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Donald Trump has had a lot of success in business, but how would he be for the economy as president? Here's how his economic policies would play out.

This story was originally published in October 2015. With Election Day almost here, it's worth taking another look at what the U.S. economy may look like under a President Trump. Also, check out our Donald Trump Stock Portfolio, which we'll be tracking until November 8. The sections below on immigration, taxes and trade have been updated.

There's no denying Trump has done a good job of making himself rich -- he's worth somewhere between $4.5 billion and $10 billion, depending who you ask. Can he make the rest of America rich, too?

The economy isn't something Trump looks forward to tackling. In a January interview with "Good Morning America," Trump offered up a bleak assessment of the U.S. economy but added that, in terms of fixing it, it's a task he'd rather skip.

"We're in a bubble," he said. "And, frankly, if there's going to be a bubble popping, I hope they pop before I become president because I don't want to inherit all this stuff. I'd rather it be the day before rather than the day after, I will tell you that."

In an April interview with the Washington Post, Trump reiterated his doomsday view of the economy, suggesting we might be headed for recession. But this time around, he appeared more open to the idea of his being in charge of finding remedies. "I can fix it. I can fix it pretty quickly," he said. And most recently, he maligned the Federal Reserve for creating what he says is a "false economy."

Many Americans appear to believe that is the case and that, more broadly, a Trump presidency would be good for the economy. According to a March CNBC All-America Survey, Americans rate Trump and Democratic frontrunner Hillary Clinton evenly on key economic issues. And a recent CNN/ORC poll shows Trump rating higher than Clinton on the economy among voters.

Trump has certainly been this election cycle's most riveting figure. He initially focused his attention on immigration reform, calling for a wall to be built between Mexico and the United States and demanding the deportation of 11 million undocumented immigrants. He has wavered on that last point as of late

He has since rolled out other policies and positions: a major tax code overhaulrepeal and replace Obamacarerenegotiate or "break" NAFTA; stop hedge funds from "getting away with murder" on taxes; reforming the Veteran's Administration; and impose import tariffs as high as 35%. All while keeping the deficit in check, growing the economy and leaving entitlement programs like Medicare and Social Security untouched. Immigration remains a major pillar of his campaign, and he has moved on to the question of Muslim immigration as wellHe has laid out a plan to make Mexico pay for the wall, too.

Trump has made plenty of enemies along the way as well, including but limited to fellow GOP contenders Ted Cruz and Jeb Bush, New York Mayor Bill de Blasio, Fox News journalist Megyn Kelly, the media in general and even the Pope.

 

Those who fear Trump's plans should find common cause with those who love them: "I'm not sure how much of what he actually says today will be his positions a year from now," said Michael Busler, professor of finance at Stockton University.

Trump's own campaign has suggested he is playing "a part" to garner votes.

While Trump certainly has some grandiose ideas -- and equally lofty rhetoric to accompany them -- deciphering the exact nature of his economic policies is a complex task, according to John Hudak, a fellow in governance studies at Washington, D.C.-based think tank the Brookings Institution.

Not to mention the fact that if he does make it to the Oval Office, Trump won't have a free pass from Congress, even if it remains under the control of the Republican Party (as you'll see, many of his positions don't exactly hew closely to GOP policies).

Taking legislative hurdles out of the equation, what will the U.S. economy and markets look like if Trump becomes No. 45.

Trump's Expensive Immigration Plan

Trump's immigration plans cost him a handful of business deals, but they might cost the United States much more.

The American Action Forum, a right-leaning policy institute based in Washington D.C., estimates that immediately and fully enforcing current immigration law, as Trump has suggested, would cost the federal government from $400 billion to $600 billion. It would shrink the labor force by 11 million workers, reduce the real GDP by $1.6 trillion and take 20 years to complete (Trump has said he could do it in 18 months). 

"It will harm the U.S. economy," said Doug Holtz-Eakin, president of the American Action Forum and chief economic policy adviser to Sen. John McCain's 2008 presidential campaign. "Immigration is an enormous source of economic vitality."

The impact would be felt on both supply and demand.

A number of industries that depend heavily on cheap immigrant labor would be devastated -- especially agriculture. "There would be an abrupt drop in farm income and a sharp rise in food prices," said John McLaren, professor of economics at the University of Virginia with expertise in international trade, economic development and the political economy.

Companies that sell to the immigrant population would be affected as well, leading to decreased revenues for local businesses and a loss of American jobs.

"Immigrants, whether they are legal or illegal, always spend a portion of their earnings in the location where they have their jobs," McLaren said. "And in a lot of our urban centers, this is actually an important part of the economy."

He pointed to the case of Postville, Iowa, where in 2008 U.S. Immigration and Customs Enforcement (ICE) raided a slaughterhouse and meat packing plant, detaining 389 undocumented workers (and jailing 300 of them). The raid caused most of the more than 1,000 immigrants not caught to leave the town of 2,300, devastating the local economy in the process.

He also noted his own research, which suggests each immigrant creates 1.2 local jobs for local workers, most of which go to U.S. natives. "Obviously, those jobs would disappear if the undocumented were just yanked away," he said.

It is worth noting that Trump appears to have backed away from his mass deportation stance slightly as of late, outlining priorities that would lead to the deportation of what The Washington Post estimates would be 5 million to 6.5 million immigrants. He has warned, however, that "anyone who has entered the United States illegally is subject to deportation."

Trump has also discussed reducing the number of jobs held by legal immigrants, namely by increasing the prevailing wage requirements for H-1B visas (visas that allow U.S. employers to recruit and employ foreign professionals) -- an element of his plan that is often overlooked. The Republican contender's thesis is that doing so would force companies to give jobs to domestic employees instead of overseas workers. The maneuver would benefit some, but not most.

"If I'm an American software programmer, I probably would benefit somewhat from making it harder for highly-skilled software programmers from elsewhere," McClaren said. "It's really hard to argue that the country, as a whole, benefits from that. It would be bad for most Americans, and it certainly would be bad for corporations."

An extreme anti-immigration policy could also cause collateral damage to the American image. "What's the American brand after we've rounded up 11 million people and sent them packing?" said Jim Pethokoukis, a columnist and blogger at the American Enterprise Institute, a center-right think tank based on Washington, D.C. "Do people still view America the same way?"

Perhaps it's a good thing the real estate magnate's immigration plans are essentially impossible to implement

Tax Cuts for Everyone, and Deficits, Too

Trump's tax plan, unveiled in September, is perhaps the most detailed proposal he has put forth yet. It essentially entails implementing tax cuts across the board and literally sets forth a scenario in which the lowest earners get to send a form to the IRS reading, "I win."

 

"His tax plan is one of the most dynamic and pro-growth tax plans out there," said Merrill Matthews, resident scholar at the Institute for Policy Innovation, a Texas-based, right-leaning think tank. "You would find a huge amount of new business investment and companies willing to put their money out there to begin growing the economy."

Trump's tax plan stacks up fairly well against his fellow Republican presidential contenders. It isn't as drastic as proposals put forth by Ted Cruz and Ben Carson but does, like most GOP tax structures, favor the rich. Perhaps the biggest distinguishing feature of Trump's proposal is his hard cap on business taxes at 15%, which might be especially appealing to freelancers and the self-employed.

But there's a catch: Trump's tax plan would reduce revenue enormously, and the federal budget deficit would almost inevitably skyrocket.

Nonpartisan tax research group the Tax Foundation calculates that Trump's plan would cut taxes by $11.98 trillion over the course of a decade. It would lead to 11% growth in the GDP, 6.5% higher wages and 29% larger capital stock as well as 5.3 million jobs. However, it would also reduce tax revenues by $10.14 trillion, even when accounting for economic growth from increases in the supply of labor and capital.

"That tax cut would produce faster economic growth and a bigger economy -- as long as you pay zero attention to the fact that it would dramatically increase the deficit and budget debt," said Pethokoukis.

Trump in August adjusted his platform, calling for a top income tax rate of 33% rather than a past plan for 25% as well as the full expensing of capital investment and a deduction for childcare costs. The Tax Foundation notes that the change will reduce the revenue loss from his original plan, but it will depend significantly on how wide the new bracket thresholds are. 

Trump has promised to reduce spending, though he hasn't explicitly said how. Moreover, he has said he will maintain entitlement programs like Social Security and Medicare, two of the costliest parts of the federal budget.

"It reduces federal revenue by maybe a quarter. You can construct the United States at 75% revenue, but you have to have a plan for how you'd get there," said Alan Cole, an economist with the Center for Federal Tax Policy at the Tax Foundation, a non-partisan research think tank, based in Washington, D.C. "If there weren't any spending cuts that materialized, you would see the deficit widen substantially the moment the plan was enacted."

In the face of such an enormous deficit, creditors might begin demanding higher interest rates on U.S. bonds, and the markets would be spooked.

"I can't imagine markets would react well to it. I can't imagine global investors looking to relocate will look on a United States that is driving deliberately over a fiscal cliff," said Holtz-Eakin. "Sending the U.S. into a debt spiral where you're borrowing interest on previous borrowing will generate a market reaction that will be far from benign and that will, I think, in the end overwhelm the beneficial effects."

Of course, just because Trump hasn't yet explained how he will cut spending doesn't mean he won't. "It's not unusual for a politician to say, 'I'm going to cut spending,' and not give specifics," Matthews said.

Changing Views on Health Care

In his 2000 book, The America We Deserve, Trump touted universal health care and laid out an ideology on the subject that, frankly, looks pretty un-Republican. On the campaign trail, he has promised to "take care of everyone." But his campaign health care plan, released in March, sings a different tune.

The Trump camp finally outlined some of the details of his vision for health care reform in America after months of leaving voters to put together the pieces on his ideas about the issue. The seven-point plan calls for the repeal of Obamacare, the allowance of purchases of health insurance across state lines and block-grant Medicaid to states, among other things.

"This strikes me as a mixture of what is mostly Republican orthodoxy...with a couple of oddball proposals," said Roger Feldman, professor of health policy and management at the University of Minnesota. One of the unique aspects of the plan: allowing consumers to re-import drugs from overseas.

At a February town hall event hosted by CNN, Trump was critical of Obamacare, noting that "rates are going up 25, 35, 45, 55 percent," and emphasized that he is not receiving campaign money from insurance or pharmaceutical companies "so I can do what's right."

"I don't think [Trump's health care proposal] is based on economic analysis, I think it's based on channeling a populist dislike of insurance executives," said Feldman in an October interview. "If he really tried to do the things he said he would do the insurance industry would be in the crosshairs."

The ability for consumers to buy their health insurance in other states is perhaps the health-related proposal Trump has discussed most on the campaign trail. The idea is not new -- such a bill was introduced in Congress a decade ago -- but it is impactful.

When pressed for detail on his plan at the February 25 Republican debate hosted by CNN, Trump focused on the state lines issue, repeating on a handful of occasions his proposal to get rid of "the lines" around each state "so we can have real competition."

"You get rid of the lines, it brings in competition," he said. "So, instead of having one insurance company taking care of New York, or Texas, you'll have many. They'll compete, and it'll be a beautiful thing."

"I think it could be a potentially significant improvement in insurance," Feldman, who in 2011 co-authored a paper on consumer response to a national marketplace for individual health insurance, said. "It would do that by allowing people to buy insurance in states with fewer regulations, and that would, in turn, cause a restructuring of the health insurance industry."

Based on a pre-Obamacare baseline, Feldman and other researchers concluded such a system would result in seven million more people being insured by opening up the insurance markets to more competition.

Of course, not everyone agrees.

"It doesn't actually achieve you much," said Matthews, pointing out that a policy in another state may not translate to access to the network of physicians and pre-negotiated prices locally-purchased policies often afford. "It's not a bad idea, but it is no panacea."

 

Too Tough on Trade?

Trump likes to talk trade. And while has said he is a "free trader," he has also clarified he doesn't like the deals the U.S. has done, such as NAFTA and the Trans-Pacific Partnership. The Art of the Deal author has promised to negotiate better agreements.

"One of the things that's often lost is that [Trump] has a strong business background, he understands how commerce works," Hudak said. "He has more business training than any American president we've ever had."

But the ramifications of some of Trump's proposals might be less than ideal.

Take China, one of his top talking points. He has proposed negotiating with the country to prevent it from manipulating its currency and keeping it too low for American manufacturers -- and workers -- from competing.

"The reality is that when China devalues its currency, the goods that they produce become cheaper, and as a result, while we may lose some manufacturing jobs, the rest of the population gets to buy things a lot cheaper than they would if the products were made [in the U.S.]," said Busler. "The jobs he would bring back are yesterday's jobs."

In November, Trump released his full plan for U.S.-China trade reform, in which he pledged to immediately declare it a "currency manipulator," force it to uphold intellectual property laws and end its "illegal export subsidies and lax labor and environmental standards," among other measures, in order to help American manufacturers -- and workers -- compete.

Trump has also pinpointed imposing tariffs on imported goods, for example, suggesting a 35% tax on automakers that manufacture cars in Mexico. Such a maneuver might bring jobs back stateside, but it might not. Instead, it could just mean people paying more for what they're buying.

"If he puts 35% taxes on products, the manufacturing will still not come back to the U.S., and all it will mean is U.S. consumers have to pay 35% more for the products that are made outside the country," said Busler.

 

"American consumers would end up paying more for things, and that hurts the economy if you're putting tariffs on those other things," said Matthews.

The Trump Effect

Trump's brand has contributed an enormous amount to his net worth -- he says more than $3 billion. But how will that Trumpiness translate to the White House? Perhaps not well.

"That off-the-cuff, gruff, tell-it-like-it-is approach that Donald Trump has may be great for headlines and a stadium full for supporters, but what unguarded comments like that from a president do is make dramatic fluctuations in the world economy, in stock markets in the United States and in the world," said Hudak. "Think about how much the market reaction is to the choice of two or three words from the Federal Reserve chairman."

The words chosen by American officials can have serious economic repercussions, and the country -- and the world -- have equally high expectations for their commercial and diplomatic capabilities. The blunt way of speaking that has made Trump so popular among Republican voters could be detrimental once he's in the Oval Office.

"His brand of rhetoric would actually make for profound economic instability," Hudak said. In an October interview with The Hill, Trump warned of a looming recession and stock market bubble and targeted Federal Reserve Chairwoman Janet Yellen in his comments. "She's keeping the economy going, barely," he said. Such comments coming from a presidential candidate are one thing -- coming from the president of the United States they would be another.

But Trump is a smart guy, and may be able to adjust. Matthews pointed to the Clinton administration, which took a few months to settle in.

"You wonder if the Trump administration would be the same until they got things under control, or got him under control," he said.

Not everyone agrees.

 

"I think Donald Trump is good for the Republican Party, and I think he's good for the country," Busler said. "Donald Trump is not afraid to face the public and raise his voice, even if it is politically unpopular."

Source : thestreet
Categorized in News & Politics

In the future, we may own much less and share much more. And if we do, it will all be down to big data.

In the last century, owning things was the marker of the middle class.  Those who had more money could own more things.  But as manufacturing became less expensive, the barrier to owning a great deal of stuff was lowered. Today, many people living at or below the poverty level own plenty of things, but it isn’t a good indicator of their relative wealth.

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In fact, as millennials enter adulthood and the middle class, the trend seems to be for them to own less stuff.  Not only is there a thriving “minimalist” movement, but the advent of the digital and sharing economies have made this much easier.

Where Baby Boomers and Gen Xers might have had shelves and shelves dedicated to books, magazines and music in their homes, today we can fit the same amount of media and more onto the pocket-sized computers we anachronistically still call phones.

Whereas being a “two-car family” (or even three or four cars) was once a mark of status, today many millennials see more status in being a one-car or even zero-car family and making use of services like Uber, Lyft, CarGo, and others to use cars only when they need one.

Ridesharing, apartment/home lending, peer-to-peer lending, reselling, coworking, talent-sharing… The sharing economy, sometimes also called the collaboration economy, is taking off in all sorts of niches. 

 

Beyond a disillusionment with consumerism, what’s driving this trend is data.  Most — if not all — of these upstarts would not be viable businesses, certainly not on a large scale, without leveraging a platform and a foundation of big data.

These companies don’t just represent a new way of thinking or new services, but a new way to use data effectively to provide services to people when and where they want them.

The obvious examples here are Uber and Airbnb, both of which developed their own platforms to allow service providers and users to connect to the benefit of both. But there are other interesting examples of companies using data and developing platforms to join this new economy:

  • Freelancing — Sites like TaskRabbitCare.com and Upwork have taken the freelance market to a new level. Upwork specializes in helping more traditional freelancers (writers, graphic designers, coders, etc.) connect with business owners looking to hire; while TaskRabbit does the same for services like handymen, dog walkers, personal assistants, and so on. Care.com specializes in caregivers for both children and the elderly. The platforms each of these sites have built make it possible to connect those offering services with those seeking the services.
  • Coworking — WeWork is only one of many companies providing coworking spaces in big cities around the world. Freelancers, entrepreneurs, and telecommuters can rent a desk or an office without the overhead and cost of renting an entire building or suite. Prices are low enough that you can use it as you like, and the space offers some of the benefits of an office including meeting space, phone lines, internet, and often free coffee and even free beer and wine sometimes.
  • Car sharing — Services like Lyft and Uber allowed individual drivers to operate like a taxi service by providing them a safe way to find clients and get paid. Zipcar allowed people to borrow cars for very short periods of time, like the length of a big shopping trip. And now, services like Getaround enable individuals to share their cars with neighbors and get paid for it by connecting the users on the Getaround platform, automating payments, and even insuring the cars for up to $1 million. Liquid provides the same service for renting bicycles!
  • Peer-to-Peer lending — Lending Club and sites like it allow people to lend one another money, with much lower interest rates and fees than traditional credit cards or bank loans. Investors earn solid returns and borrowers get more competitive rates, all facilitated by the platform.
  • Fashion — Sites like Poshmark and threadUP allow individuals to sell their gently used clothing while services like Le Tote offer subscribers the ability to borrow clothes and return them like a Netflix subscription for your closet. Rent the Runway allows women to rent designer gowns for a special event at a fraction of the price of buying one.
  • Sharing resources — Neighborgoods and similar sites allow people to borrow resources — like tools and kitchen appliances — directly from their neighbors. Rather than buying a specialized tool for a single project, people can connect with and borrow from their neighbors, facilitated by the platform.

None of these services would be possible without the big data and algorithms that drives their individual platforms. Without a sophisticated app to match a driver with a rider, Uber wouldn’t be competitive with taxi drivers who cruise around all day looking for fares — and the same is true of each of these services.What’s fascinating is that the company is rarely the actual service provider; instead, they act as facilitator, making the transaction possible, easy, and safe for both the provider and the user.

They break down the barriers that otherwise exist to starting a business or a “side hustle” for many people and make it both easy and lucrative to participate in this collaborative economy.But none of it would be possible without data and algorithms to use it.Bernard Marr is a best-selling author & keynote speaker. His new book: 'Big Data in Practice: How 45 Successful Companies Used Big Data Analytics to Deliver Extraordinary Results'

Source : forbes

Categorized in Search Engine

Republican presidential nominee Donald Trump has described the US economy as “false,” saying that the central banking system is intentionally keeping interest rates low to prevent a new economic collapse.

“We have a very false economy,” Reuters reported Trump as saying in answering to a journalist’s question while campaigning in Ohio on Monday.

“They’re keeping the rates down so that everything else doesn't go down,” Trump added in response to the question, which was about a possible rise in interest rates by the Federal Reserve this month.

“At some point the rates are going to have to change,” Trump said.“The only thing that is strong is the artificial stock market.”

The ideas on rebuilding the US economy offered by the billionaire in an interview to Fortune magazine in April have been dubbed as questionable by some, while others argue that his approach may work out just fine. 

“We have to rebuild the infrastructure of our country. We have to rebuild our military, which is being decimated by bad decisions. We have to do a lot of things. We have to reduce our debt, and the best thing we have going now is that interest rates are so low that lots of good things can be done – that aren’t being done, amazingly,” Trump said back in April.

Meanwhile, Democratic presidential frontrunner Hillary Clinton has not been so radical in her future plans concerning the US economy. However, she promised to support a shakeup in the top ranks of the Federal Reserve in an effort to increase diversity and minority representation within the Fed, Clinton’s campaign said in a statement back in May.

“The Federal Reserve is a vital institution for our economy and the wellbeing of our middle class, and the American people should have no doubt that the Fed is serving the public interest,” the statement said.

“That's why Secretary Clinton believes that the Fed needs to be more representative of America as a whole and that common sense reforms – like getting bankers off the boards of regional Federal Reserve banks – are long overdue.”

The Fed is currently headed by a board of governors based in Washington along with a dozen regional bank presidents spread across the US. The board is nominated by the White House and then approved by the Senate. Regional bank presidents, on the other hand, are chosen by their boards of directors, which are chosen by the banking industry and by Washington Fed governors.

Source : https://www.rt.com/usa/358365-trump-fed-false-economy/

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