So what exactly is Donald Trump’s economic plan?
Donald Trump’s team released his economic plan recently. It's the most in-depth look Trump has given the public of his economic vision so far.
What does his economic vision look like?
Presidential economic plans are more of a wish list of how the economy should look than an outline of what would actually happen following the election. Once in power the president has to get his/her policies through Congress, which will usually involve making changes to them. This makes it more ‘vision’ than ‘reality’. Trump’s vision has three goals:
- Grow the economy by 3% a year
- Boost jobs in manufacturing
- Increase America’s exports
Looking to the past
Both candidates want to boost America's economy – it's just that Trump's strategy seems to be to just go back to what’s worked in the past, and do that again. Between 1947 and 2008 the US economy grew at around 3% a year, mainly because of a strong manufacturing sector, and exports.
For a long time this level was considered ‘normal’ . But since 2008 the rate has been closer to 1.5%. That’s partly because the US economy has shifted from manufacturing to service industries like retail, which is much simpler and involves less jobs than manufacturing.
Trump seems to believe that what worked in the past will work in the future, and that we should put policies in place to 'Make America Great Again'. That means producing more goods and selling those goods to other people.
How does it work?
Trump likes to summarize his plan in three words: “Jobs, jobs, jobs!”. The three word thing does work, though it's not necessarily quite as simple as just 'jobs' – his policy proposals could be reduced to:
- Tax cuts
- Deregulation
- Trade Deals
Trump says he wants to give everyone in America a tax cut, including businesses. He’d lower the rate that businesses have to pay from the standard 35% (although this can vary) to 15%, which would take America from having one of the highest corporate tax rates to one of the lowest. He’d also encourage businesses to invest this extra cash in manufacturing jobs by allowing the cost of new factories and equipment to be deducted from the taxes they owe.
In order to make it easier to for new factories to get up and running, Trump would drastically slash federal regulations and not let any new ones be made until he'd seen a list of every single regulation currently in effect and had those deemed to be ‘job killing’ scrapped. While he’s not said exactly what 'job killing' means, he's specifically mentioned environmental policies which might limit the use of fossil fuels.
Finally, Trump has been a huge critic of what he considers ‘bad deals’ on trade. He would renegotiate those deals to include harsher penalties for countries that use dodgy methods of keeping their prices low. Either he'd demand they change their ways, or he'd impose additional taxes on them in America. Either way, their goods would become more expensive, making American-made goods more attractive.
And will it work?
As with many things in economics, the answer is maybe. Certainly tax cuts for everyone puts a little more cash in people’s pockets. But cuts also decrease the amount the government can collect in taxes and use to fund things like social security, which constitutes a large part of many people's income in the first place. Plus, growth in America's economy has historically gone hand in hand with large government spending and high tax rates – the corporate tax rate in 1955 was 45% and the economy was booming. So there’s a question over whether Trump’s plan adds up on this point.
On federal , it's true that they can be expensive for companies, and most of them would be grateful to have less paperwork to do. That said, they don't seem to be damaging America's economy too much at the moment: the country already has the world's biggest manufacturing sector and corporate profits are at an all-time high. Given this, cutting important environmental regulations might be a concession too far.
International have been a hallmark of global politics over the last 50 years and a particular hot topic of Trump’s campaign. Mexico and China have suffered his attacks in particular. While no one claims such deals are perfect, they’ve arguably increased stability and cooperation with the countries they involve, and renegotiating them may put America in a tough political position globally.
The bottom line
Voters will have to decide if they agree with Trump’s vision for the economy. His plan comes with a lot of ideas about how the economy should look in the future, and Americans have got to make a choice over whether they feel that government programs, environmental protections, and trade cooperation are worth sacrificing in service of Trump’s goal to 'Make America Great Again'. But considering that much of America’s economic success historically depended on the very things he seeks to undo, what exactly he means by his all-time favorite slogan is still pretty hard to unravel.
Want to know what President Clinton would do about the economy? Check it out here.