Here comes Trump-o-nomics

Trump-o-nomics is coming to Washington.

On trade, taxes and spending, President Trump’s team is preparing to push policies that are likely to face resistance from the political establishment of both parties.

Trump did not shrink from the challenge after taking the oath of office Friday, doubling down on the populist economic message he rode to victory. He talked of the nation being ravaged by foreign trade, and blamed elites in Washington for letting it happen. 

“We will get our people off of welfare and back to work — rebuilding our country with American hands and American labor,” he said in his inaugural address. “We will follow two simple rules: Buy American and Hire American.”

On trade, Trump is promising to tear up pacts with a host of nations, including multilateral agreements that President Obama and congressional Republicans spent huge amounts of political capital trying to enact. 

Speaker Paul Ryan (R-Wis.), once the most powerful Republican in Washington, still touts the value of the Trans-Pacific Partnership — a broad Asian trade pact that Trump is expected to soon withdraw from — on his official website.

{mosads}“A successful TPP would mean greater American influence in the world and more good jobs at home,” his district website reads. 

Trump’s Cabinet nominees for key positions are striking a more measured on on trade, while endorsing the president’s fundamental critique of trade policy.

“Trump absolutely believes in trade. He just wants better deals,” said Steven Mnuchin, Trump’s nominee for Treasury secretary, during his confirmation hearing Thursday.

Wilbur Ross, Trump’s pick for Commerce Secretary, told senators Wednesday that the next White House will be looking for trade pacts with single nations exclusively, rather than broad region-wide pacts that administrations have pushed in the past.

But he also expressed support for “fast track” authority to push through trade deals. 

Congress passed legislation granting the president “fast track” authority in 2015. That authority is still in effect under Trump, and will allow him to guarantee other nations that his trade deals will get an up-or-down vote in Congress. 

Mnuchin also hedged on Trump’s vow to create a “big border tax” to dissuade U.S. companies from moving abroad. 

“He has not suggested in any way an across-the-board 35-percent border tax,” Mnuchin said after Sen. Ron Wyden (D-Ore.) questioned if middle-class necessities like gas could see a tax spike.

On taxes, Trump’s team is facing a tricky two-step. On the one hand, the tax plan he presented during the presidential campaign ended up very similar to a proposal put forward by House Republicans. Analysts argue both plans would add trillions of dollars to the deficit while awarding most of the tax benefits to the nation’s wealthiest.

But Trump’s top economic advisers reject those assessments and say they will be crafting policies to help the working and middle classes. 

Trump clearly intends, for example, to push tax breaks that would help cover childcare costs — an idea Republicans are lukewarm on, at best, and could complicate their effort to draft tax reform legislation. 

Mnuchin had previously indicated that while top earners would see a major income tax drop under the administration’s plan, they would also see key deductions scrapped, reducing that benefit.

He also set a somewhat lofty promise for any tax overhaul.

“I think we want to make sure that tax reform doesn’t increase the size of the deficit,” Mnuchin said during his confirmation hearing.

Granted, Mnuchin added that he wanted the cost of a tax reform plan to be calculated using “dynamic scoring” — an approach that takes into account possible economic growth from a policy change — and that should help. But even under such scoring, creating a “revenue neutral” bill could prove challenging. 

Trump has indicated he won’t shy away from government spending.

During the campaign, he vowed to boost infrastructure spending, reinvigorate the nation’s military, preserve entitlement programs like Social Security and Medicare and cut taxes.

How all that happens without the deficit exploding is a big question. 

There was hint of an approach earlier this week, when The Hill reported on an ambitious budget blueprint being drawn up by some transition staff. The plan would ax a number of government programs and severely limit spending by some departments, with an eye toward reducing spending by $10.5 trillion over the next decade.

But without overhauling entitlement programs like Social Security and Medicare, two major drivers of the federal deficit, it’s difficult to envision how those lofty deficit-reduction numbers become a reality. 

Democrats have tried to tie Trump to his campaign comment that he does not want to cut Social Security or Medicare, and his team is showing no sign yet of backing away from that.

Asked by senators Thursday about Trump’s commitment to leave entitlement programs untouched, Mnuchin appeared to draw a similar line.

“I absolutely support the president’s promise,” Mnuchin said. “That’s why I’m here.”