The issues that could define a Trump presidency
The Economist had a curious headline this summer: “Trumpnomics would not be as bad as many fear.” The reasoning was interesting. The editors did not believe former President Trump would be able to pass many of the things he is promising because of opposition in Congress, in the courts, and among the business community.
It reminds us that whoever is elected in November, he/she will not have 60 votes in the Senate and a narrowly divided House will make life hard for everyone.
On the other hand, whoever is elected might benefit from a period of fair economic weather. The Fed will be cutting interest rates and the Biden administration’s Chips Act, infrastructure bill and Inflation Reduction Act will still be percolating through the economy.
Beyond taking credit for a growing economy, what might Trump do?
He has called for tariffs of between 10% and 20% on foreign goods and up to 60% on goods from China, something he could enact without Congress. He has argued this will boost manufacturing, act as leverage in trade negotiations and raise revenue.
It could also spark a trade war.
Vice President Harris has called the proposed tariffs a consumption tax of up to $4,000, an estimate that is probably a bit high. However, economists agree the tariffs would raise prices.
On taxes, Trump wants to make his entire 2017 tax act permanent and has floated the idea of eliminating taxes on tips and on Social Security benefits. Various bodies calculate that without severe spending cuts, this would increase the deficit by trillions.
Trump’s claim that the tax cuts would boost economic growth and pay for themselves or that he will cut “waste” is rubbish. Can you say Arthur Laffer?
It is important to remember that most of the federal budget is non-discretionary. This year, discretionary spending is about $1.8 trillion, less than a third of the total budget. Defense makes up nearly half of discretionary spending and Trump pledges to spend more on the Pentagon.
Economists also warn that eliminating taxes on Social Security benefits would hasten the day when the Social Security and Medicare trust funds run dry — by one year for Social Security (2032) and by six years for Medicare (2030). Trump has, nonetheless, promised to protect Social Security.
Trump has also pledged that they would “drill, baby, drill” to increase the supply of U.S. oil and gas to lower energy prices. Interestingly, the Biden administration has issued more drilling licenses than Trump did, and last year, the U.S. set a record for oil production.
Keep in mind that oil is a global commodity and prices and production decisions are determined by market forces. Not surprisingly, there is nothing in the GOP platform about climate change.
In that platform, one finds many of the GOP’s traditional positions that have economic impact — deport the undocumented, more competition for health care and education, deregulation, etc. There is no mention of Project 2025, but it is a constant attack line for Democrats.
The Heritage Foundation has been producing these “blueprints” for governing since 1981. Trump claims he knows nothing about Project 2025, but scores of his former aides are involved, and the ideas track with his rants about the deep state.
Economically, Project 2025 favors the fossil fuel industry, wants to reduce Medicare spending by pushing seniors into Medicare Advantage plans run by insurance companies and suggests the elimination of an independent Federal Reserve.
Trump’s economic ideas are light on details (and often the truth), but Vice President Harris has also been criticized for economic proposals light on specifics. Then again, if American voters craved a detailed 10-point plan for every issue, Sen. Elizabeth Warren would be president.
Next, Vice President Harris.
• Keith Peterson, of Lake Barrington, served 29 years as a press and cultural officer for the United States Information Agency and Department of State. He was chief editorial writer of the Daily Herald 1984-86. His new book “American Dreams: The Story of the Cyprus Fulbright Commission” is available from Amazon.com.