Friday, March 31, 2017

Why Trumponomics is so Disappointing

Dom Armentano writes:

[T]he real disappointment, surprisingly enough, is in the area of economic policy, supposedly Donald Trump’s strong suit. Trump and his economic team have yet to put forth an intelligent market-oriented legislative agenda to support candidate Trump‘s promise to “make America great again”. Where’s the beef?

To be sure, there have been some early executive orders that advanced long-debated pipeline construction projects in the U.S. and that rolled back costly EPA regulations which had no definable benefit. Fine. But the bulk of the large and important policy questions have either been addressed incorrectly or have not yet been addressed at all. To wit:

1. While most Republicans are committed to a repeal of the Affordable Care Act, their failed “replacement” bill (The American Health Care Act) was a fatal mix of capitalism and socialism. The good news is that it would have repealed the individual mandate and eliminated a host of medical taxes; the bad news is that it still contained a web of federal regulations such as health insurance mandates and premium price controls which are all incompatible with free and efficient markets. A hopeless mix from the start.

2. Trump’s suggestion of a border adjustment tax (BAT) for imports is economic nonsense of the highest order. Tariffs and taxes on imported goods harm both foreign suppliers and domestic consumers and are unfair and economically inefficient. This dumb and dangerous proposal should never have been floated and should simply go away.

3. The Trump economic team is correct that thousand-page global trade agreements (such as NAFTA) have led to some business and job loss in the U.S. (They have also led to lower prices for thousands of consumer goods). But, at the same time, the Trump team seems hopelessly confused about some aspects of international trade, especially when they condemn the trade deficit...

We are less than 100 days into the new administration and perhaps these critical comments are premature. From a free market perspective, things could improve; yet the theoretical confusion and bumbling start on important economic policies likely portends further difficulties down the road. It’s going to be a very bumpy ride.

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