U.S. President Donald Trump delivers an address to the nation from the Diplomatic Reception Room of the White House in Washington, D.C., U.S., December 17, 2025. Doug Mills/Pool via REUTERS REFILE
Nobel Laureate Paul Krugman said the purpose of President Donald Trump’s speech was to turn around Trump’s "cratering public approval" on his handling of the economy, but all it really did was outline the cliff waiting for Republicans next year as the president fails to deliver meaningful improvements for Americans.
“It was a blizzard of lies,” said Krugman. “I can’t find a single factual assertion Trump made that was true.”
But lies, boasts and tearing down Joe Biden’s legacy won’t send voters to the polls for Republicans, said Krugman. Take Trump’s persistent claim “that the world despised the US economy a year ago and now admires his achievements.”
“One year ago, our country was dead. We were absolutely dead. Our country was ready to fail. Totally fail. Now we’re the hottest country anywhere in the world. And that’s said by every single leader that I’ve spoken to over the last five months,” Trump claimed, in spite of headlines in October 2024 proclaiming “The American economy has left other rich countries in the dust.”
Krugman said Trump also filled his speech with false claims that overall prices are coming down, using turkeys, eggs and gasoline as examples, despite his policies having very little influence over the price of these items.
“Egg prices, for example, fluctuate wildly over time, not because of anything the government does, but because of the vagaries of bird flu,” Krugman said, adding that the latest report on consumer prices showing lower inflation than expected “was seriously distorted by the effects of the government shutdown,” according to othereconomists.
This leaves Krugman’s “best guess” to be “that troubling inflation, and with it public concern about affordability, will persist.”
Healthcare, meanwhile, is about to explode in cost and Republicans and Trump keep refusing to do anything about it, Krugman wrote. Trump claimed he would replace current Obamacare subsidies with a different kind of subsidy system, but Krugman said congressional Republicans "will never approve subsidies adequate to make health insurance affordable” and “because the Republican plan would be far stingier than the one currently in place [and] millions of people will be forced to drop their insurance.”
This means younger and relatively more healthy people will drop their coverage, and leave the pool filled with older and sicker people who will raise premiums even further.
“But leaving the short-run politics aside, the speech revealed something important: Namely, Trump has no idea how to govern,” Krugman said. “Faced with adversity, he’s unable to propose policies to improve the situation. All he can do is continue to gaslight the public and claim that everything is great, while smearing his opponents.”
“That was a short speech, but it presages a very long next three years for ordinary Americans,” Krugman said. “And for congressional Republicans, it presages a very ugly November 2026.”
Read Krugman’s column at his Substack here.
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