Trump is Going to Run it Hot

On July 4, 2025, President Donald Trump signed the “One Big Beautiful Bill Act,” a sweeping tax and spending package aimed at supercharging the U.S. economy while addressing the nation’s ballooning $36.5 trillion national debt. The legislation, which extends the 2017 Tax Cuts and Jobs Act (TCJA) and introduces new tax breaks, is designed to ignite economic growth to outpace rising deficits, a strategy economists call running a “hot” economy. But can this high-stakes gamble pay off?

The bill permanently extends the TCJA’s individual and corporate tax cuts, slashes taxes on tips, overtime pay, and Social Security benefits for retirees, and introduces a deduction for auto loan interest on American-made cars. According to the Tax Foundation, these measures are projected to boost long-run GDP by 1.2% but reduce federal revenue by $5 trillion from 2025 to 2034. To offset some losses, the bill imposes $2.1 trillion in new tariffs and cuts $1 trillion from programs like Medicaid and clean-energy incentives, though the Congressional Budget Office (CBO) estimates it will still add $3.3 trillion to the debt over a decade.

The White House argues that a “hot” economy—fueled by tax cuts and deregulation—will generate enough growth to shrink the debt-to-GDP ratio.

I believe this bill will ignite a few areas in the short to intermediate term.      

1. Energy 

•  Why it benefits: While the bill phases out many clean-energy tax credits from the Inflation Reduction Act (e.g., electric vehicle credits by 2025), certain energy sectors should do well. Traditional energy companies (oil, gas, and coal) could benefit from reduced regulatory burdens and a focus on domestic production.

In particular, running a “hot” economy while drill rigs have been getting cut over the last year as oil reservers are at historical lows bodes particularly well for producers over the intermediate term.

Energy is a key beneficiary to pro-growth policies, which is one of the sparks FMT has been waiting for instead of the anti-growth policies of more recent.

2. Commodities as Byproduct of Industrial Tax Incentives

•  Why it benefits: The bill provides 100% bonus depreciation for equipment investment and full expensing for new factory construction, incentivizing domestic manufacturing. One of the key goals of the current administration.

This could boost capital investment in industrial companies, particularly those focused on U.S.-based production, which should increase demand for diesel, copper, silver, and especially natural gas over the intermediate term because new U.S. manufacturing is going to require substantial natural gas to fuel operations. Meanwhile, there is already robust natural gas demand transpiring with new LNG takeaway capacity for exports!

This is great long-term news for CNX and Range Resources!

•  Details: The Tax Foundation highlights that pro-growth tax policies, such as immediate deductions for equipment and R&D expenses, favor industrial firms. Companies building or expanding factories in the U.S. could see reduced costs, potentially increasing profitability and lure more manufacturing commitments than Trump has already gotten (in the $2+ trillion range already). The tax cuts and bill going through could incentivize much more!

The Council of Economic Advisers projects 3.1% economic growth and the creation of 7 million jobs, with the typical family of four seeing a $13,000 increase in take-home pay.

Proponents claim that higher wages and business investment will boost tax revenues, even at lower rates, partially offsetting the deficit. Under Trump’s first term, we ran $1 trillion dollar deficits, and I recall then U.S. Secretary Tresurer, Steven Mnuchin, saying we were about to grow so fast that debt-to-GDP was finally about to start to come down after 4 years of big deficits (thus, we’re going to have to run it hot for a while, and this will make intermediate and long-term bonds completely suboptimal).

Treasury Secretary Scott Bessent says that tariffs and spending cuts could reduce deficits by up to $6.9 trillion over 10 years. But FMT disagrees, unless the Federal Reserve starts to run loose monetary policies (which Team Trump has been pushing very hard for).

If they get their way with the Federal Reserve, undervalued hard and real assets are going to really fly! In any case,  FMT sees Bitcoin being a large beneficiary under this administrations pro “crypto” policies over the next 6 months. 
 
One caveat is rising interest rates without the Federal Reserve on board could further strain federal borrowing, with debt servicing costs projected to hit trillions over a decade. Economists like Jessica Riedl warn that the debt could exceed twice the economy’s size by 2055, risking a fiscal crisis if investor confidence wanes. That could actually transpire at any time.

While the administration bets on a growth-driven recovery, the strategy hinges on optimistic assumptions. With the Trump Bill passing, we’ve nevertheless just entered the let’s run it “hot” economy to try to grow our way out of our overly indebted country.

Just like under Trump’s first term, FMT doesn’t seeing this run it “hot” strategy ending any time soon, or if at all under Trump’s second term.

The U.S. will likely face deeper fiscal imbalances in the shorter term, and if the strategy doesn’t pay off (sky high oil prices could throttle the run it “hot” strategy), future generations will bear the cost as usual—so they better get started on a DCA bitcoin strategy at the very least.

The last big economic agenda the Trump admin wants to conquer is the trade tariffs. We’ll have to see how that goes, because if he doesn’t get what he wants with the tax deal done, deficits could really go nuts.

Best Regards,
Nicholas Green