Why Do Over Half of Men Polled Approve of Donald Trump's Handling of the Economy?

I heard on the news this morning, the 75th Anniversary of the end of World War II, that although Donald Trump’s poll numbers are relatively dismal, just over 50% of men approve of his handling of the economy. I’m puzzled by this. The U.S. national debt at over $26 trillion now exceeds the record debt incurred during WWII, but more troubling, debt as a percentage of GDP at 136% is its highest in history. According to economists, this level of debt-to-GDP slows economic growth, and as revenues decline the debt-to-GDP ratio climbs, and the “Greek Death Cycle” accelerates.

Maybe men see Trump as a hugely successful businessman, so under the circumstances he must have handled the economy as well or better than anyone could. But, in fact Trump is a terrible businessman, as has been thoroughly documented. Furthermore, the “circumstances” are largely of his own creation — surely no one would argue that he’s managed the coronavirus pandemic well, unless the predicted 200,000 deaths is acceptable.

Maybe men, especially those relatively well off, are attracted by the siren call of today’s advancing Stock Market. But the Market is a chimera buoyed by Fed bond buying, and propped up by stock buybacks, collateralized loan obligations, and other “unknown unknowns,” as Donald Rumsfeld might have said. In any case, according to Reuters, 84% of stocks owned by U.S. households are held by the wealthiest 10% of Americans. So the deregulatory fever under Trump has boosted the Market, but, as usual, it’s the rich getting richer.

Maybe more men are impacted by and therefore especially appreciative of the lower tax rates instituted under Trump. But first of all, the so-called Tax Cut and Jobs Act (TCJA) didn’t end up paying for itself, as promised. In fact, the TCJA substantially reduced revenues, adding further to the aforementioned monumental debt.

Secondly, it was corporations who gained the most from the TCJA; their taxes were reduced by 40%, and they are permanent, unlike individual tax cuts, which expire in 2025.

 

Finally, the TCJA increased disparities in after-tax income by giving the largest relative and absolute tax cuts to high-income households — the top 1 percent will claim 83%of the benefit of the bill. As Stephanie Kelton, a senior economic policy analyst has pointed out, “Trump’s plan will widen the country’s already dangerous wealth and income gaps, and because the gains go mostly to those at the very top, the tax cuts won’t do much to promote broad-based consumer spending or overall job growth.”

So, I remain puzzled. Who are the guys that approve of the way Trump is handling the economy and what explains their attitude?

Bernie Sanders Reminds Me of My Nono Ugo

I like Bernie Sanders. He reminds me of my grandfather — my Nono Ugo — may he rest in piece. Nono used to carry candy in his pockets to give to my brother and I when Mom wasn’t looking.

We liked candy. Who doesn’t? Free college, free health care, medical and family paid leave, more robust social security, upgrading our crumbling infrastructure. Sweet!

But America is burdened with over $19 trillion dollars in debt. “Trillion.” 12 zeros. That’s about $160K per U.S. taxpayer.

Interest payments on the debt are the fastest growing area of federal spending. And interest rates are at historic lows. When they go up again, look out!

We’re looking at the possibility of $500 billion in annual interest payments by 2020, with a debt close to 80% of our gross domestic product (GDP). After that, without fundamental structural changes, we enter an Aegean Sea of debt that could sink the ship of state.

I have good teeth. I can thank my mom for that. My dad, a florist, who I loved dearly, was overly generous. He would’ve literally “given away the store,” if it weren’t for my mom, who had a good business sense, was pragmatic, and tough — she spoke her mind. Thanks to her, there was money “in the till” to pay for the dental care my brother and I needed. All that candy can rot your teeth.

Seeing is Believing

My good friend, a died-in-the-wool conservative, contested an earlier post, The Absurdity of Conservative Economics, arguing that stimulus spending doesn't work because we never reduce spending after increasing it to stimulate the economy. Really?!

There is a legitimate debate about so-called deficit spending and Keynesian Economics, and whether in the long term it helps or hurts economic growth, but there is no debate about whether federal spending is ever reduced after increases -- maybe I misunderstood him. He's old and I'm older. But here's the picture that's worth a thousand words.

Outlays, Receipts & Deficits as % of GDP

The data were downloaded from the Office of Management and Budget and then opened using an Apple Works spreadsheet program. Clearly, the outlays as a percent of GDP during WWII greatly exceeded receipts and deficits grew larger. After the war, federal spending dropped dramatically and deficits shrunk. You can see the same pattern throughout the chart, although far less dramatically.

It's also interesting to note that our current deficit problems started in George W. Bush's first term in 2001 and grew worse until he left office. Under the Obama Administration, outlays and receipts are converging and deficits are shrinking -- another fact that my friend and his conservative golf buddies at the country club are loath to recognize (there were three Democrats at the country club, but two of them died and the other one disappeared mysteriously after birdieing the 8th hole and causing a 'redistribution of wealth' among the foursome (JK)).

The contraction during the Great Recession precipitated by Bush's economic policies and an under-regulated financial industry is the largest decline since quarterly data became available in 1947. Cumulatively, real GDP fell by 4.3% during the recession. The steep drop in economic activity caused by the recession makes it imperative that more work is done to raise economic growth and speed job creation.

Republicans say they're focused on creating jobs, but actions speak louder than words. They manufactured two debt crises in the last two and a half years. In the first one they managed to get an across-the-board cut -- the sequester -- causing all kinds of chaos (which they then tried to reverse with selective appropriations). In the second they got basically nothing (except some $3b for a dam project in Mitch McConnell's state of Kentucky).

But they'll be back for more cuts, both in spending and taxes, as well as "fixes" to the Affordable Care Act. Everything they do will hurt the economy -- count on it!