WASHINGTON, January 17, 2017 — Think ahead to January 2019. Donald Trump will have been the President of the United States for two full years. What do his current supporters expect the country to look like by then?
Their first concern was the American economy. When Trump was elected, the U.S. economy was in its 11th year of sub-par growth. For the eight years of the Obama administration, economic growth averaged slightly above 2 percent; Obama was the first president in history to serve two terms without having at least one year of economic growth above 3 percent.
Imagine the view from 2019:
Trump and the Republican Congress passed income tax reduction legislation early in 2017, lowering personal tax rates for all Americans. They simplified the tax code and reduced the corporate tax rate to 15 percent. The result was 3 percent economic growth in 2017 and 4 percent in 2018.
The U.S. unemployment rate remained constant at 4.5 percent. But 3 million adults who had previously dropped out of the workforce were now employed at jobs that pay fairly well. Real wages are increasing and the inflation rate is under 2 percent.
Trump significantly reduced government spending. For fiscal year 2019 spending will be 5 percent less than it was when Trump took office. He accomplished this by examining every contract and every dollar spent in the federal budget. He was able to negotiate with contractors to find significant cost reductions, just as any person with a strong business background would do. In addition, spending on income maintenance programs decreased as people left the welfare rolls and no longer needed food stamps.
That spending reduction coupled with increasing tax revenue resulting from the robust economic growth reduced the government deficit. Although not yet achieving a balanced budget, Trump keeps hammering Congress to move in that direction.
He did fix the economy.
The next major concern when Trump was elected was the state of the American healthcare system. The Affordable Care Act (ACA), aka Obamacare, turned out to be not so affordable and covered not so many more people. In addition, there seemed to be a decline in the quality of care throughout the country, since many Americans lost their long-term relationships with their doctors. In addition, the high and increasing deductibles in nearly every exchange based plan often meant skipping important diagnostic tests.
Congress repealed the ACA and replaced it with a more market-based approach that is being phased in. The result was that Americans paid less for health insurance in 2018 than they did in 2017, primarily because the price of the new policies did not increase and people selected the policies that fit their own situations.
For the previously uninsured, Trump expanded Medicaid and sent the money to the states to administer. That resulted in the number of uninsured dropping, raising the insured rate to 92 percent of the population, the highest in history.
The Trump Administration also worked to improve the economic situation of inner cities and reduce poverty. He abandoned the income inequality theme, noting that the country had a poverty problem, not an income inequality problem. Prior to Trump, the slow growth economy meant those at the top had opportunity while those at the bottom didn’t, thus worsening income inequality.
Trump’s high growth economy provided opportunity for almost all Americans. The poverty rate fell, incomes increased and inequality was no longer an issue.
Trump did manage to increase government spending for infrastructure and to provide incentive funds to help develop inner cities. The result was that poorer urban areas have begun to change. The education system was also re-thought and revised to add competition and choice, reduce costs and improve educational quality. Perhaps not surprisingly, the U.S. crime rate fell.
Trump spent money to rebuild the military, and he took tougher positions with our adversaries, which seems to be having positive effects. He renegotiated our trade deals so that they encourage free trade. But he also made sure that the U.S. negotiated terms that were favorable to Americans and American workers.
He was able to add thousands of manufacturing jobs, although many of these jobs were different from the manufacturing jobs that were lost prior to his election. These new manufacturing jobs require workers to operate robots and other machinery on the production line.
In order for jobs to return to the U.S., manufacturing costs had to fall dramatically. This is being accomplished by the use of capital-intensive robots. Because Trump insisted that his tax cuts apply to all income earners, the economy was able to generate sufficient investment capital to fund the capital-intensive manufacturing expansion.
Those who feared the loss of healthcare coverage or the loss of other government benefits realized they had nothing to fear from the Trump Administration, although most environmentalists, social economists and those who favor a stronger role for government and Federal income distribution programs, are clearly unhappy with Trump’s priorities.
Whether this turns out to be future history or wishful fantasy depends on Trump and the Congress. But it is current possibility, and that’s something new and for the better.