MORE POST-ELECTION EXPECTATIONS
I don’t have much hope that a self-interested billionaire and a Congress dominated by Republicans indentured to Big Money/Military-Industrial complex will do much for the working classes that elected them. See: "2016 Election Postmortem" www.cassandra-chronicles.blogspot.com
Hillary, for all her ties to Big Money, would have vectored toward the left (perhaps only marginally, but left, nonetheless, which is what the working class needs), whereas Trump has promised to vector sharply right, meaning more Reaganomics, deeper deficits, greater inequality of wealth and eventually another Panic and Great Recession or worse. You will see this outcome revealed in his choices of appointees to cabinet positions and other offices. In effect, Trump will drain the swamp and fill it with alligators.
Still, there are political realities ameliorating Trump’s hard-right promises.
Infrastructure: I expect he will head-fake us with his first move, an infrastructure, program. What Trump has proposed is essentially privatization of revenue-producting infrastructure projects. Contractors would borrow private capital to fund most of these projects, while receiving huge tax breaks to effectively reduce the net cost of the equity lenders would require. In turn, contractors would receive the revenues derived from tolls on such revenue-producing projects as roads and bridges. Contractors would receive these benefits for existing as well as new projects. In effect, the government would be putting up a significant chunk of the equity capital required without receiving any of the direct revenue. Not exactly "The Art of the Deal." Moreover, this approach would not be feasible for non-revenue producing projects. Accordingly, new job creation is unlikely to be significant while the tax breaks would add to the deficits. So much for fiscal responsibility.
Health care: the next move will probably be to amend, not repeal, Obamacare. Basically, changes in health-care policy are likely to be slow and gradual, rather than the simple-minded “repeal and replace Obamacare” promised during the campaign. Repealing the “pre-existing-conditions” provisions of Obamacare and cutting off 20 million Americans from their ACA insurance would be hugely unpopular. Forbidding insurers from excluding those with pre-existing conditions necessarily means keeping the mandate and subsidies — a key sticking point with Republicans. Forcing insurers to accept everyone without regard to pre-existing conditions necessarily raises the costs insurers must bear, requiring them to raise premiums. Only by forcing young, healthy individuals into the system can those costs be spread. Subsidies are necessary both to offset cost increases and to increase the affordability of coverage for those who otherwise could not afford it, assuming the Republicans are interested in broadening the availability of coverage. Finding substitute coverage for the 20 million will also mean compromising hard-line Republican positions. Trump may find that dealing with his Republican colleagues in Congress is harder than dealing with the Democrats on this issue (and maybe others).
Immigration: I suspect his third move, on immigration will also be tempered, given the impracticality of deporting 11 million undocumented immigrants, many of whom the Big Agriculture lobby wants to keep working in the fields. There will doubtlessly be some showy roundups and deportations, especially of criminals, but nothing like the sweeping mass deportations Trump crowed about on the campaign trail. It would be difficult for the Trump administration to counter the flood of stories in the press describing families torn apart by indiscriminate deportations. He seems likely to hold to his hard line on Muslim refugees, for which he gains many points with his base and incurs little or no significant political penalty from the opposition.
Trump is going to learn that it’s easy to make sweeping promises as a candidate, difficult to keep them as the president. One thing Trump has going for him is flexibility. Having advocated both sides of every issue, Trump can pretty much do as he pleases and still be able to say he kept his word. Perhaps there is some hope of constructive movement on infrastructure, health care and immigration based on the “Nixon-in-China” syndrome.
Even so, the main thrust of his administration will be to feather the nests of the rich with generous personal and corporate tax cuts; do away with many environmental and job-safety regulations; strip provisions from Dodd-Frank that hold bankers and corporate officers accountable for imprudent, self-serving practices detrimental to investors and consumers; and spend a lot of money on Defense. The net result, as I have said, is likely to be deeper deficits, greater inequality of wealth and another Panic and Great Recession or worse.
The reason inequality of wealth results in Panics and severe contractions is that with the rich gathering up all the marbles, their huge savings are then plowed back into the stock and credit markets, creating bubbles in these markets as well as housing. The middle-class fills in the gap between their rising aspirations for consumption (’the American Dream”) and stagnant incomes, with debt — obligingly supplied by mortgage and credit-card lenders swamped with the savings of the rich. The volume of savings is so great as to force lenders to lower their lending standards to put all that money to work, creating a “sub-prime” pool of borrowers, who, when interest rates rise, cannot service their debt, resulting in an avalanche of defaults. The resulting credit crunch then produces plunging asset values and curtailment of lending, in turn dragging down the economy. As long as we pursue policies favoring the rich to the detriment of the middle class and the poor, such outcomes are inevitable in the long run. Brace yourself.