The president hopes Americans focus on his economic record but it is nothing to celebrateby Paul Wallace / November 3, 2020 / Leave a comment
Americans voting in the presidential election are passing judgment on many things. The one that Donald Trump has long wanted them to focus on is his handling of the economy over the past four years. Opinion polls have suggested he is right to see this as his strong card even though the pandemic has wreaked so much economic damage. But what will be the verdict of historians?
A starting point is that there is no such thing as “Trumponomics,” a term that suggests a coherent economic rationale. To the extent it means anything, it is a disorderly medley of populist and nationalist instincts defined as much by what Trump is against as what he is for. At home that has brought deregulation, especially of environmental standards, and a readiness to take risks with the public finances. Abroad, it has meant abandoning America’s traditional role as the anchor of a rules-based international economic order through trade wars and the undermining of the World Trade Organisation.
On Trump’s “to-do” list the president can tick various successes, by his reckoning. A hallmark measure at home was the big package of tax cuts that he pushed through in 2017. This had some merits, especially in lowering America’s overly high corporate tax rate (reducing the top rate from 35 per cent to a single rate of 21 per cent). But it especially rewarded the better-off and worsened the long-term outlook for the public finances, increasing the budget deficit by $1.5 trillion over ten years according to estimates at the time. The giveaways provided a fiscal stimulus to the economy but not one that it needed, since growth was already respectable.
Trump has also reset America’s economic relationship with China in a way that looks set to endure. The era of collaboration when US firms routinely outsourced production to low-cost Chinese manufacturers has ended. Supply chains are starting to be reorganised as American businesses seek to reduce their reliance on a country now regarded as a technological rival.
But if Trump has undoubtedly left his mark, he has also failed in much of what he has sought to achieve. At home for example, the coal industry he pledged in 2016 to revive has continued to decline despite deregulatory support, showing that there is no…