Don’t expect President-elect Donald Trump to adhere consistently to traditional Republican economic policy, or even to positions Trump staked out during his election campaign.
That’s the message in an opinion piece written in the Financial Times by Trump economic adviser Anthony Scaramucci that took a swipe at the budgetary discipline promoted for years by fiscal conservatives in the US and Europe. It may point to a coming rift between the new executive branch and the Republican-controlled Congress.
“Mr Trump is a different type of leader not burdened by rigid ideology,” Scaramucci said. “He is not dogmatic about policy positions. Rather, he has set bold targets from which to begin negotiations.”
Scaramucci ran though some of Trump’s previously-announced plans, including a proposal for a 10% one-off repatriation fee for companies. Trump would “ideally” like to see corporate tax rates cut to 15% from 35%, he said, adding that even a reduction to equal the UK rate of 20% would add nearly $600bn to US GDP.
Founder of the investment firm SkyBridge Capital, Scaramucci, 52, was named on Friday to the executive committee of Trump’s transition team. The 16-person list also includes Dune Capital Management chief executive officer Steve Mnuchin, who was finance chairman of Trump’s campaign; Reince Priebus, chairman of the Republican National Committee; and three of the president-elect’s children.
Scaramucci said global economies are still battling deflation largely because of a movement toward fiscal austerity that followed the 2008-2009 global economic crisis.
“While easy-money monetary policies have exacerbated the income divide, central bankers handcuffed by political dysfunction have had little choice but to provide extraordinary accommodation,” he said. “Business people like Mr Trump understand you can grow yourself out of excessive debt.”
Trump, who said early in his campaign that he liked low interest rates, later became critical of the Federal Reserve’s low-rate policies. In September, he accused Chair Janet Yellen of keeping rates low to benefit President Barack Obama. Yellen’s time as chair ends in 2018, unless she’s reappointed. Trump will also be able to appoint two senior Fed officials to fill vacancies on the Board of Governors.
Another Trump economic adviser, Judy Shelton, said on Bloomberg Television on Friday that Trump’s administration will respect the Fed’s independence.
Scaramucci repeated Trump’s pledge to spend $1tn on infrastructure “financed by historically cheap debt and public- private partnerships,” and said the plan would lower long-term deficits. He sounded a softer note on trade than Trump had declared on the campaign trail, suggesting the president-elect is open to negotiations before slapping barriers on imports.
“Mr Trump believes in free-but-fair trade. Tariffs are unnecessary if agreements like the World Trade Organisation and Nafta are adequately enforced,” Scaramucci said, referring to the global treaty on trade as well as the North American Free Trade Agreement that Trump regularly excoriated on the stump.
In other ways, the outline Scaramucci provided sticks to the traditional Republican playbook and to Trump’s campaign rhetoric. He attacked regulation in general as a growth killer, and took specific aim at the burden put on small companies by the Affordable Care Act, as well as restrictions under the Dodd-Frank Act that Scaramucci said had scaled back lending by banks.
Additionally, Scaramucci suggested Trump would seek to reverse a recent Labour Department ruling that requires brokers to put clients’ interests ahead of their own when handling retirement investments.
Scaramucci said Trump’s plan to cut the corporate tax rate to 20% from 35% would add 3.3% to gross domestic product.
The article appeared as Trump and his team began to offer more details of his intended policies, in some cases appearing to retreat on promises made during the campaign.
In an interview scheduled to air later yesterday on 60 Minutes, Trump reversed himself on completely eliminating the Affordable Care Act, President Barack Obama’s signature health law, saying instead he would keep two popular features and pledged no gap in coverage as it’s replaced or amended.