When Donald Trump visited Portland earlier this month, we raised a few questions we might pose to a serious candidate for president — a question about tax policy, one about health care, another about addiction.
But since Trump is no serious candidate, we wrote that it defied purpose to treat him as such. Instead of asking him serious policy questions, we wrote, the appropriate response to Trump on his visit to Maine was nothing less than complete repudiation.
To illustrate why, it’s worth noting what happens when one takes Trump at his word and considers his nonsensical, racist and impulsive declarations as fully formed policies.
In June, a team led by economist Mark Zandi of Moody’s Analytics took Trump’s statements — along with the little his campaign had in terms of published policies — at face value and assessed the long-term impact on the U.S. economy.
“Under the scenario in which all his stated policies become law in the manner proposed, the economy suffers a lengthy recession and is smaller at the end of his four-year term than when he took office,” wrote Zandi, Chris Lafakis, Dan White and Adam Ozimek in their paper, “The Macroeconomic Consequences of Mr. Trump’s Economic Policies.” “By the end of his presidency, there are close to 3.5 million fewer jobs and the unemployment rate rises to as high as 7 percent, compared with below 5 percent today. During Mr. Trump’s presidency, the average American household’s after-inflation income will stagnate, and stock prices and real house values will decline.”
One hope for less damage from a Trump presidency? The moderating influence of a Congress that waters down his proposals.
Under that scenario, “the economy will not suffer as much, but would still be diminished compared with what it would have been with no change in economic policies.”
Throughout his campaign, Trump has made lofty promises about imposing double-digit tariffs on Mexican and Chinese imports, renegotiating the North American Free Trade Agreement or abandoning it, erecting a wall along the U.S.-Mexico border and deporting 11 million undocumented immigrants living in the U.S.
Zandi — a registered Democrat who advised Republican John McCain during his 2008 presidential bid and later President Barack Obama — and his team applied a proprietary economic model to these proposals. The factors given the greatest weight? Trump’s declarations on trade and immigration, because they relate to economic fundamentals: the exchange of goods and the availability of workers.
Moody’s predicts Trump’s highly restrictive immigration policies would lead to significant labor shortages that would keep businesses from growing and spur inflation. Applying steep tariffs on Chinese and Mexican goods could very well provoke a trade war, Moody’s says, which would limit the reach of U.S. exports all while raising the prices of consumer goods.
“The upshot of Mr. Trump’s economic policy positions under almost any scenario is that the U.S. economy will be more isolated and diminished,” the Moody’s team writes, while also noting growing federal deficits as a result of Trump’s taxation and spending policies.
When Zandi and his team applied their model to Hillary Clinton’s economic policy proposals, her plans for immigration reform proved most consequential long-term. “Longer-term growth under Secretary Clinton’s policies is somewhat stronger because on net they expand the supply side of the economy — the quantity and quality of labor and capital needed to produce goods and services,” they write.
Under Clinton, federal revenues and expenditures come closer to being balanced, though federal deficits continue, the Moody’s team writes. In addition, they write, lower- and middle-income households benefit most: “Their tax bill is the same as it is today, but they are the beneficiaries of increased government assistance and a larger economy.”
It’s wise not to put too much stock in the predictions of an economic model that envisions a few different scenarios that might come to fruition or might not. But the Moody’s analysis highlights the candidates’ campaign promises in relation to economic fundamentals.
It’s also an exercise in taking Trump at his word and treating him as a serious candidate with actionable policies. The result is a frightening picture.