What the Economy Would Likely Look Like Without the Tariffs, DOGE Disruption, and IRA/IIJA Cuts

This is a counterfactual — meaning we're projecting an alternate path — but it's grounded in hard data from the CBO, IMF, RBC Economics, Deloitte, and independent analysts. Here's the honest picture:

Where the Economy Was Headed (The Baseline, Before Liberation Day)

The U.S. economy going into 2025 was on a reasonably stable trajectory. After growing by 2.5 percent in 2024, CBO had projected real GDP would continue at a similar pace. Inflation, which had spiked in 2022, was finally cooling. Inflation had been on a downward path and was previously projected to approach its 2 percent target level by 2025. The job market was healthy, and consumer spending — while showing some softness — was holding.

The Infrastructure Investment and Jobs Act and the Inflation Reduction Act were actively pumping money into the economy in ways that economists consistently described as supply-side stimulus — meaning they were building things and creating jobs without stoking inflation the way demand-side spending does.

What the IIJA and IRA Were Delivering

These weren't just legislative promises — they were producing measurable results heading into 2025.

The Biden administration claimed that as of January 2025, the IIJA, CHIPS Act, and IRA together had catalyzed $1 trillion in private investment — including $449 billion in electronics and semiconductors, $184 billion in electric vehicles and batteries, and $215 billion in clean power.

By January 2025, the IRA alone had created at least 406,000 new jobs across 751 projects and $422 billion in investments across 47 states.

According to the American Society of Civil Engineers, maintaining IIJA and IRA funding levels would save American families an average of nearly $700 per year and generate over $637 billion in savings to GDP over the next decade.

Moody's Analytics estimated the IIJA alone would produce 800,000 additional jobs in 2025, with the majority subject to federal prevailing wage rules.

If those programs had continued without disruption, the job growth in construction, clean energy, manufacturing, and infrastructure would have kept adding to GDP through 2026 and beyond.

What the Tariffs Actually Did

In 2025, the U.S. raised average tariff duties from 2.4% to 9.6%, bringing protectionism to its highest level in eighty years.

The economic consequences were real and measurable:

CBO projects real GDP will grow by only 1.4 percent in 2025 — 0.5 percentage points lower than previously projected — with the slower growth driven mainly by tariffs.

CBO now expects inflation to remain elevated in the near term due to the effects of tariffs on prices. The PCE price index is projected to rise to 3.1 percent this year, versus a prior projection of 2.2 percent.

U.S. exports shrank by 5 percent in 2025, as trading partners increased their own retaliatory tariffs, reducing foreign demand for American goods.

RBC Economics characterized the U.S. economy as experiencing "stagflation lite" — a combination of slowing growth and persistent inflation. Trade-reliant sectors including manufacturing, wholesale, retail, and transportation shed jobs on net since Liberation Day.

Without those tariffs, the most credible projection is that GDP growth in 2025 would have tracked closer to 2.0–2.5%, inflation would have reached its 2% target, and manufacturing employment would not have contracted.

What DOGE Actually Did — and Didn't Do

This is where the reality is more complicated than the headlines.

The federal government spent $7.6 trillion in the first 11 months of 2025 — approximately $248 billion higher than the same period in 2024. There is no visible structural break in 2025 spending that coincides with DOGE's start date.

In other words, DOGE did not cut overall federal spending. What it did do was eliminate workers and destabilize institutions:

DOGE cut 271,000 federal jobs in just 10 months — the biggest peacetime federal workforce reduction on record. Yet government spending actually rose by $250 billion in 2025.

Economists say that when contract workers and downstream impacts are included, DOGE-related activities could ultimately result in nearly 1 million jobs affected throughout the broader economy — hitting federal contractors, universities, hospitals, research institutes, and nonprofits.

USAID spent over $30 billion in 2024 but, as a standalone agency, didn't make it to November 2025. The Department of Education is on pace to spend over $40 billion less in 2025. However, savings in those areas were dwarfed by increases in Commerce, Homeland Security, Defense, and Justice spending.

So the counterfactual here is nuanced: keeping DOGE from dismantling agencies wouldn't have dramatically changed the deficit picture, because DOGE failed to cut spending. But it would have preserved hundreds of thousands of jobs, maintained government services, kept regulatory agencies functional, and avoided the institutional chaos that suppressed consumer and business confidence.

Business investment in 2025 remained concentrated in AI-linked segments, while broader capital investment reflected a more cautious tone — held back by elevated tariff-related costs, heightened uncertainty, and high financing costs. That uncertainty had a DOGE component: when federal agencies are being dismantled and contracts cancelled without warning, businesses pause.

The Projected Alternate Path

Putting it together, if the administration had:

• Not imposed Liberation Day tariffs
• Continued the IIJA and IRA without freezing or reversing grants
• Not pursued DOGE-style mass layoffs and agency deconstruction

Here's what the evidence suggests the economy would look like today:

GDP Growth: Likely 2.0–2.5% in 2025, rather than the 1.4% CBO projects. That gap represents hundreds of billions of dollars in lost economic output.

Inflation: Likely at or near the 2% Fed target by now, rather than the 3.1% CBO projects. American families would be paying meaningfully less for groceries, appliances, autos, and imported goods.

Jobs: Somewhere between 800,000 and 1.5 million more jobs in construction, clean energy, and infrastructure — the sectors the IIJA and IRA were actively building — plus the roughly 271,000 federal jobs that were cut, plus the downstream private-sector and nonprofit jobs tied to federal grants and contracts.

Consumer Confidence: Significantly higher. Much of the economic drag in 2025 has been driven by uncertainty — businesses not investing, consumers not spending — directly tied to trade policy volatility and government instability.

The Deficit: Ironically, roughly similar or slightly better without the tariffs and DOGE. Even taking DOGE's savings claims at face value, the federal deficit grew by nearly $2 trillion from October 2024 to August 2025 — an increase of $76 billion from the same period the year before. Tariff revenues came in, but they didn't offset the economic slowdown they caused.

The Bottom Line

The economic path not taken would not have been perfect — inflation was still a work in progress, the debt was still growing, and global headwinds were real. But by every major economic metric — GDP growth, inflation, employment, consumer confidence, business investment — the evidence strongly suggests the economy would be in a healthier position today had those three disruptions not occurred.

What makes this particularly striking for communities like Chicago's South Side is that the IIJA and IRA were specifically designed to direct investment toward historically underserved communities. 75 percent of the IRA's investments went to communities under the national median income. Those are the communities that absorbed the loss most directly when those programs were frozen or reversed.