How the Democratic House May Shift the Economic Equation

How the Democratic House May Shift the Economic Equation

You may remember that for the blink of an eye last year, it seemed possible that the Democratic leadership in Congress might make a deal with Mr. Trump to tie tax reform to a proposal to repair roads, bridges, waterways and airports.

Infrastructure has often been hospitable ground for bipartisan initiatives. Mr. Trump has always been enthusiastic about building on a grand scale, and in many ways, the Democrats are more willing partners than Republicans, who have consistently objected to the kind of spending required. Democrats have put together a trillion-dollar infrastructure proposal aimed at everything from broadband to waterways.

But financing remains a problem. Even if the president and Democrats were willing to make a deal, Senate Republicans would almost certainly object to any plan large enough to make it worth the Democrats’ while, said Rick Lazio, a former Republican congressman who is now a senior vice president at Alliantgroup, a tax-credit consulting firm. “With economy slowing and deficits climbing,” he said, “I don’t just see Republicans going for a trillion-dollar infrastructure bill.”

Nor is the atmosphere in Washington particularly conducive to cross-the-aisle collaboration. “I just have a hard time believing that after the last two years, the parties are going to be able to get along and negotiate anything,” said William G. Gale, co-director of the nonpartisan Urban-Brookings Tax Policy Center in Washington. Republicans and Democrats “can have overlapping positions,” he said, “but any compromise requires trust, and I just don’t think there’s any trust available right now.”

Democrats may also think twice about giving the president a victory before the 2020 election.

A significant slowdown in the economy could always change that calculus. With the effects of the stimulus fading, Mr. Trump has stepped up complaints that the Federal Reserve’s plan to raise interest rates will slow the economy. “If somebody offers him the opportunity to offset that with a spending bill, he would sign it, with no regard for the deficit,” said Jared Bernstein, a senior fellow at the liberal Center on Budget and Policy Priorities in Washington who was an adviser to former Vice President Joseph R. Biden Jr.

Mr. Trump has paid little attention to critics in either party in pursuing a confrontational trade policy. The administration has the power to impose tariffs without congressional approval, and that is exactly what it has done. The 10 percent tariff the president put on $250 billion of Chinese goods in late September is scheduled to increase to 25 percent on Jan. 1. The White House has indicated that it will unveil tariffs on all other Chinese imports — worth an additional $257 billionif talks between the United States and China at the G-20 summit this month fail to produce progress.

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