Friday marks the start of what may be the most fascinating few months in contemporary U.S. history. The Trump era promises a departure from the past eight years, but to where exactly? Depending on whose hyperbole you hear, we are headed toward either renaissance or holocaust.
We shall find out soon, but as a Trump skeptic trying to be a Trump optimist I can imagine some ways the months to come could yield positive results.
Education: As a candidate, Donald Trump promised a large federal school-choice program. That would be great, but the sums of money currently spent on k-12 schooling aren’t enough to provide meaningful flexibility to very many families. Spending more federal money on a state and local responsibility isn’t the right answer, but the Trump administration could try letting current funds follow students from poor families or with special needs follow them to the school of their choice. And it could strengthen the voucher program for students in the District of Columbia.
Tax reform: Trump talked a lot about fixing the U.S. tax code, and the area most in need of reform is the corporate income tax. Our high headline rate of 35 percent and convoluted system of deductions and credits discourage business investment and have contributed to the practice of U.S. firms keeping profits offshore or moving their headquarters overseas in so-called corporate inversions. Lowering that rate while reducing the number of exemptions would make the tax code, and companies’ tax-conscious decisions, more efficient.
What’s more, creating a low, short-term rate for American businesses that repatriate overseas profits to the U.S. could spur a boom in their domestic investment. Some $2.4 trillion in corporate profits are estimated to be parked offshore. Bringing back even a quarter of that amount would provide a 3 percent jolt to our $18 trillion economy. The effect of that would be incredible: Consider that, unless the fourth quarter was exceedingly good, the economy did not grow 3 percent in any single year of Barack Obama’s presidency. It could also yield a big boost to government coffers. Speaking of which …
Infrastructure and debt reduction: Yes, you read that correctly. One of Trump’s big talking points was the need to update our infrastructure, from roads and rails to airports. Congress should tread carefully here, as infrastructure spending for the sake of job creation is vastly overrated. But it could be useful to devote a portion of the tax revenues from those repatriated profits to projects with strict, measurable criteria — think traffic-congestion relief via roads or transit, structural deficiencies in bridges, updates to the electrical grid, or expansions of ports that handle growing amounts of freight. Use the money to reward states and cities that are also putting their own money into such projects, and it’d go even farther.
Then direct the balance of the new revenue toward paying down national debt. Even if it were a small number relative to the total debt (and it would be), it would be both a symbolic and a concrete step. After all, Washington’s credibility on fiscal responsibility is also in desperate need of repair.
There will be other opportunities — repealing and replacing Obamacare is the most obvious one — but these items would be consistent with Trump’s vision, feasible, and sound.