The Wall Street Journal’s editorial board praised Republican presidential nominee Donald Trump’s latest update of his tax and economic policy proposals, which he announced during a September 15 speech at the Economic Club of New York. The Journal lauded Trump’s goal of sustained economic growth of 4 percent or more annually -- comparing it favorably to failed GOP candidate Jeb Bush’s 4 percent pledge. Once again, the editorial board ignored both the Journal’s own reporting that 4 percent growth would require economic “wizardry” and criticism from economists and experts who have frequently slammed Trump and Bush’s “nonsense” trickle-down economic plans.
The Journal Touts Discredited Trickle-Down Economic Plans
WSJ: Trump’s Economic Plan “Deserves A Citation At Trump University For “Most Improved.”” The editorial board of The Wall Street Journal applauded Republican presidential nominee Donald Trump’s speech at the Economic Club of New York, claiming his plan to cut taxes would boost growth. The Journal compared the GOP nominee’s pledge of 4 percent growth to former Republican presidential candidate Jeb Bush’s 4 percent pledge, claiming “such commitments are important in setting a direction for governance.” The Journal’s only main critique of Trump’s plan was not about whether 4 percent growth is even possible or how Trump would pay for his massive tax cuts; rather, the editorial board said the plan actually would not cut taxes for the wealthy enough:
Donald Trump’s economic program has gone through several revisions and now deserves a citation at Trump University for “most improved.” The candidate’s New York Economic Club speech on Thursday, which included new tax reform details, was an encouraging if sometimes contradictory performance.
Mr. Trump identified economic growth as the most important domestic priority and set a “national goal” of reaching 4% from the 1%-2% trend of the Obama economy. That’s ambitious, but 2% isn’t some immutable ceiling and better policy could lift GDP. Jeb Bush also took a 4% pledge, and such commitments are important in setting a direction for governance.
Mr. Trump’s plan to overhaul a tax code that hasn’t been updated in 30 years would help. He’d collapse the individual income tax brackets from seven to three, with rates of 12%, 25% and 33%. To help make the fiscal math work, he introduced a new cap on deductions of $100,000 for single filers and $200,000 for couples. A cap is shrewd politics because it means not going to war with every pressure group in Washington that lives off loopholes. [The Wall Street Journal, 9/15/16]
Trump’s Economic Targets Dismissed As “Nonsense,” “Pie In The Sky,” And “Total Fantasy”
Trump’s “Pro-Growth" Economic Policy Will Not Actually Boost Job Creation. According to a tax reform outline and speech transcript published online by the Trump campaign, the Republican nominee is promising to create “a total of 25 million new jobs” over the next decade while increasing economic growth to 3.5 percent per year on average by reducing regulations, marginal income tax rates, and government spending. But Trump’s proposal to create 25 million jobs and renewed economic growth is actually a continuation of current trends. From 2012 through 2015, the Obama administration oversaw job creation of roughly 2.5 million annually, according to the Bureau of Labor Statistics (BLS), despite economic conditions that Trump attacked throughout his speech and domestic tax and regulatory policies that Trump promised to slash and gut. [Bureau of Labor Statistics, accessed 9/15/16; DonaldJTrump.com, 9/15/16, 9/15/16]
Economist Marc Goldwein: Trump’s “Pie In The Sky” Promises On Economic Growth Will Be “Pretty Much Impossible” To Fulfill. On the September 15 edition of MSNBC’s The Place for Politics, economist Marc Goldwein of the Center for a Responsible Federal Budget (CRFB) criticized Trump’s reliance on so-called “dynamic scoring” to boost economic growth estimates spurred by proposed tax cuts and regulatory changes:
ANDREA MITCHELL (HOST): Donald Trump has proposed a $4.4 trillion tax cut, and he has said that it is only going to cost the federal budget $2.6 [trillion] because of what is called “dynamic scoring.”
MARC GOLDWEIN: What Donald Trump is saying is that his tax is basically that his tax reform can grow the economy enough to offset about half of the costs. Now, unfortunately, I don’t think that’s particularly realistic. Certainly, tax reform can help to spur economic growth, but we’ve never really seen a tax reform that would pay for half of its costs or anything like that.
I think a lot of this is just pie in the sky. Of course, we can grow the economy with better tax policy, better regulatory policy, and better energy policy. But we’re talking about a couple of percentage points per year -- I’m sorry, a couple of decimal points per year, not a couple of percentage points per year. We just can’t get this kind of economic growth. We haven’t ever, really, historically. With an aging population, it’s going to be pretty much impossible to, going forward. [MSNBC, The Place for Politics, 9/15/16]
Economist Austan Goolsbee: Trump Has Not “Check[ed] The Details Of His Own Plan” Because His Claim Of Middle Class Relief Is “Not Even Remotely True.” In response to Trump’s speech, a harshly critical CNN panel including analysts Christine Romans, David Chalian, and Rana Foroohar as well as University of Chicago economist Austan Goolsbee slammed Trump over reliance on the “faulty” premise that tax cuts “would somehow unleash the animal spirits in the economy.” Foroohar correctly noted that tax cuts implemented by presidents Bush and Obama failed to “jump-start growth” while Romans add that Trump’s proposed annual economic growth target of 4 percent is “very optimistic” and has not been realized since the Clinton administration. Goolsbee concluded the segment by noting that Trump’s tax cut proposal is still overwhelmingly favorable to the richest Americans and “needs to be fact-checked”:
AUSTAN GOOLSBEE: Of course they are. He’s not including the massive tax cuts for businesses. He's not including that he wants to repeal the estate tax that would benefit his own family by some $3 or $4 billion. So, you're being generous to say that [his speech] needs to be fact-checked. My Trump policy rule is we should spend less time analyzing Trump's ideas than he spent thinking the ideas up. We've already violated my Trump rule by the end of this segment. I do not believe that he's even checked the details of his own plan. Because you heard him saying that the benefits of the tax cut would be concentrated in the middle class, and that’s not even remotely true. [CNN, Legal View, 9/15/16]
Economists Mark Zandi And Douglas Holtz-Eakin Conclude Trump’s Job And Growth Targets Are “Not Feasible” After Accounting For “The Negatives” Of His Other Policies. Economists Douglas Holtz-Eakin and Mark Zandi thoroughly deconstructed Trump’s economic policy outline during the September 15 edition of CNN’s The Lead, with Zandi noting that job creation and economic growth on par with Trump’s promises is “not feasible” without a significant increase of net immigration over the next decade, which Trump vehemently opposes. Holtz-Eakin, a conservative economist and long-time opponent of the Obama administration, also assailed Trump’s promises of robust economic growth through tax cuts, regulatory reductions, and a focus on energy production:
MARK ZANDI: No, it's not feasible. The reason is -- the only way you would get there is if you significantly increased immigration. In fact, you would have to more than double current legal immigration into the country to have enough people here to actually create that many jobs. The simple reason is that the Baby Boom generation -- that's the big Baby Boom generation that people in their 50s and early 60s -- they're retiring, and they're going to retire en masse over the next ten years. And so the labor force -- if we don't change immigration law, if we don’t allow more immigrants in the country, the growth in the labor force -- and the labor force is the people who are willing and able to work -- is going to grow very, very slowly so that it's mathematically impossible to create that many jobs.
DOUGLAS HOLTZ-EAKIN: They're not likely. Mark’s on to the right arithmetic. GDP output, the economy, however you want to label it, grows because we have workers and you can have growth in the number of workers -- that’s going to be slow -- or output per worker productivity. So he needs a productivity boom of unprecedented proportions to get to those kinds of numbers. And the places he’s pointing to -- energy, I don't think so. I am a big critic of the Obama administration's regulatory burden, but getting rid of that isn't going to deliver a percentage point of growth. So it's hard to make this all add up, especially when you add in the negatives. The immigration is a negative, the trade is a negative. So, he's going to try to make it all add up and grow more rapidly -- I give him points for that -- but the numbers aren't there. [CNN, The Lead with Jake Tapper, 9/15/16]
Huff. Post’s Igor Bobic Summed Up Trump’s Plan Simply: “A Total Fantasy.” Huffington Post associate politics editor Igor Bobic said “Trump’s budget plan, as his other plans, is a total fantasy”:
Trump’s budget plan, as his other plans, is a total fantasy
— Igor Bobic (@igorbobic) September 15, 2016
Economist Robert Reich: “Donald Trump [Walked] Away From The Abyss Of Sheer Lunacy Back Toward The Normal Nonsense Of Supply-Side, Trickle-Down Economics.” In response to Trump’s initial update to his tax and economic policy, outlined on August 8, former labor secretary and economic policy professor Robert Reich blasted Trump and his senior economic adviser, Stephen Moore, for attempting to rebrand the “sheer lunacy” in Trump’s original tax plan into the “normal nonsense of supply-side, trickle-down economics” characteristic of other Republican politicians. Reich added that “nothing trickles down” to middle- and working-class Americans from cutting taxes for the rich, but the proposed tax cuts would create “huge deficits.” [Fox News, The Kelly File, 8/9/16]
Economist Larry Mishel: Trump’s Plan “Recycles The Failed Policies Of Deregulation And Massive Tax Cuts For The Rich.” Economist Larry Mishel, president of the Economic Policy Institute, wrote that Trump’s plan “just recycles the failed policies of deregulation and massive tax cuts for the rich and corporations” that Republicans have long championed. Mishel noted that Trump’s proposals already failed to deliver during the Bush administration and argued that, while the plan may engender him to corporations and GOP donors, Trump “remains a dangerous candidate who does not have the interest of workers in mind.” [Economic Policy Institute, 8/8/16]
Experts -- And The Journal’s Own Reporting -- Dismissed Jeb Bush’s 4 Percent Growth Target As Economic “Wizardry”
WSJ: Bush's Goals “Will Require Some Real Wizardry.” Back in 2015, the Journal's Real Time Economics blog looked at Bush's goals of sustained 4 percent economic growth and 19 million new jobs created over an unspecified number of years and found those targets “will require some real wizardry, reversing long-running trends in population, job participation and worker productivity.” The blog also noted that the economy could produce those millions of jobs under the right circumstances, with or without Bush's targeted growth goal:
In order to add 19 million people, you’d probably need all three things–lots more teen jobs, lots more participation of prime-age workers and lots more immigrants.
Even if everything goes right and the economy adds 19 million jobs, that's only employment growth of about 1.3% per year. In order to get 4% GDP growth, you're going to need the economy's productivity to climb swiftly. Productivity's last major surge lasted from the late 1990s to the the mid-2000s. Presidential policies may play some role in productivity growth, but most economists would attribute the 1990s boom to the information-technology revolution. That probably had more to do with engineers in San Francisco than politicians in Washington, and even so it didn't last for an entire decade. [The Wall Street Journal, Real Time Economics, 6/15/15]
Politico: 4 Percent Growth Hasn't Been Sustained In 200 Years, Would Be “Impossible” In The Long Term. According to economists interviewed by Politico in June 2015, national economic growth of 4 percent has not been sustained in the United States in 200 years and sustaining such high levels of growth for nearly a decade would be “impossible”:
But while 4 percent growth can last for years at the state level, it has never been anything approaching the norm in U.S. economic history, even during the boom years that followed World War II. “I can go back 200 years,” said Claudia Goldin, an economic historian at Harvard, “and not get anything like this in a sustained manner.”
Economic growth has reached or exceeded 4 percent annually in only 23 of the past 63 years, most recently during the tech boom of the late 1990s, under President Bill Clinton. “Four percent for a decade?” asks economist Robert Gordon of Northwestern. “Impossible.” [Politico, 6/15/15]