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President Trump’s economy is leaving middle class behind
By Richard McLaughlin
President Donald Trump has said, and continues to say loud enough for the world to hear, that our economic growth is the absolute greatest. In fact, he says “it’s the best economy in the history of our country.” Not true. While it is currently strong, its nothing compared to economic growth in several periods during the 1950s and 1960s. Further, the Obama presidency had at least five quarters of stronger economic growth than during the Trump presidency so far. Most importantly, his economic and other policies do not benefit the middle class.
The president also modestly claims that our economy is the product of his personal leadership and legislative accomplishments, whatever they are. In fact, he has no legislative accomplishments. No improved health care, no lower drug prices, no infrastructure program no $10 minimum wage and no comprehensive immigration reform. He promised the voters he would get these done.
So, his claim to take credit for this economy is without merit. Our country is in the 10th straight year of strong economic growth. It started under President Barack Obama and is continuing under Trump. Our huge economy is so involved and complex that it is really impossible to assign either the blame or credit for the economy’s performance to any individual president. But when you look at the current numbers from the Bureau of Labor Statistics for 2010 through 2019, it is obvious that Trump is riding the crest of the economic wave started during the Obama administration. The Trump economy today is simply a continuation of Obama’s expansion.
Bull market
The Trump team, including talk-show hosts heard locally, point to the surging stock market as further evidence that this great economy benefits all of us. Here again, the market has been a “bull market” since we got out of the recession in 2009 during Obama’s first year in office. I will acknowledge that the president’s obscene tax cut in 2017 did give an added short-term boost to the market. It was also a windfall for American corporations, most of whom were already having record profits, and for rich Americans in the top 10 percent. The fact that 60 Fortune 500 companies pay little or no federal income tax should tell us how this Trump tax cut helped middle class America. Further, any short-term benefits will be outweighed by its total cost. The Congressional Budget Office estimates his tax cut will cost us $1.9 Trillion from 2018 through 2027. Something more for our children and grandchildren to think about.
The irony of a discussion about the surging stock market, for which Trump has claimed credit, is that only some Americans will enjoy the benefits. This bull market will have no effect upon half of us. The numbers may vary a little, but the Federal Reserve Board reports that about 50 percent of Americans are “in” the market, and that includes direct stock ownership, pension funds, mutual funds, IRA, 401(k) and 529 Plans. Obviously, the more you have invested, the more you will benefit. However, the wealthiest 10 percent of Americans own 84 percent of the value of the stock market. It is that select group of investors who get the most financial benefit of a climbing market. To 50 percent of Americans, the market has been nothing more than a side show or the subject of an interesting cocktail party conversation.
The other 50 percent of Americans who are not involved in the market are more interested in jobs that pay a decent living wage with some benefits. They probably, more often than not, live in a two-income household which is required to keep a family going, much less thinking about retirement or sending a child to college.
Constant job growth
Job growth has been relatively constant during the past few years. The Trump administration added about 3.6 million new jobs during its first 20 months, compared to the 3.9 million created in the last two years of the Obama administration. It’s a constant struggle and we hope for continued future increases. The systemic problem is that too many of these jobs have lower pay, often too low to raise a family.
Unfortunately, wage growth has been very slow, virtually stagnant, over the past 20 years or so, but now some increases are starting to appear. About 30 percent to 40 percent of those increases are attributable to the increased minimum wage laws being enacted in cities, states and counties around the country. The federal minimum hourly wage is $7.25, where it has been stuck for the past 10 years. Obama’s efforts to raise it were shot down by Republican opposition. President Trump promised to increase the minimum wage to $10 per hour but there has been no action taken to date.
And last, unemployment numbers are important to review to evaluate the strength and progress of the economy. A graph showing unemployment figures for the last 10 years would resemble a ski slope. All downhill. Lower every year. The point is, according to the Bureau of Labor Statistics, the downward trend in all aspects of the unemployment figures has been continuous and uninterrupted.
Unfulfilled promises
So, what is the “take-away” from this summary review of Trump’s performance and our economy? First, it shows that Trump has not fulfilled all of the campaign promises he made to us as a candidate. Second, it shows Trump cannot claim all the credit for the surging stock market and today’s economy. They are simply a continuation following the momentum started during the Obama presidency. And third, in my opinion, it shows a clear and unmistakable commitment by Trump to the “trickle down” theory of economics. That is, use tax cuts and other legislative actions (or lack thereof) is to benefit corporations and the rich. The theory is they will invest and create new economic activity in the workplace that will eventually trickle down to benefit the middle class and working people. Of course, not all of it will trickle down. The contrary theory in that government should use its taxing power, together with legislation, to directly benefit the middle class and working men and women. This theory says those recipients will spend that money more readily, thereby increasing demand for consumer wants and similar products.
On balance, and to summarize, Trump has clearly shown he is a “trickle down” president, meaning the corporations and the wealthy will get the money before the middle class.
If you are a working person, you should now realize that the Trump economy, because of the president’s actions and unfulfilled promises, is not working in your best interests.
Richard McLaughlin worked as a Labor Economist in the U.S. Department of Labor while attending Georgetown University Law School. He is now retired from the practice of law.