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“Since President Trump became president, he promises the economy will grow under his new policies and policy changes. He requires business to grow under the American people. He does not want anything to do with immigrants helping this country. His economic policies, that he thinks might help the economic growth, might just end up hurting it. It might help in the short term but in the long run it might just end up being damaging the economy. Some of Trump’s economic policies are trade protectionism, immigration, individual and corporate tax reform, consumer protection act, and reducing the regulations on environmental laws in order to help business. Going in depth about each policy would help us understand which polices are damaging the economy and why President Trump wants to enforce these policies.
Since Trump became president, he made a lot of policy changes and added new ones. One of which he changed is Trade Protectionism. This policy protects domestic industries and imposes limits on unfair competition from foreign industries. It uses tariffs, subsidies and import quotas to put restriction on the imports of foreign competitors.
President Trump “Imposed 25% tariffs on $50bn worth of Chinese goods” (bbc.com). China responded back with announcing that it would also put their own tariffs on $35bn worth of U.S. goods. By doing so, both of these countries now created a trade war. A trade war happens when two countries strike each other’s trade with taxes and quotas and raise tariffs. Trump showed that he isn’t afraid to create a trade war according to one of his tweets. “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big-its easy!” He received a lot of backlash on this tweet, like most things he tweets typically receive backlash from his followers.
When there is a tax on products made from overseas people will not likely purchase them. They would rather buy local products; thus, it would boost the country’s economy. According to dictionary.com, trade deficit is a “condition that exists when the value of a country’s imports exceeds the value of what it exports; also called unfavorable balance of trade.” Last year the trade deficit with china stood at $375 billion. The president wants to cut the trade deficit using tariffs. Trump put a 25% on steel imports and 10% on aluminum. Doing this will cause the companies to purchase local steel instead because the local steel would be more inexpensive. Trump going against china might not be good for consumers. The prices will rise if this trade war keeps going because companies will need to compensate. This will not be the only thing Trump is doing that’s receiving backlash, his policies on immigration is another policy that people are not happy about.
Immigration seems like it has been the backbone of the United States. Since the 1960s, immigrants have been coming here to live a better life. They have more opportunity here. As for Trump he is trying to reduce the number of immigrants coming into the United States. “Even more than before, immigration is closely tied to discussions about the U.S. economy and global competitiveness, national security, and the country’s role in humanitarian protection at a time of record global displacement.” So, in which ways is the U.S. economy tied with immigration? Well, wages are unaffected by immigration over long-term, and economic effects of immigration are also mostly positive for natives and the overall economy based on economic research.
There were a lot of policy changes for immigration since trump became president. A major policy that had a lot of effect on people was when he banned nationals of eight countries from entering the United States. Most of them represent Muslim countries. According to the balance.com, “On October 17 and 18, 2017, Federal courts halted portions of President Trump’s travel bans. The judges said that the bans on predominantly-Muslim countries are unconstitutional. They interpreted Trump’s own words to infer that his bans on Chad, Iran, Libya, Somalia, Syria, and Yemen were based on religion.”
Since the resettlement program was created in 1980, the refugee admission was reduced to the lowest level. Trump also cancelled the Deferred Action for childhood arrivals program (DACA). It would cost 60 billion to deport 750,000 people who are protected by DACA who contribute 28 Billion a year to the United States economy. For the nationals of Haiti, Nicaragua and Sudan, their designation of temporary protected status was ended. According to the balance.com, “the center for American progress estimated that mass deportation would reduce U.S. gross domestic product by 1.4 percent.” The United States spends $11.4 billion and 20.2 billion on immigrants who add 1.6 trillion to the economy each year.
Majority of the people from the United States do not agree with these policies. Even though when he started to campaign for the presidency, immigration reduction was the centerpiece of topic. People knew what his intentions were, yet he still got elected even though majority does not agree with him. One topic that was mentioned several times in his campaign was building a wall on the Mexico and United States border. Also, he wanted Mexico to pay for it.
The budget plan for building the wall would cost $25 billion. If Mexico refused to pay for the wall, Trump would change a “rule under the USA patriot Act antiterrorism law.” This rule would be made so that the money sent from western union to Mexico would be taken away. President Trump wants to make a lot of changes to the immigration policies. He says it is good to grow the economy, there is no proof that it has. Another thing he wants to do that he says will help grow the economy is the individual and corporate tax reform.
President trump signed the “tax cuts and jobs act” on Dec. 22. 2017. What this bill means is that corporate tax rate, which was at 35 percent, is going down to 21 percent. It will also lower taxes for small business owners and the majority of Americans. Therefore, what will this tax change and what will be kept the same?
The rich will receive a new tax cut. In 2017, married couples who are earning over $470,700 the highest rate was at 39.9 percent. With this bill, it would drop to 37 percent. Because of that, the threshold would rise. The top rate now would be $500,000 for individuals and 600,000 for married couple. This goes against what President Trump proposed. He said this tax bill would not support the rich. “The wealthy are not getting a tax cut under our plan,” Gary Cohn, Trump’s top economic advisor, said on Good Morning America. Second, the plan would slash taxes for American’s middle class. “Our frame work includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected,” President Trump said in a speech in Indiana”. Not only will the rich receive tax cuts, but so will corporations.
The tax rate for big businesses “Would fall from 35 percent to just 21 percent”. This would be a massive one-time rate cut for the nation’s largest companies in the United States. For the next decade, it would add up to $1 trillion in tax cuts. “Republicans argue this will make the economy surge in the coming years, but most independent economists and Wall Street banks predict only a modest and short-lived boost to growth.” So, there is some disagreements on how tax cuts for larger companies might affect the economy. Republicans believe that it would be making the economy “surge”. In other words, it would have a powerful impact on growing the economy. On the other hand, Wall Street does not agree with that. They think it would be a “short lived boost.” Which means the economy would grow because of it but it will not be that high of a boost. This tax cut would also allow Americans to deduct $10,000 in state, local and property taxes.
Before the tax cuts, the state and local deduction was unlimited. In the final plan they decided that people, including married couples, are only allowed to deduct up to $10,000. Because of that decision, it started a lot of controversies. It was only supposed to be restricted to just property taxes, but in the final bill, its allowing “any state and local taxes to be deducted.” According to Washingtonpost.com, “There are concerns it could cause property values to fall in high-tax cities and leave less money for public schools and road repairs.” This policy seems like it would do more harm than good.
Until 2026, Americans would pay less in taxes. While this plan would reduce tax rates for each income, it will also double the standard deduction. This would result in Americans seeing that their tax bills will drop by the following year. The amount would depend on the size, location and circumstances of every family so there is not an exact number in how much their taxes would drop by. For Americans who will not owe anything in taxes, their taxes would increase from 44 percent to 47.5 percent. In 2025 individual tax cuts would go away. Republicans want to keep tax reductions for businesses permanent, and it would not be permanent for families.
There will also be a larger child tax credit. Low income families and working-class families used to have $1,000 in child tax credit. In the final bill it would be raised to $2,000 per child. Families who work but do not earn enough to owe federal taxes will get more money back. For these families they used to get $1,100 but that’s being changed to 1,400.
So, the main focus is on how the rich will have a new tax cut, how there will be a bigger tax cut for corporations, being able to deduct $10,000 in state, local and property taxes, Americans will pay less in taxes and working-class families will get a bigger child tax credit. These policies are the main ones changing with the individual and corporate tax reform. But there are some policies that wont change. What will stay the same are the student loan deduction, medical expense deduction, graduate student tuition waivers, and the retirement account like the 401(k) is not going to change. Overall the final bill will cost about $1.46 trillion. According to washintonpost.com “Republicans decided it would be all right to go into debt up to $1.5 trillion to fund the tax cut.” Another policy that Trump wants to change is the Dodd-Frank street reform and consumer protection act.
According to Congress.gov, the Dodd-Frank street reform and consumer protection act is “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.” This became law under President Barack Obama in 2010. This law was passed because of the 2008 global financial crisis. Since Trump became president, he wants to modify some of the rules of the Dodd-Frank Act.
“The house voted late on Tuesday to pass a bill that will change significant aspects of Dodd-frank, the banking reform bill introduced after loose lending and risky maneuvers by financial institutions led to the country’s worst recession since the great depression” (nbcnews.com). So, why might President Trump want to change a law that was helping and promoting financial stability?
Senator Elizabeth Warren was helping told NBC news that banks are currently making record profits, but Washington wants to keep doing more favors for them, even if it might cause another bailout. So, there are people like Elizabeth who don’t agree with this change. People who are for this change believe it will be a relief for the community and local banks.
The new bill would weaken the rules set for the banks. The structure of the post financial crisis rules would be kept the same. According to washintionpost.com, “It would exempt some small and regional banks from the most stringent regulations, and would also loosen rules aimed at protecting the biggest banks from sudden collapse.” This means that smaller banks would no longer be under strict rules and the bigger banks would have the rules that are set to protect them from sudden collapse will no longer be enforced. The bill will not replace the rules for the post financial crisis and the consumer financial protection bureau.
According to nbcnews.com “Reducing oversight and regulations of the financial services industry could be fuel to the fire and costly in the long run.” In the end if we do give relief to banks from strict rules and regulations it could end up being bad in the long run for the economy. Eventually things would be worse than what they have to be.
As for the environment, President Trump will no longer be enforcing laws to help preserve it. The economic growth is more what’s important than protecting the environment. Unlike the Obama administration who were very supportive of cleaning up the environment. According to brookin.edu, “The new administrator of the EPA is opposed to most regulations and argues that global warming may be a good thing. The administration is moving to eliminate restrictions on greenhouse gas emissions. EPA does not control state laws, but under the Trump regime it will be easier and cheaper for companies to resolve environmental concerns at the price of more pollution.” For President Trump being a business man, it comes at a cost for our environment. He would rather have the businesses be more successful at the cost of disrupting the environment.
Overall, President Trump has made many changes to economic policies and added new ones. As a result of these changes and new policies, it seems like its having a negative impact on economic growth. According to balance.com, “President Trump promised to increase economic growth to 4 percent. That’s faster than is healthy. Growth at that pace leads to an over confident irrational exuberance.” With President Trump getting into trade wars with other nations making trade policies more complicated with Mexico and Canada. These policies that he is making are bringing the overall economic growth down. As a result, we will see a lower real gross domestic product percent. “Real gross domestic product (GDP) increased 2.0 percent in the first quarter of 2018, according to the “third” estimate released by the Bureau of Economic Analysis. The growth rate was 0.2 percentage point lower than the “second” estimate released last month. In the fourth quarter of 2017, real GDP increased 2.9 percent”.
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