President Trump’s recent address to a joint session of Congress provided some important insight on Trump’s vision of America moving forward. The president addressed concerns about the financial market, health care, infrastructure and taxes, among other things. Here’s my rundown of what we heard that evening.
While largely the same message we’ve heard from Trump for a while, the president’s tone was changed. Stepping away from a reactionary and adversarial stance, Trump sounded much more open to partnering and working together than he has previously. Most people noticed the changed tone. If the stock market were any indication (as it often is) of what people felt after hearing our president speak, then I’d say folks were feeling optimistic. On Wednesday of last week, the market went up 300 points, and ultimately 1% by the end of the week, with the DOW landing at 21,000.
The market flourish we saw in the days following Trump’s first address was, I believe, a collective reaction to his spirit of cooperation. During his speech, President Trump seemed more, well, presidential. His focus was shifted away from petty social media skirmishes and towards national growth and sustainability. All the while, the message was not “I can do this,” but rather, “We can do this.”
And a more presidential Trump is exactly what our country wants and needs right now. So much hangs in the balance, and many Americans are feeling uncertain about what comes next. Moving past political division, we need a president who can get things done. And I’m not talking about executive order level change. I’m talking about health care, and infrastructure spending, and tax reform. You know, the big issues; the issues Trump promised to address during his campaign.
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President Trump put health care and the future of the Affordable Care Act (ACA) front-and-center during his address to Congress, giving us a glimpse of his way forward. Trump eased fears about the status of pre-existing conditions, promising they will still be covered. Similarly to Obamacare, tax credits will be available to help Americans pay for coverage. Trump encouraged the expanded use of health savings accounts. Siding with his Republican brethren, Trump embraced the belief that health insurance should be sold across state lines.
At the end of the day, will these measures work bring down health care costs? The answer is unclear. What is clear is that the ACA in its current form – from a pricing and competition perspective – is no longer viable. So, we need to try something new. And a free market approach might actually work.
Turning to infrastructure, Trump asked Congress for $1 trillion for new projects aimed at revitalizing America’s roads, railways, and airports. This massive number doesn’t come down to line item government spending. Instead, much of the budget would be in the form of a tax credit of about $135 billion over ten years. And some of the budget would also be financed by taxes collected on the repatriation of foreign U.S. corporate cash.
Did someone say taxes? During his speech, Trump continued to reiterate that tax reform is just over the horizon. But where is the president setting his sights? Trump has promised historic change on both corporate and individual tax structures, but details have yet to be revealed about how he plans to structure the reform.
All the while, the stock market seems to be sending a clear message – if Trump can effectuate the change he’s promised, maybe (just maybe) we’ll see a 3% GDP growth. As it stands, growth at this level has been elusive since the great recession. A full 1% of extra growth on what is now an $18 trillion economy calculates out to, well, a massive number. In the best-case scenario, America may find itself in a position where paying down the deficit doesn’t spell disaster. Of course, as with all of Trump’s policy promises, it remains to be seen.
But as for me, I’m optimistic. In particular, I’m optimistic about the economy over the next ten years. And while I’m optimistic about the stock market over those same ten years, we all know none of this works in a straight line. So while there may be dips and drags, my money – as always — is on America.
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