Economist Dean Baker came to Hofstra to discuss President Donald Trump’s economic agenda in his lecture, “The White House and Working America: What the 2016 Election Means for Our Jobs,” which was presented as part of the International Scene Lecture Series.
Baker, who co-founded the Center for Economic and Policy Research in 1999, focused on four major topics: fiscal policy, trade policy, Federal Reserve policy and the Affordable Care Act. Baker also explained how each of these macroeconomic decisions could directly affect individual Americans.
However, Baker’s speculations were underscored by an overwhelming sense of uncertainty regarding Trump’s next moves – particularly when juxtaposed with the extent to which President Barack Obama had laid out his economic agenda by this stage in the presidency.
“We knew exactly what he [Obama] wanted to do. He proposed his budget for 2010, he proposed that Feb. 26.”
While the U.S. House of Representatives Committee on the Budget website says the federal budget should be submitted by the first Monday in February, Trump has lagged behind in fulfilling this time horizon, exacerbating how difficult it is to predict his fiscal plans.
Baker focused primarily on Trump’s desired 9 percent (or $54 billion) increase in federal defense spending and the proposed cuts to help pay for it. During the campaign, Trump had promised not to cut Social Security or Medicare, which make up a combined 60 percent of the federal budget.
According to Baker, an increase in spending of this size (the 9 percent defense hike represents about three-tenths of the U.S. GDP) would hurt the economy when coupled with lower tax revenue and cuts to only minor programs.
“ ... if you’re increasing spending $54 billion on the military side, cutting $54 billion [in] legal services, all these other programs that will disproportionately help moderate income people, that’s probably going to be a net negative,” Baker said.
Baker then moved to another topic: trade. According to him, it is easier to predict where Trump will land on trade by analyzing his previous rhetoric.
Trump has embraced a trade stance that some economists have likened to commercialism. He has withdrawn the U.S. from the Trans-Pacific Partnership (a free trade deal negotiated by the U.S. and 12 other countries), has said he wants to withdraw from the North American Free Trade Agreement and has spoken negatively about the economic and trade policies of China – the United States’ largest trading partner.
However, Baker said even these actions do not provide a clear picture of the Trump administration’s trade agenda.
“He’s not going to sit down with China and give them a laundry list. He can say ‘hey, we have a priority,’ and if you ask me, the priority should be the currency,” Baker said. “He’s good at being bellicose, but when it comes to ‘what do you actually want to do?’ I really have no idea at this point.”
This struck a chord with one attendant, senior journalism major Erica Brosnan.
“The president wants to tax Mexican imports by 20, 30 percent to pay for the wall, but it doesn’t seem like his own party is too eager to pass that. It’s not really clear now how or if he will pass it without them, so even that is in the air,” Brosnan said.
Baker’s last topic was the Affordable Care Act, where he focused on both the economic and political factors that are affecting Trump and the rest of the Republican Party’s promises to repeal and replace the ACA with something new. In doing so, Baker yet again stressed the uncertainty of Trump’s proposals.
“[Republicans] said they’re going to make it so that everyone can get insurance, they said that they’re not going to require people to get insurance, they’ve talked about having watered down plans … but what that’s going to mean is that the people who actually have serious health conditions are either not going to be able to get insurance at all, or they’re going to have to pay a lot of money for it,” Baker said.
Students shared similar concerns. “The way he speaks about pretty much everything leads me to believe he doesn’t have a clear plan developed,” said Lexi D’Attile, a senior psychology major. “... I don’t trust him to fund agencies or causes that are important to me [like healthcare].”
Some attendees, however, disagreed with the notion that the Trump team does not have a solid set of plans, suggesting instead that while the public may not know Trump’s next moves, the administration may very well have a specific set of plans in mind.
“I don’t agree with him that there is a lot of confusion within Trump’s inner circle,” said Igor Arango, a senior political science and mathematical economics dual major. “They make it look that way but, in my opinion, the inner circle is handling it more as a corporation dealing with trade secrets.”