Donald Trump Economy

On the Economy, Donald Trump isn’t Stupid. He Just Hopes You Are.

In All Posts, Economy, Elections, Politics by JD RuckerLeave a Comment

There was something perplexing about the way that Donald Trump has been discussing improving the economic situation of America and its citizens. It wasn’t that his proposed ideas didn’t make sense. That’s common. It was that a man who deals with money didn’t realize that his proposed ideas didn’t make sense. Then I came to a realization. This “outsider” is playing the campaign-promises-versus-reality game better than any seasoned professional political liar. He truly is a politician.

Trump’s campaign is banking on the idea that the Republican party and eventually the general voting population will not realize how utterly impossible his economic plans are. He’s put together tax, spending, and trade plans that do not reconcile with each other regardless of which branch of mathematics you use. He has to know this, or at least his advisers have to know this. They’re banking on his ability to convince the American people that his plans didn’t work because Congress didn’t let them work.

The Republican party and the American people need to know that his proposals are not pie in the sky. They’re 100% certifiably impossible. They cannot work. Even in the best case scenario where the stars align, every nation in the world plays along without objection, and a huge gold mine is discovered under federal lands in Nevada, his plan is still a fantasy. It’s designed to make the American people latch onto one thing or another without questioning how all of it could possibly work together. It cannot.

A Populist Tax Plan

We’re not going to get into the merits of a flat tax which most conservatives realize is the most effective way to regulate the economy, balance the budget, and increase the desire to excel in professional life. Trump’s plan is one that is designed to appeal to voters. It sounds great on the surface, particularly to the 75 million people who will not have a tax. The part that doesn’t get discussed too much is that 74 million of them do not pay taxes under the current tax plan based upon deductions and credits.

This is a plan that has one intention and one intention only: to win votes. It’s not designed to work, not by a longshot and the scary part is that Trump and his team have to know this. They aren’t shooting for the best-case-scenario in economic growth to be able to pay for the cuts. They’re shooting for an impossible scenario of growth that will be propped up by even more impossible trade agreements (discussed below) just to get to the “revenue neutral” point that they’re claiming. According to Tax Foundation economist Alan Cole, Donald Trump’s tax plan will not be revenue-neutral under any circumstances.

He’s betting on ignorance. He’s selling his brand as he has done with so many of his dealings in the past. The problem is that his brand carries no weight when it comes to actual mathematics and the numbers don’t add up. To put it into perspective, Trump’s plan is to cut taxes in a way that’s only tenable if you dramatically cut expenses. That’s all good, except that he’s also proposing…

Huge Increases in Government Spending

This is where we really get to see whether Republican voters are able to discern reality from a great sales pitch. According to Trump, he’s going to make big cuts in spending. Part of the way that he’s going to sell this to America is to bring up stupid uses of government funds that are currently taking place. He’ll point to thousand dollar paper clips and insane research studies costing hundreds of thousands of taxpayer dollars. He’ll vow to clean up those programs that are based on silliness and he’s absolutely correct.

Here’s the problem. The proposed solutions he’s been putting out there to make America great again are huge expenditures. He wants to go after infrastructure – roads, bridges, utility grids, and the like. To scratch the surface on infrastructure is tens of billions of dollars. He wants to build a wall and that’s something that most conservatives want. When asked how he will fund it, he points out that it will be a cheap wall. He says it will be a secure wall. He even mentions that it will be an attractive wall. Then he reiterates that it will be a cheap wall.

It won’t be a cheap wall, not if it’s going to be a secure wall. This is a wall that will have to be paid for somehow. We’re not dissenting on the wall; we believe there should be one. However, any realistic person understands that it won’t be cheap to build. More importantly, it definitely won’t be cheap to maintain a proper level of security at the border in order to make a wall effective. Estimates vary, but building and maintaining a moderately secure wall would likely cost around $76 million per day.

When you throw in the types of military changes he’s proposing which are reminiscent of wartime stances the United States held after 9/11, we’re looking at proposed spending increases that would make President Obama blush. This is all fine, but you have to accompany these types of changes with more tax revenue and deep cuts in other areas. He has done neither. Paper clips won’t do it.

The cornerstone of his plan is that he’ll bring the jobs and economic prosperity necessary to fund dramatic increases in spending while cutting taxes by using his most preposterous proposal to date…

Fair Trade Agreements

There’s no such thing as “free trade.” There’s also no such thing as “fair trade.” There’s just trade and conservatives understand that properly tapping into the global market is the only way that the United States can be competitive. Donald Trump, again hoping to tap into American ignorance, has described renegotiating trade agreements. He’s a deal maker. That’s what he does. He even wrote a book on it.

What Trump (and 1/4th of polled Republican voters) don’t seem to understand is that negotiating deals with foreign governments is nothing like working out deals in business. It’s exponentially more complex and the factors in play are much more numerous than buying real estate. Trump learned that getting into a business he didn’t understand can be a debacle with his Trump Air escapades. Unfortunately, running Trump Air into failure after three years is nothing compared to the ideas he’s describing.

He wants to use tariffs and tax credits/penalties to force companies to do business in the United States. He used Ford as an example as a company that is building production facilities in Mexico. When NAFTA was brought up, he said he’d break it on 60 Minutes. When he was told that he couldn’t break it, he said he’d renegotiate it. Everything has a time limit, he said. On that, he’s right, but we’re talking about years until this could happen (and we think it should). Unfortunately, this means that by the time he had NAFTA renegotiated, he would be running for a second term if he’s lucky. If he’s not lucky, he could be stuck in a quagmire of negotiations similar to the Trans-Pacific Partnership which started in the Bush administration. Seven years later, it’s now coming to Congress. If Obama’s lucky, he’ll get a trade deal that started before he was elected to get approved right before he leaves office.

All of this is fine and it’s part of how the government works. The problem is that Trump’s plans to cut taxes and increase spending cannot work, but if there’s one sliver of hope it’s that he’ll be able to bring jobs back and improve the economy instantly. That’s not possible. Taxes are quick and spending increases are instant, while economic growth through foreign trade is very, very slow. His plan is like saying that they’re going to cut down apple trees while increasing the number of apples that people eat, but don’t worry about the math because we’re going to plant a lot more apple trees to make up the difference. By the time the newly planted apple trees start producing, the people will have run out of apples long before.

He’s playing the deal maker role once again, counting on ignorance to get people to believe he can do what he says he’s going to do. This brings up another analogy that perfectly fits what his candidacy represents. It’s like taking a great major league pitcher and saying that they’ll make a great NFL quarterback because they demonstrated how well they can throw. This is a different game and Trump’s business prowess knows this. His advisers know this as well. Unfortunately, they’re taking on the attitude of getting into the White House no matter what and dealing with the repercussions of broken promises after the fact.

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