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?

My Republican Friend Worries About the Federal Debt

My friend wrote:

"I heard on the radio that the Congressional Budget Office has issued a dire warning about the USA's debt problem.  Check it out (I don't have the web address). Of course, NO democrats ever mention our fiscal situation."

Dear Republican Friend;

"Dire" is in the eye of the beholder, e.g., I think climate change is a dire situation. You don't. Nor do your Republican Presidential candidates, who feel so strongly about it NOT being "dire" that they've criticized the Pope for addressing climate change in his encyclical. Yet unchecked, global warming will kill us. What the CBO report says, on the other hand, is that ALL THING BEING EQUAL, a growing debt will make us very uncomfortable. Here's the bottom line of the CBO summary:

If current law remained generally unchanged in the future, federal debt held by the public would decline slightly relative to GDP over the next few years, CBO projects. After that, however, growing budget deficits—caused mainly by the aging of the population and rising health care costs—would push debt back to, and then above, its current high level. The deficit would grow from less than 3 percent of GDP this year to more than 6 percent in 2040. At that point, 25 years from now, federal debt held by the public would exceed 100 percent of GDP.

The consequences of this growth in debt are addressed by the CBO as follows:

How long the nation could sustain such growth in federal debt is impossible to predict with any confidence. At some point, investors would begin to doubt the government’s willingness or ability to meet its debt obligations, requiring it to pay much higher interest costs in order to continue borrowing money. Such a fiscal crisis would present policymakers with extremely difficult choices and would probably have a substantial negative impact on the country. Unfortunately, there is no way to predict confidently whether or when such a fiscal crisis might occur in the United States. In particular, as the debt-to-GDP ratio rises, there is no identifiable point indicating that a crisis is likely or imminent. But all else being equal, the larger a government’s debt, the greater the risk of a fiscal crisis.

Now the reason Democrats don't pay more attention to the debt problem is that the problem is easily fixed. Let's start by eliminating the estate tax and reducing corporate taxes, two of the Republicans favorite "fixes." Did you know that the House just voted (along party lines) to repeal the estate tax? Congress’s Joint Committee on Taxation estimated that repealing the estate tax would cost the Treasury $14.6 billion in the 2016 fiscal year and $269 billion over 10 years. John Boehner said $269 billion “is nothing more than a drop in the bucket to the federal government.”

Of course the only reason you'd be interested in the facts about estate taxes is to avoid them, but if you are interested in the larger picture and why the Republican crusade to repeal estate taxes is such a farce, you could read this economic intelligence report, which would tell you that you have nothing to worry about, because the federal tax currently applies to estates worth more than $5.43 million for an individual or $10.86 million for a couple. Only Republican donors of the Sheldon Adelson variety worry about this, and even they aren't too worried, because they can afford good tax lawyers.

But I digress. You will note that at the beginning of this email I capitalized "ALL THINGS BEING EQUAL." There are quite straight-forward things our "leaders" in Congress could do to remedy the fiscal situation (e.g., raise the amount well-off people like you and I have to pay into Medicare). Then again, Congress could simply implement the Simpson-Bowles plan. That would result in the savings shown below. But as you've pointed out, every item has a "constituency." That makes it hard for politicians to tackle, especially those with no integrity.

So that leaves us with the prospect of waiting until the POTENTIAL crisis that CBO forecasts occurs in 2040 and then watching as our "leaders" take stop gap measures to stem the tide. And speaking of stemming the tide, do you know what sea level rise is predicted to be by 2040?

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!

Path to Fiscal Sustainability Requires Taking the Long View

I’d like to suggest that solving our fiscal problem requires more than just sacrifice, which most assuredly will be necessary. It requires smart people with the ability to take the long view. We need to think strategically when we envision the fiscal future we desire, and implement structural reforms that put us on a long-term path to fiscal sustainability.

Let’s take defense spending as an example. During the presidential campaign, Mitt Romney promised to increase defense spending by $2 trillion over the next decade. President Obama argued that the United States already spends more on defense than the next 10 countries with the largest defense budgets combined. He actually understated the disparity. We spend more than the next 13 countries combined, and this includes China and Russia. This year American tax payers shelled out $718 billion for troops, and tanks, and airplanes, and ships, and etcetera. That accounted for 20% of the $3.6 trillion  federal budget.

Failing to reach agreement on reducing the United States’ federal deficit by the end of this year will result in automatic spending cuts as mandated by the Budget Control Act (BCA) of 2011. Among other things, this would slash an estimated $55 billion from defense spending in 2013. Making such cuts willy-nilly will degrade our national security in ways we can’t fully appreciate, and damage the US economy in ways we can -- America’s humongous military-industrial complex accounts for an estimated 10 million jobs. Cut defense by the 10% sequestration in the BCA and you’re looking at upwards of 1 million jobs lost.

Now that doesn’t mean we should buy tanks the army doesn’t want just because the manufacturing plant is in some congressman’s district. Nor should we keep plants open in order to manufacture advanced weapons systems to sell to our new friends in the Middle East. Friendships there change more often than Mitt Romney’s policy positions. What’s needed is a reduced defense budget based on an overarching defense strategy that reflects national security realities now and in the future and the military force structure needed to effectively deal with them.

We must move to this new force structure incrementally, and the spending cuts we realize must be allocated not just to deficit reduction, but to new programs aimed at helping veterans adjust to civilian life, and elements of the military-industrial complex convert to commercial endeavors.

If we were to take Mr Romney at his word, his presidency would have moved us toward war with Iran; an indefinite presence of thousands of US troops in Iraq; a more militant posture towards Russia; a trade war with “currency manipulator” China; a troop presence in Afghanistan until at least 2014; and a Reagan-like military buildup at home. If Mr Romney’s positions still reflect Republican foreign policy objectives, we are in for a knock-down, drag-out battle right here at home on the defense budget alone.

Then we have Medicare and Social Security to address. And once again, America is at war on multiple fronts.

The Bush Tax Cuts at the Root of America's Fiscal Problem

Republicans have argued incessantly that the 2001 Bush tax cuts are not the reason America is in the fiscal mess we find our nation struggling to overcome today. Now, a senior policy analyst on Ronald Reagan's and George H. W. Bush's administrations tells us otherwise.

Bruce Bartlett, in a July 26th op ed piece, tells us how a projected $6 trillion surplus under Bill Clinton, turned into a $6 trillion deficit as a result of the Republicans' ideologically driven fiscal mismanagement under George W. Bush. In the same piece, Bartlett points out that despite the facts, Republicans have continued to misrepresent the results of the Bush tax cuts, stating categorically that they did not reduce revenues, when in fact the did, and that they stimulated the economy, when we all know for a fact that they did not.

Republican ideologues want a smaller federal government. A government without a Department of Education. A government without an Environmental Protection Agency. A government with only the barest minimum role in protecting older Americans, children, and the disabled. A government that doesn't interfere in Wall Street's financial shenanigans, or in the manipulation of tax loopholes by corporations. If they have to bankrupt the country to get what they want -- so be it.

House votes 228 to 192 to defund NPR

While Japan goes down in flames and stock markets around the world go down with it, Republicans in the US House of Representatives held an emergency session to address what they apparently consider our most pressing issue; government funding of NPR. Glenn Garvin argued in his op ed piece (Tri-City Herald, Thursday, 3/27/2011) that , “What has most of NPR’s congressional critics riled up is a series of scandals in the past few months that have laid bare the truth about the network’s steep leftward tilt.” Baloney!

Republicans have been trying to kill NPR ever since Richard Nixon decided it was too prone to telling the truth about banks and bankers and the politicians they bought. Garvin’s op ed piece is so full of hyperbole and unsubstantiated charges (e.g., NPR “loathes” Republicans) it’s surprising the Herald editorial board chose to publish it, especially in light of the questionable “investigative reporting” techniques used to attack NPR -- techniques that even Glenn Beck’s Theblaze.com found unsavory. For readers interested in a more balanced view of public media, take a look at William F. Fore’s piece, In Defense of Public Broadcasting in Religion On-Line.

In the meantime, the House voted 228 (all Republicans) to 192 (all Democrats and 7 Republicans) Thursday to defund NPR, thereby potentially slashing $60 million (.0004%) from the $1.4 trillion federal deficit. Whoopee!

Anthony Weiner (D-NY) congratulates his Republican colleagues in this funny video.