HOW RELIABLE IS TRUMP’S ECONOMIC PLAN?
Even before the election results were disclosed, GOP nominee Trump has always touted his plans for continuous economic growth, especially during the campaign period. A key feature of these proposal increasing infrastructure spending to create 25M jobs for the citizens. The presumptive US chief stated he will allocate $1 trillion for the construction of roads, bridges, and institutions. However, despite the positive tone and appealing aura of this promises, many are skeptical that this can be realistically completed.
At first glance, his propositions can be likened to that of former leader Franklin Roosevelt, who managed to revive the economy after a major recession using the same measure. Despite the similarity, some executives have voiced out that Trump’s version seems to be more possible on paper rather than on actual implementation.
Among the many reasons for these doubts are the financial restrictions because unlike the usual way of obtaining the needed amount from federal funds, the incoming head insisted he will be getting it from the private sector--something that casts worries on whether this will suffice. His draft involves having privately owned firms put up $167B in equity, while the remaining $833 will be gathered through debt. Although the suggestion would remarkably lessen investor risk, they will still be the ones burdened by the risks associated with the deficit. This is why business experts deem the move as unclear unless heavily revised, and insisted that direct financing is required, instead of mere funding tools.
Moreover, there are other loopholes with the future ruler’s targets, such as failing to address where to get the money for ongoing maintenance costs of the establishments. In addition, heavy spending on infrastructure may result to inflation, especially since the unemployment rate in the country is already less than 5%. This could pose as a difficulty to get more workers to complete the projects, leading to the conclusion that the scheme will only be applicable in a scenario wherein many are in need of a job.
Because of this, his rather ambitious outlook of a 3.5% annual GDP acceleration is countered by several analysis, who placed the range at 1.4% per year until 2026, and this figure is only possible if Trump wins the approval for all his ideas. He has high chances of garnering majority of thumbs up considering that both houses are dominated by members of his party, but he might encounter conflicts with the opposing side, as they might push for a big chunk of the budget to come from public money.
Now the challenge for the succeeding president is to use his background in business to finish all his programs within the given available funds.
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