As the hype surrounding the most unorthodox and at times ugly U.S. presidential campaign ever is now over, it is time to take a deep breath and contemplate the new configuration of the post-election U.S. and its global ramifications under the rather unlikely presidency of Donald Trump. Trump's electoral victory as an outsider who turned the conventional methods, jargon, tactics and tricks of established politics on their head understandably left the majority of pollsters, academics and political and financial analysts who seemed convinced about an eventual Clinton win in utter disbelief. The American public and mainstream opinion makers across the liberal world had adopted an openly pro-Clinton position, which aggravated the degree of shock and despair. Global attention will focus on the extent to which the unconventional pledges of "campaigner Trump" will translate into the policy program of "President Trump."
Seen from the prism of economic policies, what Trump offers could be summarized as a return to "first generation neoliberalism" as seen during the presidency of Ronald Reagan in the 1980s. He did not just borrow Reagan's motto "Make America Great Again," he also pledged allegiance to the original neoliberal formula of reducing taxes, bureaucratic regulations and social spending, while pursuing supply-side economics through massive public infrastructure investments and tax incentives for the private sector. Following the former allure of Reaganomics, which set the tone of neoliberal structural transformations across the world, we might witness the rise of Trumponomics, promising to double U.S. economic growth to 4 percent by pursuing expansionary monetary and fiscal policies. Trump pledged to invest $1 trillion in public infrastructure alone to construct new highways, speed train lines, bridges, fiber optic communication networks and revamp the existing ones in an attempt to provide a boost for the economy and generate increased opportunities for employment.
The second side of Trumponomics concerns a significant reduction in financial regulations that were set up in the immediate aftermath of the global economic crisis in the name of prudent governance. Trump wants to loosen banking and financial sector regulations to increase fluidity in economic transactions and also use more public borrowing to finance the massive infrastructure projects he articulates. On trade, he follows a practically neo-protectionist and isolationist line based upon renegotiating or withdrawing from existing trade agreements such as NAFTA and TPP, while implementing punitive trade tariffs against China and Mexico. On fiscal policy, he promised to diminish U.S. corporate tax rates (which are among the highest in the industrialized world) from around 35 percent to 15 percent and offered a one-off 10 percent tax on funds that are repatriated from offshore markets. It is predicted that the U.S. corporate sector is holding around $3 trillion in offshore centers due to high rates of corporate tax at home. He even promised to reduce taxation liabilities on these funds if the companies take immediate investment decisions that could foster employment. Economic experts warn that Trumponomics, if applied in full swing, might create an additional budget deficit of around $4.4 trillion and add $6.6 trillion to the national debt.
The U.S. economy was able to withstand the shock waves of the global economic crisis triggered by sub-prime mortgage markets at home thanks to the disciplined implementation of a neo-Keynesian policy program by the Obama administration. Financial oversight and regulations were tightened, extra liquidity was pumped into the banking sector, the scope of social policies symbolized by Obamacare was extended and public spending on infrastructure was kept at a minimum. Although neo-Keynesianism proved efficient in saving the national economy from the edge of the abyss, its impact on the revitalization of the financial sector was not matched with equal success in social reincorporation. Obamacare turned into a real mess, for instance. Rural communities, medium-low wage earners in the service sector, manufacturing sector workers and a large portion of Middle America could not completely recover from the socio-economic impact of the global crisis and made their voices heard by voting for the "loose cannon."
It remains to be seen whether Trumponomics will remain an electoral gesture or represent the harbinger of a paradigmatic shift from neo-Keynesianism to a mixture of developmentalist expansionism with neo-protectionism. If the latter option is realized, we might have to brace ourselves for extensive global repercussions.