Special Election Edition: Trump’s Economic Plan

Christopher Harisiades

The nucleus of Donald Trump’s presidential economic plan is built around one word: growth. Mr. Trump’s plan states that the objective is to reach 3.5 percent, or even 4 percent, annual GDP growth, and 25 million new jobs in 10 years. He plans to reach this objective through an aggressive tax reform policy, and renegotiation of the United States’ trade deals. 

Mr. Trump’s tax policy consists of plans to primarily lower the taxes for the working class, and dramatically reduce the business tax rate. To achieve these objectives, he plans to do the following: 1) Reduce taxes by 35 percent for households earning $50,000 of annual income, with $8,000 childcare, 2) create a 30 percent tax reduction for households earning $75,000, with $10,000 in childcare expenses, 3) reduce a household’s taxes by three percent, if they are earning $5 million with $12,000 in childcare expenses and 4) reduce the tax brackets from seven categories to three (12 percent, 25 percent and 33 percent). 

Mr. Trump’s campaign sees these policies as putting more money in the pockets of consumers across the tax bracket, where a fraction will be saved and the other fraction will be spent. Their logic is that both of these options will help to fuel the economy, as the savings from consumers will go into investment spending, and the consumer spending will go into businesses.

The campaign also wants to renegotiate trade deals to make the United States a more competitive manufacturer. Mr. Trump’s campaign states that the toughest people will be appointed to fight for American trade deals, the Trans-Pacific Partnership will not be enacted and NAFTA will be renegotiated to be advantageous for America. Furthermore, there has been discussion of tariffs. The discussion of appointing tough individuals and renegotiating trade deals can not be used as substantial information to show an economic impact, however the use of tariffs could negatively impact the U.S. economy. Once a tariff is enacted against a nation for a certain good, there will be retaliation by others against the U.S. This will raise prices for U.S. consumers and businesses, which will retract the U.S. economy.

Furthermore, Mr. Trump plans to dramatically reduce the regulations on the energy sector, for the purpose of spurring business growth by tapping into the vast energy resources within the United States. This could create millions of new jobs within the country. However, for U.S. companies to be competitive in the global energy market, they will need to have the means to compete in a climate of depressed oil prices.

Overall, the reduction of taxes on consumers would give them more disposable income to spend, but would reduce government revenue. The government will most likely need that revenue to reduce their deficit, and support a domestic economy that can almost no longer be influenced by monetary policy. Lastly, if the trade deals could realistically be negotiated, they could benefit the U.S. economy, if they are negotiated without the use of harmful tariffs.