Today, Donald Trump went to Detroit to deliver what was billed as a major economic address. In reality, this unfortunate performance represented yet another step in Trump’s capitulation to the reigning supply side and trickle-down economics orthodoxy embraced by establishment reactionaries from the US Chamber of Commerce to the House Republican leadership to the gaggle of think tankers who actually wrote Trump’s text.
Last week, Trump was not sure whether he would endorse the well-known austerity ghoul Paul Ryan for reelection. Today, Trump threw more of his own Hobbesian-capitalist radical program overboard, taking on more and more of Ryan’s standard Republican Tax Cuts for the Rich approach.
For many Americans, the most striking thing about Trump’s is the many urgently needed programs which it does not contain. In his Detroit speech, Trump has no job creation program, no student loan debt relief, no plan to mobilize Federal Reserve credit to provide 0% financing for infrastructure, jobs, and production. In fact, Trump has no national infrastructure plan at all. Trump does not propose an increase in the federal minimum wage, and makes no mention of the minimum wage at all. There is no role for trade unions, not even in an advisory capacity. Despite some more blather about trade, there is no protective tariff, only the pledge to renegotiate existing free trade sellouts, and make them “great.” Trump says not a word about the urgently needed universal pre-K. , He says nothing about Social Security and Medicare, and has never promised to maintain food stamps (which alarm him) or Medicaid. He is however pledged to throw more than 20 million Americans off Obamacare as it is destroyed. There is no Marshall plan for the inner cities and for rural America to contribute to social pacification by facilitating the entry of young unemployed persons into the labor force. There is total deregulation of the US economy, and not an inkling of Wall Street reform or taxing Wall Street; Trump thinks that even the weak Dodd-Frank law is too draconian. Trumptown is the Pottersville of Frank Capra’s It’s a Wonderful Life.
In Trump’s original tax plan presented some months ago, the fascist billionaire was more radical than the House reactionaries in his commitment to savage tax cuts for the super-rich. Trump wanted to reduce the top rate for individuals from almost 40% down to 25%. By doing this, and abolishing the estate tax at the same time, Trump would have cost the US government about $1 trillion per year over the next 10 years, for a total of $10 trillion. This would have blunted the austerity demagogy of the Republicans today, and might have created problems with the traditional reactionary ideologues who support Ryan. So Trump has increased his proposed top rate up to 33%, meaning about a 7% cut from the current situation. But this means that Trump can no longer present himself with messianic overtones, and risks leaving him as just another boring, greedy Babbitt.
Apparently on orders from Ryan, Trump is now stressing his view that the US corporate income tax, currently at 35%, is way too high. Of course, it is an open secret that almost nobody pays the full 35% rate. Companies generally use various loopholes to get around paying. When that is factored in, the US corporate income tax is no longer one of the highest in the world, since the effective rate which companies pay in the real world approximates the international average. Nevertheless, this whopping 20% cut in the starting points for the various corporate loopholes will gratify the US Chamber of Commerce and other reactionary business interests no end. Will Trump’s crazed following of dupes and fanatics realize they are being used by GOP cynics?
Supply-side economics was developed during the pre-Reagan years by a group of publicists who were incompetent in economics, but were eagerly seeking ways to rationalize and justify revamping the tax code so as to engineer a massive redistribution of wealth from working people and the middle class into the pockets of the superrich, or top 1%, who represented the darlings of the Reagan Administration. Individuals like Art Laffer of the infamous and discredited Laffer curve, utopian Congressman Jack Kemp, and ideologue Jude Wanniski were associates in the team, which manufactured this tremendous obfuscation, which still lives on after almost 40 years.
Supply-side doctrine asserts that tax cuts for the rich would spur wealthy individuals to make productive investments and thus generate new economic activity. The benefits of these new investments would then gradually trickle down to the middle class and even to workers and the poor. But the benefits never arrived, in large part because rich people with cash on hand were tempted by the much higher rates of return in the stock market bubble of the 80s and the growing derivatives markets in Chicago and elsewhere. They did not invest in new plant, equipment and jobs in the rapidly de-industrializing US economy of the Reagan years.
But the tax cuts for the rich cut revenue drastically. And unsustainable deficit loomed. The infamous Alan Greenspan came forward with a plan to increase the Social Security Payroll Tax under the cover story that he was saving the pensions of future generations, and then steal the money to mask the deficit. Tax cuts for the rich thus went hand-in-hand with brutal tax increases for wage earners. But the looting of Social Security to mask the deficit was still not enough to prevent Reagan from literally tripling the public debt of the United States over his nightmarish four years in office.
Stephen Moore, now one of Trump’s key economic advisers, and his sidekick Larry Kudlow, are both radical devotees of the supply-side and trickle-down methods left over from the Reagan years. Get set for these two and a number of others to come on television and argue that history proves that tax cuts for the rich lead to increased revenue and economic growth. It did not happen in Reagan’s time, and it will not happen ever.
Supply-side is still the standard economic false consciousness of the Republican Party, and it is to this which Trump has now capitulated.
Trump is now widely regarded as the pawn of foreign powers who seem bent on intervening on his behalf. Trump started his Detroit speech with a lengthy rant about how the Democrats’ economic policies serve foreign powers. These days, the fascist billionaire is projecting his own characteristics more and more on his critics.
The great beneficiaries of Trump’s tax plan are the super rich. This is true whenever tax cuts are done through percentages applied across the board. The top brackets end up collecting millions, while a wretched pittance is left for working people. Tax cuts should be offered in equal dollar amounts, not equal percentages. The best way is to increase the value of the standard deduction and the personal exemptions, with tax reform from the bottom up.
Trump today claimed to be the Savior of New York City, because of his timely real estate investments. In reality, he was buying up distressed properties at bargain basement prices with a view to realizing immense profits in the future for his own greed. The disturbing implication is that the fascist billionaire is making a transition from mere garden-variety megalomania to actual messianic delusions, in which, for example, he might see himself as the second coming of Jesus Christ. Stay tuned. Trump had very little to say about Wall Street today, mentioning the New York money center only in passing, while boasting about his intention to roll back the carried interest deduction, which benefits mainly hedge fund hyenas. But even if Trump ever removes the carried interest loophole, he is more than compensating Wall Street firms by lowering the corporate income tax from 35% to a miniscule 15%, which will more than make up for any minor losses they might suffer. Bernie supporters must note: your man always talked about Wall Street, and Trump never does.
Trump remains committed to his idea of rewarding corporate tax evaders by setting up a special 10% sweetheart corporate rate for tax cheats bringing back some of the $3 trillion, which are now being held in overseas cash stashes. A real populist, needless to say, would use a confiscatory 50% tax next year to make these lampreys bring their money back this year at the standard 35% rate or face the consequences.
Trump wants to totally deregulate the US economy, especially Wall Street. He would wipe out all of Obama’s executive orders, both good and bad. He would give a tremendous reward to the parasites and speculators who created the 2008 derivatives bubble and Lehman Brothers panic. By completely abolishing the estate tax, a progressive and beneficial tax, which hits about 0.2% of the wealthiest families, the speculators who made out like bandits in the Reagan stock market bubble of the 80s, the predators who stoked the .com bubble around the turn-of-the-century, and the derivatives parasites who destroyed the US economy with the Bear Stearns and Lehman Brothers, bankruptcies in 2008 will all be able to bequeath their ill-gotten gains to their dimwitted progeny.
Through a judicious combination of outright lying and clinical hysteria, Trump was able to offer a short history of Detroit over recent decades without mentioning the Obama rescue operation which kept General Motors and Chrysler in existence, and thus able to survive. Trump is a massive hypocrite.
Without going into too many details, Trump made clear that he wants to privatize the entire US school system and wipe out the bedrock American commitment to free, universal, compulsory, quality public education, which goes back to the Northwest Ordinance of 1787 under the Articles of Confederation, and even earlier to the New England colonies in the 17th century. He also wants to destroy the teachers’ unions.
One of the most absurd aspects of this oration was Trump’s attempt to promote his predatory daughter Ivanka to the status of an Evita Peron for the well-heeled crowd at the Detroit Economic Club. Trump claimed that Ivanka had convinced him to make childcare expenses fully deductible. This notion may eventually rank with Marie Antoinette’s “Let them eat cake” outburst of the French Revolution, since it reveals how out of touch Trump’s sweatshop entrepreneur daughter actually is. Ivanka’s proposal suits the rich. In order for a childcare deduction to mean anything to a middle-class family, the benefit would have to be offered in the form of a refundable tax credit -- refundable because many lower income earners do not pay enough taxes to be able to use such a deduction. They do not have enough income to offset. This is quite apart from how the deduction is offered. If this is to become simply one deduction among many itemized deductions, for many taxpayers, it would become meaningless, and the cruel hoax. So make it a refundable tax credit that can be paid out to people who don’t have enough income, and we might be back in reality. But Trump is not likely to be thinking along these lines.
Late last week, Trump announced the members of his council of economic advisors for the presidential campaign. These were all white men – incredibly stupid, really a provocation, for a candidate with a well-earned reputation for dissing women and minorities. Almost all were connected to finance and speculation. Many represented hedge funds. There were no trade unionists, or other representatives of working people. Quite a few were business associates of Trump. They are a financier faction. Here are some samples from press accounts:
Once a liberal donor who made his fortune at Goldman Sachs, Mnuchin began running Trump’s national fundraising operation in May. Mnuchin has donated to Hillary Clinton, Al Gore, Barack Obama and John Kerry. Mnuchin has been heavily involved in gearing up Trump’s fundraising from nearly nonexistent to at pace with Clinton. [He also worked for the Soros interests.]
The founder of Club for Growth is now a visiting fellow at the conservative Heritage Foundation. Club for Growth is known for pushing small-government, free-market ideology — a position somewhat at odds with Trump’s stated goals of limiting international trade. Moore has also been a public policy and economics writer at the Wall Street Journal. In May, he began helping Trump rewrite his tax plan. [Moore is thought to be at least a co-author of Trump’s Detroit speech.]
An advisor to Harvard Business School and a member of New York University’s Board of Trustees, Paulson is an investment fund manager with more than two decades of experience. Paulson’s firm manages more than $19 billion in investments and he is worth nearly $10 billion. The investment manager famously bet against subprime mortgage loans that failed and led the financial crisis in 2008.’1
‘The panel also includes former steel executive Dan DiMicco; oil magnate Harold Hamm; Howard Lorber, the CEO of tobacco company Vector Group Ltd; Trump campaign finance chairman Steven Mnuchin, a former partner at Goldman Sachs who is now chairman and CEO of private investment firm Dune Capital Management LP; and David Malpass, a former official of the U.S. Treasury and State departments.’2
What kind of a moron do you have to be to consider Trump a populist outsider when he appoints this bunch of wealthy parasites to his council of economic advisors? A Trump regime would be a new edition of the Predators’ Ball.
(Webster G. Tarpley)