Can President-elect Donald Trump deliver on his economic promises?

During his presi-dential campaign, Donald Trump, the candidate, made a number of promises to the US voters, and now it is time to ask whether he can deliver on them! Some of his promises are easy to keep, and these include his opposition to Trans Pacific Partnership (TPP), the Paris Climate Change Treaty, and his desire to build a wall on the US border with Mexico. However, some of his other well-publicised initiatives would surely face strong opposition from Congress, international leaders, and even the American public. And then, there are those measures that might be too expensive to implement and President-elect Donald Trump might find it easier to backtrack rather than fight to push forward with. However, even if Trump expects that his adoring supporters will forget some of his promises or hopes that a miracle will happen to lift the US economy out of the current state of lacklustre growth, they will not forget his most memorable slogan, "Make America Great Again", and he needs to come up with a plan to address the problems of this country, some of which he brought to the forefront during a very contentious electioneering.

Let me go back a little. We all know that Donald Trump won the US presidential contest because of his powerful agenda. He promised to destroy ISIS, stop China from taking away US jobs, and to halt the flow of illegal immigrants from Mexico. However, these are only some of the more popular ones, and if we go over the campaign speeches, parse his countless online outbursts on Twitter, rerun the three Presidential debates, and scan the innumerable statements that came from him during the long campaign, it would be difficult not to wonder whether some of his promises are not purely wishful thinking! Just to take one of the more outrageous ones, Donald Trump offered to create a registry for the Muslims, including the citizens, and ban Muslims from entering the USA. It is very well known that these discriminatory steps would create legal problems for his administration and might even be ruled unconstitutional.

Let me now turn to some of Donald Trump's economic plans. While many items in his economic programme did not raise any eyebrows including his plan to build infrastructure, reduce regulations, and offer tax breaks for new parents, there are others that are more problematic. How does he plan to support the agriculture sector which relies partially on Mexican immigrants, many of whom are undocumented? These are jobs that the average Americans do not want to take! Similarly, his plan to restrict immigrants from Muslim countries are already causing concern in the high tech industry which has always found it difficult to recruit all the software engineers and technically skilled managers it needs from US colleges. In this short note, I will focus on three of his highly publicised campaign slogans: bring the jobs back, impose higher tariffs on cheap imports, and scuttle President Obama's healthcare programme known as Obamacare.

Donald Trump has repeatedly claimed that his economic and tax policy plans will bring back jobs to the USA. "Bring back jobs" initiative has two aspects: a) rejuvenating domestic manufacturing industries that collapsed due to lack of demand or cheaper imports, and b) providing incentives to US corporations that relocate overseas to take advantage of lower domestic taxes. While both of these appear to be very simple propositions they would require concerted and complicated manoeuvres to accomplish progress on these fronts. Let us take the case of US steel mills. US steel mills closed in the 80's and 90's not only because of cheaper imports, but partly because automation and increased productivity in manufacturing meant fewer workers were needed. According Michael Hicks, an economist at Ball State University,"80 percent to 90 percent of the manufacturing jobs lost in the US since the peak in 1977 have been because of productivity gains and not because of trade deals."

Another reason why manufacturing jobs moved overseas is that it was hard for US companies to find cheap labour to keep the production line open in the USA. Again, to quote Jeffrey Rothfeder who wrote in the New Yorker, "Many of those jobs remain lost—since 1979, when the number of manufacturing jobs in the US peaked at nineteen and a half million, the country is still down some seven million factory positions, all told. And the kernel of truth in the political rhetoric about China is that many of those jobs were originally lost to that country, although by no means a majority of them (outsourcing began in 1970, well before China became a global economic force). But the more low-skilled of those positions are not, despite Trump's claims, among those that could be brought back to the U.S. Nor are they ones that Americans would necessarily want to see returned. Typically, the lost jobs involve making products, like T-shirts or pressed-wood desks and chairs, that are now profitable to manufacture only if labour costs are at a bare minimum, and that companies can afford to maintain excess inventories of in order to obviate concerns about lead times and transportation costs."

President-elect Trump is counting on tax incentives to bring jobs back. His economic manifesto includes sweeping changes in the tax code including reduction of taxes for the lower income earners. Some of the other key points are: reduction in taxes across-the-board, especially for working and middle-income Americans; elimination of tax loopholes; and cut in business tax rate from 35 percent to 15 percent. Now here is the catch. Trump has also railed repeatedly against the growing national debt levels and it needs to be seen if his tax plans, infrastructure building, and other expenditure measures can all be accomplished without a sky-rocketing national debt level! Federal Reserve chief Janet Yellen has already warned Congress on November 17th that Trump's plan would stoke inflation and create massive debt problems.

Turning to trade and tariffs, President-elect Trump has spoken repeatedly against trade pacts including TPP and NAFTA and higher import tariffs are on his game plan. He believes that cheaper imports are taking jobs away from American workers and US's trading partners benefit more from trade than do the Americans. In a previous column in this newspaper ("Is U.S. public opinion turning against free trade?" November 8, 2016), I have argued that the remedies for loss of jobs are retraining and other fiscal measures. I had a hard time finding any discussion of these issues in Trump's campaign propaganda. US multinational companies have already voiced their concerns about any radical change in import tariffs since it will hurt Ford, Apple and others who rely on parts manufactured overseas.

Finally, it is no secret that the US healthcare system is a national shame. We spend a larger percentage of our national income on health care than other major countries but measure poorly in public health metrics. President Obama tried through his Affordable Care Act to offer health coverage to more than 25 million uninsured and to bring this industry to be responsive to rising costs. While Obamacare may not be perfect, it accomplished some major goals. Donald Trump joined the Republican Party bandwagon and has made ACA one of his targets. Unfortunately, he has not offered any indication how he plans to offer healthcare coverage to those who will be left without any healthcare coverage. As for bringing down costs, the Republicans including President-elect Trump have shied away from offering details on how to offer affordable healthcare to the majority of people who are reeling from high insurance rates, hefty deductibles, denial of coverage for pre-existing conditions, and exorbitant costs of medications. It is my prediction that even with Republican majorities in both houses of the Congress, Trump will discover that it is one thing to come up with a popular election platform but a totally different challenge to deliver the goods.

The writer is an economist and writes on public policy issues.