The slow economic growth that has been a fixture of the Obama presidency could also thwart Democratic frontrunner Hillary Clinton if she wins the White House,
writes Mark Thoma in the Fiscal Times.
“Low economic growth can be blamed on the president and used to make political gains,” he says. “The strategy of blocking anything Democrats propose – even policies Republicans have favored in the past – pursued during the Obama administration will continue no matter how much indifference it shows to the millions and millions of people struggling to make ends meet.”
President Barack Obama is set to be the first president in U.S. history without economic growth of more than 3 percent a year as the country rebounded from the worst recession since the Great Depression. While the
unemployment rate has been cut in half to about 5 percent, other measures of economic health have been weak including
wage growth,
retail sales and
inflation, which is a key indicator for the Federal Reserve.
Thoma says the political implications of slow economic growth could include stronger demands by Republicans in the House and Senate for tax breaks and less government regulation, including a weakening of Dodd-Frank reforms intended to prevent Wall Street from needing taxpayer-funded bailouts.
“The promise of growth from tax cuts has proven false in the past, but it hasn’t made any difference in the Republican establishment’s dogged pursuit of this agenda,” Thoma says. “A prolonged slowdown in economic growth will give them even more ammunition to pursue an agenda that serves the interests of the donor class rather than helping the economy to flourish.”
Thoma says a positive result of a slow economy could include immigration reforms that would “open our doors to people who are likely to make important contributions to our economic well being” and greater incentives for research and development.
Jeffrey Gundlach, star investor and CEO of DoubleLine Capital, says that if Republican frontrunner Donald Trump is the next president, his economic policies may resemble those from the 1960s with a heavy emphasis on military and infrastructure spending.
“He might spend a lot of money on airports, roads and weapons. I think Trump would run up a huge deficit. Trump is very comfortable with debt. He’s a debt guy,”
Gundlach says in an interview with Swiss business magazine Finanz und Wirtschaft. “His whole business has had a lot of debt over time and he has gone bankrupt with several enterprises. So I think you could have a debt-fueled boom.”
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