Are Trump's economic plans full of promise or nonsense?
Donald Trump’s bid for presidency has been marred with controversy due to his unorthodox tactics but also welcomed with great enthusiasm for his lack of political background and seemingly truthful demeanor. One source of Trump’s increasing popularity is attributed to his economic policy. At first sight, Trump’s economic policy is full of promising ideas such as creating new jobs, reducing taxes and cutting down the deficit. However, some of the ways he proposes to accomplish these goals involves questionable actions.
Central to his economic plans is his promise to create 25 million new jobs over the next ten years. Part of how Trump will create these jobs is by not enacting any more economic regulations because he claims these regulations cost the U.S. $2 trillion a year. The regulations he will eliminate include the Dodd Frank Act which was passed in 2010 by Barack Obama in response to the 2008 recession. The act allows the government to put regulations on the financial industry. However, if this act is discarded, the U.S. may be at risk for another financial crisis like the one in 2008. Trump also wants to eliminate regulations he views as “unnecessary” which includes acts such as the Waters of the U.S. Rule and the Clean Power Plan. By decreasing environmental regulations, Trump will bring coal and mining jobs back to the U.S. and although this would increase the amount of jobs, the quality of these jobs may prove to be more detrimental than beneficial due to the health hazards associated with these occupations.
While increasing jobs is a worthwhile endeavor for a president, the course Trump is taking to solve this issue may not be the most effective. Instead of bringing low level industrial jobs to the U.S. like those in coal and mining, the government may need to focus on providing the education for its citizens to acquire higher level skills set which will allow them to get good jobs and contribute meaningfully to a modernized society.
Another part of Trump’s economic policy is reforming the tax codes by reducing the tax brackets from seven to three. The three new tax brackets would be 12, 25, and 33, meaning a 12 percent income tax would be imposed on married-joint filers earning under $75,000, a 25 percent income tax imposed if earning between $75,000 and $225,000 and a 33 percent income tax if earning more than $225,000. The brackets for single filers would be half the above amounts. Trump also said that low-income Americans will pay no income taxes at all and millions of Americans will be taken off the income tax rolls entirely. Trump claims that these reforms are part a tax relief aimed at helping the middle and working class.
In addition, he wants to decrease business taxes from 35 percent to 15 percent which Trump believes will stimulate the economy. However, this new business tax would apply to all businesses, even to billionaire real estate magnates. This new business tax could provide a new loophole for people looking to reduce the amount of taxes they have to pay. For instance, high earners could turn themselves into contractors rather than employees which essentially makes them one person businesses and therefore, they would only be obligated to pay the business tax. This business tax could also produce even larger budget deficits by reducing the amount of revenue the federal government would be getting from businesses.
In terms of trade, Trump wants to get rid of the Trans-Pacific Partnership and renegotiate NAFTA. However, it is not specified what Trump wants from renegotiating NAFTA. Additionally, he wants to label China as a “currency manipulator” and crack down on China’s illegal trade activity. If China does not comply with the U.S., Trump proposes enforcing a 45 percent tariff on Chinese imports. However, China’s loss of its trade surplus with the U.S. may not be as detrimental as Trump thinks to their $4.5 trillion economy.
Trump’s economic plans are indisputably ambitious. However, many economists believe they are based on unrealistic assumptions that may ultimately increase the deficit. Although his ideas are aimed at jumpstarting the economy, the viability of these ideas are still largely unknown and only in the implementation of these plans in the coming years will we know for sure the future of the U.S. economy.