Despite all evidence to the contrary, most voters in battleground states believe that former President Donald Trump would do more for the economy than President Biden in a second term.reflecting their belief in the Trump economy’s potential.
Polling Results and the Trump Economy
A new poll shows Trump leading in all swing states except Wisconsin (where Trump and Biden tie), with 56 percent of voters saying the former president would do a good job on the economy versus just 40 percent for Biden.
The Reality of the Trump Economy
These voters are sadly mistaken. Trump’s first term and current policy proposals are dire warnings that a second round of Trumponomics would be devastating to everyday Americans.
Trump Economy and Tax Cuts
Trump is promising to give big tax cuts to everybody, and to protect Social Security, Medicare and Medicaid. But the truth is that his proposed tax cuts will benefit the wealthy at the expense of low- and middle-income Americans, and he will cut entitlements to cover any lost tax revenues.
Historical Lessons from the Trump Economy
We’ve seen this movie before. In 2016, Trump promised his tax cuts would favor working- and middle-class Americans. The cuts he delivered, however, favored the wealthy, widened income inequality, and encouraged massive tax fraud (which Trump may view as normal practice, given his own bogus tax write-offs).
Impact of Trump Economy on Income Distribution
By the time they expire next year, Trump’s tax cuts are projected to have boosted after-tax incomes of the top 1 percent of earners by 3 percent, to an average of $2.1 million. But they barely affect the bottom 60 percent of earners, increasing their 2025 incomes just 1 percent, to $41,800.
Long-Term Effects of Trump Economy on Tax Savings
By 2025, average tax savings will amount to just $70 for the bottom 20 percent of earners, $61,090 for the top 1 percent, and $252,300 for the top 0.1 percent. If extended to 2027, the tax cuts would actually make low- and middle-income earners worse off.
Trump Economy and Federal Debt
Trump promised his tax cuts would pay for themselves by generating robust economic growth. But that never happened, so they ended up adding between $1 trillion and $2 trillion to the federal debt.
Entitlement Spending and the Trump Economy
Republican leaders blamed this on Democrats for borrowing too much, and they use this talking point to push for cuts to Medicare, Medicaid and Social Security. Trump himself signaled openness to cutting entitlements before walking his comments back and promising to protect them. But unlike the party elites, most rank-and-file Republican voters actually want to expand them.
Fiscal Challenges and the Trump Economy
Rising entitlement spending isn’t our real fiscal problem. In fact, the bipartisan Congressional Budget Office dramatically lowered its forecast for growth in healthcare costs. Our deficits are due primarily to Trump’s tax cuts. Extending them would add another $4.6 trillion to the federal debt, CBO found.
Republican Proposals in the Trump Economy Era
Rather than confront that reality, the Republican Study Committee, which represents a majority of congressional Republicans, keeps proposing big cuts to Social Security. So when Trump vows to “never…hurt” entitlements, or that extending his tax cuts will benefit the majority of Americans and pay for themselves, voters would be ill-advised to believe him.
Trump Economy and Tariff Impacts
Ditto for Trump’s claims about tariffs. He is threatening to slap new ones of at least 10 percent on the $3 trillion in goods we import annually. He insists exporting countries would pay for this, but it’s actually American consumers and businesses who would pay.
Effects of Tariffs in the Trump Economy
Universal 10 percent tariffs would cost U.S. households an average of $1,500 a year as companies raise prices to absorb them. They would trigger additional inflation, further increasing the cost of necessities like food, housing and healthcare, hitting working families hardest. And they’d endanger American jobs by hampering U.S. companies’ ability to compete.
Trump Economy and Trade War Consequences
Trump’s 25 percent tariffs on imported steel and aluminum, for example, led to higher costs for U.S. manufacturers when Chinese suppliers cut their exports to the U.S. to avoid the tariffs. And when China switched to importing soybeans from the European Union, Argentina, Brazil and Russia, U.S. soybean exports plummeted by more than $10 billion. China also retaliated against Trump’s trade war by lowering tariffs on other trading partners to lure their imports away from the U.S.
Donald Trump abandoned the Trans-Pacific Partnership, a proposed trade agreement among 12 Pacific Rim economies including the U.S. and, importantly, excluding China. The TPP would have eliminated 18,000 tariffs on made-in-America exports including every type of U.S.-manufactured product and most agricultural products. It would also have imposed stronger labor and environmental standards on Asia’s state-owned enterprises, leveling the playing field with U.S. businesses, particularly small businesses, which make up 98 percent of U.S. exporters and employ millions of American workers.
Walking away from the agreement made imported goods from Asia more expensive for Americans, hampered our exports to the southeast Asia, and hit Americans’ wallets, lowering average U.S. incomes by $131 billion through 2030.
By scuttling the TPP, Trump ceded the field to China, which stepped in and replaced the U.S. with a Chinese-led trade agreement among 15 Asia‐Pacific countries, boosting trade among them and offering them greater access to China’s vast markets. That left Washington with fewer enticements to convince other countries to adopt U.S. trading rules.
Such perverse tax and trade policies are likely to lead to a recession, which in Trump’s hands could spiral into depression. Tax cuts and extensive tariffs deepened the Great Depression. But in the 1920s the U.S. was a major creditor nation, with the flexibility to borrow and provide liquidity and stimulus. Today Republican tax cuts have driven U.S. debt to 116 percent of GDP, hobbling our ability to engineer our way out of a crisis.
Unlike Presidents Bush and Obama, who tapped highly qualified leaders to manage the recovery from the 2008 recession, Trump will avoid anybody who isn’t a sycophant or who has the backbone to disagree with him. Instead he’ll hire enablers who are likely to preside over a new crisis and find ways to profit from it while the rest of the country suffers. It will fall hardest on low- and middle-income earners who haven’t shared in the wealth Trump’s tax cuts generated for elites.
