Get ready for some economic shocks.
We have a pretty good idea of what a Hillary Rodham Clinton presidency would look like, in economic terms: pretty much like a Barack Obama presidency. The Clinton campaign has not gotten too specific on policy yet. But what it has thus far put forward is a standard progressive slate of goals and proposals, many already embraced by the guy in the Oval Office now: raising the minimum wage, closing tax loopholes for the wealthy, and establishing an infrastructure bank.
But what of the Republican front-runner, Donald Trump?
Since it is imagining-Trump-as-nominee day here on Daily Intelligencer, I decided to go whole hog and imagine the Trumpidency, sorting through his economic-policy offerings in the hopes of answering that question. It is hard to parse, to be honest. There are not really proposals coming from the Donald, just a cacophony of shouted tax thoughts and yuuuge bellowed trade proclamations.
Nevertheless, best I can make of it, Trump would provide a gigantic flush of stimulus to the American economy, by way of a truly mammoth tax cut. But that stimulus would be entirely wiped out by the severe economic dislocations caused by his closing of the American economy to foreign goods — a policy decision that would kick off a global trade war. On top of that, the Donald is proposing radical changes to immigration and health policy, which might severely harm any number of big-employment, very-important industries. Fun! Way more fun than Hillary.
On the tax side, we have some clarity, in the form of a banana-pants tax plan and assorted policy statements. Trump plans to repeal the estate tax; eliminate the carried-interest loophole, among others; slash corporate tax rates; and significantly cut the marginal rates, topping out with a 25 percent bracket. This amounts to a giant, giant tax cut, particularly for the wealthy, which would probably act as a major stimulus to the economy. Granted, the Donald has promised it would be revenue-neutral, a feat he would accomplish by closing loopholes and increasing growth. But he could close every loophole on the books and it still would not put the plan in the black, and I have to imagine Congress would be more than happy to increase the deficit/starve the beast.
But wait! In the past, the Donald has also supported a one-time tax on wealth, big enough to wipe out the national debt. If he still supports it, that would counteract the aforementioned stimulus, were he to push it through and were the Internal Revenue Service capable of collecting it, which it would in a year of Sundays not be.
Moving on! Trump has also put forward some exciting trade-policy ideas. While many Republicans and the Obama administration are pushing proposals that would open the United States economy to trade, Trump has promised to shut us off, North Korea–like, by imposing import tariffs that would make Smoot and Hawley proud. His carefully considered warning to Beijing: “Listen, you motherfuckers, we’re going to tax you 25 percent!” This completely illegal maneuver would incite a global trade war, with foreign countries slapping punitive countermeasures on American goods. As a result, the United States would become a hermit economy, and I have to imagine that every major American firm would decamp to literally any other country than this one. Welcome to Donald’s America: no imports, no exports, but also no death tax!
Some of his other policy shrieks would have a significant impact on the economy, even if they are not economic policy, per se. Chief among those is his promise to kick out all “the illegals,” which would decimate the agriculture and meat-processing industries, among others. Say good-bye to the Mexicans and good-bye to all the fresh produce you eat. Suddenly getting rid of the Affordable Care Act would harm hospitals and insurers, and so on, and so forth. Building a giant wall between the United States and Mexico and hiring enough people to round up and deport the millions of undocumented workers in the country would create a lot of jobs, though.
It all stands in remarkable contrast to the guiding philosophy of governance stated in his new book. “The top priority for the government of the United States should be to provide security for its people,” Donald writes. “That security includes removing uncertainty and making sure that the economic future of the country is assured through better deals, smarter trade agreements, and tax policies that unburden the middle class and unleash the private sector.”