Donald Trump turned his attention to the economy Monday with a major policy address in which he cast himself as a president who could bring new jobs and prosperity and warning that his rival, Hillary Clinton, would be a steward of stagnation.
Trump, who has argued that his background as a real estate developer qualifies him to steer the world’s largest economy, highlighted how his economic vision differs from that of Clinton, warning that she would merely continue the policies of the Obama administration. In Trump’s estimation, those have failed. Trump advocated reducing the corporate income tax rate to 15 per cent from its current 35 per cent. That proposal comes after a decade in which after-tax corporate profits have risen sharply as a share of national income and compensation for workers has fallen.
He advocated “allowing parents to fully deduct the average cost of child-care spending from their taxes.” That might sound like a boost for average workers, but the way the tax code works, it would confer the greatest advantage to upper middle-class and wealthier families, and little to no benefit for vast numbers of low-income families.
For expenses of $10,000 a year on child care, the tax deduction would be worth about $3,960 for a family in the top marginal tax bracket making more than $467,000 a year, but only $1,500 to a family making between roughly $19,000 and $75,000. And many lower and lower-middle income families pay little or no federal income tax, so a tax deduction wouldn’t help them.
While Trump is warm toward the business sector on regulatory and energy issues, he is more hostile on trade, where he departs from Republican economic orthodoxy. By pledging a much tougher line on trade policy, including abandoning the Trans-Pacific Partnership trade deal and renegotiating the North American Free Trade Agreement, he put himself directly at odds with the US Chamber of Commerce and other major business groups.
The address offered a broad view of what the economic agenda of a President Trump would look like: Tax policies that track closely with what Republicans in Congress have long advocated, including dramatic tax cuts for the wealthy; a light touch in regulation; but much more willingness to disrupt long-standing trade agreements and international economic relationships in hopes of reducing the trade deficit.
The address represented an opportunity for Trump to change the subject after a week in which he was embroiled in controversy over his critical remarks about the family of a fallen Muslim soldier and several other miscues. As a result, Trump’s poll numbers have taken a dive, and some Republicans have started to desert him.