From the beginning of his unlikely quest for the 2016 Republican presidential nomination, Donald Trump has enjoyed the strong backing of those GOP voters who say they want a successful businessman in the White House. After only his outsider status, Gallup polling showed earlier this year, backers of the real estate mogul turned reality TV star cited his record as a "good businessman" as the leading factor driving their support. A staggering 64 percent of those surveyed said Trump would be the best Republican candidate on the economy and jobs; 61 percent claimed he would best handle the federal budget deficit.
Anecdotes from the campaign trail support those numbers. While casino magnate and Republican sugar daddy Sheldon Adelson jumped on the bandwagon by explaining, "Trump is a businessman; I am a businessman," one GOP acolyte boasted "ONLY TRUMP has ever BUILT any REAL THINGS." Another showed he had completely drunk the Kool-Aid:
"We want to give a businessman the chance to prove that this country can be great again!"
But a recent survey of Fortune 500 CEO's found that the leaders of America's largest companies surprisingly prefer Democrat Hillary Clinton over The Donald by a 58 to 42 percent margin. Of course, it's not just Trump's incendiary statements on trade, immigration and "other comments showing his lack of understanding of the basics of government" that are so frightening. As it turns out, the historical record of our businessmen-presidents is a dismal one. The miserable math and hilariously horrible policies of the would-be next CEO President would virtually guarantee an even worse economic performance than America's last one. Worst of all, a growing mountain of evidence shows that pretend populist Donald Trump isn't a paragon of business, but instead a profit-seeking parasite deceptively extracting money from the taxpayers and hard-working Americans he claims he would represent as president of the United States.
Four years ago, David J. Lynch of Bloomberg News warned Mitt Romney that touting his Bain Capital credentials might not end well for him. History, Lynch pointed out, was not on his side:
Since 1900, few former businessmen have made it to the Oval Office. The most prominent was the nation's 31st president, Herbert Hoover, whose handling of the economy during the Great Depression cemented his reputation as a failure...
George W. Bush was the first president with a master's in business administration. His father, George H.W. Bush, made a fortune in oil before entering politics. In their pre-Oval Office days, Jimmy Carter ran a peanut farm and warehouse and Hoover was a wealthy mining executive and financier.
Of that group, only George W. Bush was re-elected.
Like Trump, Dubya bragged about his business experience, boasting during his White House run that "I understand what can happen in the marketplace." Ultimately, however, America's First MBA President presided over what the Washington Post rightly called the "Weakest Economy in Decades." While the New York Times offered a devastating collection of charts documenting the Businessman Bush's carnage, the Wall Street Journal summed up "Bush on Jobs: The Worst Track Record On Record."
If anything, these early 2009 post-mortems grossly understated the cataclysmic failure of the man with the Masters in Business Administration from Harvard B-School. As it turned out, the recession that began in December 2007 was far worse than anyone knew at the time:
The Bureau of Economic Analysis, the agency charged with measuring the size and growth of the U.S. economy, initially projected that the economy shrank at an annual rate of 3.8 percent in the last quarter of 2008. Months later, the bureau almost doubled that estimate, saying the number was 6.2 percent. Then it was revised to 6.3 percent. But it wasn't until this year that the actual number was revealed: 8.9 percent. That makes it one of the worst quarters in American history.
All in all, private sector employment shrank during the Bush years. At the same time, the national debt nearly doubled under George W. Bush, thanks in part to his massive tax cuts for the wealthy. (It's no wonder most economists laughed when Jeb Bush promised to average four percent economic growth over his time in the White House; no president named Bush had ever hit that figure even once in 12 years.)
Sadly, for Donald Trump and his fans all the boasting about his wealth and deal-making prowess runs into another historical obstacle: the U.S. economy almost always does better under Democratic presidents. It's not even close. Going back to Herbert Hoover, the economy grew faster, job creation accelerated, incomes expanded and stock prices jumped higher when a Democrat sat in the Oval Office. And as the New Democrat Network documented last fall, the last four presidencies are no exception to the rule:
Republican Presidencies have led to recessions and larger deficits; Democratic Presidencies have led to growth, job gains and lower annual deficits. In short, the Democratic approach to the economy over the past generation has worked. The Republican approach hasn't. And this dramatic difference becomes even more pronounced when one considers the how shockingly wrong the GOP's bet the house predictions of the failure of both the 1993 Clinton budget and the "job-killing" ACA have been.
Even leaving aside for the moment today's low energy prices and the dramatic reduction in the ranks of the uninsured thanks to the Affordable Care Act, Bill Clinton and Barack Obama literally beat the Bushes:
- Job Growth: Over the Clinton and Obama presidencies, over 30 million new net jobs were created. Over the two Bush presidencies, 3.5 million. On a yearly basis, perhaps a more fair comparison, the two Democrats have produced jobs at seven times the rate of the two Bushes: 2.1 million vs. 300,000 per year.
- Unemployment Rate: Both Democratic presidents saw more than a three-point drop in the unemployment rate during their terms. The Bushes saw increases in the unemployment rate by more than two and three points respectively.
As I noted in January, President Obama saved the American economy in the face of unprecedented Republican sabotage:
As Barack Obama marks his seventh year in office, the resurgent American economy is posing a major problem for his Republican detractors. After years of denouncing the President's supposed "out of control spending", "job-crushing taxes" and "job-killing Obamacare," the pathetic GOP claim that Obama "made the economy worse" can't pass the laugh test. After all, the unemployment rate has been cut in half during his tenure as the private sector added jobs for a record 70 straight months. New jobless claims have dropped to their lowest level since 2007 while workers' ability to voluntarily switch jobs has increased. Even with its recent buffeting from China and the plummeting price of oil, the Dow Jones has doubled. All the while, the annual budget deficit has been slashed by two-thirds and inflation-adjusted federal spending has been lower than the day Barack Obama first took the oath of office.
Now, past performance is no guarantee of future results. Still, there's no mystery as why Republicans in general and businessmen in particular have faltered so badly as stewards of the U.S. economy. Just as your government isn't like your family, it's not a business either. The federal government's mission isn't to earn profits for shareholders, but "to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity." It is precisely when families and businesses are tightening their belts that government should spend more and take on more debt. CEO's can generally count on their orders being put into practice; American presidents cannot. The separation of powers and the political process itself, Barbara Perry of the University of Virginia's Miller Center explained, are "meant to preclude models and skills used in the corporate world." As Richard Neustadt famously defined it, "Presidential power is the power to persuade." Former businessman turned Minnesota Republican Rep. William Frenzel offered this prescient warning to Trump's ilk four years ago:
"You can't object to taking some abuse from people you have no reason to take abuse from."
Especially when, like Donald Trump, you badly deserve the abuse for announcing policies that represent suicide for the U.S. economy—and an insult to the intelligence of the American people.
Consider, for example, Trump's promises that his $12 trillion tax cut proposal is "going to cost me a fortune" and that he can magically eliminate the national debt "over a period of eight years." His pledges are neither true nor mathematically possible.
Now, Donald Trump has said that his tax returns are "none of your business." His reticence might have something to do with the fact many analysts suspect his claims of a $557 million income for 2015 and wealth "in excess of TEN BILLION DOLLARS" are bogus. Regardless, Len Burman, director of the Tax Policy Center concluded of Trump's tax proposal in December:
"Donald Trump hasn't released his tax returns, but people in his income group would get huge tax cuts."
Berman has it exactly right. Ending the carried interest exemption, as Trump, Clinton and Sanders have all proposed, will hit hedge fund managers and private equity titans like Mitt Romney, but generally not real estate tycoons. But the Donald's call to reduce the top marginal income tax rate from 39.6 to 25 percent could mean millions more for his coffers each year. His new 15 percent tax rate for business owners and corporations, down from the current percent corporate statutory rate of 35 percent, could benefit Trump as well. (A similar business owners' pass-through tax in Kansas cost the state hundreds of millions in lost revenue.) On top of that, the elimination of the estate tax paid by less than a quarter of one percent of all fortunes would redirect billions of Trump's supposed $10 billion wealth from the United States Treasury to his heirs. As Washington Post fact checker Glenn Kessler explained in his Four Pinocchio review of Trump's claim that his tax plan "is going to cost me a fortune":
No matter how we slice it, we do not see how Trump can justify his claim that his tax plan would cost him "a fortune." On the contrary, it appears it would significantly reduce his taxes -- and the taxes of his heirs.
If Trump is to be believed, his annual income puts him among the top 400 taxpayers in the country. And as the Tax Policy Center found, The Donald's plan on average hands the top 0.1 percent of earners a $1.3 million annual tax cut.
And that gargantuan tax cut pay day for plutocrats, combined with Trump's commitment to boost defense spending and that pledge to erase the national debt in eight years, would necessarily require gutting federal spending by about 80 percent, reductions so draconian that the U.S. economy might never recover.
Once again, basic math is not the friend of Businessman-President Trump:
- The United States currently has a national debt of around $19 trillion.
- In its most recent 10 year forecast, the nonpartisan Congressional Budget Office predicted spending over the next decade would reach $51.4 trillion while tax revenue would amount to $42 trillion. That means that barring any policy changes, Uncle Sam will run up over $9 trillion in new deficits.
- But would-be President Trump is promising gigantic policy changes. Citizens for Tax Justice estimates his tax proposals would drain up to $12 trillion in revenue from the United States Treasury over a decade. By the end of his second term, President Trump would be on track to produce a national debt of $40 trillion (19+9+12) by the end of 2026.
- Yet the Donald says America can avoid those oceans of red ink because he can magically eliminate the national debt "over a period of eight years." Both impossible and undesirable with today's projected $19 trillion debt, Trump's pledge is sheer delusion when the figure balloons to $40 trillion during his White House tenure.
- Making his boast even more comically pathetic, Trump has repeatedly promised not to cut entitlement spending on programs including Social Security and Medicare. As Jonathan Chait pointed out in November when reviewing Marco Rubio's slightly less insane plan, "According to figures from the Center on Budget and Policy Priorities, expenditures on defense, Medicare, Social Security, and mandatory interest payments on the national debt will total $30.7 trillion over that period—and that's without accounting for any other functions of the federal government at all. So Medicaid, veterans' health insurance, transportation, border security, and education, not to mention the entire federal anti-poverty budget other than Medicare and Social Security, would have to go."
Leaving aside Trump's eight-year time frame compared the CBO's 10-year forecast, we're talking about cutting $40 trillion from a $51 trillion budget—approximately 78 percent. And it's not just that Trump literally can't get there from here. The U.S. economy would be a devastated hellscape if he could get anywhere close. As ThinkProgress pointed out when a balanced budget amendment was being kicked around Congress four years ago, even those comparatively modest cuts would produce an economic calamity on the scale of the Great Depression:
If the 2012 budget were balanced through spending cuts, those cuts would total about $1.5 trillion in 2012 alone, the analysis estimates. Those cuts would throw about 15 million more people out of work, double the unemployment rate from 9 percent to approximately 18 percent, and cause the economy to shrink by about 17 percent instead of growing by an expected 2 percent.
That's hardly a plan to "Make America Great Again."
But Trump's plans for tax cuts and the national debt (including his apocalyptically ignorant scheme to "make a deal" to get Uncle Sam's creditors to accept less) aren't the only cases in which the self-proclaimed pride of Wharton is unencumbered by the rules of math and the market. As ThinkProgress noted, Trump was just "blowing smoke" when he told coal miners in West Virginia and Pennsylvania that "they're going to start to work again, believe me." Appalachian coal jobs have been disappearing for three decades as cheaper mines elsewhere, lower-cost natural gas and plummeting Chinese demand have wiped out most of the industry's employment. Hell will freeze over before the Indiana air conditioning giant shifting production to Mexico is "They're going to call me and they are going to say 'Mr. President, Carrier has decided to stay in Indiana." As for the 35 and 45 percent tariffs CEO Trump would respectively slap on Mexican and Chinese imports, the Washington Post, the New York Times and CNBC all warned a crippling economic blowback from the ensuing trade war. An analysis prepared by Moody's Analytics found that:
They would, in fact, sock it to China and Mexico. Both would fall into recession, the model suggests, if Trump levied his proposed tariffs and those countries retaliated with tariffs of their own.
Unfortunately, the United States would fall into recession, too. Up to 4 million American workers would lose their jobs. Another 3 million jobs would not be created that otherwise would have been, had the country not fallen into a trade-induced downturn.
But we're getting ahead of ourselves. You don't have to look at the havoc writ large President Trump would wreak on American workers and taxpayers. The pathological dishonesty of Businessman Trump has already left many bankrupt and jobless in its wake.
To be sure, this week's revelations about Trump University make that abundantly clear. (If it fielded sports teams, Trump University would be in the same conference with Ponzi State, Madoff Tech, Milken U and Baylor.) "A fraudulent scheme" that "preyed upon the elderly and uneducated to separate them from their money" (as former manager Ronald Schnackenberg described it), Trump University also represents what Brian Beutler called a "devastating metaphor for the Trump campaign." If Mitt Romney, as Mike Huckabee famously said, "looks like the guy who fired you," increasingly Donald Trump will remind voters what it was they hated about Mitt Romney:
Trump University will dramatize the truth about Trump for those voters in the same way Bain Capital dramatized Romney's stone-heartedness. Trump says that he--and only he--has all the answers for the ailing middle class. That he will ply his business acumen on behalf of the everyman and turn his good fortune into theirs. All they have to do to secure his beneficence is fork over their votes. But it's all a scam. All lies. And when his victims and former employees testify to this for the country, it will be devastating.
Devastating, just like it was for the employees of the now-defunct Trump University, Trump Airways, Trump Casino and Trump Magazine. Catastrophic, too, for his business partners. As USA Today reported Wednesday, during his career Trump and his various business entities have been involved in litigation an almost incomprehensible 3,500 times. (Those cases include the fraud case against Trump University, a lawsuit against the Better Business Bureau, ongoing litigation surrounding the Trump Casino bankruptcy, and the fall-out from a group of Hong Kong investors he stiffed.)
Donald Trump admitted in a New Jersey bankruptcy court that "I don't like the 'b' word." But he doesn't hesitate to boast about it as a routine business tactic, either. As he explained to ABC in 2011:
"We'll have the company. We'll throw it into a chapter. We'll negotiate with the banks. We'll make a fantastic deal. You know, it's like on 'The Apprentice.' It's not personal. It's just business."
During a Republican presidential debate last fall, Trump bragged about his businesses that went bankrupt in 1991, 1992, 2004 and 2009:
"Out of hundreds of deals -- hundreds -- on four occasions, I've taken advantage of the laws of this country, like other people. The difference is, when somebody else uses those laws, nobody writes about it. When I use it, it's like, 'Oh, Trump, Trump, Trump.' The fact is, I built a net worth of more than $10 billion. I have a great, great company. I employ thousands of people. And I'm very proud of the job I did."
As it turns out, the con jobs he did then are the same one he's pulling on gullible American voters now. As he explained the secret of the Trump grift in his 1987 book, The Art of the Deal:
I play to people's fantasies. People may not always think big themselves, but they can still get very excited by those who do. That's why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular.
I call it truthful hyperbole. It's an innocent form of exaggeration -- and a very effective form of promotion.
To put it another way, you can fool some of the people all of the time, and that is Donald Trump's target market. And as his Republican White House rival Marco Rubio put it in February, it's always been that way:
"He has spent a career in business, 50 years, sticking it to the little guy. Sticking it to the little guy. When his companies went bankrupt, the first people that didn't get paid were the subcontractors, the plumbers and the pipefitters, the people that laid bricks and all those people who worked for a living, they didn't get paid. He got his money. They didn't get theirs. He's going around telling people, 'I'm fighting to keep other countries from taking our jobs.'"
The only thing that's changed for Businessman Donald Trump is that would-be President Trump has a new name for his marks: Voters.