Annual budget proposals tell a lot about a president. Former President Barack Obama’s cautious optimism for a 2.5 percent uptick in the economy last year was tempered by the lessons of the Great Recession. It was also followed by a 400-plus page report on the challenges the country faces in today’s new economy.
“[The] economy has been changing in profound ways, starting long before the Great Recession,” the Obama administration wrote in its Economic Report in February 2016. “Today, technology doesn’t just replace jobs on the assembly line, but rather affects any job where work can be automated.”
His budget recognized two things: Economic growth isn’t something to be assumed ahead of time, and job growth and economic resilience rely on equal opportunities for all Americans. Those opportunities include not only employment, but also the tools to create small businesses.
Equally telling was the fact that Obama’s 2016 projections didn’t hold true. Economic growth was the worst in years, rising only 1.9 percent as the country began to wrestle with an uncertain election scenario.
President Donald Trump’s latest budget proposal, released a little over a week ago, seems to omit all of that uncertainty. It also reflects some troubling amnesia when it comes to the recession and what fueled the boom-and-bust scenario of 2008.
Trump’s budget forecasts a 3 percent annual growth rate for the American economy. According to some analysts, 3 percent is unrealistic for an economy that is still adjusting to those technological shifts Obama observed.
But it is how Trump plans to boost the economy that attracted the most attention from researchers, who pointed out that Trump’s edits to social programs and tax shifts in favor of the rich is a “been there, done that” scenario.
As Washington Post reporter Max Ehrenfreund observed, supporters of the plan say Obama’s focus on mending inequality should be replaced by efforts to “improve the fortunes of Americans across the board.”
Gabriel Zucman, an economist with the University of California at Berkeley, summed up the economic outcome of that “across-the-board strategy,” which he said in part began with former President Ronald Regan. “The U.S. has run a big experiment,” he told the Post. “It has failed in the most spectacular way.”
To its credit, the Trump administration also wrote measures for America’s first Paid Parental Leave Act into its budget. It’s a huge step for a developed nation that has trailed miserably behind developing nations on this track.
The budget also includes proposed reforms to America’s student loan programs. But student loan reform is much like healthcare reform: It doesn’t protect the economy unless everyone who needs the service can access it and get help when oversight fails.
Trump also says he plans to expand the Veterans Choice Program. But again, that largely depends on interpretation of what, and how, those services are improved. Will it mean that rural and semi-rural vets, who constitute a substantial percentage of the covered population, will have less difficulty assuring that their doctors’ appointments are actually paid for accurately by the VA?
But allowing parents to take time off for pregnancy, improving health access for veterans or ensuring students can pay loans won’t make a difference for every American. From the Trump administration’s point of view, the real transformation will come from measures to reduce the deficit and regenerate a “stagnant” economy (a claim even Trump has contradicted in the past).
Trump’s proposed healthcare program already cuts out more than 20 million individuals, leaving many with chronic illnesses uninsured. Studies, including this one from the National Institutes of Health, show that chronic illnesses affect workplace productivity. How can an incomplete healthcare coverage program not impact the economy negatively?
Trump proposes regenerating coal-based energy networks that regenerate America’s dependence on fuels that are unsustainable for the environment, the industry (if we look past more than a few decades) and get in the way of expanding cleaner, less expensive energy.
Similar rollbacks of consumer protections have in the past cost Americans homes, jobs and safety. Trump proposes (and has already begun) lifting regulations put in place after the recession to guard against business indiscretion.
Trump’s call for regulatory oversight of “every single dollar” is laudable. But does it include administrative actions to make sure they aren’t ensnarled in legal complexities?
Thanks to the inveterate counters who have been keeping tabs on court cases, the number of lawsuits lodged against the Trump administration (and Trump himself) is now well over 100. Is the same amount of oversight and research being applied to reducing financial impact in the courtroom as in the Executive Branch’s essential agencies?
But it is Trump’s immigration policy that has many small businesses and farmers flummoxed. How can removing, deporting, and limiting minimum-wage farm labor and laborers who have been the essential backbone for American businesses help the economy?
In the last few months, several companies examined that question and began leaving for Mexico, noting that wages paid there are as little as a fifth of what they shell out in the U.S.
With a promise to revise the tax code, the Trump administration is hoping to lure many companies back. How he will address the vacancy that will be left with a bold push for immigration reform that locks out a major portion of manpower is yet to be seen. That’s to be expected, say analysts, with a budget that is, at best, lacking in transparency and a long way away from being written in stone.
Image: Rennett Stowe