Donald Trump said much in his recent speech at the Detroit Economic Club to inspire confidence that he can resurrect the American economy and lead a great nation.
Once again, he promised to renegotiate and if necessary, rip up trade agreements to give American workers a fairer shot at competing in global markets. He now needs to offer more specifics about how he would improve upon the North American Free Trade Agreement (NAFTA) and get China to stop manipulating its currency, stealing US intellectual property or imposing high barriers to US products.
US corporate tax rates are among the highest in the world and small businesses, which usually report profits through individual tax returns, pay even higher rates. Along with the mounting burden of regulations imposed by President Obama, those encourage large companies to invest abroad and discourage young entrepreneurs from bringing new ideas to market. Mr. Trump’s plan – tabled during the primaries – would streamline and lower rates but it would slash federal revenues by almost $1 trillion annually. In Detroit, he promised revisions, and now his tax team must specify the deductions and special provisions he would eliminate, and the spending he would cut in the federal budget, to pay for those lower rates.
He promises to slash regulations on businesses generally and energy development specifically. However, he has hardly said enough about how he would impose an efficacy test to ensure the environment, financial markets and consumers are adequately protected from reckless behavior but at a lower compliance cost.
Education and skill shortages remain top priorities for American families and businesses, but promising more school choice and to end the Common Core is not enough. The latter is not a federally imposed policy but rather a state-level initiative and merely formalizes the consensus accomplished long ago by educators at local levels about what each child should know, for example, when they complete elementary school.
The tragedy is that high standards are not met – too many children emerge from public schools ill-prepared for vocational training or college. High schools and colleges spend too much time on political correctness and emphasize too little the STEM (science, technology, engineering and mathematics) skills American young people need to compete with better-trained workers in Japan and Germany, and increasingly in China. Mr. Trump has been largely silent on these issues, and he needs to talk more about these challenges.
Health care costs in the United States are about 50 percent higher than in Northern Europe or Japan. Obamacare surely did not address the terrible cost disadvantage – through high premiums and taxes – that imposes on US-based businesses competing in global markets. An effective national policy would require pharmaceutical companies, doctors, hospitals and insurance companies to benchmark policies and practices against Germany and other European nations with private insurance and high standards of care.
Mr. Trump’s promise to repeal the Affordable Care Act and replace it with something terrific is hardly more than a slogan.
The strides of recent years notwithstanding, many women and minorities believe employers treat them unfairly. Imposing greater transparency by requiring businesses to publish salaries, and providing all Americans – men and women, white and minorities – opportunities for expedited hearings and specific remedies when they believe they are treated unfairly would go a long way to building a fairer economy and hardly be onerous. Mr. Trump rails against political correctness but has said too little that is proactive about the fairness issue.
Across the board, Hillary Clinton proposes draconian solutions to economic problems – policies that would make people feel better near term but would slow growth further and end in disaster. Generalizing to the national level the California Fair Pay Act would require even the smallest business to justify every salary and hiring decision to bureaucrats at the Department of Labor. Along with her promise to raise taxes on the middle class and the wealthy to fund federally funded preschool, free college tuition and extend Medicare to Americans in their 50s, more regulation would only accelerate the rush of American businesses to take manufacturing and other corporate functions – like financial planning, strategic management, and research and development – abroad.