I provided an overview of Trumponomics two years ago for this publication. With a presidential election in November and hopes of a V-shaped economic recovery from the coronavirus lockdowns prior to then, it is an opportune time to revisit this. Let’s first look at what has been and then what could be.
As I originally wrote, Trumponomics is not associated with one school of thought like Reaganomics was. The former being: “an eclectic mix of mainly free market[s] with a significant dash of central plann[ing].” I also wrote at the time that there are “seven pillars” but it was more like ten or even more.
What has been in Trumponomics 1.0 is, thus, summarized as follows:
- Constitution: The judiciary plays a “yuge” role in the interpretation and operation of this and to the broader rule of law that is essential for any economy. The actions here included appointing two literalists to SCOTUS and almost two hundred to the circuit and district courts.
- Tax: As the Laffer Curve has shown time-and-time again, both a robust economy and a sustainable budget need a low tax burden. The actions here included removing the disincentive against state and local tax competition plus reducing the corporate tax rate from 35% to 21%.
- Obamacare: This socialist approach has unsurprisingly failed by raising premiums and the uninsured instead of reducing these. Despite the GOP-controlled House being ‘all talk and no action’ from 2011 to 2019, there was the action here of repealing the individual mandate.
- Energy: As legendary economist Julian Simon once said: “Energy is the master resource.” The actions here included getting government out of the way of oil and gas fracking and pipelines plus ending the Obama-Biden EPA’s and Paris Agreement’s ‘war’ on coal-fired electricity generation.
- Regulations: CEI has written that: “Each U.S. household’s estimated regulatory burden is at least $14,615 annually on average [which] amounts to 20% of the average pre-tax household budget and exceeds every item in that budget, except housing.” The actions here included, instead of 2 for 1, 22 regulations were eliminated for every 1 new regulation.
- Infrastructure: American infrastructure is often characterized as “crumbling” or “D-grade”. The presidential plan here has a price tag of $1 trillion, which included $100 billion designed to encourage non-federal funding and financing, as well as a streamlined environmental approval system and comprehensive regulatory reform.
- Trade: The president has long highlighted “losing at trade” as indicated by persistent trade deficits with countries like Mexico and China along with “bad” multilateral trade deals like NAFTA and WTO. The actions here included 25% and 10% tariffs on steel and aluminium imports, renegotiation of NAFTA and withdrawal from TPP, as well as lots of new bilateral trade agreements.
- Immigration: Mass immigration (legal or illegal), along with big government spending and easy money, have been the main staples of lazy and dishonest policy (by left and right) for decades in order to artificially raise GDP. This statistical measure is composed of private plus public spending as well as price times quantity (P x Q). Government spending strongly impacts on P x Q, money on P and immigration on Q. Immigration actions included starting to “build the wall”, ending “catch and release” and unleashing ICE.
- Spending: The 2018 Congressional spending bill was worth $1.3 trillion. It was signed by the president but he warned of never signing another bill like this again and called for line-item vetoes.
- Money: The president has been a vocal critic of the usually untouchable Federal Reserve (The Fed), but an inconsistent one in terms of, at times, wanting higher interest rates (i.e. less money printing) and, at other times, wanting lower interest rates (i.e. more money printing).
Further strengthening free markets whilst weakening central planning in Trumponomics will pretty much ensure, and not just increase hopes, for both a V-shaped economic recovery from the coronavirus lockdowns as well as a ‘Red Wave’ in November’s elections.
What could be in Trumponomics 2.0 is, therefore, highlighted next:
- Constitution: Despite the likely unconstitutionality of some lockdown measures, greater state and local independence and competition should be allowed and encouraged along with “draining the swamp” of the “alphabet soup” of “deep state” agencies and “regulatory dark matter“.
- Tax: Federal corporate, business and individual tax rates need to be dramatically reduced below the OECD average along with drastically simplifying tax laws, codes and regulations.
- Obamacare: This needs to be repealed and replaced. But the replacement needs to be free market oriented and ready to go first, unlike in 2017. The key is private sector choice and competition.
- Energy: The power and growth of the federal energy and environment bureaucracies should be audited, slowed, stopped, reduced and retired over time in order to further release private energy.
- Regulations: The ‘high hanging fruit’ regulations should be reformed and removed, with the focus being on replacing high-price government regulating with low-price competition regulating.
- Infrastructure: There is no need for federal, state or local government provision, funding or finance given economics, and the experience of Australia, show these monopolies are not natural.
- Trade: There hasn’t been much genuine free trade since before WWI, including under the corrupt WTO nor with the re-communizing China. Blow it all up, and build up the more reliable Anglo-sphere and a new and broad Liberty-sphere.
- Immigration: No more open-borders immigration, illegal and legal, until Welfare Socialism and Crony Capitalism have been minimized along with restoring the rule of law and property rights.
- Spending: The goal for many in the GOP of a balanced budget is at best of secondary importance compared to slashing spending on empire-building, monopoly-creation and work-disincentives.
- Money: The most important commodity in any economy should no longer be enslaved by a government-backed cartel run by The Fed which regularly fuels inflationary bubbles and busts.
In conclusion, Trumponomics 1.0 wasn’t perfect but the best we have seen since the days of Reagan and Thatcher in the ’80s or Clinton and Gingrich in the ’90s. But in the wake of the coronavirus lockdowns, Trumponomics 2.0 cannot just be a statist evolution from 1.0 but needs to be a liberty revolution. Given that, 2016’s “Make America Great Again” should not just evolve to 2019’s “Keep America Great” but transform into 2020’s “Reopen America Again“. And not just re-open from the many ‘temporary’ coronavirus lockdowns, but re-open from the plethora of ongoing free-market lockdowns.