The way President Donald Trump talks about the health of the American jobs market has undergone a pretty dramatic shift in recent years, and not because of a major change in economic trends. It’s because Trump loves moving the goalposts on his measures of success. The US economy has been steadily adding jobs since the Great Recession. Under President Barack Obama, the economy averaged an additional 109,000 jobs per month, and the administration oversaw 75 consecutive months of growth, the longest streak of total job growth on record. Under Trump, the trend has continued: The economy has kept adding jobs, and the unemployment rate is now at 3.9 percent, nearing historically low levels. But the way Trump talks about it, you wouldn’t know it. Aaron Sojourner, a professor at the University of Minnesota and a former labor economist for the Council of Economic Advisers under Obama and Trump, charted out the shift in Trump’s talking points — compared with how the US jobs market is actually doing — on Twitter recently. “The talking points changed,” he wrote, “not the growth trend.”
Before Trump was president, he consistently lamented that the US economy was flailing and claimed that jobs numbers were made up. But now that he’s in the Oval Office, he’s decided that the jobs numbers are indeed very real and the economy is doing phenomenally. When Obama was president, Trump often trashed the state of the US economy and jobs market. He called the April 2012 jobs report “” for adding just 72,000 jobs. (During his presidency, he’s seen a month of 73,000 jobs added, and another of 14,000.) Trump often derided the Affordable Care Act for cutting into the labor market and claimed the country was losing thousands of jobs to outsourcing. On the campaign trail, he pledged to bring jobs back to America and . And when there was good news about jobs and the economy, Trump often claimed it was fake.
In 2017, Christopher Ingraham at totally fiction.” Now that Trump is in the White House, he’s decided the jobs numbers aren’t phony after all. Whereas before the jobs report was fake, Trump now says it’s the news that is — or rather, what he calls the “fake news” for not giving him credit where he believes it’s due. Presumably, the Bureau of Labor Statistics hasn’t changed its methodology for calculating job growth. What’s different is what’s convenient for Trump, who has often demonstrated he has no problem bending the truth or lying in order to shape a certain narrative. When he wasn’t president, he wanted to paint the economy as disastrous. Now that he’s in the Oval Office, he wants voters to think everything’s just fine. outlined at least 19 times Trump claimed US jobs numbers were made up — before, of course, he was at the helm of the US economy. He often claimed that the than was reported, as much as 20, 30, even 40 percent. The jobs report that came out just before the 2016 election, in which 172,000 jobs were added, he said was “terrible” and contained “phony numbers.” Even as president-elect, he said the unemployment number was “
Drowning in Debt
The one notable change between the Obama & Trump economies is the dramatic way the tax cuts from a year ago are spiking deficits. Again we see in yet another report, that “revenue neutral” tax bill where economic growth was going to offset the reduced tax revenues was really pie-in-the-sky bunk: u-s-debt-sales-break-
Right before Congress passed the Tax Cuts and Jobs Act in December 2017, President Trump proclaimed: “It’ll be fantastic for the middle-income people and for jobs, most of all … I think we could go to 4%, 5% or even 6% [GDP growth], ultimately. We are back. We are really going to start to rock.” A year later, it’s very clear that the tax cuts boosted gross domestic product and jobs a bit — and just for one year. Its effects are fading as U.S. GDP growth appears likely to weaken in 2019. The only thing that “rocked” were corporate profits and the stock market. And we’re facing trillion-dollar deficits as far as the eye can see. The Tax Cuts and Jobs Act made small cuts in rates to most individual taxpayers, while cutting the corporate tax rate from 35% to 21%, expanding deductions for “pass-through” companies, and taxing only corporate income earned in the U.S., not worldwide. That theoretically removed a major barrier to U.S.-based multinational corporations repatriating the estimated $2.6 trillion in accumulated earnings they’re holding overseas.Muted hiring, investment plans: The failure of the tax cut bill to achieve those intended results was made clear Monday when the National Association for Business Economics (NABE) released its January Business Conditions Survey. This is a poll of more than 100 economists employed by major firms in corporate America, so they’re hardly lefties. But they are guided by facts and hard data, not supply-side delusions. Some 84% of these economists reported that in the year since their passage, the tax cuts “have not caused their firms to change hiring or investment plans.” Actually, data show that firms did boost capital spending in the first half of last year, but that was fading by the third quarter. And an analysis by Daniel Alpert of Westwood Capital, reported by the Financial Times, showed that businesses put more than half of that into technology and intellectual capital, and only 28.6% in new structures and equipment, the opposite of 1998, a year when GDP grew by 4.5% and income was rising.Buyback bonanza: So where is all that money going? Where else? Share buybacks, which hit a record $1.1 trillion in 2018. Companies actually spent more on buybacks than on capital investments in 2018’s first half, and remember, capex weakened as the year went on. Buybacks shrink the number of shares, boosting earnings per share and eventually, the stock price. That helps all shareholders, of course, but especially corporate executives, more than half of whose total compensation is in stock. And what happened to all the trillions of dollars the president promised corporations would bring back to the U.S.A. from overseas? That, too, has turned out to be a bust — the amount dropped 50% in the third quarter after starting out strong in the first half of 2018. See a pattern here?As economists projected, the tax cuts did boost GDP a bit: When 2018’s final numbers are in, GDP probably will have grown 2.9-3%. That’s a nice jump from 2.2% in 2017 and the anemic 1.5% in 2016, the year Trump was elected. But it will be virtually identical with the 2.9% GDP growth recorded in 2015, the highest of the Obama years. Since economists expect U.S. GDP growth to slow to the mid-2% level this year — and some are even predicting a recession — that may turn out to be the peak of the Trump years, too. Job growth has picked up, having risen by 2.6 million in 2018, vs. a gain of 2.2 million in 2017. It’s unclear how much of that can be attributed to the tax cut, since health care and professional and business services set the pace again, as they have for the past 30 years. As my MarketWatch colleague Tim Mullaney pointed out, the gains in manufacturing — which the president promised would go through a revival — have been pretty modest.Booming company profits: So, who gained? Well, corporate profits surged $78.2 billion in the third quarter, accelerating over the second quarter’s $65 billion gain. Earnings for the companies in the S&P 500 Index (SPX) probably topped $148 per share last year, about a 40% gain from the end of 2016. That’s exactly what the S&P 500 gained from just before the election to its October 2018 all-time high. The numbers couldn’t be clearer: Corporations, big shareholders and top corporate executives reap the lion’s share of the gains from the 2017 tax cut, which should be renamed the Shareholder and CEO Enrichment Act of 2017. It didn’t boost economic growth that much, didn’t start a capital spending boom or U.S. manufacturing renaissance, didn’t bring overseas profits back home, and might have led to modest job growth but little discernible wage increases. And we’ll all be stuck with the bill for a long, long time.
Controlling Pay, Hours, Benefits & Other Factors
Since 2000, labor’s share has declined by about a trillion dollars. If you’ve become jaded by numbers this huge and have no idea what they mean on a human scale, it’s simple: this works out to something in the ballpark of $7,000 per worker. If we could just get back to the level of 80s and 90s, we’d all be making about $7,000 more per year. This is not a huge ask. It’s not like trying to bring back the postwar Golden Age. We’re talking about something that was common as recently as 20 years ago. Since then, the CEO class has decided to add a trillion dollars to its income by taking it away from its workers. This is something that Democratic presidential candidates ought to share when they’re out on the campaign trail.
MORE on WORKERS getting CHEATED
Inside the next link is an excellent article detailing how our current economic system has evolved into a stubbornly unrelenting trend of escalating inequality. It highlights our single-biggest economic problem that we must figure out & fix! As workers keep falling further behind, that is the primary source of all the anger & frustration out in the heartland. I’ve often said we’d better fix capitalism soon before we slide into socialism. And socialism should not be our preference, but our DC leaders are doing a lousy job of fixing the flaws inherent in our current system. Proposals from too many progressives seem to favor big government handouts, which can serve as a crutch & not tackle the core difficulties. Although to be fair to progressives, the type of democratic socialism Bernie & others subscribe to is far different from traditional communist socialism where the state owns & controls everything. All these points are brought out in these excerpts from this enlightening article inside what-history-teaches-
In the US, capitalism has sometimes worked to make all boats rise. A remarkable study last year of the history of national income, written by the foremost French researchers about income inequality, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, shows that from 1946 to 1980, real income doubled across the economic spectrum. That was also a period of extraordinary economic growth: gains of over 5% in gross domestic product for most years, and occasionally more than 10%. The top income tax rate for the richest Americans was higher than 85% until 1964, and then 70% until 1980. Nevertheless, the top 0.01% tripled their income after taxes in this period. But since 1980, the story has been very different. The income of the poorer half of Americans has remained completely stagnant. The upper half has seen its income grow, but most of that growth has been at the very top: incomes of the top 1% have tripled, and that tiny rich slice earns almost twice as much before taxes as the whole bottom half. The few thousand families in the top .001% have multiplied their income 7 times. Our graduated income tax, along with other income-based payments like Medicaid, does redistribute money toward the bottom, but that hardly dents the huge inequality.
That’s due to political choices. The top tax rate has fallen steadily, to 50% in 1982, to 40% in 1993, to 35% in 2003. The tax rate on capital gains from stocks, which nearly all go to the wealthiest Americans, has also fallen from 40% to 20%. After nearly tripling from 1940 to 1970, the real value of the minimum wage has fallen since then. One of the least discussed but most important political policies that contributes to growing inequality is the ability of the very rich to hide their income in international tax shelters. The leak of the so-called Panama Papers brought the illegal use of tax havens into the international spotlight: the anonymous leaker said he was motivated by “income inequality”. It is estimated than 10% of the world’s GDP is held in offshore banks, including about 8% of American GDP. Corporations have contributed to rising inequality by boosting the incomes of top management. CEO’s earned about 30 times the income of a typical worker in 1980. That ratio has skyrocketed to 300 times average wages.
Political choices continue to widen the economic gulf between the few and the many. The Republican tax reform of 2017 mainly benefitted the rich, notably by doubling the amount of money that can be left in an estate without being taxed, helping only a few thousand families. Growing inequality is not only an American problem, but a global problem that keeps getting worse. Between 2010 and 2016, the total wealth owned by the poorest half of the world’s population fell by over one-third. At this moment, the world’s top 1% owns more than all the rest of us. The world’s economy keeps growing, but the yachts of the wealthiest are disappearing from view. Since 2000, the bottom half of the world’s population has gotten about 1% of the increase in global wealth. The top 1% took in half of that growth. The 8 richest men in the world now own as much as the poorer half of the global population, 3.6 billion people.
Rising inequality in the US has provoked louder discussion. Conservatives try to derail political discussions about economic inequality by talking about the “politics of envy”. It’s a common mistake of both left and right to talk about capitalism and socialism as if there were only two choices. One-party socialist systems in less developed countries have not worked well over the past century. Capitalism as practiced in the United States and many other nations has mainly benefitted those who already are wealthy. The nations in which all citizens gain from economic growth have combined elements of market economies, private ownership, and political policies that mitigate inequality. In western Europe, public health care, nearly free university education, stronger progressive taxation, higher minimum wages, and inclusion of trade unions in corporate decision-making result in much lower inequality and much happier populations. No American politician argues for replacing capitalism. The political choices of the past 40 years have weakened our national economy and our political unity by favoring the wealthy. The rising tide is swamping too many American boats. It’s time for a different politics.
Who’s Really Getting the Lion’s Share of Government Welfare?
As a lifelong Republican, I always subscribed to the notion our nation is comprised of the makers & the takers, with the makers being the job creators who fueled the economy, & the takers robbing taxpayers by living off our welfare system. There’s still an element of truth to that within the system, but the macroeconomy has so drastically changed in recent decades, many old assumptions no longer hold true. Many in the working class need & avail themselves of government benefit programs to make ends meet. The lines between makers & takers have really become blurred, possibly even being flipped on its head as the next article so boldly proclaims.
With wage/wealth gaps getting so pronounced & exaggerated, as a billionaire class has been created on the backs of stagnant wages for the working class, we’ve crossed a threshold from corporate interests providing good jobs for employees to more a case of exploiting employees. We’ve also become an economy where the benefits derived from these large corporate interests are now largely offset by repressing the viability of smaller competitors, as small business/independent entrepreneurs strive to survive. So we’re seeing oligopolistic practices in many industries which squashes free-market competition, while a preponderance of workers don’t enjoy the disposable income needed to buy many of the products/services our society produces. We’re also seeing our best & brightest being drawn to industries which are highly profitable, such as Wall Street financial institutions & those fast-emerging social media/internet giants, but such organizations may not necessarily produce much real value overall to society.
Some rather interesting perspectives are in these posts from the beginning & ending to wealth-banks-google-
This piece is about one of the biggest taboos of our times. About a truth that is seldom acknowledged, and yet – on reflection – cannot be denied. The truth that we are living in an inverse welfare state. These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurialism that are helping to advance the whole world. Now, we may disagree about the extent to which success deserves to be rewarded – the philosophy of the left is that the strongest shoulders should bear the heaviest burden, while the right fears high taxes will blunt enterprise – but across the spectrum virtually all agree that wealth is created primarily at the top. So entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.
In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue. To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth. But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit. For those who know their history, the term “rentier” conjures associations with heirs to estates, such as the 19th century’s large class of useless rentiers, well-described by the French economist Thomas Piketty. These days, that class is making a comeback. (Ironically, however, conservative politicians adamantly defend the rentier’s right to lounge around, deeming inheritance tax to be the height of unfairness.) But there are also other ways of rent-seeking. From Wall Street to Silicon Valley, from big pharma to the lobby machines in Washington and Westminster, zoom in and you’ll see rentiers everywhere.
There is no longer a sharp dividing line between working and rentiering. In fact, the modern-day rentier often works damn hard. Countless people in the financial sector, for example, apply great ingenuity and effort to amass “rent” on their wealth. Even the big innovations of our age – businesses like Facebook and Uber – are interested mainly in expanding the rentier economy. The problem with most rich people therefore is not that they are coach potatoes. Many a CEO toils 80 hours a week to multiply his allowance. It’s hardly surprising, then, that they feel wholly entitled to their wealth. It may take quite a mental leap to see our economy as a system that shows solidarity with the rich rather than the poor. So I’ll start with the clearest illustration of modern freeloaders at the top: bankers. Studies conducted by the International Monetary Fund and the Bank for International Settlements– not exactly leftist thinktanks – have revealed that much of the financial sector has become downright parasitic. How instead of creating wealth, they gobble it up whole. Don’t get me wrong. Banks can help to gauge risks and get money where it is needed, both of which are vital to a well-functioning economy. But consider this: economists tell us that the optimum level of total private-sector debt is 100% of GDP. Based on this equation, if the financial sector only grows, it won’t equal more wealth, but less. So here’s the bad news. In the United Kingdom, private-sector debt is now at 157.5%. In the United States, the figure is 188.8%.
In other words, a big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body. It’s not creating anything new, merely sucking others dry. Bankers have found a hundred and one ways to accomplish this. The basic mechanism, however, is always the same: offer loans like it’s going out of style, which in turn inflates the price of things like houses and shares, then earn a tidy percentage off those overblown prices (in the form of interest, commissions, brokerage fees, or what have you), and if the shit hits the fan, let Uncle Sam mop it up. The financial innovation concocted by all the math whizzes working in modern banking (instead of at universities or companies that contribute to real prosperity) basically boils down to maximising the total amount of debt. And debt, of course, is a means of earning rent. So for those who believe that pay ought to be proportionate to the value of work, the conclusion we have to draw is that many bankers should be earning a negative salary; a fine, if you will, for destroying more wealth than they create. Bankers are the most obvious class of closet freeloaders, but they are certainly not alone.
So why is this happening? The answer can be summed up in three little words: Because it can. Rentierism is, in essence, a question of power. That the Sun King Louis XIV was able to exploit millions was purely because he had the biggest army in Europe. It’s no different for the modern rentier. He’s got the law, politicians and journalists squarely in his court. That’s why bankers get fined peanuts for preposterous fraud, while a mother on government assistance gets penalised within an inch of her life if she checks the wrong box. The biggest tragedy of all, however, is that the rentier economy is gobbling up society’s best and brightest. Where once upon a time Ivy League graduates chose careers in science, public service or education, these days they are more likely to opt for banks, law firms, or trumped up ad agencies like Google and Facebook. When you think about it, it’s insane. We are forking over billions in taxes to help our brightest minds on and up the corporate ladder so they can learn how to score ever more outrageous handouts. One thing is certain: countries where rentiers gain the upper hand gradually fall into decline. Just look at the Roman Empire. Or Venice in the 15th century. Look at the Dutch Republic in the 18th century. Like a parasite stunts a child’s growth, so the rentier drains a country of its vitality.
What innovation remains in a rentier economy is mostly just concerned with further bolstering that very same economy. This may explain why the big dreams of the 1970s, like flying cars, curing cancer, and colonising Mars, have yet to be realised, while bankers and ad-makers have at their fingertips technologies a thousand times more powerful. Yet it doesn’t have to be this way. Tollgates can be torn down, financial products can be banned, tax havens dismantled, lobbies tamed, and patents rejected. Higher taxes on the ultra-rich can make rentierism less attractive, precisely because society’s biggest freeloaders are at the very top of the pyramid. And we can more fairly distribute our earnings on land, oil, and innovation through a system of, say, employee shares, or a universal basic income. But such a revolution will require a wholly different narrative about the origins of our wealth. It will require ditching the old-fashioned faith in “solidarity” with a miserable underclass that deserves to be borne aloft on the market-level salaried shoulders of society’s strongest. All we need to do is to give real hard-working people what they deserve. And, yes, by that I mean the waste collectors, the nurses, the cleaners – theirs are the shoulders that carry us all.
In her CNN town hall, Sen. Kamala D. Harris (D-Calif.) emphatically declared she was for “Medicare-for-all” and wanted to get rid of private insurance. A spokesperson pointed out, “Medicare-for-all is the plan that she believes will solve the problem and get all Americans covered. Period. She has co-sponsored other pieces of legislation that she sees as a path to getting us there, but this is the plan she is running on.” A walk-back! Inconsistency! Conflict in the Democratic Party! Let’s get real; actually, let’s have a real debate rather than a bumper-sticker battle. Whether you share Harris’s goal or not, it’s not actually a contradiction for her to say that she wants to get to a system of single-payer health care but to say she favors a series of incremental steps. In fact, no one who favors “Medicare-for-all” can honestly say it is going to happen anytime soon, given the Senate’s 60-vote requirement and the public resistance to cutting out private insurers. Any candidate who pretends such barriers don’t exist isn’t being any more honest with voters than Trump’s never-explained magical health-care system that was going to provide more choice, better care and cost less. So where does that leave voters and presidential contenders?
Virtually all elected Democrats want universal health-care coverage. However, most also recognize that eradicating private insurance is not feasible, at least in the short run. The problem is not that the system is “rigged” but rather that ordinary people don’t want such a drastic change. “Whatever the actual merits of the switch away from private insurance, surveys suggest that many Americans who have decent coverage now are nervous about changes,” Jonathan Cohn writes. “Just last week, a poll from the Henry J. Kaiser Family Foundation found that support for a support for a Medicare-for-all system dropped dramatically when people learned that it would mean giving up existing insurance, although that was just one of several questions the pollsters tested.” There are, as Cohn points out, oodles of proposals to expand coverage that don’t eliminate private insurance by fiat. (“An example is legislation co-sponsored by Democratic Sens. Sherrod Brown of Ohio and Debbie Stabenow of Michigan that would allow people 55 and older to sign up for Medicare,” he explains. “Other proposals envision creating a whole new government-run plan, more similar to the one in the [Bernie] Sanders bill, while still allowing employers to continue offering coverage to employees ― and then giving employees the option of sticking with the company plan or buying into the new public program.”) There are lots of ways to get closer to the goal Harris and others have — affordable, simple health care for everyone.
David Leonhardt argues that pushing the you-lose-the-insurance-you-
like plan is an “unforced error” (or what comes from following Sen. Bernie Sanders (I-Vt.) over the political cliff). Instead, he says “a less problematic, but still bold, alternative exists: A vastly expanded version of Medicare that allows people to buy in voluntarily. That plan could also be called Medicare-for-all. And if it proved to be as popular as Democrats expect, advocating for the mandatory version would become much easier.” That’s the plan from the Center for American Progress. Republicans’ notion of dismantling Obamacare and letting people fend for themselves isn’t going to fly, but neither is an undefined, scary-sounding takeover of all health insurance. We should watch to see how Democratic candidates grapple with tough questions. We should see how flexible they are, how honest they are and how they balance competing priorities because — here’s the secret — none of what they present as their perfect plan is going to be the final product. It’s a starting point for a discussion about how to improve health care. The details will change, but what we will be electing is a person to wrestle with these hard questions for which there is no easy, magical fix. We want to see which candidates display the empathy, common sense, economic literacy and political smarts necessary for the job.
The debate over health care continues in these links, with the first two live & the last two requiring a search:
Foxconn & the Overall Loss of Manufacturing