With the presidential election roughly a month away and the second debate on Sunday, the race for the White House is coming down to the wire.
One of the biggest issues that will impact the final stretch of the campaign will be the economy. Americans consistently been most worried about their own economic standing in elections and this year will be no different.
In order to get a full grasp of where he stands, we’ve broken down the ideas of Republican nominee Donald Trump based on proposals on his websites and statements he’s made. We’ve also included analysis of the proposals by economists.
In the first debate, Trump said the economy was in a “bubble” sustained by the Federal Reserves low interest rate policy. He claimed that nothing had grown in the economy since the financial crisis except stock prices and the debt. Thus, the minute Obama “hits the gold course”, as Trump said, the Fed will raise rates and the entire economy will collapse.
Trump, paradoxically, has also said that high interest rates are bad.
As for the rest of the issues, check out Trump’s stances below.
Trump’s plan would move all Americans into three tax brackets, down from the current seven. The top bracket for married joint filers making more than $225,000 a year would pay 33%; the $75,000-to-$225,000 bracket would pay 25%; and the under-$75,000 bracket would pay 12%. Right now, people who make under $75,00o pay a 15% rate, while the top bracket — made up of those making $466,950 — pays 39.6%.
Trump would cut the corporate tax rate to 15%. It now sits at 39%, but many companies pay much less in their effective tax rate. The average effective tax rate for S&P 500 companies is 29%, according to research by Goldman Sachs.
According to the Tax Policy Center, Trump’s plan would incentivise investment by businesses and individuals, but the benefits would be offset unless there was a significant decrease in federal spending. Currently, Trump’s plans indicate that he would increase spending.
“However, unless it is accompanied by very large spending cuts, it could increase the national debt by nearly 80 per cent of gross domestic product by 2036, offsetting some or all of the incentive effects of the tax cuts,” said the Tax Policy Center’s report.
Trump does not have a specific plan on creating job growth, but his policy positions are designed to increase jobs in the US. For instance, Trump wants to decrease regulation on energy production to create mining and energy-related jobs, which have been decreasing in recent years.
“We are also going to fully capture America’s tremendous energy capacity,” said Trump in a speech on June 28. “This will create vast profits for our workers and begin reducing our deficit. Hillary Clinton wants to shut down energy production and shut down the mines.”
Also, Trump has said he wants to repeal Obamacare, which he said would save 2 million jobs over the next 10 years. Trump has also stated that his trade polices will lead to more manufacturing and goods-based jobs in America.
Regulation on Wall Street
Trump has called for a repeal of the Dodd-Frank regulation that grew out of the financial crisis, saying it has prevented banks from lending money to average Americans. Additionally, Trump has called for a “pause in all new regulation” and a review of existing regulation, which would appear to include regulation on Wall Street.
Trump has been critical of hedge fund managers, saying they “get away with murder.” But it is unclear what he would do to address the issue. In his economic vision on the campaign website, there is no mention of either Wall Street or Dodd-Frank.
Trump has been mostly protectionist, saying that existing trade deals have taken manufacturing out of the country while railing against free-trade agreements like the North American Free Trade Agreement (NAFTA) and the proposed Trans-Pacific Partnership (TPP). At one point in the campaign, Trump suggested a 45% tariff on all Chinese imports. While he later went back on the idea, Trump has been adamant in his assertion that China is “sucking us dry.”
“When Donald J. Trump is president, China will be on notice that America is back in the global leadership business and that their days of currency manipulation and cheating are over,” readsthe Trump campaign’s website. “We will cut a better deal with China that helps American businesses and workers compete.”
Trump believes that negotiating new deals could be beneficial, and the US could “win” at trade under his presidency.
“Dodd-Frank has made it impossible for bankers to function,” said Trump told Reuters in May.“It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs. And that has to stop.”
In the first debate, Trump railed against Clinton for her husband Bill’s passage of NAFTA calling it the “worst thing to ever happen to the manufacturing industry.”
One area where both candidates seem to agree is the need to rebuild infrastructure in American through federal spending.
Trump’s campaign does not provide a full infrastructure plan, but he has said that he will spend $500 billion on infrastructure to stimulate the economy and provide growth.
“[Twenty-eight] per cent of our roads are in substandard condition and 24 per cent of bridges are structurally deficient or worse,” reads the website. “Trump’s plan will provide the growth to boost our infrastructure, Hillary Clinton’s will not.”
What economists say
A number of Wall Street researchers have weighed in on the economic plans of Trump.
Economists have taken a more extreme view of Trump’s plans. Most economists have warned that there could be serious negative shocks to the country’s economy under a Trump economic plan.
Kevin Logan, chief US economist at HSBC, said that the implementation of Trump’s trade policies would lower exports and increase the cost of goods in the US, which would be a serious shock to economic growth.
“While tax cuts that were implemented in the first year of a Trump administration might give GDP a short-term boost for a year or so, the combined supply shock from a contraction in the labour force and from the disruption to international trade would likely put the economy into a recession after a year or two,” said Logan in a note to clients.
Both Mark Zandi, chief economist at Moody’s analytics, and William Buiter, chief economist at Citi, agreed that the combined trade shock and increased deficit from the full implementation of Trump’s plans would lead to a recession.
Oxford economists estimated that Trump’s plans would lose the US $1 trillion, and the Wharton School of Business at the University of Pennsylvania said Trump’s immigration planwould cost the US 4 million jobs.
On the other hand, Larry Kudlow, an economist and commentator for CNBC, has said thatTrump’s tax plans would be stimulative for the economy. Kudlow has compared Trump’s tax cuts to those under President John F. Kennedy and President Ronald Reagan, noting that both of those instances led to 5% GDP growth. Kudlow has, however, criticised Trump’s immigration and trade policies.
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