While many news outlets and the Trump Administration have been quick to repeatedly tell us the US economy is doing “Great”, data on what is undergirding the economy, and how most Americans are really doing, indicate that the economy really isn’t doing so “Great” after all. Sure GDP growth is doing pretty well, jobs are being created, and wealth is growing through gains in the stock and real estate markets, but the facts are that Trump and Republicans in Congress have spiked the punch bowl with $1 trillion per year of deficit spending, the Federal Reserve has been injecting roughly $120 billion per month into the banking system to keep interest rates from rising, and all while a great many people remain financially insecure and struggling.
Anyone can throw a great party with a trillion dollars per year of borrowed money, but it’s not hard to recognize that managing the economy this way is a far cry from building an economy that prospers all and over the long term. Economists often don’t agree about much, but almost all of them can tell you that deficit spending is supposed to be reserved for when an economy is in or heading into a recession. Since Trump took office, while the economy has picked up some steam, rather than continue the downward trend of annual deficits, our deficits have nearly doubled. Stalwart of the Republican Party and fiscal responsibility Ronald Reagan would be appalled.
While some may say “who cares” about deficits, the problem with running up debts is sooner or later the bill always comes due. Should inflation pick up just a little, due to rising wage expectations, or creditors around the globe getting just a little nervous about the security of the US, interest rates could rise, and that would surely tip us into a recession, and one we couldn’t easily get out of. Another significant problem with large, tax-cut driven deficits is that they crowd out spending on the real constraints to the economy, like developing a well-educated and trained workforce and improving the security of infrastructure.
Sadly, the Trump Administration has chosen to give 83% of a $1.5 trillion tax cut to the top 1% wealthiest families in our country, while slowing the repair of 54,000 structural deficient bridges across the county to the lowest rate in the last five years. During this giveaway to the wealthy, the administration has also requested spending on public education be cut by 19%. Whether you have a detached analytic concern about the economy or are driven by a desire to extend a helping hand up to those in need, it should not be difficult to recognize that spending on public education is one of the best ways to reduce poverty, unemployment, underemployment, drug use and crime.
During this period of supposedly “Great” economic growth, the Trump Administration has also done all it can to undermine Obamacare. The steps it has taken reversed the growth of those enrolled in healthcare plans and resulted in 1.9 million people dropping their health insurance last year. This included health insurance for a half million children and drove up the cost of insurance for everyone more than it otherwise would have been.
These choices reflect a leadership focused on boosting the economy in the short-term while turning a blind eye to the needs of people and the long term needs of our country.
Another aspect of how well the economy is doing is how much it benefits all people. Sadly on this score, as measured by the distribution of wealth and income, the economy is performing poorly. Not since the 1920s has income inequality been so high. Changes in tax rates, and the rollback of regulations designed to protect the general public, have enabled the three wealthiest families in America to amass more wealth then the bottom 160 million Americans. The top 0.1% of Americans now own more than the bottom 90% of us. Stalwart of the Republican Party, Teddy Roosevelt, who steadfastly opposed the concentration of wealth among the robber-barons of his day, would be appalled if he were alive today.
Disparities in income growth further highlight the growing divide between the rich and average citizens. In 1978, the average CEO earned 30 times the typical worker. In 2018, the average CEO earned 290 times the typical worker. In 2018, the average CEO received a raise of $500,000 while the average worker received a raise of $1,000. Equally astounding is the fact that between 2009 and 2018 income growth for the top 25 hedge fund managers on Wall Street grew by more than double the combined income growth of all 140,000 kindergarten teachers across America.
If anyone finds these facts disturbing, let alone something less than “Great”, perhaps the time has come to consider electing leaders willing to turn away from enriching those already wealthy, let go of focusing on the short-term, and motivated to build an economy that gives everyone an opportunity to build a more prosperous life for themselves and their family and build a sustainable future for our country.