Voters who supported Hillary Clinton for president, including me, were shocked by the election results on Nov 8. But as we deal emotionally with the surprise, we should follow the lead of the initially jumpy financial markets and shift from doom and gloom to optimism.
1. Both houses of Congress and President-elect Donald Trump will be pro-business.
In January, we will have a Republican Congress and a Republican president, who should cooperate to pass laws that will free up capital for businesses to hire and create jobs.
We will also have a pro-business Democratic dealmaker, Sen. Chuck Schumer of New York, as Senate minority leader. Schumer replaces Sen. Harry Reid of Nevada, who used his leadership position to attack everything from the Koch brothers and Mitt Romney to patent-reform legislation and internet freedom.
With this new combination, we’re likely to see legislation that helps businesses invest in growing and hiring. By lowering corporate taxes; reforming patent, securities and class-action laws; and reducing regulatory burdens, businesses will have more money to invest in growth and job creation.
2. New infrastructure investment will create jobs and fuel growth.
Congress and the Trump administration will cooperate to invest in infrastructure. They may even agree on a plan to repatriate more than $2 trillion parked overseas by U.S. companies reluctant to bring the money home and pay the current 35 percent U.S. corporate tax rate, the highest rate of any developed country.
The lower taxes paid on this reclaimed money could go directly to infrastructure or through an infrastructure bank.
3. Many rules that hurt business growth will vanish.
Unnecessary and questionable rules are choking growth and companies’ ability to hire. During his campaign, Trump said he would reverse President Obama’s executive orders and rules hurting job creation.
By simply repealing the Department of Labor’s actions narrowing the independent-contractor definition, restricting intern hiring and mandating overtime for those making under $47,500, Trump will free businesses, especially startups, to create jobs.
4. Trump won’t do anything to sabotage economic growth.
Many economists fear Trump will block imports, skilled at immigrants and foreign investment. He won’t. He cares too much about being successful, and he will rely on visible data points to define his success.
Think about his past: As a brand, Trump touted the number of buildings his company constructed and the number of Trump product offerings. As the star of “Celebrity Apprentice,” he pored over daily and weekly television ratings and constantly tweaked the show in response.
As a candidate, he cited polls frequently in his campaign appearances. As president, Trump may still follow popularity polls, but he may be looking to monthly gross domestic product and job growth numbers to further define his success.
Given his hunger for immediate feedback, the biggest daily and even hourly measure of Trump’s administration may be the stock market. If he gives formal notice to Canada and Mexico that the U.S. is withdrawing from NAFTA, causing automaker and homebuilder stocks to tumble, he will be pained. And should he take positions that hurt tech, it would affect the broader stock market since tech stocks represent more than 20 percent of the S&P 500.
If he takes steps to raise tariffs on, or restrict imports from China causing retailer stocks to tumble, and igniting a possible trade war with China imposing retaliatory tariffs, Trump also will be accountable. If consumers balk at buying a new smartphone because it costs the same as a car, Trump will be responsible.
If Trump cuts visas and makes travel to the U.S. difficult or less desirable, causing hotel chain and airline stocks to fall, he will be (especially) displeased.
More, Wall Street will immediately respond if Trump hurts the economy, creates uncertainty and affects business forecasts. And if IRAs and 401(k)s tumble, Trump will know he is failing.
President Harry Truman had a sign in the Oval Office that read “The buck stops here.” On Jan. 20, Trump shifts from outside critic to the most important leader in the world. He will succeed only if he has presidential judgment and understands that his every action and utterance is noticed, magnified and has consequences.
Take his acceptance speech as an example. President-elect Trump’s gracious and unifying victory speech in the early-morning hours of Nov. 9 calmed and reversed the worldwide, abrupt fall in stock market prices.
Trump has every opportunity to grow our economy through policies supporting economic growth. The stock market can and will be the real-time measure of his economic success.