Assume, as the economists
did, that Trump could implement his key economic policies — tax cuts skewed
heavily to the one percent, mass deportation of illegal immigrants, and huge
tariffs on imports from China and Mexico — during his first two years as
president.
The result: the U.S. will go
into recession at the start of 2018 and not emerge until 2020. Instead of 6
million new jobs being created, 3.4 million Americans would lose their jobs.
Gross domestic product will fall by 2.4 percent. That’s a longer, though less
severe, downturn than the Great Recession (which officially began in December
2007 and ended in June 2009).
The Moody’s economists
summed up their warning:
Even allowing for some
variability in the accuracy of the economic modeling and underlying assumptions
that drive the analysis, four basic conclusions regarding the impact of Mr.
Trump’s economic proposals can be reached: 1) they will result in a less global
U.S. economy; 2) they will lead to larger government deficits and more debt; 3)
they will largely benefit very high-income households; and 4) they will result
in a weaker U.S. economy, with fewer jobs and higher unemployment.
Bureau of Economic Analysis,
Moody’s
To reach that conclusion,
the economists took Trump’s stated policies and plugged them into their model
for the U.S. economy. They noted that their model is similar to the ones used
by the Federal Reserve and the Congressional Budget Office.
Of course, as The New York
Times’ Neil Irwin points out, forecasting with precision is very hard, and so
the Moody’s report is more useful to understand the broad economic trends that
would be at work in a Trump presidency. Those trends are really bad.
First, Trump’s huge tax
cuts, of which one-third would go to the top one percent, would fail to durably
stimulate the economy, and the U.S. national debt would balloon. Debt is not
necessarily bad. It can, in fact, be a good thing when it’s paying for
investments that help grow the economy. But Trump’s tax cutting binge wouldn’t
do that. It would instead send debt to record levels for no greater long-term
purpose than to tilt the tax code even further in the favor of the rich.
Second, Trump’s vow to get
tough on trade — by, for instance, putting a 45 percent tariff on Chinese
imports — would raise consumer prices 3 percent. American businesses would be
left struggling to find alternative sources of goods, while China raised its
own tariffs in response. Not a good scene at all.
Third, there’s the
presumptive GOP nominee’s pledge to deport all 11 million undocumented
immigrants. Undocumented workers, Moody’s points out, make up 5 percent of the
U.S. workforce. So Trump’s plan is the equivalent of ripping all the workers in
North and South Carolina, and then some more, out of the economy, and telling
yourself this will have no ripple effects on businesses or local communities.
Trump’s campaign hit back in
a statement last week by pointing out that the lead author of the Moody’s
report, Mark Zandi, is a Democrat and a donor to Hillary Clinton. That’s true,
but it’s no substantive response to the economists’ predictions. The attack
also failed to mention that Zandi served as an economic advisor to 2008 GOP
presidential nominee John McCain.
Trump economic adviser Peter
Navarro was more on point in a CNN interview. The University of California,
Irvine, professor said that the candidate’s policies wouldn’t cause a recession
because tax cuts mean growth and American workers would fill the (often poorly
paid) jobs left vacant by deported immigrants.
Trump won’t start a trade
war with China, Navarro said, because China won’t even fight back. When that
nation realizes it “no longer [has] a weak leader in the White House, China
ceases its unfair trade practices,” Navarro said.
Or as Trump put it last
year, “We will have so much winning if I get elected that you may get bored
with the winning.”
Culled From Huffington post
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