How Trump can boost economy
Donald Trump must scale huge barriers to accomplish 3 to 4 percent economic growth. Sweeping measures must be implemented, and that will prove no mean task.
George W. Bush slashed personal income taxes without fundamentally altering corporate incentives to create tax dodges and offshore production. Barack Obama expanded entitlements — partially financed with higher taxes on Americans who invest and create jobs. Both relied on big deficits and accomplished only anemic growth.
House leaders are working on corporate tax reform that will close loopholes, lower rates to internationally competitive levels and shift part of the tax burden onto imports. It has a decent chance of winning enough bipartisan support in the Senate but much more needs to be done.
Trade deficits with China and on oil directly subtract $500 billion annually from the demand for American made goods and services, kill millions of jobs and stifle R&D.
Confronting China on trade with a 45 percent tariff, alone, won’t get Beijing to stop undervaluing its currency, subsidizing exports and cease blocking market access for American-made goods and services. It can push back by harassing U.S. companies with operations in China and imposing new barriers on U.S. products, and more broadly by squeezing Taiwan, upping the ante on militarization of the South China Sea and further enabling North Korea.
Trump must gird for a broad crisis with China, deploy the full range of America’s geopolitical and economic assets and compel Beijing to reckon with the fact that their shaky economy cannot withstand an all front confrontation with the United States without risking the Communist Party’s grip on power.
Imposing an efficacy test on regulations — requiring just what is absolutely needed to accomplish legitimate goals for protecting workers, the environment, consumers and financial stability, and then jettisoning the rest — should be the overarching objective as Trump’s Cabinet goes to work at Labor, Environmental Protection Agency, Treasury and elsewhere in the far-flung federal regulatory apparatus.
In the end, Republicans in Congress may have to resort to a grand budget reconciliation bill to push through a panoply of reforms, and Trump will have to marshal public support for radical measures to overcome a barrage of criticism and protests from liberal politicians and the media.
Bigger than his vision and knack for picking competent executives will be his salesmanship.
America’s first dealmaker is not a man inclined to small deeds, and these will be the measure of his presidency.
Peter Morici is an economist and business professor at the University of Maryland and a national columnist.