Dissecting the ‘Trump Plan’
Republican nominee’s policy ideas are a tangle of contradictions, lies
The cure for admiring U.S. presidential candidate Donald Trump’s platform for “making America great again” is to go and look at it.
The “Trump Plan” for boosting economic growth and individual prosperity is a mishmash of contradictions, falsehoods and retreads of Republican policies that have failed in the past.
“Trump paints a picture of the (U.S.) economy that is irreconcilable with the facts,” the U.K. Economist has editorialized. “He says jobs are scarce, poverty is rising and incomes are stagnant. But in reality America’s economy is the strongest in the rich world.”
Trump wants a tax cut for the richest Americans, proposing a reduction in the top tax rate from 39.6 per cent to 33 per cent. That’s something of a contradiction. Trump has relentlessly decried America’s supposedly debilitating national debt. But even right-of-centre economists seethe that Trump’s tax cuts would further debauch the Treasury.
“Trump’s package of tax cuts for the rich, social-spending cuts to pay for them and abrogating free trade deals would cut U.S. economic growth about 5 per cent and reduce job creation,” claims Oxford Analytical, a non-partisan think tank.
Like a stopped clock that gives the correct time twice a day, there is some merit in the Trump plan. He wants to revoke the outrageous loophole by which billionaire hedge-fund managers pay minimal taxes, a gimmick in the tax code called “carried interest.” (But then, so does his Democratic opponent, Hillary Clinton.)
Trump proposes a child-care deduction for families with children up to age 13. And it’s means-tested, so that affluent Americans don’t benefit. Trouble is, Trump doesn’t disclose the amount of the cut — which could be generous or inconsequential, for all anyone knows. And he doesn’t realize that those most in need of assistance can’t make use of his tax cut because, as working poor or lower-middle-class income earners, they don’t generate sufficient taxable income to benefit. (On child-care, Clinton proposes a mix of tax cuts and cash subsidies.)
Trump is not afraid to wear the anti-environmentalist tag. He would revive the Keystone XL heavy oil pipeline nixed by Barack Obama. And Trump would have Uncle Sam save $7.2 billion (U.S.) per year by scrapping the Clean Power Act. The goal of that law is a transition from coal to natural gas and other alternatives for power plants. America’s reliance on coal for about half its electric power helps make the U.S. the world’s biggest producer of CO2 emissions.
Even China, with its voracious appetite for additional power, is trying to cut back on new coal-fueled power plants. Conventional pollution produced by those plants and by coal-fueled factories is killing an estimated 4,000 Chinese per day.
Germany has committed to closing all its remaining coal-fueled power plants. As to the $7.2 billion savings, that’s a rounding error in a $17-trillion U.S. economy.
If Trump was serious about reducing public spending, he’d cut the defence budget. Obama has trimmed it by 17 per cent. But his predecessor hiked it by 50 per cent at a time when it already eclipsed the rest of the world’s defence spending combined. Defence offers at least $150 billion in savings.
Trump vows to “make us energy independent,” apparently unaware that the U.S. achieved energy selfsufficiency about five years ago. Thank the fracking phenomenon that qualified North Dakota as an OPEC member; and Obama’s edict that global automakers meet more ambitious fuel-efficiency targets. As a result, American motorists use less fuel today than they did in 2008, when there were fewer vehicles on the road.
Trump’s pro-coal initiatives could have been drafted by the coal industry. Trump does allow that “We are also the world’s leader in nuclear technology.” Again, Trump seems unaware that no new nuclear-power plant has been built in America since 1979, 37 years after the Three Mile Island scare.
And in Trump’s opposition to the proposed Trans-Pacific Partnership (TPP) trade deal, Trump hasn’t calculated that the other 11 members of that deal, including Canada and Japan, are likely to proceed with it on their own without the U.S. if need be. That would have the U.S. on the outside looking into one of the world’s biggest free-trade zones, rather than influencing the TPP as a founding member.
Trump is itching for a trade war with China, which, as it happens, has begun offshoring Chinese jobs to the Carolinas and other low-wage U.S. jurisdictions. Higher tariffs against Chinese imports would drive up Americans’ cost of living, and risk closing the Chinese market to computer servers imported from Silicon Valley and Texas.
Trump’s “protectionism would wreck the (U.S.) economy,” says the Economist, “reduce wages and achieve little in return.” Trump, multiple bankruptcy filer, says he’ll negotiate “really great trade deals” in place of existing ones, without explaining what form they’d take. Which has the Economist scowling: “Rarely has a candidate for president been less deserving of such a leap of faith.”
Trump’s vow to create 25 million new jobs over the next decade is magical thinking. Trump bases his promise on 3.5 per cent GDP growth. American GDP growth has already been running at an annual 2.5 per cent for years, yielding approximately 10 million new jobs since Barack Obama was first elected. Basic math doesn’t get you a 150-per-cent increase in new jobs with a 1-per-cent increase in annual GDP growth.
The Trump Plan above is already a footnote in history. The candidate weeks ago shifted to attacks on an allegedly unfair news media, and to groundless assertions that the election is “rigged” and will be “stolen” from him.
That pivot might be just as well. Not one of 17 Republican appointees to the president’s Council of Economic Advisers canvassed recently by the Wall Street Journal has endorsed Trump.
Martin Feldman, who chaired the council under Ronald Reagan and is now an economist at Harvard University, is blunt.
“I have known personally every Republican president since Richard Nixon,” Feldman said. “They all showed a real understanding of economics and international affairs . . . Donald Trump does not have that understanding and does not seem to be concerned about it.
“That alone disqualifies him in my judgment.”
If rumours since last spring that became a talking point this week mean anything, Trump is looking beyond Nov. 8 to launch a Trump TV channel that would cater to the Trump Nation audience he identified during his campaign of fury and fear.
In which case, Trump could avoid the tag “loser,” since it might be that he wasn’t actually running for U.S. president this year, but conducting his most audacious personal-branding scheme ever. dolive@thestar.ca