It is dark days in America when the highest office in the land sets the lowest standards. Today America under the Trump administration is sicker, poorer, nastier, fueled by hate and divisiveness than it has ever been. This pandemic has led to America’s worst economic disaster and any recovery that takes shape with the same underpinnings cannot stand the test of times. It will wither and faulter. What is disconcerting to me is that a majority of American’s still feel that Donald Trump is better at handling the economy than Joe Biden, or just the fact that he has handled the economy well at all.
This is a misguided and fact free perception. So, let us walk down the economic journey we have had under President Donald Trump.
GDP, Tax cuts and Employment numbers
GDP growth was 2.4%, 2.9% and 2.3% in 2017, 2018 and 2019, respectively, under Trump, for an average growth rate of 2.5%. This is a far cry from Trump’s claim that the economy would grow 4%, 5% or maybe even 6% when he was selling his misguided tax cut to the country. Using the same GDP metric of consumer spending plus business investment adjusted for inventory changes, Obama’s last three years in office had growth rates of 3.06, 3.05 and 2.17 whereas Trump's is 2.49, 2.83 and 1.99. Corporate tax revenues fell 31% in the first year after the cut was passed. Overall tax revenues have declined as a share of the economy in each of the two years since the tax cut took effect.
Trump continually says that, “the U.S. is experiencing the best economy ever.” The best employment numbers under Trump were 2.314 million in 2018 (the first year of the tax cut) but it falls short of any of Obama’s last three years. That is what Donald Trump does. He constantly keeps gaslighting his audience with impunity.
Trump alone gets a benefit of $22 million annually from the tax cut whereas an average family earning $75K/yr got a benefit of $860/yr. Most average wage earners have complained that they have indeed paid more in taxes under Trump and have not realized any gains from the tax cut.
Republicans always portrayed themselves as deficit hawks. Today increasing deficits with Trump at the helm is the least of their concerns. Everything they had said they stand for comes out as outright lies in the present. Nothing what they say is believable anymore. Total deficit under Obama’s last 3 years was $1538 billion. Trump's 3 years - 2019 - $984 billion, 2018 - $779 billion, 2017 - $669 billion resulting in a total of $2432 billion. Not to mention the projected budget deficit for 2020 is $5 trillion. This can grow to $8 trillion with further stimulus bailouts being proposed.
President Trump has been very focused on how the stock markets have performed during his Presidency and views it as the hallmark of his economic success. For the first three plus years since Trump’s inauguration the S&P 500 has risen 30% while under Obama it increased 70%. The Dow is up 28% under Trump and over the same time frame it was up 62% under Obama. He constantly brags about it and he has tweeted about it at least 128 times during his three plus years in office according to trumptwitterarchive.com. On the other hand, we have never heard President Obama take credit for the stock market rise under him. Reminds me of what Atticus Finch told his daughter in the novel “To Kill a Mockingbird”, when she found out what a great marksman her father was “People in their right minds never take pride of their talents”. A concept totally lost on this current president. He constantly takes pride on false premises and unrealized outcomes and talents that he never possessed. It is time to ask Donald Trump what has been his contribution for the stock market rise? You know the answer: tax cuts for the wealthy and corporations. The corporations turned around and invested that money on stock buy back rather than new investments and expanding markets. Since only Fifty five percent of American own stocks, making this the focal point of this country’s economic success is an affront to so many Americans, many of which are his supporters. This President has never understood the disconnect between Wall Street and Main Street. We have recently witnessed one of the largest stock market rallies with record unemployment of 40 million Americans. It is as if Wall Street has its biggest gains when everyday Americans suffer their biggest losses with a record number of Americans unemployed.
The Federal bailouts in trillions of dollars is what has kept the stock market afloat. In other words, the stock market stands on borrowed money and future expectations as the current situation keeps deteriorating from the ongoing unsurmountable health crisis and resulting economic devastation. Sixty percent of the windfall from the 2017 corporate tax break was invested in stock buyback. That has no chance of repeating this time to fuel further stock growth. If performance falls below expectations, the only journey that follows is downwards.
Trump’s tax cuts in 2017 helped boost manufacturing in 2018, but the President’s tariffs have since taken a toll, sending manufacturing into a technical recession in 2019. Manufacturing slipped deeper into a recession in November of 2019, with a key gauge of factory activity contracting for the fourth straight month. Obama created 805,000 manufacturing jobs by counting job growth since February 2010, which was the low point for manufacturing jobs in the U.S. following the Great Recession from December 2007 to June 2009. As of January 2020, under the Trump administration 487,000 jobs have been created. But the gain in factory jobs came almost entirely in 2017 and 2018 when 458,000 manufacturing jobs were created. Trump won Pennsylvania, Michigan, Ohio, Wisconsin in 2016, promising working-class voters he would revive US manufacturing. Yet all four states have lost more than 16,000 factory jobs in the past year alone. Robert Scott the director of Trade and Manufacturing Policy Research at the Economic Policy institute has this to say “Frankly Trump is bad for manufacturing. Since he took office, the deficit in goods is up 15%. Trump’s trade deals the USMCA and the phase one deal with China fail to address the structural issues that fix long term trade imbalances, and therefore help workers. His policies haven’t helped change anything – they keep the status quo.”
“We will bring back our jobs. We will bring back our borders. We’ll bring back our wealth, and we will bring back our dreams,” Trump said at his inauguration in January 2017. As part of that vision, he promised a manufacturing renaissance that would bring back millions of U.S. factory jobs that have relocated to China and other countries with lower production costs. He clearly has fallen far short of that promise. That is a standard Trump operating procedure – Over sale, underperform and then begin a misinformation campaign.
Pitch to Steel Manufacturers
Donald Trump's pitch to Steel manufacturer on July 15, 2019 at a “Made in America” event at the White House: “And, by the way, steel — steel was dead. Your business was dead. Okay? I don’t want to be overly crude. Your business was dead. And I put a little thing called ‘a 25% tariff’ on all the dumped steel all over the country. And now your business is thriving.” The 25% tariff on most imported steel helped the U.S. steel industry: Prices went up (though they’re now a little below what they were when Trump took office), productivity has increased, imports decreased. But Trump exaggerates the before-and-after picture.
The industry wasn’t “dead” before the tariffs, and there weren’t signs it was “going out of business” before his election, as he claimed on July 15. “If I hadn’t been elected, you would have no steel industry right now. It would be gone,” he said at the same event.
Production is up since 2016, but it has been higher as recently as 2014 under Obama. Figures from the U.S. Geological Survey, which gets its data from the American Iron and Steel Institute, show an increase in raw steel production from 2016 to 2018 of 10.8%. Production hit 87 million metric tons in 2018 but was 88.2 million metric tons in 2014.
Iron and steel mill jobs have gone up by 4,500 from January 2017 to June 2017, a 5.6% increase, according to the latest figures available from the Bureau of Labor Statistics. In June 2019 the level of employment was 85,300 workers which is 16% below the 101,700 workers in May 2007, months before the Great Recession. With the price spike, the steel mills made a lot of money at the detriment of America’s consumers and steel-reliant industries. Ford Motor Co. said its tariff costs on steel and aluminum amounted to $750 million in 2018, and Caterpillar said it would raise prices in the second half of 2018 to offset higher costs due to the tariffs. Donald Trump does not understand much of trade that he brags about if he cannot put the two and two together or he just believes he can keep taking his audience for a ride. He is known to have said “I love the uneducated”. What America needs is an education on Donald Trump’s lies.
The promised Coal revival
Trump said this to coal miners in West Virginia before the 2016 election: "I'm thinking about the miners all over this country…. We're gonna put the miners back to work. We're gonna put the miners back to work. We're gonna get those mines open." At another rally in New York before the elections he said “We’re going to get those miners back to work ... the miners of West Virginia and Pennsylvania, which was so great to me last week, Ohio and all over are going to start to work again, believe me. They are going to be proud again to be miners.” He knew he was just selling snake oil to his audience, many of them his most ardent supporters. Coal miners may be the hardest working Americans who do a very dangerous job in unhealthy conditions. Unfortunately for them, market forces, along with continued concerns about climate change, have pummeled the industry. Trump remains unconcerned with any of that. As long as he can get them to vote for him he has no problem lying. It is a pattern he keeps repeating time and again. The Dow Jones U.S. Coal Index tracks the coal industry subsector. When Trump was elected in November 2016 the index was around 45 and closed on Friday at 8.57, down approximately 80%. There have been numerous mine closures and bankruptcies during his time in office, with little positive outlook for the industry. He complained about President Obama’s policies and coal plants closing, even though market forces such as natural gas fracking were making coal less and less economically viable. Trump has embraced the coal industry and even appointed an ex-coal lobbyist to head the EPA. It’s all smoke and mirrors to give an appearance of effort to his base without any real effort going into it. Donald Trump has come to believe that his lies do not matter, the truth does not matter when it comes to him and he has a good reason to believe so because that is how it has turned out so far.
Farmers and their plight under Trump
There has been a spike of ever-increasing farm bankruptcies and farmer suicides in the Trump era. In 2017, China imported $19.5 billion in agricultural goods, making it the second-largest buyer overall for American farmers. In 2018, that dropped to $9.2 billion as the trade war escalated, according to the United States Department of Agriculture. U.S. farmers lost one of their biggest customers after China officially cancelled all purchases of U.S. agricultural products, a retaliatory move following President Donald Trump’s pledge to slap 10% tariffs on $300 billion of Chinese imports. China’s exit piles on to a devastating year for farmers, who have struggled through record flooding and an extreme heat wave that destroyed crop yields, and trade war escalations that have lowered prices and profits this year. US farm bankruptcies were up 20% in 2019, despite the billions of dollars in aid President Donald Trump has paid to farmers hurt by the trade war with China. To make up for some of those losses, and shore up political support, Trump has allocated a $28 billion aid package for farmers over the past two years.
Bob Kuylen, who’s farmed for 35 years in North Dakota had this to say: “It’s really, really getting bad out here, Trump is ruining our markets. No one is buying our product no more, and we have no markets no more.”
Non impacting Trade Deals
Under Donald Trump the U.S. goods trade deficit with China reached a new record of $419.2 billion in 2018, up from $375.6 billion in 2017, an increase of $43.6 billion (11.6 percent). That is $70 billion, or 23 percent, higher than in 2016, the year of highest trade deficit with China under the Obama administration. United States trade with China is dominated by the deficit in manufactured products. This happened even after United States imposed tariffs of 10 to 25 percent on $250 billion in imports from China (about half of total U.S. imports from that country). The rapid growth of U.S. trade deficits reflects the failure of Trump administration trade policies, as well as the negative impacts of tax cuts and spending increases.
The initial USMCA trade deal the replacement of NAFTA as drafted by Trump’s trade representatives and Senate republicans left American workers exposed to losing their jobs to Mexico, included unacceptable provisions to lock in high prescription drug prices, fell short of key environmental standards and lacked concrete, effective enforcement mechanisms. The bill was not acceptable to labor unions, environmental activists, several business groups as well to the trade representatives from Canada and Mexico. It was the revised version of the bill to correct the shortcomings as drafted by Pelosi and the House Democrats, that was agreed to by all parties and signed in to law. This was what Nancy Pelosi had to say about the bill “We ate their lunch”. Mitch McConnell was more subdued in his enthusiasm saying, “The bill could have been better from my perspective”. Trump owed the Democrats this rare legislative accomplishment.
What Moody’s Analytics has to say
Moody’s Analytics, a financial investment analytics company with a conservative leaning recently published this: “Based on the economic proposals of both President Trump and Biden, the economic outlook is strongest under the scenario in which Biden and the Democrats sweep Congress and fully adopt their economic agenda,”
An economic forecast from Moody's indicated that a Biden presidency would create 7 million more jobs compared to a second Trump term.
“The Moody's analysis tells us the Biden plan would result in more jobs, a stronger economy, and higher incomes for the middle class," economics expert Michael Linden said.
Household incomes would also rise nearly $5,000 under Biden, but stay unchanged if Trump is reelected to another term.
The COVID-19 pandemic outbreak has brought unimaginable economic and human disaster to this country more than any other event in this century. Two hundred and fifteen thousand people dead, almost 7.5 million people affected, with current active cases being more than one and half million which projects to at least a total of 300,000 Americans dead by the end of this year. This President never understood the basic fact that without bringing this pandemic to a halt he cannot get a grip on this economy. He never understood without life there is no livelihood. With a sound coordinated national plan he could have just done that. But this President did not rise to the occasion and was not up to the task.
Almost 13 million people unemployed currently, with the unemployment rate more than 8.0%. What is Donald Trump’s plan for economic recovery? It is the same old tax cut for the wealthy. That is a Trump recovery not America’s recovery. For the first time since World War 2, the total national debt will exceed the size of the economy this year. Another tax cut is a nonstarter. If anything, the repeal of the Republican tax cut of 2017 for the wealthy and corporations who have not been paying their fare share of taxes as proposed by Joe Biden is one of the many steps that need to be taken for the path to economic recovery.
Through the CARES act the Federal government has already committed $6 trillion toward economic recovery and there was more to follow with the $3-trillion HEROES Act passed by the Democratic House, which goes further in providing relief than the CARES act, by including everything like unemployment extension, additional unemployment benefits, rent relief, etc. But the Republican Senate pulled the plug on that and never brought that bill to the floor of the Senate, while the President kept flip flopping from one proposal to another each one of them at odds with his previous proposals.
One thing that all Americans should know is that the extent of coverage namely the $600 per week of unemployment and extension of state unemployment insurance came from Democratic initiative both in the Senate and the House. What did Republicans and Donald Trump do, you might ask? The answer is Donald Trump forced his Treasury to reprint the stimulus checks to include his signature and constantly comes on TV and says everything is handled and under control. No Mr. President you don’t have anything under control, and likely never will, so stop lying and saying that. The Trumpian saga does not end there. President Trump removed Glenn Fine the chairman of the federal panel Congress created to oversee his administration’s management of the $2 trillion coronavirus stimulus package, thus undermining the system of independent oversight. The question that follows is, why would any administration do that if corrupt practices were not being followed and there was nothing to hide? What this President and his cronies have done at every turn is exploit the sufferings of everyday Americans and the grim situation of this country for their own political and monetary benefits. This is not a great Trump economy. This is an economy Mr. President that is rigged and going to be busted in the very near future, must be build back better. It is time to build a new economy under a new President that rises from Main Street and not Wall Street.
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