WASHINGTON – Donald Trump, it seems, embraces the old dictum: Make no small plans.
Already, he’s published an agenda for his first 100 days in office, recalling Franklin’s Roosevelt’s launching of the New Deal. Not surprisingly, near the top of Trump’s to-do list is a pledge to double economic growth from its recent desultory rate of 2 percent a year to 4 percent – through massive tax cuts, the relaxation of government regulations and measures that curtail imports.
Who might frustrate Trump?
How about: Donald J. Trump.
A huge contradiction sits at the core of his economic agenda. He wants faster economic growth (who doesn’t?), but his proposed policies would also elevate economic uncertainty – and uncertainty hurts growth. If the president proposes deep tax cuts, what will Congress enact? Who will benefit, who won’t? The same uncertainty applies to regulatory cutbacks and anti-import policies. Until the outlook clarifies, businesses and households postpone some spending. Growth suffers.
Of course, there’s always some uncertainty. What makes this different is the breadth of Trump’s proposals. He advocates wholesale upheavals of existing policies.
For example, his proposed tax cut would radically transform the income tax. It would have only three rates (12, 25 and 33) as opposed to today’s seven rates. Its cost over a decade, according to the nonpartisan Tax Foundation, would be between $4.4 trillion and $5.9 trillion, equal to about 11 percent to 15 percent of present tax revenues over 10 years.
Or consider his trade plans. Trump isn’t pushing marginal changes. He wants to renegotiate the North American Free Trade Agreement, which could dramatically shift trade flows with Mexico and Canada.
Much is unknown. On regulations, Trump would “cancel every unconstitutional executive action, memorandum and order issued by President Obama,” a sweeping commitment whose actual effect is ambiguous.
“Uncertainty is a real risk,” says economist Michael Strain of the American Enterprise, a right-of-center think tank. “I’d be reluctant to start a business now, and if I had one, I’d be reluctant to increase payroll by 15 percent until I saw how things shake out.”
A Trump presidency faces many paths to greater uncertainty: A clash between the White House and the Federal Reserve or a dispute over budget deficits are obvious possibilities.
Under the most favorable circumstances, Trump’s big plan would be a daunting task. Under realistic circumstances, it could be mission impossible.
Robert Samuelson is a columnist for The Washington Post. © 2016 The Washington Post Writers Group.