1. Trump Trade Wars Could Crash Markets, Cost Millions of US Jobs
Trade wars are bad for almost everyone and Trump’s proposal to put severe limits on free trade goes up against over two hundred years of economic theory. It has been mocked by economists from across the spectrum.:
According to an assessment by the Peterson Institute for International Economics:
If implemented, these proposals would provoke retaliation by US trading partners, unleashing a trade war that would send the US economy into recession and cost millions of Americans their jobs. Industries that manufacture machinery used to create capital goods1 in the information technology, aerospace, and engineering sectors, which depend on exports, would be the most intensely affected. But the trade shock would also damage sectors not engaged in trade, such as wholesale and retail distribution, restaurants, and temporary employment agencies, particularly in regions where traded commodities are produced. Millions of American jobs that appear unconnected to international trade—disproportionately lower-skilled and lower-wage jobs—would be at risk.
Scott Lincicome of the Cato Institute:
While Trump might have the authority to pull the US out of the WTO, he could not unilaterally change the country’s existing tariff laws. However, said Lincicome, US withdrawal “would permit every other trading partner in the world to unilaterally block US exports, unilaterally infringe on US intellectual property.”
Beyond that, he added, “A US exit from the WTO would just crash markets. The economic uncertainty that would be unleashed by the world’s largest economy leaving a body that has been a pillar of the global economic framework since the 1940s? It would be devastating.”
2. Trump Tax Cuts Would Devastate Government Revenues
According to the independent Tax Foundation, Trump’s newly revised tax plan, although considerably less radical than his original plan, would still cost somewhere between $2.6 trillion and $5.9 trillion. The large spread is owing to a lack of clarity regarding Trump’s plan for business taxes. Basically, it’s the same tax-cutting theory that has devastated states like Kansas, only exponentially more irresponsible and applied on a national level. Robert Reich:
Such tax cuts produce giant budget deficits. Under Reagan and George H.W. Bush, the federal budget deficit exploded. It took Bill Clinton’s administration (of which I was proud to have been a member) to get the budget back in some semblance of balance.
Then, under George W. Bush, what happened? The deficit exploded again.
Trump would do all this on a far grander scale.
The government would end up without adequate resources to ensure that social security fulfills all its obligations, and without additional funds for healthcare, college costs, or any unforeseen expenses that might arise, including military emergencies. It could mean the end of America’s days as a predominant power in the world.
3. Trump Debt Default Would Put the Entire Global Economy at Risk
In May, Trump suggested that he could artificially boost the US economy by borrowing money and then refusing to pay all of it back: "I would borrow, knowing that if the economy crashed, you could make a deal," he said. This ignores the fact that the US dollar, and hence the US economy, is the very bedrock of global financial stability. It’s a classic case of thinking that you can have the cake and eat it. As Matthew Yglesias wrote:
Every assessment of risk in the financial system is based on the idea that the least risky thing is lending money to the federal government. If that turns out to be much riskier than previously thought, then everything else becomes much riskier too. Business investment will collapse, state and local finances will be crushed, and shockwaves will emanate to a whole range of foreign countries that borrow dollars.
Remember 2008, when the markets went from thinking housing debt was low-risk to thinking it was high-risk, and a global financial crisis was the result? This would be like that, but much worse — US government debt is the very foundation of low-risk investments.
4. Lack of Confidence in Trump Could Wreck the Stock Market
Economists have predicted that a Trump victory would cause the stock market to lose about 7 percentage points, even before the long-term effects of Trump’s policies would begin to set in.
Billionaire investor Mark Cuban has voiced a similar concern:
In an interview with Fox Business' Neil Cavuto on Tuesday, the investor and reality-TV star said that the uncertainty from a win by Republican presidential candidate Donald Trump would cause a collapse in the stock market.
Cuban previously expressed this view, but he reiterated it in Tuesday's interview.
"In the event Donald wins, there is no doubt in my mind the market tanks," Cuban said.
5. Trump’s Obsession with De-Regulation Could Create a Major Recession
Trump has said that he wants to cut “70 to 80 percent” of federal regulations. This would likely lead to tens of billions in increased healthcare costs as regulations that protect consumers from the effects of pollution, unsafe food, dangerous work environments and faulty products are scrapped. In addition, the removal of regulations that protect the public from various kinds of fraud will have enormous negative consequences as consumers find themselves with less spending power or, in many cases, driven into bankruptcy.
Trump has specifically called for the repeal of the Dodd-Frank Act, the very legislation that Congress put in place in order to prevent another 2008-style crisis so that the taxpayer would never again have to bail out financial institutions that took irresponsible risks. It is ironic that this issue was such an important impetus to the founding of the Tea Party and yet many of the movement’s supporters are now enthusiastically supporting a man who intends to take financial reform right back to square one.
6. Trump’s Global Warming Denial Could Lead to Economic Disaster
Trump famously thinks that global warming is a hoax invented by China and has pledged to pull the United States out of the Paris climate agreement. Professor Michael T. Klare of Hampshire College has argued that the loss of American participation that would follow a Trump victory would likely lead to a breakdown of the international cooperation that is vital in order to protect the world from the most disastrous consequences of climate change.
An open letter endorsed by 375 members of the National Academy of Sciences states that:
The political system also has tipping points. Thus it is of great concern that the Republican nominee for President has advocated U.S. withdrawal from the Paris Accord. A “Parexit” would send a clear signal to the rest of the world: "The United States does not care about the global problem of human-caused climate change. You are on your own." Such a decision would make it far more difficult to develop effective global strategies for mitigating and adapting to climate change. The consequences of opting out of the global community would be severe and long-lasting – for our planet’s climate and for the international credibility of the United States.
According to the Organisation for Economic Co-operation and Development (OECD), by 2050 inaction on climate change will lead to about 250 million people being left without access to adequate safe water and 3.6 million people per year dying as a result of air pollution. By this time climate change would be essentially “locked in” and there would be no obvious way of reversing it. All of this would have devastating consequences for global security and economic development.
7. Trump’s Mass Deportations Could Cause a Depression
There are obvious problems with the notion that getting rid of undocumented immigrants would open up enormous numbers of jobs for unemployed citizens. There would clearly be mismatches in fitness, skill set, aptitude and, perhaps most important of all, geographical location, between the employees being deported and the citizens in need of employment. You can’t take a job from a guy who is replacing roofing in California and give it to a middle-aged grandmother with arthritis who resides in Michigan. There is more to it than that though, as Ben White of Politico explains:
If 11 million immigrants were rounded up and removed from the country, many of the jobs they do — including restaurant, hotel and low-end construction work — could go largely unfilled, economists say. That would create a large and immediate hit to gross domestic product growth and the effects would ripple out to companies that supply goods and services to all those businesses. There would also be 11 million fewer people consuming goods and services, further driving down economic activity.
8. A Tsunami of Personal Bankruptcies
Trump’s plans to repeal Obamacare but has no plan to replace it with a system that covers people with preexisting conditions. This will inevitably lead to an upsurge in medical bankruptcies when people with preexisting conditions lose their coverage.
Student loans can generally not be forgiven through bankruptcy. However, the financial stress added by a large student loan repayment obligation reduces the amount of money available for paying off other debts. Thus, student loan debt can become a crucial factor in driving individuals toward bankruptcy. Trump’s plan for capping student debt will never materialize because it is funded by magical thinking, namely the assumption that he will be able to combine his massive tax cuts for the wealthy with enough cuts to government that there will actually be a surplus that can be used for student debt relief!
Student loan obligations and unpaid medical bills, along with the consequences of the repeal of consumer protection regulations and other adverse economic effects brought on by Trump’s policies, are likely to create a tsunami of personal bankruptcies. These bankruptcies will have a ripple effect: consumer spending will go down and small businesses will be hit because their credit is often dependent on the creditworthiness of their owners. Unemployment will rise. The total effect is unpredictable but it could be enormous.
9. Trump’s Ignorance Is a Threat in its Own Right
Trump has not demonstrated an ability to talk at length in a meaningful fashion about any aspect of macroeconomics. Even when answering short debate questions he seems to get lost in thought, talks ambiguously, or becomes incoherent. He seldom seems able to cite a specific figure or even a relevant economic principle. A president needs to have enough knowledge to be able to deal in a timely and decisive fashion with unforeseen economic problems of enormous consequence. From the Rachel Maddow Show at MSNBC:
“I have known personally every Republican president since Richard Nixon,” Harvard University economist Martin Feldstein, who chaired the CEA under Ronald Reagan, told the Journal. “They all showed a real understanding of economics and international affairs…. Donald Trump does not have that understanding and does not seem to be concerned about it. That alone disqualifies him in my judgment.”
Merely reviewing the spelling and grammar of Trump’s innumerable tweets would give most educated people cause for concern.
10. He Really Might Just Drop the Big One
Trump plans to go back on the Iran deal, which would open up the way once more for Iran to develop nuclear weapons. This would increase tensions between Iran and both Israel and Saudi Arabia. Presumably, Trump would bomb Iranian facilities once they were reactivated. However, the Iranian nuclear facilities are concealed and geographically diversified so a complete destruction of Iran’s nuclear program might well require ground troops. An invasion of Iran would also destroy the US’s relationship with Iraq, which is also predominantly Shiite.
Trump’s easily egged-on nature is likely to involve the US in unnecessary and expensive conflicts in any number of regions from the south China seas to eastern Europe. According to leading American economist Larry Summers:
Prosperity depends on a secure geopolitical environment. Requiring Japan and Korea to defend themselves and scaling back Nato is a prescription for emboldening China and Russia and promoting nuclear proliferation. A perception that the US is at war with Islam rather than with radical elements within Islam is an invitation to terrorism. In such an environment, investment and trade are unlikely to flourish.
But the worst kind of economic devastation of all is the one that ought to make any undecided voter think twice before voting for the Donald: the thought that a man who is so easily angered, so inconsiderate of others, and so quick to act reflexively should have his finger on the nuclear button. Even his own ghostwriter thinks Trump might well bring about the end of the world as we know it through a nuclear holocaust, a prospect that is truly too horrifying for us to adequately conceptualize.
Let us now enter the world of fantasy, just for one moment. Imagine the possibility of President Donald J Trump being impeached for some unspeakable crime. Impeachment is a process that takes time. Until the process is completed the president retains the authority to launch a nuclear first strike. Imagine President Donald J. Trump with nothing left to lose and with his finger still within easy reach of that dreadful button of obliteration. Because of his perilous blend of ignorance and spitefulness, the candidacy of Donald J Trump might just be the greatest emergency that the world has faced since the Cuban missile crisis.
