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© 02.03.2017, Oksana Bogaevskaya

Photo by Ninian Reid // www.flickr.com/photos/ninian_reid

Speaking to Congress on February 28, Donald Trump adhered to a business meeting format, although he could not refrain from making some statements more intended for the general public. Describing the economic state of the country, he listed the problems he had inherited from the previous administration: 94 million Americans are not part of the labor force (not mentioning the low level of unemployment, which in January was 4.8%), and more than 43 million people live below the poverty line and receive food aid from the government. He noted a serious increase in public debt during the presidency of B. Obama, a huge US trade deficit, and a critical reduction in jobs in the manufacturing industry.

At the same time, D. Trump highlighted his own achievements over the past month. He spoke about the agreement with a number of large companies (Ford, Chrysler, General Motors, etc.) on investing billions of dollars in the American economy, about his ban on recruiting new federal employees (except military officers and special categories of employees), and promised to lower prices on government procurement. As his most important decisions D.Trump mentioned the permission to build oil pipelines Keystone XL and Dakota, which should create tens of thousands of jobs, as well as the US withdrawal from TPP.

Further, the President outlined the priorities of his economic policy. D.Trump considers implementation of reforms through the prism of "the revival of the American spirit”, by which he understands, first of all, the prevalence of internal issues and emphasis on the interests of the middle class. As specific goals, he named the creation of new jobs and favorable conditions for doing business, combating the leakage of profits, assets of companies and jobs abroad, the revival of American industry and the working class. The main elements of the economic agenda of D. Trump and the means to achieve the goals set will be deregulation, tax reform and huge investment in infrastructure.

The repeal of unnecessary regulation has actually started, unlike the other economic measures of the new administration, which are only being discussed. The President signed a decree establishing operational groups for deregulation in every executive agency. Also now it is necessary to cancel two old rules of regulation in order to introduce a new one. D.Trump made specific mention of the repeal of a regulation in the coal sector, which was an important part of his campaign promises.

The President underlined that in order to maintain international competitiveness of American companies it is very important to reduce the corporate tax (now the US has one of the highest rates in the world). D. Trump promised a "very, very large" reduction in the corporate tax rate and significant tax breaks for the middle class. However, he did not elaborate on the details of the future tax reform. Currently, several plans are being developed of which the main ones are the project by the Ministry of Finance and the project by the Republican Party in Congress. They will be submitted to Congress not earlier than spring, after the budget is passed.

The president promised to submit to Congress a bill investing 1 trillion in infrastructure. It will be financed both from budgetary and private sources within a framework of a public-private partnership. Also, participating companies will receive tax incentives. The project involves the use of American construction materials and recruitment of American workers, and is supposed to create several million jobs.

D. Trump paid much attention to immigration issue. The President reaffirmed his position on the construction of a wall on the border with Mexico and the strengthening of the border control. In his opinion, at present the flow of immigrants substantially infringes the interests of low-paid Americans. This creates competition in this segment of labor market and further has a downward pressure on wages and leads to an increase in government spending. D. Trump proposed to adopt a system of issuing entry permits based on assessing the qualifications and skills of candidates, their relevance to the economy and the ability to provide themselves financially. A similar system exists in Canada and Australia. D. Trump called on representatives of both parties to support him in matters of immigration reform. If his proposals do not contain politically scandalous moments, getting the support of Congress does not seem unrealistic. And the President has already taken a step back, giving up the fight for his decrees on restricting the entry for citizens of seven countries that caused mass protests.

Another important issue for Trump is trade protectionism. Trump justifies the need for an import tax by the fact that such taxes exist in many countries. The new administration has not yet developed specific proposals on trade policy. The president expressed only general ideas that he "believes in free trade very much, but it must be fair". The tax reform plan drafted by the Republican Party proposes to introduce not import duties, but a border adjustment tax. However, D.Trump earlier spoke negatively on this proposal, saying that it looks too complicated to him. Trump's speech in Congress also did not clarify the issue of specific prospects for US trade policy.

Donald Trump has also paid much attention to healthcare issue, which is the first to be considered by Republicans in Congress. According to Trump, Obama's healthcare reform has led to a "catastrophe", in particular, to a sharp increase in the cost of medical insurance. He urged Congress to roll back the  reform and to replace it with an alternative health care system. The purchase of insurance should not be mandatory, and in order to increase access to insurance and its coverage, it is necessary to reduce costs, expand the choice and improve the quality of medical care. Tax credits should be granted to citizens, and targeted health savings accounts should be opened, while the governors should be given expanded resources and authority to control the accessibility of insurance to the least protected sections of the population. Trump urged to legislatively protect patients and doctors from unjustified growth of prices for medical insurance, reduce artificially high prices for medicines and allow them to buy insurance outside their state. This will create a truly competitive market.The President also recognized the need to give access to health insurance to everyone, regardless of medical history, and to reduce unnecessary regulation in the pharmaceutical industry.

The draft budget, which the President intends to submit to Congress, cancels the military sequester and provides for one of the most significant increases in defense spending in US history. The exact amount was not specified by Trump, but earlier it became known that military expenditures could increase by $ 54 billion.

The President urged Congress to approve a bill financing the school choice for children from poor families (this is a system of school vouchers). He stressed that families should be able to choose between private, state, religious, charter schools or family education. Minister of Education B. DeVos also wants to develop the system of school vouchers and to expand the network of charter schools (public schools with private management and a more free and flexible organization of the learning process).

Unlike Barack Obama, who always mentioned in his speeches the need for innovative development, Donald Trump did not pay attention to this issue. He mentioned science only in the context of the inventions of the 19th century (telephone, typewriter, lamp, telegraph), asking what scientific achievements we will see in nine years, on the 250th anniversary of US independence.

Does this mean that Trump is not interested in maintaining the innovative leadership of the United States? Despite the fact that the President did not speak about the importance of science, he is concerned about keeping up the competitiveness of American companies and the country's economy. His own experience as a businessman, the prevalence of business people in his team, and the demonstrative disregard of academic economists - it all leaves an imprint on both his rhetoric and politics, which are highly pragmatic and rely more on common sense than on the macroeconomic picture of the world.

The stated policy guidelines of D. Trump can contribute to the growth of the American economy and to strengthening of its competitiveness, while the increase in defense spending could boost the financing of science through military projects. However, this does not eliminate the need for long-term investments in education and science, and the top officials should be aware of this.

In his speech, the President outlined his economic agenda, but did not clarify any of the specific issues that are soon to be dealt with by US Congress. What are the proposals of the new administration on tax reform; the sources for, and mechanisms of investment in infrastructure; the details of the proposed healthcare reform and the sources for financing the budget deficit. Apparently, D. Trump does not yet have any definite answers to those questions.