Trump Needlessly Squandered Our Economic Relief Toolkit
Trump Needlessly Squandered Our Economic Relief Toolkit
Rant #14(Opinion)
Originally March 19, 2020; posted March 20, 2020
Remember all those tax cuts enjoyed primarily by the rich and large corporations, which would supposedly create trickle-down growth, even though growth was almost exactly the same after Trump's tax bill as it had been before? You know, all those tax cuts that increased the federal deficit despite an already robust economy? Collecting money for tax revenue when we have a bustling economy--nah, not important. Increase the deficit and public debt.
Many Americans stomached this, thinking that they would somehow benefit from the tax cuts when most did not or only did so slightly. Ironically, the average American will end up paying later for the money that the rich and big businesses didn't today. Lower taxes leads to lower tax revenue; assuming the budget doesn't change, this means the government needs to borrow money to pay for what the taxes collected can't. Later on, somebody needs to pay it back. So while rich folk today have more money from the tax breaks, might invest that money and have more in a few years, a regular earner has only a tiny bit more money, and ultimately has to pay back the money that the rich person saved this year, plus interest. Of course it has more complexities than that, but in a nutshell, it works like that.
Remember when Trump kept pushing Mnuchin to lower interest rates even back in the Fall, even though we had the lowest unemployment in half a century, a record-setting stock market and uninterrupted economic expansion for roughly a decade? Normally, slashing interest rates is a tool used by the Fed to stimulate the economy when it slows down, but Trump kept insisting on lowering it to speed up business when it was already moving along.
Millions of Americans didn't think twice about this president's economic policy. "He's a billionaire," said many when he was elected, unaware of the true nature of Trump's seedy businesses and poorly managed finances. It may have seemed to some like Trump ushered in a booming economy, when really, the economic trajectory that solidified during the later Obama years merely continued after his inauguration. However, because of recovery from the Great Recession, it may not have seemed as though the economy was on the upswing until recently--giving it the illusion that Trump did something to make it better.
Yet Trump used all these tools in his arsenal to supposedly speed up economic growth, even though the economy was doing well, and these measures didn't even make it grow any faster! Below is a chart of GDP growth by year beginning with Obama's second term:
Growth in 2013: 1.8%
2014: 2.5%
2015: 2.9%
2016: 1.6%
2017: 2.4%
2018: 2.9% (first yr Trump tax cuts apply)
2019: 2.3%
So, even with impeccably broad repeal of environmental regulations, getting rid of important committees and teams like the pandemic unit within the NSC, and even with all the moves Trump made to boost economic activity that are normally reserved for slumps, GDP growth pretty much went unchanged from the second Obama term. The trajectory of the stock market's major indices, job growth and unemployment, etc didn't really change from Obama's second term throughout Trump's presidency up until now.
The United States sacrificed some vital safeguards in order to achieve what turned out (and what legitimate economics predicted) to be virtually no additional growth. AND we used up many of the conventional tools the government has to reverse what looks like a looming recession. And ironically, having used up the traditional tools that the federal government has used to stimulate the economy, it may now require much more drastic measures to kickstart it once again. Perhaps Trump will adopt such measures, though it could also foreseeably get much worse until the next president arrives in the Oval Office nearly a year from today (assuming a bad economy and massive damage from a pandemic leads to Trump's loss. He has dodged some bullets before, though, so who knows?)
Admittedly, the next few months will likely not resemble any other downturn seen in modern history, given its catalyst being the coronavirus rather than, say, a housing bubble. Trump himself couldn't have wholely prevented the coronavirus from reaching our shores--although he had a lot of opportunities to mitigate its spread and impact and to act as a bold leader during these times, rather than pat himself on the back for finally recognizing the threat. Instead, he had to rant about unfair news coverage and how the Obamacare website had bugs when it debuted during the announcement of a national emergency. His tone has changed somewhat, though his competence undoubtedly hasn't. Pockets, lungs and hearts of Americans will suffer as a result.
Works Cited:
-Statista, GDP growth by year.
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