Alex Rodriguez getting paid more than $20-million (U.S.) by the New York Yankees to basically do nothing through the 2017 Major League Baseball season: That pretty much sums up whats wrong with America.As if three consecutive quarters of declining productivity, something that we havent seen since the tail end of the miserable Jimmy Carter, back in 1979, isnt ominous on its owna recession came exactly a year later.So what is Donald Trumps response to the overall economic malaise' Well, he revealed his fiscal plan on Monday in Detroitwhere he has a steep hill to climb considering that he is behind in Michigan 41% to 32% in the latest polls.The plan has received a thumbs up in some circles, but not very many, and for good reason.The plan to cut the corporate tax rate to 15% from 35% will restore global competitiveness on this score, but the reality is that given the myriad of tax breaks, the effective U.S. tax rate is really 18% (what really would have worked is a lower rate and a broadening of the base, as Canada did in the 1990s).The intention to pull personal tax rates into three buckets with top rates of 12%, 25% and 33% (from the top rate of 39.6%) will certainly bolster disposable incomes, but by only 0.2% for the middle class and over 5% for the top-income earners (if you want to get a big bang from an aggregate demand standpoint, then what you really want to do is lift incomes for the lower and middle income earners whose spending propensities are far higher; then again, Trumps economics team hardly has any economists on itthree out of 13! And our best estimate of the median net worth of this group of advisors is a cool $1 billion and the average in excess of $2 billionnice to see that The Donald truly is a man of the people!).A special lower tax rate of 10% on retained earnings held abroad could mean at least $100 billion being repatriated home. That makes good sense, but whether it spins the dial for capital spending remains to be seenits not as if the corporate sector has been cash-starved this cycle. Its just that businesses find it more to their advantage with interest rates where they are to buy back their stock than deploy capital into the real economy. Its not really much more complicated than that.A new tax deduction for child care is pure populism, but again, will help underpin cash flow for families too.His promise to roll back energy regulations is a positive from any macro standpoint, to be sure, but again, with gasoline prices approaching 14-year lows of barely higher than $2 a gallon, it can hardly be argued that costly energy is an impediment to growth.So this Trump package is being hailed as a Reagan-esque budgetary plan, as Larry Kudlow claimed over and over again on CNBC.But here is the problem: the government debt-to-GDP ratio in 1980 when Ronald Reagan took over the Oval Office was 25%; today it is 75%. When Ronald Reagan took over in 1980, the first of the boomers were turning 34, not 70.The Tax Foundation concludes that this fiscal package will cost $1 trillion annually for the next 10 yearsthis is what is otherwise known as fiscal suicide, especially considering the secular rise in the dependency ratio in future years and how the graying of the population is going to be exerting intense strains on fiscal policymakers for decades to come.No doubt there will be some positive multiplier impacts, but the view that this is a plan that pays for itself or largely pays for itself via the extra economic growth that will benefit revenue coffers is way off base and has no basis in fact.In order to prevent runaway fiscal debt in the face of daunting demographics with all this stimulus would require significant spending cutsbut given that about 70% of all federal spending is Social Security, defense, veterans benefits, Medicare and debt-service costs, where is the restraint on the spending side going to come from to prevent destabilizing and intractable deficits'On top of that, the pledge to reinstate the Glass-Steagall Act (which separated banks commercial and investment operations), would end up impairing U.S. competitiveness from a global banking standpoint unless other countries also followed suit.And the threat to either raise tariffs or renegotiate trade treaties is dangerous and irresponsible, and will blunt whatever positive growth impact will come from the proposed tax relief.Mr. Trumps dark and defeatist attitude toward freer global trade has no statistical support: Since the key inflection point in 1973, with the Tokyo round of the General Agreement on Tariffs & Trade(GATT), the United States has enjoyed a 1.4% annual growth rate in employment, which actually beats Germany (0.9%), the United Kingdom (0.6%), Japan (0.5%), France (0.4%) and Italy (0.3%).The constant trend of U.S. trade deficitsAmerica has been running deficits consistently since 1976reflects the consumers insatiable appetite for spending more than anything else. To claim that deficits are harmful is to ignore that over this time frame, real GDP has expanded at nearly a 3% annual rate and employment has risen at a 1% annual rate.Yes, output growth has outpaced employment growth, and the gap is otherwise known as productivity. If you want to, as a politician, try to reverse technological progress, then good luck to you.Meanwhile, it is unclear that the protectionist policies being put forward by Mr. Trumps team is gaining traction outside of his narrow base of supporta Washington Post/ABC poll over the weekend found Democratic presidential nominee Hillary Clinton leading 48% to 46% in terms of handling the economy, 51% to 41% on taxes and 54% to 40% on international trade agreements.Well see what sort of effect Mr. Trumps economic proposals will have in coming days; Ms. Clintons plan is about to be unveiled, and while the fiscal math is equally daunting, it will be interesting to see how she respondslikely more populist and chock with spending promises.The question is how all this gets paid for. It was one thing for Mr. Reagan to boost the deficit in the name of defeating the Soviet Union, but he didnt face the constraint of a massive debt load, weak demographic support and a mere 3% growth trend in nominal GDPnominal GDP growth was 7% on average during Mr. Reagans tenure; the next president will not have this luxury.SEE ALSO:Hillary Clinton's student loan initiative might be the superpower the US economy needsJoin the conversation about this storyNOW WATCH: This lunch box for adults could change the way you eat
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