Straight Talk to Trump Supporters
02/001/2024
What follows is not an opinion or
distortion of the facts. I point this out because Trump supporters are used to both
and may or may not recognize a factual account (or care).
Trade: Candidate Trump is again flogging the
idea of more, and more aggressive, trade actions against China. The problem?
Trump proclaimed, when he did it (tariffs) the first time, that “China will pay
them.” Yes he said exactly that. (you know,
like Mexico would pay for the border wall?) Any high school economics student
knows that tariffs are paid by the importing entity, not the exporter, yet
against the advice of almost every sentient economist in America, Trump imposed
additional (and punitive in intent) tariffs on China.
The results? Threefold for simplicity’s sake:
First, the National Association of Manufacturers,
the business entities Trump proclaimed he was “protecting”, has determined that
the average American household has been impacted by an additional cost of
living of about $850 annually in extra expense specifically as a result. Here’s
a simple example: Black and Decker buys some electronics parts for (just an
example) power tools from China. They import the parts; they pay a tariff. No,
they don’t “eat” the extra cost, rather they pass it on in a slightly higher price
to the US consumer.
Second, China simply retaliated with
tariffs on American exports to the People’s Republic, a huge portion of which is
(was) soybeans. China did not pay the tariffs; rather they found cheaper sources,
Brazil chief among them. This negatively impacted American farmers who relied
upon the Chinese market. This led to unintended consequence #3.
Third: as a consequence of the radically
decreased market for soybeans, The Department of Agriculture, at Trump’s insistence, increased aid to farmers in the form of subsidies. How much? More
than the annual operating budget of the State Department or the Navy’s annual
ship construction budget! The cost of Trump trade policy in farm subsidies
alone was an estimated $28 billion in 2020. That’s $84 for every living soul in the USA, parceled
out to US agriculture, and some of which recipients are members of Congress. Note:
It’s also billions more than is allocated for children’s health insurance!
Remember, Maga people, this is but one
economic legacy of the man who bragged about his academic brilliance while
never making the Dean’s list and being unable to qualify for grad school.
Taxation: Trump, as have Republican Presidents
before him, also ballyhooed tax cuts as examples of his grasp of macro government
economics. He vaguely referred to the long discredited “trickle down” theory
which claims that dollars not spent on taxes will somehow be plowed back into
businesses with a resultant Gross Domestic Product (GDP) growth and federal revenue
of more than the loss of tax dollars. The results of the Reagan, Bush 41, Bush 43
and Trump tax “reforms” show a markedly different result.
Reagan cut taxes
and then spent far more money than we had on military buildups. The deficit blossomed.
Bush 41 ran in 1988, on a platform of “No new taxes” right up until the
steadily increasing deficit led to his signing of a budget reconciliation bill
in 1990 which included new taxes in an attempt to deal with a burgeoning deficit.
To GHW’s credit this was effective and his successor, Bill Clinton actually increased
taxes somewhat and slowed the National debt growth by decreasing the deficit. In
fact, from 1989 to 2001 (all Clinton budgets) the deficit dipped to negative
numbers for the first time since 1969!
Unable to leave well enough alone,
Bush 43 again reduced taxes, especially on those most able to actually afford
to pay them, and then went to war in the Mideast. Two conditions resulted by
the end of his 8 years. One, federal annual budget deficits had drastically grown
due to (wait for it) spending more and collecting less in federal revenue.
The second result was a massive lack of
oversight in the commercial banking industry, culminating in the housing bubble
collapse and the worst recession since the Great Depression.
The Obama administration suffered significant
deficits due to recession-based spending (including the 2009 Bush legacy of TARP
spending of $700 billion) yet the period of 2009 to 2013 saw the most rapid rate
of deficit reduction over time to date.
The deficit remained relatively low until
2016, when Trump was elected and again touted a massive tax cut plan. Understand
that, by this time, the “trickle down” myth had been thrown in the trash bin by
essentially all real economists. In fact, one Australian Prime Minister referred
to it as “The rich pissing on the poor.”
By the time the Trump tax cuts were
enacted, research had repeatedly shown that, for every dollar in tax cuts, only
about 70 cents ends up back in the federal pocket, even in the form of GDP
growth. Trump knew (or should have known) this but he ploughed ahead, and the deficit
blossomed. In fact, the Trump tax cuts will add as much to the federal deficit ($1.9
trillion) as Covid spending has!
To make matters worse, Trump has
continually supported, and even pushed for, weakening the Obama era Dodd-Frank legislation
designed to avoid another disaster such as the housing bubble collapse of 2008.
The failure and risky policies of Silicone Valley Bank are but one early result
of these efforts. It should not be lost on any of us that taxpayer bucks bailed
out that failed institution.
Interestingly
enough, but characteristic of the Far Right, the initial blame hurled at SVB
cited what were characterized as “Woke” policies, when in fact the fault lay
with the greatly relaxed oversight and regulatory control which was removed or
greatly reduced from the original Dodd-Frank legislation.
Why anyone still believes the myth of Trump economic
prowess is unfathomable.
