During the last Republican debate the Wall Street Journal’s Kimberly Stassel challenged Donald Trump on the projected revenue from his proposed tax plan.
In essence Stassel claimed some economists doubted the growth factor Mr. Trump projects in his tax proposal.
In a sixty second response time, it is factually impossible to explain something we have discussed here before. Specifically, one of the larger hurdles Trump faces is a need to re-educate an entire generation on a fundamentally new vision of the U.S. economy. A return to a goods- based manufacturing and industry driven economic model.
Interestingly, many people have referenced a 1991 (25 years old) video of Donald Trump testifying before congress – as evidence of him being tuned in to political consequences of economic activity. The entire video is well worth watching because it gives you insight into a very specific moment in time as they discuss the ‘Reagan era’ 1986 tax reform act.
However, for the sake of this discussion post I would like to draw your attention to a very specific exchange between Donald Trump and Representative Helen Delich Bently (R-MD).
Representative Bently takes the discussion a little off subject from real-estate and engages Mr. Trump on U.S. manufacturing. Remember this is 1991. (The video is prompted to @39:24) Watch – it’s only about two minutes:
Related Note – During Donald Trump’s testimony before congress in this video, Senator Marco Rubio and Senator Ted Cruz were approximately 20-years-old. This understanding sets the backdrop for a generation who is disconnected from the previous economic model being discussed within the congressional committee itself.
In this 1991 hearing, Representative Helen Bently is pointing out an ongoing erosion of U.S. manufacturing. Notice how she references current trade deals and “fair trade” versus “free trade”, sound familiar? It should.
What you will find in all of Donald Trump’s positions, is a paradigm shift he necessarily understands must take place in order to accomplish the long-term goals for the U.S. citizen/worker as it relates to “entitlements” or “structural benefits”.
All other candidates are beginning their policy proposals with a fundamentally divergent perception of the U.S. economy. They are working with, and retaining the outlook of, a U.S. economy based on “services”; a service-based economic model. Consequently their forecasted economic growth projections are based on ever-increasing foreign manufacturing dependency, and even more solidifying service-based economics.
While this economic path has been created by decades old U.S. policy, and is ultimately the only historical economic path now taught in school, Trump intends to change the course entirely.
Because so many shifts -policy nudges- have taken place in the past several decades, few academics and even fewer MSM observers, are able to understand how to get off this path and chart a better course.
Candidate Trump is proposing less dependence on foreign companies for cheap goods, (the cornerstone of a service economy) and a return to a more balanced U.S. larger economic model where the manufacturing and production base can be re-established and competitive based on American entrepreneurship and innovation.
No other economy in the world innovates like the U.S.A, Trump sees this as a key advantage across all industry – including manufacturing.
The benefit of cheap overseas labor, which is considered a global market disadvantage for the U.S., is offset by utilizing innovation and energy independence.
The third highest variable cost of goods beyond raw materials first, labor second, is energy. If the U.S. energy sector is unleashed -and fully developed- the manufacturing price of any given product will allow for global trade competition even with higher U.S. wage prices.
In addition the U.S. has a key strategic advantage with raw manufacturing materials such as: iron ore, coal, steel, precious metals and vast mineral assets which are needed in most new modern era manufacturing. Trump proposes we stop selling these valuable national assets to countries we compete against – they belong to the American people, they should be used for the benefit of American citizens. Period.
EXAMPLE: Currently China buys and recycles our heavy (steel) and light (aluminum) metal products (for pennies on the original manufacturing dollar) and then uses those metals to reproduce manufactured goods for sale back to the U.S. – Donald Trump is proposing we do the manufacturing ourselves with the utilization of our own resources; and we use the leverage from any sales of these raw materials in our international trade agreements.
When you combine FULL resource development (in a modern era) with with the removal of over-burdensome regulatory and compliance systems, necessarily filled with enormous bureaucratic costs, Donald Trump feels we can lower the cost of production and be globally competitive.
In essence, Trump changes the economic paradigm, and we no longer become a dependent nation relying on a service driven economy.
In addition, an unquantifiable benefit comes from investment, where the smart money play -to get increased return on investment- becomes putting capital INTO the U.S. economy, instead of purchasing foreign stocks.
With all of the above opportunities in mind, this is how we get on the pathway to rebuilding our national infrastructure. The demand for labor increases, and as a consequence so too does the U.S. wage rate which has been stagnant (or non-existent) for the past three decades.
As the wage rate increases, and as the economy expands, the governmental dependency model is reshaped and simultaneously receipts to the U.S. treasury improve. More money into the U.S Treasury and less dependence on welfare programs have a combined exponential impact. You gain a dollar, and have no need to spend a dollar. That is how the SSI and safety net programs are saved under President Trump.
When you elevate your economic thinking you begin to see that all of the “entitlements” or expenditures become more affordable with an economy that is fully functional.
As the GDP of the U.S. expands, so too does our ability to meet the growing need of the retiring U.S. worker. We stop thinking about how to best divide a limited economic pie, and begin thinking about how many more economic pies we can create.
Simply put, we begin to….
…..Make America Great Again !
Trumps Policy and Economic Solutions in Three Easy To Understand Parts:
Trump Solutions #1 – Domestic Policy
Trump Solutions #2 – Entitlement Reform / Economics
Trump Solutions #3 – The Chinese Example