By Walker Curtis (NYU London)
Throughout President Trump’s tumultuous campaign, economic issues took center stage time and time again. From trade, to jobs, to private sector growth, President Trump made his intentions clear: “America First.” The slogan extended not only to foreign policy, but also to an “all American” economic policy, one aimed at bringing back the middle class that has suffered in recent years. Put in simple terms, his economic policy was to be: “Buy American, Hire American” (which became the name of an executive order signed on April 18th), the hypocrisy of which should be lost on no one. With this prerogative as his original purported goal, it has to be said, he wasn’t ill intentioned: he meant to bring back jobs that have since been shipped overseas and impose tariffs & penalties on those who continued to do so as opposed to keeping their operations stateside, along with a few other general directives (one could argue about whether this is indeed the best way to stimulate growth in the private sector, but this is neither the time nor the place). The fact that President Trump comes from the private sector along with his (alleged) billions of dollars and decades of (questionable) deal making experience is what qualified him most to be President, both in his eyes and in those of his supporters. Since taking office, there are principally two platforms being advanced by the Trump administration with regards to economic policy: “Bringing Back Jobs and Growth” and “Trade Deals That Work For All Americans.” A third, “An America First Energy Plan,” should also not be overlooked due to its implications. In this series, I would like to provide further insight into these, but also take a look at some of the legislation being proposed (for example, Mr. Trump’s recently revealed tax-cut legislation, which I will concentrate on more next time).
The first central aspect of Mr. Trump’s policy I would like to address, and for that matter the one where Trump has made the most concrete progress, is federal deregulation. Another central idea to the conservative platform is the reduction of the federal government’s presence in our lives, and as Steve Bannon likes to describe it, the Trump administration is attempting the “deconstruction of the administrative state.” Ever since the signing of the famous “Two-for-One” executive order which said that for every future regulation implemented, two had to be repealed, deregulation has been happening at a record pace. Many of these rollbacks are being made in fields other than finance, specifically at the expense of the environment. Hunters will no longer be prohibited from using lead-based bullets on federal lands, nor will mining companies be prohibited from dumping debris in rivers (and the list goes on). Regarding finance specifically, the administration has taken issue with the Obama era Dodd-Frank finance reform law that imposed stricter regulations on Wall Street after the collapse of 2008. Just this past weekend, the President signed two memorandums which took aim at Dodd-Frank’s Orderly Liquidation Authority (the federal government’s ability to intervene in the case of a fiscal emergency or the winding-down of large banks) and the Financial Stability Oversight Council, a team of regulators. These memoranda come after the President sat down with several CEOs and bankers. Furthermore, the administration (through another memorandum, this time to the Department of Labor) has delayed the implementation of the fiduciary rule, which essentially obligated financial advisors to act in their client’s best interests. While these memoranda don’t have any concrete legislative consequences (memoranda don’t have any binding value), they are an indicator of the way in which the Trump administration plans to treat Wall Street and big business, and they for one are thrilled.
One need not be an economist, I believe, to understand the broader implications of some of these economic policies. Returning to the conditions of pre-housing bubble Wall Street seems like an abhorring possibility, and yet it is one that is happening right in front of our eyes. Regarding economics, I’d argue the Trump team either has no idea what they’re doing (although, as I’ll discuss more next time, the idea of tax cuts as a whole is an absurdity), or they do and they simply do not care. The latter seems like the more likely possibility in my eyes, and it makes sense: they ultimately only care about themselves and what they can do for themselves (because yes, I find it hard to believe that multi-millionaire Secretary Mnuchin is kept awake by the middle class’s crushing debt).
In the next segment, I would like to look at President Trump’s tax reform legislation more in depth, as well as taking a look at some of the other proposals that the administration has advanced, including directives on climate and trade.