Everyone should have known, friends, everyone should have known. All people had to do was to look at Donald Trump’s shockingly bad track record in managing his businesses, his astonishing failures, his money laundering for organized crime, his mind-boggling losses, his utter corruption, his constant con-man lies, and how he managed to throw away the hundreds of millions of dollars he inherited from his father. But the truth was drowned out by propaganda such as The Apprentice, which gave an utterly false picture of Trump’s business acumen. It was also drowned out by the 25 year-long hate campaign against Hillary Clinton, an effort led by the Right Wing Smear Machine. So the truth about Trump was buried. And that truth is simple:
Donald Trump is an atrocious manager and a complete incompetent. And in ANY situation, Trump’s only question is: “What’s in it for me?”
The fact that Trump is given relatively high marks (!) for his handling of the economy speaks to the power of propaganda, the inattentiveness of many Americans, the failings of much of our political media, and general confusion about such things as the role of the stock market. Above all, it’s about the notoriously short memories of many people. So we need to remind everyone of some fundamental truths.
A. Barack Obama, who became president on 20 January 2009, inherited an economic disaster
The Republican recession that began to hit the housing market in August 2007, officially became a recession in December 2007, and which caused a general economic meltdown beginning in the late summer of 2008, was the worst economic disaster since the Great Depression. From The Bureau of Labor Statistics:
During the “Great Recession,” which took place from late-2007 through mid-2009, the economy steeply contracted and nearly 8.7 million jobs were lost.6 Consumer spending experienced the most severe decline since World War II.7 Households cut spending, shed outstanding debt, and increased their rate of personal savings in response to reductions in income, wealth, confidence, and credit access.8
From Federal Reserve History:
The Great Recession began in December 2007 and ended in June 2009, which makes it the longest recession since World War II. Beyond its duration, the Great Recession was notably severe in several respects. Real gross domestic product (GDP) fell 4.3 percent from its peak in 2007Q4 to its trough in 2009Q2, the largest decline in the postwar era (based on data as of October 2013). The unemployment rate, which was 5 percent in December 2007, rose to 9.5 percent in June 2009, and peaked at 10 percent in October 2009.
The financial effects of the Great Recession were similarly outsized: Home prices fell approximately 30 percent, on average, from their mid-2006 peak to mid-2009, while the S&P 500 index fell 57 percent from its October 2007 peak to its trough in March 2009. The net worth of US households and nonprofit organizations fell from a peak of approximately $69 trillion in 2007 to a trough of $55 trillion in 2009.
From Monthly Labor Review:
The economic downturn intensified in September 2008 when the economy was jolted by trouble in the Nation’s financial system. In the aftermath of the turmoil, credit markets constricted and banks tightened lending standards. The recession rapidly deepened, and job losses spiked. Monthly job losses averaged 712,000 from October 2008 through March 2009—the most severe 6-month period of job losses since 1945, when WWII was ending. [My emphasis.]
B. THE RECOVERY BEGAN UNDER OBAMA. Every single economic indicator improved under Obama, and was improving ON THE DAY TRUMP WAS SWORN IN
From The Center on Budget and Policy Priorities:
And by the way, although the auto industry bailout was proposed under Bush, it was President Barack Obama who managed it into an unqualified success, as we can read here.
Every so often, we ought to celebrate our victories. The auto bailout is a case in point. Six years ago, it was wildly controversial, with the fate of General Motors and Chrysler hanging in the balance. Now, it’s clear that the bailout was a solid success.
The revitalized auto industry has been a pocket of strength in a lackluster economic recovery. Motor vehicles and parts have provided 25 percent of the recovery’s gain in manufacturing, despite representing only 6 percent of manufacturing’s value added. Since mid-2009, the number of manufacturing jobs increased by 256,000, up 41 percent from the low of 623,300. Dealerships and parts stores added another 225,000. (All gains are as of mid-2014.)
Trump’s assertion that he “saved the auto industry” is a particularly nauseating falsehood.
And what about black unemployment? Trump brags that its decline is his doing. But that’s just another pathetic lie. From The Economic Policy Institute:
To begin with, it is true that the 2018 black unemployment rate was the lowest it has been since the Bureau of Labor Statistics began reporting it in 1972. But little, if any, credit for that belongs to the Trump administration. As the graph below clearly shows, the black unemployment rate had been steadily falling since 2011, well before Trump was sworn into office, and the rate of decline has not gained momentum since. Arguably, the decline of the black unemployment rate to its current level has more to do with the Fed’s decision to keep interest rates at or near zero for an extended period of time—decisions led by the two previous Federal Reserve chairpersons.
Trump INHERITED a healthy economy. He did NOT build it. His assertion that he “created the greatest economy in history” is an utter, damned LIE.
C. Trump’s economic moves have ranged from nothing special to inept to outright disaster
1. The 2017 tax law was a farce and a travesty
The only major “accomplishment” of Trump’s term was the tax cut the Republicans rammed through in December 2017. There were NO hearings on the legislation, nor were any Democratic amendments allowed. (The Republicans falsely accused Obama of having “rammed through” the ACA. Did you ever notice that they accuse you of whatever they themselves are doing?) And what was agreed to was a shocking give-away to the rich. From The New Yorker:
The last-minute haggling and rewriting resulted in a bill even more skewed toward the rich. To buy the votes of Senators Steve Daines, of Montana, and Ron Johnson, of Wisconsin, the G.O.P. leadership agreed to further sweeten the pot for owners of unincorporated businesses who declare their profits as “pass through” income on their personal tax returns. Although Daines and Johnson claimed that they were trying to help owners of small businesses, the fact is that the richest one per cent of households receive more than half of all the pass-through income the economy generates. Donald Trump, who owns dozens of pass-through ventures, is a member of this group, and as a result of the bill he could see his marginal tax rate reduced from 39.6 per cent to below thirty per cent. [My emphasis.]
As tax experts raced through the final text, they discovered other giveaways to the one per cent—indeed, to the 0.001 per cent. They included the retention of the infamous carried-interest deduction, which allows hedge-fund managers and private-equity tycoons to pay a lower tax rate on their profits than the one many middle-class families face. During last year’s campaign, Trump promised to abolish this scandalous loophole, but that turned out to be one of his many fake pledges.
Speaking on the Senate floor, Chuck Schumer and other Democrats drew attention to a last-minute amendment that appeared to exempt Hillsdale College, a Michigan institution that is supported by the conservative DeVos family, from taxes on colleges with large endowments.
From The Center for American Progress:
The major provisions of the tax law that benefited the wealthy included a reduction in the top individual income tax rate from 39.6 percent to 37 percent, a new 20 percent deduction for many forms of pass-through business income, and a large increase in the exemption from the individual alternative minimum tax. In addition, the TCJA dramatically weakened the estate tax and cut the corporate tax rate from 35 percent to 21 percent—a boon to the wealthy who own the majority of stock.
The Tax Policy Center estimated that the new law increased after-tax incomes for people with incomes of more than $1 million by 3.3 percent, compared to only 1.3 percent or less for people earning less than $100,000.47 In dollar terms, the disparity appears even more stark: Millionaires received an average tax cut of $69,840, while people making less than $100,000 received a tax cut averaging only $453. Moreover, if lawmakers respond to the huge cost of the tax cuts by cutting spending on Medicare, Medicaid, Supplemental Nutrition Assistance Program benefits, or other programs, middle- and low-income taxpayers could be disproportionately affected and find themselves worse off than if there had been no tax cuts at all.48
Provisions that favor real estate developers other than the pass-through exemptions were included as well. (Gee, I wonder who those were designed for.) The Associated Press points these facts out:
Another boon for real estate developers came in the new tax law’s treatment of “like-kind exchanges.” The exchanges, especially favored by real estate investors, allow a property owner to defer paying tax on property if — rather than selling it — they exchange it for a similar property…
[Law professor Bridget] Crawford maintains Trump’s family has been doing this for generations — transferring property for a stunningly low value that has never been questioned.
As predicted by level-headed observers, the Republican tax scam overwhelmingly benefited the rich at everyone else’s expense:
Those making $50,000 to $100,000 for example, paid just three-fourths of 1 percentage point less of their incomes to our federal government. People making $2 million to $2.5 million saw their effective tax rate fall by about three times that much.
Now let's compare two groups, those making $50,000 to $100,000 and those declaring $500,000 to $1 million. The second group averaged nine times as much income as the first group in 2018.
Under the Trump tax law, the first group's annual income taxes declined on average by $143, while the second group's tax reduction averaged $17,800.
Trump's tax law will require at least $1.5 trillion in added federal debt because it falls far short of paying for itself through increased economic growth even without the pandemic. Most of the tax savings were showered on rich Americans and the corporations they control. Most of the negative effects will fall on the middle class and poor Americans in the form of Trump's efforts to reduce government services...
And how did Trump himself feel about all this?
...Trump kicked off his holiday weekend at Mar-a-Lago Friday night at a dinner where he told friends, "You all just got a lot richer," referencing the sweeping tax overhaul he signed into law hours earlier. Mr. Trump directed those comments to friends dining nearby at the exclusive club -- including to two friends at a table near the president's who described the remark to CBS News -- as he began his final days of his first year in office in what has become known as the "Winter White House."
2. The Tariffs and the trade war have been a disaster
Trump has told his fan club repeatedly that China (and other countries affected by tariffs) pay those tariffs. That’s not how tariffs work. Consumers pay the bill for them. From PBS:
The latest studies suggest the combination of new tariffs and increased trade policy uncertainty create a substantial drag on the economy as a whole: net losses projected for 2020 are between about $500 and $1700 per household.
And even though the trade war has cooled off, it is still wreaking damage.
From Moody’s Analytics, via CBS:
The White House's imposition of tariffs on hundreds of billions worth of Chinese imports has resulted in 300,000 fewer jobs being created and reduced U.S. gross domestic product by an estimated 0.3%, Moody's Analytics' chief economist Mark Zandi said in the report.
That estimate is based on the difference between actual nonfarm employment and projections of what employment would have been as of June 30 if not for the U.S.-China trade war.
Tariffs and the trade war disaster. Tariffs and inflation ATE UP almost all of the tax cut received by the average person. From Bloomberg (2019):
President Donald Trump’s trade wars have already wiped out all but $100 of the average American household’s windfall from Trump’s 2017 tax law. And that’s just the beginning.
That last $100 in tax-cut gains also could soon disappear -- and then some -- because of additional tariffs Trump has announced or is considering. If the president makes good on his threats to impose levies on virtually all imports from China and Mexico, those middle-earning households could pay nearly $4,000 more as they shell out more for a vast range of goods -- from avocados to iPhones.
The tariffs did catastrophic damage to America’s farmers. From CNBC in 2019:
“It’s really, really getting bad out here,” said Bob Kuylen, who’s farmed for 35 years in North Dakota.
“Trump is ruining our markets. No one is buying our product no more, and we have no markets no more.”
Agriculture exports to China dropped by more than half last year. In 2017, China imported $19.5 billion in agricultural goods, making it the second-largest buyer overall for American farmers. In 2018, that dropped to $9.2 billion as the trade war escalated, according to the United States Department of Agriculture.
This year, China’s agricultural imports from the U.S are down roughly 20%, and U.S. grain, dairy and livestock farmers have seen their revenue evaporate as a result. Over the last 6 years, farm income has dropped 45% from $123.4 billion in 2013 to $63 billion last year, according to the USDA.
For years, Wisconsin has led the US in farm bankruptcies. In 2019, the state lost one in 10 of its dairy farms, marking the biggest decline on record. [My emphasis.]
Exports of US dairy products to China declined by over 50% in 2019, and the US Dairy Export Council estimated last year that retaliatory tariffs from China could cost US dairy farmers $12.2bn by 2023 if they remain in place.
And yet, a great many farmers were placated by Trump’s shaky 2020 “deal” in which China said it would “strive” (China’s term) to buy more U.S. agricultural products over the next two years.
What will it take?
3. Other considerations
Trump’s government shutdown, which was an attempt to extort money for his idiotic “wall”. From my diary on the “wall”:
This statistic illustrates the estimated effect on the real Gross Domestic Product (GDP) from Q4 2018 to Q3 2019 due to the partial government shutdown in the United States, which took place from December 22, 2018 to January 25, 2019. During the first quarter of 2019, it is estimated that the real GDP of the U.S. will be reduced by 0.2 percent due to the government shutdown.
The government shutdown cost the economy $11 billion, including a permanent $3 billion loss, Congressional Budget Office says.
Trump brags that he has completely revised the NAFTA agreement through the USMCA deal. The new trade deal isn’t very different from the old one at all:
- Overall, the changes from the old NAFTA are mostly cosmetic. After a year and a half of negotiations, the three parties are going to end up with a new trade deal that looks remarkably similar to the old NAFTA. The main structure of the deal is largely intact; the biggest changes include higher rules-of-origin requirements for the auto sector, marginally greater U.S. access to the Canadian dairy market, and a scale-back of the investor-state dispute settlement (ISDS) rules. Thus we shouldn’t expect to see any dramatic economic effects from this deal—though if it convinces businesses’ that U.S. withdrawal from NAFTA is no longer on the table, resolving this uncertainty may lead to a small increase in investment.
Of course, Trump, who never takes responsibility for ANYTHING, has blamed the Federal Reserve for the slowdown in the economy that was beginning to show up even before the pandemic. From December 2019:
Trump on Monday blamed his handpicked Federal Reserve chief for a deepening U.S. manufacturing slowdown, his latest attempt to scapegoat the central bank for the economy.
Trump again accused the Fed and Chairman Jerome Powell of hindering U.S. manufacturers by artificially inflating the value of the dollar. The president has argued for 15 months that the Fed has kept interest rates too high and should flood the economy with cheaper money to manipulate the value of the dollar…
His latest attack on Powell followed the release of data Monday showing the fourth straight month of decline in U.S. manufacturing activity. The Institute for Supply Management’s Purchasing Managers’ Index measured 48.1 percent, falling 0.2 percentage points from October and remaining below the 50 percent threshold considered a contraction.
And for all of this, how did Trump do in comparison to Obama?
Job growth in the three years before the pandemic was WORSE than the last three years of job growth under Obama. From the Bureau of Labor Statistics (via Mother Jones):
And the stock market, which Trained Monkey Hannity always dwells on:
And Trump’s performance BEFORE the pandemic, compared to Bush and Obama:
The grim truth is that the U.S. economy was ALREADY getting shaky in early 2020. Trump’s luck was running out.
And things were about to get much, much worse.