Trump Bragging is very Selective & Misleading…The basic theme for today’s part 3 is all this Trump bragging about the economy is working with his base, but there are so many nuances to the data, the economy isn’t as strong as it’s portrayed to be. We’ve picked off lots of interesting economic articles from the newsfeeds this week, so let’s jump right in! As I’ve said about a thousand times, trickle down no longer works, not in this new global economy where the chasm between Wall St. & Main St. has grown so enormous they practically operate independent of each other. See these excerpts from trump-puts-supply-side-economics-to-its-final-test? which shows the tax cuts have been a dud so far in raising wages:
Corporate tax cuts were basically the last hope for supply-side economics. This economic doctrine, which became popular in the 1980s, holds that taxes distort the economy a great deal, and that cutting taxes therefore produces big gains in growth. Those gains are assumed to eventually result in higher wages for workers, leading some to derisively label the idea as trickle-down economics. But since the turn of the century, a bevy of tax cuts don’t seem to have had the broad positive effects that supply-siders anticipated. A series of studies has generally concluded that the growth effects of President George W. Bush’s income tax cuts of 2001 and 2003 were small, and the dividend tax cut of 2003 had even less of an impact. That generally fits with economic theory, which holds that the lower the tax rate, the less of an effect cutting it will have — income and dividend taxes had already come down significantly decades earlier, so it makes sense that cutting them even further should have diminishing returns. In any case, earnings for the bulk of Americans stagnated in the 2000s, leaving many with the feeling that the supply-side credo had little to offer.
But one piece hasn’t fallen into place: wages. Even if corporate taxes are raising economic growth and business investment, that new wealth hasn’t yet trickled down to the masses. This is apparent just from looking at the behavior of wages since the tax cut was passed at the end of 2017. Two common measures of real wages are still below the peaks they hit in the third quarter of 2017. What about those companies that announced bonuses after the tax cut was passed? Sadly, that trend seems to have been exaggerated. Economist Larry Mishel reports that bonuses didn’t add up to a significant increase in total compensation in 2018, implying that the announcements were mostly a publicity move. So what’s going on? Why isn’t the tax cut raising wages? Perhaps the impact of tax cuts will be felt only over a period of years rather than months. After all, it’s important not to read too much into short-term economic data. But it also might be the case that the supply-siders are simply wrong. Perhaps those who believed that a substantial amount of the corporate tax cut would go to workers were doing their empirical studies incorrectly, or plugging the wrong numbers into their models. Or maybe U.S. corporations were simply so successful at avoiding taxes before the tax cut that the new lower rate hasn’t really done anything other than to allow them to save money on accountants and lawyers. Either way, if Trump’s corporate tax cuts end up having no observable effect on workers’ pay, it will be the final blow to the supply-side worldview.
Hardly enough to even notice
Most Americans haven’t even noticed the tax cuts in their paychecks, which is mainly because most of the tax cuts didn’t go towards the middle class: wage-growth-flat-after-trump-tax-cut. So I’d like to humbly suggest don’t listen to the Trump bragging. The prez & his economic advisers rely on outdated trickle-down theories which essentially don’t exist in reality, plus all those repatriated dollars aren’t trickling back to our shores, while corporations overwhelmingly used their windfalls for stock buybacks instead of raising wages. And those shortsighted tax cuts serve as deficit spending that’s borrowing on future growth. There are good reasons why the polling is running against the Trump tax cuts, seen in excerpts from nearly-two-thirds-say-theyve-seen-no-increase-in-take-home-pay:
Almost two-thirds of Americans polled say they haven’t seen an increase in their take-home pay as a result of last year’s Republican tax-reform bill, according to a new survey. A Gallup poll published Wednesday found that 64 percent of respondents said they haven’t seen a raise in their take-home pay as a result of reduced federal income taxes. That finding is identical to results in Gallup’s February/March poll taken shortly after the tax changes went into effect. The poll also found that a slim majority of Americans polled — 51 percent — say the law hasn’t helped their family’s financial situation. Meanwhile, 26 percent of respondents said the law has helped a “little” and 12 percent said it has helped “a lot.” As this fall’s midterm elections near, more Americans disapprove of the tax overhaul than approve of it, per the Gallup poll. The poll found that 46 percent of respondents disapproved of the GOP tax cuts, while 39 percent approved of them. Those approval ratings are unchanged from the previous Gallup poll about seven months ago. The poll before that, taken in January, found that 55 percent of respondents disapproved of the tax cuts and 33 percent approved. Americans’ views of the tax cuts are divided by party lines, with 8 percent of Democrats approving and 76 percent of Republicans approving, according to the poll.
Strong economy for some
The healthy economic stats don’t mean much if people aren’t feeling it: economic-anxiety-still-hurting-trump-politically. The data that the Trump bragging is all about are skewed towards the top. These excerpts are seen inside national-economic-growth-is-not-helping-people-in-local:
Democratic pollster Mark Mellman said in an interview that aired Thursday on “What America’s Thinking” that the national economy is not helping people at the local level. “There’s a difference between this abstraction we call the economy, this national economy, and the lives people live,” Mellman told Hill.TV’s Joe Concha on “What America’s Thinking.” “So if you ask people how they’re living, there’s a lot of people who think the cost of living is going up faster than their income, that they’re either barely keeping even or falling behind. So there are a lot of people who are not feeling so good at a personal level,” he continued. The poll comes after the unemployment rate fell to 3.7 percent, a 49-year low, while the economy added 134,000 jobs in September. President Trump and Republicans have taken credit for the strong economy, saying their policies have driven economic growth. However, research shows that the economy does not look as strong when you get to the local and state levels.
Blame The Fed
The Trump bragging suddenly stops when things don’t go his way. He doesn’t use the mantra the buck stops here, but rather always looks to blame others for the problems he creates. After the Trump tax bill overheated the economy with misguided tax cuts to those who least need it, spiking deficits & inflationary pressures which correctly prompted The Fed to make a modest uptick to interest rates, Trump doesn’t like it. But it’s the president’s own drunk sailor policies of deficit spending tax policies to artificially juice the economy & tariffs which escalated into trade wars that are hurting the stock market. It’s this added volatility & higher deficits Trump has actually introduced into the economy. The stock market dive this week could be a mere correction or signs of greater concerns. But whenever the Dow & tech stocks take such a hit, it doesn’t jive with the talking points he likes bragging about, so he knows his loyal base always believes him whenever he can redirect the blame. If this were anywhere near the greatest economy ever as the prez claims, interest rates should actually be much higher. These excerpts were patched together from trump-federal-reserve:
In an extraordinary series of attacks this week, Trump called the Fed “crazy,” “loco” and said it’s “gone wild” with interest-rate hikes. And he blamed the central bank, in part, for the latest sharp decline in the stock market. “I think the Fed is out of control,” he told reporters Thursday. “I think I know about it better than they do,” Trump said. He expressed disappointment with Powell but said he would not fire him, something he lacks the authority to do anyway barring extreme circumstances. Trump’s battle with the Fed played out as markets tumbled Wednesday, then whipsawed Thursday before turning sharply lower late in the day. The Dow Jones Industrial Average closed down Thursday another 545 points, bringing its two-day decline to over 1,300 points, or more than 5 percent. The S&P 500 and Nasdaq also declined again on Thursday. In the process of attacking the Fed in such an unprecedented manner, Trump has alarmed senior advisers and forced them into public walk-backs. And he’s unnerved market watchers and former government officials who fear the sharp broadsides could undermine the Fed’s longstanding role as a politically neutral arbiter of interest-rate policy — charged with making tough decisions with a focus on the long-term interest of the U.S. economy.
“The president is wrong, obviously, in his judgment about the Fed,” said Larry Summers, the former Treasury secretary and economic adviser to Presidents Bill Clinton and Barack Obama. “There is room for debate about the precise posture of monetary policy. But the suggestion that there is something crazy about the Fed’s decisions is absurd.” Trump launched his broadsides against the Fed despite private conversations in which both Kudlow and Mnuchin urged him to describe the declines as a natural market correction and to highlight the continued strength of the economy. White House aides are now hoping Trump eventually gets tired of bashing the Fed and moves on. Market observers suggested because Trump has for so long pointed to the stock market as a report card on his administration, he felt forced to place blame on someone for a bad day in the market. Previous administrations mostly steered clear of daily market commentary out of fear of getting blamed when markets declined. “The president’s comments confirm our view, which has been that Trump will blame the Federal Reserve for any negative economic news while taking credit himself for positive news,” Jaret Seiberg, analyst at the Cowen Washington Research Group, said in a note to clients on Thursday, noting that other presidents have criticized the Fed. “The difference is that we believe this President is willing to go much further than his predecessors in that criticism. This includes frequently floating the idea that he could fire” Powell.
The central bank’s target rate for overnight loans between banks, which ultimately sets rates for everything from credit cards to home mortgages, remains low by historic standards at 2 percent to 2.25 percent. The central bank is expected to raise rates once more in December. Some market analysts suggested that Trump’s rhetoric is aimed at trying to get the Fed to hold off on another hike this year, something few expect he will succeed in doing, barring a significant slowing in the economy. “The economy — especially the labor market — is over-heating, and the president wants it to stay hot through his re-election fight in 2020,” Greg Valliere, chief global strategist at Horizon Investments, wrote in a note to clients. “But many of Trump’s economic prescriptions invite inflation — so obviously the Fed has to take away the monetary punch bowl.”
Another area where the Trump bragging has nothing to boast about. This plays into the unfortunate decline of upward mobility, that the American Dream has become mostly open only to those born into privilege, as seen from these excerpts inside its-better-to-be-born-rich-than-gifted:
A revolution in genomics is creeping into economics. It allows us to say something we might have suspected but could never confirm: money trumps genes. Using one new genome-based measure, economists found genetic endowments are distributed almost equally among children in low-income and high-income families. Success is not. The least-gifted children of high-income parents graduate from college at higher rates than the most-gifted children of low-income parents. First, consider the people whose genome scores in the top quarter on a genetic index the researchers associated with educational achievement. Only about 24 percent of people born to low-income fathers in that high-potential group graduate from college. That’s dwarfed by the 63 percent college graduation rate of people with similar genetic scores who are lucky enough to be born to high-income fathers. Contrast that with a finding from the other end of the genetic scoring scale: about 27 percent of those who score at the bottom quarter of the genetic index, but are born to high-income fathers, graduate from college. That means they’re at least as likely to graduate from college as the highest-scoring low-income students.
The application of genetics to economics is in its infancy. Limitations abound. Most notably, researchers are forced to focus on white people. The world’s genomic data comes overwhelmingly from people of European descent, and genetic comparisons across races can produce bizarre results. But it can already begin to expose truths about the economy. The figures above come from a new, genome-based study of economic data which aims straight at the heart of the popular conception of America as a meritocracy. “It goes against the narrative that there are substantial genetic differences between people who are born into wealthy households and those born into poverty,” said Kevin Thom, a New York University economist and author of a related working paper released recently by the National Bureau of Economic Research. “If you don’t have the family resources, even the bright kids — the kids who are naturally gifted — are going to have to face uphill battles,” Thom said. “Their potential is being wasted. And that’s not good for them, but that’s also not good for the economy,” his collaborator, Johns Hopkins economist Nicholas Papageorge said. “All those people who didn’t go to college who had those high genetic scores, could they have cured cancer?”
Should Trump bragging focus on this issue he’s made worse? As the GOP continues to prove they only care about deficits when a Dem is in the White House, we’re looking at trillion dollar deficits on an annual basis coming on the backs of the tax cuts. As this posting from an-economist-thinks-us-is-bankrupt-what-it-means-for-retirement explains, we’re already broke!:
But Kotlikoff’s dire prognosis for the United States is enough to wake anyone out of even the deepest summer slumber. “The evidence is in front of our eyes that we’re bankrupt,” Kotlikoff said. “It’s not bankrupt in the future. It’s bankrupt right now.” With a calm demeanor and a penchant for discussing complex economic concepts, Kotlikoff, 67, might not stand out from any other Bostonian with strong political views. Yet Kotlikoff is quite unlike other liberals in that urban Democratic bastion. And his criticism of the government dates back to far before the current controversies that surround President Donald Trump’s administration. For one, Kotlikoff credits Ross Perot — the independent presidential candidate in the 1992 and 1996 elections — as being the only politician to bring the country’s true fiscal situation to light. Since then, all other presidents and their administrations have buried that information, according to Kotlikoff. “Both parties are trying to hide this,” Kotlikoff said. “We’re in an emperor’s new clothes story. Our conversations about the fiscal policy are about the emperor’s latest apparel.”
I see both sides of the argument, but the GOP is adamant that Medicare for all would cost way too much. We could also call it single-payer or universal healthcare. There’s no doubt the current system costs way too much also. With the GOP obsessed with protecting the interests of insurance & drug companies, some of their largest donors, perhaps a new system that largely streamlines & bypasses these giant corporate profit machines might actually reduce our staggering healthcare costs. Other countries have learned to do it better at far less costs, so maybe we could get a hint. See some perspectives in trump-op-ed-medicare-for-all-healthcare-plan-bernie-sanders & also ahead-of-midterms-republicans-suddenly-pretend-they-havent-opposed-medicare-for-decades, plus these excerpts from the-dollar32-trillion-question-that-medicare-for-all-advocates-will-never-answer, which clicking on the entire article provides an interesting, even-keel perspective:
On Monday, House Speaker Paul Ryan declared that the Democrats’ embrace of single-payer health care—often called Medicare for All—shows that the party has “gone off the rails.” While liberals will surely dismiss the speaker’s comments, the leading proposals do suffer from a potentially fatal Achilles’ heel: They would create the largest government debt burden in world history. Specifically, Sen. Bernie Sanders’ Medicare for All Act, as written, would add $32 trillion in debt over the decade, and as much as $170 trillion over 30 years. Advocates repeatedly dismiss these figures and assert that single-payer will save money. In doing so, they confuse the proposal’s effect on total national health expenditures (NHE) with its effect on the federal budget. Over that decade, America is currently projected to spend roughly $60 trillion on health care. Of this total, Washington will spend $22 trillion (mostly for Medicare and Medicaid), and state governments, businesses, and families will spend the rest. The Medicare for All Act would nationalize nearly all of this spending.
There is a vigorous debate over whether NHE would rise or fall under a single-payer system. The Mercatus Center estimates that projected NHE could fall to $58 trillion (under the most generous assumptions), or rise as high as $65 trillion (under more plausible assumptions that also match those made by the liberal Urban Institute). But regardless of whether projected NHE falls to $58 trillion or rises to $65 trillion, there remains the enormous question of how to federalize nearly all of this spending. Even under the most optimistic assumptions, Washington’s share of projected NHE would still rise from $22 trillion to $54.5 trillion (out of a $58 trillion health economy). Where is Washington supposed to get the $32.5 trillion to pay for this? Single-payer advocates claim to have an easy answer: simply shift the dollars that state governments, businesses, and families today spend on health premiums and co-pays to federal taxes for health care, with no one worse off. In theory, this makes some sense. In practice, no one has figured out how to convert all $32.5 trillion spent by states, businesses, and families into a federal tax.
Can these corporate high-tech giants figure out a whole new way?: alphabet-amazon-apple-and-microsofts-influence-in-healthcare. The issue of preexisting conditions makes the GOP especially vulnerable for the midterms: a-look-at-the-record-republicans-repeatedly-voted-to-kill-protections-for-pre-existing-conditions. And in our stressed-out world, the issue of mental health is increasingly problematic (& expensive): mental-health-crisis-could-cost-the-world-dollar16-trillion-by-2030.
Misc Economic Topics
It’s a shame the government is spending so much money on so many benefit programs. It’s also a shame our economy is structured in a way so many Americans need them: whos-using-the-social-safety-net-more-and-more-its-the-middle-class. The next link shows millennials have the dream of home ownership but not necessarily the financing: millennials-prioritize-owning-a-home-over-getting-married-or-having-kids. And are we tired of winning yet?: ford-prepares-mass-layoffs-losing. Yes, a liberal perspective in this next link to be sure, but food for thought: conservatives-built-the-establishment-they-love-to-hate.
Midterm Insights & Projections
Who does Trump really answer to?
Do Dems have the answers?
This is flat-out cheating!
Around these parts here in Ohio…
Funny ad about gridlock-Teddy
Narrowing, not broadening their base
Trump districts turned blue
Women poised to save the day!
Dems have astounding 30-point lead among women!
Dems have astounding 30-point lead among millennials!
Kanye feels like Superman when he puts on MAGA cap!
A big problem with our prez is the people he’ll give an audience to & provide credence to their viewpoints that aren’t based at all on merit, but rather if they can feed his oversized ego by demonstrating a slobbering infatuated loyalty to him. And the strange scene that ensued further illustrates this presidency is more committed to being a celebrity circus sideshow than actually leading the country. The famous rapper went on a bizarre, profanity-laced rant in the Oval Office yesterday. We always considered Trump mentally unstable, but his White House guest is really nuts!!! It’s really rather sad. Kanye said he didn’t have much male energy growing up in a broken home, so he sees Trump as a father figure, or something like that. So to hear him explain it, putting on that red hat has the same effect on him as the Superman character who changes in a phone booth, turning him into a powerful superhero!: kanye-west-says-he-likes-trump-male-energy-maga-hat-superman. Maybe his rant just represents the kind of mentally it really takes to be a Trumpeter! In honor of Kanye (& whatever his issues are), we dug up this Superman song….