Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Thursday, June 29, 2017 04:34:32 AM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

What’s a president to do?

By
14th-Mar-2017       Readers ( 130 )   0 Comments
Comments
Share your thought
Post a comment »
Read all (0) »

Barry Eichengreen :
Donald Trump took office promising a raft of sweeping economic-policy changes for the United States. He has quickly discovered, like previous US presidents, that America's political system is designed to prevent rapid, large-scale change, by interposing formidable institutional obstacles, from the Congress and career civil servants to state governments and the courts.
Start with reform of personal income tax. This should be a slam-dunk, because the president and congressional Republican leaders are on the same page. Trump's goal of removing the government's groping hand from Americans' pockets, by cutting the top marginal tax rate on ordinary income from 39.5% to 33%, is entirely consistent with mainstream Republican ideology, according to which high tax rates penalize success and stifle innovation.
But, to be politically viable, significant tax cuts for the wealthy would have to be accompanied by at least token tax cuts for the middle class. And broad-based tax cuts would blow a hole in the budget and excite congressional deficit hawks, of whom there are still a few.
One can imagine closing loopholes to render rate cuts revenue neutral. But one person's loophole is another's entitlement. Even if there are economic arguments for eliminating, say, the deductibility of mortgage interest payments, imagine the howls of protest from homeowners, including many Trump voters, who borrowed to purchase their houses. Imagine the reaction of Trump's friends in real estate.
Cuts on the spending side would assuage the deficit hawks. And big cuts to the Environmental Protection Agency, the US Agency for International Development, and National Public Radio are high on the Republican hit list. But the vast majority of federal spending is on entitlements, the military, and other proverbial "third rail" items that elected officials touch at their peril. Simply put, broad-based spending cuts to match broad-based income-tax reductions are not politically feasible.
Eliminating federal subsidies for health-insurance coverage under the Affordable Care Act ("Obamacare") would save the government a little over $100 billion a year, about 3% of federal spending. But those subsidies are largely paid for by their own dedicated taxes. Moreover, Trump and congressional Republicans are learning that replacing Obamacare is easier said than done. Health-care reform, as Hillary Clinton could have told them, is fearsomely complex. It is increasingly clear that the name will change ("Trumpcare," anyone?), and it can be expected that the Republican plan will cover fewer people; but much of the substance will remain the same.
Because corporate taxes are less significant in terms of overall federal revenue, rate cutting doesn't pose a comparable threat to the budget balance. But here there is no agreement between Congress and the Trump administration on the form such cuts should take.
House Speaker Paul Ryan and others favor moving to a border adjustment tax that would tax corporate cash flows regardless of where the goods sold by US companies are produced, while exempting exports. Others, such as Treasury Secretary Steven Mnuchin, are evidently skeptical. And an important part of Trump's business constituency - import-dependent retailers like Target and Walmart - are actively hostile. Agreement on a plan won't come easily.
Trump's other flagship proposal is a $1 trillion infrastructure program. But this initiative will run headlong into deficit concerns, and it is fundamentally at odds with Republican skepticism about big government, and specifically about the public sector's capacity to carry out investment plans efficiently. Trump will want to be able to point to a few signature projects. He will want his border wall with Mexico. But any new federal infrastructure spending is likely to be more symbolic than real.
So what will an impatient president, frustrated and hemmed in on all sides, do? First, Trump will focus on the one set of economic policies a president can pursue without close congressional cooperation, namely those affecting trade. He can invoke the Trade Expansion Act of 1962, restricting imports on the grounds that they threaten US "material interests." He can invoke the International Emergency Economic Powers Act of 1977 on the grounds that the loss of jobs to Mexico and China constitutes an economic emergency. He can even invoke the Trading with the Enemy Act of 1917 on the grounds that the US has Special Forces active in the Middle East.
Second, Trump will respond, as populists do, by attempting to distract attention from his failure to deliver the economic goods. This means directing his ire and that of his supporters toward others - whether internal enemies like the press, the intelligence community, and Barack Obama, or external adversaries like the Islamic State and China. It wouldn't be the first time a politician used a domestic political crusade or a foreign policy adventure to divert attention from his economic failures.
We have already seen Trump's tendency to lash out at perceived enemies, foreign and domestic. And we know that this confrontational style is the modus operandi of senior White House advisers like Stephen Bannon and Stephen Miller. We can hope that cooler heads prevail. But, given the constraints on implementing Trump's economic agenda, it's hard to be optimistic.
(Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund).
Courtesy : Project Syndicate

0 Comments. Share your thoughts also.
Write a comment
Tariff
Add Rate

News Archive

Inside The New Nation

Cricket »

Sabbir Rahman in top ten T20I list


Sports Reporter  :The three-match T20 I series between England and South Africa was concluded recently. After the series, International Cricket Council (ICC) announced the top ten T20 I batsmen, bowlers and all-rounders.According to the latest ICC ranking Sabbir Rahman has taken the tenth spot in the list of the T20 ...

Editorial »

The worsening human trafficking situation


HUMAN trafficking has worsened in Bangladesh from Tier 2 in the previous five consecutive years to Tier 2 'Watch List' this time.  The US Human Trafficking Report -2017 released by the State Department on Tuesday made the point making it clear that Bangladesh government is not doing enough to stop ...

Entertainment »

Nazmul Huda Bachchu passes away


Entertainment Report :Veteran film and television actor Nazmul Huda Bachchu has passed away. The 78-year-old died while undergoing treatment at city’s Square Hospital around 4:00am on Wednesday. Bachchu was down with fever two days before Eid after returning from a shoot, said his wife Lina. He was admitted to the ...

City »

KISHOREGANJ: Country`s biggest Eid congregation was held at the historic Sholakiya Eidgah Maidan in Kishoreganj on Monday. Noted Islamic thinker Moulana Farid Uddin Masud led the 190th Eid Jamaat .


International »

Qatar condemns Saudi refusal to negotiate over demands


BBC Online :Qatar's foreign minister has condemned its Gulf neighbours for refusing to negotiate over their demands for restoring air, sea and land links.Sheikh Mohammed Al Thani said the stance was "contrary to the principles" of international relations.Saudi Arabia, the United Arab Emirates, Bahrain and Egypt accuse Qatar of aiding ...

Editorial »

Eid Mubarak


THE nation is set to celebrate EID-UL-FITR on Monday subject to sighting of the moon of Shawal. It is also known as the 'Feast of Breaking the Fast' through the whole month of Ramzan. Preparations are afoot throughout the country to end the fasting through festivities. Eid is an important ...

Cricket »

Danielle Hazell claimed the wicket of Punam Raut in the match of the ICC Women`s World Cup between England and India in Derby on Saturday.


.

City »

BNP Standing Committee Member Gayeshwar Chandra Roy speaking at a protest rally organised by Jatiyatabadi Projanmo Dal at the Jatiya Press Club on Saturday demanding release of BNP leader Barkat Ullah Bulu.


.

Entertainment »

Shahrukh is not doing a cameo in Jagga Jasoos


It was recently reported that Shah Rukh Khan will do a cameo in Ranbir Kapoor’s Jagga Jasoos, however contrary to the rumours it emerges that Shah Rukh Khan will not be seen in Anurag Basu’s musical adventure featuring Ranbir Kapoor and Katrina Kaif. Sources close to the film rubbishes the ...

International »

Ivanka ordered to testify in dispute with shoe company


AP, New York :Ivanka Trump must testify in a dispute with an Italian shoemaker over one of her company's shoe designs, a judge said Friday.U.S. District Judge Katherine Forrest rejected a request by the senior White House aide's lawyers that she be blocked from submitting to a deposition in the ...

Editorial »

Safety on highway must be high on card


AS the Eid-ul-Fitr is knocking the door, home-bound passengers are taking long journey on highways and using Railways and Waterways to reach families overnight. There is acrimonious scene all over and we must say the government must ensure discipline at critical places to avoid mishap. The weather is however good ...

Back Page »

Iftar Mahfil welfare approach


Abdul Muqit Chowdhury :Iftar Mahfil has become a tradition in the Holy Ramzan. Such gathering, if it is a positive approach to contribute to fraternal relation in the society, is surely acceptable. Sharing the joy of fasting irrespective of social status and class is praiseworthy.This reflects allegiance to the Islamic ...

City »

BNP Standing Committee Member Barrister Moudud Ahmed, among others, at a discussion on 'Attack on Mirza Fakhrul Islam Alamgir and Amir Khasru Mahmud Chowdhury and Future of Clean Politics of Bangladesh' organised by Swadhinata Forum at the Jatiya Press Club on Friday.


.

Entertainment »

Alia is Raazi for Meghna Gulzar`s next


Alia Bhatt is all set to feature in Meghna Gulzar’s next, Raazi. The actress would be seen playing a Kashmiri girl marries to a Pakistani army officer in the espionage thriller. Raazi portrays the story of a Kashmiri girl married to a Pakistani army officer who would provide Indian intelligence ...

International »

Senate Republicans unveil Obamacare replacement bill after months of closed-door crafting


Reuters, Washington :U.S. Senate Republicans on Thursday unveiled their version of legislation that would replace Obamacare, proposing to kill a tax on the wealthy that pays for it and reduce aid to the poor to cut costs.With Democrats deeply opposed to Republican attempts to overhaul former President Barack Obama's signature ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news