While the media has been focused on Donald Trump’s boorishness and general lack of social refinement, wonky issues like economic policy have largely been relegated to the sidelines. With the economy growing at a dull pace of 1.1 percent per year, and with the Congressional Budget Office forecasting just 2 percent annual growth (in inflation-adjusted gross domestic product) for the next 10 years, what exactly does Trump have to say about this?
I know, as Obama has said, “It’s Bush’s fault”, but the recession ended in 2009, and the so-called recovery has been the weakest in decades, and the first that has actually pushed median incomes down. Business investment and profits are also weak, much of this caused by odd fellow federal policies that limits small businesses and cramps hiring. Despite fluffy banter, under Obama the gap between the 1% and the rest of us has increased; much of this is attributed to economic stagnation and a failure to end the corrupt pay-to-play system which emails released by WikiLeaks have shown that Mrs. Clinton is very adept at maneuvering (Bernie Sanders offered similar criticisms). Critics argue that federal policy over the last eight years has favored gains for the haves, not the have-nots. Most of the middle class would argue that they have gone backwards financially.
Still debatable, Mr. Trump would lower tax rates, including for middle-income voters, and simplify the tax code (have fun taking down that monolith). However, an immediate bonus would be that Americans would be able to exempt average child-care expenses from taxes. Trump also has the death tax on the block. Critics of this tax claim it hits some small businesses and farmers the hardest.
Controversially, Trump would reduce corporate tax rates to 15 percent while eliminating or capping many tax deductions. In theory, this would simplify the tax system, making US business more competitive while creating new jobs. While Clinton counters that this will create a bigger deficit, the opposite camp claims tax rates play a big part in growth and investment. The scenario (according to Moody’s study) may be somewhere in the middle, with a bigger deficit, but a surge in job growth. While Mrs. Clinton is focused on a tax increase for the wealthy, worries are this will hit many more than that–reaching $1.1 trillion in tax hikes.
Mr. Trump claims his focus will be more on helping the private sector to grow faster and to create a debt limit that would rein in our debt-to-G.D.P. ratio, which has skyrocketed under President Obama.
Mr. Trump also claims to be the enemy of any new federal regulations on business. To his point, in 2015 alone, the Obama administration issued more than 2,000 new regulations. Businesses, many of them small, argue these regulations are really just hidden taxes.
Mr. Trump claims to endorse a new trade policy that encourages American jobs rather than undercuts them. His position is flimsy; however access to United States markets without achieving vital conditions like intellectual property protection in China has been a problem for the last three administrations.
Trump has scored points in some sectors criticizing the North American Free Trade Agreement, which allowed Mexico to enforce its value-added tax on American products while exporting goods to the United States duty-free. The dubious Trans-Pacific Partnership would allow foreign companies to challenge United States laws in an international court, but it would do nothing to guarantee that countries couldn’t use currency manipulation to their benefit.
No matter which candidate you prefer, this is something to think about…in the end, it’s still The Economy Stupid.