Exit polls show that many voters support President-elect Donald Trump because they believe his pledge to “fix the economy.” However, the economy is in good shape and some of his proposals could cause serious damage.
Inflation is slowing and is close to the Federal Reserve’s target of 2 percent. Therefore, the Fed lowered its lending rate by one quarter to a range of 4.5 percent to 4.75 percent on Thursday. Prices are always high. However, wages are rising and growing. In addition, unemployment is low.
With that background, let’s take a look at some of Trump’s economic proposals and the impact they could have on your wallet.
Inflation
As mentioned above, inflation has already fallen to around 2.4 percent from a peak of 9.1 percent in 2022. However, on the campaign trail, Trump said that if he is re-elected, “inflation will disappear completely”.
Instead, many economists warn that Trump’s plans could do the opposite. They argue that his proposals to freeze imports, cut taxes and mass deportations of migrant workers will increase prices.
A a book signed by 16 Nobel Prize winning economists Last June he expressed fears that Trump’s economic plan would “dominate” inflation.
Taxes
During his first term, Trump’s legislative achievement was the passage of The Tax Cuts and Jobs Act (TCJA) of 2017. Many provisions of the TCJA are scheduled to expire at the end of 2025. However, Trump has committed to extending it and making it permanent.
The biggest benefit of extending the TCJA would go to the highest percentage of income earnersaccording to a study by the Tax Policy Center. That would mean a tax cut of about $280,000 for those earning $5 million a year. At the same time, middle-income earners will save about $1,000 in taxes.
Trump doesn’t want to stop there.
“If you vote for me, I will lower your taxes,” Trump said at a rally in New York.
Republicans regained control of the Senate and are likely to maintain a small advantage in the House. As a result, nothing can stop Trump from following through on that promise.
However, like the TCJA, not all Americans will benefit equally from Trump’s new tax plans. In fact, research shows that most would see a tax increase.
I the wealthiest five percent of Americans would get a tax cut based on Trump’s proposals, according to the Institute on Taxation and Economic Policy. The remaining 95 percent of taxpayers will see their taxes rise.
Trump also wants to eliminate taxes on Social Security benefits, overtime pay and tips
Costs
Past and future presidents have proposed tariffs ranging from 10 to 20 percent on goods from many foreign countries. However, he wants a 60 percent tariff on products made in China and a 100 percent tariff on those from Mexico.
Major categories with high cost exposure include automobiles, pharmaceuticals for human and animal use, food and beverage, toys, furniture, clothing and household goods.
Analysis of Peterson Institute for International Economics found that Trump’s tax plans would cost American families more than $2,600 a year.
In a CNBC interview, Moody’s Chief Economist Mark Zandi said Trump’s plan will hit families hard.
“Tariffs based on the scale proposed by former President Trump will act as a huge tax increase on American families as they pay more for all imported goods, reducing their purchasing power and thus weighing heavily on their consumption and the economy as a whole,” it said. They are loud
Trump insists that tariffs will encourage domestic and foreign companies to set up manufacturing jobs in the US However, economists disagree.
“It will always be much cheaper to source goods from abroad, given the high cost of US labor, which limits re-incentives,” it said. Pantheon Macroeconomics economist Samuel Tombs.
An announcement from fashion company Steve Madden confirms Pantheon’s analysis.
CEO Edward Rosenfeld told the media that salary call on Thursday that the company plans to move 40 to 45 percent of its Chinese production to one or more other countries. The United States is not on the transit destination list. Instead, the company thinks “Countries like Cambodia, Vietnam, Mexico, Brazil,” according to Rosenfeld.
Health insurance
Trump has been all over the map on health care.
He has long said he would repeal and replace the Affordable Care Act (ACA) commonly known as Obamacare. On his first day in office in his first term, he signed an executive order to repeal the ACA. However, the president does not have dictatorial powers that allow him to sweep the law off the books at will.
That said, Trump has weakened Obamacare. During his presidency, Congress abolished the individual mandate as part of the TCJA. In addition, his administration stopped paying cost-sharing subsidies.
After House Speaker Mike Johnson announced that Trump would repeal Obamacare, the Trump campaign said that was not true. Instead, Trump’s staff said he would focus on reducing health care costs. However, no details were given.
Trump was called out on his health care issues during a one-on-one debate with Vice President Kamala Harris. He was asked, after eight years of putting together a promise to replace the ACA, what his health care plan was.
Increasing the National Debt
Trump has raised his tariffs as a solution to the country’s financial needs. However, his tax cuts and other proposals are expected to increase the federal deficit. That will increase the government’s borrowing costs.
An analysis by the Committee on a Responsible Government Budget found that Trump’s financial plans will add $7.75 trillion to the deficit in the next ten years.
The reaction to the possibility of such an increase in the national debt sent bond yields higher the day after the election. I 10-year Treasury it gained 14 points on Wednesday and scored 4.433 percent. However, most of those gains were lost when the Fed announced a rate cut.
Exile of the Many
Trump has received a lot of political attention on illegal immigration. He vowed to use mass deportation. However, those efforts include plans to limit legal immigrationaccording to a Wall Street Journal report.
Strictly restricting immigration would hurt many businesses and slow economic growth.
“Overall, differences in immigration policy alone could cause GDP growth in 2025 to be about half a percent—or $130 billion—lower in the second Trump administration than under the Harris administration,” the Brookings Institute reported. October.
Foreign-born workers have filled the void that could have occurred as baby boomers retire, according to Brookings.
A study from Wells Fargo determined that more than half of the labor force growth from 2022 to 2023 will come from immigrants. Wells Fargo economists Jay Bryson and Michael Pugliese He pointed out that the growth of the nation’s economy is largely determined by the growth of the workforce.
“Thus, policies that restrict immigration and/or mass deportations will lead to slower labor force growth and, by extension, potentially weaker economic growth, all things being equal,” Bryson and Pugliese wrote. “There may be valid reasons for accepting this policy. But, the side effects of a policy that restricts immigration and deports undocumented people could be upward pressure on labor costs and a negative impact on the country’s economic growth rate.”
Read more:
- Caffeine May Affect Gut Health Unexpected Findings
- Fighting Rising Drug Prices
Source link
