Tuesday, August 9, 2016

Trump's New Economic Plan Is Not A Plan

Donald Trump's campaign has been a disaster since the GOP convention.  He decided to turn back the negative tide that has turned against him by announcing a new economic plan to a business group in Michigan.  This editorial summarizes Trump's "new" economic plan and tears it to pieces. The Washington Post also criticizes the plan. Trump proposed several tax cuts that will appeal to many Republicans who fund political campaigns.  He justified the tax cuts with a well worn GOP argument.  That is, cutting taxes for the rich, and for corporations, will stimulate economic growth.  His plan ends the estate tax, which only affects a handful of families with estates above $5 million for a single family, and above $10 million for married couples.  That will do little to stimulate the economy, and it certainly does nothing for the great majority of Trump supporters who are not multimillionaires.  He did not ignore that group, however.  He warmed up his tirade against free trade and promised them that he would take steps to return jobs that have gone to low wage countries, particularly China, back to the US.  That is much easier said than done.  It is also totally inconsistent with the free trade ideology that is dominant in the Republican Congress.  It also has little appeal to large corporations who are eager to sell their goods and services to a growing middle class in China and elsewhere.  Trump offered to reduce the top corporate  tax rate to 18% but that is pretty close to the effective tax rate that affects many large corporations.

Trump's plan also deviates from Republican policy preferences which are centered around federal deficit reduction.  His plan would lower tax revenues and increase federal spending dramatically.  In that sense it is not a real plan at all.  He has simply made an effort to shift his campaign away from the problems that he has created by his own statements.

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