Last week I wrote about Donald Trump’s newly-named team of economic advisors, 13 Rich White Men, and noted that each was in the stratosphere along with Trump himself, and far removed from the economic realities of the real world. Therefore, I questioned whether their policy “advice” would be of benefit to the nation as a whole, or merely to the 1% in their own class. This week, Trump gave his first (hopefully last) speech about his economic game plan, and proved that my concerns were justified.
While it is true that I am not an economist, I am a CPA and have a basic understanding of how budgets work, so let us take a look at just a few of Trump’s proposals and how they would affect the average citizen:
- Cut the highest tax rate from 39.6% to 33%. This will be a great help to the 1% who may actually be in that top bracket, but neither I nor anybody reading this blog are likely in that bracket.
- Cut corporate taxes from 35% to 15%. This might make the U.S. a more desirable location for multinational corporations, and might make the U.S. more competitive in world markets, likely adding some jobs. However, with tax incentives and credits, the average corporation in the U.S. currently pays an effective rate of just over 18%.
- Eliminate the ‘estate tax’. Guess what, folks! The average citizen pays no ‘estate tax’! Only the wealthiest individuals who inherit at least $5.45 million (or about $10 million for married couples) are subject to the 40% tax. His claim is that this would ‘help workers’. Workers rarely inherit $5 million!
- Repeal ACA (Obamacare). First, it is doubtful he could do this without some comparable alternative plan, as the republicans in Congress have tried over 50 times to repeal ACA and failed every time. But even if he could, the result would be that some younger, healthier people might pay less for insurance, but older people would be left out in the cold, unable once again to afford insurance, and those with pre-existing conditions would likely be left without insurance. Great idea, huh?
- Eliminate environmental policies and place a moratorium on new policies. He would support increased use of fossil fuels such as coal, that have been proven to increase damage to the environment. He claims this would reduce the cost of electricity which, in fact has increased only a total of 2% over the past seven years and is expected to decrease in 2016. The ultimate cost of such an action would far outweigh the benefits.
It is unlikely that any of these proposals would get through Congress, and certainly none are aimed at providing economic benefit to the average citizen. More to the point, however, is what is missing from his plan. If every one of his proposals were passed by Congress, it would leave a multi-trillion-dollar deficit for which he has made no proposal to compensate.
In May, Trump suggested that he might reduce the federal deficit by ‘persuading’ creditors to accept less than full payment. At the same time, he said that the U.S. need never default on its debt because “you print the money”. Both of these statements prove just how little Mr. Trump, a self-proclaimed “successful” businessman despite numerous bankruptcies and lawsuits, actually understands about how the economy works. As I mentioned, I am not an economist, but even with my limited knowledge I am able to comprehend that you cannot simply create a $10 trillion deficit without first determining where the additional money to fund the government will come from.
Does he plan to cut spending on current programs by trillions of dollars? If so, which programs? Nobody seriously believes he will cut military spending, or any other programs that provide income for the wealthy, so that leaves healthcare, social welfare, and other programs that are designed to help the poor and middle-income people. Or, does he have some magic plan to build federal casinos and hotels? Or perhaps he will just “print more money”!!! Nobody knows, and for that reason, if for no other, his entire “plan” is foolhardy, if not obscene.
Trump’s plan is woefully short on detail and so full of holes that it would make a piece of Swiss cheese jealous. Those who blindly accept whatever Trump says will love his economic plan, because he has said it will put more money in their pockets. He has said it will create “millions of jobs”, however who would fill those jobs? If he wants to deport immigrants and ban immigration, there may not be enough workers to fill those millions of mostly low-wage jobs. The only beneficiaries of his plan are the very people who live in that stratosphere occupied by Trump and his 13 rich white advisors. But try explaining that to the lemmings with dollar signs in their eyes. I am reminded of the ‘Great and Powerful Oz’ in The Wizard of Oz, who promised everything to everyone, yet had not the means to fulfill a single one of his promises. Think about it.