The Benefits of Economic Growth Still Not Being Shared…And that’s despite a budget-busting, deficit-fueled tax cut for the rich that Trump world claimed would trickle down, but as The VORACS has claimed all along it wouldn’t! So in selling his misdirected tax cuts, the prez originally said they would pay for themselves with GDP growth hitting 4, 5 or even 6%! Instead we’re closing in on trillion dollar deficits with GDP failing to hit 3% in 2018, at the exact same level as Obama’s economy in 2015. So all those bold Trumpian promises on economic growth have failed to materialize, with tax cuts being the lone bullet in his economic gun, & he has no more ideas so his chamber is now out of bullets. As you can see here in today’s Part 3, we largely focus on those failed tax cuts & tepid economic growth that Trump & his GOP accomplices have graced us with.
Yes, Just Short of 3% is a Disappointment, But What’s Worse is the Distribution of that Growth
The benefits even more so keep going to the very top, so what is the real payoff for running up even more enormous deficits? That is a very bad bargain we got from Trump, one we’ll be paying for as a country for decades to come. And the working class keeps getting shortchanged as opportunity, upward mobility & the long-esteemed American Dream keep slipping away. We have several articles below about our lopsided economic growth, so we’ll begin with these excerpts from gdp-promise-fell-short-trump-tax-cut:
President Donald Trump came just shy of the biggest economic promise of his presidency in 2018, according to data released Thursday, in the first full year since Republicans passed sweeping tax cuts. The Bureau of Economic Analysis on Thursday released gross-domestic-product growth for both the fourth quarter and all of 2018, which showed that the US economy grew at a 2.9% rate last year (2.88%, to be exact). While that annual growth rate was the strongest since 2015, it still came in just shy of Trump’s long-promised 3% annual GDP growth. Many White House advisers were publicly confident that the US would make it to 3%, but a fade into the end of the fourth quarter seemed to tail off growth just enough to move the number below that threshold.
There were two key areas where the GOP and Trump said the tax law enacted at the end of 2017 would boost economic growth. The first was spending by consumers who were getting higher take-home pay, and the second was by increased investment from businesses that saw their tax bill fall. According to the US government data, both of those categories improved in 2018 — but not by significant margins. While it is just one year and it’s unclear what effect these investments will have over time, the slowing trend over just one year has led many economists to suggest that post-tax-cut business investment may have peaked. Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote in a note to clients that the trend over the year showed that business investment was most likely “softening” and that 2018 might have been the high-water mark for the tax-cut boost. “The bigger picture for this year is that growth is reverting to the post-crash trend, 2-to-2.5%, demonstrating that the personal tax cuts offered nothing more than a sugar high, and that the business tax cuts did nothing to lift trend growth,” Shepherdson said.
Similarly, economists across Wall Street have projected that business investment will return to its long-run pace in 2019. According to Bloomberg data, GDP on average is expected to grow at a 2.5% rate in 2019. While business investment and personal consumption didn’t explode as Republicans probably hoped, Trump did get a big boost from the government. Government spending contributed 0.26 points to GDP in 2018, a significant boost from the 0.01-point drag in 2017. This was largely due to the massive bipartisan budget deal reached by Congress early in the year. Stripping government spending out of the equation, Trump would have delivered 2.6% GDP growth — well below the promised amount.
The Current Economic Growth & Wage Gains are Mediocre, Not Great
The Trump constant hype about this being the greatest economy ever is crazy-talk. He’s a BS artist & con man whose act is wearing thin, as more Americans can clearly see he’s full of hot air. GDP growth, job creation & the trends of lower unemployment rates roughly follow the same trajectory as Obama’s, except it’s being done with the sugar-high of more deficit spending. And the economic growth keeps missing the Americans who need it the most. Plus we’re seeing ominous signs of an economy that’s cooling, revealed in this opening to the article usa-economy/u-s-economic-growth-in-2018-misses-trumps-3-percent-target:
The U.S. economy fell short of the Trump administration’s 3 percent annual growth target in 2018 despite $1.5 trillion in tax cuts and a government spending blitz, and economists say growth will only slow from here. A better-than-expected performance in the fourth quarter pushed gross domestic product up 2.9 percent for the year, just shy of the goal, Commerce Department data showed on Thursday. President Donald Trump has touted the economy as one of the biggest achievements of his term and declared last July that his administration had “accomplished an economic turnaround of historic proportions.” On the campaign trail, Trump boasted that he could boost annual economic growth to 4 percent, a goal that analysts always said was unachievable. “We are moving back to a sustainable growth pace that we experienced during most of the Obama years,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “With the tax cut impacts largely done with, it is hard to see how growth can accelerate sharply.”
Gross domestic product increased at a 2.6 percent annualized rate in the fourth quarter after advancing at a 3.4 percent pace in the July-September period. Economists polled by Reuters had forecast GDP rising at a 2.3 percent rate in the fourth quarter. Growth in 2018 was the strongest since 2015 and better than the 2.2 percent logged in 2017. The expansion will be the longest on record in July. The stronger-than-expected fourth-quarter performance, which reflected solid consumer and business spending, was despite many headwinds, including financial market volatility and the United States’ trade war with China, raising optimism that an anticipated slowdown this year would not be abrupt. The fiscal stimulus is believed to have peaked sometime in the fourth quarter. December economic data such as retail sales, exports, homebuilding and business spending on equipment weakened sharply. In addition, most manufacturing measures softened in January and February, and motor vehicle demand has eased.
The labor market is also exhibiting signs of cooling, with a report from the Labor Department on Thursday showing the number of Americans receiving unemployment benefits rising to a 10-month high in the week ended Feb. 16. “The first quarter won’t be this good,” said Paul Ashworth, chief economist at Capital Economics in Toronto. “As the stimulus fades and the lagged impact of past monetary tightening continues to feed through, we expect GDP growth to slow to 2.2 percent this year.” Slowing growth together with weakening global demand and uncertainty over Britain’s departure from the European Union, support the Federal Reserve’s “patient” stance towards raising interest rates further this year. Fed Chairman Jerome Powell reaffirmed the U.S. central bank’s position in his testimonies before lawmakers on Tuesday and Wednesday.
Middle Class Crunch
Please check out these charts inside raw-data-incomes-of-wage-and-salary-workers. And below is a paragraph from how-to-close-americas-income-gap, which reading the whole article presents a levelheaded perspective & good options to help remedy the situation:
I’m worried about the loss of our middle class, because without that secure buffer between rich and poor, democracy is finished. No other issue tops this right now. Democracy always is at risk when the middle class drops out. All that remains then is a small, wealthy elite that protects its assets generationally and makes itself distant from the grassroots, while a majority population living with daily insecurity over the acquisition of basic needs nurtures festering resentments. This formula does not spell great success for a free and stable regime.
The Heart of the Problem is Most Jobs Hardly Pay a Livable Wage
More on this very same topic are in this article below pulled from new-economic-stats-blow-up-trumps-promises-of-long-term-economic-growth-as-tax-cuts-flop-cnbc-anchor, that despite the rhetoric from Trump, his pundits & the news media, economic growth has mostly been a flop. The GDP numbers get distorted when the top half of the economic ladder see the gains. We won’t see a great economy until economic growth overall produces meaningful wage gains &/or lowers the cost of living:
CNBC editor at large John Harwood told MSNBC on Thursday that the new Congressional Budget Office report blows up Trump’s promises of up to 6% economic growth, and despite his tax cuts, worker take home pay hasn’t increased. “The president and his economics team promised tax cuts and deregulation would lift America’s gross domestic product, or GDP as most people call it, above 3%, and keep it there,” said host Stephanie Ruhle as she introduced her guest. “The new numbers indicate that the economy slowed less than expected, that is good, but we are already seeing signs of slowing in the first quarter of 2019 especially in manufacturing.” “This has been a long standing Republican theme,” Harwood said, reminding viewers that the GOP promised better economic growth than under Obama. “What we’ve seen today from these numbers is that Trump has gotten to 2.9%. That is not better than Obama,” Harwood said. “In fact we saw growth decline from 4.2% in the second quarter, to 3.4% in the third quarter, 2.6 in the fourth, expected to be in the 1s in the first quarter of 2019.” “In the long run, the CBO and Federal Reserve both say that long term growth will be below 2%,” he continued. “That is not what the trump team promised that they were going to deliver with tax cuts and deregulation.”
Ruhle asked Harwood to “de-wonk” the numbers and explain what they mean for ordinary people. “Long term economic growth was supposed to be the thing that lifted the living standard of average Americans,” he replied. “We’ve seen long term stagnation, increasing income inequality but people in the middle and working class have not been moving ahead. People at the top have been moving ahead.” He added that “the key” to greater paychecks for middle class families was “making labor more valuable for businesses to pay.” “There is no sign that that’s going to happen. Wages continue to grow ahead of inflation, but not by that much,” Harwood said. “So we haven’t really seen the fundamental shift in worker take home pay from the Obama Administration despite tax cuts.”
Not Higher Real Wages, But Higher Deficits & Stock Buybacks
Yes, there is economic growth but it’s mostly blah. The approximately 50% of the working class that need a break just can’t catch that break. The top-down approach from the tax cuts was exactly the wrong strategy, as we needed more of a bottoms-up approach. But the big GOP donors wouldn’t take no for an answer, while Trump just rode along with the party line not really having a clue. And some Americans are really getting hammered by the tax bill: tax-deduction-turmp-323-billion.
So the reality of this so-called economic miracle, we see benefits went even more to the top as workers’ wages remain largely stagnant, especially when adjusted for inflation. In such a tight job market we’d expect better wage growth, but it almost smacks of collusion on the part of corporate interests to hold expenses down (& profits up). Yep, the system really is rigged for the corporate uber-wealthy: michael-cohens-testimony-on-trump-business-reveals-conduct-thats-widespread-in-corporate-america. And corporate stock buybacks are way up, as if employees could get excited over that. See more on this disconnected & disappointing economic growth posted below from inside economic-growth-workers-wages-economy:
You may have heard President Donald Trump say that the US economy is booming right now. That’s an exaggeration, but the economy is definitely growing, as the latest economic indicators show. But why doesn’t it feel like the economy is growing? The answer is pretty simple: Because economic growth is not really benefiting the average American worker. The chart below says it all. The red line shows that overall wages are growing faster than they have in a long time — about 3 percent per year. That’s great, right? Not really. Look at the blue line. That’s the actual wage growth when you factor in inflation and cost of living (based on the Consumer Price Index). Here is another measure of income growth, which shows a similar trend. This shows that wage growth still hasn’t caught up to 2006 levels. Taking all this into account, it’s no surprise that many Americans aren’t experiencing an “economic miracle” under Trump. Nearly half — 48 percent — of Americans say they believe economic conditions are worsening. That’s up from 45 percent in December and 36 percent in November, according to a January Gallup poll. The slow wage growth problem probably has a lot to do with that.
Slow income growth has been the most persistent problem afflicting the US economy since the recession ended, around 2010. Wages have barely kept up with the cost of living, even as the unemployment rate dropped and the economy expanded. Mainstream economists have been baffled by this. Free-market economics revolves around a simple theory: When unemployment is low, employers will be forced to raise wages to keep and attract workers. That has happened in past economic expansions, but low unemployment has not boosted wages much in the past two years —at least not fast enough to keep up with the cost of living. In January, private sector workers (excluding farmworkers) got an average 3-cent hourly raise, adding up to an average hourly pay of $27.56. In the past 12 months, average hourly earnings have only increased 85 cents, or 3.2 percent, and that doesn’t even take inflation into account. January’s 3-cent average hourly wage hike suggests that the trend has not really shifted.
It’s true that wages are rising faster than they have in a decade, but that’s only because the US economy collapsed 10 years ago. Comparing current wage growth to recession-era wage growth sets a pretty low standard. And over the past year, prices rose, so paychecks had to stretch further. When the 1.5 percent inflation rate is taken into account (based on the Consumer Price Index), workers’ wages only grew about 1.7 percent within the past year — a pathetic amount compared to the sky-high payouts to corporate CEOs. Frustration over stagnant wages is also the major underlying factor behind widespread worker strikes across the country in places like California, Oklahoma, and West Virginia. Congressional Republicans had promised that their massive corporate tax cuts would help the average worker, but the gains have been meager.
GOP’s signature economic policy achievement, the Tax Cuts and Jobs Act, did little to boost wages and business investment. In November 2017, the president assured Americans that slashing taxes on corporations and private businesses would provide the “rocket fuel our economy needs to soar higher than ever before.” And when Trump signed the tax bill on December 22, 2017, in the Oval Office, he also promised that businesses would invest those tax savings in their businesses and give “billions and billions of dollars away to their workers.” He pointed to a handful of big companies that promised to raise wages and give employees $1,000 cash bonuses — among them Walmart, Bank of America, and Comcast. More than a year later, economic data shows that the tax bill’s benefit to workers never materialized. The left-leaning Economic Policy Institute recently crunched compensation data from the Bureau of Labor Statistics, showing that the much-touted bonuses did little to boost workers’ paychecks. In the past 12 months, cash bonuses only gave workers an extra 2 cents in average hourly compensation, adjusted for inflation. (This does not include bonuses tied to productivity goals.)
Instead, US companies have spent a record amount of money this year buying back shares of company stock, an effort to inflate their value for shareholders. US corporations have announced spending $1 trillion on stock buybacks so far this year. That’s a 64 percent increase from 2017, according to CNN Business. So it’s no mystery why the savings from the GOP tax bill didn’t trickle down to workers. Only a handful of companies (34 from the Fortune 500) said they are using the tax savings to invest in US operations. Economists do believe the tax bill helped boost overall economic growth — for a little while, at least. The economy was growing at about 2.2 percent a year since the end of the recession in 2009, and then hit 2.9 percent last year. Economists expect growth to slow more in 2019, then fall even further in 2020. Wall Street banks are already preparing for the US economy to slow down. The International Monetary Fund also expects the global economy to cool down this year, partly because of the trade dispute between the world’s two largest economies: the United States and China. So to recap, instead of rocket fuel, the tax cuts ended up being more like a sugar high. They gave the US economy a brief jolt while triggering an $800 billion hole in the federal budget. The average American worker is still waiting for the promised economic boom.
$22T & Counting, Where’s the Alarm?
Those poorly conceived, badly performing tax cuts haven’t done much for economic growth, but as we’ve been documenting they sure have increased our national debt. And here we thought the GOP was fiscally responsible, but that’s only when a Dem is in the White House (call it a case of disingenuous selective timing). Nobody in DC seems to be paying heed to our growing deficits, which we ignore to our own peril as presented in this article from greenspan-warns-us-budget-deficit-will-ultimately-lead-to-higher-inflation:
The yawning federal budget deficit is ultimately going to eventually lead to higher inflation, former Federal Reserve Chairman Alan Greenspan said Thursday. The federal debt-to-gross domestic product ratio is on track to be as large as it was during World War II, Greenspan said during a talk at a National Association for Business Economics conference. “Unless you believe in fairies, that is not an economy that can function without inflationary instability,” Greenspan said. The former Fed chairman despaired the lack of political pressure to control entitlement spending and narrow the deficit. “Despite the huge increase that we’ve seen in the debt, nothing is happening. People are behaving like it’s a terrible thing, but [say] ‘I want a little more,’” he said. Current Fed Chairman Jerome Powell and his colleagues have said that they see muted inflationary pressures in the economic horizon. That is a key reason the Fed has said it can be patient with further interest-rate adjustments. Greenspan was fairly upbeat about the fourth-quarter GDP data, released earlier Thursday, which showed a 2.6% growth rate, above economic forecasts. “The long-term outlook is terrible. The short-term outlook is not too bad,” he said.
Young people drowning in debt (no wonder they’re becoming partial to socialism): salon.com/2019/02/28/heres-how-millennials-1-trillion-in-debt-is-affecting-their-lives
The retail apocalypse: businessinsider.com/stores-closing-in-2019-list
The looming disaster of potential default this year: businessinsider.com/debt-ceiling-hit-national-debt-22-trillion-trump-congress-fall-deadline
Is this the road America is on?: vox.com/2019/1/1//rome-decline-america-edward-watts-mortal-republic
CPAC Exists in a Far-Away Distant Galaxy
See a lot more on the cultish CPAC nonsense in Part 2, which these past few days we’ve seen statements from the hardcore far-right goofs having as much to do with what’s happening in our world as the situation on the planet at Gliese 436. Those delusional extremists are trying to portray the Dem socialist ideas with communist or Venezuelan socialism, which is more like comparing a sinus infection to metastasized stage-4 cancer. It’s all a diversion to demonize the political opposition, since the GOP can offer no viable ideas themselves for fixing an economy that is rigged against such a large percentage of working people, so it’s the lone remaining card the do-nothing party has left to play in trying to save face. See some of the perplexing & disturbing shenanigans from CPAC in excerpts from at-cpac-the-red-scare-is-in-full-swing:
From the very start of CPAC 2019, the dreaded “s” word was on everyone’s lips. Former White House adviser Sebastian Gorka declared that “socialism is here in America,” noting a recent study which found that 40 percent of Americans described themselves as socialist, to loud boos from the crowd. Larry Kudlow, director of the White House National Economic Council, asked attendees to “put socialism on trial,” and said that Democrats were “proposing to overturn America’s success,” which would lead to “high taxes, health care takeover and impoverished poverty traps.” Rick Harrison, of the show “Pawn Stars,” said that socialism was “literally like heroin.” Though not explicitly mentioned by name, it is abundantly clear that the policies advanced by freshman Democratic lawmakers like Reps. Alexandria Ocasio-Cortez (D-NY) and Ilhan Omar (D-MN) — including the Green New Deal, universal healthcare, and a federal jobs guarantee — have severely triggered CPAC attendees.
He did not elaborate on why the free market has led to an America where 57 percent of adults can’t cover a $500 emergency, or where teachers have to turn to Uber and Airbnb to supplement their income. CPAC attendees were largely unwilling to talk to ThinkProgress — although one who did not wish to be named described the renewed interest in socialism as “unfathomable”. A cursory inventory of attendees, however, quickly revealed that the fear-mongering about socialism had filtered down into the audience. Plenty wore badges declaring “Socialism Sucks” — fashioned in the style of Bernie Sanders’ 2020 campaign stickers. At a Turning Points USA afterparty, a cardboard cut-out of Ocasio-Cortez was featured next to a “Socialism Bread Line”. As The Intercept noted, the cut-out was promptly defaced during the party.
But for all the jeers and questions of how to pay for single-payer healthcare, the fact that CPAC devoted so much time to the dreaded socialist threat demonstrates just how spooked conservatives are of the resurgent left-wing of the Democratic Party. This was exacerbated by the fact that, in the breaks between attacks on the left, none of the speakers offered anything new in terms of conservative ideas. Instead, it was just a re-hash of conservatism’s greatest hits — how tax cuts and de-regulation were driving the economy, how amazing it was the U.S. embassy had been moved to Jerusalem, and how great that the U.S. military was now fully revamped. That’s red meat to the conservative base, of course, but the question remains whether it will play to a wider electorate at a time of the greatest economic inequality in nearly 100 years.
The answer could help explain why conservatives at CPAC are so desperate to attack socialism in the first place. In response to questions about CPAC scaremongering, a spokesperson for the Metro D.C. chapter of the Democratic Socialists of America (DSA) said that CPAC’s focus on socialism showed the success of their narrative. “Looking back at Joe McCarthy there’s always been red baiting, there’s an increase now because of the Success of Rashida Tlaib, Bernie Sanders, Ocasio-Cortez and the large amount of Americans on board with [policies like] Medicare for All,” the spokesperson said. “For the ruling class, and specifically the people at CPAC, that threatens their view on power.” “We’re talking about making people have dignity in their lives, there’s nothing radical about that,” the spokesperson continued. “We are driving the conversation, we are presenting a vision of America for the many, not the few.”
Myths of Socialism Perpetrated by the Far-Right that Progressives Advocate
With Hillary-bashing finally getting a little stale even within the echo-bubble, the likes of AOC & her form of socialism are the latest target, trying to portray her views as somehow representative of the Dem party overall. But she’s only one rep way out on the progressive left, whose views & persona aren’t nearly as radicalized as the far-right loonies in the House Freedom Caucus. Let’s just hope both parties can get a grip & start moving closer to the center, since many of the proposals floating around out there from both sides on the fringes aren’t very practical. As that far-right Trumpian echo-world greatly exaggerates the dangers of democratic socialism, click on this link five-myths-about-socialism to see details on these 5 myths about that progressive form of socialism. Yes, it tends to be far to the left but not without some merit (hey GOP, it’s better than doing nothing!):
MYTH NO. 1: Socialism is a single coherent ideology.
MYTH NO. 2: Socialism and democracy are incompatible.
MYTH NO. 3: All socialists want to abolish markets and private property.
MYTH NO. 4: When socialism is tried, it collapses.
MYTH NO. 5: Socialism offers a ready-made solution to numerous current problems.
Where’d the Center Go?
The WSJ bemoans Trump tearing apart his party, although not many within the party are yet ready to speak out publicly against him as described inside wall-street-journal-hammers-trump-tearing-gop-apart-blistering-editorial, since the GOP base remains enamored. I do bemoan the hollowing out of the middle. No wonder we’re so bitterly polarized & can’t get substantial things done when there’s so much to do! Going way out on the extremes can be counterproductive & won’t get passed anyway, so see this opening to moderation-wont-cure-our-polarization-but-real-leadership-might:
As the polarization of our national politics grows more extreme, much is made of how few moderates are left in Congress. There are only a handful of true moderates left in Congress: Susan Collins, Lisa Murkowski, and Joe Manchin, plus a few more in the House. There’s not much reason to hope that we’ll see more anytime soon. But maybe we should be focused on something more important: actual leadership, which is also in short supply. The topic was discussed this week at the Niskanen Center’s Event, “Beyond Left and Right: Reviving Moderation in an Era of Crisis and Extremism.” On the surface, the topic of debate was the decline and fall of moderate politics, but the subtext was almost always about the office holders themselves. Fairly quickly the participants came to a consensus: Moderation isn’t the same as political centrism. Nor should it be. The best policy on any given issue isn’t necessarily somewhere in between the two parties. It’s possible one party is right and the other party is wrong, or, as seems the most likely recently, both parties are way off base. “Moderation, to be useful, has to be thought of in relation to a set of founding values and philosophical ideals,” Johns Hopkins political scientist Yascha Mounk said, “and to me those ideals are ideals of liberal democracy.” Where the parties stand is immaterial. Elaine Karmack of Harvard argued, “The other way to look at moderation is incrementalism.” But, she implied, politicians are in a race with one another to offer radical policies like the Muslim travel ban or the Green New Deal, perpetuating a cycle of resentment with their bases when the checks invariably bounce. In response, Damon Linker of The Week said that what we usually think of as the center – voters with conservative economic preferences and liberal social preferences – really don’t exist anymore, per the Voter Study Group.
Feeling the Bern
Bernie does articulate the economic problems we face extremely well, which it’s important those key points are kept in the public consciousness. The real argument is over the solutions. Those feeling the Bern love his passion. While Bernie just gave his presidential announcement speech today, he’ll run into the exact same 50 problems as Elizabeth Warren & the other Dem candidates: https://www.thevoracs.com/elizabeth-warren-decides-to-run/
Is Trump About To Be Called Dotard Again?
That’s what North Korean dictator Jong Un called our prez during the first year of Trump’s presidency. Now that their negotiations have broken down, Jong Un might bring out that nickname again. There’s a difference of opinion between the two leaders over their accounts of what was being offered & why the talks broke apart. It’s incredible to think we have the world’s most brutal & untrustworthy dictator disagreeing with our American president, yet we don’t know who to believe!
And it may be Trump has softened on his de-nuke demand, the whole reason for even scheduling these talks in the first place. A total lack of thought or preparation on our side went into these summits. Plus the parents of Otto Warmbier have already had their hearts torn out & stomped on, but now Trump is accentuating the pain by absolving Jong Un of their son’s brutal murder. There’s just something about murderous dictators Trump is captivated by (think Russia & Saudi Arabia). See these articles on the aftermath to their failed summit:
That’s a Game for Fools
Prior to the Vietnam Summit, their love affair was going so strong: how-trump-and-kim-went-from-fury-to-love. A few months ago Trump even admitted they “fell in love” that summer in Singapore. Now they’ve broke up again. This song best describes their powwow in Vietnam. It seems break up to make up is all they do: