Gregory Daco, chief US economist at Oxford Economics, explains where Trump needs to focus to boost the economy. Following is a transcript of the video.
Well, I think that if you really want to boost the economy over a longer period of time, you have to address a few issues. You have to address the fact that we have really low productivity growth. You have to address the fact that we have severe constraints in terms of an ageing population and therefore you need to increase the quality of the labour and that comes through education. You need to increase the desire of businesses to invest and reassure them that future demand will be there, and that can come through a flurry of different proposals. But the core, the essence of these proposals has to be an environment from a policy standpoint that is certain, and that also promotes stronger investment via a lower tax burden and a burden that’s competitive from an international standpoint.
I think at this point it’s very hard to say whether we’ll see certainty over the next few months. What we know for sure is that Congress has a very busy agenda. Congress has to focus right now on the whole issue of the Russian interference in the election.
It has to focus on passing — or at least the Senate — passing its own version of the health care reform bill. It wants to promote tax reform infrastructure spending. It also needs to pass a budget for fiscal year 2018 by September of this year, and it also will probably need to raise the debt ceiling by October of this year. A lot of priorities and a lot of policy uncertainty, I think that is highly unlikely to dissipate over the coming months. And again, businesses prefer to know what the outlook is going to be in terms of policy even if it’s not favourable, rather than not know what will happen in terms of their tax obligations over the next few months, years, or even decade.
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