Trump Gets Detailed on Plan to Cut Taxes, Restore Jobs

Republican Donald Trump’s economic plan would reverse job losses born of lopsided trade arrangements and spur economic growth without exploding the national debt, his campaign argues in an analysis released Sunday.

The analysis projects that a harder line on trade would produce $1.74 trillion in additional tax revenue through 2026 to go along with $487 billion from regulatory reform and $147 billion from taking the shackles off the U.S. energy sector. The combined 10-year total in increased revenue, $2.374 trillion, nearly equals the $2.6 trillion cost of Trump’s tax cuts, as estimated by the nonpartisan Tax Foundation.

“It does break even when you factor in the spending cuts. It’s ludicrous for forecasting agencies to just look at the tax plan … The tax plan is just part of the overall economic plan.”

Counting spending cuts Trump has pledged, the plan would raise roughly as much money as it would cost in tax cuts.

Peter Navarro, a University of California, Irvine, professor and Trump adviser who prepared the report along with private equity investor and fellow Trump adviser Wilbur Ross, said independent studies that have projected massive deficits from Trump’s plan failed to account for the impact of non-tax reforms.

“It does break even when you factor in the spending cuts,” Navarro said. “It’s ludicrous for forecasting agencies to just look at the tax plan … The tax plan is just part of the overall economic plan.”

The detailed explanation of Trump’s plan, coming the day before the first presidential debate with Democrat Hillary Clinton, could undermine any talking points she may have planned to press about the Republican nominee’s lack of specifics. But Navarro said the timing is purely coincidental.

Rejecting ‘Defeatist’ View of Growth
The analysis breaks Trump’s economic plan into four major parts — taxes, regulations, energy and trade. It rejects as “unnecessarily defeatist” the prevailing conventional wisdom that shrinking labor participation due to retiring baby boomers means that slow economic growth is the “new normal.”

The Trump campaign argues that it is possible to improve annual increases in the gross domestic product from the 1.9 percent it has averaged since 2002 to the 3.5 percent annual rate it averaged from 1947 through 2001. If Trump succeeded in bumping growth to 3.5 percent, it would put to work most of the 2.2 million “missing workers” who have dropped out of the labor force, according to the campaign analysis. Including those workers — who are not counted in the official unemployment statistics because they are not looking for work, would increase the unemployment rate from 4.9 percent to 6.2 percent.

Much of the drag on economic growth comes from the country’s $500 billion trade deficit, Navarro said. That predominantly results from bad trade deals the country has entered over the past three decades, he added.

Navarro rejected arguments that forcing a renegotiation of those deals would prompt a trade war. First of all, he said, the U.S. already is in a trade war — and losing. Second of all, he said, America has plenty of leverage that it has been reluctant to use.

“We’re the biggest economy in the world and the biggest market in the world,” he said. “We need to negotiate on our terms, not theirs.”

[lz_table title=”Tax Revenue Boom” source=”Analysis by Trump advisers]Projected 10-year Increases
|
|Policy Change,2017-2026*
Trade reforms,$1.74 trillion
Regulation changes,$487 billion
Energy reforms,$147 billion
|
|Total,$2.374 trillion
|
* Nominal dollars
[/lz_table]

Alan Tonelson, an economic policy analyst who is not part of the Trump campaign, said the idea of stimulating sustainable growth by increasing domestic manufacturing is sound.

“There’s no doubt that the U.S. trade deficit, all else equal, does slow economic growth,” he said.

The Trump campaign analysis uses the “dynamic scoring” of the Tax Foundation to project the cost of tax cuts. The Washington thinking tank calculates that the nominal cost is $4.4 trillion to $5.9 trillion over 10 years. After factoring in increased economic activity, the cost of the tax cuts would be $2.6 trillion to $3.9 trillion. The campaign uses the low end of that estimate.

Regulation, Energy and Trade 
The campaign paper by Navarro and Ross projects tax gains from the following areas:

Regulations. The paper cites estimates by the Heritage Foundation and the National Association of Manufacturers that regulations cost about $2 trillion annually, a “hidden tax” amounting to almost $15,000 per household, according to the Competitive Enterprise Institute. Last year, alone, federal agencies adopted 3,300 final rules and regulations, up from 2,400 the year before.

A survey indicated that 82 percent of Business Roundtable members believe regulations are more burdensome in the United States than other developed countries.

The analysis cites other data indicating that regulations have a disproportionate impact on the manufacturing sector, costing $91,564 per employee to comply with federal mandates.

Trump’s plan to lighten regulations would result in $200 billion in additional profit. That, combined with addition tax revenue from that money being reinvested, would produce $439.51 billion over 10 years in 2016 dollars, and $487.1 billion after accounting for an annual inflation rate of 1.1082 percent.

Energy. The Trump campaign analysis cites a study by a Columbia University business professor Geoffrey Heal estimating the cost of cutting carbon emissions by 80 percent by 2050 at $5.3 trillion over 30 years. Clinton would drive up the cost of oil by $10 a barrel, which would cost $194 million a day, or $70.8 billion a year.

Meanwhile, Obama’s Clean Power Plan — which Clinton would continue — would raises electricity costs by $39 billion.

[lz_related_box id=”208944″]

Trump has vowed to remove restrictions of fossil fuel production. His campaign uses estimates from the Institute for Energy Research that increased energy supplies could boost GDP by $127 billion a year for seven years, and $450 annually fro 30 years.

The campaign estimates an impact of $147.3 billion over 10 years in new tax revenue.

Trade. Exports have grown from $59.7 billion in 1970 to $1.5 trillion by the end of 2015. But imports have grown much more dramatically, from $40.9 billion to $2.3 trillion over the same time period.

In 2015, the trade deficit in goods was $800 billion. The overall trade deficit was $500 billion, since America runs a trade surplus in services.

Eliminating the $500 billion trade deficit would result in $220 billion in additional wages, producing $61.1 billion in taxes. Increased profits would yield $11.25 billion in tax revenue. Counting taxes from money that is reinvested, the cumulative impact would be $766.8 billion in new tax revenue over a decade.

The impact would be even greater, the paper argues, because manufacturing activity creates spinoff economic activity. Adding new tax revenue from that increase economic activity yields a grand total of $1.74 trillion from trade reform.