What a Trump presidency could mean for infrastructure, taxes, and tradeby George Magnus / January 24, 2017 / Leave a comment
Speculation about the economic policies of a Trump Administration has been “hot” in financial markets since the end of last year, but for most folk the serious discussion starts now that the president is in the White House. Well it would, if Steven Mnuchin, his nominee for Treasury Secretary, had been confirmed.
Or Mick Mulvaney, his nominee for Budget Director. Or a slew of other nominees for posts at the Departments of Transportation, Energy, Housing, Health, Labour, Commerce and Trade among others. Most, if not all, though, will gradually slot into place and before long, the new US government will articulate a plan for the economy which will have to fuse with plans originating in both Houses of Congress. But we can already reflect on what so-called Trumponomics is going to look like—especially given that Trump yesterday pulled the US from the Trans-Pacific Partnership.
Then look at what the president said in his inaugural address. He promised: “we will build new roads and highways and bridges and airports and tunnels and railways all across our wonderful nation. We will get our people off welfare and back to work, rebuilding our country with American hands and American labour.” He also (now famously) said that “protection will lead to great prosperity and strength.” The White House website, updated as soon as the inauguration was over, also mentions cutting taxes for all individuals and companies, along with deregulation to relieve the alleged $2trn cost of regulations to the American economy in 2015.
There will be controversy around many of these issues—and others. The three most important from a macroeconomic standpoint are infrastructure, taxes, and trade.
“We need more—and better—infrastructure” is, in principle, a position most people will agree with. Infrastructure creates jobs; integrates businesses, communities and regions to produce so-called economies of scale; and “should” generate its own momentum of renewal and maintenance. In the US, as elsewhere, infrastructure investment has been neglected, and so here, the Trump presidency is tapping a potentially rich vein. Trump’s list of what comprises infrastructure is fair. But there are newer, potentially productive projects in the highway, energy and broadband systems that derive from fast-changing developments in, for example, driverless cars, energy storage and transmission, and communications technology.
The questions for the US government are whether it will have the vision to…