In 2016, Donald Trump became president by riding a wave of anger and resentment in America’s white, non-college population, especially among men, whose earnings and employment have shrunk dramatically in the past generation.
In the immediate aftermath of the one-year anniversary of his inauguration, it seems natural to ask: Has his presidency served his supporters in that population?
We see many attempts by Trump to curry favor with workers by talking (and sometimes acting) tough on trade and immigrants, by cutting taxes and regulations that he blames for declining factory jobs and by claiming credit for all positive economic numbers emerging since his election.
{mosads}But, besides the base-pleasing rhetoric and the boasting about economic momentum he really inherited, there is a consistent characteristic of Trump’s economic policies: They will produce visible but modest benefits for U.S. workers, which supporters will offer as proof of policy success. But the hidden costs they impose on workers will eventually be greater and more lasting.
Consider, for instance, Trump’s signature policy issues: trade and immigration. On international trade, Trump’s withdrawal from the Trans-Pacific Partnership, and perhaps his renegotiating the North American Free Trade Agreement (NAFTA), will please his base but ultimately will cost the U.S. more jobs in exports than they save in imports.
In general, the export jobs we lose — in advanced manufacturing sectors like equipment or chemicals — pay substantially more than the import jobs (in, for instance, food or garments) that we preserve.
A rising U.S. dollar, caused in part by the deficits Trump’s tax cuts have created, will do much more to dampen exports and increase imports than any trade agreement, thereby causing rising trade deficits.
Likewise, Trump’s restrictive actions on immigrants will modestly benefit small numbers of U.S. students and workers by eliminating some foreign competitors they would face in the short term.
But the well-educated immigrants who create business start-ups and generate many patents for U.S. companies will now come less frequently, perceiving the hostile environment to foreigners that the president has created.
The loss of innovation to the U.S. economy will be less visible but more harmful to our productivity and living standards over time.
Less-educated immigrants who reduce the costs and prices paid by consumers for housing, food and child and elder care will stay away too, especially if restrictive immigration laws are enacted. Overall, fewer immigrants will also reduce the numbers of American paying taxes, over many generations, who would contribute to our under-funded Social Security and Medicare programs as baby boomers retire.
The theme of modest short-term benefits but larger and hidden long-term costs is also clear in the tax bill Trump recently signed. The growing deficits created by this bill will temporarily strengthen consumer and business spending, thus creating even lower unemployment and some wage growth for workers.
But the Federal Reserve will ensure that interest rates rise more quickly than before, ultimately choking off the higher spending and growth before they turn into inflation.
Thus, the extra investment and productivity that conservatives promised will mostly not materialize. And the very meager tax cuts or wage increases these workers enjoy will pale in comparison with the benefits they ultimately lose, especially from government spending on income support and retirement programs, including Social Security, Medicare and Medicaid, to pay for the tax cuts that mostly help the rich.
Similarly, by cutting environmental and financial regulations, Trump provides small and temporary boosts to manufacturing and finance while dramatically raising the risks of climate and financial disasters in the future.
By eliminating Labor Department rules to protect worker investments for retirement and by eliminating regulations on for-profit colleges, he raises the likelihood that less-informed workers and students will be exploited, mostly by investment advisers and educators who are no longer legally required to protect their interests.
Of course, education and training are now critical for creating skills that workers need for good jobs in many industries, like health care, advanced manufacturing or transportation/logistics. Indeed, employers now have trouble filling high-wage jobs with appropriately skilled workers.
This is an area where state and federal governments could make sensible investments that create lasting benefits for workers, industry and the economy.
But, here too, the growing deficits Trump has created will prevent substantial new federal investments in community college programs that would help workers obtain these skills.
The caps on the deduction of state and local taxes in the Republican bill will increase existing pressure on state funding for public community and four-year colleges, including the workforce programs that directly train workers for good jobs.
Indeed, initiatives like South Carolina’s tax credit for apprenticeships, or the Drive to 55 to educate and train more workers in Tennessee, could face real financial pressure as a result of the harmful tax bill that the president just signed.
In all of these cases, the bottom line is the same: Loud rhetoric and imprudent actions by the president may feel and look good to working Americans, but the benefits they generate will be meager and short-lived, while the hidden costs will be greater and lasting. This is not the bargain that U.S. workers should want or that they deserve.
Harry Holzer is a nonresident senior fellow in economic studies at the Brookings Institution and the LaFarge SJ professor at the McCourt School of Public Policy at Georgetown. He previously served as chief economist for the U.S. Department of Labor and professor of economics at Michigan State University.