In the Covid era, we have become used to hearing the term “false positive” when a positive test for the corona virus is ultimately declared wrong, thus clearing the person from immediate fright and panic.
But there is another false positive lurking that is just as dangerous. That one is the Trump Economy. When asked about the president’s strengths, one of the first things that people cite is jubilation for his strength in handling the economy.
Really? Have you done the math? Have you seen the numbers? How quickly people forget. How quickly people willingly fail to understand history. How quickly people don’t understand – or don’t want to understand – the math behind the economics.
Let’s talk deficit and debt.
The last time the U.S. had a balanced budget was when President Clinton left office in 2000. Clinton had budget surpluses for his final four fiscal years 1998-2001, which was the only time between 1970 and 2018 that the U.S. has experienced such. National debt had been driven down to a mere $18 billion. He had inherited national debt of more than $400 billion.
And then came eight years of GOP reign which ended in the Great Recession, America’s worst financial crisis other than the Great Depression. President Obama inherited an annual deficit that would grow to more than $1.4 trillion and a national debt of $1.8 trillion. Many economists predicted it would take a generation (20 years) to recover.
Yet, after an influx of government bailouts and subsidies to right the ship, the economy under Obama began its ascent better than many economists had predicted. By the time the 44th president left office, the national deficit had been more than cut in half ($665 billion) and the national debt reduced more than $1 trillion. (CBO data)
While refusing to recognize the ills that his former party chieftain had handed Obama, President Trump called Obama’s economic policy a disaster and vowed to revive an already resurgent economy to Make America Great Again.
So, let’s look at what’s happened since his infamous tax cut that was going to help all Americans and give the U.S. the greatest economy the world has even seen. He began with a federal deficit of approximately $1.2 trillion and pushed it to $2.0 trillion.
As he’s spending like a drunken sailor while taking in fewer personal income and corporate tax revenues due to his tax cuts, the unthinkable happens. A crisis. A crisis that impacts the economy. Soon that $2.0 trillion deficit has risen to over $3 trillion with the $1.2 trillion Covid stimulus package. Yet another stimulus is needed, which will escalate the deficit even more. Thus, the deficit is likely to surpass a record $4 trillion.
So, while the president talks a great game, the economics tell a different story. And all too often, he mistakes a revived stock market for a surging economy. Gains on Wall Street are tendered most to those in the C-suites and shareholders. Only 52% of Americans actually holds stock.
One argument is that a surging Wall Street creates jobs. Really? Then why is unemployment so high? Ok, Covid. I’ll give you that. Some of that. Not all. But if Covid is the reason for unemployment, you would think the president would try to fix that so the economy could begin to stabilize and even thrive. We all know he is not.
To put Trump’s economic plan on personal terms, think of it this way. You make $100,000 a year. Your combined debt (mortgage, autos, college, secured, unsecured) is about $300,000. You are deficit spending and know you have to get your arms around that debt, so what decision do you make? In your infinite wit and wisdom, you declare that you are going to reduce your income and increase your debt another 50-100%. How long do you think you will survive?
Now, some will say that personal debt and national debt are two different things. Two different calculations. I’ve heard the argument. I’m not buying it. Math is math. Addition and subtraction are addition and subtraction. I think one former president called it “Voodoo Economics”.
Image credit: the feature illustration "False Positive" was provided by the author and presumed downloaded from ClipArt.email.