President Donald Trump is abandoning a number of his key campaign promises on economic policy, adopting instead many of the centrist positions he railed against while campaigning as a populist.
Trump will not label China a ‘currency manipulator,’ he told the Wall Street Journal last Wednesday, despite a campaign pledge that he would apply the label on his first day in office. He also said he was open to reappointing Federal Reserve Board Chair Janet Yellen after saying last year that the central banker should be ‘ashamed’ of what she was doing to the country.
And he embraced the Export-Import Bank, a government agency that he mocked last year and that has long been despised by conservatives who labelled it crony capitalism.
The statements represent a move toward the economic policies of more centrist Republicans and even at times align with the approach of former president Barack Obama. Should he follow through on the newly articulated positions, it would suggest that the candidate who ran as the ultimate outsider is increasingly adopting a more moderate economic agenda.
The reversals come amid a period of rapid evolution for Trump on both foreign and domestic issues.
Trump’s commitment to repealing the Affordable Care Act has wavered. Last Wednesday, he said repealing the Affordable Care Act needed to be Congress’s main priority after scrapping the effort several weeks ago.
On the global stage, Trump’s reversals have been even sharper. Recently, he ordered airstrikes against the Syrian military, even though he promised during the campaign to keep the United States out of conflicts in the Middle East.
He is also adopting the Obama administration’s call to oust Syrian leader Bashar Assad, a position he refused to take during the campaign. The shift on Syria enraged some of Trump’s campaign supporters who had embraced his isolationist foreign policy.
The reversals come amid a period of rapid evolution for Trump on both foreign and domestic issues
Trump has also sharpened his criticism of Russia, a major break from the praise he lavished on Russian President Vladimir Putin during the campaign. Also last Wednesday, Trump praised the work of NATO, a pact between the United States and some of its closest allies that Trump once called ‘obsolete.’
“It was once obsolete; it is no longer obsolete,” he said last Wednesday after meeting with NATO Secretary General Jens Stoltenberg.
Trump’s changes are catching lawmakers, business executives, supporters, critics and even markets off guard.
The US dollar slumped and Treasury bond yields fell after the Wall Street Journal quoted Trump saying the dollar was too strong.
The rapid shuffle of priorities comes as he adopts a growing number of centrist policies, many of which the Obama administration tried to advance amid heated GOP opposition for years.
His decision not to label China a currency manipulator follows an explicit and repeated campaign vow to do so. But economists and even critics of China’s economic policy have said that while the country used to intervene to devalue its currency, it abandoned that practice years ago.
It would have been embarrassing for Trump, in an upcoming currency report by the Treasury Department, to allege that the Chinese were engaged in a practice they had already stopped, these experts said.
“Presidents, they get facts like the rest of us, and they should use them,” said Larry Kudlow, who was one of Trump’s top economic advisers during the campaign.
Trump’s embrace of moderate positions also suggests a waning influence among the hard-line nationalist White House advisers who helped Trump win the election, as well as the rise of other advisers — many of whom hail from New York — who have more centrist, even left-leaning views.
For example, National Economic Council Director Gary Cohn, a former Goldman Sachs president who did not play a role during the campaign, has a rapidly growing portfolio within the White House, while Trump has marginalised the role of chief strategist and self-proclaimed economic nationalist Stephen Bannon in recent days.
“Trump is walking a policy tightrope,” said Stephen Moore, who was a top economic adviser to Trump during the campaign. “A president of course has to adapt to changing circumstances, but he also has to honour his central campaign promises. Janet Yellen and Obamacare have to go.”
Many of Trump’s new positions show his shift away from a populist platform embraced by the Republican Party’s most conservative members. For example, in 2015, he said the Export-Import Bank was not ‘necessary’ because it mainly helped a few large companies that did not need assistance. The agency essentially offers financing support for companies that export goods overseas, helping many US companies reach new markets.
In the Wall Street Journal interview, Trump rejected his past thinking on this, saying that “lots of small companies are really helped” and that “it’s a very good thing.”
Since the Clinton administration, the United States has adhered to a ‘strong dollar’ policy in which leaders have defended the value of the currency. But Trump said Last Wednesday that confidence in his leadership was driving up the dollar’s value and that it could end up hurting the US economy. A strong dollar makes it more expensive for other countries to buy US manufactured goods, hurting US companies.
Eswar Prasad, a professor of international trade at Cornell University, said it was striking that a sitting president would comment so directly on the value of the dollar.
The Washington Post Service
Published in Dawn, Economic & Business, April 17th, 2017