By Nehad Ismail.
Donald Trump’s inauguration speech was full of inaccuracies and wild assertions. They can be easily refuted by facts and statistics. He painted a misleading and gloomy picture of life in the U.S. High unemployment and ‘carnage’.
According to the New York Times the following day the number of people receiving federal Temporary Assistance for Needy Families benefits fell by more than 70 %, to 1.2 million, between 1996 and 2016.
The unemployment rate has fallen from 10% in 2009, the height of the recession, to under 5% by 2015.
Mr. Trump also claimed that jobs are going overseas and factories are closing. Wrong again. Production jobs have fallen by about five million since 1987, but he did not say, or perhaps even know, that the country’s manufacturing output has increased by more than 86% according to the Bureau of Labour Statistics.
Last year Candidate Trump declared two major policy strategies. Both may have bad consequences. First was his tax-cutting policy, and second was tearing up trade agreements with China and Mexico.
This week January President Trump signed an executive action to withdraw from the negotiating process of the TPP – Trans-Pacific Partnership, in effect declaring war against the WTO and globalisation.
Tearing up trade deals like NAFTA the North American Free Trade Agreement and TPP will not create jobs in the US nor lead to prosperity and economic growth. It just reduces the US global economic and political leverage. Most economists agree that Trump’s threat to impose big tariffs on China and Mexico will backfire. If Trump had studied the causes that led to the crash of the late 1920s, he wouldn’t have threatened to impose higher tariffs on imported goods.
It is true that trade with China cost the U.S. about a million factory jobs from 2000 to 2007, according to one recent study. However, automation and increased efficiency is a larger reason why factory employment has declined. American industrial output is actually at the highest level in history. Doesn’t he realize that that US influence is greatest when it works with other nations in an open and free world economy rather than when it shuts itself off behind nationalistic rhetoric?
Here we have the leader of the most powerful capitalist state in the world promoting protectionism and isolationism yet without presenting a coherent fully detailed and costed plan for close scrutiny.
In August last year the Economist reported “Mr Trump vowed to boost growth by tearing up federal regulations—particularly those regulating carmakers and energy firms. He promised a moratorium on new rule-making by federal agencies.”
During his election campaign Trump promised huge tax cuts to stimulate economic growth. Steve Mnuchin told Senators at his confirmation hearing, “I think we want to make sure that tax reform doesn’t increase the deficit.” Most economists believe that the deficit will increase.
It is known historically the Republican Party has been in favour of lower taxes because they believe it spurs economic growth and household spending. Analysts think the Trump’s tax plan will create a deficit in the range of $2.6 trillion to $10 trillion according to Moody’s calculations. The right wing “Tax Foundation” believes that Trump’s tax plans will boost annual GDP growth by up to 2.7% over 10 years.
Trump also promised big cuts in the budgets of government departments such as theEnergy and the Food and Drug Administration, but this will be more than offset by higher spending on defence estimated at $950 billion Alternatively Trump might finance his tax cuts by borrowing which will add $14 trillion to the federal debt. So there is no easy fix. Every action has ramifications most of which are negative.
Of course with a Republican dominated congress, Trump may get his wishes translated into action whether we are talking about tax cuts or increased military spending.
During the election campaign we heard a lot from Trump about re-building the decaying infrastructure. However spending on infrastructure will take time to feed through. The Trump camp talks about more loose fiscal policy and a tighter monetary one. How can you reconcile the two?
The new Trump White House has now released its “America First Energy Plan” saying the U.S. must take advantage of its $50 trillion in untapped shale oil and gas reserves, especially on federal lands and to free the US from dependence on imported oil.
The plan promises to eliminate “harmful and unnecessary policies such as the Climate Action Plan and the Waters of the U.S. rule.”
The natural gas industry is likely to benefit from deregulation, of federal restrictions on methane emissions. However, a natural gas industry facing lower costs will keep prices low, undermining Trump’s campaign promises to help the coal industry.
However Trump believes the shale oil and gas revolution will bring jobs and prosperity to millions of Americans. It doesn’t add up.