A note on the links below: Before you dismiss them because they came from news sites you may consider “liberal,” follow these links and then follow the links therein. The writers here back up their points with nonpartisan evidence. Or what some people used to call “facts.” This isn’t “opinion.” This is what happened.
Presidents should never take full credit or get full blame for the economy. There’s only so much the White House can do about global forces, including pandemics and wars.
But let’s look at what Trump did. He took over when the economy was booming. He then decided to make it boom more — for the wealthy. His tax cuts enriched the wealthy, not the working class. Corporations used their tax breaks to buy their own stocks. He added trillions to the national debt even before the COVID-19 stimulus pushed us past a record $3 trillion in 2020 alone. In addition to budget deficits, we ran a high trade deficit — maybe not a big problem but something he pledged to address.
And his tariffs have hurt — and continue to hurt, contributing to our inflation problems. (This is, incidentally, one of many ways Trump was a RINO. Republicans used to be more libertarian in their economic policy. And Trump put in tariffs despite concern from Republican lawmakers, who suddenly remembered they were supposed to represent their constituents instead of their party leader. Those tariffs hurt farmers. And Ford. And Harley-Davidson. And the beer industry. And retailers. And for dubious reasons, Biden is hesitant to cut them.)
And forget “trickle-down” economics, one of the rare things the modern GOP has continued from the Reagan era. The International Monetary Fund debunked that in 2015. Even though a lot of us have a 401(k), stocks have been concentrated in the top 1% of the country.
Republicans like to tout their ability to cut red tape. That didn’t work out so well in 2008, when the deregulated financial sector crashed, leaving us with a bill that jumped into the trillions. That bill was on top of the fact that we spend far more on corporate welfare than we do on our safety net.
And while Republicans always run against “big government,” the elected official who has done the best job in recent history of making government more efficient was (gasp!) Al Gore.
This isn’t new. Through the last 100 years or so, the economy has performed better under Democrats. Even before the pandemic, Trump’s economy lagged behind Obama’s. Bear in mind that Democrats are often able to do better even when they run into obstructionist Republicans trying to milk the clock until they think they can take back Congress.
Red states shooting their own feet
Under Trump, poverty rates declined nationally but went up in 30% of counties — ironically, mostly in the rural and Southern areas that went wild for Trump. Manufacturing, Trump’s pet issue? Down to a 10-year low in 2019.
The long-term Trumpist view is worse. Coal jobs are going away, and the way forward for Coal Country is to shift to other means of employment. A lot of manufacturing jobs are also going away as factories get more efficient. Republicans offer comfortable words about keeping safe jobs. They’re lying.
No wonder “red states” take more from the government than “blue states.” It’s one thing to see Brookings point to “blue states” as the country’s economic engine. But when libertarian Reason magazine points this out, as they did way back in 2011, that should be pretty difficult for a Tea Party alumnus to dismiss. The blue-state subsidy of its red neighbors certainly hasn’t stopped in the past decade.
Future shock
Without a doubt, 2022 has been a weird year. After the 2020 downturn, 2021 saw the strongest growth rate in 37 years. But that surge happened so quickly that oil companies and other suppliers were caught unprepared. Then Russia invaded Ukraine, devastating supplies of fuel and food.
We’re in the midst of the “Great Resignation.” Some of it can be attributed to a better safety net. Some of it can be attributed to the fact that we’ve made it more difficult for hard-working immigrants to come in while our increasingly well-educated population isn’t interested in doing the grunt work of low-paid jobs. Some of it can be attributed to white-collar workers who’ve saved up some money and don’t want to participate in soul-sucking jobs any more.
And so we have a labor shortage. Job growth was massive in 2021 and continued into 2022. In the long run, automation might help fill the lower-end jobs that people no longer want or need. In the short to medium term, immigration helps. Yes, immigration.
Another factor: climate change. You can argue that the worst-case scenarios of Category 10 hurricanes smashing into Des Moines are overstated. But even a conservative take on the economic impact forces costly adjustments to farms and coastal cities, leads to a lot of clean-up bills and drags down the GDP.
Which leads to this.
We’re in a period of dramatic upheaval.
Bottom line is that neither party is going to have all the answers. The Democrats’ record is better but far from perfect. It’s going to take a multipartisan effort to address inequality and maintain the quality of life we’ve enjoyed since the Clinton era.
That starts with kicking the “cut taxes on the rich and hope for the best” policy to the curb. Then go from there.
Safety nets aren’t socialist
Wrapping up: Let’s talk about health care and a safety net.
The uniquely American health care system is inefficient, to the point of us spending far more (percent of GDP) than our peers. And we can end up with uninsured people because insurance is tied to employment. And it can kill us, in part by leaving us unprepared for COVID-19. Obama improved it, but not by enough.
Who suffers without a solid safety net? Lazy people? Maybe, if that net isn’t properly constructed. But two other groups have more freedom if they know they won’t lose their housing and health care — entrepreneurs and “gig economy” workers. Capitalism is supposed to reward people who innovate and invest. Tough to do that when you can’t take risks. That’s one reason why a universal basic income has some support among “conservatives” — it’s a safety net that encourages entrepreneurship without muddled government intrusion. One of the biggest success stories for UBI is a state not known for socialism (even if you can see Russia from one of its islands) — Alaska.
What is economics, anyway?
Economics is an imprecise field. Economists fancy themselves scientists and put a lot of faith in their models. They usually ignore psychological factors such as Gen Z and Millennials prioritizing something other than money in their careers. They can’t take into account major disruptions such as the pandemic and the rise of authoritarianism.
And it’s all about tradeoffs. Want to buy American? OK, but it’ll cost you. Want cheaper goods? That means workers get paid less.
So the bottom line is this: Democrats’ view of those tradeoffs is usually rooted in empathy for the working class and the less fortunate, along with freedom to innovate. Republicans’ views are not. If Republicans were simply taking the Buckley-esque approach that we need to be cautious and spending and safety nets, that would be reasonable. What they’re doing today is not.
Looking down the road: If you’re interested in protecting capitalism, you’d better make some better arguments. As it stands now, Millennials are ready to ditch it. If we don’t make capitalism work better in the next decade or so, kiss it goodbye.
FURTHER READING
General
- November 2019, CNBC: Trade wars, climate change plunge the family farm into crisis. Is it an endangered American institution?
- August 2019, The Guardian: ‘Coal is over’: the miners rooting for the Green New Deal
- July 2019, Federal Reserve Bank of Dallas: Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis
- September 2017, FactCheck: Obama’s final numbers
- May 2012, New York Times (Gary Gutting): How Reliable Are the Social Sciences?
GOP
- August 2020, The Guardian: Millions of Americans scrape by after benefits expire: ‘I lost everything’
- March 2020, Forbes: Fed Injects $1.5 Trillion To Prop Up Crashing Markets
- December 2019, Pew: Poverty Grew in One-Third of Counties Despite Strong National Economy
- November 2019, Washington Post: Corporate debt nears a record $10 trillion, and borrowing binge poses new risks
- October 2019, Washington Post: For the first time in history, U.S. billionaires paid a lower tax rate than the working class last year
- August 2019, Washington Post: The Trump vs. Obama economy — in 15 charts
- November 2018, Bloomberg: Left Behind by Trump’s Boom: The Rural Americans Who Elected Him
- September 2012, Washington Post (Steven Pearlstein): I am a job creator: A manifesto for the entitled
- March 2011, Think By Numbers: Government Spends More on Corporate Welfare Subsidies than Social Welfare Programs
2021 growth
- February 2022, The Atlantic: The Economy Is Good, Actually
- January 2022, Salon: Behind Biden’s booming economy
- December 2021, Bloomberg: Biden’s Economic Performance Has Proved Unbeatable
Safety nets, including universal basic income
- June 2022, Investopedia: The Long, Weird History of Universal Basic Income—and Why It’s Back
- October 2020, Vox: Everywhere basic income has been tried, in one map
- June 2018, MIT Technology Review: Basic Income Could Work — if You Do it Canada-Style
- December 2017, The Conversation: 3 myths about the poor that Republicans are using to support slashing US safety net
- November 2015, Vox: Economists tested 7 welfare programs to see if they made people lazy. They didn’t.
The future
- April 2022, HR Dive: Randstad: Younger workers primed to leave, want employers that share their beliefs
- October 2019, New York Times: Sharp Cuts in Immigration Threaten U.S. Economy and Innovation
- November 2019, The Conversation: As the coal industry shrinks, miners deserve a just transition – here’s what it should include
- March 2017, Fortune: Robots Could Steal 40% of U.S. Jobs by 2030
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