In President Trump’s State of the Union address we saw a brilliant display of rhetorical sleight of hand on the economy. The successful misdirection was enabled by the corporate news media, which consistently maintains that the one thing Trump should be claiming credit for is his stellar performance growing the economy. What was ignored was how it has also grown increasingly more unequal and tilted to the rich since he took office, as the country sinks deeper and deeper into a miasma of long term multi-trillion dollar debt. In the critical commentary that followed the SOTU, the only quibbling on Trump’s assessment of the nation’s economy was that he had failed to credit his predecessor, President Obama, for getting things headed in the right direction.
For those assembled in the House chamber, and those watching at home, Trump waved the shiny object of “an economic miracle . . . taking place in the United States . . . an unprecedented economic boom — a boom that has rarely been seen before.” So, despite our life expectancy declining for the last three years, one of the highest childhood poverty rates among the 36 member nations in the Organization for Economic Co-operation and Development, and the most expensive and least effective health care system among western developed nations, Trump would have us believe we are the envy of the world. And, with the TV cut away shots of the assembled men and women of Congress and the decorated generals all nodding their heads, and occasionally applauding, there was legitimacy conferred on one man’s delusion that the United States is the fastest growing economy in the world and that he is the key accelerant.
As Richard Wolff, professor of economics at the New School, pointed out, Trump’s assertion of U.S. global economic preeminence ignores the reality that for many years now China has been growing exponentially faster than the United States. The U.S. has struggled mightily to expand at all, even as the richest got an increasingly larger share of the nation’s wealth. Hmm, could there be a connection between our increasingly extreme wealth concentration and sluggish broad-based economic growth? “Over the last twenty years the U.S. has had a hard time achieving economic growth . . . and even though it is averaging two-and-a-half to three percent, part of the time . . . to say that it’s the best in the world, that’s just a lie,” Wolff says. “Let me give you just one example, the People’s Republic of China. They’re having a bad year . . . ready . . . six-and-a-half percent, which is lower than they have been able to do for most of the last 15 to 20 years.”
And what, you might wonder, were wages doing for workers all that time of major growth in China? “The real wages of Chinese workers, the average amount of money they got adjusted for inflation, has quadrupled in the last 12 to 15 years,” says Wolff. “What happened to the average wage in America, adjusted for inflation? It hardly budged. It went up single digits, not three to four times.” What made Trump’s magic SOTU misdirection so complete was how, right after he waved the glittery miracle of faux American prosperity in the air, he conjured up the raping and pillaging hordes of blood sucking illegals that are coming over the southern border in waves that threaten to take it all away. Wolff points out, that while Trump cast undocumented immigrants as the only shadow on American greatness, he didn’t mention one word about the nation’s growing wealth and income inequality which “is the starkest feature of American economic life in the last 40 years.”
Of course, it is in the interest of the builders of the great American wealth pyramid, to continue to breathe life into this Trumpian delusion that the American economy is working and working well, ignoring the very real socio-economic deterioration that has now manifested after decades of depressed and anemic wages. And the degree to which there is a collective media buy-in that things are great and improving, the longer it will take for us to fully embrace the radical steps needed to get this country really working for all of America’s families. This never-ending squeezing of Americans who have to work every day to make a living, has now mushroomed into a full- blown affordability crisis that has tens of millions of working- class American households struggling every month to cover the basics. We had ample evidence of this during Trump’s 35-day government shutdown when furloughed Federal workers had to wait on soup lines. Trump didn’t mention them either.
His Tax Cuts at the Center of the Trump Economic Miracle Fraud
The prez lies about everything else, so why not the economy too? Those Trump tax cuts have indeed turned out to be a bust, with the actual results turning out nothing like as promised, with even some Trumpeters being smart enough to figure out they’ve been scammed as revealed inside wonderful-watch-trump-
Donald Trump’s tax cut for the rich and the corporations they control is turning out to be a bust for the American economy. It will burden taxpayers with at least $1.5 trillion more federal debt because, instead of boosting tax revenues through increased economic activity as promised; it has caused a sharp drop in revenue. In addition, millions of residents of blue states are about to get hit with big federal income tax increases while many American expatriates who own businesses overseas are also facing unexpected new tax bills, especially if they prudently saved for old age under the systems of the countries where they now reside. A host of economic indicators shows the 2017 Tax Cuts and Jobs Act failed to achieve its key promise, a major increase in investments by business that would create more jobs. This is exactly the result that many, including those of us at DCReport, predicted. The economy is slowing down despite the promise that the Trump-Radical Republican tax cut would spur massive new investment. We call the 2017 tax law the Trump-Radical Republican tax law because not one Democrat voted for the bill in the House or Senate. It was also passed without a single public hearing. It is a terrible law that benefits the richest among us at the expense of the many—and it needs to be fixed.
The Trump-Radical Republican tax law not only cut the corporate tax rate from 35% of profits to 21%. It also allowed corporations to immediately deduct 100% of capital expenditures instead of writing them off on their tax returns over periods from three years to decades. This kind of corporate tax timing trick has been employed several times since the John F. Kennedy administration in 1962. The effect each time was to create a brief surge in corporate investment, called capital expenditures, followed by a slump. Looked at over a period of several years, total capital investment was unchanged. The evidence today shows the economy is slowing down after expanding since early in former President Barack Obama’s first term despite the promise that the Trump-Radical Republican tax cut would spur massive new investment. The National Association for Business Economics found this month that the Trump-Radical Republican tax law has failed to increase business investment and activity. NABE president, Kevin Swift, who is chief economist for then American Chemistry Council, said that 84% of business economists it surveyed agreed that “one year after its passage the 2017 Tax Cuts and Jobs Act has not caused their firms to change hiring or investment plans.”
Manufacturing activity has grown for 116 consecutive months, the last 23 of them under Trump, the Institute for Supply Management’s latest report showed. But institute reports also showed a sharp slowdown as 2018 ended despite the Trump-Radical Republican tax cut favors for business. In December, the institute’s Purchasing Managers Index (PMI) stood at 54.1, down sharply from 59.3 in November. Much more worrisome was an 11-point decline in the index for future orders, which fell in December from 62.1 to 51.1. That suggests economic growth will slow, perhaps even stall, later this year. Expect some contraction in consumer spending in the first half of this year as many prosperous Americans get hit with much bigger than expected income tax bills.
More Tax Cut Tomfoolery
Does it really look like our great leader orchestrated his Trump economic miracle, when his lone major legislative achievement turned out to be so badly mistargeted? Plans are underway to correct that boondoggle of a tax bill, with the irrefutable stats on the reality of growing income inequality resonating with the public, while 2020 presidential candidates seek to make a mark by proposing better/workable/new ideas. Those points on the disjointed distribution of wealth in our modern society are brought out in these excepts seen inside richest-0-00025-
According to Zucman’s research, the richest 0.00025 percent—just 400 Americans—have seen their share of America’s national wealth triple since the 1980s, while the wealth of much of the U.S. population has stagnated or declined. As the Washington Post‘s Christopher Ingraham noted in a breakdown of Zucman’s research, adults in the bottom 60 percent of the wealth distribution “saw their share of the nation’s wealth fall from 5.7 percent in 1987 to 2.1 percent in 2014.” Consolidation of wealth at the very top, Ingraham observes, “is eroding security from families in the lower and middle classes, who rely on their small stores of wealth to finance their retirement and to smooth over economic shocks like the loss of a job. And it’s consolidating power in the hands of the nation’s billionaires, who are increasingly using their riches to purchase political influence.” Zucman’s research comes as members of Congress and 2020 presidential candidates are pushing a variety of plans to begin reducing America’s staggering wealth and income inequality by raising taxes on those at the very top.
This is no Trump economic miracle & his tax cuts were just plain counterproductive. Corporate profits are up & unemployment is down, so where is the wage growth? Good question: where-is-the-wage-
The Republican tax cut is the gift that keeps on giving … to Democrats. The 2017 law was supposed to boost workers’ wages, create jobs, and drive more investment — and as we’ve known for awhile, it’s done none of that. But now we can add two more failures to the creatively-named Tax Cuts and Jobs Act (TCJA): It hasn’t encouraged corporations to return their profits from overseas, and it’s probably hiding a nasty surprise for many Americans come tax season. Let’s start with the second idea. Lots of Americans work for an employer who sends them regular paychecks. Those employers rely on tables published by the Internal Revenue Service (IRS) to guesstimate how much their employees owe in taxes each year. Then they withhold the necessary increments from each paycheck.
You can debate whether this was deception on the GOP’s part or sloppiness resulting from a hastily written bill. Regardless, the result is that nothing has changed. “The global distribution of corporations’ offshore profits — our best measure of their tax avoidance gymnastics — hasn’t budged from the prevailing trend,” Brad Setser just pointed out in The New York Times. But revenue from the corporate profits tax did fall by 31 percent this year. What’s the takeaway from these two developments? The Republicans, supposedly the green-eyeshade party that Americans trust to handle the economy, are at best a pack of incompetents and at worst a gang of swindlers. Their landmark tax overhaul, supposedly the pinnacle of their efforts, is an incoherent and contradictory mess. And its results keep getting worse and worse.
Heading Towards Socialism?
Readers of The VORACS have seen many times my warnings if we can’t fix modern-day capitalism, we’re going to lose it. And it’s astounding how popular the thought of socialism is becoming, because our current economy is letting so many down. Young people are especially more open to a new socialist model. On one hand the democratic socialism espoused by progressives is a far cry from the communist socialism we always feared in the past. But on the other hand we never want socialism to transcend our nation’s psyche from a strong work initiative over to a dependency mentality that empowers freeloaders.
Trump & the echo will use the term socialist to describe various Dem hopefuls for 2020 & their proposals, but it will mostly be faux talking points pandering to their base. One thing Trump excels at is crafting narratives that are nothing more than scare tactics. He is incapable of engaging in an intelligent policy debate. And increasingly he’s looking like a lousy dealmaker. Many Dem ideas are going quite far to the left, but are reflections of the times & not as scary as the GOP make them out to be. For a more evenhanded look at the socialism debate & how it’s shaping modern politics, these excerpts are pulled from trumps-war-on-socialism-
In his State of the Union address last week, Trump cast himself as Horatius at the bridge standing against the Red Menace: “We renew our resolve that America will never be a socialist country.” Yet in referring to “new calls to adopt socialism in our country,” he had a point. Open advocacy of socialism is now a normal part of our political discourse. Ocasio-Cortez is a member of the Democratic Socialists of America, and Sen. Bernie Sanders (I-Vt.) won more than 12 million votes in the 2016 Democratic presidential primaries running explicitly as a democratic socialist. Some recent polls even have Sanders running ahead of Trump in hypothetical 2020 matchups.
We should be clear that Trump’s words are entirely about reelection politics. He wants to tar all Democrats as “socialists” and then define socialism as antithetical to American values. “America was founded on liberty and independence, and not government coercion, domination and control,” he declared. “We are born free, and we will stay free.” Cue Lee Greenwood. But attacking socialism isn’t the cakewalk it used to be. During the Cold War, it was easy to frighten Americans with the s-word because the Union of Soviet Socialist Republics offered a powerful example of the oppression that state control of all of the means of production could unleash. The Soviet Union, however, has been dead for nearly three decades. China is communist on paper but a wildly unequal crony capitalist dictatorship in practice. Young Americans especially are far more likely to associate “socialism” with generous social insurance states than with jackboots and gulags. Sweden, Norway and Denmark are anything but frightening places.
The 2018 PRRI American Values Survey offered respondents two definitions of socialism. One described it as “a system of government that provides citizens with health insurance, retirement support and access to free higher education,” essentially a description of social democracy. The other was the full Soviet dose: “a system where the government controls key parts of the economy, such as utilities, transportation and communications industries.” You might say that socialism is winning the branding war: Fifty-four percent said socialism was about those public benefits, while just 43 percent picked the version that stressed government domination. Americans ages 18 to 29, for whom Cold War memories are dim to nonexistent, were even more inclined to define socialism as social democracy: Fifty-eight percent of them picked the soft option, 38 percent the hard one. Oh, yes, and on those tax increases that conservatives love to hate — and associate with socialism of the creeping kind — a Fox News poll last week found that 70 percent of Americans favored raising taxes on families with incomes of over $10 million. Trump will still probably get some traction with his attacks on socialism. And progressives should remember that social democratic ideas associated with fairness and expanding individual freedoms — to get health care or go to college, for example — are more popular than those restricting choice.
Yes, We Must Stop Socialism!
But I’m not referring to the type of socialism Trump & his echo are railing against, & will surely be a main talking point for them heading into 2020: is-socialism-still-an-
America will never be a socialist country,” Donald Trump declared in his State of the Union address. Someone should alert Trump that America is now a hotbed of socialism. But it is socialism for the rich. Everyone else is treated to harsh capitalism. In the conservative mind, socialism means getting something for doing nothing. That pretty much describes the $21bn saved by the nation’s largest banks last year thanks to Trump’s tax cuts, some of which went into massive bonuses for bank executives. On the other hand, more than 4,000 lower-level bank employees got a big dose of harsh capitalism. They lost their jobs. Banks that are too big to fail – courtesy of the 2008 bank bailout – enjoy a hidden subsidy of some $83bn a year, because creditors facing less risk accept lower interest on deposits and loans. Last year, Wall Street’s bonus pool was $31.4bn. Take away the hidden subsidy and the bonus pool disappears. Trump and his appointees at the Federal Reserve are easing bank requirements put in place after the bailout. They’ll make sure the biggest banks remain too big to fail.
Trump is promoting socialism for the rich and harsh capitalism for everyone else in other ways. GM has got more than $600m in federal contracts, plus $500m in tax breaks. Some of this has gone into the pockets of GM executives. Chairman and CEO Mary Barra raked in almost $22m in total compensation in 2017 alone. But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019. When he was in business, Trump perfected the art of using bankruptcy to shield himself from the consequences of bad decisions – socialism for the rich at its worst – while leaving employees twisting in the wind.
Now, all over America, executives who run their companies into the ground are getting gold-plated exit packages while their workers get pink slips. Sears is doling out $25m to the executives who stripped its remaining assets and drove it into bankruptcy, but has no money for the thousands of workers it laid off. As Pacific Gas and Electric hurtles toward bankruptcy, the person who was in charge when the deadly infernos roared through northern California last year (caused in part by PG&E’s faulty equipment) has departed with a cash severance package of $2.5m. The PG&E executive in charge of gas operations when records were allegedly falsified left in 2017 with $6.9m. Under socialism for the rich, you can screw up big time and still reap big rewards. Equifax’s Richard Smith retired in 2017 with an $18m pension in the wake of a security breach that exposed the personal information of 145 million consumers to hackers. Wells Fargo’s Carrie Tolstedt departed with a $125m exit package after being in charge of the unit that opened more than 2 million unauthorized customer accounts.
Around 60% of America’s wealth is now inherited. Many of today’s super-rich have never done a day’s work in their lives. Trump’s response has been to cut the estate tax to apply only to estates valued at over $22m per couple. Mitch McConnell is now proposing that the estate tax be repealed altogether. What about the capitalist principles that people earn what they’re worth in the market, and that economic gains should go to those who deserve them? America is on the cusp of the largest inter-generational wealth transfer in history. As rich boomers expire over the next three decades, an estimated $30tn will go to their children. Those children will be able to live off of the income these assets generate, and then leave the bulk of them to their own heirs, tax-free. (Capital gains taxes don’t apply to the soaring values of stocks, bonds, mansions and other assets of wealthy people who die before they’re sold.)
After a few generations of this, almost all of the nation’s wealth will be in the hands of a few thousand non-working families. To the conservative mind, the specter of socialism conjures up a society in which no one is held accountable, and no one has to work for what they receive. Yet that’s exactly the society Trump and the Republicans are promoting for the rich. Meanwhile, most Americans are subject to an increasingly harsh and arbitrary capitalism in which they’re working harder but getting nowhere, and have less security than ever. They need thicker safety nets and deserve a bigger piece of the economic pie. If you want to call this socialism, fine. I call it fair.
The Trump Economic Miracle is a Dud, So We Really Should Try Something Else
On that same topic of socialism for the rich & dog-eat-dog capitalism for everyone else, the only reason Trump & the GOP keep crying socialism about Dem proposals is they are doing the bidding for their wealthy donors, so will do everything in their power to push back on addressing our growing income inequality problem. It’s been a century since we’ve last seen this type of disproportional wealth concentration: its-been-
And because the system has become so lopsided in favor of the rich, the GOP is correctly worried they’re starting to lose the capitalist-socialist argument with the struggling & frustrated working class. By protecting wealth & large corporate interests, GOP talking points bashing what they falsely claim is socialism actually serve to repress opportunity & upward mobility for the middle class/working class. So expect from the right we’ll be bombarded with plenty of fearmongering tying in Dem socialism with the Venezuelan nightmare, which is a completely irrelevant comparison & false dichotomy. And it’s really a way to squash the debate, since the GOP doesn’t want new ideas floating around out there which could dismantle our current rigged system, perhaps creating a new economic model where workers can actually start earning a livable wage. These are the thoughts expressed in excerpts from real-reason-
One of the only things President Trump said in his State of the Union address that had a half-life over a nanosecond was his assertion that “America will never be a socialist country.” His comment, which attempted to tie a spate of progressive policy ideas to the terrible conditions in Venezuela, signaled how conservatives will fight back against ideas like a Green New Deal, universal health coverage and much more progressive taxation. Treasury Secretary Steven Mnuchin echoed the point, averring that “we’re not going back to socialism.” That may be a successful political strategy (though I expect it to backfire). But it’s also a thoroughly false dichotomy. Questions about our economy aren’t about socialism versus capitalism. Every economy exists on a continuum, with markets on one end and government on the other. We may be closer to the former pole than other nations, but every economy redistributes some part of its growth — and not just from the rich to the poor but in both directions.
The real debate is about who gets to write the rules, and Trump and the conservatives are legitimately scared that a growing group of diverse, progressive politicians, backed by a diverse base that’s fed up with its lack of political representation, is threatening to take the pen. A way to quickly spot the vacuity of the socialism scaremongering is to look at spending on safety-net protections (like public health care and retirement security) as a share of GDP across countries. OECD data show that at about 19 percent, the United States is below average, right in between Estonia and the Czech Republic, and far down the continuum from the social democracies of Scandinavia.
When someone screams “socialism!,” they’re signaling they don’t want to have that debate. And it isn’t just because they’re against the downward redistribution of income and wealth. It’s also because they’re protecting its upward redistribution. The Trump tax cut is the most recent giveaway of the strategy. At a cost to the 10-year fiscal debt of $1.9 trillion, the cuts largely redistribute income up the scale, to corporate shareholders, inheritors of rich estates, outsourcing firms and high-end, “pass-through” businesses. Then, when diminished revenue begins to swell the budget deficit, the tax cutters argue we must cut social insurance and safety net programs.
This is socialism for the rich, capitalism for everyone else. That’s why, even amid the dysfunction of government shutdown, endless gridlock, and presidentially induced chaos there is excitement in the air, as some extremely smart and compelling policymakers, both newcomers and older hands, are both exposing these ploys in real time and offering up a counter-agenda, one that polls show to be well-received. The phony cries of socialism are not going to stop some of these ideas from taking hold or thwart the political aspirations of politicians elevating them.
Instead of Both Sides Always Fighting Each Other, We Should Brainstorm
As far as I’m concerned along with millions of Americans, the current economic system is so badly flawed, we should put all ideas on the table in looking to come up with something better. UBI is an idea we could look at if it’s tied into real work: could-a-universal-basic-
And yes, there are currently lots of jobs available out there, but the big challenge is how to revamp the system so those jobs can earn more? As that previous article clearly shows, there are too many individuals & areas of the country so mired in economic despair with no hope for the future, we need some really big/bold plans to lift them out of poverty. And not with another run-of-the-mill welfare program, but some transformational initiatives able to put people back into productive careers where they can earn their way to a sustainable living. Americans should never give up on those bootstraps as a way to lift themselves up: those-bootstraps-still-
We should enlist the private sector to help educate & train the workforce, as they can provide the hands-on practical experience schools often miss: education-career-
If We Were Really in a Trump Economic Miracle, There Wouldn’t Be This Level of Debt & Dissatisfaction:
We’ve hit our limit on live links, but you could search for any of these articles on our economic troubles hitting the newsfeeds this week…
Record National Debt:
It’s a Miracle!!!
The Trump economic miracle is a total farce, but in honor of the way our president shamelessly panders falsehoods to his base (& they actually seem to believe him), we dedicate this song to the prez: