Category Archives: Donald Trump

The Clinton Plan for “Equitable” Growth

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I have tried to make it clear in my post that I have not endorsed either of the two main presidential candidates.  In fact I am waiting to see a credible plan for simultaneously spurring economic growth and getting our very large and growing national debt under much better control.
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The debt problem is real and cannot be sloughed off as many try to do.  The two charts below show that while annual deficit levels have returned to what may be considered “normal” since 1984, they are still much too high and will lead to a rapidly increasing level of debt even if interest rates remain low which is by no means assured.
In other words, it is not good enough to just make the economy grow faster, it needs to be done in a fiscally responsible way.
I’ve already discussed how the Trump tax plan is unacceptable because it will substantially raise deficits and therefore make the debt much worse.

The same thing is true for the Clinton plan for “equitable” growth, but in a different way.  She wants

  • $250 billion in new spending for infrastructure.
  • Free public college tuition.
  • Universal Pre-K education.

Regardless of their individual attractiveness, it is irresponsible to propose new programs, with new spending, when deficits are already way too high and the debt is steadily climbing.

She also wants to:

  • Raise the national minimum wage to $15 per hour.
  • Mandate paid family leave.

The problem here is that both of these measures will increase unemployment and therefore slow down economic growth. Many states and cities are raising the minimum wage on their own and this way is preferable because it is locally determined.  Paid family leave should be left up to individual employers to use as an incentive to attract and retain good employees.

Conclusion. Hillary Clinton does want to make the economy grow faster which is highly desirable.  But she would do it with new federal spending and new mandates.  The new mandates will actually slow growth.  The new spending programs will add to the debt.  Both approaches are counterproductive.

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“A Better Way” for Donald Trump to Make His Case

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In my last post, “Donald Trump’s Best Chance to Win in November,” I said that the best way for Mr. Trump to broaden his appeal beyond working-class whites and to have any chance of winning the presidential election is for him to endorse the reform plan, “A Better Way,”  recently developed by the Republican House of Representatives.
Capture9Here is a brief and positive summary of the Trump platform so far:

 

  • His tax plan is highly pro-growth and will not cost nearly as much as the previously advertised $10 trillion over a decade.
  • He supports legal immigration and simply wants to solve the illegal immigration problem, one way or another.
  • He is not opposed to foreign trade per se but wants to negotiate, from a position of strength, with countries that manipulate their currencies, steal intellectual property or compel companies to disclose trade secrets as a condition of entering their markets.

His policy proposals so described are completely compatible with the House’s “A Better Way” reform plan whose planks are:

 

  • Poverty. Reward work. Tailor benefits to people’s needs. Improve skills and schools. Demand results.
  • National Security. Defeat the terrorists. Protect the homeland. Defend freedom.
  • The economy. Regulate smarter. End bailouts and cronyism. Put students and workers first.
  • The constitution. Make government more accountable and more representative. Restore constitutional checks on spending.
  • Health Care. More choices and lower costs. Real protections and peace of mind. Cutting edge cures and treatments. A stronger Medicare.
  • Tax reform. Simplicity and fairness. Jobs and growth.

 

These guiding principles are being fleshed out into complete policy documents. They do indeed represent a better way forward for our national government.  Donald Trump could do far worse than to endorse this comprehensive reform plan developed by the House Republicans.  It would show that he is serious about “Making America Great Again.”

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Donald Trump’s Best Chance to Win in November

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As I occasionally remind my readers, I am a non-ideological fiscal conservative and a registered independent. In November I will vote for the presidential candidate who has the most credible plan to address what I consider to be our country’s two more serious problems:

  • Slow Economic Growth, only 2.1% per year for the past seven years since the end of the Great Recession in June 2009. Faster growth will create more jobs and bigger wage gains for America’s workers.
  • Massive Debt. Our public debt (on which we pay interest) is now 75% of GDP, the highest it has been since the end of WWII, and likely to keep getting worse unless strong measures are taken to prevent this from happening.

According to current polls, Hillary Clinton is strongly predicted to be elected our next president. However her policy proposals will do little, if anything, to stimulate economic growth and are likely to make our debt much worse than it already is.
Capture8Donald Trump has a strong base of support among working class whites who are suffering in today’s economy and blame illegal immigration and unfair foreign trade for their woes.  However this base of support, while large enough for Mr. Trump to win the Republican nomination, is not nearly large enough to bring victory in November. The only way Mr. Trump can win is to greatly expand his base of support by appealing to moderate Republicans and Independents who are highly concerned about the direction our country is taking.
Capture9The best and most direct way for him to do this is to endorse the reform program, “A Better Way,” developed by the Republican House of Representatives, under Speaker Paul Ryan. This reform program has already unified the fractious Republicans in the House, and could easily serve as a vehicle for unifying the entire Republican party as well as many independents.
In my next post I will delineate how the Trump platform could easily mesh with “A Better Way.”

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Can the U.S. Economy Do Better VI. Does the President Matter?

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My last five posts have discussed several different aspects of the question, “Can the U.S. Economy Do Better?”  Our economy has been doing especially poorly since the end of the Great Recession seven years ago (see the chart below).  Many people claim that the President doesn’t really have all that much control over the economy.
Capture6 Here is what the2016 presidential candidates are saying on economic policy so far:

  • Hillary Clinton. She wants national paid family leave, a national minimum wage increase and more government spending on infrastructure projects. She would raise taxes by about $100 billion per year to pay for these initiatives. She is opposed to the Trans Pacific Partnership to expand trade with 11 other Pacific Rim countries.
  • Donald Trump. His top priorities are trade and immigration policy. Would he be able to successfully address China’s currency manipulation without starting a trade war? How would he be able to round up and deport millions of illegal immigrants without destroying millions of jobs and thereby crippling many businesses? His plan to slash tax rates would boost the economy but also add trillions of dollars to the debt.

As I have discussed over and over again on this blog, see, for example, here and here,  there are several fundamental policy changes needed to make our economy grow faster and create more and better paying jobs.  We need to:

  • Make it easier to start a small business by simplifying regulations at all levels.
  • Lower tax rates and simplify the tax code, paid for by shrinking deductions and closing loopholes.
  • Respond to globalization and new technology by helping its victims rather than blocking progress.

Our two presidential candidates are appealing to the fears of the voters rather than to their hopes and aspirations. Neither of them is espousing policies which will help the economy really grow in a healthy way.

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After Donald Trump

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It looks more and more likely that Hillary Clinton will be our next President. She is almost certain to be the Democratic nominee and unlikely to be indicted for mishandling classified information.  If Donald Trump is the Republican nominee, she will trounce him because his negatives are much worse than hers.  If Mr. Trump is denied the Republican nomination, he is likely to run as an independent candidate and take votes away from the Republican nominee, thereby also electing Mrs. Clinton.
Capture0What happens then?  The Republicans will regroup by broadening their base to better appeal to Mr. Trump’s constituency of disaffected white working class voters.  Yuval Levin, editor of National Affairs, has visualized what policies a reconstituted conservative party might want to embrace to replace the no longer affordable progressive model:

  • Healthcare: a new approach would liberate insurers and providers to offer many different models of coverage and care and empower consumers to choose between them.
  • K-12 Education: a new approach would allow parents to make choices for their children and reshape the educational system around their preferences.
  • Welfare: a new system would empower local problem solvers to mix resources, advice, experience and moral leadership in a process of bottom-up experimentation.
  • Higher Education: a new model would no longer reinforce a cycle of rising tuition and declining value with inflationary federal loans. Rather it would open up accreditation to allow for more options and offer aid to the needy which rewards high value rather than high prices.
  • Cultural Issues: moral traditionalists should emphasize building cohesive and attractive subcultures, offering alternatives to the chaos of the mainstream permissive society.
  • Diminished Opportunity for the Working Class: Improvements to Trade Adjustment Assistance and Job Retraining programs (wage insurance?) will have to be embraced.

Conclusion. The disruption caused by Donald Trump could lead to a new and more broadly based Republican Party better equipped to address the emerging problems of the 21st century.

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Who is Responsible for the Rise of Donald Trump?

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It is generally agreed that Donald Trump’s great success as a presidential candidate is his strong appeal to working class white voters, often described as white voters without a college degree. It is also widely agreed that Mr. Trump is unsuited to be president, based on his unstable temperament as well as a poor understanding of many basic issues.
Capture0As I have described in a previous post, the quality of life for working class white men has been declining for many years. Nevertheless it has gotten even worse since the Great Recession of 2007-2009 and our slow recovery from it.
Steven Rattner, in yesterday’s New York Times, blames the Republican Congress for the rise of Mr. Trump because of Republican opposition to President Obama’s economic agenda as follows:

  • Opposition to the American Jobs Act of 2011 which proposed a $447 billion package of measures including payroll tax cuts and the creation of an infrastructure bank which would have created thousands of construction jobs.
  • Opposition to continuing federal emergency benefits for the large number of long-term unemployed.
  • Apparent opposition to a recent plan for wage insurance. Under this proposal a worker who lost a job and was forced to take a lower wage job which paid less than $50,000 per year, would receive half of the lost wages for two years, up to $10,000.

These aren’t necessarily bad ideas. In fact I think wage insurance is an excellent idea, as long as it is paid for and does not add to deficit spending.  The problem is that these measures do not generally address the basic problem of slow economic growth, averaging just 2.1% of GDP since the end of the recession in June 2009.  Only by speeding up economic growth, with fundamental tax reform, both individual and corporate, can our economy support both the new jobs and higher paying jobs that will create broad-based prosperity in the United States.
It is both detrimental and inaccurate for supporters of President Obama to blame political opposition for the plight of working class Americans.

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Reviving the Working Class Without Building Walls

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The strangest aspect of the current presidential campaign is the staying power of the highly unconventional and controversial candidate Donald Trump. There is wide agreement that the secret of his success is his strong appeal to the members of the white working class whose incomes have been in decline for many years.
The plight of the working class is often viewed in the context of the overall increase in income inequality in the U.S.  My last two posts, here and here, are part of that discussion.
Mr. Trump appeals to these disaffected voters by vowing to wall off Mexico and cut back on foreign trade.  But it may be possible to “Revive the Working Class Without Building Walls” as Eduardo Porter suggests in the New York Times.  According to Mr. Porter, what are needed are new government programs such as wage insurance or direct government employment.
CaptureAlternatively we could meet the illegal immigration and trade protectionism problems in a much more growth oriented way as follows:

  • Immigration Reform. Set up an adequate Guest Worker program to serve only those businesses and industries which can demonstrate that they are unable to recruit enough local workers to meet their employment needs. Once the Guest Worker program is functioning properly, eVerify would be enforced to weed out unauthorized illegal workers and deport them back to their home countries. At the same time the number of H1-B visas would be expanded in order to retain more of the highly skilled foreigners getting advanced degrees in the U.S.
  • Foreign Trade. As the above chart shows, there is a close connection between world trade and world economic growth. And clearly the U.S. economy benefits from world-wide economic growth. The way to balance off job losses caused by foreign trade is with more effective trade-adjustment assistance and job retraining programs.

Whether or not Mr. Trump receives the Republican presidential nomination or is elected to be president in November, we should address the real grievances of his supporters in ways that benefit the entire economy.

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The Appeal of Donald Trump

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Donald Trump is having a huge impact on the 2016 U.S. presidential race and lots of people are trying to understand why. In a previous post I wrote that the Republican Party needs to figure out where all of the Trump supporters are coming from and then try to keep these people under a perhaps larger Republican tent.
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A very good explanation of the Trump phenomenon comes from the AEI social scientist, Charles Murray, writing in yesterday’s Wall Street Journal. Says Mr. Murray:

  • The long time American Creed of egalitarianism, liberty and individualism is losing its authority and its substance. One of the most widely acknowledged aspects of American exceptionalism is the lack of class consciousness.
  • This lack of class consciousness has now been replaced by the emergence of a new upper class, a new lower class and the plight of the working class caught in between.
  • The new upper class is characterized by its condescension toward ordinary Americans. Mainstream America is fully aware of this condescension and contempt and is irritated by it. It may mean that American egalitarianism is coming to an end.
  • In the 1960s, white working class men in their 30s and 40s were almost all working and almost all married. But, as shown in the chart, these high labor participation and marriage rates have dropped dramatically in the past 50 years.
  • The success of the civil rights and feminist movements, both classic invocations of the American Creed, have led to a large scale ideological defection from the pillars of liberty and individualism. The problem is that affirmative action demands that people be treated as groups. Equality of outcome trumps equality before the law.
  • By the 1980s Democratic elites largely subscribed to an ideology in conflict with liberty and individualism. This produced the Reagan Democrats.
  • During the past half-century, American corporations exported millions of high-paying jobs while the federal government allowed the immigration, legal and illegal, of tens of millions of competitors for the remaining working class jobs.

As Mr. Murray says, “if you are dismayed by Trumpism don’t kid yourself that it will go away if Donald Trump fails to win the Republican nomination. Trumpism is an expression of the legitimate anger that many Americans feel about the course the country has taken.”

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Why the GOP Should Reconcile with Donald Trump II. How to Do It.

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As I have stated over and over again on this blog, It Does Not Add Up, my greatest concern for our country is the lack of fiscal responsibility amongst our national leaders.  The public debt (on which we pay interest) is $13 trillion, which is 74% of GDP.  This is way too high for peacetime and, furthermore, it is very likely to just keep getting worse until serious steps are taken to shrink it (as a percentage of GDP).
CaptureIt is my opinion that the Republicans are more serious than the Democrats about fixing this problem.  Therefore I want the Republicans to nominate a presidential candidate who has a good chance of being elected in November.  I don’t know if Donald Trump is that candidate but he is attracting a whole new group of people to the Republican cause.  They are working class whites who have fallen away from the Democratic Party.
Republicans can reach these voters, as Trump is doing, with suitable policies such as:

  • Immigration. Rather than “Comprehensive Immigration Reform” which would put most of our current illegal immigrants on a path to citizenship, we should adopt the principle, “All the immigrants we need but only the immigrants we need.”  A tightly constrained Guest Worker program, enforced with border control and eVerify, would accomplish this.
  • Free Trade. Trade agreements are still possible but need to include provisions like Trade Adjustment Assistance or other programs to help retrain laid-off workers for the millions of well paying, high skill jobs in the U.S. which are hard to fill.
  • Tax Policy. Rather than skewing tax cuts mainly for the wealthy, as most of the Republican candidates propose, they should be applied equally to all income levels, and fully paid for by shrinking deductions which mostly benefit the wealthy. This would put more money in the pockets of all middle income workers and create more and better jobs at the same time by speeding up economic growth.

Conclusion. Donald Trump has lots of negatives as a presidential candidate but Republicans can, and hopefully will, learn a lot from his very successful campaign so far.

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Why the GOP Should Reconcile with Donald Trump

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I am a non-ideological fiscal conservative. I don’t judge government as being either too large or too small.  I just want to pay for however much government we do have without going into debt.  Such an approach normally leads to political compromise whereby Congress tries to operate efficiently and hold costs down, only raising taxes as a last resort when it is impossible to squeeze any more low priority programs out of the system.
Such common sense used to be a fundamental operating principle, adhered to by both political parties.  Unfortunately in recent years we have moved away from this model.  In fact our public debt (on which we pay interest) has rapidly accumulated to $13 trillion, 74% of GDP, and will continue to grow much higher unless we strongly change our ways.
In some ways our current presidential campaign is following a conventional path.  Both of the major Democratic candidates, Hillary Clinton and Bernie Sanders, want to expand federal programs and raise taxes to pay for the new spending.  The Republican Tea Party candidate, Ted Cruz, is a constitutional and social conservative and wants to cut back on government programs.  The leading Republican establishment candidate, Marco Rubio, supports modest new programs, such as expanding the Earned Income Tax Credit, and also modest tax reform to stimulate the economy.
Capture0The wild card in the presidential race is Donald Trump.  He is a secular populist with unconventional and even contradictory policy views.  He not only leads the Republican field in most polls, he is steadily pulling ahead.  He is doing all this by attracting huge support from working class white voters who have fallen away from the Democratic Party.  In other words, he is potentially expanding the Republican base and therefore should be taken very seriously.
Question. Can a fiscal conservative (who just wants to balance the budget!) but who also wants to address the very serious social problems in American society, support a Donald Trump candidacy for president?  I am struggling with this question.  Stay tuned!

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