With fears of an economic slowdown and perhaps an outright recession in the next 2 years rising, markets are spooked and so is the White House. Predictions for stock markets and the underlying economy is by no means an exact science, but neither are they random proclamations (except when they are made by the average faux economist). Predictions are based on fundamentals, data analysis, market sentiment, labor markets, supply, demand, trade, and confidence in those running the government, among other factors. Question is — what expertise does this administration have to recognize the symptoms, to recognize how its own actions are hurting the economy, and what expertise does it have to take corrective action?
You know the answers to these questions. But here is a short synopsis of my take on the trump 6-step approach to handling the rumblings in Wall Street —
- Deny, distort, lie
- Deceive, throw out some general-purpose bull-s**t
- Deflect, blame others for the bad news
- Intimidate and threaten his own supporters when they stray from the party line
- Panic, beg for help
- Cut taxes for the donor class.
Let’s back up these assertions with some real quotes from trump and his cohorts and some real news over the past few days -
1. Deny, distort, lie
- “Our economy is the best in the world, by far. Lowest unemployment ever within almost all categories. Poised for big growth after trade deals are completed. Import prices down.”
- “Helping targeted Farmers from big Tariff money coming in.”
- “I don't think we're having a recession. We're doing tremendously well.”
- “We’re not concerned about the economy, because this is the hottest economy in modern history” — National Press Sec.
- “We did not have a yield curve inversion right now, by technical standpoints. You have to have a significant spread between short and long rates” — White House trade adviser Peter Navarro.
2. Deceive, throw out some general purpose bull-s**t
- “I don’t see a recession. I mean, the world is in a recession right now.”
- “China is eating Tariffs.”
- “Our consumers are rich. I gave a tremendous tax cut and they're loaded up with money.”
- “Our dollar is so strong that it is sadly hurting other parts of the world.”
- “Let’s not be afraid of optimism” — Kudlow
- “Trade wars are good, and easy to win” — March 2018
- “I never said China was gonna be easy” — Aug 18
3. Deflect, blame others
- Blame the Fed: “Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed.”
- Blame Democrats: “The Democrats are trying to “will” the Economy to be bad for purposes of the 2020 Election. Very Selfish!”
- Blame the media — “The Fake News Media is doing everything they can to crash the economy because they think that will be bad for me and my re-election.”
- Pretty soon they will be blaming Obama, Hillary, AOC, Deep state, China, Mexico, Greenland, whatever. You can bet the trump war room is frantically preparing tweets and social media stories on the topic.
Paul Krugman shows very clearly that republicans are arsonists, not just hypocrites.
4. Intimidate, threaten his own supporters into submission
- Intimidate the WSJ to stay in line: “The WSJ editorial board and other people who advocate a quick deal with China and removal of the tariffs "understand nothing about trade or business."”
- Threaten Fox news into submission: “My worst polls have been coming from Fox. There’s something going on with Fox, and I don’t like it. Fox is making a big mistake because, you know, I’m the one who calls the shots.”
- This one is interesting. This was actually try to put some fear into his most ardent followers at the NH rally. Shows that he realizes that red meat is not enough if the economy goes South: “You have no choice but to vote for me, because your 401(k)s down the tubes, everything's gonna be down the tubes. So whether you love me or hate me, you gotta vote for me.”
5. Panic, beg for help
- “The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well.” (The current federal funds rate is 2.25%. So, it would fall to 1.25%, if trump has his way. This may be for purely personal reasons).
- Delay the planned 10% tariff on many Chinese goods until December. (First bully, then blink. The Chinese are learning).
- White House officials have begun discussing whether to push for a payroll tax cut in order to juice the economy with more consumer cash. trump denied it yesterday. Confirmed it today. www.washingtonpost.com/…
The obvious question everyone (except the base) asks is — if the economy is doing so great, why do we need interest rate cuts and deficit financing? And if China is paying the tariffs, then why delay the free money train?
6. Cut Taxes for the rich
The idea of more tax cuts for the rich (e.g., indexing capital gains to inflation) has been simmering among GOP circles. Trust them to bring it back with a vengeance if the economy slows down, because in republican la-la-land, the solution to every problem is tax cuts for the rich, and service cuts and deficits for the rest.
How is that Trade War going?
The State of the Economy
The trump economy?
For all the bragging and boasting by trump, the trump economy is nowhere near Obama’s on the yardstick of stock market returns and is running into strong headwinds. Also, Obama started in a deep hole created by Bush while trump got a free ride on Obama’s booming economy and an artificial bump due to the tax-cut.
So, there we are. Whether the economy is running out of steam, whether the trade wars are taking their toll, whether a recession will hit us in the next year or two — it is not 100% certain, but there are plenty of signs that there is more risk of downside than upside. The lack of genuine expertise in the administration and their penchant to lie and deceive, is well-known even to trump’s biggest supporters and does not inspire confidence in industry. Can they engineer a soft landing? Or will they simply continue to tweet while America burns?
How can Democrats show that we are better for the economy (besides pointing to the obvious historical evidence)? Let’s keep exposing trump’s hollow and fraudulent presidency. Let’s keep showing how the GOP tax cut frittered away the hard work of the average American leaving us with fewer tools to manage the economy. Let’s talk about how we will manage economic policy, trade deals and how a Democratic administration will rely on experts, not sycophants, charlatans and grifters, to serve the American public. Let’s show how we will be good stewards of tax-payer money, investing it in areas that benefit the People, not the billionaire club and the MI complex. And let’s fire up our base.