Trump administration: U.S. Economy

Written by  //  March 23, 2017  //  Economy, U.S.  //  1 Comment

Trump’s Economic Labyrinth

(Project Syndicate) US President Donald Trump is finally getting down to the hard work of trying to please his blue-collar supporters and his administration’s resident plutocrats. The results so far are as incoherent as the electoral coalition that brought him to power.
Donald Trump’s economic-policy agenda during the 2016 US presidential election campaign was a political Rorschach test: where his supporters saw a bold new design for robust growth and greater prosperity, many others in the United States and around the world saw only a cynical blob of dodgy proposals and crossed lines.
Now that Trump must deliver to Congress an outline of his 2018 fiscal-year budget priorities, he and his advisers have no choice but to trade in the campaign inkblot for a governing blueprint. And yet, in his first address to Congress, Trump offered few policy details, even as he called on the assembled representatives and senators to help him “restart the engine of the American economy.”

Bill Gates meets with Donald Trump. The face-to-face comes after the Gates Foundation said it is “deeply troubled” by the US president’s 2018 budget proposal. An agenda hasn’t been released, but a statement from the Gates Foundation said it has “a long history of working with officials” on issues like domestic education and global health and development. Gates and Trump also met in December to discuss innovation.
Trump Tantrum looms on Wall Street if healthcare effort stalls
The Trump Trade could start looking more like a Trump Tantrum if the new U.S. administration’s healthcare bill stalls in Congress, prompting worries on Wall Street about tax cuts and other measures aimed at promoting economic growth.
Investors are dialing back hopes that U.S. President Donald Trump will swiftly enact his agenda, with a Thursday vote on a healthcare bill a litmus test which could give stock investors another reason to sell.
“If the vote doesn’t pass, or is postponed, it will cast a lot of doubt on the Trump trades,” said the influential bond investor Jeffrey Gundlach, chief executive at DoubleLine Capital.
U.S. stocks rallied after the November presidential election, with the S&P 500 posting a string of record highs up to earlier this month, on bets that the pro-growth Trump agenda would be quickly pushed by a Republican Party with majorities in both chambers of Congress.
The S&P 500 ended slightly higher on Wednesday, the day before a floor vote on Trump’s healthcare proposal scheduled in the House of Representatives.
On Tuesday, stocks had the biggest one-day drop since before Trump won the election, on concerns about opposition to the bill.

21 March
Is The Trump Trade Fading?
(Seeking Alpha opin – Ian Bezek) All politics aside, the simple fact is that Trump’s political honeymoon is fading more quickly than we might have expected based on historical precedent.
The Streak Has Ended: Markets Finally Drop
What does that mean for the market. Let me quote myself from my Weekend Digest on Sunday:
If Trump quickly loses popularity, the Republican Congress, which has always had mixed feelings about Trump being their standard-bearer, could quickly turn on him. A gridlocked Congress with the Republican Party working at odds with the President and the Democrats attacking both factions would hardly be good for the market’s Trump building prosperity narrative.
I know it’s early to judge Trump, there’s a good chance this initial downswing in popularity will right itself. But traditionally new presidents get a “honeymoon” period where people expect or at least hope for the best. Trump initially got this, with his net favorability being slightly positive, despite being negative from beginning to end of the campaign. However, that goodwill is fading unusually quickly, and the White House better start delivering on some expectations. Otherwise, look for the Trump Rally to find itself on shaky ground in a hurry.
If you think of the market as a gauge measuring the odds of Trump being able to stimulate the economy to a significant degree, then you better take his decline in popularity seriously.

17 March
Trump’s “America First” budget will leave the economy running behind
(Brookings) The proposed cuts to the nation’s economic development and scientific infrastructure would erode critical programs that help regions succeed in the global economy. These range from technical assistance for small manufacturers, to incentives for regional firms to solve shared technical problems, to research funding for innovations that will define tomorrow’s global economy.
In fact, many of the proposed program cuts would undercut the very goals on which President Trump campaigned. For example, while the president promised to reduce the trade deficit, the $5.8 billion cut from the National Institutes of Health’s budget surely won’t help decrease our $55.8 billion trade deficit in pharmaceutical products. NIH funds more than 300,000 researchers across the country and represents the nation’s feedstock of pharmaceutical research. The budget also eliminates the Overseas Private Investment Corporation and the U.S. Trade Development Agency, which help U.S. companies access foreign markets.
And there will be many more
Trump to spend 7th consecutive weekend at Trump-branded property, at enormous cost to taxpayers
Austerity for us, regular Florida vacations for the president.
(Think Progress) As Quartz reported on Friday, after this weekend, Trump will have already spent about $16.5 million on trips to Mar-a-Lago. For that amount, Meals on Wheels could feed 5,967 seniors for a year and after school programs could feed 114,583 children for a year.

16 March
This pretty well sums it up
Trump’s budget: the dream of a paranoid strongman and a vicious Scrooge
By Michael Paarlberg
It reflects a kind of banana republic militarism designed to fleece taxpayers, enrich defense contractors, disloyal agencies and screw the poor at every turn
(The Guardian) There are many other programs on the chopping block, most of which are economically insignificant: foreign aid, long targeted by Republicans despite its role in counterterrorism, is 1% of the federal budget. Trump’s plan to eliminate the National Endowment for the Arts entirely, for example, would pay for one F-35. Yet even if voters may not care about Sesame Street, or national parks, or finding a cure for cancer, there’s something deeply sadistic about eliminating a program that helps elderly poor people heat their homes in the winter – especially coming from a president who has charged taxpayers $10m and counting for weekend getaways to his Palm Beach mansion.
Trump’s budget isn’t about saving money – he’s said so himself, that military spending is “more important” than a balanced budget. And it isn’t about rebuilding a “depleted” military for a country that already spends more on defense than the next twelve countries combined. Trump’s plan is about catering to his base. Not the fabled white working class, who will soon lose their WIC, heating subsidies, and job training. No, his real base, those golfing buddies and board members at companies like Lockheed, who want lower taxes and access to the government spigot, and want poor people to pay for it all.

(The Atlantic) Deep Cuts: The budget proposal the White House released to Congress today is an aggressive demonstration of Trump’s campaign promises. To fund an increase in military spending, it makes deep cuts to education programs and funding for science, including the bipartisan-supported National Institutes of Health. It would eliminate funding for 19 independent agencies, including the National Endowment for the Arts. (Here’s a visual breakdown of the spending changes.) All these cuts could hurt low-income Americans, including some of Trump’s own supporters, not to mention slowing scientific and tech research that might otherwise help revive U.S. manufacturing. But don’t panic yet: Thanks to the complicated fiscal procedure known as sequestration, the budget needs bipartisan support, so it may not make it through Congress.
Charles P. Pierce: This Is the Ending Conservatives Always Wanted
You can draw a straight line from Reaganomics to Trump’s budget.
(Esquire) This proposed budget isn’t extreme. Reagan’s proposed budget in 1981 was extreme. This budget is short-sighted, cruel to the point of being sadistic, stupid to the point of pure philistinism, and shot through with the absolute and fundamentalist religious conviction that the only true functions of government are the ones that involve guns, and that the only true purpose of government is to serve the rich.
(The Atlantic) Deep Cuts: The budget proposal the White House released to Congress today is an aggressive demonstration of Trump’s campaign promises. To fund an increase in military spending, it makes deep cuts to education programs and funding for science, including the bipartisan-supported National Institutes of Health. It would eliminate funding for 19 independent agencies, including the National Endowment for the Arts. (Here’s a visual breakdown of the spending changes.) All these cuts could hurt low-income Americans, including some of Trump’s own supporters, not to mention slowing scientific and tech research that might otherwise help revive U.S. manufacturing. But don’t panic yet: Thanks to the complicated fiscal procedure known as sequestration, the budget needs bipartisan support, so it may not make it through Congress.

15 March
(The Atlantic) Economic Strengths: Just as analysts expected, the U.S. Federal Reserve voted to raise interest rates today, a move that reflects confidence in the strength of the still-recovering economy. Economic worries were among the strongest factors that brought Trump to the White House: His rhetoric—if not the specifics of his policies—gave voters a satisfying answer to their personal concerns by promising to put them first. Yet now that Trump is president, the populist ideals of his candidacy seem to be falling away—replaced by a much more traditional brand of conservatism. Meanwhile, a couple pages of his long-awaited tax returns were released last night—but they reveal much less than Trump’s critics expected

13 March
The Trump slump? Tourists say they’re scared to visit the United States
(LA Times) The fallout from President Trump’s executive orders limiting travel from some Middle Eastern and African countries is having far-reaching implications for U.S. tourism.
It is not just visitors from the countries targeted by the bans that are souring on U.S. travel.  Rather, an atmosphere of fear at the nation’s airports — and well-publicized incidents of visitors being detained and interrogated — are scaring off people without the slightest connection to the Muslim world.
An economic consulting firm that has crunched the numbers from various airline and travel booking websites projects that the U.S. will lose 6.3 million visits by the end of next year, which translates into $10.8 billion in spending. What the firm, Tourism Economics of Wayne, Pa., is calling “Trump-induced losses” could affect an estimated 90,000 Americans whose jobs are directly or indirectly dependent on tourism
White House civil war breaks out over trade
(FT via CNBC) A civil war has broken out within the White House over trade, leading to what one official called “a fiery meeting” in the Oval Office pitting economic nationalists close to Donald Trump against pro-trade moderates from Wall Street.
According to more than half a dozen people inside the White House or dealing with it, the bitter fight has set a hardline group including senior adviser Steve Bannon and Trump trade adviser Peter Navarro against a faction led by Gary Cohn, the former Goldman Sachs executive who leads Mr Trump’s National Economic Council.
The battle over trade is emblematic of a broader fight on economic policy within the Trump administration. It comes ahead of a visit to Washington next week by Ms Merkel, the German chancellor, and amid preparations for a meeting of G20 finance ministers in Germany next week at which allies’ concerns over protectionism are likely to be high on the agenda.

10 March
The Animal Spirits in the Jobs Report
(Bloomberg view) Has the presidential election of Donald Trump reawakened the animal spirits in the U.S. economy, giving businesses more confidence to create jobs? Judging from the latest data, it may have — particularly if you’re a miner, a machinist or a construction worker.
To be sure, these are early days: Trump has president only a few months, not enough time to implement an economic agenda. So far, some employers appear to be giving him the benefit of the doubt. For that confidence to spread, he’ll have to follow through successfully on policies — such as well-crafted infrastructure investment and sensible measures to make banks simpler and stronger — that could benefit the economy overall, rather than boosting specific sectors at the expense of the environment or financial stability.

9 March
The Most Underrated Story About the U.S. Economy
Income growth is faster at the bottom than at the top. Thank a growing economy, falling unemployment, and minimum-wage hikes across the country.
(The Atlantic) annual wage growth has been greater (as a percent) for the poor than for the rich in the last few years. A new report by the left-leaning Economic Policy Institute found that wages grew faster in 2016 for the poorest quintile than for the richest. The trend was particularly pronounced for white workers. The poorest 10 percent of white workers collectively saw a 5.1 percent raise in 2016, twice as faster (sic) as the 2 percent growth among the richest decile percent.

8 March
Mohamed A. El-Erian: Prepare for Market Beliefs to Be Challenged
(Bloomberg view) Deeply ingrained beliefs can be hard to dislodge — and especially in markets when they have led to high investment returns over a prolonged period. That can encourage certain behaviors to last even in the face of contradictory indicators; and it may take a very large set of inconsistent data for behaviors to change.
This tendency — underpinned by what behavioral finance calls “belief perseverance,” “confirmation bias” and “attitude polarization” — could be one of the reasons that financial markets have confidently brushed off what has been a growing list of developments that otherwise would have resulted in higher volatility. It includes just in the last couple of weeks:
White House’s cold shoulder slows economic agenda
(Reuters) David Nason, chief executive of GE Energy Financial Service, has withdrawn from the running to be vice chair of supervision at the Federal Reserve, the company confirmed on Wednesday. Administration officials declined to offer support after critics noted his role at the Treasury Department in arranging bailouts of the 2008 crisis.
The head of regulatory policy at the Fed is a key post considering the administration’s desire to cut red tape on banks. The position has been open since it was created by the 2010 Dodd-Frank Act. Daniel Tarullo has been doing the job unofficially but he is stepping down from the Board of Governors in April.
(Fiscal Times) The US Economy Is Humming Along, but a Big Jump in Growth Is Unlikely
In the near term, growth projections, at least by the top-line measurement of gross domestic product, are looking a whole lot more tepid than they did a few months ago.  Related: How the New Trump Travel Ban Could Hurt the US Economy

7 March
Here’s What It Would Cost the U.S. Economy If Every American Woman Went on Strike Tomorrow
(New York Magazine) On Wednesday, women around the world will go on strike in observance of International Women’s Day as part of “A Day Without a Woman.” While not every woman has the luxury to take a day off from paid work, a new analysis from the Center for American Progress determined what it might cost the American economy if every working woman actually were able to strike tomorrow: around $21 billion in gross domestic product.
The Center for American Progress calculated that women’s labor contributes $7.6 trillion to America’s GDP each year — which is more than the entirety of the country of Japan’s GDP of $5.2 trillion. Moreover, women make up nearly half of the U.S. workforce, the analysis found, so women’s financial contributions have also become “increasingly important” to their individual families’ well-being.

3 March
(The Atlantic) Budget Battles: President Trump is due to send an official outline of his budget to the Senate within the next couple of weeks, and it’s not likely to go over well: Though he’ll need the support of some Dems plus the whole GOP to get his massive increase in defense spending approved, he’s already getting pushback even from some Republican leaders.
Yellen points to March rate hike as Fed signals end of easy money
(Reuters) Yellen capped off a seemingly coordinated push from the central bank on Friday when she cemented the view that the Fed will raise interest rates at its next meeting on March 14-15, and likely be able to move faster after that than it has in years.
The Fed has struggled for the past three years to raise interest rates off the zero lower bound as the U.S. economy slowly healed after the Great Recession. Issues from sluggish inflation globally to the dampening effect of a strong dollar and low energy prices blew them off course.
By contrast, 2017 may be the year the Fed is able to follow through on its forecast of three rate hikes.
It’s a welcome turn for the Fed chair, who has hoped to get rates off the ground throughout her three-year tenure, and now sees the economy on track and investors aligned around the idea.
Bill Hall: Trump’s Secret Wall Street Plan
President Trump and his administration have a plan for the economy that he didn’t tell anyone about in his address. It’s a plan that Wall Street insiders already know is firmly in place but that the popular press isn’t aware of. And that plan is good for stocks in the short run but has its fair share of land mines. … it’s a simple nine-step program whose aim is to get the electorate accustomed to a massive debt load in the developed world and anemic future economic growth. …
when you listen carefully, you’ll be able to spot the plan progressing when you hear Janet Yellen talk about raising the Fed Funds Rate three times this year (Step 5) or see it playing out right before your very eyes when Trump talks about the four pillars of his economic plan that I detailed in my January 20 Money and Markets article (Step 6).
You’ll also know exactly where new Treasury Secretary Steven Mnuchin is headed when he talks about the very real possibility of issuing U.S. Treasury bonds with 50- and even 100-year maturities (Step 7). You’ll recognize the Laffer Curve (See Comment of 3 March below) when you see it in the mainstream media as a justification to cut taxes and introduce tariffs on imports (Step 8).
And, you’ll know why the traditionally dovish Janet Yellen is turning into a monetary hawk as she attempts to reshape her legacy before her term as Federal Reserve chairman ends in January 2018. (Step 9).
In a nutshell, what this nine-step plan means is that we are headed for a long period of slow growth, low interest rates and central bank intervention anytime the financial markets signal a collapse. That’s why equities are marching higher because Wall Street is in on it, too.

27 February
The money masters already know that in a slow-growth, low-interest-rate environment, where the world’s central banks are committed to providing a safety net, STOCKS — which represent the only chance at growth — are the best way forward.
Missing: Donald Trump’s Trillion-Dollar Infrastructure Plan
(NYT) Which of Donald Trump’s many campaign promises would bring real benefits to the economy? Which would almost certainly win support even among people who voted against him? And which seems to have disappeared completely from the White House radar?
The answer to all three questions is Mr. Trump’s pledge to put his self-described talents as a builder to work by spending $1 trillion on restoring the country’s crumbling bridges, potholed roads, rust-bucket trains and shabby-not-chic airports. More than a month into his presidency, no such plan has emerged, and there are no signs that one is coming anytime soon.
Republican sources told the news organization Axios last week that the White House wouldn’t unveil an infrastructure proposal until 2018. Congress, meanwhile, seems fixated on other issues — rolling back Obamacare, cutting taxes — while its leaders, the House speaker, Paul Ryan, and Mitch McConnell, the Senate majority leader — seem decidedly unenthusiastic about the idea of a huge infrastructure spending proposal.
Wilbur Ross, soon to be secretary of commerce, and Peter Navarro, an economics professor who now heads a trade council for the president — published a white paper in October proposing tax credits to private developers, a plan more likely to provide a windfall for projects that would be built anyway. The credits wouldn’t spur needed investment in water systems, mass transit and other infrastructure that are public utilities, not vehicles for private profit.
A big infrastructure package involving direct government spending would, politically and economically, be a slam-dunk compared with other misguided investments and policies, like building a border wall or cutting taxes for the wealthy. Experts say that the United States needs a huge increase in spending on public works after years of neglect and to prepare for the increased threat from climate change.
(Quartz) Donald Trump meets with US state governors. The discussion is expected to focus on key infrastructure projects. Ever since Trump made “rebuilding America” a key campaign promise, governors have been drafting wish lists of big ticket projects. Expect billion-dollar price tags.

22 February
Jennifer Rubin: Paul Ryan’s tax plan is destined for failure
(WaPost via Chicago Tribune) For weeks now, House Speaker Paul Ryan, R-Wis., has struggled to convince his colleagues of the benefits of the border adjustment tax. If his reasons seem unsound and unconservative (why should the government dictate which suppliers you use?), it’s because he is not being honest about the motivation behind the plan to tax imports. The one and only reason behind the push centers on the massive deficit the rest of the GOP tax plan would create. (Take a fiscally irresponsible tax plan and add in a counterproductive border tax adjustment!) In short, his tax plan needs the infusion of cash that a tax passed on to U.S. consumers would raise.
Without the border adjustment tax, the GOP tax plan will be (rightly) excoriated for blasting an enormous hole in the budget. However, with the border adjustment tax, the Senate and a great many House Republicans will not vote for it.
Retailers have organized against the border adjustment tax. In particular, small businesses — the darling of Democrats and Republicans alike — foresee disaster. The Wall Street Journal recently reported that small businesses “typically have less ability to negotiate better deals with suppliers or push through price increases to customers or spend time and money modeling tax changes. More than 95 percent of U.S. importers have fewer than 250 employees, according to 2014 U.S. Census data.”

Dodd-Frank Wall Street Reform and Consumer Protection Act
The Dodd-Frank Wall Street Reform and Consumer Protection Act is a massive piece of financial reform legislation passed by the Obama administration in 2010 as a response to the financial crisis of 2008. Named after sponsors U.S. Senator Christopher J. Dodd and U.S. Representative Barney Frank, the act’s numerous provisions, spelled out over roughly 2,300 pages, are being implemented over a period of several years and are intended to decrease various risks in the U.S. financial system. The act established a number of new government agencies tasked with overseeing various components of the act and by extension various aspects of the banking system. President Donald Trump has pledged to repeal Dodd-Frank.

7 February
Revamping Dodd-Frank a ‘this-year priority’: U.S. lawmaker
(Reuters) Republican Representative Jeb Hensarling said he would soon reintroduce his legislation that gives banks a choice between complying with Dodd-Frank and holding more capital.
While the bill is expected to easily pass the Republican-led House, it will face resistance in the Senate, where Democrats hold enough seats to filibuster. Pence can cast votes to break ties on legislation.
On Friday, Trump ordered a review of Dodd-Frank’s effects on business and the economy, which raised the possibility he may use his executive powers to block, undo or kill by neglect parts of the law on his own.
There’s been some confusion over the “fiduciary rule,” which requires brokerage firms to put their clients’ interests first when advising them about 401(k) plans or individual retirement accounts. The Trump administration was originally expected to delay implementation of the rule for 180 days. But Trump’s most recent memo to the Labor Department was considerably weaker, calling only for a review of the rule. This has confused brokers, but they’re preparing to comply with the rule anyway.

6 February
Andrew Ross Sorkin:A Quiet Giant of Investing Weighs In on Trump
(NYT) While Mr. Klarman has long kept a low public profile, he is considered a giant within investment circles. He is often compared to Warren Buffett, and The Economist magazine once described him as “The Oracle of Boston,” where Baupost is based. For good measure, he is one of the very few hedge managers Mr. Buffett has publicly praised.
In his letter, Mr. Klarman sets forth a countervailing view to the euphoria that has buoyed the stock market since Mr. Trump took office, describing “perilously high valuations.”
“Exuberant investors have focused on the potential benefits of stimulative tax cuts, while mostly ignoring the risks from America-first protectionism and the erection of new trade barriers,” he wrote.
“President Trump may be able to temporarily hold off the sweep of automation and globalization by cajoling companies to keep jobs at home, but bolstering inefficient and uncompetitive enterprises is likely to only temporarily stave off market forces,” he continued. “While they might be popular, the reason the U.S. long ago abandoned protectionist trade policies is because they not only don’t work, they actually leave society worse off.”

4 February
Gary Cohn Emerges From Trump Shadows Touting Dodd-Frank Overhaul
(Bloomberg) As director of the National Economic Council, one of the most influential White House posts, he played front man for Trump’s bid to overhaul financial regulations. Cohn made a series of television appearances on Friday to promote the president’s initial executive actions to undo Obama-era policies, including the Dodd-Frank law and a rule requiring financial advisers to act in their clients’ best interests.
“From the executive office, the number one priority we have is job growth,” Cohn said on Bloomberg Television. “We’ve been told we need deregulation to grow jobs in this country. We are not anti-regulation. We want smart regulation that allows our financial services to be the envy of the world.”

3 February
donald-trump-executive-ordersElizabeth Warren Is NOT Amused With Trump’s Dodd-Frank Rollback
(Heisenberg Report via Seeking Alpha) To put it colloquially, Warren will gladly burn your ass if she thinks what you’re doing is in any way nefarious. And that goes triple for anyone doing something she perceives as designed to return Wall Street to the pre-Dodd Frank glory days.
Trump Says He Cut Wall Street Reform Because His “Friends” Need Money
(Vanity Fair) On Friday, Donald Trump signed an executive order intended to roll back Dodd-Frank, the sprawling regulatory framework President Obama signed into law in 2010 to avoid another financial crisis, which was not entirely beloved on Wall Street. He also scrapped a fiduciary rule intended to protect retirees by forcing brokers and advisers to “work in the best interest of their clients.“ (This, too, was controversial.)
According to its defenders, Dodd-Frank has been a modestly successful, if tortuous affair, requiring banks to bend over backwards to comply with regulations that protect investors and consumers from abusive practices and excessive risk. According to Trump, it was inconveniencing his friends:
“There is nobody better to tell me about Dodd-Frank than [JP Morgan C.E.O.] Jamie [Dimon]. So he has to tell me about it, but we expect to be cutting a lot from Dodd-Frank because, frankly, I have so many people, friends of mine, that have nice businesses, they can’t borrow money,” Trump said Friday morning, shortly before signing the executive orders. “They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank.”
Fiduciary Rule Is Now in Question. What’s Next for Investors
(NYT) The so-called fiduciary rule, the subject of years of intense debate and industry lobbying, was set to take effect in April, but the order removes that deadline, and the rule will likely disappear. Gary Cohn, the former Goldman Sachs executive who is now the director of the National Economic Council, told The Wall Street Journal that he wanted it gone. … The technical terminology gets confusing, but a financial planner or investment adviser in a stand-alone firm may be required to act in your best interest or may pledge to in all instances. But some stockbrokers and many people who sell life insurance, annuities and other more esoteric investment products merely have to follow what’s known as the “suitability” standard.
Trump Announces Plan to Let Wall Street Scam America Again
(New York Magazine) Donald Trump has filled his administration with Wall Street veterans, who believe that their industry is over-regulated. (Financial firms accounted for 30 percent of all corporate profits before the economic crisis, but only 17 percent now, thanks largely to Dodd-Frank’s tighter regulation.) “Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” National Economic Council Director and Goldman Sachs veteran Gary Cohn tells The Wall Street Journal.
Cohn is planning to weaken the fiduciary rule, which he believes robs Americans of their freedom to hire financial advisers who might want to rip them off. “This is like putting only healthy food on the menu,” he tells the Journal, “because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”
Trump to Order Dodd-Frank Review, Halt Obama Fiduciary Rule
Trump also will halt another of former President Barack Obama’s regulations, hated by the financial industry, that requires advisers on retirement accounts to work in the best interests of their clients. Trump’s order will give the new administration time to review the change, known as the fiduciary rule.
Taken together, the actions are designed to lay down the Trump administration’s approach to financial markets, with an emphasis on removing regulatory burdens and opening up investor options, said the White House official, who briefed reporters on condition of anonymity.
The orders are the most aggressive steps yet by Trump to loosen regulations in the financial services industry and come after he has sought to stock his administration with veterans of the industry in key positions. His plans are sure to face fierce criticism by Democrats who charge that Trump is intent on undoing changes designed to protect everything from average investors to the global banking system.

2 February
Nouriel Roubini: The End of Trump’s Market Honeymoon
(Project Syndicate) It is little wonder that corporations and investors have been happy. This traditional Republican embrace of trickle-down supply-side economics will mostly favor corporations and wealthy individuals, while doing almost nothing to create jobs or raise blue-collar workers’ incomes. According to the nonpartisan Tax Policy Center, almost half of the benefits from Trump’s proposed tax cuts would go to the top 1% of income earners.
For starters, the anticipation of fiscal stimulus may have pushed stock prices up, but it also led to higher long-term interest rates, which hurts capital spending and interest-sensitive sectors such as real estate. Meanwhile, the strengthening dollar will destroy more of the jobs typically held by Trump’s blue-collar base. The president may have “saved” 1,000 jobs in Indiana by bullying and cajoling the air-conditioner manufacturer Carrier; but the US dollar’s appreciation since the election could destroy almost 400,000 manufacturing jobs over time.

1 February
This is the Republican plot to kill the US corporate income tax as we know it
(Quartz) Last week, White House press secretary Sean Spicer said Trump wanted to slap a 20% tax on goods imported from Mexico to pay for a new wall along the United States’ southern border. In the context of the escalating tensions between the two countries, the idea came off as just what it was: an undiplomatic, knee-jerk proposal to punish an important trading partner targeted by the US president.
But Spicer’s freelancing generated confusion about a serious proposal, developed over years, to restructure the US corporate tax system from one that taxes profits to one that taxes domestic consumption. It includes a 20% assessment on imports, but it is not targeted at Mexico, and its purpose is not to penalize trade.

27 January
gary-cohn-goldman-sachsThe rise of Gary Cohn, from Midwestern kid to Goldman Sachs boss — and now adviser to President Trump
(Business Insider) Gary Cohn, the former chief operating officer and president of Goldman Sachs, is taking up the role of director of the National Economic Council in the Trump administration.
25 January
Gary Cohn Joins Trump with a $284 Million Parting Gift from Goldman
(Vanity Fair – Hive) After spending his campaign railing against Wall Street, with a particular emphasis on Goldman Sachs, Donald Trump kicked off his transition by hiring, without any apparent cognitive dissonance, a half-dozen employees or alumni of Goldman Sachs. While the Treasury will likely be run by 17-year veteran of the firm Steven Mnuchin, Trump’s biggest score was convincing the firm’s president, Gary Cohn, to head to D.C., too. Sure, the fact that Cohn has spent interminable years sitting in his office stewing about Lloyd Blankfein selfishly sticking around as C.E.O. when he should’ve retired and let other people (Cohn) shine certainly helped. But trading the number two job at the bank to head the National Economic Council represents something in the range of, we’re guessing, a 99 percent pay cut. Luckily, it turns out that Cohn will still be able to put food on the table despite becoming a lowly public servant [thanks to] a $285 million parting gift from Goldman.

12 December
Trump officially taps Goldman Sachs President Gary Cohn to be National Economic Council director

One Comment on "Trump administration: U.S. Economy"

  1. Diana Thebaud Nicholson March 3, 2017 at 8:09 pm · Reply

    Re the Money & Markets piece & the Laffer curve
    1. Art Laffer, when I last heard, was at the University of Southern California. He once had some connection with the University of Chicago, probably as a student. His message at the time of the early Reagan Administration was that a government can decrease tax rates, with the effect of increasing economic activity resulting in actually increasing tax revenues. The original Laffer curve was famously drawn on a napkin. It is a two dimensional graph, with tax rates ranging from 0% to 100% on the vertical axis, and tax revenues measured in 4 on the horizontal axis. Revenues are 0 at both extreme rates. As you raise rates from 0% revenues rise, hit a maximum, and shrink back to 0 at 100%. The trick is to set the tax rate where the revenue is at its maximum. This was used in the Reagan Administration to assume that tax rates were then above the maximum revenue rate, thus tax-cuts will increase government revenues. They did not. This points to the uselessness of the Laffer Curve, because nobody knows where we are at the beginning of the exercise, thus whether an increase or a cut in tax rates will increase the amount of taxes collected.
    2. The rest of the stuff is pure nonsense. It is a way to sell to the uninformed the idea that “there is a plan”. In fact, the Administration has sent to Congress a budget that a Republican Congress should have a great deal of trouble accepting. There is nothing else visible out of the White House except for “alternate facts” such as “the money keeps pouring in” at NATO. – AD

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