Donald Trump's run for the Presidency is serious and should be taken seriously by business owners like you and I.
He is spending millions, putting his personal brand at stake and campaigning hard. Sure, some of the things he's saying are controversial. But he's among the leading candidates in the polls, both nationally and in key primary states, and is hitting a nerve with many voters. As I write this, he has as much of a chance of becoming the next President as any of his current competitors. And as business owners who look ahead and want to plan for the future, we should be considering now the economic impacts of a Donald Trump presidency on our companies. Social issues aside, these are five ways a Trump presidency would affect us.
Don't count on automatic tax decreases. Like most of his Republican competitors, Trump is a supporter of lower taxes for individuals and corporations, believing that lower taxes spur jobs and economic growth. In the past he has proposed simplifying the tax code to just four brackets, with a top rate of 15%, reducing capital gains taxes and killing inheritance and corporate taxes. He was a supporter of the 2003 Bush tax cuts and opposes a flat tax. However, unlike many of his colleagues (and true to his progressive nature) Trump has frequently proposed a one-time tax on the wealthy to help pay down the national deficit. As President, we should not automatically expect Trump to be a staunch supporter of lower taxes just for the sake of lower taxes. Although the trend would likely be in that direction, he has proven to be a compromiser (and a dealmaker, as he likes to call himself) when it comes to achieving his objectives and for him all options to achieving those objectives (for example, deficit reform) are up for negotiation, including those on the revenue side.
Expect big changes to healthcare. Consistent with his Republican challengers, Trump has been an outspoken critic of the Affordable Care Act, once saying “Obamacare is a heat-seeking missile that will destroy jobs and small businesses; it will explode healthcare costs; and it will lead to healthcare that is far less innovative than it is today. Every argument that you’d make against socialism you can make against socialized healthcare, and any candidate who isn’t 100 percent committed to scrapping Obamacare is not someone America should elect president.” That said, Trump is a believer in some type of universal healthcare coverage and a supporter of Medicare and Medicaid which he believes would be sufficiently funded as the economy grows. Trump has offered few specifics for addressing the legislation or rising healthcare costs but you can expect a proactive position on limiting or outright repealing the law if he were President.
He's short on deficit reform suggestions. Trump is as concerned about the country's recurring deficits and growing national debt as the business community and all of his challengers. As mentioned above he has even go so far as proposing a one-time tax on the wealthy (14.25%) to help pay down the country's liabilities. It's difficult to tell if he supports sequestration or other cuts in spending to help bring our budget overages under control, but he has said in the past that the government should be mostly about public works and safety and wants to severely reduce the Department of Education. He believes that social security is not an entitlement as much as it is honoring a deal. As President, you can expect Trump to take a business person's approach to the government's operations and draw a line in the sand when it comes to future spending and deficits. That may be a good thing for the economy but a tough pill if your business sells to markets that depends on government spending.
He is a protectionist. Although a vocal proponent of "fair trade," Trump is not an advocate of free trade. He has proposed tariffs and taxes on goods coming in to this country (for example, a 35% import tax on goods from Mexico) and considers China to be more enemy than rival. He does not support the recent Trans-Pacific Partnership free trade agreement proposals and frequently criticizes U.S. trade officials. If your business relies heavily on exports and imports, you can expect a Trump administration to be taking a closer look at your customers and a harder line on your activities. Future duties and restrictions could be in your future, depending on who and where you're doing your business.
The tone and culture of his presidency may be too poisonous. A Trump presidency would be unique. He frequently tells his growing audience that he is rich enough not to need money from interest groups and can think for himself and to that end he's correct. He is used to getting his own way, autocratically leading from the top and suing his opponents into submission. He is known for his unfiltered statements which could cause trouble both when negotiating with his opponents and awkward (if not dangerous) moments from a foreign policy perspective. Even though he's a tough talker, he's also famous for his deal making and the ability to compromise. As governor of the nation, Trump would need to surround himself with politically experienced people and be willing to work with both Democrats and Republicans who hold different opinions and values than he does in order to get things done. If Trump doesn't live up to his deal-making promises we could face another four years of legislative stalemate--which for many businesses may not be such a bad thing either.
Donald Trump is serious. He wants to be President. And, depending on how he performs in the upcoming Republican debates, his candidacy may quickly turn from a summer media circus to legitimate contention. We will have a new President in less than 18 months and that President will affect the profitability of our companies in the months after that. Donald Trump could be that person and it's important that we pay attention.