Judd Legum in his popular.info email exposes how Trump and his economic advisors dish out BS about the economy. Legum starts with this economic fantasy.
Willy Wonka has nothing on the Trump White House.
The first White House press briefing in three weeks featured Kevin Hassett, the chairman of the White House Council of Economic Advisers. Hassett painted a fantastical picture of an idyllic American economy. The only thing that was missing was a chocolate river.
In Hassett’s reality, wages are booming, business investment is spiking, and a trillion dollars in corporate tax cuts is paying for itself. And we have one person to thank: Donald Trump.
None of this, however, is true. Hassett’s apocryphal economy has little in common with the real thing.
I’m going to invert the order and tell you in Legum’s account why no one should believe a damn thing that Hassett has to say.
Perhaps Hassett is not the best judge of economic trends.
In 1999 he wrote a book called “Dow 36,000.” Hassett and his coauthor predicted that the Dow Jones Industrial Average would top 36,000 by 2002 or 2004. The book offered investment advice on how to profit from this coming surge.
In 2002, the Dow stood at about 8,000. Nearly 16 years later, the Dow is at about 26,000, still 10,000 short of Hassett’s prediction.
I won’t bother you with the Hassett’s fantastical claims and instead just quote the facts about our current economy.
Wages: “Economic data show real wages are declining. In the 12-month period that ended in July, nominal wages grew by 2.7%. But this was outstripped by inflation of 2.9%. So real wages declined. Trump didn’t create the problem of stagnant wages. Workers have seen their wages flat-line for 40 years. But he has not, as Hassett and Trump claim, solved the problem.”
Corporate tax break: “has not paid for itself. So far this fiscal year, corporate tax revenues are down 40%. As a share of the economy, corporate tax revenues have hit a 75-year low.”
Business investment: has not “boomed as a result of the Trump tax cuts. … if you look at the trend in business investment since the end of the recession, you can see a steady increase since the great recession ended in 2010.” So Trump does not get credit for increasing business investment. He might, however, wish to take credit for stock buy-backs and more corporate dividends for the already rich.
Job growth: “has slowed since Trump became president. As Robert Reich notes, in the last 19 months of the Obama administration, the economy created 3.96 million new jobs. In the first 19 months of the Trump administration, the economy created 3.58 million new jobs.”
Tax cuts: “The Trump administration is eager to make the case that the tax cuts have delivered. Why? Because they want more.” Despite the failure of Trumponomics expressed in the administration’s bogus claims, here is their response.
The administration and Republican leaders in Congress are currently working on a new wave of tax cuts that will be unveiled sometime this month.
The centerpiece of the proposal is to make the individual tax cuts enacted in December 2017 permanent. That legislation created massive permanent tax cuts for corporations but its individual tax cuts, which are heavily tilted toward the wealthy, expire around 2025.
The cost of the extension would be about $600 billion.
The effort is expected to struggle to get the necessary votes in the House and has no chance of passing the Senate.
One reason: Support for the original tax legislation is languishing below 40%.
Trumponomics is the occult art of lying about what does not work and then doing it again.
As the saying goes, insanity is “doing the same thing over and over again and expecting different results.” And, we should add, when those results don’t materialize, start the chocolate river flowing and let them eat cake.