscores the rationale behind the former administration’s approach to AI. The previous president’s executive order on this technology was straightforward: “The policy of the United States is to maintain and enhance its global AI superiority.” This directive reversed the current administration’s focus on guiding the development and use of AI towards various social goals, including promoting equity and preventing negative impacts on job quality.
It is reassuring to see a focus on AI as a critical factor for economic strength and national security. In addition to this, the previous administration made significant strides in deregulating the energy sector and promoting geothermal and nuclear energy, efforts that are expected to bolster the reliability of electricity and lower energy expenses for homes and businesses. Furthermore, export permits for liquefied natural gas have been reinstated after a prior halt.
Additionally, changes in the antitrust enforcement agency have revitalized the business sector, generating optimism not only among high-level executives but also within small businesses. A survey from December by a small business federation revealed the most substantial monthly increase in positive economic outlook since 1983, suggesting potential for growth, innovation, and increased investment, which could lead to productivity gains and higher wages.
Moreover, the establishment of a new initiative aimed at enhancing federal government efficiency deserves recognition. Historical observations have noted the enduring nature of government agencies and their expanding share of GDP. If effective collaboration with Congress ensues, this initiative may result in improved governmental performance.
Expectations for public sector workers to fulfill their roles on-site during standard work hours is part of ongoing efforts to enhance accountability and productivity, ultimately benefiting taxpayers.
In terms of taxation, the agenda shifts from a previously proposed international tax framework towards a focus on reducing corporate taxes domestically, aiming to stimulate business growth and investment. The decision to pause substantial green energy funding has been made in favor of utilizing those resources for business tax benefits, such as full expensing, which could lead to greater investment, productivity, and wage increases.
While the incoming administration has only begun its term, the effectiveness of its policies will rely heavily on their execution and design. This includes immigration strategies; while removing illegal immigrants with serious offenses could be beneficial, large-scale deportations could have detrimental effects on communities and the economy.
Efforts to minimize diversity, equity, and inclusion initiatives could help sharpen a focus on merit, but poor implementation risks exacerbating discrimination.
Despite the positive changes, criticisms of the new administration remain valid, such as decisions that may undermine international relations or fiscal sustainability. Nonetheless, acknowledging the constructive actions taken so far will foster better discourse regarding ongoing developments within the administration.
photo credit: www.ft.com
