From Grassroot Institute, November 18, 2016
To paraphrase Confucius, a prosperous society is where the rich get richer and the poor get richer!
That is what is on my mind today as we contemplate what the Trump presidency might mean to the U.S. (and Hawaii) economy.
Even experts like the Cato Institute's Dan Mitchell concede that it's difficult to know exactly what policy changes we can expect to see under Trump, but there are reasons for both caution and optimism.
Mitchell, who recently addressed these issues as part of a Grassroot Institute event on Maui, points out that without any change in economic policy, our country is in "deep trouble." Entitlement programs like Medicare and Social Security are unsustainable and the federal debt continues to mount.
If nothing else, Trump's promise to control spending can be considered a step in the right direction. His plan to enact a spending cap that allows the government to spend no more than 99% of the previous year's expenditures is a realistic and necessary goal. If we do not harness the government's reckless spending, we will inevitably see tax increases in the future.
Trump has promised to cut taxes as well, but how that can be accomplished without cutting entitlement programs remains uncertain. Not only has the President-elect stated his unwillingness to make such cuts, but Mitchell argues that the window to do so is closing as the aging Baby Boom generation increases the number of people depending on government programs.
Trump has also stated his support for protectionist trade policies. If not handled carefully, this approach could begin a trade war if other countries respond by heavily taxing U.S. exports. Such protectionist measures could end up having a negative effect on the economy.
Ultimately, the best way to improve the lives of all Americans, from the very wealthy to the poor, is to make everyone richer. Mitchell wonders whether Trump will be able to pursue the short-term, unpopular measures that are necessary to create long-term prosperity. For anyone who hopes to see our citizens get richer, we have to hope the answer is "yes."
E hana kakou (Let's work together!),
Keli'i Akina, Ph.D.
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