Trump’s economic speech

Donald Trump was in Detroit over the weekend, giving a major policy speech on the state of the economy. Here’s the speech transcript, and here’s the Washington Post’s fact-checking article. So here we go, finally; a substantive description of what Trump’s economic plans might be.

I say ‘might be’, because it’s not like Trump hasn’t been talking about the economy all along. But he’s been doing it in his own idiosyncratic Trumpian way–dropping hints, riffing off the top of his head, dropping little factoids (none of them even remotely accurate), and commenting on them. And, of course, bragging. And what he’s said up to now hasn’t added up to, you know, ‘policy.’ He’s going to cut taxes; no, he’s not either going to raise taxes. He’s going to spend money on infrastructure; no, he’s not either going to do that. He’s going to make America great again. We’re going to win again. It’s all slogans and taglines, well seasoned with braggadocio. He has put some details of something that looks like an economic program on his website, but it bears little resemblance to his big Detroit address. He has now appointed a council of economic advisors. I think it’s likely they had a hand in writing his speech. So let’s dig into it.

Of course, the national news media has described the Detroit speech as a ‘campaign reboot.’ His tendency to make things up as he goes along has led to a very weird couple of weeks, in which he has picked a fight with a Gold Star family, suggested that Russia will never invade Ukraine (despite having done so two years ago), and kicked a baby out of a rally. He keeps shooting himself in the foot. He needs to quit. He needs to ‘appear Presidential.’ Hence a big, serious speech on economic policy. Read from a teleprompter. He looks like a loon right now; he needs to cut it out. He needs to seem grounded, serious, thoughtful.

So the mainstream media response to the Detroit speech is essentially drama criticism. Did he make this reboot look plausible? Was his delivery sufficiently grave? Did he seem Presidential?

I’m a drama guy, a theatre guy, and I don’t care. I’m interested in policy. I want to read his speech, and look at the specific proposals he offers, and see if they make sense. Under President Obama, the US economy has enjoyed the longest sustained period of economic growth. On the other hand, it’s not very robust growth–2 percent, more or less. We’d like it to grow more. Hillary Clinton has, on her website, a detailed job plan. It’s specific and detailed, with actual numbers you can look at. Trump’s never had anything like that on his website. But now we have a speech to look at.

It’s very . . . Republican. All the problems in our economy are caused by high taxes and regulation. And the first step, says Trump, is tax reform.

My plan will reduce the current number of brackets from 7 to 3, and dramatically streamline the process. We will work with House Republicans on this plan, using the same brackets they have proposed: 12, 25 and 33 percent. For many American workers, their tax rate will be zero.

Hey, your taxes are going down! Isn’t that great?

No. It’s not.

For most working people, the federal income tax is a negligible part of their tax burden. The federal tax that affects them the most is FICA, which pays for Social Security and Medicare. That won’t be diminished under Trump. The most effective federal anti-poverty program is the Earned Income Credit, which enables working families to pay a big annual bill–a car repair, replacing an appliance, put money aside for education . . . or pay a medical bill. Trump doesn’t address the EIC. No, this is a major tax cut for rich people.

And he has no way to pay for it. This tax plan will drastically reduce federal tax revenues. That’s all there is to it. He does not propose any corresponding spending cuts. If you are the kind of person who sees deficit and debt reduction as centrally important political issues, then you cannot, cannot support Donald Trump. He’s going to blow the budget up.

The corporate tax cut (which I actually agree with) is a tax that is easily dodged; very few big corporations pay it. Still, I don’t mind that tax cut; we’re not particularly competitive. But I had a warm fuzzy feeling when I saw Trump call for the end of the ‘death tax.’ Republicans have been inveighing against estate taxes since Caesar conquered Gaul; nice to see the New Improved Trump actually act, for once, like a Republican.

But it’s a terrible idea. The estate tax, let’s remind ourselves, was first proposed by that wild-eyed radical socialist commie, John Adams, who thought it would prevent the growth of a parasitic aristocratic class. (They had their own Paris Hiltons even then). Right now, the estate tax wouldn’t affect poor people, poor farmers, small businessmen of modest means, or the middle class. It’s a tax that really does only affect rich people; trust fund kids. How about, for once, leaving the estate tax alone?

But none of these proposals will help working class people at all. None of Trump’s proposals will lift anyone out of poverty, or in any sense whatever help lower class, lower-middle class, or middle class people at all. It’s trickle-down economics all the way. Trump is the Republican candidate for President of the United States. He’s got an economic council of Republican advisors. He’s gone back to the economic proposals of Jeb Bush. It’s a massive sell-out to his followers.

I found it a depressing speech. I’m enough of a cock-eyed optimist that I have, in the past, harbored some hopes that the Trump candidacy might actually accomplish some good. This speech ended that possibility.

For forty years, close enough, the Republican establishment has run for office on a platform of tax cuts for rich people, deregulation of business, and increased military spending. The Trump candidacy had, up to now, revealed how fed-up Republican voters were with an economic plan that wouldn’t help them at all, that would do nothing but increase income inequality. Trump’s kind of unhinged, but he did, at least, at times, talk dismissively of that particular agenda. (Of course, what he replaced it with was know-nothing nativism). Now, he’s acting Presidential (emphasis on acting–who knows what he really believes). The result is depressing. There’s not a single academic macroeconomist on his council of advisors. They’re all hedge fund guys (‘six guys named Steve,’ in Hillary Clinton’s clever phrase). They want to keep getting richer. And screw everyone else. So that’s what they put in the speech they wrote for Trump.

It’s a lousy plan, and it won’t work. The good news is, it has little chance of ever being enacted.

 

Leave a Reply