Neil Buchanan: Trumponomics Is All Fizz and Waffle

09_26_Trump_Waffle_01
A waiter holds a bottle of Trump-branded sparkling wine at the opening of the Trump International Hotel in Washington, D.C., on September 12. Neil H. Buchanan writes that Donald Trump feels that taxes are too high for rich people. And despite all evidence to the contrary, he believes that cutting their taxes will unleash economic nirvana. Kevin Lamarque/reuters

This article first appeared on the Justia site.

Depending on how we count them, Donald Trump has now announced somewhere between zero and three economic policy platforms.

He has never provided a level of detail even close to what would be necessary to make reasonable predictions about how his policies would work.

That vagueness, in fact, is in keeping with Trump’s entirely hostile relationship with facts.

On the other hand, Trump has made a number of speeches that his campaign has touted as big-deal policy announcements. Most recently, he managed to read a speech in New York on September 15 that discussed several economic policy ideas. Was there any actual content to the words that came out of his mouth?

That is not an idle question, because the Trump campaign continues to test the limits of the press’s credulity in covering events that are actually misdirection plays. (Remember his bizarre infomercial masquerading as a victory speech in March, when he touted his branded water, wine and steaks?)

The very next day after Trump’s New York speech, after all, Trump turned what he said would be a major announcement about his “birther” obsession into a half-hour unpaid campaign commercial, made worse by his attempt to create two new lies while smearing Hillary Clinton. As the editorial board of The New York Times wrote, we learned then that Trump was “altering but not abandoning the Big Lie campaign that first made him the darling of wing nuts and racists five years ago.”

We need to bear all of that in mind when we discuss anything that Trump or his campaign says, including economic policy. In addition to having no respect for facts, Trump presents his vagueness on economics (and everything else) as some kind of virtue, because he says that it allows him maximum flexibility to negotiate deals. We are simply supposed to trust him without demanding to know any specifics about his priorities.

Trump’s New York speech was, in fact, another event that was touted as a major policy proposal but that turned out to be a self-serving mess. Indeed, as I discuss below, he could not even keep his new story straight for an entire news cycle before he muddied the waters again.

Readers with long political memories, which in this case means at least six weeks, will remember that Trump also read a speech in Detroit in August that was supposed to be a major policy moment for his campaign. That speech, too, provided a few meager details that had the pundits buzzing for a few days.

The Detroit speech, which I described at the time as a “smattering of loosely related suggestions” rather than an actual policy agenda, was Trump’s first attempt to discuss taxes since last fall. In reviewing those 2015 pronouncements, in turn, I concluded that “it would be inaccurate to characterize what he described as an actual ‘proposal’ or even a ‘plan,’ because such labels suggest a level of detail and careful policy coordination that Trump rejects.”

So, again, we have three instances in which Trump has said something about economic policy that provides a few clues to what his priorities would be as president. Given the vagueness of each of his proposals, however, it might make more sense to try to describe what is different and what is the same across his different announcements as a way to see what matters and what does not matter to him.

Most of Trump’s economic thinking (and I use that word loosely) boils down to an obsession with tax cuts for the rich. Before returning to that topic, however, it is worth noting a few non-tax-related aspects of Trump’s economic priorities.

Trump believes—truly believes—in his magical ability to eliminate “waste, fraud and abuse” in the government, which will supposedly free up all of the money we need to solve every problem.

Even anti-government, anti-spending groups have mocked that idea, with one libertarian advocacy group noting that Trump’s plan to eliminate $3 billion that is supposedly wasted annually on Social Security still amounts only to 0.4 percent of the system’s $900 billion in annual benefits to retirees.

And Trump’s budgetary magical thinking is hardly limited to Social Security. He attempted last week to appeal to white suburban women by proposing a paid-leave program for new mothers.

Most of what was objectionable about his proposal had nothing to do with the dollars and cents, of course. In particular, he channeled his 1950s-era sexism by limiting the program to mothers—but only birth mothers, because family leave is really just a physical recuperation period, in Trump’s narrow view.

Even so, the question of paying for that minimalist program was interesting in its way, because it found Trump again relying on the waste/fraud/abuse meme. This time, because he plans to use the unemployment insurance system to administer the program, he needed to say that there was plenty of money there just waiting to be un-wasted.

To be clear, Trump is hardly the only Republican to claim that the government is uniquely wasteful and that it is thus an endless source of free money for everything else. When House Speaker Paul Ryan was the chair of the Ways and Means Committee, for example, a report from his majority staff tried to claim that slashing the IRS’s budget was similarly not a problem, even though all of the supposed waste that the report identified was not enough to make up for those crippling budget cuts.

It should hardly be a surprise that these waste-cutting expeditions so frequently turn up empty. Notwithstanding Republicans’ claims that Democrats are somehow waste-loving spendthrifts, Democrats have every incentive to stretch every dollar to solve the problems that they care about. It makes sense, therefore, that programs like Social Security are so efficient. For different reasons, everyone wants them to pinch pennies.

For decades, therefore, both parties have been scrutinizing government agencies’ budgets, looking for all of that elusive free money. Not only is the low-hanging fruit gone, but the trees are bare. In Trump’s view, however, none of that matters, because apparently only he has the ability to knock heads together and force those feckless bureaucrats to cough up the dough.

Still, it is notable that Trump wants to spend money that other Republicans would not spend. Of course, he also wants to spend much, much more money on the military, deportations and a border wall. Most of the people in his party are on board with all of that, however.

A bigger departure for Trump is his view on infrastructure spending. Hillary Clinton, in her characteristically cautious way, has proposed an increase in spending on roads, bridges and other public works projects of $275 billion over five years.

Her proposal includes full funding for the project from a progressive tax increase, even though public infrastructure is the classic example of government spending that can responsibly be financed through borrowing. Clinton does not want to be accused of increasing the deficit, however, so she fully finances the plan on an ongoing basis.

What makes a $275 billion spending plan “cautious” is that the American Society of Civil Engineers, which has been tracking our underinvestment in infrastructure for years, estimates that we would need to spend $3.6 trillion by 2020 simply to bring existing structures up to acceptable levels of safety. Clinton proposes to spend less than 8 percent of that amount.

Surprisingly, Donald Trump has decided to run to Clinton’s left on this issue, promising a plan that is twice as large as Clinton’s (but still woefully short of what we really should be spending). Trump actually agrees that the government should spend more money on this crying public need. That must be better, right?

Not really. There is not a chance in the world that Republicans in Congress would approve a large increase in spending, especially for projects that are likely to employ large numbers of unionized workers. They would never even pass Trump’s misbegotten maternity-leave plan, much less something much larger. And Trump has given us no reason to believe that he would fight for that money. It simply is not part of what he cares about.

Beyond government spending, Trump has been consistent in his claim that regulations of all sorts must be reduced, which means that we could count on him to join Republicans in cutting enforcement of environmental laws and workplace and consumer safety rules.

He also hates financial regulation, so he would return us to the days before the 2008 financial crisis, when Wall Street engineered the worst economic disaster since the Great Depression.

And for good measure, Trump is now spinning conspiracy theories about the Federal Reserve. Like so much else in his worldview, however, he cannot decide from day to day whether he likes the Fed’s policies or not. But he certainly thinks that they are plotting against him.

Which brings us back to the centerpiece of Trump’s economic policy pronouncements, which is and has always been about tax cuts for rich people.

He is still fully committed to huge regressive tax cuts, with his latest proposal set to cost about $4.5 trillion over 10 years—although with so many missing pieces in his supposed proposals, those estimates must be viewed with even more than the usual amount of skepticism accompanying long-term economic forecasts.

Trump’s New York speech this month, however, purported to make a few tweaks to his earlier trickle-down “plan,” in particular eliminating an egregious loophole that would have allowed business owners to pay much less in taxes than people with similar incomes who happen to work for someone else.

Only hours after making his speech, however, Trump’s campaign told a lobbying group for small businesses that he was still in favor of the giveaway (which would cost at least $1 trillion over 10 years, and probably a lot more). Amazingly, however, Trump’s people simultaneously told a conservative think tank that estimates the cost of tax proposals that he was not in favor of the giveaway.

As an economics columnist for The New York Times put it simply: “Call it the trillion-dollar lie: Both assertions cannot be true.”

Therefore, we can see two things that are the same across Trump’s tax proposals. He is consistently in favor of regressive, trickle-down tax cuts that would primarily benefit people like him. And he is consistently unwilling to stick to any of his proto-proposals long enough, or with enough specificity, for people to say anything about them other than “Boy, that’s a lot of money to be redistributing upward!”

Trump’s economic policy pronouncements, therefore, continue to be more about feelings than about facts. He feels that there is a lot of government waste, and that he alone can find it and eliminate it.

He feels that the 1950s were the best time in America, notwithstanding the reality for women and minorities (and the environment, and workers in dangerous jobs, and consumers who bought dangerous products).

Trump also feels that Wall Street will do the right thing, and that the Fed will do the wrong thing (even when it is doing what he says he wants).

Most important, Trump feels that taxes are too high for rich people. And despite all evidence to the contrary, he believes that cutting their taxes will unleash economic nirvana.

And if he were elected president, but none of Trump’s feelings turned out to be true? We know how he would feel about admitting that he had made a mistake. He would never agree to undo his errors, because he feels that he never makes errors. That is a dangerous mind-set for a president.

Neil H. Buchanan is an economist and legal scholar, a professor of law at George Washington University and a senior fellow at the Taxation Law and Policy Research Institute at Monash University in Melbourne, Australia. He teaches tax law, tax policy, contracts and law and economics. His research addresses the long-term tax and spending patterns of the federal government, focusing on budget deficits, the national debt, health care costs and Social Security.