The Failed Economic Promises Of Donald Trump

Jan 2016
51,655
47,878
Colorado
#1
When he was on the campaign trail, Donald Trump certainly made a lot of outlandish economic promises to the American people. Well, here is his REPORT CARD.

I will not focus on what I think were his more minor promises, such as his silly promise to revive the coal industry and bring back thousands and thousands of coal mining jobs, which never made any more sense than promising to resurrect the moribund typewriter industry. The coal industry is dying from natural market forces, and I suspect that MOST of us know that. No, I am talking about his more MAJOR promises, such as the following:

(1) Economic Growth of 4%, or More: Grade: FAIL We have not gotten to 4% economic growth, or anywhere near to it, nor are we going to. No CREDIBLE economist is forecasting such a remarkable pickup in economic growth, for the simple reason that it would require a genuine productivity miracle, which is simply nowhere in sight. First quarter real GDP growth this year was 2.3%, which most financial news sources described as decent but not great growth. And most forecasters are predicting something like 3.3% growth for this year, with the stimulus of Mr. Trump's tax cuts (especially for corporations) and the benefits of a globally synchronized economic expansion, which is rather rare. But after this year, virtually all forecasters are expecting growth to SLOW DOWN again. This is true of the Congressional Budget Office, the Federal Reserve, the International Monetary Fund, and every private sector forecaster of repute that I've been able to find. Growth will be back in the BELOW 2% range starting in 2020 and beyond. So, no 4% growth on the horizon. Sorry, this gets a FAILURE grade.

(2) Solving the Trade Deficit: Grade: FAIL This one is easy. The trade deficit is GROWING under Trump's policies, and is now at the highest level in more than a decade, since before the Presidency of Barack Obama. And Mr. Trump's policies are at least partly RESPONSBILE for this, as I have posted on recently, because there is a macroeconomic LINK between the budget deficit (which is soaring) and the trade deficit, with Goldman Sachs estimating that the trade deficit increases by $35 for every $100 increase in the budget deficit. And, bear in mind, this was Mr. Trump's signature issue on the campaign trail! He said that America has this enormous trade deficit because EVERY other nation in the world is 'taking advantage of us'. It is an absurdist theory of how international trade works, and stems from Trump's zero-sum views formed during his years as a casino operator.

(3) Better and Cheaper Health Care: Grade: FAIL Remember this promise? Mr. Trump promised that after he wrecked Obamacare, he was going to get America "much better healthcare at much lower costs". Well, so much for THAT promise! In fact, his former HHS Secretary Tom Price recently admitted that with the end of the individual mandate, health insurance premiums are likely to increase rather dramatically for many people. No kidding! For people in their 50's and early 60's, your health insurance premiums might be about to SKYROCKET. Younger and healthier people will be dropping their health insurance in large numbers, figuring that they don't need it, which will FORCE the health insurance companies to start charging much more for the higher-risk people remaining in the pool. Ouch.

(4) Big Middle Class Tax Cut: Grade: C-, at best. Nobel Laureate Paul Krugman had a NYTimes column the other day calling the tax cut a Big Nothing-Burger. And from the standpoint of the middle class, it sure seems that way. For many people, it has already been completely gobbled up by higher gasoline prices. And if they now get socked with much higher health insurance premiums on top of that, well, look out below. Could get ugly. Marco Rubio also had some nasty words for that tax cut, too. Wow.

Overall grade has GOT to be an F.
 
Likes: 5 people
Sep 2012
14,209
18,071
SoCal
#2
The tax bill accelerated the bull market – and may make its end more painful
Today’s good news could be bad news tomorrow.

The recently passed tax-reform package was seen as one of the most significant pieces of legislation for the U.S. stock market in years, resulting in an immediate boost to corporate profitability and providing another tailwind for equity prices.

All those positives, however, may just be short-term in nature, and the bill may have simply set markets up for a fall from a greater height.

“Fiscal expansion is near-term growth supportive, but it risks increasing pro-cyclical behavior. The benefits may be ‘in the price’ and investors must account for greater potential market downside at end of cycle,” Morgan Stanley wrote in a note to clients.

On Tuesday, the International Monetary Fund lifted its estimate for U.S. economic growth in both 2018 and 2019, citing the tax bill as a major factor behind the move. The IMF lifted its U.S. growth estimate for 2018 to 2.9% and its 2019 estimate to 2.7%, both increases of 2/10 of a percentage point. Beyond that, the IMF suggested economic momentum would begin to slow in 2020.

Morgan Stanley also conceded the bill “brought some near-term GDP uplift,” estimating an additional 0.3% of economic expansion in 2018, but added that “beyond that, positives become less reliable.”

...MORE...
 
Likes: 2 people
Jan 2016
51,655
47,878
Colorado
#6
This was, by the way, one of the specific promises Donald Trump made about health care on the campaign trail, so I wanted to post it as kind of an addendum:

Donald Trump: “You’re going to have such great health care at a tiny fraction of the cost, and it is going to be so
easy.”
 
Sep 2016
19,442
13,481
My own world
#8
I have one simple question. What were you earning in 2016 and what are you earning now 2016? What were you spending on expenses in 2016 and what are your expenses now? Are you better off or not? Forget the bullshit anybody else tells you about the general public. Look at your own situation PERIOD.
 
Jan 2007
34,634
7,522
#10
When he was on the campaign trail, Donald Trump certainly made a lot of outlandish economic promises to the American people. Well, here is his REPORT CARD.

I will not focus on what I think were his more minor promises, such as his silly promise to revive the coal industry and bring back thousands and thousands of coal mining jobs, which never made any more sense than promising to resurrect the moribund typewriter industry. The coal industry is dying from natural market forces, and I suspect that MOST of us know that. No, I am talking about his more MAJOR promises, such as the following:

(1) Economic Growth of 4%, or More: Grade: FAIL We have not gotten to 4% economic growth, or anywhere near to it, nor are we going to. No CREDIBLE economist is forecasting such a remarkable pickup in economic growth, for the simple reason that it would require a genuine productivity miracle, which is simply nowhere in sight. First quarter real GDP growth this year was 2.3%, which most financial news sources described as decent but not great growth. And most forecasters are predicting something like 3.3% growth for this year, with the stimulus of Mr. Trump's tax cuts (especially for corporations) and the benefits of a globally synchronized economic expansion, which is rather rare. But after this year, virtually all forecasters are expecting growth to SLOW DOWN again. This is true of the Congressional Budget Office, the Federal Reserve, the International Monetary Fund, and every private sector forecaster of repute that I've been able to find. Growth will be back in the BELOW 2% range starting in 2020 and beyond. So, no 4% growth on the horizon. Sorry, this gets a FAILURE grade.

(2) Solving the Trade Deficit: Grade: FAIL This one is easy. The trade deficit is GROWING under Trump's policies, and is now at the highest level in more than a decade, since before the Presidency of Barack Obama. And Mr. Trump's policies are at least partly RESPONSBILE for this, as I have posted on recently, because there is a macroeconomic LINK between the budget deficit (which is soaring) and the trade deficit, with Goldman Sachs estimating that the trade deficit increases by $35 for every $100 increase in the budget deficit. And, bear in mind, this was Mr. Trump's signature issue on the campaign trail! He said that America has this enormous trade deficit because EVERY other nation in the world is 'taking advantage of us'. It is an absurdist theory of how international trade works, and stems from Trump's zero-sum views formed during his years as a casino operator.

(3) Better and Cheaper Health Care: Grade: FAIL Remember this promise? Mr. Trump promised that after he wrecked Obamacare, he was going to get America "much better healthcare at much lower costs". Well, so much for THAT promise! In fact, his former HHS Secretary Tom Price recently admitted that with the end of the individual mandate, health insurance premiums are likely to increase rather dramatically for many people. No kidding! For people in their 50's and early 60's, your health insurance premiums might be about to SKYROCKET. Younger and healthier people will be dropping their health insurance in large numbers, figuring that they don't need it, which will FORCE the health insurance companies to start charging much more for the higher-risk people remaining in the pool. Ouch.

(4) Big Middle Class Tax Cut: Grade: C-, at best. Nobel Laureate Paul Krugman had a NYTimes column the other day calling the tax cut a Big Nothing-Burger. And from the standpoint of the middle class, it sure seems that way. For many people, it has already been completely gobbled up by higher gasoline prices. And if they now get socked with much higher health insurance premiums on top of that, well, look out below. Could get ugly. Marco Rubio also had some nasty words for that tax cut, too. Wow.

Overall grade has GOT to be an F.
#3 was already a disaster for many. Premiums were unaffordable, deductables so high insurance for most medical issues was useless. Then if you dropped insurance out of necessity you were punished. My friend is going through this now. Now , at least he won't be financially punished for dropping insurance he can't afford anyway. Some win , some lose.

Forecasting economic growth is just that. Tax plan has been in effect just a short while. We don't know how it will turn out. Predictions are useless, to many variables in play.