The Wall Street Journal has just confirmed that Donald Trump’s economic plans if adopted the way he wants them, are little more than a recession waiting to happen. Not overnight, but by 2026 this report shows that should Trump’s America happen, it is going to hurt.
The most painful Trump effect of all may be on our economy.
Moody Analytics, who have correctly predicted the outcome of every election since 1980, has done the first quantitative analysis of the giant hodgepodge of disastrous ideas that comprise Trump’s “economic plans.”
They reached 4 basic conclusions regarding the “basic economic impact of” Trump’s plans:
1) they will result in a less global U.S. economy
2) they will lead to larger government deficits and more debt
3) they will largely benefit very high-income households
4) they will result in a weaker U.S. economy, with fewer jobs and higher unemployment.
Their analysis is, of course, is disputed by Trump insiders because the loss of 3.5 million jobs before (like the analysis predicts should Trump get his way) is a horrifying probability. That same insider says that Trump will be clarifying these plans soon.
According to the WSJ:
The Moody’s Analytics report, which a person close to the Trump campaign strongly disputed, is the first that attempts to quantify the cumulative economic benefits and costs of Mr. Trump’s proposals on taxes, trade, immigration and spending. It determines that full adoption of those policies would sharply reduce economic output during his first term and reduce employment by 3.5 million jobs.
Moody’s is clear that Donald Trump’s campaign’s absolute lack of specificity made this quantification difficult, so to fill in the gaps they used conversations with “some of those working on economic policy for the Trump campaign.” This clearly would make Moody’s analysis of Trump’s economic plans the clearest representation of it in any sense, and therefore its conclusions the most damningly accurate of any interpretation thus far of the results of such policies being enacted in the USA.
Trump’s proposals will result in an “increased debt load” and “larger federal deficits.” According to the report, Trump proposes both large tax cuts on businesses and personal incomes and an increase in spending for veterans benefits. That, plus his stated position that he won’t cut medicare or entitlements spending will require government borrowing to cover costs.
Trump’s campaign insider quoted by the WSJ claims that the tax cuts will stimulate the economy. However, regardless of the number of times a Republican says cutting taxes stimulates the economy, we still have Kansas and California to look at, proving cutting taxes kills economic growth and responsible taxation aids it.
Trump’s isolationist policies, which will result in loss of trade and immigration, two things that feed our economy with “direct foreign investment” which will be reduced as well. The direct result of pulling back from the global economy, according to this report, is that our Nation’s economic growth will be “diminished.”
From the Moody’s report:
Driven largely by these factors, the economy will be significantly weaker if Mr. Trump’s economic proposals are adopted. Under the scenario in which all his stated policies become law in the manner proposed, the economy suffers a lengthy recession and is smaller at the end of his four-year term than when he took office (see Chart). By the end of his presidency, there are close to 3.5 million fewer jobs and the unemployment rate rises to as high as 7%, compared with below 5% today.
This is not a pretty picture, not at all.
Moody’s did take three scenarios into account, and the above represents Trump’s plans being enacted as he has stated them, taken at “face value.” There are two other scenarios and Moody’s openly states that all three result in “diminished economic growth.” Their best case scenario in which Trump’s plans are “scaled back and adjusted in response to political realities” could avoid actually causing another recession but will still slow economic growth.
According to the WSJ:
The Moody’s analysis outlines two other scenarios that show more muted effects on the economy, assuming that Mr. Trump’s proposals are slimmed down, either voluntarily or as a result of legislative negotiations. Under the latter model, Moody’s assumes the tax cuts are whittled down sharply and that a trade war with China and Mexico is averted. The result is slower economic growth but not a recession.
The takeaway here is that the more of Trump’s actually stated plans that become reality, the worse it is for America.
You can also expect that taking this analysis into account, when Trump decides to “clarify” his economic plan, the words “huge”, “beautiful”, “great” and “best,” will all feature prominently.
Featured image via screen capture