This is the fifth in a series of articles detailing the terrible job Donald Trump has done as President. This article is focused on the ways in which his choices have undermined our economy.
Trump did initially continue the gains of the previous 8 years, with continued decreases in unemployment and gains in the stock market (which is admittedly not the economy), but his failure to lead in the fight against Covid has taken what should have been a couple of months of shutdown to get Covid under control, and instead turned it into an ongoing burden on the economy.
While fans of Trump like to claim that he has done a good job with the economy, it was a mixed verdict and in several ways he has undermined our ability to continue to be competitive. He has subsidized aging and financially inefficient industries like coal, decreased incentives for industries of the future like wind and solar, pursued trade deals unilaterally, added tariffs that American taxpayers fund, promoted policies that largely benefit the rich, and most alarmingly has added to our national debt faster than any administration in history.
Debt and deficit
Trump’s administration has had the highest deficit spending of any administration in history. Yes, Trump has been leading us into debt faster than any previous administration. In part this was due to taxes, and tax breaks that primarily benefitted business owners and those with a lot of assets. In part it was due to uncontrolled spending. In part it was due to subsidies to partially offset the negative impact of tariffs on farmers and others who were impacted. And, of course, the Trump administration’s poor response to Covid has resulted in a protracted partial closure of the economy that has required multiple stimulus payments and continues to be a burden.
While things were good according to some indicators, the Government should at least have been slowing the accumulation of debt. Trump has done the opposite. Our debt is on track to exceed the size of our economy for the first time since WWII.
It’s equivalent to one of us taking a loan against our entire retirement savings and our kids’ education savings to throw a huge party. Yeah, it was great while it lasted but it was brief, and now we have the rest of our lives to deal with the consequences.
But this is what Trump does. He takes huge risks and runs a long con in his pursuit of self-validation. It’s why he’s declared bankruptcy 6 times. He’s a con man running ponzi schemes, and every time it eventually collapses on him. That’s undoubtedly why no US bank will loan money to him. The problem is, the Federal Government doesn’t get to claim bankruptcy (though it can print unlimited amounts of money and devalue the dollar in the process). Republicans used to claim they were the party of fiscal responsibility, and now they’re led by a man who has failed at business at least six times.
Trade and tariffs
On international trade and tariffs, Trump has famously broken with post-WWII bipartisan precedent in the U.S. He has used tariffs as a sledgehammer, especially against China, which is a danger to the U.S.’s place in an increasingly interdependent global economy. The U.S. depends heavily upon exports, so as tariffs go up on all sides and dampen the international flow of goods and services, the U.S. has the most to lose.
Tariffs, of course, are a tax on American consumers. Furthermore, they required extensive government spending, such as farm subsidies, to offset some of their disastrous effect on our economy. And despite that, farmers are going out of business.
Industry
Despite his claims, Trump has not increased the number of American manufacturing jobs and has not brought back manufacturing to the U.S. Not only that, he has invested in industries of the past (e.g., coal) rather than investing in things like infrastructure or clean energy to make us more competitive in the future.
Labor and immigration
Immigration has always been an important support for our growing economy. Many immigrants fill jobs that are otherwise difficult to fill, especially as baby boomers exit the workforce. They also pay taxes, and in fact pay more than they utilize in government services.
Trump’s war on immigration has affected industries like agriculture that depend on immigration. It has also affected skilled jobs, where companies (including my own) have long relied on the H1-B program to supplement the available U.S. workforce. Trump suspended H1-B visas and this dampens companies’ ability to fill needed roles.
Financial deregulation
Trump has been on a deregulation spree in the financial services sector. Some of this regulation was put in place to prevent the circumstances that led to the recession in 2008. The Dodd-Frank legislation was probably already too weak to begin with, and the Trump administration has weakened it further.
Add this to attacks on overtime and allowing 401k’s to invest in private equity funds, and it’s clear Trump has furthered policies that will disproportionately and negatively impact low- and middle-income earners. Ultimately these decisions benefit himself more than the rest of us.
Taxes
Some like to tout Trump’s tax cuts as a boon to the economy, but for the most part they’ve been a boon to the top 10% of earners and to those with significant wealth. The middle class has seen mixed benefits, while lower income families have seen no benefit. Ultimately this looks like a bait-and-switch that further consolidates the gains of those already doing the best.
Consolidation of wealth
The “good” economy hasn’t been good for very many Americans. Look no further than the large number of Americans facing evictions and foreclosures despite exorbitant stimulus funds. If the economy was so good, then why are most Americans not more financially resilient? Because the “success” of the economy was really only success for the top 10% or so, and it has not gotten better for most Americans.
It’s fair to say that this is just a continuation of the increasing consolidation of wealth that we’ve seen since the mid-70’s. Trickle-down economics and tax breaks for the rich do not work long-term, yet some Americans who can’t afford a mortgage or private health, much less pay for a college education for their kids, still believe that somehow that tax cuts for the rich will benefit them. Income has shifted dramatically since the mid-70’s from the people doing the work to the people who own the businesses, in part due to the weakening of labor, and in part due to tax code changes that largely benefit the rich. Trump has continued this but has also made it worse.
In closing, once we dig into the claim that Trump has been good for the economy it’s clear the boasts don’t match the reality. Most Americans are not better off, the economy is reeling due to a variety of factors including Covid mismanagement, and our long-term prospects are worsened as we’re saddled with dramatically increasing national debt.
