MARKET reaction to Donald Trump’s win has been something between sanguine and elated. But if you set out to design policies to do long-term harm to the economy, you might end up with something resembling Mr Trump’s agenda. The next president threatens to erect trade barriers, which would disrupt supply chains and dampen productivity growth. He wants to deport many of America’s 11m illegal immigrants, which could reduce the size of the labour force by up to 5%. And his tax plan is ruinously expensive, costing almost $7trn over a decade, or around half of America’s outstanding national debt.
How much damage is President Trump actually likely to do? That depends first on how much of his policy he can get enacted. Until recently, his tax cuts would have been vulnerable to a Democratic filibuster in the Senate. But thanks to a rule change in the latest budget deal, the Republicans can now pass even unfunded tax cuts with only a simple majority, explains Richard Kogan of the Centre on Budget and Policy Priorities, a think-tank. (To do so, they must include sunset clauses, as George W. Bush did when he cut taxes in...Continue reading
Source: United States http://www.economist.com/news/united-states/21710013-congress-can-constrain-only-parts-donald-trumps-economic-policy-strap-up?fsrc=rss
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