Some hopeful commentators, even liberals like Paul Krugman, have expressed the hope that Donald Trump might enact some good economic policies, of they kind they have advocated.  This includes a vigorous spending program on infrastructure, tax reforms to simplify and reduce tax burdens, and deregulation.

All of that would be good, but as always, the devil is in the details.  How would these policies be financed?  What trade-offs will be made (there is never a free lunch)?  And who will benefit most from the changes?

The answer to the latter question is already quite clear: the proposed tax reforms direct most of their benefits to the top 0.1%.  This is the only group that will benefit from ending the inheritance tax, and the group that will gain the most from Trump’s proposed personal income and corporate tax cuts.  Such cuts will do little to actually boost the economy, as the rich who benefit will put most of their gains into asset acquisition, which as we have seen for the last ten years produces asset inflation but little economic growth.

The infrastructure spending program, if it is to be effective in creating jobs and boosting the economy, would have to be massive, spending somewhere between .5 and 1 percent of GDP.   But where would the funds for that come from?  The Federal government only gets and spends about 20% of GDP, so such a program would be a 5% increase in Federal spending.  Yet the Republicans in Congress have said they want to increase defense spending as well as cutting taxes.  What room will there be for a large infrastructure program unless massive cuts are made elsewhere (and cuts in health care, education, and regulation are already being contemplated — things that are the most vital to ordinary Americans)?   America already has a substantial debt, and large liabilities for medicare and social security for a very large and fast-aging cohort of baby boomers. Some have projected that Trump’s budget plans, like those of G.W. Bush and Ronald Reagan before him, will simply sink the government under debt (few fans of President Reagan know or care that he was responsible for the greatest increase in US Federal debt, in percentage terms, in U.S. history since WWII).  A modest increase in the U.S. debt is certainly sustainable, but large increases just as spending on the elderly is set to increase will likely crowd out other needed spending.

Corporations are already sitting on massive piles of cash because they do not see opportunities for profitable investments in job-creating activities.  The type of people who have withdrawn from the labor force or feel underemployed — older workers on disability, workers without high-level craftsman skills, and young high school graduates looking for white-collar work — will not benefit from infrastructure construction projects.  Unlike in the era of rapid growth, today’s youth cohorts are no larger nor better educated than the generation they are replacing.  Rebuilding our roads and bridges may be necessary to prevent further clogging and decay of our economy’s arteries, but is not likely to transform the labor market or return us to 1960s and 1970s levels of economic growth.

In addition, Trump’s protectionist trade policies seem certain to hurt growth; that will likely offset any short-term gain from higher government spending.

What the U.S. economy needs is higher spending aimed at raising the productivity of average workers — education, investment incentives for hiring workers, trade deals to boost exports.  And that spending needs to be financed by taxes that allow the government to manage its debts.  Some of that could come from creating a separate Federal capital account; some could come from a value-added tax on consumption; some could come from a more progressive tax system.

But the Trump plan has none of these features.  It is instead an exact repeat of the G.W. Bush plan of higher debt, higher military spending, and policies aimed to increase the returns on financial and capital investments that benefit the very rich.  We know how that ends.  But it seems we are headed that way again, and full throttle.