Take Two®

News and culture through the lens of Southern California. Hosted by A Martínez

How you can assess Trump's job on the economy

by Take Two®

149178 full
President-elect Donald Trump speaks during a news conference in the lobby of Trump Tower in New York, Wednesday, Jan. 11, 2017, in New York. (AP Photo/Evan Vucci) Evan Vucci/AP

These next 100 days are a critical time for President Trump to, as he promised, "Make America Great Again."

And he's hit the ground running: this morning, he signed an executive order to to begin withdrawing from the multi-national trade deal the Trans-Pacific Partnership – or TPP.

Take Two brought together a roundtable of economic experts to analyze what Trump could do to the economy, for better or worse.

Guests

  • Raphael Bostic is a housing expert and chair in the Department of Governance at USC.
  • Delia Fernandez is a certified financial planner with Fernandez Financial Advisory in Los Alamitos.
  • Chris Thornberg is a founding partner of Beacon Economics.

Interview highlights

Don't use Wall Street to measure whether Trump is good or bad for the economy, right now

Thornberg: They think one of his top priorities is going to be tax cuts, particularly corporate tax cuts. And we have to remember that Wall Street is not thinking, "Gee, there's going to be a huge surge in growth."

What they're simply saying is, "Guess what? I get to take home more of what my company is earning."

That's why the market is popping, so it's a little different. Everyone keeps on interpreting it as, "Oh, Trump's going to be great for growth." No, Trump's going to be great for corporate profits.  

Republicans have a plan to alter taxes

Fernandez: We are going to see a change the tax system. I don't know what it's going to look like. They're going to try to simplify it, but it definitely could cut some of our deductions.

I want to put people on alert, particularly in California, that there's a lot of talk about wiping out the deduction for California income tax. We're a high tax state like New York and others, and that could have an impact on our taxes.

Taxes will go down. But mostly for the rich.

Fernandez: Looks like there's going to be a net tax decrease for high-income people, especially the 1 percent, making over $400,000. For 80 percent of the people, the Trump plan does not lower any of their taxes.

Trump could be good for the housing market

Thornberg: Dodd-Frank, [the federal law that regulated mortgage lenders after the 2008 housing crisis], was vastly over-reaching, and the net result of which had lenders stop lending to higher-risk households. 

There's room for the sub-prime market and that has been absolutely been wiped out by Dodd-Frank. That's one of the reasons the housing market recovery in the United States and home ownership in the United States has recovered so slowly.

Getting in there, busting up Dodd-Frank, getting the mortgage market working properly again – that could have a positive influence on our economy over the next few years. 

But he may not invest federal money in housing help

Bostic: The federal government subsides a lot of housing.

If those go away, it makes it much more difficult for two reasons. One, we don't have as much money to build. And if we don't have voucher money for people who are lower-income, we're going to see more and more families spending more and more of their income on housing, which will put stress on a whole host of other places. 

Explaining Trump's reversal of an Obama plan to cut fees on mortgages from the FHA loan program

Fernandez: Obama wanted to reduce the burden on individuals about to buy a house by lowering that 1.75 percent mortgage insurance cost to 1.25, so he was going to lower it by half-a-percent.

He wrote that decision, and then Trump overturned it. It would have meant saving about $42/month for $100,000 that you borrowed.

But my understanding is that it never really got implemented by Obama, and Trump made sure it was never implemented.

Bostic: When [Obama's Housing Secretary Julian Castro] announced it, he made sure it wasn't effective until after President Trump was in office.

It was purposefully done to force a decision, and the decision was going to be one that was going to work for the Obama community either way. One is on the political side if it's reversed, and the other is on the constituent side because the payments going down.

Ignore it when Trump pressures specific factories to stay in the U.S.

Thornberg: He might come in and shame them, but something to keep in mind here is the number of jobs we're talking about is really almost insignificantly tiny.

We're talking about 1,000 jobs when, on a monthly basis, this nation adds any where from 150,000 to 200,000 jobs on average. It's absolutely pointless except for making a headline. 

If the ACA is repealed, here are the economic winners and losers

Fernandez: People with $200,000 - $250,000 of taxable income are impacted by an additional 3.8 percent surtax for any kind of unearned income, so if you get rental income or dividends in interest, if you sell stocks, there's an additional tax related to medical insurance.

That could go down if they decide to change the Affordable Care Act.

Thornberg: Republicans are going to look at this and realize if they truly do what they're claiming to do, which is repeal it out of hand, you're not only going to have a social disaster, you're going to have an economic disaster.

For all the worries about manufacturing jobs, over the last 15 years we've added 1.5 health care jobs for every manufacturing job lost. And those are better jobs. 

 

blog comments powered by Disqus

Enjoy Take Two®? Try KPCC’s other programs.

What's popular now on KPCC