Nobel laureate Paul Krugman has described President Donald Trump's recent announcement of a 10% cap on credit card interest rates as a legally powerless "charade." Krugman asserts the move is driven by political considerations.
In a new analysis on Substack, Krugman dismisses the President's declaration as purely "performative." He notes that a post on Truth Social lacks the legal force to alter financial regulations.
"Tweets don't change the law," Krugman writes. He characterizes Trump as a "would-be price controller" attempting to govern by monarchical edict rather than legislative process.
Krugman draws a sharp contrast between Trump and Richard Nixon. While Nixon imposed price controls in the 1970s, he did so through serious enabling legislation.
Trump, conversely, has shown "no interest in doing anything substantive," preferring to rely on "bluster and antics" to solve his political problems ahead of the midterms. According to Krugman, this reveals the President's lack of a consistent ideology; he is "utterly transactional," willing to discard free-market rhetoric whenever it suits his immediate political interests.
The economist argues that Trump's newfound concern for borrowers is contradicted by his administration's track record, specifically its "war" on the Consumer Financial Protection Bureau (CFPB).
Krugman highlights that Trump's own Budget Director, Russell Vought, previously attempted to shutter the agency, instructing staff to cease work illegally.
"Trump's motives are clearly cynical," Krugman states. He notes the irony of a leader attempting to "disembowel" the only federal body dedicated to fighting predatory lending, only to propose a rate cap when facing electoral defeat.
Despite rejecting Trump's methods, Krugman acknowledges that credit card rates are indeed "deeply unfair" and disconnected from legitimate supply and demand dynamics.
However, he insists the remedy is not an impulsive executive decree, but the enforcement of existing laws. Krugman offers "unsolicited advice" to Democrats: do not validate the President's "charade."
Instead, he urges the opposition to demand the full restoration of the CFPB's funding and independence as a precondition for any cooperation, ensuring substantive relief for American families rather than aiding a "transactional" political stunt.