Trump frequently points to the Dow and the rising value of US financial markets as an indication of the health of our economy. And while the market has been resilient during COVID and even recovered most of its losses after an earlier crash, it’s merely one indicator of financial well-being for the country. Moreover, it’s one aimed at those who are affluent enough to own stock. Unfortunately, the majority of Americans are not in that camp, and they have been squeezed by Trump’s continued focus on those like him.
The US anticipates a massive $3.3 trillion deficit in FY20, up 79% from last year, in part because of Trump’s sweeping tax cut. Marketed disingenuously as a tax cut for the working class, 60% of the tax savings actually went to people earning in the top 20%, while the corporate tax rate was slashed by 40%. Even though the tax plan was supposed to pay for itself with economic growth, corporate tax revenues actually fell 31% in the first year after the cut was passed, and overall tax revenues have declined as a share of the economy.
Trump’s mishandling of the coronavirus pandemic is at least partly to blame for the single greatest decline in US employment in history. In the second quarter of 2020, the economy contracted by over 30%, more than three times greater than the 10% fall in 1958. While other countries were able to bring the pandemic under control and systematically reopen the economy, Trump’s obstinance and political pandering have left the nation incapable of following suit. Instead, the virus continues to spread, businesses can not reopen, travel has not resumed, and a number of industries like service, education, and the arts have been left decimated. Over 25 million Americans remain unemployed, and because of Trump’s inability to reach consensus in Congress (with a proposal lined with pork that incorporated special deals for his constituents), they have gone for months without the $600 weekly federal unemployment supplement.
Longterm, Trump had promised during the 2016 campaign that he would eliminate the nation’s debt in eight years. Instead, he has overseen the fastest increase in debt of any president, rising from projections by the Congressional Budget Office at $28.5M trillion ($8.3T more than when he entered office), and that was before COVID-19. Already by the end of July 2020, the debt was at $26.5T. Unfortunately, too much debt slows economic growth leading to higher interest rates, a weaker dollar, inflation, and higher costs of providing services and paying interest on the debt. In turn, there’s less money for services, more pressure to raise taxes, and further economic growth. In sum, Trump is setting up the national economy for hard times by spending irresponsibly and providing short-term gratification to enrich his supporters.
