The economy under Trump was a train wreck and it hurt us all
COMMON SENSE SAYS: President Trump’s unwillingness to contain the COVID-19 pandemic constitutes one of the most catastrophic failures of leadership in our nation’s history. Trump’s refusal to develop a national strategy to defeat — let alone contain — the virus has resulted in thousands of avoidable deaths and the most severe economic crisis in a generation. In the face of this colossal failure, small businesses across the country are closing their doors for good, families are facing hunger and eviction, and millions of Americans are still having to make the impossible choice between their health and a paycheck.
Republican hypocrisy knows no bounds. While a lame Senator from Arizona, who is supposed to be a Democrat, stands in the way of new spending and the federal budget, companies have been using the Trump tax cuts to enrich shareholders and CEOs. Even GDP was terrible.
Trump claimed credit for a strong economy, saying that he inherited a “disaster” from President Barack Obama and that he “accomplished an economic turnaround of historic proportions.” However, the truth is that by the time he became president, the economy largely had recovered from the Great Recession and was nearing full strength. Yes COVID hit us hard but Trump’s lies hit us harder.
Economic growth under Trump was the worst since President Herbert Hoover, who was in the White House from 1929 to 1933, the Wall Street Crash, and the onset of the Depression. GDP growth under Mr. Hoover was negative 7.4 percent. Mr. Trump performed better, with the GDP growing 1.6 percent during his time in office, but that number is meager compared to every other president since Mr. Hoover. Granted, it was the time of COVID but let’s remember that Trump’s inaction led to the spread of the virus.
Then there are the Trump tax cuts. The Republican-led Congress approved a massive corporate tax cut under Trump. “A game-changer for U.S. businesses” is how Treasury Secretary Steven Mnuchin described the $2.3 trillion tax cut on CNBC after its passage. “You’re going to see massive investment coming back to the U.S.”
It was anything but.
Corporations used the tax cuts for stock buybacks. Buybacks totaled $579 billion for the first three quarters of 2018 and are expected to smash the previous annual record of $589 billion, set in 2007. Republicans promised that the tax cuts would lead to new jobs and trickle down to employees. They were wrong. They lied through their teeth… They knew the past evidence of the past 40 years showed that massive corporate tax cuts didn’t work, but they were eager to pander to their base.
Mother Jones looked at the promise of the tax cuts. Here’s what they found…
Business investment will skyrocket — The first and most fundamental logic behind the Republican predictions that a corporate tax cut would promote economic growth and higher tax revenues was a simple one. Most CEOs knew perfectly well that a tax cut was just a temporary shot in the arm. It might modestly spur consumer demand for a short time, but in the long run, it would do nothing-or maybe even produce a weaker economy.
The economy will be supercharged — If an investment boom was the big lie that drove everything, the arguments made to the general public in support of the tax cut mostly revolved around a better-known metric: economic growth. Republicans claimed that the investment growth spurred by the tax cut would drive GDP growth higher. But in the last quarter unaffected by the coronavirus crisis, it was barely above 2 percent. Not only didn’t the tax cut usher in the growth that Republicans predicted, but growth rates started dropping soon after.
The tax cut will pay for itself — Corporate tax receipts plummeted from $240 billion to $140 billion in the first quarter after the tax cut passed. As a result, the federal deficit has gone up-and that’s not even accounting for the COVID-19 stimulus spending. This comes as no surprise to anyone who has heard the same Republican tax arguments for decades and now recognizes them for the fabrications they are.
Corporations will bring back profits stashed overseas — Republicans did their best to include as many corporate giveaways as possible in their tax cut, but spun them as a benefit to the greater economy. Take “repatriated earnings.” American multinational corporations like to keep their overseas profits away from the IRS, and the Republican tax plan aimed to change this by offering companies a temporary “tax holiday.”
This was just another lie, one that no serious economist believed for a moment. And indeed, after a brief boom in repatriated earnings after the tax cut passed, there was a bust. Repatriations to date have amounted to only $840 billion above normal, and the total amount of repatriations in the last quarter of 2019 is only $60 billion higher than it was before the tax cut passed. The total will never come anywhere close to $4-$5 trillion.
Then there were Trump’s tariffs. Donald Trump’s tariffs and the trade war his administration launched against China turned out to be far more damaging than many believed. American firms and consumers paid the vast majority of the cost of Trump’s tariffs. Trump’s tariffs did not help the U.S. negotiate better trade agreements or significantly improve national security.
Originally published at https://commonsenseandpolitics.com on August 24, 2021.
