Keynes Would Have Loved Trump’s Economic Plan

by | Nov 22, 2016

Keynes Would Have Loved Trump’s Economic Plan

by | Nov 22, 2016

Trump’s plan is what Keynes would have prescribed!

Most economic commentators such as a Nobel Laureate Paul Krugman should be delighted with the US president-elect Donald Trump’s economic plan for it is going to be along the lines of Keynesian economics.

One of Trump’s promises is a massive infrastructure spending program. According to Trump,

We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.

Mr. Trump said at one point in the campaign that he would double the $275 billion infrastructure plan that Hillary Clinton proposed. According to Trump’s plan he is also promising to create 25 million jobs over 10 years.

Trump Doubles Down on Deficit Spending

Trump has also promised tax cuts for all Americans. His plan includes lowering the rate on the highest earners from its current 39.6 percent to 33 percent and also lowering the corporate income tax rate from 35 percent to 15 percent.

Various estimates have put the cost of his tax cuts at some $6 trillion over 10 years. In addition to this Trump has also promised to boost US military spending.

It is not possible to lower taxes and raise government spending at the same time

Nothing in Trump’s plan suggests that he is aiming at generating more real wealth. His entire focus is to generate an increase in employment regardless of whether this increase in employment is in response to wealth generating activities or not.

This is quite disappointing, given Mr. Trump’s business credentials one would suppose he would understand the meaning of profitable versus non-profitable activities.

Note that Trump’s plan also suggests a lowering of taxes and a corresponding increase in government outlays. Obviously, this is a contradiction since it is not possible to effectively lower taxes without a corresponding reduction in government outlays.

The plan is likely to boost the money supply growth rate.

Read the rest at the Mises Institute.

About Frank Shostak

Frank Shostak's consulting firm, Applied Austrian School Economics, provides in-depth assessments of financial markets and global economies.

Our Books

latest book lineup.

Related Articles

Related

In Defense of Inaction

In Defense of Inaction

On March 17, The Wall Street Journal published an op-ed by a woman named Mary Anastasia O’Grady titled, “Giving up on Haiti Isn’t a U.S. Option.” She argues, in short, that Americans don’t have a choice but to continue doing all the things that have failed in the past...

read more
Is America a Rogue Superpower?

Is America a Rogue Superpower?

“Unipolar” used to mean that the United States was, at least in theory, alone in leading the world. Now “unipolar” means that the United States is alone and isolated in opposition to the world. In global affairs, a hegemon is a nation that leads because it has the...

read more
Collateral Murder 2.0

Collateral Murder 2.0

When the footage of Reuters journalists and civilians were Wikileaked to the world, there was outrage. A shame exhibited by some in the American government caused them to reel from the crime that had been exposed, to downplay the prevalence of such murders, and...

read more
The Fed and the Fight for 2%

The Fed and the Fight for 2%

Last week, Jerome Powell & Co. met to issue an immediate decision regarding the status of the federal funds rate for March, and to provide some insight into the trajectory of monetary policy for the rest of 2024 and into 2025. As with the past few inflation...

read more
Truth Has No Chance on Capitol Hill

Truth Has No Chance on Capitol Hill

Americans are encouraged to believe that the U.S. Congress is practically on automatic pilot to serve the public. Happily, most Americans are not so gullible and Congress receives much of the contempt it deserves in public opinion polls. But the media and the...

read more