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?

Doc Hastings -- Common Sense for Congress?

Prior to the impasse over reopening the government after the Republican manufactured shutdown, a majority of House members went on record saying that if given the opportunity to vote, they would support a "clean" continuing resolution.

According to the standing rules of the House, any member could have brought the CR to the floor, a vote would have been taken, and the shutdown would have ended early, or perhaps avoided altogether. Much of the damage to the economy and to people’s lives could have been prevented.

However, on the eve of the shutdown, the House Rules Committee slipped through a resolution (H. Res. 368) denying members their long-standing privilege and giving that right exclusively to House Majority Leader, Eric Cantor, R-VA.

This was a shameless attempt by Republicans, pressured by their TEA Party caucus, to undermine the Nation’s democratic processes. Only nine House Republicans had the courage to vote against this travesty. Doc Hastings (R-WA) was not one of them. Doc Hastings, who was elected to represent a district (WA-4th) whose very existence as a viable economic entity depends mightily on the federal government, abandoned the interests of his constituents and bowed to the more extreme elements of the Republican Party.

Common Sense for Congress? Hardly.

Happy New Year Wall Street!

The deal that President Obama signed into law January 3, 2013, will allow multinationals to defer paying US taxes on certain financial transactions undertaken outside the US. The companies, including Bank of America, Bank of New York Mellon, Citigroup, General Electric and JPMorgan Chase, are taxed by the US on that income only when it is brought back to the country. This will cost the US Treasury $9.4 billion in lost revenue in 2013 alone.

As Citizens for Tax Justice (CTJ) explained, “The active financing exception makes it easier for multinationals to expand overseas, making investments and creating jobs in foreign countries (rather than here in the US) by reducing the related tax costs.” CTJ added, “The active financing exception also plays a significant role in the ability of large U.S.-based financial institutions to pay low effective rates.”

Meanwhile, as Pat Garofalo points out, the fiscal cliff deal allowed a cut in the payroll tax to expire, raising taxes on every working American. The deal will reduce U.S. economic growth by about 1.3 percent this year.

Miraculous Signs and Wonders

U.S. President George W. Bush, 2001 - 2009

Why, after the CBO predicted in the 1990s that the US would experience $6 trillion in surpluses over the Third Millennium (2000s), did we end up in the hole today? Well, it's not that complicated.

First, the economy did a lot worse than anybody expected during George W. Bush’s presidency and the Republican “trickle-down” economic policy; the housing bubble burst in that same period due to unmitigated greed and fraud; we had the financial crisis caused by under-regulated financial institutions; and then the big recession hit in 2008. That cut income to the government and made us spend more on various benefits that kick in as a safety net, like unemployment, welfare, and food stamps. The perfect storm. But that wasn’t all.

Second, Congress cut taxes repeatedly, starting with Bush's tax cut primarily benefiting the wealthy, and so there was less revenue than we had anticipated.

Third, the government spent more—a lot more. A couple of wars, "off the books," expansion of Medicare (Bush's unfunded drug plan), and the bank bailouts ($700+ billion under Bush with no strings attached). Believe it or not, Bush and his anti-government Republicans increased government spending more than any of the six U.S. presidents preceding him, including LBJ, of Great Society fame.

Now, when you cut taxes, have less revenue coming in, and you spend more than what you budgeted -- Hello! You end up with a deficit. Any surprise there? Of course not.

And if you have a deficit, you have to pay more interest, so that brings us to four -- higher interest payments.

The economic downturn was precipitated by a Republican president, with the unbounded cooperation of a Republican House and Senate in his first term. You can go back to the 1990s and blame Bill Clinton for signing a Republican-initiated bill throwing out the Glass-Steagal Act, but if Bush and his Republican stalwarts wanted to control Goldman Sachs and their ilk, couldn’t they have re-instituted Glass-Steagal. You bet they could. Did they want to? Hell no! And they don’t want to now.

Wasn't all this a Republican nightmare perpetrated on a basically ignorant American public, 46% of whom don't believe in evolution and think Glass-Steagal is a form of art glass?

For Republicans, all this proves one thing; Obama is a communist. No, I’m not kidding. Listen to your Republican friends crow about the American Communist Party having endorsed Barack Obama. This is like believing that because the CEO of Chick-fil-A endorses Mitt Romney it makes Romney a chicken.

For Republicans, because recovery from the consequences of their disastrous time in office is slow, it follows that we must bring back a Republican-led government that will lead us out of recession with “a mighty hand and an outstretched arm, with great terror and with miraculous signs and wonders.” Verily. But without a plan, or not one they are willing to share.

We can, however, surmise what a Republican government will do. It will voucherize Medicare, and privatize Social Security, so that Wall Street can take care of your healthcare future, and BTW, repeal Dodd-Frank so that they can do it to you better.

Republicans will cut Medicaid, repeal the Affordable Care Act and let the uninsured die (listen for the cheer in the background), cut Planned Parenthood, NPR, the National Endowment for the Arts, Head Start, and Early Childhood Education.

They will do away with Affirmative Action, eliminate the Department of Education, cut the Department of Energy funding for clean up of the mess we made during the Manhattan Project, cut back EPA and OSHA and limit their ability to enforce clean air, clean water, and safety standards. How can we know this? By reading the GOP Platform. It’s poorly written and full of contradictions, but it will tell you all you need to know about who today’s Republican Party is. And it ain’t your grandaddy’s Republican Party.

"No peril justifies the regulatory impact of Obamacare on the practice of medicine, the Dodd-Frank Act on financial services, or the EPA’s and OSHA’s overreaching regulation agenda. A Republican Congress and President will repeal the first and second, and rein in the third." (The 2012 GOP Platform)

The other great financial calamity that befell the United States, the "Great Depression," lasted a decade -- ten years for my math challenged Republican friends. It took massive deficit spending to recover. After obstructing every effort that President Obama made in good faith to put us on the road to economic recovery, Republicans are now asking that we put them back in charge of the government -- a government they disdain, e.g., "Government is not the solution to our problem, government is our problem." Remember Ronald Reagan saying this in 1981? I remember, because it was the year I retired from the US Air Force. But Reagan also said this at that time, "The solutions we seek must be equitable, with no group singled out to pay a higher price."

But today's Republican Party is not the party of Reagan. Reagan was too moderate. It's the party of Bachmann, Santorum, Huckabee, Palin, Perry, Arpaio, and Limbaugh. It's an anti-science party, an anti-democracy party, an anti-everything but big business party.

The Republican Party is a party with the arrogance to believe that enough of the American people either have short memories, or are just stupid enough to ignore their record, their obstructionism, and their failed policies, and put them back in charge.

I hope to God they’re wrong! 

The Sword of Damocles Approach to Deficit Reduction

Damocles at the feast of Dionysis.

Oil painting by Richard Westall

Everyone seemed to breathe a sigh of relief when Congress finally agreed to raise the debt ceiling, given certain conditions, all of which involved cutting government spending. Then two days later, stock markets around the world plunged -- the Dow Jones was down over 500 points and the S&P was down almost 5%. Is it possible that the "path ahead" hashed out by partisan bickering with the sword of Damocles hanging over our heads wasn't the most intelligent approach to solving the long-term debt crisis?

According to the Congressional Budget Office, the American Recovery and Reinvestment Act of 2009" (“the stimulus”), which included $288 billion of tax cuts and $499 billion of spending, added between 1m and 2.1m jobs to the American economy by the end of 2009. Moody's, IHS Global Insight, and Macroeconomic Advisers think it added between 1.6m and 1.8m jobs.

The American economy is staggering along at a growth rate of 1.3% in Q2 of 2011 (for comparison, China's GDP rate is 9.5% and India's is 7.8%). The US unemployment rate increased to 9.2%. Among major economies, this is the third highest rate of unemployment after France (9.7%) and India (9.4%). And yet Republicans in Congress are clamoring for additional cuts in government spending and decrying past stimulus spending. Instead, they want to extend the Bush tax cuts and they don't want to eliminate tax breaks and/or subsidies, or close loopholes. According to Paul Krugman, they've got it bass ackwards. Tax cuts do little to stimulate the economy, especially those for the wealthiest 1% of Americans. Public spending, on the other hand, can raise GDP by $1.50 for every dollar spent.

The bottom line is that the $775b fiscal stimulus proposed by President Obama in 2009 (ultimately cut to $600b by the Senate), wasn't enough then, and spending cuts now will exacerbate the mistake. The American economy needs a shot in the arm, not a kick in the pants.