Donald Trump talks economics in Detroit
WASHINGTON, August 8, 2016 — Donald Trump went to Detroit today to speak about the economy and his economic policies. The Republican nominee delivered his remarks to the Detroit Economic Club.
Trump, who has favored an off-the-cuff, free-wheeling speaking style, remained on message with his remarks. His message could be summed up in two lines: “The City of Detroit is a living, breathing example of my opponent’s economic agenda”; and “I want to jumpstart America; it can be done and it won’t even be that hard.”
Trump promised that details of his plan will be released soon, but the plan he laid out with broad brushstrokes was clear: lower corporate taxes; a lighter regulatory burden on businesses; a simplified tax code; an “energy revolution” that unshackles America’s energy resources; and “I want jobs, and I want wealth to stay in America.”
As Trump observed, America’s corporate tax rate is the highest among the “developed nations” of the OECD. He proposed to bring it down from 35 percent to a maximum of 15 percent. He argued that this will attract business back into the United States in a sort of negative inversion. He claimed that Clinton’s tax proposals would be three times as costly for small businesses, and the added burden of regulation would ensure that no new businesses would be created.
Trump also proposed allowing firms to repatriate some of the cash they hold abroad, charging a flat 10 percent tax.
Trump claimed that the burden of regulation placed on U.S. industry since 1980 has reduced GDP by 25 percent. In 2015 alone, the Obama Administration imposed 2,000 regulations on American business. That may have been an unaccustomed understatement on Trump’s part. According to The Hill, the number of regulations added to the Federal Register in 2015 was 3,378, and they filled 81,611 pages, an all-time high for one year.
Said Trump, “It is time to remove the anchor dragging us down.”
A Trump Administration would impose an immediate moratorium on new regulations and cancel “illegal” and “overreaching” executive orders issued by the Obama Administration. This would include repealing and replacing Obamacare, which Trump said would save millions of jobs.
For Trump, unleashing an “energy revolution” means unleashing coal, oil and gas. He said that the “Obama-Clinton war on coal has cost Michigan over 50,000 jobs … We will put our coal miners … back to work.” He said that a Hillary Clinton Administration would go after fossil fuels, a sector he said supports over 10 million jobs. His energy revolution would preserve those jobs and add $100 billion per year to GDP.
The Democratic platform calls for the U.S. to get 50 percent of its electrical power from “clean energy sources” within a decade. Clinton has not specified what those sources would be, nor is there any estimate of the cost. Democrats argue that putting America at the forefront of green energy technologies with a Manhattan-Project approach would be a boon for the U.S. economy. Absent a clear understanding of what the technologies and costs are, the claim that this course would boost the economy more than oil and coal can’t be verified in any meaningful way.
Trump hit Clinton and the Obama Administration hard on trade, denouncing the TPP and NAFTA as trade deals that would and have stripped cities like Detroit “of its jobs and its wealth.”
“A vote for Hillary is a vote for TPP,” he added.
He claimed that his position is not anti-trade. “Trade has big benefits, and I am totally in favor of trade. … Isolation is not an option.” He argued that he only opposes trade deals that drive jobs and wealth offshore. He wants better trade deals, “winning” trade deals that bring jobs home.
Trump’s speech contained a variety of other items, at times sounding like a state-of-the-union laundry list. He wants to rebuild our military, but “get our allies to pay their fair share for the protection we provide them.” He wants a complete reform of the Veterans Administration. He proposed “educational reforms [that] will help parents send their kids to a school of their choice.”
Other proposals included elimination of estate taxes—the “death tax”—and complete deduction of child-care costs from income taxes.
The costs and benefits of Trump’s proposals will be ground out in greater detail as he releases the details of his economic plans. That his insistence on cutting taxes will cut government revenues in the short run is clear—the U.S. has probably never approached the hump of the iconic Laffer curve—hence without cuts in spending, the deficit would rise. The question remaining is whether and how much Trumps proposals would cause the economy to grow, thus generating higher tax revenues and cutting deficits down the road.