Four economists at Moody’s Analytics have conducted an in-depth study of the impact of Donald Trump’s proposed economic policies.
“Broadly, Mr. Trump’s economic proposals will result in a more isolated U.S. economy. Cross-border trade and immigration will be significantly diminished, and with less trade and immigration, foreign direct investment will also be reduced. While globalization has created winners and losers in the U.S. economy in recent decades, it contributes substantially to the ongoing growth of the U.S. economy. Pulling back from globalization, as Mr. Trump is proposing, will thus diminish the nation’s growth prospects.
Mr. Trump’s economic proposals will also result in larger federal government deficits and a heavier debt load. His personal andcorporate 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.”
The Moody’s analysis directly contradicts the claims of Sen. David Perdue and others that a Trump presidency would somehow usher in an era of fiscal sanity. There is nothing in Trump’s policies, promises or debt-driven record in private industry to suggest that it would do so, and every indication that it would do the opposite. According to Moody’s, the Trump-created recession “would be an unusually lengthy recession — even longer than the Great Recession.” It also contrasts the predicted loss of 3.5 million American jobs under Trump with the predicted growth of 6 million jobs under current laws, creating a net loss of almost 10 million jobs.
Apparently, that’s what it means to “Make America Great Again.” It also demonstrates the danger of allowing resentment, anger and misplaced nationalism to masquerade as effective economic policies.