Wednesday, June 22, 2016

Trump's Policies Would Send U.S. Into Another Recession

Donald Trump says he would be best for the United States economy, because he is a businessman. Moody Analytics (which provides information and analysis of global financial markets) disagrees. They have released a report that says Trump's policies would actually stunt economic growth, and most likely send this nation into another serious recession. Here is some of what Peter Schroeder wrote about this for The Hill:

Donald Trump’s economic proposals would isolate the United States, hurt its economic growth, increase the federal deficit and cost millions of American jobs, according to new analysis.
The grim findings from Moody’s Analytics state that the nation’s wealthiest would benefit the most from the presumptive GOP presidential nominee's proposals, while middle- and lower-class Americans would be hurt the most.
“The economy will be significantly weaker if Mr. Trump’s economic proposals are adopted. Under the scenario in which all his stated policies become law in the manner proposed, the economy suffers a lengthy recession and is smaller at the end of his four-year term than when he took office,” the report said.
“By the end of his presidency, there are close to 3.5 million fewer jobs and the unemployment rate rises to as high as 7%, compared with below 5% today. During Mr. Trump’s presidency, the average American household’s after-inflation income will stagnate, and stock prices and real house values will decline.”
The new study attempts to analyze Trump’s plan similar to how agencies like the Congressional Budget Office calculates the economic impact of plans offered by the president or Congress. . .
However, Moody’s did note that analyzing Trump’s plans was “complicated,” in large part due to the lack of specificity from the campaign. As such, the analysis includes some assumptions, but Moody’s did say they were based on information provided by the Trump campaign.
Moody’s tested Trump’s plans under three scenarios: one in which Trump is taken at face value and his plans are enacted exactly as he has described, a second where his policies are adopted but at a more modest level, and a third where a skeptical Congress scales back Trump’s plans due to “political realities.” Moody’s described the third as the most likely case if Trump were elected.
But even under that scenario, Moody’s predicted the U.S. economy would effectively freeze under Trump and job growth would be roughly halved from its current pace.
If Trump’s plans are fully enacted, Moody’s said the U.S. economy would dive into a recession that would last over two years — longer than the downturn caused by the financial crisis, although less severe. Trump’s policies would also slash U.S. job growth by 3.5 million jobs compared to the current trajectory.
Trump’s call for broad tax cuts across income levels, while limiting some deductions, would drive up the deficit without dramatic spending cuts elsewhere, Moody’s warned. And Trump has not indicated he wants to significantly alter the nation’s entitlement programs, making those cuts hard to come by. . .
In its report, Moody’s acknowledged that oftentimes policy proposals offered on the campaign trail are politically driven, and elected officials often change course after winning office. But even under that lax standard, Moody’s described his proposals as “fiscally unsound” and do not see a way they can boost the economy.

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