The Trump Economy

  1. To understand the effect of Trump’s policies you need to untangle Trump’s results from the inherited economy. People tend to shy away from that, but there is actually no alternative — otherwise there is no way to say where we are going from here. As we’ve noted before, Trump has pulled a fast one on the American public. It’s not just a matter of claiming responsibility for successes of an inherited economy. It’s that he is substituting wildly dangerous policies for the ones that actually got us here. When we last discussed that subject we could only talk theoretically, but now there is considerably more to say.
  2. The usual statistics (even the unemployment rate) tell you more about the business view of the world than about what it means for people. The difference between the two says a lot about the real significance of Trump policies.
  3. Finally, most discussions of Trump’s policies focus on results from the hugely expensive tax cuts that were done last December. However, it is at least as important to understand what we have NOT DONE because of Trump’s economic priorities. As we’ll see those sins of omission are a serious part of the picture.
  1. Effects of Trump’s policies on the economy
  1. Trump’s policies and the workforce
  • Globalization
  • Rise of Non-Standard Employment
  • Rise of Non-Compete Agreements
  • Automation
  • De-unionization
  • Education, where school financing has never recovered from the 2008 crash, state budget cuts have teachers out on strike, and increased public college costs have led to a generation trapped in debt.
  • Infrastructure, a problem area identified by both candidates for President but unaddressed in the budget, because there was just no money left.
  • The estimated backlog for repairs of existing highways is $430 B.
  • The estimated cost of upgrading US airports over ten years is $48 B.
  • Ten years of K-12 school repair to upgrade fair and poor facilities nationwide is $380 B.
  • Ten years’ worth of the estimated cost of a federal program to provide free tuition to all the US public colleges and universities is $470 B.
  1. The declines in unemployment associated with recovery from the 2008 crash have continued in the same way through the Trump Presidency. No policy act of the Trump administration, including even the 2017 tax cuts, has produced a significant impact on that trend.
  2. Trump’s own policies have been disruptive. His repeated and ever-changing threats of trade wars have unsettled markets and businesses. Even more importantly he has embarked on massive deficit-based stimulation in good times, contributing to an IMF-identified risk of repeating 2008 or worse.
  3. The decline in unemployment has not produced the usual accompanying increase in wages. Some of the reasons are structural, but the Trump administration has exacerbated this effect by systematically attacking labor’s leverage in dealing with management. Despite the decline in unemployment, the Trump economy has not been good for the existing workforce.
  4. Trump’s tax cuts have essentially stifled any action to address the pressing problems of education and infrastructure in this country. We have become in effect a poorer country.

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