Tag: donald trump

Does Donald Trump Think Washington Politicians Should Have More of Our Money to Prop Up the Entitlement State?

I have a very straightforward rule when assessing politicians. Simply stated, if they are open to tax hikes, then it’s quite likely that they have no desire to control the size, cost, and power of the federal government.

Based on that rule, I’m skeptical about Donald Trump.

To understand my doubts, here are some passages from a story on the topic in the New York Times.

For years, Republicans have run for office on promises of cutting taxes… But this election cycle, the Republican presidential candidate who currently leads in most polls is taking a different approach… Mr. Trump has…suggested he would increase taxes on the compensation of hedge fund managers. And he has vowed to change laws that allow American companies to benefit from cheaper tax rates by using mergers to base their operations outside the United States.

These policy positions are raising a lot of eyebrows.

“All of those are anti-growth policies,” said David McIntosh, the president of the Club for Growth… “Those aren’t the types of things a typical Republican candidate would say,” said Michael R. Strain, a scholar at the conservative American Enterprise Institute, referring to the candidate’s comments on hedge funds, support for entitlement spending and the imposing of trade tariffs.

And Trump’s failure to sign the no-tax-hike pledge exacerbates the concerns, particularly when combined with his inconsistent statements on tax reform.

Mr. Trump and former Gov. Jeb Bush of Florida are the only leading Republican candidates who have not signed a pledge to not raise taxes. …In an interview with Fox News last week, Mr. Trump said a flat tax would be a viable improvement to America’s tax system. Moments later, he suggested that a flat tax would be unfair because the rich would be taxed at the same rate as the poor.

Byron York of the Washington Examiner writes about Trump’s fiscal policy in the context of traditional Republican orthodoxy.

Trump is preparing a tax proposal that will again set him far apart from the party’s powers-that-be. …Trump has been sending signals that his tax proposal, which he says will be “comprehensive,” will include higher rates for some of the richest Americans, a position generally at odds with Republican orthodoxy. “I want to see lower taxes,” Trump said at an appearance in Norwood, Mass., on Friday night. “But on some people, they’re not doing their fair share.”

And if his campaign manager is accurately channeling Trump’s views, the candidate even equates higher taxes with making America great.

Trump campaign manager Corey Lewandowski would say little about Trump’s intentions, but noted that “Mr. Trump has said that he does not mind paying what is required to make our country great again.” Raising taxes on anyone, even the super rich, has generally been anathema to Republicans for a generation.

Wow, what’s next, a Biden-esque assertion that higher tax payments are patriotic?!?

Trump, Ford, and Trade Policy

I don’t think anyone likes the idea of responding to all of the various statements that Donald Trump makes, but when he says something vaguely – emphasis on vaguely – substantive on an issue, a short response might be of value. In a recent interview with Chris Cuomo, Trump talked about trade policy, and had this to say (starting around the 7:00 mark) about Ford doing some of its manufacturing in Mexico:

Trump: … Ford is building a $2.5 billion … manufacturing plant for cars, trucks, and parts in Mexico.

Cuomo: How do you keep them?

Trump: Uh you keep them by…

Cuomo: … ‘cause the labor’s cheap that’s why they go.

Trump: For one thing, you keep them by talking to them. But I would say you keep them … if they go there, you know… they’ll make cars, and they’ll sell them to the United States no tax, no nothing. Just come right across the border. …

Cuomo: …and they say the labor’s cheaper over there.

Trump: And you know what, then we’ll say that’s fine. If the labor’s cheaper over there that’s good, but you know what, you’re gonna have to pay a tax to get those cars back in. You’re gonna have to pay a penalty. And if you put a… a penalty on, a tariff or whatever you call it … 

My sense is that Trump’s conception of Ford as a company is rooted in the 1950s, or maybe even the 1920s. In his mind, Ford is owned by Americans, produces in America, and sells to Americans. In reality, though, Ford has long been a global company. Here’s something I wrote about Ford a while back in the context of a paper on international investment:

Does Donald Trump Really Do Best Among Less Educated Voters?

Gage Skidmore/flickr

The short answer is: Yes, Donald Trump likely has greater appeal among less educated Americans.

While we should keep in mind that the margins of error are wider for subsets of national polls—Trump consistently performs better among Americans who have not graduated from college than among college graduates.

For instance, Rasmussen finds that among Republicans who have not finished college, 25 percent support Trump for president compared to 11 percent among Republican college grads.

No other Republican candidate comes within 16 points of Trump among GOP non-college grads. However, among Republicans with college degrees, Trump is just one of many favored candidates: Scott Walker (13 percent), and Carly Fiorina (12 percent) score slightly better, and Marco Rubio (11 percent) ties Trump. All of these are within the margin of error.

Similarly, an August CNN/ORC poll finds that in a hypothetical match-up, Hillary Clinton leads Trump by 15 points among college graduates nationally, but only leads by two points among non-college graduates. Moreover, another CNN/ORC poll found that among all Americans, Trump’s favorables were underwater: -32 points among college grads but only by -8 points among non-college grads.

These August polls line up with July polls finding Trump performing better among less educated voters, as I detail in this piece at Federalist.

Does this mean that Trump’s appeal is any less genuine or meaningful? Definitely not. But his candidacy has the capacity to divide the more educated from the less educated.

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Donald Trump on Immigration: Same Anti-Immigration Ideas, New Salesman

Donald Trump’s newly released position paper on immigration is the precise mix of fantasy and ignorance that one has come to expect from the recently self-described Republican.  Specifically, his position paper reads like an outline of this April op-ed by Senator Jeff Sessions (R-AL).  Trump is still a candidate in the GOP primary supported mainly by older white men who are not particularly conservative.  Although the electorate has never been more supportive of expanding legal immigration, Trump has never been more opposed.

Trump’s position paper attempts to lay the foundation for his immigration policy as president. Below, I review how his ideas measure up. Quotes from his paper are in quotes, my responses follow.

Here are the three core principles of real immigration reform:

  1. A nation without borders is not a nation. There must be a wall across the southern border.
  2. A nation without laws is not a nation. Laws passed in accordance with our Constitutional system of government must be enforced.
  3. A nation that does not serve its own citizens is not a nation. Any immigration plan must improve jobs, wages and security for all Americans.

The first sentence is true by definition, but assumes that for a border to be real, it must have a wall around it. Whether a wall is warranted should depend on the circumstances at the border, which are vastly more safe than Trump claims. 

The last two principles are vague enough that they could support any immigration policy from a total ban on immigration to open borders. The rest of his position paper narrows their focus.

U.S. taxpayers have been asked to pick up hundreds of billions in healthcare costs, housing costs, education costs, welfare costs, etc. Indeed, the annual cost of free tax credits alone paid to illegal immigrants quadrupled to $4.2 billion in 2011.

This analysis factors in only fiscal costs, which will always lead to negative fiscal outcomes. It ignores the fiscal benefits that come from a larger economy.  The fact remains that poor immigrants use less welfare than poor Americans.  They contribute mightily to Social Security, Medicare, and other portions of the U.S budget.  Over time, immigration’s impact on the U.S. taxpayer is about a net-zero.  In other words, immigrants and their descendants pay for themselves. 

Immigration can turn fiscally positive by further restricting welfare access.  Right now illegal immigrants do not have access to means tested welfare programs, but their American born children do.  However, their benefit levels are adjusted downwards to account for the non-eligible members of their households.  Short of lowering welfare benefit levels for everybody, which would be a positive move, the government cannot deny citizens access based on who their parents are.  However, Congress can deny all non-citizens access to welfare.  Cato has published the only guide of how to do that. Removing the Earned Income Tax Credit for unauthorized or other categories of non-citizens would also be easy.

The position paper doesn’t factor in the estimated $400 to $600 billion government cost of removing all unauthorized immigrants as well as the lost tax revenue from the subsequently smaller economy.  Doing so reveals how fiscally damaging this immigration plan would be if it ever became law. 

The effects on jobseekers have also been disastrous …

The influx of foreign workers holds down salaries, keeps unemployment high, and makes it difficult for poor and working class Americans – including immigrants themselves and their children – to earn a middle class wage.

There is a lot of research on whether immigrants displace Americans in the job market – and the general finding is that immigrants displace very few American workers. 

Donald Trump as Litigation Bully

Do you need another reason — besides the tariff talk, the eminent domain trail, the inane birtherism, and, well, the hundred other reasons — to hope the presidential campaign of Donald Trump goes nowhere? Well, here’s another reason: he’s an aggressive, some might say abusive, user of lawsuits and threats of lawsuits against those who apply unwanted scrutiny to his business operations.

Twenty years ago, analyst Marvin Roffman of the Philadelphia investment firm of Janney Montgomery Scott predicted that Trump’s then-new Taj Mahal casino would have difficulty recouping its huge investment, in part because of its troubled Atlantic City location. As financial predictions go, Roffman’s was a very shrewd one, borne out by the later restructuring of the casino’s finances, which was costly for bondholders. At the time, however, Trump threatened the Janney firm in no uncertain terms: “I am now planning to institute a major lawsuit against your firm unless Mr. Roffman makes a public apology or is dismissed.” No profile in courage, the Janney firm proceeded to fire Mr. Roffman.

More recently, Trump pursued New York Times reporter Tim O’Brien and Warner Books through extensive defamation litigation (eventually dismissed) over O’Brien’s 2005 book TrumpNation, which placed a much lower valuation on the net worth of Trump’s empire than Trump thought proper or accurate.

There are words that come to mind to describe wealthy people who repeatedly use lawsuits or the threat of lawsuits to shut up or extract apologies from people they think have criticized them, and one of those words is “bully.” Why one would seek out that sort of character trait in a candidate for higher office is anything but clear.

A Wall Street Journal Column Understates the Size of U.S. Manufacturing

The Wall Street Journal’s December 1 “Ahead of the Tape” column, by Kelly Evans, says “manufacturing is a relatively small part of the economy; It employs about 9% of the work force and accounts for about the same percentage of GDP.” Actually, manufacturing accounts for about 12 percent of nominal GDP.  But that, too, is misleading.  

Chicago Fed economist William Strauss explains why neither U.S. manufacturing’s share of employment nor its share of GDP captures the actual strength of manufacturing:

Between 1950 and 2007 (prior to the severe recession), manufacturing output was just over 600% higher while over the same period growth in real GDP of the U.S. was only a slightly lesser 560%. Yet, the manufacturing share of GDP declined markedly over this period as measured in current dollar value of output. In 1950, the manufacturing share of the U.S. economy amounted to 27% of nominal GDP, but by 2007 it had fallen to 12.1%. How did a sector that experienced growth at a faster pace than the overall economy become a smaller part of the overall economy? The answer again is productivity growth. The greater efficiency of the manufacturing sector afforded either a slower price increase or an outright decline in the prices of this sector’s goods. As one example, inflation (as measured by the Consumer Price Index) averaged 3.7% between 1980 and 2009, while at the same time the rise in prices for new vehicles averaged 1.7%. So while the number (and quality) of manufactured goods had been rising over time, their relative value compared with the output of other sectors did not keep pace. This allowed manufactured goods to be less costly to consumers and led to the manufacturing sector’s declining share of GDP.

Those who imagine “we don’t make anything anymore,” as Donald Trump claims, don’t grasp the magnitude of America’s industrial productivity gains.

In reality, the U.S. is by far the world’s largest manufacturer, with China trailing by 22 percent according to U.N. data for 2008 and arguably much more when we’re not in recession.

Revenge of the Laffer Curve, Part II

An earlier post revealed that higher tax rates in Maryland were backfiring, leading to less revenue from upper-income taxpayers. It seems New York politicians are running into a similar problem. According to an AP report, the state’s 100 richest taxpayers have paid $1 billion less than expected following a big tax hike. The story notes that several rich people have left the state, and all three examples are about people who have redomiciled in Florida, which has no state income tax. For more background information on why higher taxes on the rich do not necessarily raise revenue, see this three-part Laffer Curve video series (here, here, and here):

Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth.

…[New York Governor David] Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20 percent less than anticipated.

…So far this year, half of about $1 billion in expected revenue from New York’s 100 richest taxpayers is missing.

…State officials say they don’t know how much of the missing revenue is because any wealthy New Yorkers simply left. But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh.

…Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.