By Frank Newman on 12th November 2016
On the eve of the US election, I was talking with some young school kids who assured me that if Donald Trump was elected he would release scary clowns into local communities. It did not surprise me that they would think that, given how bizarre the campaign had been.
It’s stating the obvious to say Donald Trump’s win was historic. It’s actually staggering from various perspectives, but 2016 has been a year of historical outcomes (e.g. Brexit).
2016 has thrown out the “How to” book on politics and a new rule book has yet to written, or even understood. What we do know is Trump defied every convention, every commentator, every pollster, and most politicians (even some in his own party). Everyone seemed to get it wrong, apart from Trump who remained staunch. What can we expect from Donald Trump?
Trump’s 100 Day Plan, released in October, indicates busy times ahead. Some of those plans are:
• Withdraw from the Trans-Pacific Partnership.
• Lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal.
• Cancel billions in payments to U.N. climate change programmes.
• Implement a plan to grow the economy 4% per year and create 25 million new jobs. This would include massive tax cuts. A middle-class family with 2 children will get a 35% tax cut. The current number of brackets will be reduced from 7 to 3, and tax forms will likewise be greatly simplified. The business rate will be lowered from 35 to 15 percent, and the trillions of dollars of American corporate money overseas could be brought back at a 10 percent rate.
• Initiate a $1 trillion spending programme on infrastructure investment over 10 years.
These are just a few of many bold promises, and the effects will reverberate internationally. Some are predicting the borrow and spent approach will place upward pressure on interest rates, which would flow through to our mortgage market.
It will be interesting to see if Trump’s fellow Republicans in the Senate and Congress have the courage to follow his lead or if they bind his hands and feet – they, after all, are politicians and part of the establishment that Trump has railed against and has promised to fix – “Drain the swamp”, in his words.
Trump’s influence is likely to extend much further than the US. Next year there are some critical elections in Europe – the Netherlands, Germany, France. The repercussions for a united Europe should Angela Merkel’s Christian Democratic Union party lose power are very significant.
These are interesting times and entertaining times.