An analysis of Donald Trumps economic proposals by Moody’s Analytics predicts that “the U.S economy will become significantly weaker if Donald Trump’s economic policies were implemented.”
More information on Donald Trump’s economic vision can be found at https://www.donaldjtrump.com/positions/economic-vision.
This report reveals, “Mr. Trump’s economic proposals will result in a more isolated U.S. economy because cross-border trade and immigration will be significantly diminished. With less trade and immigration, foreign direct investment will also be reduced which will diminish the nation’s growth prospects.
Trump’s economic proposals will also result in larger federal government deficits and a heavier debt load because his personal and corporate tax cuts are massive and his proposals to expand spending on veterans and the military are significant.
Given his stated opposition to changing entitlement programs such as Social Security and Medicare, this mix of much lower tax revenues and few cuts in spending can only be financed by substantially more government borrowing.
Driven largely by these factors, the economy will be significantly weaker if Mr. Trump’s economic proposals are adopted.
Under the scenario in which all his stated policies become law in the manner proposed, the economy suffers a lengthy recession and is smaller at the end of his four-year term than when he took office.
By the end of his presidency, there are close to 3.5 million fewer jobs and the unemployment rate rises to as high as 7%, compared with below 5% today. During Mr. Trump’s presidency, the average American household’s after-inflation income will stagnate, and stock prices and real house values will decline.
Under the scenarios in which Congress significantly waters down his policy proposals, the economy will not suffer as much, but would still be diminished compared with what it would have been with no change in economic policies.
Those who would benefit most from Trump’s economic proposals are high- income households. Everyone receives a tax cut under his proposals, but the bulk of the cuts would go to those at the very top of the income distribution, and the job losses resulting from his other policies would likely hit lower- and middle-income households the hardest.
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.”
