Ahead of Donald Trump’s inauguration, I’ve been asked by lots of people (OK, 2) what I think about his administration’s potential effect on U.S. household and government finances. So here goes. I consider myself pretty moderate, so hopefully this is a balanced look at things.
ECONOMY & JOBS
I anticipate Trump’s tax cuts, increased spending, and free market reforms (less regulation and more private sector outsourcing of government) will continue (and perhaps accelerate) the economic expansion begun under President Obama. Given the moribund state of most of the world’s economies, that’s pretty amazing.
Cautionary note: The individual worker will suffer under Trump: Less safety net (e.g. Obamacare repeal), stagnant minimum wage, and fewer protections. The environment will deteriorate as well. Question is whether the economic rising tide will be enough to offset these losses.
There is no denying the Trump Effect, which has pushed the stock market to new highs, despite pre-election predictions of a decline if Trump won. Inversely, bonds have tanked.
Cautionary note: Part of the market reaction is related to promised tax cuts and an infrastructure stimulus, both of which will add to the national debt. Also, the stock market is a long play for most investors, so a run up now won’t mean much if there is a plunge later on in Trump’s term.
Trump plans to simplify the corporate and personal tax code (good), while cutting taxes mostly for the wealthy (not good). Lower corporate taxes that are better aligned with the rest of the world and with U.S. interests will help keep companies (and jobs) stateside.
Cautionary note: The rich-poor divide increases every year, while the middle class continues to shrink. We aren’t in French Revolution territory yet, but we’re headed that way.
Like many people, I think Trump is highly erratic, dangerously thin-skinned and narcissistic, ignorant about a lot of the world, seriously compromised by conflicts of interest, and not a very good Christian in word or deed. I’m not hopeful any of this will change, but perhaps his advisers can protect him (and us) from a lot of his worst impulses.
Cautionary note: Pre-election, many people (including Jill Stein) thought Hillary Clinton was a greater risk to start a war, but I disagree – her hawkishness would’ve kept things at a high simmer, but Trump’s unsteady approach is likely to rapidly boil over. The human and financial cost could be immense.
Agree or disagree? Let me know what you think in the comments section.
Interesting take on Trump. The reality is that we are probably going to have a couple of years of solid growth. A lot of this will likely be infrastructure and manufacturing. sectors which typically provide working class job growth. So, the assessment here might be too pessimistic.
Also, Trumps campaign pledge was to lower taxes across the board, not just for the rich. Where are you sourcing your information?
With Trump you never know – he tends to be all over the map. But this Washington Examiner article says that both the Trump plan and the House GOP plan favor higher incomes: http://www.washingtonexaminer.com/what-we-learned-about-trumps-tax-plans-from-mnuchin/article/2612370
Valerie Mendenhall says
I predict his actions will stimluate the economy in a hearty way (the rise we’re seeing is the premonition of just that). Lower taxes to the individual (irrespective of tax bracket) and to corporations is a good thing as long as the President’s Budget (spending plan) can also be held in check and the national debt decreased. If we as individuals need to have financial responsibility & accountability, why not the U.S. Government?
What’s wrong with being rich? The rich, because of their annual income, contribute a great deal to the tax base.
In the US being rich is celebrated, but the bible singles out rich people as having a particularly hard time winning salvation. Not impossible, but it’s definitely a stumbling block.