John Edward teaches economics at Bentley and UMass Lowell. This is the seventh in a series of columns he has written on economics and the presidential election. Links to his earlier posts may be found at the end of this column.
Trump’s success with voters tells an important story about the deep trouble America is in. [Trump] tapped into a frustration I have chronicled for decades, writing extensively about inequality for many years before it became a household concern.
David Cay Johnston, from The Making of Donald Trump
Polls show Republican Presidential nominee Donald Trump doing well among low-income less-educated white males. He does extremely well among voters who favor an authoritarian regime. A number of media outlets, including The Wall Street Journal and Fox News, have referred to Trump’s base as angry white males. Many of his supporters have good reason to feel resentment for how “the system” has treated them.
The Homer Simpsons of our economy are the people who will be hurt most by a Trump presidency!
In 2003, a professor from Princeton University wrote a paper titled Homer Gets a Tax Cut. It explored how tax cuts advertised to help the “middle class” often benefit mostly the upper class. Poor Homer Simpson gets excited over what will be a minimal tax cut. Mr. Moneybags – in the Simpsons, Mr. Burns – gets the windfall benefit.
At one point Trump pledged “low income Americans will not pay taxes at all.” However, upon closer inspection, Trump’s tax policies will push Homer even further behind. As reported in a The Washington Post headline: “Economists: Trump tax plan offers almost nothing for the middle class.” Homer gets a 1 percent tax cut. Mr. Burns gets a 19 percent cut.
The Tax Policy Center estimates Trump’s budget policies will increase the national debt by $11 trillion. They observe that even if he eliminated all spending on national defense it would not come close to closing the gap he will create. Yet he says he will increase defense spending. Trump will leave much less available for the government programs that low and middle-income families like the Simpsons need.
After Great Britain voted to exit the European Union, The New York Times ran a headline “A Lesson From ‘Brexit’: On Immigration, Feelings Trump Facts.” Donald Trump is feeding on the anxiety that Homer Simpson has regarding economic security. However, anti-immigration fervor is bad economics. The former head of the Congressional Budget Office estimates Gross Domestic Product (GDP) would decrease by $1.6 trillion under Trump’s immigration policy. The Huffington Post cites analysis that “granting legal status to undocumented immigrants” would increase GDP by $1.1 trillion. History shows that the Homer Simpsons of the world will not fare well when Trump’s immigration policies cause a recession.
Trump’s trade policies could be even worse. An estimate from Moody’s analytics (run by one of Senator McCain’s economic advisors when he ran for President) has Trump’s trade policies resulting in a loss of seven million jobs and an unemployment rate of 9.5 percent (in 2016 it has gone below 5 percent for the first time since the Great Recession). Some prices at the Springfield Kwik-E-Mart that Homer shops at go up 20 to 40 percent.
If Homer loses his job at the nuclear power plant, Obamacare will provide him continued access to health insurance. Mr. Burns has enjoyed government subsidized health benefits for decades. Millions like Homer will lose their insurance under Trumpcare. Meanwhile Mr. Burns will get lower premiums for his “gold” plan.
Homer’s children should be able to get an education at UMass Lowell without incurring a huge student load debt. Democratic nominee Hillary Clinton wants to make that happen. Meanwhile, Trump wants schools to compete like his failed and disgraced Trump University competed. He thinks schools that someone judges to not be doing as well should close. He thinks closing schools is good. Homer better hope that Bart and Lisa are lucky enough to attend one of the schools that are deemed more competitive.
Clinton and Trump are poles apart on the environment. Pollution is a classic example of an “environmental inequality” – pollution problems are much more prevalent in low-income neighborhoods. Global warming will also have a larger impact on the poor.
Each of these economic issues is important. The links at the end of this column discuss them in more detail. They are all related to and reflections of inequality. President Obama, the International Monetary Fund, and others have called inequality “the defining issue of our times.”
Inequality is severe in the United States and has steadily been getting more extreme for over three decades. As just one data point, as reported by The New York Times:
From 1970 to 2010, average pre-tax income per taxpayer in the bottom 90 percent of the distribution fell from $31,839 to $28,840 in inflation-adjusted dollars. For those in the top 0.01 percent, market income rose from $2.14 million a year in 1970 to $16.27 million in 2010.
We have known for a few years that inequality has become at least as severe as it was just before the Great Depression. Now, as recently reported in The Washington Post, “today’s income inequality may be the highest the nation has ever known.”
However, we recently had some positive news on inequality. The Census Bureau released a report showing median income rose by 5.2 percent in 2015. Average income has been going up since the Great Recession, but almost all the gains had been going to high-income earners. The good news regarding inequality in this census report was that all income groups enjoyed gains. It was only one year. We have to keep this trend going.
David Cay Johnston is a Pulitzer Price winning investigative journalist. He wrote The Making of Donald Trump based on years of following Trump’s career, interviews and conversations with Trump, and digging for the truth. Based on Johnston’s reporting, we cannot trust Trump to do what he says he will do.
I would rather take Trump at his word. That he means what he says when he says what he will do if we elect him President.
Trump’s policies will make already extreme inequality even more extreme. We are at dangerously high levels of income inequality. Our economy, and our society, cannot take much more. We are coming precariously close to going over The Social Cliff.
It’s not a police issue, it’s a society issue. In impoverished neighborhoods, people without hope do these kinds of things. You show me a man that doesn’t have hope, I’ll show you one that’s willing to pick up a gun and do anything with it. Those are the issues that’s driving this violence.
Chicago Police Superintendent Eddie Johnson
The kind of violence we are seeing in Chicago will stir authoritarian urges in some. Homer Simpson may think he should vote for the self-proclaimed “law and order” candidate. After 4 years of Trump’s economic policies, impoverished neighborhoods will likely be even more impoverished, and without hope.
Hillary Clinton is a much better choice. During the last 4 decades the best run our economy had was during her husband’s administration. Although inequality continued to increase under President Bill Clinton, the rate of increase at least slowed down. On September 21st, Hillary Clinton penned an Op-ed in The New York Times that outlined her “Plan for Helping America’s Poor.” Homer should give it a read, because…
An informed voter is our best citizen.
Next up – the final installment – who you should vote for if you care about the economy. Paraphrasing a popular maxim, don’t do Do’h!
The first column in this series, “The 100 Percent,” appeared on May 16, 2016; The second, “Voodoo Two,” on May 23, 2016; the third. “Paying for the Wall” on June 22, 2016; the fourth, “Trump’s Trade War” on July 5, 2016; the fifth, “Making America Sick Again” appeared on August 16, 2016; the sixth, “The Education President” on August 29, 2016; and the seventh, “Energy & Environment & The Precautionary Principle” on September 18, 2016.