- October 31, 2016 -

ICYMI: Economic Analysis of Donald Trump’s Contract with the American Voter

“Donald Trump’s Gettysburg Address On October 22, 2016, Laid Out A 100-Day Blueprint For Growth That Will Turn The Sinking Economy Around Immediately.”


Donald Trump's Contract with the American Voter
Real Clear Policy
By Wilbur Ross, Andy Puzder & Peter Navarro
10/30/16
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Donald Trump’s Gettysburg Address on October 22, 2016, laid out a 100-day blueprint for growth that will turn the sinking economy around immediately. This is an Obama-Clinton ship that is hopelessly adrift in the doldrums of high taxes, over-regulation, open borders, a war on American energy, the Obamacare disaster, crumbling infrastructure, and a trade policy that ships our jobs overseas even as it imports massive trade deficits and stagnant wages.


This analysis provides a concise summary of Donald Trump’s Contract with the American Voter, delivered at Gettysburg. It explains how this contract will expand rapidly America’s shrinking middle class.


The Obama-Clinton Scorecard and the “New Dismal”

The Obama-Clinton economy has given us the slowest economic recovery since the Great Depression. One in four Americans in the prime working ages of 25–54 are not employed. Nearly one in six men aged 18–34 are either in jail or out of work. 45 million Americans suffer in poverty. The real median household income is $1,274 lower than it was in the year 2000.


Since 2002, we have lost over 70,000 factories and 5 million manufacturing jobs. Our annual trade deficit in goods has ballooned to $766 billion while we lose over $300 billion a year to intellectual property theft.


The offshoring of American jobs to destinations such as China and Mexico has only accelerated during the Obama-Clinton years as a consequence of bad trade deals. These bad deals range from Bill Clinton’s signing of NAFTA in 1993 and his 2001 shoehorning of China into the World Trade Organization to Hillary Clinton’s 2012 South Korea deal. The South Korea deal promised 70,000 new jobs, but instead has destroyed close to 100,000 jobs, primarily in our critical auto industry, while doubling our trade deficit.


Key manufacturing states, such as Michigan, Ohio, and North Carolina, have been particularly hard hit. Michigan has lost more than a fourth of its manufacturing jobs since Clinton’s 1993 NAFTA and 2001 China trade deals went into effect; Ohio has lost more than a third; and North Carolina has lost nearly half of its manufacturing jobs since NAFTA’s ratification. Michigan, Ohio, and North Carolina farmers have lost out too. U.S. exports to Canada and Mexico of cattle — top agricultural products in these states — have fallen more than 45 percent in the first 22 years of NAFTA.

Under Obamacare — or, as it was once known, Hillarycare — our health care system is imploding while premiums are exploding. Three of the five big insurers — Aetna, United Healthcare, and Humana — have pulled out of the Obamacare exchanges after losing hundreds of millions of dollars. Seventeen of the non-profit health-insurance co-ops in the system, which received $2.4 billion in taxpayer funds, have failed. Five others are on the brink of collapse. Premiums have skyrocketed by double-digits nationwide: Arizona is up 116 percent; Pennsylvania by 53 percent; North Carolina by 40 percent.


Under Obama-Clinton, urgently needed infrastructure projects have also been routinely delayed for years due to endless studies, red-tape, and obstructionist lawsuits. More than60,000 American bridges are now considered “structurally deficient.” Traffic congestion coststhe U.S. economy over $100 billion annually. The water in cities like Flint, Michigan is unfit to drink, and 6 million Americans are exposed to contaminated water.


At a fiscal level, the Obama administration has doubled our national debt in just eight years, from $10 trillion to $20 trillion. Yet, despite this, we’ve seen crumbling infrastructure, an under-invested space program, a navy shrunk to its smallest level since World War I, and America’s military readiness threatened — even as the Obama-Clinton foreign policy has unleashed ISIS and Hillary Clinton’s saber-rattling in Syria could trigger a third World War.


The policies the Trump administration will put in place and begin to pursue in the first 100 days will raise wages and put money in the pockets of all Americans. Businesses will hire again and our economy will grow again.


Trump’s plan will create a sustainable growth rate of at least 3.5 percent and as high as 4 percent while creating 25 million jobs. Faster growth will mean trillions of dollars in additional revenues that will make Social Security and Medicare more secure — programs that Hillary Clinton expressed support for cutting when speaking in private to financial executives — and allow us to rebuild our shrinking military and crumbling infrastructure.


Donald Trump’s 100-Day Growth Agenda

Trump’s Tax Reforms. On day one, President Trump will move forward with his Middle Class Tax Relief and Simplification Act. The largest tax reductions are for the middle class.


A middle-class family with two children will get a 35 percent tax cut. The current number of brackets will be reduced from seven to three, and tax forms will be greatly simplified so that they can fit on a single page. The Trump tax cuts will put money in the pocket of millions of Americans, money they can use to buy goods and services in their neighborhoods, thereby stimulating growth and raising living standards.

According to the Tax Foundation, the Trump tax plan alone would increase the size of the economy by 7–8 percent; increase wages by 5–6 percent; and increase the capital stock by more than 20 percent.


Small businesses — the backbone of our economy — will see their tax rate cut by more than half, from 35 to 15 percent. They will use those savings to hire and expand in communities across the country.


The trillions of dollars of American money now parked overseas to avoid punitive tax rates will stream back with the promise of a one-time 10 percent rate.

The Tax Foundation estimates that the Trump tax plan will itself increase GDP by almost one percentage point per year. They estimate that the Clinton tax plan, in contrast, will decrease GDP by more than a quarter percent per year.


Trump’s Trade Reforms. On day one, the Trump administration will announce America’s intention to renegotiate NAFTA or withdraw from the deal under Article 2205; withdraw from the Trans-Pacific Partnership; and order the Treasury Department to label any country undervaluing its currency to gain competitive advantage over U.S. manufacturers a currency manipulator. President Trump will direct the Secretary of Commerce and U.S. Trade Representative to root out and stop every unfair trade practice being used against American workers and domestic manufacturers.


A President Trump will also work with Congress to pass the “End The Offshoring Act.” This will establish tariffs to discourage companies from laying off their workers in order to relocate to other countries and ship their products back to the U.S. tax-free.


This combination of bold and visionary trade reforms will eliminate our massive trade deficits by increasing exports and reducing imports and add a point or more to our annual real GDP growth rate. Moreover, these reforms will create over a million more jobs in year one of a Trump administration towards the goal of 25 million jobs, and generate over $1.7 trillion in additional tax revenues over a 10-year budget window.


Through the enforcement of our trade laws and by stopping the inflow of illegally subsidized steel and other products at below-market prices, capital will flow into our mining, logging, steel, aluminum and heavy industries, as businessmen regain confidence that predatory trade practices will not underprice them.


Trump’s Regulatory Reforms. On day one, President Trump will impose a temporary moratorium on all new regulations not compelled by Congress or public safety, order an agency-level regulatory review to eliminate wasteful regulations, and require that for every new federal regulation, two existing regulations be eliminated. Trump will thereby dramatically reduce America’s annual regulatory burden of $2 trillion — about $15,000 per household according to the Competitive Enterprise Institute.


Over a 10-year budget window, these regulatory reforms will generate close to a half a trillion dollars in additional revenues while spurring growth. Businesses will have the certainty they need to invest in new plant and equipment as well as new product lines, confident that federal bureaucrats won’t come up with some new rules to punish them. A reduced regulatory burden will allow us to compete and win on the world stage — we will stop hamstringing American production.


Trump’s Energy Reforms. On day one, President Trump will lift the restrictions on the production of $50 trillion worth of job-producing American energy reserves, including shale, oil, natural gas, and clean coal. He will lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects to move forward.

According to The Wall Street Journal, “more than a dozen [energy infrastructure] projects, worth about $33 billion, have been either rejected by regulators or withdrawn by developers since 2012, with billions more tied up in projects still in regulatory limbo.” This includes coal and shale energy export facilities.


Major pipelines are being blocked as well. As noted in The Wall Street Journal, blocking such projects “leaves some communities without access to lower-cost fuel and higher-paying jobs.” The Keystone XL Pipeline, alone, would amount to an $8 billion investment in U.S. infrastructure and create 42,000 jobs.


According to the Heritage Foundation, by 2030 the Obama-Clinton energy restrictions will eliminate another half a million manufacturing jobs, reduce economic output by $2.5 trillion dollars, and reduce incomes by $7,000 dollars per person.


The Institute for Energy Research calculates that lifting unnecessary restrictions on all sources of American energy (such as coal and onshore and offshore oil and gas) will increase GDP by more than $100 billion annually, add over 500,000 new jobs annually, and increase annual wages by more than $30 billion over the next seven years. Lifting such restrictions will also increase federal, state, and local tax revenues by almost $6 trillion over four decades and increase total economic activity by more than $20 trillion over the next 40 years.


By unleashing America’s abundant energy sector, both businesses and consumers will see lower energy and electricity costs. Thus, our businesses will become more competitive while the purchasing power of consumers will only increase. These forces will, in turn, further stimulate growth and generate additional income and revenues.


Trump’s Infrastructure Reforms. America’s infrastructure is crumbling. Over the past eight years, urgently needed projects have been routinely delayed due to endless studies, red tape, and obstructionist lawsuits. The U.S. now ranks ninth in roads investment as a percent of GDP and twelfth on the Global Competitiveness Index in infrastructure.


On day one, President Trump will cancel billions in payments to U.N. climate change programs and use the money to help fix America’s water and environmental infrastructure. On day one, Donald Trump will move forward with his proposed American Infrastructure Act.


This act will transform America’s crumbling infrastructure into a golden opportunity for accelerated economic growth and more rapid productivity gains. This revenue-neutral plan leverages public-private partnerships and private investments through the help of tax incentives to spur $1 trillion in infrastructure investment over 10 years. It will create thousands of new jobs in construction, steel manufacturing, and other sectors to build the transportation, water, telecommunications and energy infrastructures needed to enable new economic development in the U.S.


Trump’s Immigration Reforms. On day one, President Trump will move forward to pass the End Illegal Immigration Act, beginning with a border wall. A Trump Administration will also cancel all federal funding to “sanctuary cities.”


The End Illegal Immigration Act establishes a two-year mandatory minimum federal prison sentence for those illegally re-entering the U.S. after a previous deportation, and a five-year mandatory minimum for those illegally re-entering with felony convictions, multiple misdemeanor convictions, or two or more prior deportations. It reforms visa rules to enhance penalties for overstaying and to ensure open jobs are offered to American workers first.


Our current corporate donor-driven immigration system punishes American workers, particularly African-Americans and Hispanic-Americans. It does so by flooding our labor market with additional workers, thereby reducing job opportunities for those already here, displacing American workers, and depressing wages.


According to a new study issued by the National Academy of Sciences (NAS), our current immigration system increases deficits at the local, state, and federal levels by up to $300 billion annually.


As president, Trump will reform our immigration programs so they no longer depress wages and displace American workers. He will add a self-sufficiency requirement so immigration ceases to impose a fiscal deficit, and institute a merit-based system for future entry.


Trump’s Health Care Reforms. On day one, President Trump will move to repeal Obamacare. The Congressional Budget Office calculates Obamacare will result in 2 million fewer jobs in 2017, rising to about 2.5 million in 2024.


Nearly 6 million Americans are now working part-time jobs because they are unable to find full-time jobs, and nearly 8 million more are working multiple jobs, often because employers have cut their hours below 29 hours a week to avoid the costly regulation of Obamacare. These workers will go back to work in full when President Trump repeals and replaces Obamacare, a signal failure of the Obama-Clinton regime. By contrast, Hillarycare would double down on this failure and institute a job killing, economically devastating government-wide health care takeover.


Consumer incentives, more competition, and more choice in a free and open market are the keys to reducing health care costs and improving quality, not more government. Trump will replace Obamacare with Health Savings Accounts and the ability to purchase health insurance across state lines. Reforms will also include cutting FDA red tape and speeding the approval of life-saving medications — there are now over 4,000 drugs awaiting such approval. States, not the federal government, will manage Medicaid funds through generous block grants. These reforms will be important steps in bringing rapidly rising health care costs finally under control.


At least 1.4 million Americans in 33 states are about to lose their plans in 2017 because of the failure of Obamacare exchanges. Insurers have dropped out of these exchanges in droves, and almost one in five Americans using exchanges will only have one insurance company to choose from.


Obama promised, “if you like your health care plan, you can keep it” and that premiums would go down. Yet, despite all the false promises of Obamacare, Hillary Clinton’s campaign would have more of the same.

With the Trump plan, by contrast, Americans will have freedom, choice, and affordability in health care.


Trump’s Child Care and Elder Care Reforms. On day one, President Trump will move forward with the Affordable Child Care and Elder Care Act. This will allow Americans to deduct child care and elder care from their taxes, incentivize employers to provide on-site child care services, and create tax-free Dependent Care Savings Accounts for both young and elderly dependents, with matching contributions for low-income families.


As a result of these reforms, families will have thousands of dollars more disposable income to save or spend, thereby driving additional investment and growth. Flexibility in the federal regulation of day care providers will spur new child care solutions in small towns and rural America.


Closing Argument Summary

Donald Trump believes in American workers, opportunity, free markets, and individual liberty. His goal is prosperity.

Trump’s pro-growth agenda will get this economy growing and thereby make America great again. It is a solemn promise based on a solid set of interactive and highly synergistic policies designed to free the American economy from the chains that have been wrapped around it during the Obama-Clinton years. The sum of its parts create a much more prosperous whole.


Clinton’s plan is to grow government, not our economy. She proposes higher taxes that will discourage the capital investment we need for growth, more regulation that will hobble America’s small businesses, and further restrictions on American energy that will raise energy and electricity costs significantly. Clinton will also double down on the trade policies and trade deals that she has helped put in place and which have led to chronic trade deficits, reduced economic growth, and weakened sovereignty.


Hillary Clinton will also double down on Obamacare, putting the health care of millions of American families in jeopardy. And, finally, she pledges to fulfill her dream of “open borders” that harms American workers and massively threatens national security.


The economics in this presidential race are clear. One candidate’s policies point in the direction of growth and prosperity; the other candidate’s policies are a recipe for poverty, failure, and misery.


Wilbur Ross is a private equity investor. Andy Puzder is CEO of CKE Restaurants, Inc. and a member of the Job Creators Network. Peter Navarro is a UC-Irvine business professor. All three are senior policy advisors to the Trump campaign.


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