feh...
Posted on 12/20/2016 3:02:03 AM PST by expat_panama
NEW YORK – As US President-elect Donald Trump fills his cabinet, what have we learned about the likely direction and impact of his administration’s economic policy?
To be sure, enormous uncertainties remain. As in many other areas, Trump’s promises and statements on economic policy have been inconsistent. While he routinely accuses others of lying, many of his economic assertions and promises – indeed, his entire view of governance – seem worthy of Nazi Germany’s “big lie” propagandists. Tillerson with Putin The Trump Enigma John Andrews asks whether Carl Bildt, Joscha Fischer, Ana Palacio, and other Project Syndicate commentators are right to be so uneasy about the incoming US administration.
Trump will take charge of an economy on a strongly upward trend, with third-quarter GDP growing at an impressive annual rate of 3.2% and unemployment at 4.6% in November. By contrast, when President Barack Obama took over in 2009, he inherited from George W. Bush an economy sinking into a deep recession. And, like Bush, Trump is yet another Republican president who will assume office despite losing the popular vote, only to pretend that he has a mandate to undertake extremist policies.
The only way Trump will square his promises of higher infrastructure and defense spending with large tax cuts and deficit reduction is a heavy dose of what used to be called voodoo economics. Decades of “cutting the fat” in government has left little to cut: federal government employment as a percentage of the population is lower today than it was in the era of small government under President Ronald Reagan some 30 years ago.
With so many former military officers serving in Trump’s cabinet or as advisers, even as Trump cozies up to Russian President Vladimir Putin and anchors an informal alliance of dictators and authoritarians around the world, it is likely that the US will spend more money on weapons that don’t work to use against enemies that don’t exist. If Trump’s health secretary succeeds in undoing the careful balancing act that underlies Obamacare, either costs will rise or services will deteriorate – most likely both.
During the campaign, Trump promised to get tough on executives who outsource American jobs. He is now holding up the news that the home heating and air conditioning manufacturer Carrier will keep some 800 jobs in my home state of Indiana as proof that his approach works. Yet the deal will cost taxpayers $7 million, and still allow Carrier to outsource 1,300 jobs to Mexico. This is not a sound industrial or economic policy, and it will do nothing to help raise wages or create good jobs across the country. It is an open invitation for a shakedown of the government by corporate executives seeking handouts.
Similarly, the increase in infrastructure spending is likely to be accomplished through tax credits, which will help hedge funds, but not America’s balance sheet: such programs’ long track record shows that they deliver little value for money. The cost to the public will be especially high in an era when the government can borrow at near-zero interest rates. If these private-public partnerships are like those elsewhere, the government will assume the risks, and the hedge funds will assume the profits.
The debate just eight years ago about “shovel-ready” infrastructure seems to be a distant memory. If Trump chooses shovel-ready projects, the long-term impact on productivity will be minimal; if he chooses real infrastructure, the short-term impact on economic growth will be minimal. And back-loaded stimulus has its own problems, unless it is managed extremely carefully.
If Trump’s pick for US Treasury Secretary, the Goldman Sachs and hedge-fund veteran Steven Mnuchin, is like others from his industry, the expertise he will bring to the job will be in tax avoidance, not constructing a well-designed tax system. The “good” news is that tax reform was inevitable, and was likely to be undertaken by Speaker of the House Paul Ryan and his staff – giving the rich the less progressive, more capital-friendly tax system that Republicans have long sought. With the abolition of the estate tax, the Republicans would finally realize their long-held ambition of creating a dynastic plutocracy – a far cry from the “equality of opportunity” maxim the party once trumpeted.
Large tax cuts and large expenditure increases inevitably lead to large deficits. Reconciling this with Trump’s promise to reduce the deficit will probably entail a return to Reagan-era magical thinking: despite decades of proof to the contrary, this time the stimulus to the economy brought by tax cuts for the rich will be so large that tax revenues will actually increase.
This story doesn’t end well for Trump’s angry, displaced Rust Belt voters. Unhinged budgetary policies will induce the US Federal Reserve to normalize interest rates faster. Some see incipient inflation (given the low unemployment rate); some believe the long period of ultra-low interest rates has distorted capital markets; and some want to “replenish their ammunition,” so that the Fed can lower interest rates should the economy slow down again.
Trump has argued that the Fed should raise interest rates. The Fed, which took the first step toward normalization in early December, will almost certainly deliver – and Trump will soon regret what he wished for. There’s a good chance that the monetary contraction will outweigh the fiscal stimulus, curbing the Obama growth spurt currently underway. Higher interest rates will undercut construction jobs and increase the value of the dollar, leading to larger trade deficits and fewer manufacturing jobs – just the opposite of what Trump promised. Meanwhile, his tax policies will be of limited benefit to middle-class and working families – and will be more than offset by cutbacks in health care, education, and social programs.
If Trump starts a trade war – by, say, following through on his vow to impose a 45% tariff on imports from China and to build a wall on the US border with Mexico – the economic impact will be even more severe. Trump’s cabinet of billionaires could continue to buy their Gucci handbags and $10,000 Ivanka bracelets, but ordinary Americans’ cost of living would increase substantially; and without components from Mexico and elsewhere, manufacturing jobs would become even scarcer. Fake news or real views Learn More
To be sure, a few new jobs will be created, mainly in the lobbying shops along K Street in Washington, DC, as Trump refills the swamp that he promised to drain. Indeed, America’s bog of legal corruption is likely to reach a depth not seen since President Warren G. Harding’s administration in the 1920s.
And there really is no silver lining to the cloud that now hangs over the US and the world. As bad as his administration will be for America’s economy and workers, its policies on climate change, human rights, the media, and ensuring peace and security are likely to be no less damaging for everyone else.
Someone dug this old script from the democrat stenographers 2009 handbook.
“Trump will take charge of an economy on a strongly upward trend, with third-quarter GDP growing at an impressive annual rate of 3.2% and unemployment at 4.6% in November. By contrast, when President Barack Obama took over in 2009, he inherited from George W. Bush an economy sinking into a deep recession. And, like Bush, Trump is yet another Republican president who will assume office despite losing the popular vote, only to pretend that he has a mandate to undertake extremist policies.”
Do these mooks get paid to see who can be the most wrong?
Somebody is struggling for self importance.
Trump is a Nazi? Oh how original.
Tsk, tsk, tsk. All those words for naught. Trump won. Thank you, Lord!
Ho-hum.
Economic growth has been non-existent throughout the Obama administration. The unemployment numbers are low only because millions of people have given up looking for jobs. There is no real evidence that the recession ever ended; the only real change is in the way the economic numbers were reported. As many of us know, economic reporting is drastically different if a Republican is in office, versus if a Democrat is in office.
Based on the inaccuracy of this excerpt, I didn't bother reading further.
FAKE NEWS ALERT: Stock Market is up, business is hiring, even if most of it is Christmas help, but even in small towns we are see new businesses being started, sure they are mostly low wage jobs for now, but that’s a start. Better than welfare and UE sitting on your butt.
And they will need skilled workers in Seiverville, TN to rebuild after the wild fire that destroyed the area.
Next step is rebuild our Military with a decent pay check. VA has to be reformed and new skilled medical staff hired as well as management. Top to bottom scrubbing of all gov’t agencies of muzzies and lazy Libtards.
Oh, and no buttercups need apply you are not wanted, you are to lazy to work.
U E 6 puts the figure at over 9% Unemployment when you add in all the factors.
New figures have Christmas hire help that will be gone by the end of January.
Seiverville, TN will have a large need of skilled builders for the next couple of years. Thousands of homes and businesses to be rebuilt. Relocate, we don’t have a State Income Tax!
DeSoto, Siglitz, Klein on discussion panel
http://youtubegogogo.com/video/qkErO-TwOeo/Naomi-Klein-and-Joseph-Stiglitz-on-Economic-Power
HOORAY DeSoto
The devil could not have perverted the truth more if he wrote this himself.
I'm legally a resident of CA. My son was telling me that if CA secedes, I'll have to change my residence legally to MD.
I wasn't really considering TN, but I would definitely consider a state that doesn't have income tax.
feh...
Three sentences in, the writer goes full Godwin. Pathetic.
The author used many words to say what he could have in just four: “I hope Trump fails,”
Puke.
What...In....the....H.....is this guy smoking? First of all, the only fat that elected officials cut in D.C.is the outside layer on a NY Strip.
Secondly, I assume he's counting illegals in his percentage equation but in reality, WTH cares? Why would we need a percentage of Federal employee to citizen ratio?
Joscha Fischer? Right. The Baader Meinhof dude photographed bludgeoning a police officer in Germany. And probably a friend of Billy the Bomber Ayers. Commie scum.
95 million adults out of work puts real unemployment in the 40% range.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.