A $3 trillion dollar, unfunded, tax cut which largely benefits the wealthy; a rollback of 70 percent of federal regulations; and the repeal of the Affordable Care Act (with no currently available plan to replace it); and potential trade restrictions, would not only bust the budget deficit wide open, but would likely cause the type of growth that leads to even more speculative excesses in the economy and an implosion in global trade.
Such plans could complicate the Federal Reserve's efforts to normalize interest rate policy, or worse, cause them to raise rates more rapidly than is currently envisioned.
That would seriously jeopardize economic growth, as we have seen in the 1980s, early 2000s and, again, in 2008.
That does not mean, however, that there is no room for an expansionary fiscal policy that would lead to balanced growth, allow the Fed to normalize interest rate policy and provide relief to the unskilled and under-skilled who are rapidly being left behind in an increasingly knowledge-based economy.
Therefore, I would humbly submit the following suggestions to you on the economic policy front.
Let me preface this by saying that, while I agree, at least theoretically, that all should pay their fair share of taxes, a more stringent and progressive tax code could lead to slower growth and further reinforce the "secular stagnation" that prominent economists, like Larry Summers, have fretted about in recent years.
More simply put, I fear that your economic plan, in its current construction, is just too stingy and not as growth- oriented as it needs to be, under the existing burden of slow growth, both at home and abroad.
If I were an adviser to you, I would simply pull the Simpson/Bowles plan off the shelf and ask Congress to pass it on an up or down vote.
The plan, as you well know, reforms and simplifies the tax code, both individual and corporate, while remaining deficit neutral. Further it reforms unsustainable entitlement programs and spends more on infrastructure and education than current budgets allow.
Contractionary fiscal policy, exacerbated by the so-called "sequester," cut economic growth in recent years by as much as one percent per annum, helping to slow the pace of growth to its lowest annual rates since the end of World War II!
I would go even further beyond Simpson/Bowles with a $4 trillion infrastructure plan that readies the U.S. economy for the 22nd Century, not just the 21st.
Comprehensive immigration reform would be next.
Go ahead and pass TPP, despite opposition from the Sanders/Warren wing of your party! It is a growth enhancer, not a job killer.
On the education front, where reform is critical, I would first focus on the disenfranchised before worrying about the costs of a four-year education.
Rather than focusing there, I would propose a community college-led, STEM-based, federally financed, associates' degree for the unskilled, and under-skilled, so that they can transition away from dying industries, like coal, or assist those who are at risk of being replaced in coming years by robots and software.
There are 5.9 million open jobs in the U.S. Many of them are going wanting for lack of highly skilled labor.
Equality of educational opportunity, in my humble opinion, may be far easier to achieve than equality of economic outcomes.
If you want to re-impose the Glass-Steagall Act, which was designed to prohibit commercial banks from also operating an investment bank, then dial back the Dodd-Frank Act, which imposed strict regulations on banks, so that the benefits of low interest rates can reach those who need credit the most!
No doubt you will be met with a wide variety of issues on your first day in office, should you become president.
There are political realities, rising geopolitical risks and countless unanticipated problems that will confront the occupant of the Oval Office in the next president's first 100 days.
But, rapid economic growth can address a multitude of problems. The stronger the U.S. economy is in the next executive's early days, the more she, or he, will be able to tackle the seemingly intractable problems that could arise unexpectedly elsewhere.
I would err toward the side of much more rapid growth before worrying about a rapid increase in progressivity.
Respectfully yours,
Ron Insana
Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.
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