By Simon Johnson:
First, we can expect an enormous tax cut that will be tilted towards people at the upper end of the income distribution. On this point, President-elect Trump and the House leadership are in complete agreement. Some version of this Trump plan will pass without much difficulty.
This means America will see a large increase in the deficit and the national debt (see these projections for details). Republicans will justify this plan with the assumption that tax cuts for the wealthy will produce a higher rate of economic growth. This assumption, which was also made by the George W. Bush administration when it put tax cuts in place in the early 2000s, will again prove unrealistic.
Second, President-elect Trump will want more federal government spending, including to build his wall with Mexico and also for infrastructure and other initiatives (including military-related ones). House Republicans will be less enthusiastic, but this spending will also likely pass without too much difficulty. This will further increase the budget deficit and the national debt. The effect that this will have long term on economic growth and the number of well-paying jobs remains to be seen.
Third, House Republicans have cued up a large wish list on financial deregulation, which includes plans to remove nearly all of the safeguards that were put in place after the financial crisis of 2008. Mr. Trump will likely embrace this with enthusiasm.
The Full Story (November 13, 2016)
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