Understanding Donald Trump's Disruptive Plans

Republican presidential candidate Donald Trump speaks during a rally in Eugene, Ore., Friday, May 6, 2016. (AP Photo/Ted S. W
Republican presidential candidate Donald Trump speaks during a rally in Eugene, Ore., Friday, May 6, 2016. (AP Photo/Ted S. Warren)

In his campaign for the Republican nomination, Donald Trump, now the presumptive nominee, has articulated various positions and made promises about what actions he would take as president. Some of those positions appear intended solely to attract voters; but some of them are truly meant. I have had the opportunity to watch Trump's career closely for more than 34 years, since my business partner, Howard Weingrow, and I first made a deal with him to turn over the development we had assembled to build a hotel-casino in Atlantic City and become a lessor for his first hotel casino -- the Trump Plaza Hotel. (The property was part of bankruptcy filings in 2004, 2009 and 2014 and now Carl Icahn has taken control of the lease.) During that period there have been a number of other connections with him, as well. Based on that long experience with him, I believe I have some understanding about which of his plans are serious, a part of his world-view, and that he really intends to carry out.

There are a few generalities to be noted about these particular plans. First, they stem from his long experience in business, as an effective no-holds barred deal-maker and property and business operator. Second, they are not constrained by Republican conservative beliefs. Third, they can be highly disruptive in a number of areas that affect commerce and security in an already very uncertain world.

The first of these plans is to allocate a significant amount of federal funds to rebuild the broken, aging infrastructure throughout our nation. To attract his earliest supporters, Trump built his candidacy on a commitment to create jobs and he knows that nothing can create jobs in size and with more immediacy than putting people to work to rebuild the national infrastructure. "I am a builder" he likes to say and he believes that with interest rates as low as they are, now is the right time to borrow money and use it to build. He also believes he knows how to carry out this kind of program more effectively and efficiently than any politician. To be sure, a broad based infrastructure development and financing program presented by President Obama and the Democrats in Congress has been thwarted by the Republican legislature. It is antithetical to the views of true believer conservatives who are against the government doing anything that would sharply increase government spending and debt. So, Trump will likely add trappings to portray this more as a private sector program. He may also include his highly heralded wall on the border with Mexico in this program and he has stated that he will force Mexico to pay billions of dollars for the wall. However, although he would probably develop plans to build the wall, I'm not sure he would end up building it, perhaps finding a rationalization not to build it in a negotiation with the Mexican government on immigration.

The aim of Trump's tax plan is to simplify the tax code, sharply reduce taxes on American corporations and reduce taxes on the middle class. Initially, he claimed that he could accomplish those results and at the same time reduce taxes on the wealthy, all without increasing the deficit. His plan has been attacked from the right by The Conservative Tax Foundation, claiming that it would result in huge deficits. The one specific proposal Trump has offered for increasing the government income is to eliminate the tax benefits for carried-interest for private equity and hedge fund managers. However, the amount involved is quite small compared to the budget shortfall from the proposed tax reductions. Just recently, Trump acknowledged that his tax plan is "negotiable" and may involve tax increases for the wealthy. It does not appear that Trump feels constrained by conservative principles against raising any taxes or increasing the deficit.

In his interview on CNBC on May 5, Trump raised the possibility of reducing United States debt through negotiations with US bondholders, which he clarified as negotiating with holders of US bonds to buy them back at a discount. This has frightened some, who fear that any such effort would backfire and increase the interest cost to the government. Conservative economist Douglas Holtz-Eakin president of the American Action Forum called it a "false Hope." Still, Trump, having substantially reduced his own and his corporate debts by negotiating with his debt holders sees this as one of his strengths and probably will keep looking for ways to accomplish a debt reduction even of there are risks attached to it.

One of the Trump's most disruptive programs relates to international trade. He has consistently stated, even going back as far as 20 years ago discussing trade relations with Japan at that time that the U.S. was being "ripped off." He has described the American trade relations with other countries as a disaster; and argued that the trade deals negotiated by our government are failures and that he and his appointees could do much better. While it is not clear precisely how he expects to improve the US position, presumably the balance of trade will be more weighted in our favor with lower imports and greater exports reducing our trade deficit and Trump would argue that as a result, the job market in the US will improve.

No one can credibly predict what will result from an aggressive trade policy with China, Japan Germany, Mexico, South Korea, Vietnam and other countries with which the US has a large negative trade balance. If Trump applies in this arena the same ultimatum threatening negotiating techniques that he has used in his business practices, one can expect that the negotiations will be fraught with anger and be very protracted. During that period, American and foreign companies will not have the certainty or market stability to plan ahead for purchases of inventory, hiring employees and other factors. What that disruption will do to those companies and their stock market prices is unknowable.

Of course, even if Trump's efforts can reduce imports, the corollary of that is that the prices of some of those goods that are imported will have to increase, because they are purchased from domestic producers at a higher price. That, in turn, can affect the price paid by consumers here and can have inflationary implications. One would hope that Trump would consult with some of those he has called stupid and failed negotiators to understand the full implications of his conduct before undertaking some of these adventures.

It is in the area of international relations that Trump's thinking is most disruptive. Although he promises a quick end to ISIS and terrorist organizations that threaten the United States directly, a significant part of his thinking about foreign policy is non- interventionist, based on the concept he calls "America First." (For an older generation that phrase evokes the isolationism called for by Charles Lindbergh and others who objected to President Roosevelt's increasing support for Great Britain as Hitler continued his advances in Europe.) Thus Trump repeatedly cites the war in Iraq as an example of a major mistake and notes with pride his objections to it.

Trump's approach would impact both US financial support and military commitments. He has consistently argued that many countries are getting a "free ride" from the United States in the protection of their security and not carrying their fair share. He has cited European countries in connection with NATO, Japan, Middle East countries like Kuwait and Saudi Arabia. Although in the political campaign, Trump has professed his support to Israel, under the deal now being negotiated between the Obama and Netanyahu administrations the amount of military aid to Israel would reach around $4 billion annually, more than any other country and a tempting target for him since Israel Is not important to his hard core white, lower income constituents. These relationships have been developed by both Republican and Democratic led governments, which have seen them as in the best interests of the United States. It is not hard to envision a Trump administration marginally reducing the cost borne by the US. It is much harder to think that Trump can make significant differences in the costs without seriously damaging these relationships.

Finally, in a number of areas in the world, the United States is the major power standing in the way of some nation's expansionist program and thus protecting the interests of other countries. These include increasingly fraught relationships with China, which is seeking to expand its outreach in the South China seas, opposed by Japan, Vietnam and the Philippines; with Russia in connection with annexation of Crimea, activities in the Ukraine, Moldova, Georgia, Armenia and other nations that are potential objects of Mr. Putin's ambitions; with North Korea about nuclear development; and throughout the Middle East, including Iran, Syria and Iraq. Trump has suggested that he is better able to deal with these problems than President Obama has been. It appears from his statements that his technique involves more aggressive approaches in some cases and a demonstration of less involvement in some areas reflecting his "America First" approach. If he were to win the election, there is no way to know what his positions will be until he takes office and has had intensive reviews with our military and whoever else he chooses to advise him.

Whether one supports Trump for president or not, and there are many other issues on which to make that decision as well as these, the subjects he has raised discussed here warrant serious thinking. I hope that the three debates with Secretary Clinton, presumably the Democratic nominee, will address some or all of these issues in a way that allows the voters to understand what is at stake and let the candidates learn what is important to the American public. That kind of debate, in contrast to the childish name calling that we witnessed in the Republican debates, would be of great service to our nation at a time when the changes taking place in the world and our own country require revisiting many of our earlier positions and deciding whether they are still appropriate for the current times and conditions.

Robert K. Lifton is a businessman and political activist, former president of the American Jewish Congress, Co-Chair of the International Board of the Council on Foreign Relations Middle East Project, Founder, former president and current board member of the Israel Policy Forum. His memoir "An Entrepreneur's Journey: Stories From A Life in Business and Personal Diplomacy" was published by AuthorHouse in 2012.