The business community is not impressed with Donald Trump, and seem to be desperately looking for the nearest exit. Today they fret that Donald Trump will cause a global recession. This isn’t a one-off, given that previous reports have also suggested dark economic outcomes from a Trump presidency.
“The election of Donald Trump as President of the United States could lead to chaos in markets and increased policy uncertainty that tip the world into recession, according to Citigroup Inc.,” Bloomberg reported Thursday.
Explaining that William Buiter “has been warning of a global recession for nearly a year, though he previously saw a deceleration in Chinese growth as the proximate cause”, Bloomberg quotes Buiter’s current theory on Trump:
“A Trump victory in particular could prolong and perhaps exacerbate policy uncertainty and deliver a shock (though perhaps short-lived) to financial markets,” writes a team led by Chief Economist Willem Buiter. “Tightening financial conditions and further rises in uncertainty could trigger a significant slowdown in U.S., but also global growth.”(Continued Below)
Reports showing that the economy would “weaken significantly” under Trump’s policies aren’t new.
In June, a Moody’s analysis warned that during Trump’s first term we would reduce employment by 3.5 million jobs and a heavy recession would hit the nation.
Mr. Trump’s tax plan would lower tax rates across the board and limit some deductions. The Tax Policy Center, a project of the Urban Institute and Brookings Institution, said the plan would cut federal revenues by $9.5 trillion, while the Tax Foundation, a think tank that favors lower taxes, said the plan would cost $10 trillion over a decade, even after assuming higher economic growth.
In June, a Forbes opinion column tried desperately to make the case that while the reports on Trump’s economic policies were bad, it didn’t matter. Sure, the outcome is still bad, but not as bad as the reports claim, the author Tim Worstall posited, because presidents don’t get everything their way with budgets.
“The outcome still is not good for the simple reason that parts of those economic plans are not good,” Worstall wrote. “Shrug, that’s what happens with bad economic policy. But those outcomes are nowhere near as bad as is being generally bandied about when people make the incorrect assumption that Trump would get what he asked for.”
Still, this is not a great campaign slogan: “A Trump presidency will be bad, but don’t worry, Congress will stop him from making it a total disaster!”
On August 17, Citigroup’s William Lee suggested that the odds of a recession would be much higher under Trump. Speaking to CNBC’s Power Lunch, Lee said, “All of his trade policies may not only cause the lowering of our imports but it could cause retaliation on the part of our exporters and so that could contract trade. We think that would be the source of a recession sooner than later under Trump.”
The real point here is that Donald Trump’s economic policies are just as bad as his “border” policy and his banning Muslims policies.
It’s just that people are used to Republican tax plans doing the opposite of what they claim, so it’s no shock that Trump’s plan would cost trillions in lost revenues and even with alleged growth factored in, would cost $10 trillion over a decade. So much for “trickle down.” Again.
That’s a lot of money to spend to reduce employment by 3.5 million and cause a global recession. We already tried this version of “Making America Great Again” and it was a horrifying failure that put the full burden of the mistake on the backs of the middle class and poor.
Thanks, but no thanks to Trickle Down Trump style.