Irrational Exuberance
American politics is in constant flux; permanent victory simply does not exist. Acting like it does is counterproductive.
In December 1996, during an otherwise totally anodyne speech at a thinktank’s annual dinner, then-Federal Reserve Chairman Alan Greenspan coined a term that made both an immediate and long-term impact on global society. When Greenspan uttered the words “irrational exuberance” in relation to the booming stock market, particularly the nascent tech sector, global investors panicked, sending markets into freefall. Japan’s major stock market lost over 3%, European markets lost 4%, and the Dow Jones opened down 2.3%; this immediate correction was followed a few years later by the implosion of the tech-heavy market across the world. Ever since, the phrase has been an irreplaceable part of the investor’s lexicon, meant to signal an overly hot market with an investing public overconfident about the prospects of continued future success. But the concept of irrational exuberance as such can surely be applied more broadly, anywhere from media hype campaigns and sports teams to multilevel marketing schemes and, yes, politics.
The first few weeks of the second Trump administration have seen a whirlwind of executive actions: some good (banning DEI, maximum pressure on Iran, promoting a Greenland purchase), some bad (trying to unilaterally rewrite the 14th Amendment, saving TikTok), some stupid (stopping all foreign aid funding entirely), some mixed (DOGE). But the reaction from the MAGA faithful has been one of almost religious ecstasy. It has been characterized by incredible hyperbole, a great deal of hubris, a mind-blowing lack of critical thinking, and a confidence that its enemies are dead and buried forevermore. In short, it is exactly the type of thing Alan Greenspan was identifying with respect to the stock markets in 1996: irrational exuberance.
That is not to say that all of the actions currently being undertaken by the Trump team are ephemeral vaporware, but a great deal very well may be, especially if they are not backed up by legislation. Understandably, the White House is focused on its blitz of executive orders, the president’s policymaking by decree – whether on social media or in ad-hoc press conferences – and the tasking of the semi-governmental Department of Government Efficiency to ferret out wasteful spending and search for productivity improvements. Those are all tasks that the executive branch can arguably take unilaterally – even if some are destined to be overturned by the courts. Given the brief period of time that Trump has been back in the Oval Office, this executive-heavy effort not abnormal. But it is also highly impermanent.
Barack Obama’s “pen and phone” allowed him to make dramatic changes to the legal, cultural, economic, and social fabric of the United States, as well as to our foreign policy. DACA, the Iran Deal, the federal government’s DEI efforts, the revision of Title IX in colleges, and far more were all products of this strategy. Yet all no longer exist, either defeated by the courts or repudiated and reversed by his successors. Much of the Obama legacy has been undone in the 8 years since he left office, but the remainder are his legislative accomplishments; even Donald Trump could not get rid of Obamacare in any real fashion. The current administration should take this reality into account if it wishes to make Trump’s legacy more lasting than that of the man he seeks to eclipse. However, so far there is little movement legislatively to actually cement any of the gains that the administration is claiming to make. It is indeed early, but the attitude of the MAGA faithful and its elected representatives runs counter to the very idea of having to do anything to encode these victories into law.
Instead, proponents of the Trump actions have declared that the political left has been crippled permanently because the “vast infrastructure that made their feeble arguments viable” is being destroyed. They argue that without the federal government funding, progressivism is a dead letter and the threat from the left is defeated entirely. Suffice it to say, this is the definition of “irrational exuberance.” Politics in a democratic society is never certain and always changing. No victory, no matter how significant, is permanent. This applies especially to the American political landscape, where majorities are fickle and shift with the winds every few years. Divided government is far more often the norm than the exception in the modern American system, and even significant victories can be followed by losses in congressional elections a mere two years later – particularly if the victor is overconfident in his popular mandate. But you don’t have to take my word for it; history explains this adequately enough.
To find the most stunning version of this repeat phenomenon, we have to take a jaunt across the pond and back to the early 1900s. British politics for the majority of the 19th century was dominated by two parties: the Liberals and the Conservatives. They traded off electoral victories throughout the Victorian era, but by the turn of the 20th century, the Tories had had a long run of success. In the 20 years between 1885 and 1905, they had been in power for more than 16, consolidating their political and ideological hold over the government of the greatest empire on Earth. And yet, in 1906, the party suffered a total electoral collapse, losing 246 seats in Parliament and seeing the Liberals returned government leadership for the next 16 consecutive years (although some were wartime coalitions). The Liberals were flying high in the 8 years before the outbreak of the Great War, but that conflict tested their mettle. Still, under the astute leadership of David Lloyd-George and through the politics of coalition, Liberal paramountcy held. That is, until it didn’t. The Liberals lost power in 1922 after their Conservative coalition partners had had enough of playing second fiddle. By 1924, the party was essentially dead in the water, being reduced to a mere 40 seats in Parliament and 18% of the vote, after having earned 400 seats in the 1906 landslide. It was never again a viable force in British politics, something that would have been scoffed at even a decade earlier.
Political fortunes shift radically here in the United States, too. Midterm elections typically go against the party in power, as the public reassesses its prior choice and generally seeks either change or balance. It is rare for a party to hold the presidency for more than two consecutive terms; this has only happened once since 1950, when George HW Bush followed Ronald Reagan in 1988. Change is perhaps the only constant in American politics, which is why it is crucial to pass laws if one seeks to make lasting changes to the structure or power of the federal government. Even so, pushing one’s luck too far too fast can have dramatic negative impacts on the public’s perception of their leadership and their likelihood to vote the party in the White House more power. One does not have to delve deep into the history books to see a perfect example of how this works and the negative consequences it can have for a party – in fact, one only has to look back to the last administration.
When Joe Biden came into office on January 20, 2021, Democrats and progressives were on cloud nine. They had just won a solid electoral victory, capturing 306 electoral votes and over 51% of the popular tally at the presidential level, while narrowly retaining the House majority and gaining 3 Senate seats, allowing the Vice President to cast the tiebreaking vote. This was a trifecta of federal power that signaled a break with the chaotic Trump era and a weariness with the insanity of the pandemic year. Yet it still had cracks; the Democrats lost ground in the House and barely squeaked into a tie in the Senate, while the vote for Joe Biden was primarily a vote for calm, normalcy, and a return to moderation. This was conveniently overlooked, partially due to the events of the lame duck period. After the election, Trump proved the voters against radicalism right by falsely claiming the election was stolen and causing a disgraceful riot at the Capitol that he seemed to tacitly approve. This was purportedly the death-blow of Trumpism as a political reality. Until it wasn’t.
Joe Biden and the Democrats took this slim victory as carte blanche to progressivize the American Republic, inserting racist DEI agendas throughout government, continuing extreme pandemic measures far longer than were necessary, pushing through lawless executive actions, and promoting wasteful government spending on climate change, accelerating inflation. They ignored said inflation, downplaying it as transitory, while weakening America abroad, failing to deter two major wars against American friends and catastrophically botching the withdrawal from Afghanistan. Joe Biden was clearly not running the ship from the Oval Office and his administration was stocked with left-wing activists, who pressed radical ideas with little to no pushback from the empty vessel behind the Resolute Desk. When it came to Trump, they overreached legally, working with states to attempt to keep him off the ballot, charging him criminally for a variety of issues, and seeking to make anything associated with the former president radioactive.
All of this together led to massive declines in the popularity of the Democratic Party and Joe Biden, who was unable even to complete his run for reelection, humiliatingly handing the baton to his vapid Vice President Kamala Harris before the DNC. Despite huge advantages in media support, fundraising, and celebrity endorsements, as well as constant apocalyptic rhetoric about the end of democracy as we know it, the 2024 election ended in widespread defeat for the left. Harris lost her bid for the presidency, with Trump earning 312 electoral votes and a narrow popular vote plurality (49.9% to 48.4%). The Republicans also gained 3 seats in the Senate, while barely retaining the House. This was clearly, on the part of the Democrats, the end result of a failure to understand the results of an election and to claim a mandate when there was none.
The 2024 GOP victory was lauded as a massive rout that granted the once-and-future president a popular mandate to basically do whatever he wanted. Yet it was nothing of the sort, being instead far more akin to the slim Biden triumph in 2020. Trump’s win was no landslide. It was barely even a mudslide. The Senate victories were solid, but several winnable races were lost, often due to poor candidate quality (cough, Kari Lake, cough). The House majority is about as slim as it gets, with Republicans winning 220 seats to Democrats’ 215; 218 are needed for a majority. A death or resignation – even a prolonged illness – could flip the lower chamber to Democratic control in a heartbeat. The electorate was sending a very clear message: radical policies are not wanted, nor is a president who has lost his mental faculties. Instead of taking that to heart and working to push popular legislation on the key issues of the election – immigration and inflation – MAGA is throwing everything it can at the wall to see what sticks, almost exclusively through executive action. The president is already underwater when it comes to his approval ratings, and this is supposed to be the honeymoon period. If things continue the way they are, that rating will likely not improve before the midterm elections. This is only going to end in the defeat that Trump proponents think is impossible; it did for Biden just last year.
Triumphalism breeds complacency. Complacency breeds defeat.
If the second Trump administration seeks to be remembered for anything other than the historical oddity of nonconsecutive terms, it should focus on making its temporary reforms permanent rather than claiming permanent victories through temporary means. Every one of Donald Trump’s executive actions – even the defenestration of USAID and the firing of government employees – is reversible via the same simple process. His signature may as well be written in pencil instead of pen, for the next Democratic president will immediately undo all of his work upon inauguration. If the right continues to act like these actions are universally popular and the left is defeated forever, that outcome will occur far sooner than they think, perhaps as soon as 2028. And just as the pendulum swings hard one direction, it swings back just as hard in the opposite way. President Trump could be followed not by two terms of JD Vance, but two of Alexandria Ocasio-Cortez.
Contra the critics, this attitude is not defeatist; it is prudent. It is not accepting an inevitable loss, but pushing for durable change over temporary wins, so as to move the ball down the field for good. Victory is never permanent, but acting like it is only makes it far more fleeting. End the irrational exuberance before the bubble inevitably bursts and get down to the hard business of making real change. If the heady path of triumphalism is the one MAGA remains on, it will turn out far more like Pets.com than Amazon.