What to Expect from a Trump Economy
American voters said they wanted change. Change is what they will get, but not the kind of change they thought they were voting for.
- Did they vote for a recession? That’s what they will get.
- Did they vote for lower wages? Look for real wages to go down, not up.
- Did they vote for workers to receive an even smaller share of the nation’s wealth while more of it goes to billionaires? They will get that.
- Did they vote for even more manufacturers to move away from the rust belt? Look for that to happen.
- Did they vote for a shrinking economy and a lower standard of living? That’s what comes with an America-first isolationist attitude, massive deportations, and unstable international relationships.
- Did they vote for a massive increase in federal debt? No doubt, it is coming.
- Did they vote for uncertainty and chaos in the healthcare industry while they wonder if they will be denied life-saving healthcare services? That starts in January 2017.
- Did they vote for lower Social Security and Medicare benefits? They might get those, too.
While Donald Trump has consistently contradicted himself by promising just about everything to everybody - while providing almost zero details - we can get an idea about a Trump economy from his actions as well as the priorities of the congressional majority.
We know this much already:
- Trump has provided very few economic plans of any kind, specific or otherwise. The exception is a tax plan he announced during the campaign. This plan clearly shows his priorities. It is a plan to increase the wealth gap between his billionaire friends and everyone else. While voters were clamoring for economic justice for the average worker, Trump came up with a tax plan which doubles down on what has created the problem in the first place.
- Trump’s team of advisors consists primarily of billionaire Wall Street insiders. They have their own interests to look out for, and they are not the same interests as yours. The stock market has risen on speculation that a Trump presidency will be good for Wall Street, not Main Street.
- Donald Trump has demonstrated through his words that he has no clue how the economy actually works. He doesn’t understand that growing an economy for the benefit of all requires a completely different approach and completely different actions than running his own business. He doesn’t understand that shafting workers and investors is not “smart”. His comments about renegotiating the national debt indicate a dangerous lack of knowledge of the economy and the source of America’s global economic power.
- Insulting our trading partners, promising to renege on our global commitments, and deporting millions of workers are sure-fire ways to shrink the domestic economy while destabilizing the global economy. A recession is inevitable.
- Donald Trump can submit any kind of budget proposal he wants, but in reality Paul Ryan will control what ends up in the budget. The priorities will be Ryan’s, and we already know what his priorities are: Cut Social Security and Medicare in the name of entitlement reduction as a means of dealing with a budget deficit. These are programs that the most vulnerable of us depend on for survival. These are programs which act as major economic stabilizers during recessionary times. These are programs which are not financed through income taxes – they are paid by participants through payroll deductions. Cutting benefits is a means of taking money away from retired, disabled, and poor Americans.
Meanwhile, Republicans have already promised that the first order of business will be to repeal the Affordable Care Act. They will have to do something in order to appease the political base. This time, though, a vote for repeal will not be an empty gesture which wastes taxpayer money and lawmakers’ time, like the other 60 attempts were. This time, they know the healthcare law won’t be protected by a presidential veto.
I don’t believe they will be stupid enough to simply repeal, with no replacement. Even Donald Trump has been careful to always say “repeal and replace” and not simply “repeal”. If they did repeal with no replacement, the negative consequences – health, economic, and political – would be dire. More likely, they will pass a law which repeals the Affordable Care Act but won’t go into effect until much later, when presumably they will have time to come up with a replacement. One plan being discussed is a repeal which will go into effect three years down the road.
Such an open-ended “repeal”, with no details available for the eventual replacement, will destabilize the healthcare profession and the entire economy. Republicans won’t admit it, but healthcare has been an important and stable contributor to job growth ever since the ACA has gone into effect. Repeal without the public knowing any details of the eventual replacement will only create uncertainty in the economy.
Republicans have shown no desire or ability to formulate a workable healthcare plan. They might have actually succeeded in repealing the ACA if even one of their 60 votes would have included a workable replacement. They were not able to come up with one. I doubt they will be able to come up with something in three years. More likely, they will either keep American healthcare in limbo for an indeterminate amount of time, or make some minor changes - changes they can use politically. They could then call it their own, disassociate it with President Obama, and thus keep a promise to “get rid of Obamacare”.
We are in for some rough economic times. The inevitable recession could be deep and long. Congressional Republicans vote according to debunked economic philosophy which makes them averse to consider proven recession-fighting tools.
Wages will not go up. A Republican majority isn’t interested in increasing the minimum wage. Instead, they are okay with manufacturing jobs moving from the rust belt to right-to-work states in the south. Corporate tax reduction has the effect of eliminating an incentive to increase payroll. A Republican majority is interested in deregulating large corporations, making it easier for workers to be exploited.
Given that voters overwhelmingly support infrastructure improvement, there is some hope for action on an infrastructure plan. But it is uncertain that the Republican majority will do anything. Donald Trump says he supports infrastructure, yet his plan is to push for the moneyed powers to invest in projects which they find profitable – which is not really infrastructure in the economic sense, and isn’t a real stimulus plan. The economy could use a strong stimulus through infrastructure spending, though, and a good plan might be possible to achieve.
Some things make me scratch my head. Why did so many voters, in a “change” election, vote to put an incompetent outsider in the White House while at the same time vote to reelect members of Congress whose policies directly contradict the stated economic wishes of the voters? Why did so many voters say they rejected Hillary Clinton because she was an “insider”, yet they voted to reelect all the congressional insiders who are actually in power? Why did so many voters accept empty bombast while completely ignoring policy positions?
Understanding the economy takes more than 140-character sound bites and selling hats.