Correction: An earlier version of this op-ed stated incorrectly that the Obama administration issued “about a thousand” more rules and regulations in 2015 than it did the previous year. According to a tabulation from the Competitive Enterprise Institute, the source for the 2015 figure, 3,410 final regulations were issued in 2015, fewer than the 3,554 issued the previous year. This version has been corrected.
Peter Navarro is a business professor at UC-Irvine. Wilbur Ross is an international private equity investor. Both are senior policy advisers to the Trump campaign.
From 1947 to 2001, the U.S. gross domestic product grew at an annual, inflation-adjusted rate of 3.5 percent. Since 2002, average real GDP growth has plummeted to 1.9 percent annually. This fall from strong growth is the taproot of the nation’s current woes.
Despite a recent jump, real median household income remains below its 1999 peak. Some 43 million Americans suffer in poverty. The headline 4.9 percent unemployment rate sounds good — until you factor in missing and discouraged workers. Astonishingly — and disgracefully — nearly 1 in 6 men ages 18 to 34 are in jail or out of work.
Hillary Clinton’s economic plan would not improve this anemic growth or heal other economic ills. It would raise taxes, increase regulation, and impose further restrictions on fossil fuels that would significantly raise energy and electricity costs. Clinton would also perpetuate trade policies she helped craft that have led to chronic and debilitating trade deficits. All this points in the wrong direction.
Even Clinton’s centerpiece stimulus plan is growth-inhibiting. It would tax businesses to fund a highly leveraged national infrastructure bank. This approach would shift funds from the more efficient private sector to a less efficient government bureaucracy and introduce high-risk, subprime lending to the government.
In sharp contrast, Donald Trump’s plan is growth-inducing. It would cut taxes, reduce regulations, remove restrictions on energy development and eliminate our debilitating trade deficit. As growth rapidly accelerated, Trumpnomics would generate millions of additional jobs and trillions of dollars in additional income and tax revenue.
Every nation’s GDP is driven by four components: consumption, government spending, investment and net exports (what we sell vs. what we buy). The United States’ structural economic problems are primarily focused on the investment and net exports growth drivers and associated “offshoring drag” and “trade deficit drag.”
For example, when Ford offshores new production facilities to Mexico, that both boosts the Mexican economy and reduces investment in this country, subtracting from future economic growth. That’s offshoring drag.
U.S. factories are being “pushed” offshore because of the high corporate tax rate and burdensome regulatory environment. They are “pulled” offshore by unfair trade practices such as undervalued currencies and unequal tax treatment by the World Trade Organization.
Trump’s plan would realign corporate incentives so that it would be more profitable to invest in the United States. Cutting the high corporate tax rate, reducing unnecessary regulation and cracking down on trade cheating would make U.S. corporations competitive on domestic soil.
The Trump plan would also eliminate “trade deficit drag.” Net exports are currently running at a negative $500 billion annually, a direct subtraction from growth.
Trump would eliminate the trade deficit not just by cracking down on currency manipulation, intellectual property theft and other mercantilist cheating. He would also negotiate new deals and renegotiate bad deals, such as NAFTA, according to the Trump trade doctrine: Any deal must increase growth, reduce the trade deficit and strengthen the manufacturing base.
As a poster child of how not to negotiate, there is Clinton’s 2012 South Korea deal. As secretary of state, she promised us 70,000 new jobs. Instead, we have lost 75,000 jobs, and our Korean trade deficit has nearly doubled.
Beyond trade, America’s Gulliver economy is also being tied down by thousands of Lilliputian regulations. The Office of Management and Budget and the Heritage Foundation estimate a cost burden approaching $2 trillion annually. The Competitive Enterprise Institute calculates an annual “hidden tax” of “nearly $15,000 per U.S. household.”
Trump promises a moratorium on all new regulations not compelled by Congress or public safety and an urgent agency-level regulatory review. He would also lift restrictions on U.S. energy production and streamline permitting for infrastructure projects. This would lower energy costs, reduce our imports and spur growth.
As our economy grows faster and millions of Americans go back to work, tax revenue would rise, safety-net payments would fall and the Trump plan would travel along a fiscally responsible path that achieves revenue neutrality. We conservatively estimate a more than $2 trillion revenue boost from Trump’s trade, regulatory and energy reforms alone — a significant offset to the revenue reductions from his tax cuts.
Trump’s detractors insist that the United States’ days of rapid growth are over. Such defeatism defies the American spirit and ignores the bad tax, trade, regulatory and energy policies now shackling the U.S. economy. It’s time that a president set this nation’s economy free.
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