It’s Donald!

My last article (“It’s Kamala!”) was about Kamala Harris as the Democratic nominee for president. This one is about Donald Trump as nominee for the Republicans.

I’ve written a lot about Trump over the years, most of it critical of him and his policies. Like my article on Kamala, I try to rely on facts, data, and common sense on which to base my analysis. 

My main gripe with Trump is that I know what he says but not what he will do. He seems to be making it up as he goes along. One critic wrote that his policy is the last thing that was whispered in his ear. I think that is an exaggeration but it has a ring of truth. 

I have studied the platform published on his website and I have listened to some of his speeches. He also has a track record from his Administration. He says a lot of things and wanders all over the board, but he has been consistent on several issues, and I presume he will act on them: tariffs, immigration, tax cuts, and regulatory cutbacks.

Tariffs

The problem, Trump says, is that unfair trade practices by China have hollowed out manufacturing in America and we need tariffs to bring back jobs to America. He proposes a 10% tariff on all imported goods. 

His premise is false. Manufacturing is booming in America. Free trade and China are not the problem. 

Since China joined the World Trade Organization (WTO) in 2001, U. S. manufacturing output has increased 85% and GDP has tripled. The U.S. is still the second largest manufacturer worldwide (16% of world manufacturing) after China (32%).

The main reason manufacturing employment has slightly declined was the massive impact of technology, innovation, and capital investment within and without the U. S. This is a worldwide phenomenon. But, with all the disruption – plus China entering world trade – American manufacturing jobs only declined 15% (from 15.3 million to 13 million today). Not exactly a “hollowing out.” Total U.S. employment is now higher than ever. The current unemployment rate (4.3%) is the same as when China entered the WTO.

Tariffs punish all American consumers because we pay for them, not China. Tariffs are a tax we pay on goods we buy. Tariffs cause us to spend more for goods we used to buy from China or for higher cost American made goods. Increased costs mean we will have less to spend on other things, making us poorer. A 10% tariff is estimated to reduce GDP growth by 1% to 2% or more. That would be a significant hit if growth was 3% to 4%.

Immigration

Just so you know, I am not in favor of open borders. This is a huge problem because we have laws on the books that let anyone gain temporary entry by claiming they are fleeing persecution and violence. Maybe the law meant well but it opened the door wide to anyone making that claim. I can’t blame anyone wanting to escape poverty, corruption, and violence. But at present it seems to be an open door.

Reliable estimates say there are about 10 to 11 million illegal immigrants in the U.S.  Trump talks about deporting 15 to 20 million illegal immigrants en masse but that may be off-the-cuff campaign rhetoric for which he is famous. During his administration he had deported illegal immigrants with criminal records, and so does Biden. 

Mass deportation would be infeasible. Ignoring the logistics and cost of such, Pew Research estimates that illegal immigrants make up about 5% or more of the workforce. Deporting them would lead to a recession.

Trump will build a wall, but what that means is not known. During his administration he built 52 miles of new wall, 33 miles of secondary walls, and repaired or replaced 373 miles of existing barriers.

In his nomination acceptance speech Trump said Hispanics “spread misery, crime, poverty, disease and destruction to communities all across our land.” He has been fact-checked ad nauseum on this issue as being a major untruth. He doesn’t support DACA or the Dream Act, these laws would grant residency status to immigrants who were illegally brought into the country as children.

Tax Policy

During his administration Trump’s 2017 Tax Cuts and Jobs Act reduced the corporate tax rate to 21% from 35%. Trump has vowed to continue the 21% tax rate or even reduce it further. Democrats have advocated a 28% rate. Federal tax revenues have roughly doubled since that rate was enacted in 2017 and GDP has grown another 33%. While not the sole cause of such growth, I believe that the tax cuts combined with the perception by businesses that businessman Trump would support them contributed to more growth and jobs. 

Trump proposes eliminating taxes on low-income seniors’ Social Security income and on restaurant tip income. He has said he will reduce taxes on the middle class but has provided no details. He opposes a wealth tax. 

Inflation

Inflation is caused by Fed policies that increase the supply of money and credit in the economy. Inflation is not caused by supply-demand issues that were experienced during the pandemic. All of Trump’s policies to reduce inflation have to do with supply-demand issues that have been mostly solved post-pandemic. These policies do not impact true inflation which voters have been complaining about.

Trump Platform

There is a long wish-list of things Trump claims he will do to “save” America and restore good old-fashioned values that appeal to his MAGA base. Most of these are MAGA social issues which a president or Congress hasn’t the power to solve.

Conclusion

The problem with Trump is Trump. Based on his speeches and comments, he seems to be unable to control his impulses leading him to say outrageous things and exaggerate or lie about, well, almost everything. It makes it difficult to analyze his policies.

As a believer in freedom and free markets as the best way to bring prosperity to all citizens, there are some positive things in his policies but they are countered by the negative results of other policies that he proposes. Politicians are famous for ignoring the unintended consequences of politically popular policies to get elected and Trump is no different. He will pursue immigration, tariffs, and cut taxes, but the details are unknown, only to be revealed when and if he wins the election.

Now that I’ve covered Harris and Trump, my next article will be a comparison of the plusses and minuses of each candidate. Stay tuned.