‘Trump-onomics’ is mostly boastful baloney

 

Bill Knight column for 9-14 15 or 16

 If President Trump has an economic philosophy – “Trump-onomics” – it might be seen as tax cuts for the rich, deregulation for corporations, and odd tariff stunts unpopular with economists, business and consumers.

Plus, as with most anything, he takes credit for anything positive and avoids blame for everything else.

“I built the greatest economy the world has ever seen,” he said in April.

Ah, no.

Trump seems to claim his term began with a recession and he created a boom. The opposite is true.

In his first three years, Trump’s economic record showed a bit less employment growth than Obama’s, about the same improvement in Gross Domestic Product, a slightly better stock market, and comparable wage increases. Still, in 2018, Trump boasted of “an economic turnaround of historic proportions,” conflating 94 consecutive months of job growth with the 18 months during his own administration.

“The real economy, as opposed to the financial markets, is still in terrible shape,” wrote Nobel Prize-winning economist Paul Krugman, “more deeply depressed than it was at any point during the recession that followed the 2018 financial crisis.”

Some facts:

* Pre-pandemic, Trump’s economy was OK, but not exceptional, much less “historic.” However, his Tax Cuts and Jobs Act of 2017 added trillions to the national debt.

* Obama’s administration DID start with a recession sparked by the financial meltdown.

* Economic growth in the three-plus years since Trump was inaugurated has averaged 2.5%, up slightly from the 2.3% in Obama’s last three years – far lower than George W Bush, Bill Clinton or Ronald Reagan (much less Dwight Eisenhower).

* Last week, there were 884,000 jobless claims, exceeding expectations of 850,000. This month, the official jobless rate is more than 10%. In the last few years, businesses added a monthly average of 185,000 jobs under Trump (before COVID-19); Obama averaged 216,000 a month.

*Trump’s tariffs have hurt farmers, manufacturers, suppliers and consumers. Moody’s Analytics last year said Trump’s trade war with foreign friends and foes alike resulted in some 300,000 lost jobs.

 

“The president inherited a growing economy with low unemployment, which was primed for the sort of middle-class surge that the country last enjoyed in the late 1990s,” wrote Jim Tankersley, author of “The Riches of This Land: The Untold, True Story of America’s Middle Class.”

“He could have uncorked a new wave of shared prosperity that would have pulled millions of workers into the economic stability that we have come to call the American Dream,” he continued. “He did not.”

Wall Street’s “comeback” has occasionally set records in recent weeks.

So?

If there’s a “trickle-down effect,” it’s not helping the economic drought most people feel. A Federal Reserve study said 4 in 10 American adults would have difficulty coming up with enough to handle a $400 emergency., and according to New York University economics professor Edward Wolff’s 2016 analysis of Federal Reserve data, “84% of stocks owned by U.S. households are held by the wealthiest 10% of Americans.”

“It was jarring, even macabre, to watch the market soar while tens of thousands of Americans were dying of COVID-19 and millions were losing their jobs as a consequence of the nation’s economic shutdown,” said journalist and critic Michael Steinberger, author of Au Revoir to All That.”

“The market seemed impervious to bad news,” he wrote in the New York Times magazine.

An inflated stock market is what former Federal Reserve Board chair Alan Greenspan in the ’90s called “irrational exuberance.” Now, it’s been dubbed a “mania” fueled by the Fed and investor speculation that will end badly in coming years, longtime hedge-fund manager Stanley Druckenmiller said last week on CNBC.

“Companies … go up 50%, 30%, 40% on stock splits,” Druckenmiller said. “That brings no value, but the stocks go up.”

Many people have recognized the phony-baloney optimism, or calculated lies. Gallup reported that 48% of Americans felt the economy is worsening (and that poll was in January, before the pandemic hit).

At a Sept. 1 campaign speech, Vice President Mike Pence bragged that “our economy is on the ballot.”

He’s correct. The claims are exaggerated or false, and the fake boom should be busted.

Realizing workers matter less than we thought

 

Bill Knight column for 9-10, 11 or 12, 2020

 Days after Labor Day, the priorities of the country’s rich and powerful have become painfully clear: commerce, not the working people who produce the economy’s goods and services.

The shock and realization – exemplified with the rushed reopening of businesses despite risking the health of workers, consumers and families – may be the final confrontation in a long, brutal betrayal. Looking at the accumulation of signs and suspicions, wrongs and hurts, you know you’ve been ignored, rejected or worse, but always lesser, lower …

Knowing now that the Trump administration and corporate theme is “A big help for me, a bit of hope for you,” you accept that a new relationship, a new future, depends on a different understanding.

The economy has lost almost 13 million jobs since February, says economist Dean Baker of the Center for Economic and Policy Research.

“It is also striking how the job loss is concentrated in the lowest paying sectors,” Baker said. “The job losses in this downturn have been disproportionately among production and nonsupervisory workers.”

That could be one reason for the substantial and rising support for unions. A Gallup poll released Sept 3 showed 65% of Americans approve of unions, “one of our best marks in more than half a century,” commented AFL-CIO President Richard Trumka. “The popularity of unions cuts across party lines, with 83% of Democrats, 64% of independents and even 45% of Republicans expressing approval.”

An MIT study says that 50% of non-managerial workers say they would vote to join a union.

“One reason for this trend is that many unions have worked to build public support, as when striking L.A. teachers demanded not just pay raises, but smaller class sizes and more nurses, librarians and school counselors,” said Steven Greenhouse, author of “Beaten Down, Worked Up: The Past, Present and Future of American Labor.” 

“Another promising sign is the changing generational support for labor,” he continued. “Americans age 18 to 34 are the age group most enthusiastic about unions.”

However, organizing and restoring labor to effectively represent working people still faces roadblocks.

“Barring a tidal wave of worker anger that swamps corporate resistance, it will be extremely hard for unions to meet their goal of organizing millions more workers, unless there are major changes in labor law,” Greenhouse said. “Joe Biden’s platform includes many far-reaching proposals to boost unionization, among them, ensuring union recognition through majority sign-up and giving all public-sector employees a right to unionize. But they could be blocked by filibusters, which Senate Republicans have often used to torpedo pro-union proposals.”

Congress could pass worker protections like that proposed by Sen. Elizabeth Warren (D-Mass.) and Rep. Ro Khanna (D-Calif.) in the next coronavirus relief bill. Their “Essential Workers Bill of Rights” would be a game-changing steppingstone for a better future. It provides:

* Health and safety protections, including personal protective equipment.

* Fair premium pay recognizing the higher risks essential workers face, with higher benefits for workers who earn low wages (and thus need it most).

* Protection for all collective bargaining agreements so that they can’t be changed by employers during crises, including bankruptcies.

* Universal paid sick leave and family & medical leave so essential workers can care for themselves, family members or dependents without submitting doctors’ notes.

* Protections for whistleblowers, so workers who witness unsafe conditions can share concerns without retaliation.

* An end to employers' misclassification of workers as “independent contractors” to avoid providing them with the benefits and protections available to employees.

* Health care for all workers during this crisis, regardless of immigration status, provided at no cost through public programs, and a federal subsidy for 15 months of continued health care coverage for employees who lose eligibility.

* Guaranteed child care to ensure essential workers have access to reliable, safe, healthy and high-quality child care at no cost.

* A place at the table for workers in setting safety and compensation standards so policies now and going forward reflect workers' insights into needs and gaps in existing protections.

* Accountability for corporations so taxpayer dollars go to help workers, not wealthy CEOs, shareholders or political cronies.

 

“We can't erase decades of inequality overnight,” the two lawmakers said in a joint statement. “Going forward, we're going to need to take big, bold steps to reboot and transform our economy – and make structural changes so families don't have to keep living crisis to crisis.

“American economic policy has been focused for too long on helping the rich get richer,” they added. “We need to rebuild the economy so it works for all Americans and rebalance economic power so no workers have to struggle to make ends meet.”

Social Security again targeted for cuts

 

Bill Knight column for 9-7, 8 or 9

 Less than a day after President Trump at the Republican National Convention pledged to safeguard Social Security and Medicare (like he said during the 2016 campaign), he let companies stop collecting some Social Security taxes, jeopardizing the popular programs. Besides progressives, some conservative Republicans and the Chamber of Commerce and other businesses oppose the scheme.

Employee’s 6.2% payroll deductions are listed on checks as FICA, for Federal Insurance Contributions Act. It’s essentially an insurance premium like folks pay for cars, health insurance, homes, etc., except employers also contribute 6.2% to fund Social Security and Medicare.

Also, the halt is temporary, through Dec. 31, a “deferral,” meaning that the uncollected payments would have to be repaid in 20,21. Plus it only applies to those who still have jobs and make less than $104,000 a year.

Two-thirds of any benefit would go to the richest 20% of Americans, according to the Institute on Taxation and Economic Policy, which also showed that the poorest 20% would get about 2% of the benefits.

In other words, low- and middle-income workers are being offered a modest tax cut for a few months in exchange for less-secure retirements. How modest? Someone making $35,000 a year would save about $42 a week, but have to repay $750 next year, according to the Chamber of Commerce.

Social Security advocates are aghast and angry.

Stephen Goss, chief actuary at the Social Security Administration, said that the four-month cut could cause the Social Security Disability Insurance Trust Fund to be depleted by mid-2021, and reserves in the Old Age and Survivors Insurance trust fund “would become permanently depleted by the middle of calendar year 2023, with no ability to pay… benefits thereafter.

“While benefits scheduled in the law … are obligations, such obligations can only be met to the extent that asset reserves are available,” said Goss, a 30-year SSA veteran. “The law does not provide authority for the trust funds to borrow in order to pay benefits beyond the limited authority for ‘advance tax transfers.’ This limited authority allows all payroll tax income expected for a month to be advanced to the beginning of that month if needed to meet benefit obligations on a timely basis. Thus ... benefit obligations could not be met after the depletion of the asset reserves and elimination of payroll taxes.”

Besides the deferral creating more red tape for employers, “Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” according to a letter to the White House and Congress from a coalition of about 30 business groups, including the Chamber of Commerce. “It would also be unworkable to implement a system where employees make this decision.”

Of course, U.S. Presidents don’t have the authority to enact or repeal taxes, but Trump’s order echoes the desire to eliminate or privatize Social Security that’s been a long-time goal by the Right, which sometimes implies Social Security benefits are unearned welfare giveaways, not insurance.

“They’re not a handout,” Dan Adcock, with the National Committee to Preserve Social Security and Medicare.

Other defenders of the programs criticized the President as well as the idea.

“If Donald Trump is re-elected, Social Security will cease to exist before the end of his second term,” Nancy Altman, president of Social Security Works, told CNBC.

Previously, Trump called for steep cuts in the programs. For example, his 2020 budget blueprint called for $845 billion in cuts to Medicare and $25 billion in cuts to Social Security. And in May, Congressional leaders discovered that the State Department had been working on the “Eagle Plan” to cut Social Security.

 “Jeopardizing retirement security during a health and economic crisis that disproportionally impacts older Americans is not the right time,” said U.S. Rep. Julian Castro (D-Texas). “We should only be strengthening Social Security.”

The Eagle Plan, said Alex Lawson, director of Social Security Works, would “force people to choose: Go hungry today or work until you die.”

Making matters worse, Trump also said that if he wins in November, he’ll “terminate the payroll tax … We’ll be paying into Social Security through the General Fund.”

Since the payroll tax generated about $1 trillion last year, according to U.S. government data, ending it could cause a need to replace it with tax hikes.

Or dissolve it.

“Trump has shown himself willing to undermine the Post Office, the free press, and other institutions,” Altman said. “If he's re-elected, our Social Security system is his next target.”