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Running head: ECONOMICS PAPER

Whether the citizens elect a Republican or a Democrat President; there will be

major changes in the country.

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Institution

Author Note
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The Democratic and the Republican parties have totally different views on the

way the US economy will develop. At the same time the whole market conjuncture and

economic realities depend on who will be the President. Therefore, it is crucially

important to have a paramount consideration of economic policy and views in order to

predict possible outcomes of his presidency for the nation and for the entire world. Even

today, the Republican's program is incomplete, but his pundits still present 6 tangible

proposals. Here are the main lines of the four other proposals concerning namely finance

and economy.

Donald Trump is strictly adherent to Reaganomics. He wants to limit the

withdrawals of companies to 15% when they reach almost 35% today. Nevertheless, it

stands out from Trumps conservative predecessors on the rhetoric adopted,

embroidering the large companies of the Dow Jones. Trump will rather fight tax havens

that allow them to escape part of the tax and wishes to return on the advantageous

taxation of hedge funds. The question of financing such measures is also regularly

questioned by economists.

On this issue, Donald Trump remains relatively faithful to the Republican

tradition. He promises to exempt from taxes the 73 million tax homes in the country that

earn less than $ 25,000 a year, as well as couples who receive less than $ 50,000 a year.

The middle classes would also be affected by tax cuts. The Republicans also intend to

introduce a 25% tax loop, which would benefit first and foremost the 1% of the

wealthiest Americans who could earn up to $ 400,000 a year. The economy is

nevertheless facing a major problem: the financing of such a measure. There will be 4
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tax ranges: 0%, 10%, 20% and 25%, instead of 7 which are currently being applied

("Tax Plan", 2016).

In the field of tax reform there will be simplification of the income tax and

elimination of "loopholes" of the rich and businesses to save tax. Trump also intends to

discourage tax reversals (that is, a US company buys a business based in a country with

a lower tax rate to relocate its head office and intellectual property) including capping

the rate of tax on all companies to 15%. Experts predict that the new Administration

will seek to end of corporate tax on profits generated abroad (as in most countries other

than the United States) and give an opportunity for the US companies to repatriate their

money from abroad at a favorable tax rate of 10% (The Economist 2016).

The banking sector will go through hard times. Two regulations which will

become operative in 2018 will begin to pinch in 2017 and the banks will prepare to meet

their requirements. The first is from the Basel Committee on Banking Supervision,

which severely restricts the amount of leverage that banks can refer to in the process of

money making. Furthermore, the banks will be obliged to recognize expired loans more

quickly in order to avoid Lehman Brothers fate.

As for the interest rate, according to the recent estimations until the ed of the

year it will remain the same as now, 0.75%. Later il will grow slowly until reaches peak

of approximately 2.25

There will be no planned fiscal deficit. Experts in general agree with Trump's

tax reform, which many of them think would be a step in the right direction. Individuals

and local businesses would pay less tax, which would be financed by the corporate tax
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recovery of multinational corporations that are currently avoiding US tax by stratagems.

This reform would also reduce the costs of preparing tax returns. However, there is a

major problem: this tax reform is impossible without cutting drastically in spending.

The most likely result will be a huge deficit.

According to Trump, the United States has completely opened its borders to

Chinese goods, but China has not done so. He declares China as a "currency

manipulator", as the Yuan would be undervalued by 15% to 40%. The President-elect

Donald Trump accuses China of all the evils of the American economy. Therefore, he

strongly wishes to increase customs duties on imports of products labeled Made in

China. The key objectives thereto are to rebalance the very strong American trade deficit

with China (500 billion dollars), and to incite companies to produce in the United States.

Donald Trump also wants to renegotiate a series of trade and free trade agreements

signed between the United States and its partners (White, McCaskill, Isenstadt, &

Shafer, 2016). These include the North American Free Trade Agreement (NAFTA).

This policy is not balanced and clever.

First, the Chinese currency is not undervalued; if not why would the Chinese

government currently exhaust its foreign exchange reserves to try to support it? Besides,

name me a country that does not manipulate its currency in one way or another

(including the United States)?

Second, the United States remains a protectionist country. It is wrong to say that

"borders are open". Moreover, from the point of view of investment, the government

has blocked acquisitions of US companies by Chinese interests.

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Third, Trump erred in saying that imposing tariffs on Chinese imports will help

the US economy and, even less, bring manufacturing jobs back to the country. Like

many others, Trump gets lost in the worship of exports. These tariffs would only be a

tax paid by American consumers, who would, therefore, have to lower their standard of

living. If manufacturing output leaves China, it will not be for the US, but simply another

low-cost country of production. Trump forgets that the more trade there is, the better,

even if one of the two parts of the exchange applies protectionist measures. The United

States has nothing to gain by launching a tariff war against China.

The Republican's worst proposals relate to his immigration reform, which is a

grotesque parody of right-wing populism. Mr. Trump forgets that a very large number

of American companies have been founded by immigrants, not to mention all the

inventions patented by immigrants. In a context of demographic aging, immigrants are

a source of wealth. The construction of a wall at the Mexican border, end of the right to

citizenship through birth and deportation of illegal immigrants are very likely to occur

under the new Administration.

Immigrants generally represent about 10% of the US population, but 40% of the

Fortune 500 companies were founded in part by immigrants ("Forbes Welcome", 2016).

The founders of Oracle, Yahoo, IBM, AT & T, Goldman Sachs, Radio Shack, Kraft,

Pfizer, Comcast, Procter & Gamble, Nordstrom, Kohl's and Home Depot are either

immigrants or immigrant children. Steve Jobs, Apple's founder, was a son of

immigrants, not to mention Google and EBay. When a child is born in the United States

of foreign parents, that child actually obtains American citizenship, as provided for in
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the constitution. However, this child will not be able to sponsor his parents before the

age of 21. The "anchor babies" of Trump are therefore a myth.

In fact, many Chinese come to the United States only for childbirth, pay medical

bills from their pockets and return to China immediately afterward, if only to obtain

good medical care and escape the policies of Natality. In addition, one study found that

low-income immigrants use government programs less than native citizens. It is;

therefore, wrong to say that immigrants come to the United States to abuse social

programs at the expense of taxpayers. Immigrants, legal and illegal, come to the United

States to work there, and the jobs they occupy do not interest the vast majority of

Americans. They do not come to steal jobs either. According to the American Action

Forum, a right-wing think tank, only Trump immigration reform to reduce the amount

of 11 million workers in the US and reduce the $ 1.6 trillion GDP.

Conclusion:

The Presidential elections of 2016 demonstrated that their result will have crucial

effect on the economy. All political results will affect market, social sphere,

employment, stock. Possible tax reform is quite good but in terms of overall impact on

economy he will really do more harm than good. The spheres which the candidates want

to change the order drastically are too critical and to numerous to stand all the

experiments. The lessons learned by these elections are that even strong desire to

conduct economic reforms shall not ignore political and social impact of too radical

steps. Complex approach is needed in balancing such economy as the US one is.
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References

The Economist (2016). Economist.com. Retrieved 8 December 2016, from

http://www.economist.com/news/finance-economics/21693538-trumps-

proposals-require-implausible-spending-cuts-or-10-growth-donald-ducks

Forbes Welcome. (2016). Forbes.com. Retrieved 8 December 2016, from

http://www.forbes.com/sites/stuartanderson/2011/06/19/40-percent-of-fortune-

500-companies-founded-by-immigrants-or-their-children/#59b4200b7a22

Tax Plan. (2016). Donaldjtrump.com. Retrieved 8 December 2016, from

https://www.donaldjtrump.com/policies/tax-plan/?/positions/tax-reform

White, B., McCaskill, N., Isenstadt, A., & Shafer, J. (2016). Economists savage Trump's

economic agenda. POLITICO. Retrieved 8 December 2016, from

http://www.politico.com/story/2016/01/trump-economy-217496