Trump’s Dynamic Tax Policy

Lower Rates Across The Board

:: By: Larry Walker, II ::

Here’s an excerpt from Donald Trump’s Tax Plan which may be found on his official website www.donaldjtrump.com :

TAX REFORM THAT WILL MAKE AMERICA GREAT AGAIN

The Goals of Donald J. Trump’s Tax Plan

Too few Americans are working, too many jobs have been shipped overseas, and too many middle class families cannot make ends meet. This tax plan directly meets these challenges with four simple goals:

  1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.

  2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.

  3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.

  4. Doesn’t add to our debt and deficit, which are already too large.

The Trump Tax Plan Achieves These Goals

  1. If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.

  2. All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.

  3. No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.

  4. No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.

Again, this is only an excerpt; you may read the rest of Trump’s detailed tax plan on his website: Trump – Make America Great Again!

Under the Trump Plan, those in the lowest quintile, and most in the second and third quintiles (depending on marital status) won’t pay any income taxes at all. This is brilliant, considering that as a whole it’s estimated that those making less than $50,000 currently receive back roughly $37 billion more from the government, each year, than they pay in (see table below). This is due to a series of redundant, and costly tax expenditures. Removing upwards of 75 million households from filing requirements actually amounts to savings of no less than $370 billion, in government speak.

When it comes to simplifying the tax code, eliminating the filing requirements of some 75 million households turns out to be a big money saver. It will directly reduce the processing and subsequent examination, by the Internal Revenue Service, of around half of all tax returns currently filed. Since most individuals under this threshold only file to receive refundable tax credits, or to determine that they don’t owe any taxes at all, and around 37% of all individual returns audited involve the Earned Income Credit, once Trump’s plan is implemented the size of the IRS may be reduced dramatically.

Under Trump’s plan, if you are single, the first $25,000 you earn won’t be taxable, and if you are married, the first $50,000 you earn will be exempt from taxes (see table below). This will amount to a huge tax cut for the many, at the expense of a few. Compared to Dr. Ben Carson’s idea, where the government would get up to $2,500 or $5,000 from the same, Trump’s plan is a huge windfall for the working poor and middle class. Are you for lower taxes? Will this help you?

Trump’s plan lowers the top marginal tax rate to 25%, or to the same level imposed from 1925 to 1931 under the 1924 Mellon Tax Bill. So this is not a shot in the dark, but rather a return to policies the U.S. had in place during the Roaring Twenties, back when the country truly was great. Compared to the present tax code, Trump’s plan will reduce income taxes for a married couple making $85,000 per year from around $8,800 to just $3,500 (assuming 2015 taxable income of $65,000). Does this appeal to you? Is there some part of this plan that you don’t comprehend?

According to Trump, the huge reduction in rates will make many of the current exemptions and deductions unnecessary or redundant. “Those within the 10% bracket will keep all or most of their current deductions. Those within the 20% bracket will keep more than half of their current deductions. Those within the 25% bracket will keep fewer deductions. Charitable giving and mortgage interest deductions will remain unchanged for all taxpayers.”

Trump’s tax plan also reduces corporate taxes from a top rate of 39% to just 15%, making the U.S. one of the most attractive places to do business worldwide. But then he goes a step further, by applying the same 15% cap to income earned by freelancers, sole proprietors, unincorporated small businesses and pass-through entities (i.e. partnerships and S-corporations), which are all taxed at the individual level. According to Trump, these lower rates will provide a tremendous stimulus for the economy, as in significant GDP growth, a huge number of new jobs and an increase in after-tax wages for workers.

Finally, Mr. Trump’s plan eliminates the death tax, reduces or eliminates deductions and loopholes available to the wealthy, phases out the tax exemption on life insurance interest for high-earners, ends the current treatment of carried interest for speculative partnerships, adds a one-time repatriation of corporate cash held overseas at a discounted 10% tax rate, ends the deferral of taxes on corporate income earned abroad, and reduces or eliminates corporate loopholes that cater to special interests.

Coupled with his well aired balanced trade initiative, which seeks to eliminate our ongoing trade deficits with China, Mexico, Japan and other nations, every true Conservative is forced to concede that Donald Trump has a viable, solidly conservative, plan for this economy, and is indeed a serious candidate. Like him or not, when you lay Donald Trump’s tax reduction plan next to any other candidate’s, it’s clear that his plan will have the greatest positive impact on 99% of all Americans. No other plan comes close. It’s time for the mainstream media to stop focusing on the small stuff, and begin taking Trump and his policies seriously.

Related:

2016 Conservative Tax Plans: Trump vs. Carson

Top GDP Growth Rates in U.S. History

30-Year Trade Deficit with Mexico

30-Year Trade Deficit with China

2016 Conservative Tax Plans: Trump vs. Carson

Placing Principles before Personalities ::

Every time in this century we’ve lowered the tax rates across the board, on employment, on saving, investment and risk-taking in this economy, revenues went up, not down. ~ Jack Kemp

:: By: Larry Walker, II ::

Dr. Ben Carson doesn’t really have a tax plan at all, yet he’s number 2 in the polls among conservative Republicans. On the other hand, Donald Trump has a very detailed tax reduction plan. In a nutshell, Trump’s plan eliminates taxes on individuals making less than $25,000 and on couples making less than $50,000, lowers the top marginal rate to 25%, just as Calvin Coolidge did under the 1924 Mellon Tax Bill, and lowers the top corporate tax rate to just 15%. It’s time for conservatives to grow up and start focusing on principles rather than personalities. Do that and Trump wins easily.

Dr. Ben Carson’s Tax Theory

Here’s the entirety of Dr. Ben Carson’s Tax Plan which may be found on his official website www.bencarson.com :

The American People Deserve a Better Tax Code

The current tax code now exceeds 74,000 pages in length. That is an abomination.

It is too long, too complex, too burdensome, and too riddled with tax shelters and loopholes that benefit only a few at the direct expense of the many.

We need wholesale tax reform.

And, we won’t get that from career politicians in Washington. They’re too deeply vested in the current system to deliver the kind of bold, fresh, new reforms that the American people are demanding.

We need a fairer, simpler, and more equitable tax system. Our tax form should be able to be completed in less than 15 minutes. This will enable us to end the IRS as we know it.

Yep, that’s it. Thus far, Dr. Carson has been able to skirt by without offering more than a shallow critique of the current tax system. His overly simplistic solution fails to address landlords, freelancers, investors, owners of pass-through entities, owners of multiple entities, corporations, trusts and estates, and the death tax to name a few. A simple tax form that takes 15 minutes might work for someone who receives one or two W-2 Forms, a pension, or Social Security benefits, but it’s not going to cut it for the varied real-life complexities that many Americans face in this day and age.

“It is too long, too complex, too burdensome, and too riddled with tax shelters and loopholes that benefit only a few at the direct expense of the many.” Yeah, yeah, that’s what they all say, but what’s Carson’s alternative? In an interview with FOX Business Network’s Stuart Varney, Dr. Carson elaborated on his tax proposal, stating that it would be based on the Old Testament Biblical principle of tithing. Great, just like the Israelites were commanded to do around the year 1300 B.C.

Dr. Carson stated: “You make $10 billion, you pay a billion. You make $10, you pay one [dollar]. [Of] course I would get rid of all the deductions and all of the loopholes but here’s the key, people, they look at a guy who put in a billion dollars, he’s got $9 billion left, that’s not fair — we need to take more of his money. That’s called socialism. And what made America … a great nation was we had a very different attitude. We would say he just put in a billion dollars, let’s create an environment that’s even better for him so that next year he can make $20 billion and put in $2 billion. That’s how we went from nowhere to the pinnacle of the world in record time. And it’s growth, it’s not taking what’s there and dividing it up and making it smaller.”

According to Dr. Carson’s statement above, “What made America a great nation was we had a very different attitude… That’s how we went from nowhere to the pinnacle of the world in record time,” as if to say that America once had a flat-rate tax structure. But when was that? Perhaps he’s confusing America with pre-Christian Israel, because prior to 1861, and between the years 1873 and 1912, the U.S. government was funded strictly through customs duties and tariffs levied on imported goods.

And, although a 3% flat-rate tax was proposed under the Revenue Act of 1861, as a temporary means of funding the Civil War, no revenue was ever raised under the act, and it was quickly replaced by a progressive rate structure under the Revenue Act of 1862. At no time since the Revenue Act of 1913, and at no time prior, has the U.S. ever been funded by a flat-rate income tax. So where is Dr. Carson coming from?

Okay, so if you make $10, $10,000 or $25,000 under Dr. Carson’s arrangement, you’ll pay $1, $1,000 or $2,500 in taxes. Never mind that depending on the size of your family, after your living expenses have been met, you might not have a penny left wherewith to pay it. Yet this he fathoms as fair. And, according to Dr. Carson, his program is great if you make $10 billion a year, but that’s primarily because you’ll see a 49% reduction in your effective tax rate, from where it is today. But for those less fortunate, including the entire middle class, Carson’s theory will result in a massive tax hike.

Under Dr. Carson’s 10% Deal, individuals within the lowest, second, middle and fourth quintiles, that currently pay average effective individual tax rates of -7.5%, -1.3%, 2.4% and 5.8%, respectively, will see their tax rates rise by at least 72%, and by as much as 233%. Increasing the rate to 15% only compounds the problem. What’s wrong with this picture? Well, for one, the only growth it produces is among the uber-wealthy. In fact, it appears to be just another means of benefiting “only a few at the direct expense of the many” – a direct contradiction to his stated goal.

So let me get this straight. Under Dr. Carson’s tax program, those in the highest quintile, including billionaires, who currently pay an average effective tax rate of 14.2%, will receive a 30% to 49% tax cut, while those in the lower quintiles receive a 72% to 233% tax hike. And how is this supposed to help the economy? More importantly, how does it help you and me? Well, it doesn’t. What Dr. Carson’s strategy actually does is make the rich richer and the poor soul down to his last $10 a dollar poorer.

Carson mentions nothing about corporate tax reform, disincentivizing corporate inversions, balancing trade, growing the economy, or expanding the workforce. He claims his proposal will be revenue neutral, which is at best a farce, but even if it somehow were – why would anyone care? Dr. Carson’s approach ransacks the middle class, plunders the working poor, and only profits the wealthiest among us. It’s a strategy unworthy of consideration by serious-minded conservative voters, as in my opinion is the entire Carson candidacy. Phooey!

Donald Trump’s Tax Plan

Here’s an excerpt from Donald Trump’s Tax Plan which may be found on his official website www.donaldjtrump.com :

TAX REFORM THAT WILL MAKE AMERICA GREAT AGAIN

The Goals of Donald J. Trump’s Tax Plan

Too few Americans are working, too many jobs have been shipped overseas, and too many middle class families cannot make ends meet. This tax plan directly meets these challenges with four simple goals:

  1. Tax relief for middle class Americans: In order to achieve the American dream, let people keep more money in their pockets and increase after-tax wages.

  2. Simplify the tax code to reduce the headaches Americans face in preparing their taxes and let everyone keep more of their money.

  3. Grow the American economy by discouraging corporate inversions, adding a huge number of new jobs, and making America globally competitive again.

  4. Doesn’t add to our debt and deficit, which are already too large.

The Trump Tax Plan Achieves These Goals

  1. If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.

  2. All other Americans will get a simpler tax code with four brackets – 0%, 10%, 20% and 25% – instead of the current seven. This new tax code eliminates the marriage penalty and the Alternative Minimum Tax (AMT) while providing the lowest tax rate since before World War II.

  3. No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15% of their business income in taxes. This lower rate makes corporate inversions unnecessary by making America’s tax rate one of the best in the world.

  4. No family will have to pay the death tax. You earned and saved that money for your family, not the government. You paid taxes on it when you earned it.

Again, this is only an excerpt; you may read the rest of Trump’s detailed tax plan on his website: Trump – Make America Great Again!

Under the Trump Plan, those in the lowest quintile, and most in the second and third quintiles (depending on marital status) won’t pay any income taxes at all. This is brilliant, considering that as a whole it’s estimated that those making less than $50,000 currently receive back roughly $37 billion more from the government, each year, than they pay in (see table below). This is due to a series of redundant, and costly tax expenditures. Removing upwards of 75 million households from filing requirements actually amounts to savings of no less than $370 billion, in government speak.

When it comes to simplifying the tax code, eliminating the filing requirements of some 75 million households turns out to be a big money saver. It will directly reduce the processing and subsequent examination, by the Internal Revenue Service, of around half of all tax returns currently filed. Since most individuals under this threshold only file to receive refundable tax credits, or to determine that they don’t owe any taxes at all, and around 37% of all individual returns audited involve the Earned Income Credit, once Trump’s plan is implemented the size of the IRS may be reduced dramatically.

Under Trump’s plan, if you are single, the first $25,000 you earn won’t be taxable, and if you are married, the first $50,000 you earn will be exempt from taxes (see table below). This will amount to a huge tax cut for the many, at the expense of a few. Compared to Dr. Carson’s idea, where the government would get up to $2,500 or $5,000 from the same, Trump’s plan is a huge windfall for the working poor and middle class. Are you for lower taxes? Will this help you?

Trump’s plan lowers the top marginal tax rate to 25%, or to the same level imposed from 1925 to 1931 under the 1924 Mellon Tax Bill. So this is not a shot in the dark, but rather a return to policies the U.S. had in place during the Roaring Twenties, back when the country truly was great. Compared to the present tax code, Trump’s plan will reduce income taxes for a married couple making $85,000 per year from around $8,800 to just $1,500 (assuming taxable income of $65,000). Does this appeal to you? Is there some part of this plan that you don’t comprehend?

According to Trump, the huge reduction in rates will make many of the current exemptions and deductions unnecessary or redundant. “Those within the 10% bracket will keep all or most of their current deductions. Those within the 20% bracket will keep more than half of their current deductions. Those within the 25% bracket will keep fewer deductions. Charitable giving and mortgage interest deductions will remain unchanged for all taxpayers.”

Trump’s tax plan also reduces corporate taxes from a top rate of 39% to just 15%, making the U.S. one of the most attractive places to do business worldwide. But then he goes a step further, by applying the same 15% cap to income earned by freelancers, sole proprietors, unincorporated small businesses and pass-through entities (i.e. partnerships and s-corporations), which are all taxed at the individual level. According to Trump, these lower rates will provide a tremendous stimulus for the economy, as in significant GDP growth, a huge number of new jobs and an increase in after-tax wages for workers.

Finally, Mr. Trump’s plan eliminates the death tax, reduces or eliminates deductions and loopholes available to the uber-wealthy, phases out the tax exemption on life insurance interest for high-earners, ends the current treatment of carried interest for speculative partnerships, adds a one-time repatriation of corporate cash held overseas at a discounted 10% tax rate, ends the deferral of taxes on corporate income earned abroad, and reduces or eliminates corporate loopholes that cater to special interests.

Coupled with his well aired balanced trade initiative, which seeks to eliminate our ongoing trade deficits with China, Mexico, Japan and other nations, every true Conservative is forced to concede that Donald Trump has a viable solidly conservative plan for this economy, and is indeed a serious candidate. Like him or not, when you lay Donald Trump’s tax reduction plan next to Ben Carson’s tax the poor philosophy, it’s clear that only one has a workable plan. Dr. Ben Carson may be a nice man, but it’s time to admit that there isn’t any substance behind his shallow rhetoric. It’s time for Conservatives to stop focusing on personalities, and start taking Donald Trump and his policies seriously.

Trump’s Dynamic Growth Policies

Top GDP Growth Rates in U.S. History

:: By: Larry Walker, II ::

In an October 4, 2015 interview on Meet the Press, Donald Trump was asked which government programs he will cut so his tax reduction plan won’t blow a hole in the deficit.

Trump’s first response described how we are going to save a lot in administrative costs by exempting millions of Americans from filing income tax returns. Under his plan, single individuals making under $25,000 and couples making less than $50,000 will not owe any income tax, and will thus not be required to file tax returns. This totally makes sense to me, as I outlined a similar plan in a post entitled, Tax Simplification, Part II – Saving $1,756 Billion, Overnight. Although it’s only part of the answer, it may actually be a bigger deal than some imagine.

Next, Mr. Trump remarked that his dynamic revenue plan focuses on growth. “We’re going to grow the economy. If China grows at 7%, they’re having a terrible year. We’re saying we can’t grow at 3% or 4%.” Overriding the host’s rude interruptions, Mr. Trump continued, “If we do 6% or 7% under my plan, everybody benefits.”

Snarky host, Chuck Todd, blurted out, “We’ve never done [sic]; we’ve never had a year at 6% or 7%.”

Of course, the public should be aware of Mr. Todd’s background. Although he may sound like an economic expert to some, he actually attended George Washington University from 1990 to 1994, majoring in political science with a minor in music, but never graduated. He certainly lacks proficiency in matters involving business, economics, or finance.

Mr. Todd would have no idea that the U.S. economy has in the past grown at rates as high as follows:

  • 10.8% (1934)
  • 12.9% (1936)
  • 17.7% (1941)
  • 18.9% (1942)
  • 17.0% (1943)

He would likewise have no clue that, back in the good old days, the U.S. economy grew in the 7% to 8% range (see chart below):

  • 7.3% (1984)
  • 7.1% (1955)
  • 8.1% (1951)
  • 8.7% (1950)
  • 8.0% (1944)
  • 8.8% (1940)
  • 8.0% (1939)
  • 8.9% (1935)

In fact, Ronald Reagan was the last American president to put together a cogent pro-growth economic plan which thrust GDP above the 7.0% mark. Of course Mr. Todd could have looked this up before making a fool out of himself and NBC, but like many of his colleagues, he suffers from the recency effect. He is unable to see beyond the pathetic growth rates of -3.0% to 2.5%, which the U.S. has realized since 2009 (i.e. their new normal).

Mr. Trump continued to discuss how his tax plan will disincentivize corporate inversions (where U.S. companies move overseas to capitalize on lower tax rates and cheap labor). He described how his plan will incentivize U.S. companies to bring an estimated $2.1 trillion (or more) in profits held overseas back to the U.S. for domestic investment. Both policies work to raise GDP, expand the workforce and boost tax revenues.

Trump also discussed his plan to balance our longstanding trade deficits with China, Mexico, Japan and other nations through imposing a scaled tariff. Since over the last decade, trade deficits with the three named countries alone amount to $2.7 trillion, $602.6 billion, and $716.5 billion, respectively, Trump’s balanced trade initiative could add another $4.1 trillion to the national economy.

Mr. Todd continued to interrupt, “We still have a hole in the deficit that this tax plan blows open; unless you tell us what you’re cutting.” Of course this is a classic gotcha question, since most liberals view cutting anything, even waste, fraud and abuse, as a negative.

Given the anemic growth rates he and other liberals are accustomed to, failing to account for the $1.8 trillion saved by exempting millions from income tax filing requirements, and gains realized through disincentivizing corporate inversions, recovering overseas profits, and balancing trade, Chuck Todd concluded that Donald Trump’s tax plan may add as much as $10 trillion to the debt over 10 years.

To this, Mr. Trump simply reiterated, “If we can get it (i.e. the growth rate) up to 5% or 6% it’s a huge difference.”

Mr. Todd again interrupted, “Okay, 6% is something we have not done.”

Trump refuted, “Well, we used to do it in the old days.”

It turns out that Mr. Todd is wrong, and that Mr. Trump, who has the kind of thinking America needs to solve its trade, growth, and debt problems, is correct. The chart here shows U.S. GDP growth rates from 1930 through 2014. Growth of 6% or more has been achieved numerous times in the past and is entirely possible in the future. The first step in getting there is to stop listening to know-nothing media pundits. The second step is to elect a president with notable acumen in financial matters.

“Solving a multi-trillion dollar problem just may require the mind of a billionaire.”

References:

Data Worksheet

Bureau of Economic Analysis – Interactive Data

30-Year Trade Deficit with Mexico

30-Year Trade Deficit with China

Tax Simplification, Part II – Saving $1,756 Billion, Overnight

Big U.S. firms hold $2.1 trillion overseas to avoid taxes: Study

An Economic Program for Stimulating U.S. Economic Growth

30-Year Trade Deficit with Mexico

Trump Nails It

– By: Larry Walker II –

Last year our trade deficit with Mexico totaled $53.8 billion, and is projected to end about the same in 2015. When the last three decades are summed, we find that the United States 30-year trade deficit with Mexico amounts to $910.2 billion. Although this has been great for Mexico, it hasn’t been so great for the United States.

Looking back over the last 30 years, we find that the United States actually ran trade surpluses with Mexico in 1991 through 1994, and then came the North American Free Trade Agreement (NAFTA – 1994). Since NAFTA, the United States annual trade deficits with Mexico have totaled $897.8 billion (since 1995). By comparison, the deficit amounted to just $13.7 billion during the 9 years preceding NAFTA.

U.S. Trade Deficit with Mexico (1985 to 2015)

2015 $31.2 billion (through July)

2014 $53.8 billion

2013 $54.5 billion

2012 $61.7 billion

2011 $64.6 billion

2010 $66.3 billion

2009 $47.8 billion

2008 $64.7 billion

2007 $74.8 billion

2006 $64.5 billion

2005 $49.9 billion

2004 $45.2 billion

2003 $40.6 billion

2002 $37.1 billion

2001 $30.0 billion

2000 $24.6 billion

1999 $22.8 billion

1998 $15.9 billion

1997 $14.5 billion

1996 $17.5 billion

1995 $15.8 billion

1994 ($1.3) billion (surplus)

1993 ($1.6) billion (surplus)

1992 ($5.4) billion (surplus)

1991 ($2.1) billion (surplus)

1990 $1.9 billion

1989 $2.2 billion

1988 $2.6 billion

1987 $5.7 billion

1986 $4.9 billion

1985 $5.5 billion

Not only are we losing in trade with Mexico, but the Mexican government has allowed millions of its own citizens, and those from nations to its south, to pour over our southern border illegally. That’s right! The Mexican government has been mostly complicit, looking the other way while tens of thousands boarded trains from its southernmost to its northernmost border, allowing them to cross our border without any resistance. Although lately Mexico claims to be clamping down on illegal border crossings, the damage has already been done.

There are folks both left and right who say, “Free-trade is good for America, because it allows us to work less and buy cheaper goods.” Although plausible on paper, the theory fails once we tally the last thirty years results. Looking back over the last 30 years, we discover that not only has the U.S. lost nearly $5.0 trillion in national wealth ($4 trillion to China and $1 trillion to Mexico alone), but according to the Bureau of Labor Statistics, manufacturing jobs in the U.S. have declined from 18.0 million in 1985 to just 12.3 million as of August 2015.

According to Raymond Richman (Ph.D. in Economics from the University of Chicago and Professor Emeritus of Public and International Affairs at the University of Pittsburgh), “We should end our huge chronic trade deficits which have decimated our manufacturing sector and caused the loss of millions of good American manufacturing jobs. Our policy should be balanced trade which economic theory supports rather than free trade which is supported by economic theory only when countries have a common currency and free movement of capital and labor (as among the States of the United States). We should use the “Scaled Tariff” (our invention!), a single-country-variable-tariff that rises as trade deficits widen significantly, whatever the reason, and are reduced to zero as trade is brought into balance.”

Once aware that our flawed trade policy has resulted in the siphoning away of more than $5 trillion in national wealth ($1 trillion to Mexico alone) and 6 million manufacturing jobs, it should be easy to understand how Mexico will pay for the new border wall. Mr. Trump has his finger on two of the most glaring problems with our economy, illegal immigration and our Lose-Lose foreign trade policy. Balancing our trade deficit, by any means necessary, is a vital component in the quest to make America great again.

References:

An Economic Program for Stimulating U.S. Economic Growth

30-Year Trade Deficit with China – Maybe Trump Gets It

U.S. Census Bureau – Trade in Goods with Mexico

Bureau of Labor Statistics – CES Establishment Data – Manufacturing

U.S. Census Bureau – Income and Poverty in the United States: 2013

30-Year Trade Deficit with China

Port of Savannah

Maybe Trump Gets It

-By: Larry Walker II-

This year-to-date, the United States has imported $267.7 billion in goods from China, while exporting just $65.4 billion in goods to China. That amounts to a current year trade deficit of $202.3 billion, in the first seven months alone. Looking back over the last 30 years, the last time our mutual trade comprised any semblance of balance was in 1985.

Our trade deficit with China was a mere $6.0 million in 1985 (the last time it would amount to less than a billion dollars). From a trade deficit of just $6.0 million in 1985, the imbalance suddenly jumped to $1.7 billion by 1986. It has grown progressively worse almost every year since. Last year our trade imbalance with China reached a record $343.1 billion, and it is projected to end higher this year.

When the last three decades are summed, we find that the United States 30-year trade deficit with China amounts to $3.9 trillion. To top it off, the imbalance is clearly growing worse year by year. Although this has been great for China, it hasn’t been so great for the U.S.

U.S. Trade Deficits with China (1985 to 2015)

2015 $202.3 billion (through July)

2014 $343.1 billion

2013 $318.7 billion

2012 $315.1 billion

2011 $295.2 billion

2010 $273.0 billion

2009 $226.9 billion

2008 $268.0 billion

2007 $258.5 billion

2006 $234.1 billion

2005 $202.3 billion

2004 $162.3 billion

2003 $124.1 billion

2002 $103.1 billion

2001 $83.1 billion

2000 $83.8 billion

1999 $68.7 billion

1998 $56.9 billion

1997 $49.7 billion

1996 $39.5 billion

1995 $33.8 billion

1994 $29.5 billion

1993 $22.8 billion

1992 $18.3 billion

1991 $12.7 billion

1990 $10.4 billion

1989 $6.2 billion

1988 $3.5 billion

1987 $2.8 billion

1986 $1.7 billion

1985 $6.0 million

There are folks on both the left and right who say, “Free-trade is good for America, because it allows us to work less and buy cheaper goods.” Although it may be true that free-trade allows us to purchase more goods at lower prices, a problem arises when the exchange is so grossly out of balance. Although plausible on paper, the theory fails once we tally the last thirty years results. Looking back, we discover that not only has the U.S. lost $3.9 trillion in wealth (with just one country), but according to the Bureau of Labor Statistics, manufacturing jobs in the U.S. have declined from 18.0 million in 1985 to just 12.3 million as of August 2015.

The idea of working less and being able to buy cheaper goods might sound great to someone who’s working their behind off and doing well, but not so much for those forced to sit on the sidelines. As I recently commented on an Anti-Trump Trade Policy Video, “How is the guy, in your example, supposed to go to Wal-Mart to buy an imported Chinese TV, if he has no job and is stuck on food stamps, unemployment or welfare? And, why is the poverty rate in the U.S. higher than it was 30 years ago?”

If you think a policy resulting in the siphoning away of $4 trillion in national wealth and 6 million manufacturing jobs is somehow winning, then perhaps that’s why you’re not. Maybe Mr. Trump is more knowledgeable than thou, at least when it comes to the economy.

References:

U.S. Census Bureau – Trade in Goods with China

Bureau of Labor Statistics – CES Establishment Data – Manufacturing

U.S. Census Bureau – Income and Poverty in the United States: 2013