Understanding Trumponomics: A Conversation with Trump Economist Stephen Moore

Mark Duffy

President Trump’s Senior Economic Adviser for his 2016 campaign sat down with us to discuss the administration’s economic policies.

SIGNAL Vice President Mark Duffy sat down for a discussion with economist Stephen Moore, who served as Senior Economic Adviser to President Donald J. Trump’s 2016 campaign. Stephen is a visiting fellow at the Heritage Foundation, a CNN economic analyst and continues to serve as an informal adviser to the White House.

Q: Can you talk us through one of the most significant pieces of economic policy that yourself and President Trump worked on together?

A: That’s easy, because Larry Kudlow and I helped write the tax plan that passed back in December. I think this was a game changer for the economy, and the gem stone of that plan was the business tax reduction. We wanted to give businesses incentives to expand and invest more and hire more workers. So far, it’s worked out. I saw President Trump recently in Florida, and I said this is working better than we thought it would in terms of the impact. We’re seeing a big increase in business spending, which is a lead indicator of the economy. It’s been a job creator, it’s been good for middle class families, and a good generator of 4% growth.

Q: Speaking about 4% economic growth, we had great numbers for the second quarter. Where do you see the economy going longer term? How do you see things changing in the next 6-12 months?

A: I’m pretty bullish, probably one of the more bullish people you’ll talk to. I don’t see anything holding back growth, the tax cuts are kicking in and a lot of the deregulation efforts. So, you know, I see potentially 2-3 years of 3.5 – 4% growth, which would be phenomenal. Now what are the constraints on that growth? I think there’s two things that could hold back growth. One is the trade war (by the way I don’t think that’s going to happen), and the other would be workers. We just need more workers. We’ve talked about this, you and I, how do we get the workforce that we need that can fill these jobs? I talked to manufacturers two weeks ago and they were yelling at me: “Yeah, business is good, but we don’t have the people to fill the positions.”

Q: That’s a really important point because I know immigration has been a topic that you’ve written a lot about. Can you give us any insight into what President Trump thinks we need to do about high skilled immigration? Do we need to lift the visa caps, have more high skilled immigration, or is it something that you don’t foresee changing in the next few years?

A: That’s a tricky question. I have been working on immigration for 30 years, and I’ve lived through a lot of immigration changes that we’ve made. We did a big thing in 1986, and a big immigration bill in 1990. I think President Trump wants to get a deal on immigration. He would like to get a border wall, would like to do something with the Dreamers, and then improve our legal immigration system. There is a deal on the table to be cut, but the reason I think it’s not probable, I just don’t think the Democrats have any interest whatsoever in handing President Trump a political victory on immigration. President Trump has offered, not just a million, but 1.6 million visas for the Dreamers, and even put on the table a path to citizenship. I’m in favor of legalization, I’m not so sure I’m in favor of citizenship. And Nancy Pelosi rejected that, so it makes it really difficult to get this done when Democrats realize that if President Trump were to get this done he would be politically impossible to stop. I think this is really important for the economy to get this done, but realistically I think it’s very tough given how polarized the two parties are right now.

Q: I know there’s been a lot of discussions about NAFTA (North American Free Trade Agreement) and TPP (Trans Pacific Partnership). I’m interested to hear your thoughts on possibly the U.S. possibly rejoining TPP. Do you think it’s an effective way to counter the rise of China?

A: I don’t think President Trump is going to reverse himself on TPP. He doesn’t reverse himself, he doesn’t retreat. For better or worse, he just doesn’t. So, I don’t think it’s likely that we re-enter TPP. That doesn’t mean we can’t have negotiations with these countries – and we will, Japan, Singapore, Australia, Taiwan – I think the White House is coming around to the conclusion that the best way to stand up to China is to isolate them. And the best way to isolate them is to make deals with these other countries and not have all these other fights going on when you’re trying to fight China. So no I don’t think we’re going to see the U.S re-enter the TPP, but you could see many deals getting cut with Japan, Korea, and some of those other nations.

Q: Speaking of trade, last week we had EU Commission President Jean-Claude Juncker here in Washington D.C. President Trump and the EU Commission President announced that they’re going to try and achieve zero tariffs. What do you think that’ll do for the economy and do you think that’s realistic?

A: Zero? No. But can we get tariffs down rather than up? Yeah, I mean the idea is to ratchet those tariffs, down, and the point I’ve made to the President and the point Larry Kudlow makes is that we have the lowest tariffs in the world and most of these countries have higher tariffs. What has Trump always said since I first talked to him two years ago? That he wants to level the playing field, other countries aren’t playing by the rules or keeping up their end of the bargain. Not always, but in a lot of cases he’s right about that. I’m hoping that the outcome is that we get a deal where tariffs are reduced, which improves the economic climate for American manufacturers and our farmers. That would be the best of all worlds! And by the way, if you get that kind of deal done, I think the stock market just goes through a boom.

Q: What do you think President Trump’s greatest economic policy achievement has been so far?

A: First of all, I’m biased because I worked on the tax cut. But I do think the big thing about President Trump is that he is pro-business; this he is a pro-business president. And that makes a big difference. Businesses feel that they can expand, that they can take risks, that they can invest more and not feel like a big hammer is going to come down on their head or a club from government. I think that’s really the main theme of the book, Trumponomics, that I wrote. The big difference that’s going on now from between a few years ago is President Obama (and a lot of the people he appointed) were not pro-business. They didn’t know a lot about business. President Trump knows a lot about business and he wants businesses to succeed. I think that’s what our President means when he says “Putting America First.” So, I think it’s almost an unleashing of the animal spirits of the economy by getting government off of businesses’ backs.

A: Absolutely. Finally, do you think the President Trump is keeping his promise to American workers by making our economy great and do you think another tax cut could be part of that?

Q: It’s pretty clear form the polling – before the election, 3 out of 10 Americans thought the economy was going in the right direction, now it’s 7. I mean that’s a gigantic increase. People are feeling more confident about the direction of the economy, that’s good news for the country, and good news for President Trump. In terms of a second tax cut, we’ve written about it, promoted it, but I don’t see that happening this year. Maybe next year, but I think everything is so gridlocked right now it’s very difficult to get any new legislation passed.