Economy & Business


Container ships at the Port of Newark, 2012. (Eduardo Munoz/Reuters)

Donald Trump gave a speech on his economic agenda to the Economic Club of Detroit. It was heavy on anti-trade invective and high-fructose promises, but there were parts that deserve encouragement and support, too.

The best of Trump’s economic agenda has little or nothing to do with taxes, trade, or spending, but with energy production. Citing the Obama administration’s so-called clean-energy policies and Hillary Rodham Clinton’s promise to continue President Obama’s merciless war on coal producers and consumers, Trump vowed to seek regulatory reform that would “unleash an energy revolution.” Some of the promised benefits of that revolution are wildly optimistic — Trump spoke of adding 500,000 new jobs annually from energy-industry reforms, which seems unlikely — but in fact “revolution” would not be too strong a word for the likely results of unshackling U.S. energy producers. Trump is correct that the energy industry is not a standalone factor in the U.S. economy, but is a critical buttress of the manufacturing, chemical, agricultural, and heavy-industrial sectors, too.

We’d feel a great deal better about his energy agenda if Trump hadn’t recently expressed sympathy with the Tom Steyer–backed initiative to ban hydraulic fracturing in Colorado. It will be difficult to secure the fruits of a 21st-century energy revolution if we mandate 19th-century extraction practices.

Energy is an important driver of the U.S. economy. So is trade, and on trade, Trump promises nothing less than chaos. He threatens to pull out of the North American Free Trade Agreement, which has contributed both to employment and to economic growth in the United States. It is a critical factor in states such as Texas, where manufacturing and service businesses do substantial business in Mexico. Here, Trump’s usual weakness — his shallowness — is on unfortunate display. He notes that before NAFTA, there were 285,000 autoworkers in Michigan, whereas today there are only about 160,000. But the U.S. automotive industry is in fact thriving, creating thousands of high-wage jobs — but not in Michigan. Detroit is a lost city, a monument to progressive misgovernance, and while Michigan has made some strides in the right direction — including the passage of a right-to-work law, a milestone achievement for which Governor Rick Snyder has received insufficient credit — years of domination by the United Automobile Workers union and its allies have taken a toll. Americans still build great cars, but they build them in Texas and Alabama, not in Michigan. Rather than threaten to disrupt international trade relations over fictitious Mexican trade buccaneering, Trump would do better to notice that many of the high-end vehicles U.S. autoworkers are building today say “Mercedes” and “Toyota” on the back, and work to strengthen those trade relations. Beyond that, Trump — and the rest of the trade critics — should turn their focus from highly visible consumer goods to capital goods and industrial supplies, which account for two-thirds of U.S. exports: You don’t come to American firms if you want somebody to sew a pair of sneakers — you come to American firms if you want to build a sneaker factory.

On taxes, Trump offers an incoherent program, a dog’s breakfast of proposals obviously engineered with an eye to nickel-and-diming his way to victory. For example, his proposal to create a 100 percent deduction against taxes (rather than taxable income) for money spent on child care will be welcome news to Manhattan families with expensive nannies and to baby-sitters from coast to coast, but it is a terrible policy that will prove very expensive and will provide an economic incentive for outsourcing parenting duties rather than having them done by parents. His proposed simplification and reduction of the federal income-tax brackets is welcome, but it would be much better if that proposal were accompanied by a serious plan for reducing spending proportionately. It isn’t, and his reliance upon the mantra of “waste, fraud, and abuse” — the habitual incantation of the cowardly Washington careerists Trump sneers at — points to a deep and dangerous unseriousness about reducing deficits.

Economic programs offered in presidential campaigns are like battle plans in that they very rarely survive their first contact with reality. But they do speak to a candidate’s understanding of the issues, to his approach to economic questions, and to his view of the proper role of the federal government in economic affairs. Trump’s habitual populism leaves him disinclined and ill-positioned to make difficult decisions, and his neo-mercantilist disposition inclines him to blame the necessity of negotiating painful tradeoffs on enemies foreign and domestic, whether in Mexico City or on Wall Street. A simplified tax code and an energized energy sector would indeed be welcome and profitable, but that Trump has the seriousness or the political capacity to get from here to there is far from obvious.


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