Why Trump Is Not “Better For The Economy”
We don’t see how anyone’s really helped by extending the metaphor of Trump as a crime boss
So we’re only going to do it a little.
Because the most common refrain these days we hear from our friends who are still supporting Trump, is that while they now agree he’s a horrible person and even that he botched COVID-19, he’s “better for the economy”.
And that does remind us of how people used to view old-time big city crime bosses. Those bosses always worked to project an image of prosperity to the people in the often very poor neighborhoods they controlled. Of protection too: from real or perceived threats from outside influences that wished those people harm. Usually a different race or ethnicity.
How’d the boss accomplish this? By throwing festivals for the neighborhood. By giving out free turkeys on Thanksgiving. But even more often by literally handing out money. To newlyweds. The bereaved. Even victims of crimes.
Not too much. Just enough to notice.
To engender a sense of loyalty, and a willingness not to make too much of the fact those neighborhood bosses were actually lining their pockets and those of their cohorts with money purloined from those very same neighborhood folks.
Now, we’re not saying that’s Trump at all. There’s one glaringly massive difference between those old-time mob bosses and Trump in their approach to the masses. They didn’t have access to an unlimited supply of U.S. dollars. Trump does.
The federal government can print out an unlimited amount of money. Meaning the President has an unlimited supply of cash at his disposal. Actually, it’s the Treasury Department that can do that. And actually, the Treasury Department can only do that if it’s authorized by Congress. But when he took office, Trump had all three.
So what did he do? Gave corporations and wealthy individuals a giant tax break. In the trillions. And a little bit to average folks. Not too much. Just enough to notice.
The huge corporate tax breaks came with incredibly few strings attached. Like even though the President said they would mean companies would bring back jobs from overseas, he didn’t require them to bring back those jobs in order to get the tax breaks, which he easily could’ve done.
So why didn’t Republicans make a stink about passing something that was sure to run up the federal budget deficit? They sure had when President Obama was trying to get the U.S. out of the Great Recession. Mainly because Trump’s tax cuts were gravy for the wealthy and corporations, and that’s what Republicans are all about.
In the end, only one single Republican Member of Congress voted against both the Obama and Trump stimulus packages. And Walter Jones has since passed away. Everybody else who opposed Obama fell in line with Trump.
Of course, the President claimed his tax cut would “pay for itself”. But it didn’t.
So you know what did? He had the Treasury print up a whole bunch more money. Leading to a federal budget deficit — to borrow a phrase from Trump — the likes of which we’ve never seen before.
Never mind that one of Trump’s big campaign promises was to eliminate the federal budget deficit easily over his term in office. Another one was that since he was so smart about exploiting tax loopholes, he “alone” would lead the charge to eliminate them. How’s he doing on either one of those?
And all that was happening at a time the economy was booming. Big corporations used a lot of their windfall to boost the prices of their own stock, which in turn sent the salaries of the executives running those companies skyrocketing. So the stock market boomed. Happy times.
Never mind at some point there would have to be a reckoning: Trump would be long out of office by then probably. And anyway, a future financial crisis that might force cuts to things like Social Security and Medicare only accomplishes goals Republicans have long been trying to achieve anyway.
But what would happen if there was a sudden disaster and you needed emergency money for that? Well, we found out.
And the answer to that too has been to simply keep printing out money. And we’re with Federal Reserve Chair Jerome Powell when he says this economic disruption is so staggering, the U.S. absolutely needs to keep spending until we’re out of it, and then figure out how to address the consequences later. Although that concept might be easier to swallow if the country wasn’t already saddled with so damn much debt. That also means that the “rocket ship” economy Trump conjures up is an illusion. The stock market has done well because the government is flooding the economy with cash. While some of that cash has gone to help businesses stay open and keep people employed, or keep unemployed people financially solvent, the number of new unemployment claims every week is still staggeringly high. Suggesting that money is not going to new hiring. At least not much. But it’s got to go somewhere. And with interest rates at pretty much zero, stocks become the investment of choice.
So where to now? As we write this, the White House, the Democrat controlled House, and Republican controlled Senate are trying to hammer out another Coronavirus relief package. Sort of. More of the time seems like they’re just trying to place blame for why it’s not happening.
Trump’s main focus has been on preventing money from going to big cities and states that didn’t vote for him. Because it’s always about punishment with him. Those cities and states don’t have the ability to print up money on their own and tax revenues are way down. He also doesn’t want too much money going to expand COVID-19 testing. Republicans’ primary objective seems to be protecting corporations from being sued by employees who get sick with COVID-19. But really, this is completely taking a back seat to completing their utterly hypocritical task of getting their Supreme Court Justice through. And some Republicans are starting to squawk again about deficits, which may be a prelude to their opposition to any more big funding packages should Joe Biden get elected. Which might actually be an added incentive for Democrats to get a deal done now. In addition to actually helping people who need help, which presumably everyone wants.
So the President’s prescription when the economy is good? Print up more money. When the economy is bad? Print up more money.
Either way, this country wallows in debt. Printing out money like crazy can bump an economy that’s already cruising, and can be a fix for an economy that’s under siege. What it cannot be is a forever solution.