After Donald Trump's election, media and experts are predicting the president-elect’s stated policies will harm the economy if implemented in 2017 and beyond. According to expert analyses, working-class Americans will face the greatest economic disruptions as a result of Trump’s policies.
World Economy On Edge In Wake Of Trump’s Election
Reuters: For The Global Economy, “Everything Is Up For Reassessment” After Trump Election. Reuters reported that Donald Trump’s victory in the presidential election will be “a major challenge to the conventional wisdom on the global economy,” which has relied on policies that the president-elect opposes like free “cross-border trade and migration flows” to sustain economic growth. Reuters noted that Trump’s win creates so much economic uncertainty that “everything is up for reassessment.” [Reuters, 11/14/16]
Trump’s Economic Plan Could Create Short-Term Growth And Long-Term Pain
Politico: “Trump-o-nomics” Is A “Possible Sugar High Followed By A Potentially Devastating Sugar Crash.” Politico described the president-elect’s economic agenda, which includes massive deficit spending, as a “sugar high” that could likely be followed by a “devastating sugar crash” driven by monetary inflation -- a self-inflicted recession. The article noted that Trump’s short-term stimulus spending may boost economic growth, but over the long-term his budget-busting tax cuts, mass deportations, and anti-trade policies would lead to an economic slowdown. Mark Zandi, chief economist at Moody’s Analytics, described Trump’s proposed policies as a “short-term boost” while warning that Trump’s immigration plan would leave “a much diminished economy.” From the November 14 article:
The early line on Trump-o-nomics? A possible sugar high followed by a potentially devastating sugar crash.
“If he does $6 trillion in deficit-financed tax cuts plus infrastructure spending right away it would be a short-term boost but a much bigger hit in the longer run in terms of a spike in deficits and interest rates,” said Mark Zandi, chief economist at Moody’s Analytics. “And if he follows through on his immigration policies we would have a much diminished economy.” [Politico, 11/14/16]
NY Times’ Paul Krugman: “In The Longer Run, Trumpism Will Be A Very Bad Thing For The Economy.” Nobel Prize-winning economist and New York Times columnist Paul Krugman wrote that Trump’s economic plan will “hurt, not help, the American working class” in the long run, but could result in a short-term stimulus. Krugman noted that while Trump’s anti-trade policies could reduce American consumers’ reliance on imported goods, the same policies would also reduce the competitiveness of American exports, meaning “the overall effect on jobs will be more or less a wash.” From the November 14 column:
Now, in the longer run Trumpism will be a very bad thing for the economy, in a couple of ways. For one thing, even if we don’t face a recession right now, stuff happens, and a lot depends on the effectiveness of the policy response. Yet we’re about to see a major degradation in both the quality and the independence of public servants. If we face a new economic crisis — perhaps as a result of the dismantling of financial reform — it’s hard to think of people less prepared to deal with it. [The New York Times, 11/14/16]
Economist Jim O’Sullivan: “Everyone Will Lose If There Is A Global Trade War.” The Wall Street Journal reported that 43 percent of economists surveyed believed the greatest threat to the economy was a possible trade war after Trump’s victory was announced. Chief U.S. economist for High Frequency Economics Jim O’Sullivan told the Journal that “everyone will lose” if a trade war is started by Trump. From the November 13 article:
Over the past year, forecasters consistently fretted that a severe slowdown in international growth was the biggest risk to the U.S. Not anymore. In the post-election survey, 65% of economists said the factors likeliest to knock the economy off course were potential White House missteps.
The potential for a trade war topped the list. It was cited as the biggest risk to the economy by 43% of economists. A move from the U.S. to impose tariffs on foreign nations could lead to a spiral of rising trade barriers, higher import prices, and shrinking markets for U.S. exporters.
“Everyone will lose if there is a global trade war,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics. [The Wall Street Journal, 11/13/16]
Experts Predict Trump’s Policies Will Hurt Working-Class Americans
Vox: Trump Will Push Millions Of Working-Class Americans Into Poverty. Vox reported that “Trump will likely oversee the most vicious cuts to programs for poor and medium-income people of any president since Reagan,” which would result in a decrease in the health insurance rate and an increase in the poverty rate among low-income Americans. Vox also reported that Trump’s anti-trade policies could cost 4 million jobs, noting that “Michigan, Pennsylvania, and Wisconsin” will likely see “massive job losses” if Trump implements his economic agenda. From the November 9 article:
Lower-income whites are not going to suffer from Trump’s restrictions on Muslims traveling, or from his mass deportations, or from his cavalier attitude toward police brutality. But Trump has promised an economic agenda that will increase the ranks of the uninsured by tens of millions, that will eliminate crucial safety net programs for low- and moderate-income Americans, that could start a trade war that drives up prices and devastates the economy, and that will put in place a tax code that exacerbates inequality and leaves many families with children worse off.
Trump will likely oversee the most vicious cuts to programs for poor and medium-income people of any president since Reagan — and could very well go further than Reagan did. The result will almost certainly be a massive increase in uninsurance for the lower-income working people currently covered by Medicaid, an increase in poverty and hunger for the working poor on food stamps, and a large increase in extreme poverty. [Vox, 11/9/16]
The Atlantic: Trump May Undo All Obama Has Done For America’s Poor. The Atlantic reported that President Obama’s administration had reduced “after-tax inequality more than any administration on record” and argued that Trump’s proposed tax cuts for the wealthy and likely cuts to vital anti-poverty programs could reverse much or all of Obama’s success. The Atlantic warned that a Trump administration “would make it much harder to be poor in America.” From the November 9 article:
President Obama’s anti-inequality crusade has had three main pillars. First, the Affordable Care Act, or Obamacare, brought the percentage of uninsured down from 16 percent in 2010 to 9 percent, the lowest in U.S. history. Second, tax benefits passed in the 2009 stimulus, and extended throughout the last seven years, raised the overall income of millions of poor Americans. Third, the administration went beyond the tax code to increase anti-poverty spending, like food stamps and long-term unemployment benefits, and to support the national movement for a higher minimum wage. Together, these measures helped to reduce after-tax inequality more than any administration on record, according to the non-partisan Congressional Budget Office.
How will Republicans roll back these measures? Trump’s boldest proposals and most radical promises—to build a border wall and establish a police force to deport 10 million undocumented workers, while instigating a trade war, cutting taxes, trying to balance the budget, and hinting that the U.S. won’t pay back its debt—are together a recipe for financial panic and a possible recession. But even if the U.S. gets a more moderate version of Trump that dovetails with the wishes of his Republican Congress, there is another clear conclusion to draw. Quite simply, his administration would make it much harder to be poor in America. [The Atlantic, 11/9/16]