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Economists offer bleak view of President Trump’s first term, citing deglobalization trends and ‘protectionism’

The Republican National Convention kicks off Monday, giving party leaders a chance to showcase what they see as the biggest victories of President Donald Trump’s first term.

CNBC sat down with several economists to get their take on the effectiveness of the Trump administration’s fiscal policies and what impact they’ve had so far.

Though several economists CNBC interviewed for our “What’s Next For The U.S. Economy” series declined to comment on the current administration, a handful were willing to offer their insights.

Overall those willing to speak on the record took a dim view of the administration’s policies, though the president’s ability to break Washington’s “obsession” with budget deficits was cited as a positive accomplishment. 

Both Moody’s Chief Economist Mark Zandi and Nobel laureate Joseph Stiglitz expressed concerns over Trump’s moves toward deglobalization.

Zandi said the U.S. economy will be “diminished” after the coronavirus pandemic and expects policymakers to have trouble trying to “reengage with the rest of the world.”

Stiglitz condemned Trump’s protectionism as “ugliness,” citing the ban on exports of medical supplies and hoped that other countries will not reciprocate.

Jim O’Neill, former chief economist at Goldman Sachs, said, “There’s a difference between the rhetoric that comes out of the U.S. president’s mouth and what will happen” when it comes to reducing the trade deficit with China and bringing jobs back to the U.S.

He warned that without a “defined policy” in the U.S. to deliberately rein in deficit spending, the U.S. will not be able to erase its trade deficit with China, which as of July 2020 was more than $130 billion.  

He added that though Trump’s promise to bring jobs back to the U.S. in 2016 was powerful, he does not see how it could work without specific policy intervention

Stiglitz noted that factory work that can be brought back to the U.S. will likely be done by robots so it would not create as many jobs for American workers as Trump hopes.

He thinks Trump’s “protectionism” is a way to make U.S. manufacturing more resilient but that it could “backfire.”

Economist Jeffrey Sachs, former director of The Earth Institute at Columbia University, offered the bleakest view of Trump’s tenure, telling CNBC, “I think it is, aside from perhaps James Buchanan’s lead into the Civil War, the worst presidency in American history.”

He went on to warn that the president’s rhetoric regarding China is dangerous and said the U.S. should be preparing for a “multipolar world.”

Sachs also praised Scandinavian countries for their social safety nets and suggested the U.S. move toward a similar approach.

Paying for those kinds of social safety nets in the U.S. may be possible now, Nobel laureate Paul Krugman told CNBC. The New York Times columnist, who has been known to criticize Trump, credited him with breaking Washington’s “obsession” with budget deficits and predicted that a Joe Biden presidency would not face the same calls for fiscal austerity that would have befallen Hillary Clinton had she won in 2016. 

When asked for comment, White House deputy press secretary Judd Deere told CNBC, “President Trump’s policies of lower taxes, deregulation, fair and reciprocal trade, and energy independence created the strongest most inclusive economy with rising wages in our history and under his leadership, we will do so again.”

Trump will formally accept his party’s nomination for a second term on Thursday. He currently trails his rival, Democratic nominee Biden, in most national and battleground polls. 

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