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What we know about Trump’s plans to make the American economy great again

What we know about Trump’s plans to make the American economy great again

“We’re going to make Pennsylvania so rich again. Your jobs are coming back,” Donald Trump told a rollicking rally at an arena in Wilkes-Barre, Pennsylvania, last October.

Trump had only been on stage for a matter of minutes, but he was already repeating himself. “They’ve taken our jobs out of Pennsylvania. We’re going to be bringing them back, folks, believe me,” he’d said a few minutes earlier. This time, he delivered the line as a sort of aside, almost a throwaway, after nonchalantly tossing a page of his speech to the crowd the way a sweaty singer working a Vegas crowd might toss a towel to a particularly adoring fan.

Hard along the Susquehanna River, Wilkes-Barre’s economy has been in decline since the 1920s, when the anthracite coal from the hills of Luzerne County that once heated millions of American homes began to be replaced by oil and gas. Americans aren’t going back to coal cellars. Nor is employment in Luzerne County — which peaked in 1914 — rebounding any time soon.

Still, the sheer audacity of Trump’s promise — why would he say it if he couldn’t really do it? — was effective. After voting for Barack Obama by 8 percentage points in 2008 and 5 percentage points 2012, Luzerne County flipped, going for Trump by almost 20 percentage points.

Millions of the Americans drawn to Donald Trump’s campaign mantra “Make America Great Again,” like those in Wilkes-Barre, heard a pledge to radically reshape America’s economy to their direct personal benefit. But more than a month into the Trump administration, there’s little indication of anything resembling a cohesive plan to deliver on the surging economic expectations of the people who put him in the White House. If such a plan is coming, few of the people involved in generating it are economists, who might be useful to have around as Trump attempts what could be the biggest reshaping of the U.S. economy since the New Deal.

“If you’re going to do evidence-based policymaking, then you need to have advisers that can help you interpret the evidence,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics, an economic policy think tank that tends to be pro-trade, and a former staffer at the White House Council of Economic Advisors during the Obama administration. “Not having those people around is a huge detriment.”

Like many populists, Trump doesn’t adhere to a clear organizing ideology, such as the free-market conservatism that has dominated Republican economic policy since Reagan. And without a cohesive ideology, it’s hard to have a cohesive plan.

For example, over the course of the campaign, Trump floated numerous and  sometimes contradictory positions to remake the American middle class. At first he suggested that wages of U.S. workers were “too high.” He then said he supported raising the federal minimum wage to $10 an hour. Then he said the “states should really call the shots” on the minimum wage.

And since his inauguration, there’s been little clarity on the economic policymaking priorities of the administration as a whole. So far, a push for lighter regulation, including easing financial sector rules — a theme Trump barely mentioned on the campaign trail — has been one of the most consequential policy changes introduced by top Trump administration officials.

For their part, most economists think Trump’s economic promises — a manufacturing jobs boom coupled with an economy growing faster than 4 percent a year — are impossible to keep. And that might explain why so few economists are involved in his administration. Trump’s initial roster of economic advisers published during the campaign listed a single credentialed economist (defined as someone who has a Ph.D. in economics): Peter Navarro of the University of California, Irvine, whose anti-trade positions put him at odds with almost the entire economics profession — though on the right side of Trump.

Now head of the newly created, but operationally unclear, White House National Trade Council, Navarro remains one of the few trained economists involved in White House policymaking at all. Navarro did not respond to a request for comment for this article.

The three-person Council of Economic Advisers, the traditional heart of economic thinking in the White House, remains completely unfilled. Respected conservative economist Kevin Hassett has been repeatedly reported to be in line to lead the group, but no announcement has yet been made officially.

And even if Hassett were named, the position has less influence than it once did. The administration has already said that the chairman of the CEA won’t be included in Trump’s Cabinet, an effective demotion for what had been the central position in analyzing the economic value of potential policy changes.

The former president and chief operating officer of Goldman Sachs, Gary Cohn, has stepped into that vacuum, consolidating control over economic policy in the Trump White House as head of the National Economic Council, a separate group in charge of implementing the president’s economic decisions. And, Rust Belt Trump loyalists should know, Cohn’s early focus is on Wall Street.

Until joining the administration, Cohn was one of Wall Street’s most powerful men (he, too, was not made available for comment). In his new role, Cohn has spoken most clearly on the need to soften the rules regulating the financial sector.

And Trump’s White House is also taking other steps to ease regulations on Wall Street. The president has already signed an executive order aimed at delaying implementation of Department of Labor rules that prevented money managers from selling high-fee investments that eat into workers’ retirement savings rather than more suitable, lower-cost options. A separate executive order directed the Treasury Department (now run by another former Goldman Sachs trader and hedge fund manager) to look into ways to undo aspects of the Dodd-Frank financial overhaul crafted in response to the financial crisis of 2008.

Trump did sign an order that symbolically pulled the U.S. out of the Trans-Pacific Partnership trade agreement, a campaign pledge that resonated with anti-trade voters. But given that the pact never passed the U.S. Senate, and wasn’t actually in force, pulling out will have little immediate impact on the lives of workers.

Meanwhile, the White House has yet to release any serious plans on a promised infrastructure push that would enable the construction of “new roads and highways and bridges and airports and tunnels and railways all across our wonderful nation,” as Trump said during his inaugural address.

Such a program, depending on how it’s structured, could generate large numbers of jobs, especially for Trump’s political base, which skews heavily toward men without college degrees. But the major announcement of note on the topic has been Trump’s move to put a couple of personal friends and real estate industry associates in charge of overseeing a supposedly $1 trillion infrastructure plan — which has yet to materialize.

Trump could also give the economy a lift through a tax overhaul. But even with the Republicans who control the House and Senate eager to enact some sort of big tax cut, things seem to be getting bogged down. House Republicans are interested in imposing an across-the-board tax on imports — known as a border adjustment — which would likely raise prices for consumers. But the Trump administration has called the idea “too complicated.” The idea has likewise split the business community, with retailers — whose goods are largely made overseas — opposing it and domestic manufacturers supporting it. Nobody knows what the overall tax plan entails, but Trump told retailers earlier this month would be unveiled in the “not-too-distant future.”

Another area with big consequences for the economy is the healthcare sector, which accounts for roughly 18 percent of GDP and employs more than 15 million Americans. Here again, Trump’s path forward has yet to emerge. Throughout the campaign, Trump repeatedly promised to repeal and replace President Obama’s signature Affordable Care Act. Now, any such legislation seems stalled in the Republican-controlled Congress as legislators face the political complexities of unraveling a law that has helped extend healthcare coverage to roughly 20 million Americans.

At the same time, Trump’s highly publicized clampdown on illegal immigration threatens to disrupt other large parts of the economy. For instance, in California’s massive agriculture industry, upwards of 30 percent of workers are undocumented, according to the Center for the Study of Immigrant Integration at USC. And for the country writ large, immigrants and their children will be crucial replacements in the labor force as the baby boom generation continues its wave of retirements. Given that the overall size of the labor force is an important part of the recipe for economic growth, a downturn in immigration could make it much harder to reach the 4 percent growth targets Trump set during the campaign.

The evidence suggests that Trump’s supporters took his claims both literally and seriously. Economic expectations among Republicans have soared since the election. According to Pew Research polling data, some 75 percent of Republicans now expect the economy to be better next year, whereas back in June just 27 percent said that. Meanwhile, economic expectations among Democrats have fallen sharply, a pattern of partisan division that’s emerging in other economic data as well.

“The sharp partisan divide that now dominates consumer sentiment is unprecedented,” said Richard Curtin, chief economist of the University of Michigan’s closely watched survey of consumers. Curtin suggests that eventually, overly optimistic Republicans and overly pessimistic Democrats will be forced to acknowledge that the economy seems to be growing and creating jobs at a healthy, but moderate, rate.  

In fact, the U.S. seems to have some significant momentum, with 76 consecutive months of job growth, an unemployment rate of 4.8 percent, low interest rates and inflation, and an improving housing market.

With those tailwinds, it’s possible that the economy could continue to perform well for a while, even as the Trump administration largely avoids contact with actual economists.

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