03:52 GMT +321 January 2020
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    Dean Baker, co-director of the Center for Economic Policy and Research, joins Sputnik’s Brian Becker to discuss the economic tides of Donald Trump’s presidency, as a $1.1-trillion spending bill passes Congress on Thursday and heads to the Oval Office.

    Baker pointed out that Trump advocated several significant spending changes. In particular, the president wanted to increase military spending to $54 billion, start building his wall on the Mexican border and to "defund" women's health organization Planned Parenthood.

    But the spending bill includes a much smaller military spending increase than Trump wanted, provides a boost for border security but has no funds dedicated to the construction of the wall, and still provides funds to Planned Parenthood.

    ​Funding for so-called sanctuary cities, where local authorities limit their cooperation with federal immigration enforcement, is also there, despite Trump's threats to cut money to these cities.

    "In that sense all the items targeted by [Donald Trump] and the Democrat opposition, are pretty much all going in the Democrats' way," Baker told Becker.

    According to him, Trump has had serious troubles getting his agenda through Congress. Baker compared Trump to President Ronald Reagan, saying that Reagan was a good actor and that he used his personality traits to make people like him, and that helped Reagan push his policies. This approach doesn't work so well for Trump, Baker said.

    All seats in the House of Representatives will be up for grabs in 2018, along with 34 of 50 seats in the Senate. Lawmakers, then, have quite a delicate line to walk: many are expected to defend Trump's initiatives, such as his tax plan, widely ridiculed as specifically designed to benefit the Trump family empire, considering all the tax loopholes, according to Baker.

    "And a lot of this will be pretty hard to defend" come election time, Baker said.

    On the other hand, Baker defended Trump's move to reshuffle taxes in favor of domestic US corporations.

    Should Trump find a simple way to reduce corporate taxes from the current figure of 35 percent to, say, 28 percent, he'll get almost every Democrat in the Congress "onboard," Baker noted.

    Becker pointed out that the US stock exchange has been going up since Trump's election. This is understandable, he said, as companies expect Trump to introduce tax cuts and ease other regulations.

    "People often talk about stock market as the measure of economic well-being. It's even in principle not supposed to mean the economic well-being, it is supposed to mean future profitability," Baker noted, adding that this growth is likely not a "bubble" similar to what happened in 2008, but that markets will recede somewhat in the future, and that this is natural.

    Trump has also spoken a lot about massive infrastructure projects, but, as Baker notes, the spending bill "had nothing on infrastructure" (Trump is expected to reveal his infrastructure plan later in 2017.) What Trump has let out on infrastructure so far has all been about tax credits, he noted, and tax might work in case of a "toll bridge or a toll road," but one can not rebuild a city's water system on taxes alone, unless one privatizes it.

    "And the record of privatized water systems is not a good one," Baker said.


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    economics, budget, spending, US Congress, Donald Trump, United States
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