Midterm re­sults blocked two core eco­nomic plans

China Daily (USA) - - COMMENT EDITORIAL • OPINION -

Ed­i­tor’s note: Af­ter the midterm elec­tions in the United States, the Democrats have con­trol over the House of Rep­re­sen­ta­tives while the Repub­li­cans have con­trol of the Se­nate. Bei­jing Youth Daily com­ments:

The Don­ald Trump ad­min­is­tra­tion has safely “passed” its midterm ex­am­i­na­tion. But the im­ple­men­ta­tion of its eco­nomic poli­cies, such as the sec­ond phase of its tax cut plan and the large-scale in­fra­struc­ture con­struc­tion plan, might face greater re­sis­tance.

De­spite this, the ad­min­is­tra­tion should have al­ready re­al­ized that its pro­posed tax cuts will pro­vide lit­tle stim­u­lus to the econ­omy, be­cause the cap­i­tal re­leased by the tax cut will flow to the stock mar­ket not man­u­fac­tur­ing. The bull mar­ket is a re­sult of both the pre­vi­ous quan­ti­ta­tive eas­ing poli­cies and the stim­u­la­tion of the ad­min­is­tra­tion’s pre­vi­ous tax cuts, not nec­es­sar­ily a re­flec­tion of the improve­ment of the US econ­omy.

And through its quan­ti­ta­tive eas­ing poli­cies, the Fed­eral Re­serve has suc­ceeded in trans­fer­ring the US do­mes­tic cri­sis to the world. The Trump ad­min­is­tra­tion has been ex­tract­ing, if not ex­tort­ing, con­ces­sions from the world un­der the pre­tense of “Amer­ica first” by lev­er­ag­ing the role of the US dol­lar as the global cur­rency.

Well aware of the US’ time-tested tricks, the Euro­pean Union and the other ma­jor economies are all try­ing to es­tab­lish a new trade pay­ment mech­a­nism to end the dom­i­nant role of the US dol­lar in world trade.

With the Democrats hold­ing the House, it will be­come more dif­fi­cult for the ad­min­is­tra­tion to stoke man­u­fac­tur­ing in­dus­tries and in­fra­struc­ture con­struc­tion through tax cuts or debt, which will di­rectly af­fect the eco­nomic growth of the US and its em­ploy­ment mar­ket, two things the ad­min­is­tra­tion has pinned its for­tunes on. If so, it will trig­ger a chain re­ac­tion in the coun­try’s econ­omy, so­ci­ety and pol­i­tics.

The past two years’ eco­nomic boom may fi­nally be­come a flash in the pan, and the US may re-en­ter an­other cri­sis era.

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