A TIP of the hat to Republican presidential nominee Donald Trump, who on Monday interrupted his stream of consciousness to provide some actual policy proposals. The kudos end there, however; Mr. Trump’s economic policy speech to the Detroit Economic Club managed to embrace the worst of traditional Republican doctrine while repudiating the best of it.
Harking back to a nonexistent period “when we were governed by an America First policy,” Mr. Trump blamed the economic collapse of Detroit, and many other untoward economic trends, on trade, specifically free-trade agreements — such as the North American Free Trade Agreement — which the postwar GOP has generally supported, along with many Democrats. Not only would Mr. Trump scrap the proposed Trans-Pacific Partnership with 11 other Pacific Rim nations, he would “renegotiate” NAFTA and “walk away” if Mexico and Canada don’t do what he wants. You may or may not like NAFTA and similar deals; they create winners and losers across the $17 trillion U.S. economy. Even critics must agree that, by now, they are firmly woven into the American economic fabric — and that unraveling them would be profoundly disruptive, perhaps creating “jobs and higher wages” for some, as Mr. Trump promises, but destroying them for many, many others.
On taxes, though, Mr. Trump reverted to GOP orthodoxy, offering cuts for upper-income Americans as a growth elixir. He promised to abolish the estate tax and to reduce the current seven income tax brackets to three, with a top rate of 33 percent. The former idea would benefit a relative handful of super-wealthy families; the latter would blow a gargantuan hole in federal finances unless Mr. Trump also ended deductions and other loopholes, most of which benefit upper-income households disproportionately. Yet he promised to close only one: the “carried interest” deduction whereby Wall Street investors can have certain earnings taxed at the lower capital gains rate rather than as ordinary income. It’s a good idea but would save the Treasury only about $1.8 billion per year.
In any case, Mr. Trump would lower the top rate on business income to 15 percent; savvy hedge fund types will probably figure out a way to characterize their winnings that way so as to avoid the top ordinary-income rate just as they do now. Meanwhile, Mr. Trump called for a new tax break, a deduction for child-care expenses. Though ostensibly for the benefit of hard-pressed families, the proposal will do nothing for the nearly half of American households who don’t owe federal income taxes at all.
There was, in short, little in the way of tangible benefit for the downscale Americans for whom Mr. Trump claims to speak. Possibly to draw attention away from that fact, Mr. Trump framed his proposals as a salve for such injustices as “rebuilding other countries instead of our own” and “resettl[ing] millions of refugees at taxpayer expense” while our infrastructure “fell into disrepair.” Brimming with statistics, larded with footnotes, Monday’s speech was meant to instill “message discipline” in the Trump campaign. But even that message’s most carefully scripted version is held together by smoke, mirrors and scapegoating.