TRUMP’S FAR-FETCHED ECONOMIC VIEWPOINT
Economists say Trump’s economic plan will increase debt by $5-10 trillion, at least 26 times that of Clinton. Though the election is now over, it’s still useful to compare the two models.
CBS News noted:
“A new Washington study says Donald Trump’s tax and budget plans would make the national debt skyrocket by $10 trillion or more over the coming decade, mostly because of his ambitious and expensive tax cuts….The Committee for a Responsible Federal Budget says Democrat Hillary Clinton’s agenda — which relies on tax increases to pay for proposals such as making the Affordable Care Act more generous — would increase the debt by about $250 billion over 10 years….All told, Trump’s policies would result in the $19.3 trillion national debt spiking to 127 percent of the size of the U.S. economy by 2026. Clinton’s plans would closely track current law, in which the debt would equal 86 percent of the economy….By contrast, a tax proposal released last week by House Speaker Paul Ryan, R-Wisconsin, promises no net loss of tax revenue and is therefore only able to lower the top individual tax rate to 33 percent and the top corporate rate to 20 percent.”
And from CNBC a few months later in September 2016:
“Trump’s stated plans to stimulate the economy through the building of infrastructure, boosting military spending and making sharp tax cuts would increase the national IOU by $5.3 trillion, or roughly 26 times more than Hillary Clinton’s plan would, according to a report Thursday from the Committee for a Responsible Federal Budget….Many economists have put the Trump debt price tag in excess of $10 trillion…The estimate for Trump is sharply higher than the analysis of Clinton’s plans, which are projected to increase the debt by $200 billion…While Clinton is calling for aggressive new spending programs, she also is proposing offsetting hikes on estates, investments and financial institution taxes, among others.”
One analyst remarked, “According to a new report from the nonpartisan Committee for a Responsible Federal Budget, the most fiscally conservative presidential contender left standing is . . . Hillary Clinton.” The CRFB’s findings included: “It is quite encouraging that Secretary Clinton has outlined specific offsets for her new proposals. By our estimates, these savings would cover nearly all the new costs…”
Experts on the right and left have dismissed Trump’s economic plan as disastrous. Traditional conservative publications such as The National Review reject several pillars of the proposal and agree with aspects that continue typical GOP policies of the past 35 years. Respected liberal source, The Nation, calls it “economic fairy dust”. They describe the approach as “pushing the same old failures of Reaganomics: tax cuts for the rich and deregulation, along with nostalgia for an industrial era long gone.” Time’s article title on the subject shows that they generally agree with the latter position: “Donald Trump’s Economic Plan Is Magical Thinking”. They elaborate:
“He’s selling the same economic magical thinking that any number of Republicans have over the last 40 years—tax cuts without spending cuts….This is not a bipartisan issue. It’s a simple fact. The tax cuts in 2001 and 2003 under George W. Bush didn’t jump start sustained growth, nor did any of the tax cuts pushed through by President Obama post 2008….the overall GDP growth rate in this country was far higher in the 1950s and 60s when the tax rate was higher too (as taxes have been cut over the last 40 years, levels of start-ups per capita, along with other levels of business dynamism, have fallen)….Reagan cut taxes (though he eventually raised them as well, negating about half of his own cuts), but he failed to cut spending—that’s why the national debt actually tripled under his watch.”
Seven states with Tea Party backed governors and cooperative legislatures, most widely publicized regarding Kansas and Louisiana, experienced tremendous economic failures. They had promised their constituents various programs to radically cut taxes, greatly reduce budgets and give extra preference to corporate interests, which they put into practice. As one journalist commented, Kansas governor Sam Brownback “went around the country telling anyone who’d listen that Kansas could be seen as a sort of test case, in which unfettered libertarian economic policy could be held up and compared right alongside the socialistic overreach of the Obama administration, and may the best theory of government win.” Prosperity for the average citizen did not follow. In Kansas, for example, their credit rating was downgraded, job growth trailed neighboring states, healthcare was drastically cut, schools were significantly underfunded and revenue shrunk by $700 million. Brownback’s leadership provided a stark example of how Reaganesque trickle down economics can harm a state’s finances and market conditions.
Contrast that to California’s moderate Democrat governance at all levels, much of it newly in place, in the same time period and one can see a significant economic success story. It surpassed France to become the world’s 6th largest economy. In 2015, the economy for that state expanded by 4.1 percent, while the national average went up by 2.4 percent and France grew by 1.1 percent. California has led the nation in growth since 2011, last year creating more jobs than Texas and Florida, the next two populous states, added together.
Or we can look at Minnesota to see a similar very positive transformation. As one reporter described in October 2016:
“When he took office in January of 2011, Minnesota governor Mark Dayton inherited a $6.2 billion budget deficit and a 7 percent unemployment rate…Gov. Dayton raised the state income tax from 7.85 to 9.85 percent on individuals earning over $150,000, and on couples earning over $250,000 when filing jointly — a tax increase of $2.1 billion….Between 2011 and 2015, Gov. Dayton added 172,000 new jobs to Minnesota’s economy — that’s 165,800 more jobs in Dayton’s first term than [earlier Republican governor] Pawlenty added in both of his terms combined. Even though Minnesota’s top income tax rate is the fourth highest in the country, it has the fifth lowest unemployment rate in the country at 3.6 percent. According to 2012-2013 U.S. census figures, Minnesotans had a median income that was $10,000 larger than the U.S. average, and their median income is still $8,000 more than the U.S. average today….
“By late 2013, Minnesota’s private sector job growth exceeded pre-recession levels, and the state’s economy was the fifth fastest-growing in the United States. Forbes even ranked Minnesota the ninth best state for business (Scott Walker’s ‘Open For Business’ Wisconsin came in at a distant #32 on the same list). Despite the fearmongering over businesses fleeing from Dayton’s tax cuts, 6,230 more Minnesotans filed in the top income tax bracket in 2013, just one year after Dayton’s tax increases went through. As of January 2015, Minnesota has a $1 billion budget surplus, and Gov. Dayton has pledged to reinvest more than one third of that money into public schools. And according to Gallup, Minnesota’s economic confidence is higher than any other state.”
Apparently, Trump used to understand this kind of thing. See the video clip below of what he told CNN’s Wolf Blitzer in 2004: “I’ve been around for a long time and it just seems that the economy does better under the Democrats than the Republicans.”
An editorial in Forbes by Jere Glover offers a big picture overview:
“It is simply a fact that since World War II, Democratic presidents have seen 24.4 million more jobs created on their watch—an average of 78.6% more jobs created per year of Democratic administrations—than have Republican presidents. Ditto real GDP growth, 44% higher under Democratic presidents. On the flip side, unemployment has been 18% higher under GOP presidents.”
Glover has compiled a large amount of official government data that undergirds those assertions. Here are some sample charts:
Look at the difference in performance for the first 2700 days of a Republican versus Democrat president’s term regarding the Dow Jones Industrial Average. Notice that Republican president Coolidge’s high points are built up just before the worst financial crash in U.S. history that led to the Great Depression:
TRUMP’S MISUNDERSTANDING OF TRADE AND MANUFACTURING
He’s repeatedly told us that America is losing to China and other nations. Only he can turn things around. However, America is still the most powerful nation on Earth. As shown in the chart above regarding California’s tremendous improvements, our country’s GDP is nearly 40% larger than China and approximately equal to the combined size of the next 7 nations: Japan, Germany, U.K., France, India, Italy and Brazil. Investopedia provides an overview:
“The United States has been the world’s biggest economy since 1871. But that top ranking is now under threat from China….China is estimated to pull ahead of the U.S. steadily in the following years, taking over the lead position as the world’s largest economy…Will it even matter? Only for bragging rights! With a population less than one-fourth that of China, the U.S. is still projected to remain one of the world’s most prosperous economies, and still the far ahead in terms of per capita GDP, which reflects living standards and quality of life for a nation’s residents…U.S. economy remains the largest in the world in terms of nominal GDP. The $18.5 trillion U.S. economy is approximately 24.5% of the gross world product. The United States is an economic superpower that is highly advanced in terms of technology and infrastructure and has abundant natural resources. However, the U.S. economy loses its spot as the number one economy to China when measured in terms of GDP based on PPP. In these terms, China’s GDP is $21.3 trillion and the U.S. GDP is $18.5 trillion. However, the U.S. is way ahead of China in terms of GDP per capita (PPP) – approximately $57,294 in the U.S. versus $15,423 in China.”
Entire nations are equal to individual American states:
Trump has raised a high level of alarm regarding jobs being sent overseas. But, his contentions on this topic are strikingly disproportionate and very misleading. In reply, National Public Radio referenced a major study, “The Myth and Reality of Manufacturing in America”, by Ball State University’s Center for Business and Economic Research:
“9 out of 10 manufacturing jobs have been lost to mechanization, not trade policies. ‘No matter how you measure it, 2015 was the record year for manufacturing production in the USA. Right now manufacturing in Indiana and the USA is at record levels. There’s no ambiguity on this….To be sure, our trade deficits have cost us manufacturing jobs. The high-end estimates are that today we have 1.5 million fewer manufacturing jobs across the nation because of foreign trade. All the other 6 million or so lost manufacturing jobs are due to mechanization, better technology and better production practices. Today’s typical factory workers make twice as much ‘stuff’ in an hour as they did in 1977. For every manufacturing job lost to trade, nearly 9 have been lost to machines. But trade also creates jobs. We have 7 million more transportation and logistics jobs alone, likely attributable to trade, since the 1970s.'”
U.S. manufacturing production is at an all-time high:
The North American Free Trade Agreement is regularly maligned by Trump, as he says it’s been a “total disaster” (one of his favorite phrases that he repeatedly uses as a description for the policies of his opponents). In contrast, Bloomberg elaborates on why NAFTA was beneficial for the United States and Mexico in an article related to his visit to Mexico City in August 2016:
“Donald Trump said on Wednesday, [NAFTA] ‘has been a far greater benefit to Mexico’ than the U.S….but he didn’t disavow Nafta altogether…..Trump still got it wrong, though, when he said Nafta helped Mexico more than the U.S. He ignores the less quantifiable, hidden aspects of free trade that have helped the U.S. economy, such as an increase in higher-paying, export-related U.S. jobs, more competitive (and profitable) U.S. companies, and lower consumer prices at home….Out of a workforce of 135 million people, about 4 million to 6 million leave their jobs voluntarily or forcibly every month. The jobs lost to Mexico over a 20-year period amount to less than 0.1 percent of that turnover….Exports to Mexico have risen tremendously [$267 billion in 2015] — they were only $42 billion in 1993. That increase has come in part from Mexicans’ higher standard of living (because of Nafta). Today, exports to Mexico support six million U.S. jobs, many of which pay more than the blue-collar ones that were lost.”
His devotees claim, in agreement with the man who constantly brags about his near mythical abilities, that Trump’s business expertise and success will substantially help them in ways no one else can. They’re firm believers that he’ll move this country out the perilous jam it appears to be in. This especially applies to their constant refrains about the terrible shape of our trade deals, employment levels and wealth creation. As argued for above, these Trumpesque “credentials” are highly suspect and paper thin. And, what if the majority of his followers are not in a tough financial position like we’ve been led to believe?
Contrary to the popular perception that Trump’s appeal is largely toward downtrodden working class people, the average Trump voter is wealthier than most other Americans and the average follower of most other candidates.
Nate Silver is one of the most respected statisticians and poll analysts in the public square today. He’s a famously successful predictor of elections, as he was right about 49/50 states in 2008 presidential election and 50/50 in 2012. In early May 2016, he pointed to some vital data regarding Trump’s base:
“The median household income of a Trump voter so far in the primaries is about $72,000, based on estimates derived from exit polls and Census Bureau data. That’s lower than the $91,000 median for Kasich voters. But it’s well above the national median household income of about $56,000. It’s also higher than the median income for Hillary Clinton and Bernie Sanders supporters, which is around $61,000 for both.”
Vox research concurred with that of Silver:
“Trump supporters are richer, not poorer, than average: For one thing, [Gallup Organization’s researcher Jonathan] Rothwell found that both across the overall population and among whites, support for Trump is correlated with higher income, not lower. That’s not surprising; low-income people have always preferred Democrats. But it definitely contradicts the image of Trump as spokesman for the economically struggling….Rothwell also found that Trump supporters are no likelier to be unemployed or to have left the workforce. The problem of men dropping out of the labor force doesn’t seem to be a factor behind Trump’s rise.”
TRUMP’S ALLEGED BUSINESS KNOWLEDGE AND SKILL
Trump claims to be very successful, a great winner who’ll make America dominate global markets again. He asserts this even though we continue to lead the world in power, influence and GDP by a huge margin. He makes these claims in dismissal of the fact that our economic situation is radically better now than during the harsh years immediately after the 2007-2008 financial crash. He promises to bring much expanded prosperity and stability for citizens at all socioeconomic levels. But, how often has Trump legitimately succeeded in his career? What evidence is there to demonstrate his expertise with money management? Does Trump’s performance as a leader inspire trust and praise from his former employees and business associates? How often has he won?
Time Magazine lays out the categories where success evaded him: Trump Airlines, Trump Vodka, Trump Mortgage, Trump: The Game, The China Connection, Trump Casinos, Trump Steak, Trump Magazine, GoTrump.com, Trump University.
There’s a very public and long trail of major mistakes in his life history that harmed thousands of people. His track record includes consistent refusals to pay a whole lot of contracted laborers:
USA Today explains:
“(We) found he has been involved in more than 3,500 lawsuits over the past three decades — and a large number of those involve ordinary Americans…who say Trump or his companies have refused to pay them….At least 60 lawsuits, along with hundreds of liens, judgments, and other government filings reviewed by the USA Today Network, document people who have accused Trump and his businesses of failing to pay them for their work. Among them: a dishwasher in Florida. A glass company in New Jersey. A carpet company. A plumber. Painters. Forty-eight waiters. Dozens of bartenders and other hourly workers at his resorts and clubs, coast to coast. Real estate brokers who sold his properties. And, ironically, several law firms that once represented him in these suits and others….The actions in total paint a portrait of Trump’s sprawling organization frequently failing to pay small businesses and individuals, then sometimes tying them up in court and other negotiations for years. In some cases, the Trump teams financially overpower and outlast much smaller opponents, draining their resources. Some just give up the fight, or settle for less; some have ended up in bankruptcy or out of business altogether.”
Through an investigation, Reuters found out these details:
“Donald Trump has a message for anyone who agrees to do a job for him: If I don’t like your work or I think you’re trying to rip me off, don’t expect to be paid in full….The strategy has left some small business owners who have done jobs for him over three decades of real estate deals saying they have felt cheated and don’t want to ever work for him again. In a number of cases they have also faced big legal bills from subsequent court action….Reuters reviewed more than 50 court cases and liens from contractors related to Trump projects in New York, Atlantic City, Miami and West Palm Beach, and interviewed dozens of people who have done construction jobs or legal work for him. The majority said they were paid in full and happy to work for him but at least a dozen said they had been left out of pocket or had watched as other contractors were short-changed. ‘I fight like hell to pay as little as possible,’ he said. ‘You can’t spend millions of dollars for something you could do for $2,000.’ Donald Gregory, general counsel for the American Subcontractors Association, a Washington-based trade group that represents individual building contractors, said renegotiating fees at the end of a job is not standard practice. ‘It certainly isn’t the run of the mill activity, even in this post-recession environment that has probably brought some poor habits to the construction industry,’ he said.”
Trump’s habitual stinginess has carried over into his presidential campaign, as told by Reuters:
“Republican presidential nominee Donald Trump has run an unusually cheap campaign in part by not paying at least 10 top staffers, consultants and advisers, some of whom are no longer with the campaign, according to a review of federal campaign finance filings….Those who have so far not been paid, the filings show, include recently departed campaign manager Paul Manafort, California state director Tim Clark, communications director Michael Caputo and a pair of senior aides who left the campaign in June to immediately go to work for a Trump Super PAC….The New York real estate magnate and his allies have touted his campaign’s frugality, saying it is evidence of his management skills. His campaign’s spending has totaled $89.5 million so far, about a third of what Democratic rival Hillary Clinton’s campaign has spent….But not compensating top people in a presidential campaign is a departure from campaign finance norms. Many of the positions involved might typically come with six-figure annual paychecks in other campaigns.”
Many public testimonies attest to his shady service offerings to “help” others get rich by applying his alleged genius entrepreneurial skills. He expects the voters to find his wealth impressive after receiving a $1 million loan from his father and $40-200 million inheritance and his father’s connections in the same industry. They both saved hundreds of millions through governmental financing programs. He acts like he supports the average person’s monetary success while officially submitting a future tax policy that disproportionately benefits the super-rich.
This fits neatly with his refusal throughout the campaign to release his tax returns, his stated reason being that he couldn’t do it until a routine audit was complete. To the contrary, the IRS stated there was no legal restriction preventing him from sharing this paperwork with the public and his own lawyers communicated that a half decade of returns from the mid-2000s could be shared in the meantime.
When his 1995 tax return was leaked in early October 2016, the voters got a shocking preview of what the rest of Trump’s hidden finances might look like. Personally, not from a business expense, he had lost $900 million in just one year. Trump’s response:
He had boastfully claimed just one week earlier in a debate with Clinton that his successful avoidance of paying taxes made him “smart”. Tax experts have informed the media that such a tremendously large financial setback as he had in 1995 would mean that by law he probably would not have been required to pay any federal income taxes during the following 18 years. This is a stark example of how Trump’s life experience is so incredibly dissimilar in comparison to the vast majority of Americans. Many of those committed to and enamored with Trump think he understands their concerns and will be loyal in protecting their livelihood and making them prosper. While citizens around the nation pay their taxes and thus supply needed funding for things like the roads, fire departments and police forces that provide services for communities and businesses like his, Trump likely has profited without contribution for almost two decades. This is congruent with his personal use of other people’s money by what they thought were donations to charity through the Donald J. Trump Foundation. The Washington Post conducted a detailed research project on this organization. They found that he drew from this reservoir of cash numerous times for things not related to philanthropy at all. Twice he bought himself presents, one of which was a 6-foot tall self-portrait painting for $20,000. Research into the Foundation further showed:
“An investigation of the foundation — including examinations of 17 years of tax filings and interviews with more than 200 individuals or groups listed as donors or beneficiaries — found that it collects and spends money in a very unusual manner….For one thing, nearly all of its money comes from people other than Trump. In tax records, the last gift from Trump was in 2008. Since then, all of the donations have been other people’s money — an arrangement that experts say is almost unheard of for a family foundation….Money from the Trump Foundation has also been used for political purposes, which is against the law. The Washington Post reported this month that Trump paid a penalty this year to the Internal Revenue Service for a 2013 donation in which the foundation gave $25,000 to a campaign group affiliated with Florida Attorney General Pamela Bondi (R)….
“Behind the scenes, he was transforming the foundation from a standard-issue rich person’s philanthropy into a charity that allowed a rich man to be philanthropic for free….Experts on charity said they had rarely seen anything like it….’Our common understanding of charity is you give something of yourself to help somebody else. It’s not something that you raise money from one side to spend it on the other,’ said Leslie Lenkowsky, the former head of the Corporation for National and Community Service, and a professor studying philanthropy at Indiana University….By that definition, was Trump engaging in charity?”
One of the common self-promotional notes Trump tells his audiences is that his book, The Art of the Deal, lays out the brilliant insights at the heart of his commercial philosophy. He falsely claimed that it’s the best selling business text of all time. Other business books like How To Win Friends and Influence People and The 7 Habits of Highly Effective People have sold 10-25 times more copies. Tony Schwartz, the person who actually wrote the book, had to spend 18 months on the job with Trump to gather the content because Trump couldn’t stay on task during standard interviews. Schwartz said:
“‘One of the chief things I’m concerned about is the limits of his attention span, which are as severe as any person I think I’ve ever met,’ Schwartz says. ‘No matter what question I asked, he would become impatient with it pretty quickly, and literally, from the very first time I sat down to start interviewing him, after about 10 or 15 minutes, he said, ‘You know, I don’t really wanna talk about this stuff, I’m not interested in it, I mean it’s over, it’s the past, I’m done with it, what else have you got?’…Add to that the fact that Trump is so easily provoked, that what Schwartz calls Trump’s insecurity ‘makes him incredibly reactive whenever he feels threatened, which is very, very often.'”
“Schwartz thought…’He has no attention span….it’s impossible to keep him focused on any topic, other than his own self-aggrandizement, for more than a few minutes…If he had to be briefed on a crisis in the Situation Room, it’s impossible to imagine him paying attention over a long period of time’…’Lying is second nature to him,’ Schwartz said. ‘More than anyone else I have ever met, Trump has the ability to convince himself that whatever he is saying at any given moment is true, or sort of true, or at least ought to be true..’..Schwartz says of Trump, ‘He lied strategically. He had a complete lack of conscience about it.’ Since most people are “constrained by the truth,’ Trump’s indifference to it ‘gave him a strange advantage.'”
Trump’s signature casino, the Taj Mahal, has long been at the center of controversy for failing to pay its taxes. The New York Times has covered the details. Over many years, the debt to the state of New Jersey grew to a level of about $30 million, including the late fees. “The state had doggedly pursued the matter through two of the casinos’ bankruptcy cases and even accused the company led by Mr. Trump of filing false reports with state casino regulators about the amount of taxes it had paid.” Beginning in the mid-2000s, Chris Christie and Trump became friends, even going on double dates with their wives. Trump donated to two organizations that Christie was chairing. In 2010, Christie became New Jersey’s governor. By the end of 2011, the amount owed by the Taj Mahal was negotiated down to the startling low level of $5 million. Legal experts interviewed by The New York Times commented that although negotiations and settlements are common in this kind of situation, a resolution that shrinks the total by more than 80% is very unusual. The same article revealed something even more overtly disturbing: “A deputy New Jersey attorney general wrote in 2007 that…[the Taj Mahal] had reported that it paid $2.2 million in alternative minimum assessment tax in 2003, which was not true. It had paid only $500 in income taxes.”