Trump’s policies will make the middle-class wealthy

Op-ed views and opinions expressed are solely those of the author.

President Trump is implementing his economic agenda for the country. He wants continued low taxes, deregulation, inexpensive energy and a strong manufacturing base. He is advancing his agenda as quickly as possible. Mostly the signs are positive, except for his tariff policy. His recent tariff actions have caused the stock market to lose about 15% of its value. That certainly is not making anyone wealthier.

The Senate passed an extension to the tax cuts originally passed in 2017. The hope is that the House of Representatives also passes this legislation which Trump will quickly sign into law, keeping tax rates low.

Those who oppose the extension of the tax cuts, and opposed the initial passage, say that these cuts are simply a tax cut for the wealthy and do nothing to help the middle or lower classes. The reality is that this tax cut treated nearly all taxpayers the same.

In 2017 Trump said he wanted to pass tax relief that was fair. So, he cut tax rates for all taxpayers by 10%. Except for those who lost their State and Local tax deduction, every taxpayer paid 10% less. That seems fair to me.

Of course, if an individual was paying $2,000,000 in taxes annually, the tax cut was $200,000. If a taxpayer paid $2,000 annually, the tax cut was $200, which is why the opponents say this is a tax cut for the rich.

Still, the tax cut was proportional and fair.

Trump has been removing as many counter-productive regulations as possible to encourage business expansion. This is particularly true in the energy industry where for the last four years the ability to expand output had been greatly hampered.

The President believes that the removal of regulations coupled with allowing oil companies to drill where the oil is located, should vastly increase the supply of energy. That will dramatically reduce the price of energy for Americans and will allow for energy to be exported.

Energy can be exported as long as our foreign trading partners do not put barriers on American companies. Trump would like to remove all barriers to free trade.

At the same time, Trump wants to expand our deteriorated manufacturing base. In particular, products that are vital to national security like steel, aluminum, copper and medical supplies. These must be produced domestically, even if the cost is a bit more.

Trump has placed at least 25% tariffs on the importing of those key products. That means manufacturers will find that it is less costly to produce in the US. Manufacturing will return to the US, growing the economy while providing good jobs for American workers and cementing our national security.

The short-term problem is that consumers will pay more for those products. Trump says he will offset any upward price pressure from tariffs by dramatically reducing energy prices. The result will be mild inflation. Recall when Trump left office last time, inflation was 1.4%. There were tariffs and there was cheap energy.

Currently those who invest in the stock market have seen about a 15% drop in the value of their portfolio.

Considering the high growth economy that lies in the near future, that drop means stocks are under-valued today. And they may drop even further.

Workers, who receive higher wages in the high growth economy, coupled with low taxes and low inflation, will have excess funds to save and invest. Putting money into retirement accounts that invest in the stock market, especially when stocks are undervalued, will create long term wealth for the middle class.

Granted, in the short term, there will much uncertainty and some economic pain. But for decades countries have been taking advantage of Americans. We charge a very small, usually 2 ½% tariff. At the same time, almost every one of our trading partners charged tariffs of 10%, 15%, 50% or even higher tariffs.

This annually created hundreds of billions of dollars of negative balance of trade. That’s wealth flowing out of our country. Trump wants this stopped immediately. By placing a minimum 10% tariff on all countries, he is now in a position of bargaining strength, and he has created a sense of urgency in trading partners who were reluctant to negotiate.

Trump expects all countries to negotiate with the US with the goal of charging reciprocal, if any, tariffs. Already more than 50 countries have expressed an interest in immediately renegotiating.
In the long run, every contributing American should see an increase in wealth. It’s about time.

Dr. Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Stockton University where he teaches undergraduate and graduate courses in Finance and Economics.

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