If Donald Trump had been able to keep his campaign promise, he would have beaten the current record-holder, President Bill Clinton, who created 18.6 million jobs during his two terms. To create those jobs, Trump told the Economic Club of New York he wanted to establish a national goal of 4% economic growth. Let’s look at the details of his policies and how they’ve worked during his term.
COVID-19 and the Economy
Trump created 6.6 million jobs before the COVID-19 pandemic shut the economy down. The new jobs his policies created represented a 4.3% increase over the 152.2 million people working at the end of Obama’s term.
6.6 million jobs created before the pandemicTariffs on $250 billion in Chinese importsA renegotiation of NAFTA with the intention of bringing jobs back to the U.S.A reduction of the corporate tax rate from 35% to 21%Removal of a key Dodd-Frank requirement for banks with assets of less than $100 billion
In response to COVID-19, Trump signed The Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 to restore jobs (20.5 million of which would be lost in April alone) through several forms of assistance to businesses, including:
Employee retention credits of 50% on up to $10,000 in wages for each employeePayroll tax credits and deferralsLoans to cover payroll costs
The CARES Act provided benefits, but by February 2021, there were still 10 million people who were unemployed.
“America First” Trade Policy
Trump’s trade policy, called “America First,” was based on economic nationalism. He supported tariffs, duties, and other forms of protectionism to give domestic industries a competitive advantage. The plan did this in a few primary ways:
End Outsourcing and Bring Back Jobs From Overseas
America lost 31.4% of its manufacturing jobs between 2000 and 2011; these were steady jobs that, on average, paid $28.85 per hour. U.S. companies outsourced many of these jobs to save money. But robotics, artificial intelligence, and bio-engineering also made some jobs obsolete, so ending outsourcing may not bring back all the jobs that were lost. It’s possible that government-sponsored training for these specialties might create more jobs for U.S. workers than a trade war.
Increase U.S. Competitiveness Against China
In 2018, Trump imposed three tariffs on $250 billion in Chinese imports. In 2019, he levied a 25% tariff on an additional $200 billion worth of goods. China responded with tariffs on $110 billion of U.S. products. In December 2019, Trump announced a trade deal between the U.S. and China. In the deal, China agreed to increase imports of certain U.S. goods by $200 billion annually. Trump pulled out of the Trans-Pacific Partnership (TPP) in 2017, saying it would force U.S. workers to compete with lower-paid foreign workers, thus sending more jobs overseas. On the other hand, the TPP was formed to help the United States strengthen its ties with Asian countries that are struggling to compete with China. Without the TPP, proponents argue, these countries may rely more on China and less on the United States, making America less competitive.
Strengthen U.S. Competitiveness Against Mexico
Trump has many initiatives that involve Mexico. Trump successfully renegotiated the North American Free Trade Agreement in 2018. The new treaty, now called the U.S.-Mexico-Canada Agreement (USMCA), was officially ratified by all three parties in early 2020. Its goal was to bring back some U.S. manufacturing jobs sent across the border in previous years. The most significant change is that auto companies must manufacture more parts in the NAFTA trade area. Trump promised to reduce the number of workers coming from Mexico by completing the wall along the 1,954-mile border. Legislative initiatives from the George W. Bush and Barack Obama administrations led to more than 650 miles of completed wall. Trump added another 371 miles, with a goal to complete 450 miles by the end of 2020.
Reduce Corporate and Investment Taxes
Trump’s tax plan, the Tax Cuts and Jobs Act, lowered the corporate tax rate from 35% to 21%. This was the lowest rate since 1939. This change may not be as dramatic as it sounds, though. Most corporations make good use of legal deductions. The Congressional Budget Office found that a more cost-effective method would be to cut business payroll taxes and increase unemployment aid. Governments should target any stimulus to small businesses, which produce 65% of all new private-sector jobs.
Spend $1 Trillion to Rebuild U.S. Infrastructure
To create jobs, President Trump launched the Rebuild America plan to repair America’s aging roads, bridges, and airports. It outlined $200 billion in spending to leverage a $1 trillion investment in infrastructure. It also promised to reduce the permit process time from 10 years to two years. The plan failed as it met roadblock after roadblock. A study by the Center on Globalization, Governance & Competitiveness at Duke University found that $1 billion of federal investment in infrastructure creates 21,671 jobs.
Reduce Regulation
The Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) eased regulations on banks with assets under $100 billion. Under the looser restrictions, these banks no longer had to run stress tests to ensure they could withstand a major financial catastrophe. Banks with assets of $50-$100 billion no longer had to submit a “living will” to the Fed, which outlined how the bank would safely wind down if facing a financial crisis to prevent another bankruptcy on the scale of Lehman Brothers.
Outside Perspectives About Trump’s Plan
Trump’s expansionary fiscal policy created 6.6 million jobs by early 2020, but the pandemic erased those gains.
New England Journal of Medicine
The New England Journal of Medicine said the U.S. didn’t adequately test nor provide healthcare workers and the general public with enough protective equipment. It also criticized the administration for handing off disease control to the states instead of launching a national strategy. As a result, social distancing directives were inconsistent. The resultant hotspots of infection kept many businesses closed, and raised unemployment levels.
National Association of Manufacturers
The National Association of Manufacturers (NAM) had agreed with Trump’s plan to lower U.S. manufacturing costs, which are significantly higher than in other countries. NAM wanted Trump to further reduce regulations on manufacturing companies, as it pays nearly twice what companies in other industries do. This raises the price of American-made goods. On the other hand, NAM disagreed with Trump’s protectionism. Other countries raise tariffs in return, which reduced American exports to those countries, even prior to the pandemic. It put a brake on U.S. growth and raised import prices for American consumers.
Committee for a Responsible Federal Budget
Experts also debate how effective tax cuts are at inducing economic growth. Tax cuts are often considered an expensive way to create jobs. Historically, tax cuts haven’t created enough new jobs to finance themselves, so the jury is still out on whether Trump’s 2017 tax cuts will ultimately help the economy.
