It’s only natural that expectations about the start of Donald Trump’s presidency were high.
US election campaigns have become so protracted that the electorate is waiting with baited breath by the time a new President takes the oath of allegiance. And Mr. Trump was keen to promise that he would hit the ground running. If President Obama’s catchphrase was “Yes we can”, Mr. Trump’s was more of a “Yes, we will”.
Now the first 100 days of the Trump era have passed, and it’s fair to say that we’ve seen relatively little meaningful presidential action so far. Building the notorious Mexican wall did not start on day one of his presidency, as was pledged. His healthcare reform bill ran into trouble early on before being approved by Congress (it has yet to be cleared by the Senate) and a number of his executive orders have misfired. Mr. Trump has taken to the task of president with enthusiasm, but perhaps not with the aplomb of a seasoned politician familiar with the nuances of getting things done on Capitol Hill. To this extent, he has generated more heat than light.
From an economic perspective, some of this inaction is a good thing. The administration has stepped away from some of the campaign’s most emotive protectionist rhetoric. China has not been labelled a currency manipulator. In fact, Mr. Trump and President Xi Jinping have rather warmed to each other. The US has not torn up the North Atlantic Free Trade Agreement (NAFTA) and instead, Mr. Trump has committed to talks with Canada and Mexico to update the deal.
Putting positive inaction to one side, is there more that Mr. Trump should have done in the early days of his presidency? The US recovery was already motoring along fairly nicely before he took office. The labour market is close to full employment (when everyone who is able and willing to work is employed). So Mr. Trump’s economic priority should be all about improving the economy by helping to boost the production of goods and services and improve infrastructure, rather than stimulating demand. In this way, the US economy could grow in a non-inflationary way without forcing the Fed to raise interest rates and choke off growth.
As to what these priorities might involve, tax reform and infrastructure spending are two obvious examples. Mr. Trump spoke passionately about both during the campaign, but it’s fair to say that progress in the first 100 days has been disappointing. The president’s tax plans still contain big gaps when it comes to detail and funding. Likewise with his infrastructure plans.
To be fair to Mr. Trump, judging a president by his first 100 days is an arbitrary, pointless metric when it’s a 1,000-day job. The practice first began with Franklin D. Roosevelt (FDR), who used his 100-day anniversary to enact reforms ranging from a business stimulus plan to new protections for those at risk of losing homes and farms. But the comparison doesn’t make much sense. No president since FDR has achieved anything similar, so he’s more of an anomaly than a benchmark. Other Presidents, like Jimmy Carter, started strongly, but struggled later on. As for President Trump, if he wants to mark his first 100 days in a meaningful way, he could do worse than flesh out his infrastructure plans.
The US is in dire need of better transport, building and utilities and infrastructure. Such reform would help set the US economy up for the decades to come. And it is over this much longer term horizon that we’ll really be able to judge the worth of Donald Trump.
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