Tags: Trump Administration | Trump | Backtrack | Faster | Growth

Trump May Have to Backtrack for Faster Growth

Image: Trump May Have to Backtrack for Faster Growth

 (AP)

By    |   Wednesday, 28 Dec 2016 10:28 AM

President-elect Donald Trump campaigned on a promise of increased economic growth, but to reach his high targets he may have to alter some of his most popular policies among his supporters, The New York Times reports.

One way Trump hopes to reinvigorate the economy is by overhauling and simplifying U.S. tax law. Trump's choice to head the Treasury, Steven Mnuchin, told CNBC in November, after the election, that the president-elect’s tax plan will include "a big tax cut for the middle class, but any tax cuts we have for the upper class will be offset by less deductions that pay for it."

Neil Irwin, writing for the Times, doubts that tax cuts will get the job done. According to him, the bigger problem is low productivity growth.

"Economic growth can happen two ways: More hours are worked, or more economic output is generated from each hour of labor," Irwin writes.

"Low productivity growth has been one of the chronic problems of the economy in the last decade, and an important contributor to the low growth rate, even if economists aren’t entirely sure why it’s happening. If we want living standards to rise over time, we need productivity to rise."

Irwin points to long-haul truck drivers as an example. Due to the rise of self-driving cars, he predicts that professional truck drivers may soon be replaced by self-driving trucks.

This would put 1.7 million truck drivers out of a job, but an automated system could be advantageous for the many businesses that rely on trucks for supplies and distribution, meaning a rise in the GDP.

Another problem for the U.S. in economic growth is the country’s labor force. The Congressional Budget Office predicts that the labor force will grow by .5 percent in the next 10 years. If Trump cracks down on immigration, it could cost the U.S. about 1 million legal workers per year.

"In other words," Irwin writes, "unless Mr. Trump wants to entertain immigration policies that are contrary to his campaign messages, demographics will be a major headwind making his growth promises all but impossible to achieve."

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President-elect Donald Trump campaigned on a promise of increased economic growth, but to reach his high targets he may have to alter some of his most popular policies among his supporters, The New York Times reports.
Trump, Backtrack, Faster, Growth
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2016-28-28
Wednesday, 28 Dec 2016 10:28 AM
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