In Part I of this series, I reviewed the economic plan of Hillary Clinton. (Clinton v. Trump Economic Plans – Part I) Today I will review the economic plan of Donald Trump.
The Trump Plan
Donald Trump first revealed his plans for the economy in a speech given in Detroit on August 8th. Recently he provided more information in a speech to the New York Economic Club. In contrast to the plan of Hillary Clinton, Trump’s plan is all about providing incentives for private investment, economic growth, and job creation.
Fred Barnes, writing in The Weekly Standard, reviewed the Clinton plan last post. Barnes says the Hillary plan would provide zero incentives for growth and rely on government spending to generate jobs, a policy that has never produced a robust economy. The Trump plan, however, according to Barnes, “worked brilliantly for Presidents Kennedy and Reagan.”
Barnes notes there is a special link to President Kennedy since it was at the same New York Economic Club where Kennedy announced in 1962 his sweeping, across –the- board tax cuts to jolt the sagging economy. Under the Kennedy tax cuts the economy boomed.
As a result, reducing individual tax rates became the model, as Lawrence Kudlow and Brian Domitrovic write in their new book, JFK and the Reagan Revolution. Congressman Jack Kemp later developed the Kemp-Roth tax cuts in the 1970s to match those of Kennedy. Then Reagan followed Kemp’s lead. Now it’s Trump’s turn.
While House Speaker Paul Ryan and Trump may have some differences, on the issue of tax cuts they are in agreement. Trump told the Economic club, “My plan will embrace the truth that people flourish under a minimum government burden.”
He went on to promise growth of 3.5 – 4.0% and 25 million new jobs over the next decade. This is roughly double the economic growth of the last eight years under President Obama. Here’s more of Trump’s speech:
“If we lower our taxes, remove destructive regulations, unleash the vast treasure of American energy, and negotiate trade deals that put America first, then there is no limit to the number of jobs we can create and the amount of prosperity we can unleash.”
The Trump specifics include reducing the seven current income tax brackets to just three: 12, 25, and 33 percent. The corporate tax rate would fall from 35% (highest in the world) to 15%. Furthermore, companies with overseas profits would be able to repatriate those profits at 10 percent.
The Wall Street Journal editorial board says Trump would also introduce a new cap on deductions of $100,000 for single filers and $200,000 for couples. They consider this shrewd politics because it means not going to war with every pressure group that lives off loopholes and yet it helps make the fiscal math work. Although they consider the 33 percent top rate still too high, it’s in keeping with the Ryan plan put forth by House Republicans in their proposed “Better Way” legislation.
To be sure, his recent call for a new entitlement for child-care tax credits and deductions is a contradiction in this otherwise conservative fiscal plan. But it may represent good politics as it tries to win the votes of young women like his daughter Ivanka Trump, who convinced him to offer this idea.
Clearly the Trump plan is a step in the right direction after eight years of economic stagnation under President Obama. With Hillary’s plan a virtual continuation of the Obama economics, it’s time for a change that actually works.
Trump repeated at the Economic Club a statement he first made in Flint, Michigan. “It used to be cars were made in Flint and you couldn’t’ drink the water in Mexico. Now the cars are made in Mexico and you can’t drink the water in Flint.”
What better evidence of the need for a change to lift our economic future?