Trump predicts he will be the “greatest job-producing president in American history.” To accomplish this, he will “make America the best place in the world to do business.” America certainly needs to do better at creating good jobs. Median earnings of a full-time worker are only $43,000 and are considerably less for young workers and for workers with less education. Bluster aside, would Trump’s economic policies entice businesses to pay higher wages and employ more workers?
Unfortunately, no. But his proposals would increase the deficit, worsen economic inequality, raise the cost of college and according to Moody’s Analytics and the U.S. Chamber of Commerce lead to a prolonged recession.
Trump’s economic plan rests on four planks: lower taxes, less regulation, renegotiated trade deals and fewer restrictions on energy production. But the devils lurk in the details.
Taxes
Trump’s initial tax proposal had huge income tax breaks for the wealthiest Americans (equal to 19 percent of after-tax income for the top 0.1 percent) but only modest cuts for the middle class (5 percent at the median). Despite recent changes, the wealthy and big business remain by far the biggest winners, according to the Tax Policy Center.
The bipartisan Committee for a Responsible Federal Budget has estimated that a $5.8 trillion drop in revenues over the next decade would result from the Trump tax cuts and that, despite large cuts in many agencies, the federal debt would still grow by $5.3 trillion. (This estimate doesn’t take into account Trump’s planned $500 billion investment in infrastructure.)
Regulation
Cuts in regulations and federal agencies would reduce protection of consumers, public health and the environment. Trump favors very deep cuts in the Department of Education and in environmental protection. Health care and consumer financial protection would also be hit hard. States in turn would have to raise taxes to maintain these services. Trump and the GOP want to end federal student loan programs, turning them over to private banks that typically charge higher interest rates. Not good, given that improved education and research have been indisputably tied to higher incomes.
Renegotiated trade deals
These could be beneficial to U.S. companies, but more profits do not necessarily mean higher wages. Higher wages rest on employers’ willingness to pay them, as Trump himself has noted. Since 2000, profits of corporations have tripled and worker productivity has increased 30 percent, but real hourly wages have stagnated. Job growth has not kept up with the growth of the labor force.
And his protectionist trade policies could prove harmful. Trump has threatened to impose tariffs of up to 45 percent on imports from countries that don’t renegotiate to his liking. Any serious increase in tariffs, though, would hobble the U.S. economy, driving up prices, perhaps bringing on trade wars and a recession.
Energy
Trump would lift restrictions on coal, permit increased extraction of oil from federal lands and discard the Paris Agreement to cut greenhouse gas emissions. There is no discussion in his vision statement of how he would reduce emissions or promote the rapidly-growing clean energy sector. Energy experts point out that energy prices do not support the need for more production of coal or a drastic expansion of drilling. In addition, they note that reducing dependence on oil and developing alternative energy sources increases our independence.
As to immigration, firms — Trump contractors included — historically have taken advantage of immigrant workers who can be paid less or be more easily controlled. But the negative impact of immigrants on the wages and employment of nonimmigrants is small, according to a new National Academies of Sciences report. If immigrants had the same wage and workplace protections as others, the incentive to hire noncitizens rather than equally qualified citizens would be gone. Harsh treatment of immigrants is at odds with our need for a strong workforce and for a unified country.
Trump prefers right-to-work states and presumably would be opposed to the Employee Free Choice Act that would increase workers’ ability to negotiate collectively. He favors having states determine increases in the minimum wage. He would end Obamacare and with it the requirement that large employers provide a minimum health care coverage for their full-time employees.
In fact, there are very few proposals that, on balance, provide assured benefits to the typical worker. It is deeply troubling, as well, that at least 60 lawsuits and many liens have been filed against the supposedly pro-labor Trump and his businesses for failure to pay for work done.
Would you feel confident in the decisions made under a Trump administration? I know wouldn’t.
Marianne Hill, Ph.D., moved to Maine in 2013 from Mississippi, where she did the state economic forecast and edited the Mississippi Economic Review and Outlook for 23 years. She lives in South Portland.