Policy Fights That Will Define 2026 | This Week's Economy Ep. 146
The biggest economic and policy battles to watch in the year ahead.
Hello Friends!
As we turn the page on another year, the questions facing the economy aren’t abstract—they’re deeply personal.
Families are watching prices, businesses are weighing risk, and policymakers are deciding whether the year ahead will bring stability or more uncertainty. The choices made in the months ahead will shape not just headlines, but real lives and livelihoods.
In this episode of This Week’s Economy, I look ahead to 2026 and lay out the policy battles most likely to define the year. From trade and inflation to artificial intelligence, these decisions will determine whether we move toward prosperity or remain stuck in cycles of dysfunction. I urge leaders to return to the basic economic principles that work—and to choose policies that let people prosper in the year ahead.
You can catch the full episode on YouTube, Apple Podcast, or Spotify, and visit my website for more information, and follow me on X.
1. Trade Wars and Tariffs
My Prediction:
Trade will remain one of the most consequential policy battles of 2026. The Trump administration has doubled down on protectionist trade policies, relying heavily on tariffs justified under “emergency” authorities. At the time of this recording, the Supreme Court has yet to rule in Trump v. V.O.S. Selections, a case that could determine whether presidents may continue unilaterally taxing Americans through so-called emergency tariffs.
Even if the Court strikes down the “Liberation Day” reciprocal tariffs on U.S. trading partners, many analysts expect the administration to pursue equivalent tariffs using alternative statutory authorities—keeping trade uncertainty high and policy risk firmly on the table heading into 2026. Source: The Hill
My Solutions:
Tariffs Are Taxes That Hurt Americans: Tariffs don’t strengthen the economy—they distort it. They function as taxes paid directly and indirectly by Americans, not foreign governments. Businesses face higher input costs, and families pay higher prices for everyday goods. With inflation already straining household budgets, adding another hidden tax under the banner of “economic protection” only makes life harder.
American Businesses—and Workers—Bear the Cost: Tariffs don’t punish foreign companies; they punish American producers, workers, and consumers. Policy uncertainty disrupts supply chains, raises costs, and weakens long-term investment and confidence. If we want people to prosper, government must step back and allow individuals and markets—not political directives—to drive growth.
There Are Better Tools for Trade Disputes: Trade disputes are real and deserve serious solutions—but tariffs aren’t one of them. Expanding trade agreements that lower barriers, reinforce the rule of law, and strengthen alliances offers a far better path forward. Open trade promotes competition, innovation, and higher incomes—at home and abroad—without sacrificing American consumers in the process.
Related: Check out my deep dive on tariffs in a recent This Week’s Economy episode.
2. Congressional Budget Battles
My Prediction:
Government shutdowns are a clear sign of dysfunction in Washington. Last year’s shutdown wasn’t inevitable—it happened because Congress refuses to follow regular order, abandoning the timely passage of the 12 appropriations bills in favor of short-term continuing resolutions and massive, unread omnibus packages.
This dysfunction is unnecessary. State and local governments pass comprehensive budgets nearly every year, providing stability and predictability. The federal government could do the same, but instead lawmakers are already bracing for another shutdown at the next funding deadline at the end of this month—proof that Washington remains stuck in a cycle of self-inflicted crises rather than responsible governance. Source: The Hill
My Solutions:
End CRs and Restore Accountability: Continuing resolutions have become Congress’s default budgeting tool, replacing regular order with perpetual crisis management. This must end. While shutdowns may occasionally be necessary to break entrenched gridlock, they should be used to force real reforms—not to extract empty promises or justify another round of short-term compromises.
Commit to Sustainable Budgeting: Federal spending growth should never exceed population growth plus inflation. Had Congress followed this simple rule over the past two decades, the federal budget could be balanced today. This is the foundational principle of my Let Americans Prosper Project and ATR’s Sustainable Budget Project.
Learn from the States: States like Colorado show that balanced budgets are achievable alongside strong economic growth. Through spending restraint and constitutional safeguards like TABOR, states have proven that discipline works. Adopting similar reforms at the federal level would put the U.S. on a path toward lasting fiscal stability and prosperity.
Related: For a deeper dive, check out my This Week’s Economy episode breaking down the basics of government spending.
3. Inflation and the Economy
My Prediction:
Americans are right to feel uneasy about the economy. At its December meeting, the Federal Reserve cut interest rates by 25 basis points as economic signals continue to soften. But today’s challenges are not inevitable—they are the result of policy choices.
Much of the pressure facing households could be relieved by reining in government spending, reducing the Federal Reserve’s bloated balance sheet, and removing tariffs that raise prices and inject uncertainty into the economy. Source: The Wall Street Journal
My Solutions:
Hold the Line on Rate Cuts: Inflation has remained elevated—around 3% over the past year—even as the Federal Reserve lowered its target interest rate. Rates should remain steady until inflation is consistently at or below 2% for several months and only after the Fed meaningfully reduces its balance sheet. Rather than cutting rates prematurely, the Fed should unwind its balance sheet, end its mission creep into political priorities, and undergo a full independent audit.
Fuel the Economy: Today, the Fed’s oversized balance sheet exerts more influence over economic conditions than its policy rate. Until that intervention is rolled back, inflationary pressures will persist. The surest path to a freer, stronger economy runs through fiscal responsibility, sound money, and free trade.
Restore Firm Fiscal and Monetary Rules: Reducing uncertainty requires binding rules grounded in sound economics, not political expedience. That means limiting federal spending growth to below population growth plus inflation and ensuring money supply growth is consistent with stable prices. Together, these reforms would restore predictability and create a more prosperous environment for families, workers, and businesses.
Related: For a clear breakdown of inflation—what causes it and how to fix it—listen to this Econ 101 episode.
4. Property Tax Revolution
My Prediction:
A growing number of states are actively considering eliminating or significantly reducing property taxes—and many will have the chance to act during this legislative cycle. Key states to watch include Florida, Illinois, Kansas, Missouri, Montana, Nebraska, North Dakota, Oklahoma, Pennsylvania, South Carolina, Texas, and Wyoming.
Property taxes function like an annual wealth tax or an unrealized capital-gains tax, imposed regardless of income or ability to pay. They are an outdated, coercive, and economically damaging way to fund government—and momentum is building to end them. Source: Fox News
My Solutions:
A Historic Opportunity for States: Few reforms offer as much upside as meaningful property tax relief. Property taxes effectively turn homeowners into perpetual renters of the government. The notion that ownership depends on making annual payments to the state undermines the very idea of a free society.
Relief Requires Fiscal Discipline: The property tax crisis is driven by overspending. High property tax burdens are a symptom of runaway government spending—not an argument against reform. Real relief requires governments to live within their means. When spending is restrained, investment, growth, and true ownership follow.
The Goal of Reform: Property tax reform isn’t about revenue neutrality—it’s about smaller, more disciplined government. Redesigning government to tax and spend less unleashes economic growth, expands ownership, and restores trust between citizens and the state.
Related Reading: Read my case against property taxes, published at Liberty Taxed: A Blog on US Tax Policy.
5. Artificial Intelligence & Energy
My Prediction:
Artificial intelligence—and the data centers powering it—will be at the center of major policy battles in 2026. Expect growing pressure to slow, restrict, or heavily regulate data center development, often from the same voices that ignored America’s deteriorating electric grid for decades. Instead of confronting long-standing energy and infrastructure failures, critics are increasingly treating AI, cloud computing, and high-density data centers as convenient scapegoats.
This debate misses a fundamental reality: the modern economy runs on data centers just as earlier generations relied on railroads and highways. As demand accelerates, data center expansion will continue to fuel a construction “gold rush,” driving higher wages and intense competition for skilled labor. Growth of this scale doesn’t happen in declining sectors—it signals where real economic value is being created, and where policymakers will soon have to choose between enabling growth or blocking it. Source: Wall Street Journal
My Solutions:
The Real Source of Grid Problems: America’s grid challenges stem from decades of government ownership, heavy regulation, and distorted incentives—not data centers. Utilities have under-invested, mispriced risk, and politicized energy decisions, pushing electricity bills more than 5% higher year over year. AI didn’t cause these problems—but it’s getting the blame.
Let AI Improve Lives: AI is already delivering real benefits in health care and education—from faster diagnoses to personalized learning and language support. Regulators are fixated on hypothetical risks instead of tangible gains. If states build fragmented, fear-driven AI rules, the U.S. risks stifling innovation, raising costs, and handing leadership to countries willing to experiment.
The Path Forward: America’s AI future depends on abundant, affordable energy and a regulatory framework rooted in freedom and market innovation. The solution is clear: build more data centers, reform or privatize failing government utilities, and let markets work.
Related Reading: I recently wrote about the looming policy fights over data center development.
To learn more about the economic principles that help people prosper, I hope you’ll check out my ECON 101 Guide: 20 Principles that Build Prosperity.
Thanks for joining me in this episode of "This Week's Economy." For more insights, visit vanceginn.com and get even greater value with a paid subscription to my Substack newsletter at vanceginn.substack.com.
God bless you, and let people prosper!
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