Though Trump's character has proven to be highly controversial, his economic policies over the last four years have been successful. With our next general election only a few years away, we could learn a few things from the 45th President, argues John Baron MP.
The current 'celebrity' culture tempts some to believe personalities are all important. At least when it comes to politics, the US presidential election reminded many that policies remain central in determining the success of incumbents – the result was far closer than many predicted in large part because of Mr Trump's successful economic policies. The lessons for our own prime minister are apt and suggest optimism at the next general election.
Over the past four years taking a swipe at Donald Trump has evolved from a sport and into an art form. There has been much to take a swipe at – our former Ambassador, himself a victim of the President's tweeting fingers (and of a malicious leak), painted an unflattering picture of an administration which seemed to bump along on a daily diet of chaos and dogged by scandal and innuendo. The President's staunch refusal to concede the election confirmed many people's suspicions.
Yet Mr Trump's many detractors have to deal with the inconvenient truth that their bête noire turns out to have been a popular incumbent of the White House. Whilst Joe Biden won the largest number of votes of any US presidential candidate in history, the person who garnered the second-highest number of votes in history is none other than the Republican challenger he successfully sought to unseat. This election was not the cake-walk of the pollsters' imaginings or the Democratic Party's predictions.
During Bill Clinton's 1992 campaign the key insight was famously 'it's the economy, stupid'. Whilst Trump's opponents obsessed over the President's character flaws and the general feeling of anarchy compared to his predecessor's sober administration, the President and his team got on with the job of reinvigorating the economy, knowing that in the secrecy of the voting booth Americans tend to ask themselves whether they felt better off than four years ago or not.
Polling in September showed that 56 per cent of American voters believed that they and their families were better off than in 2016. Trump's policies of aggressive tax cuts, increasing government spending and keeping interest rates low led to a true 'Trump bump' which improved the lives of many millions of Americans, and offer lessons for us on this side of the Atlantic.
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In 2016, for example, real median household income was $62,898, which was just over $250 more than it was in 1999. However by 2020, this had grown to $68,703 – an increase of almost $6,000. US unemployment rates, which many believed could not be driven down lower, began their first sustained falls since the 1980s.
Meanwhile, Trump's decision to cut the 35 per cent US corporation tax rate, which was one of the highest in the world, down to 21 per cent was derided by his critics, who claimed it would lead to plunging tax receipts. His decision to cut the top rate of income tax from 39 per cent to 37 per cent and raise its threshold to $500,000 met with the same complaint.
However, the President got the last laugh, as the tax collected in the first month after they took effect was 12 per cent higher than the previous year and broke all records, not least because corporate money began returning to the US in spades. Again, there is a clear lesson for British policymakers here, especially as the prospect of tax rises are being openly mooted.
President Trump has also been an arch deregulator, under his watch ensuring that US lawmakers were forced to repeal two old rules for every new rule they created. As our American cousins have shown, when done correctly stripping away deadweight regulations can translate directly into better outcomes – improving competitiveness and simplifying complex regulations can be just as powerful as tax cuts.
Trump's success with the economy should be heard as loudly in Britain (and Europe) as many of his other pronouncements. Mocking the orange toddler-president may remain in vogue, but it is difficult to disagree with the analysis that, had it not been for the coronavirus pandemic, Trump would have been re-elected. It is the virus which is the flash in the pan, not Donald Trump.
The Prime Minister and the Cabinet would be wise to study Trump's success on the economy, and prioritise tax cuts, active deregulation, market-friendly policies, smaller and better government and open trade while defending the national interest. Trump might be on the way out, but his example remains.
With the general election a few years away, there is time to rekindle the economic success prior to Covid. Record high inward investment, high manufacturing output and low unemployment were some of the hallmarks. Such success will empower further the One Nation agenda and better help those less fortunate. Pleasing personalities are welcome but sound policies remain essential.
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