Donald Trump is a global risk and a clear and present danger
Moody’s Analytics recently released a report titled “The Macroeconomic Consequences of Mr. Trump’s Economic Policies” that should scare every American. They concluded the following.
Presidential candidates often put forward proposals that are as much political statements as firm policy positions. No one expects that their proposals will get through the legislative process and into law fully intact. But while the policy proposals put forward by candidates are generally well overstated,they are a statement on their philosophy and priorities.
Mr. Trump’s economic policy proposals should be considered through this lens. He has suggested that he might be willing to bend his position on taxes and perhaps tariffs. He has even intimated that his policy statements are simply a negotiating stance— he is asking for a lot more up front than he ultimately expects to get.
Having said this, what he is asking for is fiscally unsound. His tax and spending proposals will result in very large deficits and a much higher debt load. A future Congress may be able to rein in this profligacy, but it will not be easy, as there is a gulf between what he says he wants on taxes and spending and what it will take to make the budget arithmetic work.
He is also very suspicious of globalization. His willingness to threaten higher tariffs on U.S. trading partners and his sharp criticism of major trade deals signal a reversal on the long-running expansion of U.S. trade and foreign investment. Requiring millions of undocumented immigrants to leave the country also signals less openness to the rest of the world.
The upshot of Mr. Trump’s economic policy positions under almost any scenario is that the U.S. economy will be more isolated and diminished.
The Economist Intelligence Unit (EIU) names the ten greatest global risks facing the world every month. A Donald Trump presidency is currently rated the three biggest global risk.
EIU concluded the following.
Although we do not expect Mr Trump to defeat his most likely Democratic contender, Hillary Clinton, there are risks to this forecast, especially in the event of a terrorist attack on US soil or a sudden economic downturn. It is worth noting that the innate hostility within the Republican hierarchy towards Mr Trump, combined with the inevitable virulent Democratic opposition, will see many of his more radical policies blocked in Congress – albeit such internal bickering will also undermine the coherence of domestic and foreign policymaking.
Yes, Donald Trump is an economic risk to America and to the entire world.
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