<u+201c>i think you are going to see tax reform and corporate tax repatriation much along the lines of what he promised during the campaign and what republicans in congress already support,<u+201d> said larry kudlow, an adviser to donald trump on economic policy.  | ap photo by ben white 11/14/16 05:59 am est new york <u+2014> president-elect donald trump is preparing to dump massive piles of cash into the american economy. the result could be a stimulative blast that fires up faster growth followed by an inflationary disaster that makes current structural problems much worse and explodes the deficit while sending interest rates soaring. story continued below and other aspects of trump<u+2019>s agenda, from shredding trade deals and imposing tariffs to mass deportations and building a giant wall with mexico could threaten the nation with recession or worse. the early line on trump-o-nomics? a possible sugar high followed by a potentially devastating sugar crash. <u+201c>if he does $6 trillion in deficit-financed tax cuts plus infrastructure spending right away it would be a short-term boost but a much bigger hit in the longer run in terms of a spike in deficits and interest rates,<u+201d> said mark zandi, chief economist at moody<u+2019>s analytics. <u+201c>and if he follows through on his immigration policies we would have a much diminished economy.<u+201d> much depends on what trump decides to prioritize and how the republican congress reacts to his legislative agenda. off message by glenn thrush some of trump<u+2019>s formal and informal advisers desperately hope he focuses on the growth aspects of his agenda, crafting an early economic package focusing on corporate tax cuts and infrastructure spending in a way they say could juice growth from 2 to 3 percent to closer to 5 percent. <u+201c>i think you are going to see tax reform and corporate tax repatriation much along the lines of what he promised during the campaign and what republicans in congress already support,<u+201d> said larry kudlow, an adviser to trump on economic policy. <u+201c>and i don<u+2019>t think you<u+2019>ll see willy-nilly imposition of trade tariffs but rather a series of renegotiations. you give me a 15 percent business tax rate and good repatriation terms and expensing of new investment and i<u+2019>ll give you a big jump in economic growth, 4 or 5 percent for the next several years.<u+201d> but some economists worry that trump will feel political pressure to deliver on his pledges to immediately slap tariffs on chinese and mexican imports, possibly sparking trade wars before any of his stimulative policies can work their way through congress. that would take away even the short-term sugar high nature of trump<u+2019>s plan. <u+201c>the things that trump can do immediately that don<u+2019>t require congressional approval are all around trade and immigration,<u+201d> said megan greene, chief economist at manulife asset management. <u+201c>and those things are all very bad for short-term growth. they are gross negatives for the economy.<u+201d> and if trump starts out with trade fights and begins to build a wall with mexico, markets could swing back against him quickly. <u+201c>it would not take much to bring the panic back,<u+201d> greene said. liberal economists also worry that trump<u+2019>s pledges to reduce the corporate rate from 35 percent to 15 percent and individual rates to 12 percent, 25 percent and 33 percent will explode the deficit, shower benefits on the already wealthy and do little to address economic inequality that has seen wealth accrue to the top of the income ladder even under the current more progressive tax code. <u+201c>a tax policy like this is going to increase long-term debt to unsustainable levels and is not based on sounds economics,<u+201d> said heather boushey, an economist at the washington center for equitable growth who was expected to play a major role if hillary clinton had won the white house. <u+201c>this would be a massive cash giveaway to multinationals who are already doing great. what you will see is a further rise in inequality and a decline in our ability to make long-term investments in things that actually foster broad-based growth.<u+201d> presidential transition by eli stokols some of the potential impacts of trump<u+2019>s policies can already be seen in financial markets. stocks rose in the first three days after the election on hopes that trump<u+2019>s plans will boost corporate profits, slash regulations and produce faster growth in the short run. but the bond market tells a very different story. by thursday, the yield on the 10-year treasury note rose to 2.118 percent, its biggest four-day jump in over three years. this suggests that investors believe that trump will rely heavily on government borrowing to fund his agenda, potentially increasing rates on everything americans pay for, from their cars to their homes to everyday purchases. if these increases continue <u+2014> and trump<u+2019>s moves on immigration reduce the labor supply and put further upward pressure on wages in an already tight labor market <u+2014> the federal reserve might be forced to move more quickly to boost rates, further dampening growth. <u+201c>we are looking at vastly higher interest rates with more growth in the short run and much bigger inflation and higher debt in the long run which is perilous for the economy and exactly what trump says he doesn<u+2019>t want to have,<u+201d> said steve rattner, an investment banker who backed clinton during the campaign. <u+201c>and if he were to impose tariffs on chinese and mexican goods it would immediately raise the cost of goods for people trump says he is trying to help. most of the products he<u+2019>s talking about can<u+2019>t be made here. we can<u+2019>t make iphones here." the policies economists fear most <u+2014> and hope republicans in congress reject <u+2014> are trump<u+2019>s pledges on deportations. an effort to round up and eject 11 million undocumented residents could have devastating impacts not only on people<u+2019>s lives but the economy as a whole. <u+201c>you would have fewer workers and consumers and thus the economy would be smaller. and it would be very disruptive to the many smaller and mid-sized companies that are employing the undocumented,<u+201d> zandi said. presidential transition by alex isenstadt and marc caputo house speaker paul ryan said sunday that he and president-elect donald trump are "not planning" to pursue mass deportations of undocumented immigrants. the impact of mass deportations, should they materialize, could be especially disruptive now, economists suggest, because the jobless rate is at 4.9 percent and there are a record number of job openings. wages are rising in part because employers are struggling to find workers. both kicking out current workers and reducing the flow of new workers through reduced legal immigration could lead to significantly slower growth, the kind of problem that beset japan for the past decade. <u+201c>it would have been one thing to do this six or seven years ago with unemployment at 10 percent. but now it's under 5 percent and falling and it would be very disruptive,<u+201d> zandi said. by bill scher by joshua zeitz by thomas wright by jack shafer
economy could soar and then crash under trump - politico
ben white eli stokols alex isenstadt marc caputo jack shafer