Comprehensive Impacts of Trump’s Second Year: Business & Economy
This publication is meant to be a comprehensive assessment of the impacts of the Trump administration. There are many things that happened during the campaign that are not included. For this series covering the second year, impacts from about January 20, 2018, to January 31, 2019, are included. An introduction to this year’s series is here.
You can read the complete series on the first year of the administration here.
There are sure to be things missing, but I have done my best to record these impacts. The impacts are compiled under 19 different categories, or articles:
1. Cabinet and Other Appointments;
3. Women & Families;
4. LBGT;
6. Ethics;
7. Targeting free press/free speech/Privacy;
8. Health & Safety;
10. Education;
11. Transportation/Infrastructure/Housing;
12. Immigration;
13. Social Contract;
14. Business/Economy;
15. Military/Defense/Police;
16. World;
17. General Governance;
18. Character; and
19. Some good news. Because there is always some good news.
Since this series takes a long time to write, I will publish each section as I complete it. This article is on Trump’s impacts on the business and the economy.
Although we have moved on from Trump’s dark ages with the 2020 election, I will complete this entire series because it’s so important that we never forget the damage done to millions of people, the fabric of the country, and basic democracy by the Trump administration.
Business/Economy
Trump’s tax cuts for the wealthy highlighted his economic impacts. While the middle class continued to shrink and working families continued to struggle, those who are already wealthy were provided a windfall. Profits at Wall Street trading increased by almost 50 percent and average Wall Street bonuses hit a record high of more than $184,000. While the average middle-class family saved about $930 a year, the top five percent of earners saved an average of $13,480, the top one percent saved an average of $51,140, and the top one-tenth of one percent saved an average of $193,380, according to the Tax Policy Center. In fact, 75 percent of middle class earners surveyed reported seeing little to no increase in their paychecks. And the reality is that those average taxpayers ended up paying more than $90 billion more under Trump’s new tax plan.
Economist Paul Krugman analogized Trump’s tax cuts like this:
You go out for dinner with a wealthy acquaintance. “I’ll take care of everything,” he says, and orders you a hamburger. Then he orders himself an expensive steak and a bottle of wine, which he doesn’t share. And when the waiter comes with the check, he points at you and says, “Charge it to his credit card.”
Economists from the Federal Reserve Bank of San Francisco warned that the tax cuts would most likely provide less of a boost to economic growth than predicted, and possibly none at all. That proved to be true. While there seemed to be some short-term gains for certain people, the Trump’s tax cuts were described as “a bust,” resulting in one-time small gains, if anything, for the average person with most of the saved funds going to buying back shares, which “shrinks the number of shares, boosting earnings per share and eventually, the stock price. That helps all shareholders, of course, but especially corporate executives, more than half of whose total compensation is in stock.” In fact, the small gains that the average person did get was immediately offset by inflation. Inflation increased so much, raising the cost of food, shelter, gas, and other things that any possible tax savings and wage gains were wiped out for the average American. The rise in healthcare costs alone outpaced wage gains and inflation. Adjusted for that inflation, there was slow, and even negative, growth in real wages. A Pew Research study found that real wages in the US are essentially stagnated at 1974 levels. In addition, findings from studies by the Federal Reserve and the United Way show that although the unemployment rate is low and the GDP is growing, the economy isn’t nearly as strong as these measures suggest. Almost half of Americans don’t have enough savings to cover a $400 emergency expense such as an unexpected medical bill, car problem, or home repair and more than a quarter of adults skipped necessary medical care last year because they couldn’t afford it.
Reporter Neil Irwin broke down how the economy can be measured:
Think of the economy as a bathtub. The level of the water in the tub — how much economic activity there is — is one useful, interesting question. Whether the water level is rising or falling — is this an economic expansion or recession? — is a separate question. And how fast the water level is changing — what is the pace of growth? — is a third question. All might be useful information, but they capture different things. And too much of the debate over how the economy is doing conflates them.
So the economy may appear strong if you “look only at the level of economic activity, not the rate of change.”
So while Trump touted an increased Growth Domestic Product, stating (falsely, like most of his statements), “In many ways this is the greatest economy in the HISTORY of America and the best time EVER to look for a job,” one strategist rightfully pointed out, “You can’t eat GDP. GDP doesn’t pay the bills.” This is illustrated by the fact that 40 percent of all Americans in 2018 struggled to pay for basic needs such as food, housing, utilities, or healthcare. As reporter Heather Long stated, “Jobs are plentiful, but jobs with good wages aren’t.” And writer Peter Georgescu pointed out that “having a job doesn’t exempt anyone from poverty anymore” since the 12 percent of Americans (43 million) who are considered poor by government measures are actually employed. In fact, writer Rajan Menon noted that one of the greatest national security threats for millions of Americans is their economic reality. Finally, even if we did want to blindly rely on GDP as an accurate measure of the economy, Trump’s trade wars dragged GDP growth down by 1.78 points in 2018, the worst number in 33 years.
In the meantime, the US continued to have one of the highest levels of income inequality on earth (although, to be fair to Trump, this trend was wholly started by Reagan). Under Trump, CEO pay grew by 17 percent.
Tax Policy & Income Inequality
· Trump cut taxes for the very wealthy at a time when the country needs to raise more revenue than ever — the CBO predicted that Trump’s tax cuts will add $1.85 trillion to the deficit over the next decade — unless we cut back sharply on benefits that middle-class Americans count on such as Social Security, Medicare, and Medicaid. The plan that Congress voted on and passed had written assumptions about these cuts, and Trump’s Treasury Department explicitly cited “welfare reform” as necessary. And that’s exactly what Speaker Paul Ryan attempted to do. Writer Erik Sherman pointed out that “by 2027, people making less than $75,000 will see a net loss through higher taxes or receipt of fewer services.”
· In addition to “welfare reform” being necessary for any positive economic impacts from these cuts, the Treasury Department’s pathetic, one-page “policy analysis” described positive economic results as based on agreeing to pass “Trump’s non-existent infrastructure plan, Trump’s non-existent welfare reform plan, and wait for Trump’s regulatory reform plan to work wonders.”
· According to an analysis, 80 percent of economic growth that is generated by the tax cuts will go abroad and benefit foreigners by 2028 after individual tax cuts expire.
· By April, the 4 biggest banks already made $2.3 billion off Trump’s tax law.
· Also, the biggest companies used their extra tax benefits to boost the value of their own shares instead of investing in outside growth or their workers by issuing a record number of stock buy-backs. One glaring example was Harley Davidson, which bought back $700 million in stocks while closing one of its plants.
· A United National analysis found that under Trump, Americans born into poverty are more likely than ever before to stay that way and that those who already are poor have gotten more impoverished. The analysis also found that the US is “fast becoming a champion of inequality.” One example of this is West Virginia, where poverty rose substantially under Trump.
Anti-Labor, Anti-Middle Class
· During the same week that Trump proclaimed to recognize public service, he announced a proposed $143 billion in cuts to federal retirement benefits, as well as freezing federal salaries and overhauling civil service laws. His goal was to end pensions completely.
· Citing the country’s fiscal situation (not ironically caused by his tax cuts and economic policies), Trump canceled pay raises for more than two million federal workers.
· He also signed an executive order limiting the amount of time required before an agency can fire a federal employee and encouraging agencies to fire immediately rather than suspend employees and allow them time to show improvement.
· In addition, Trump’s Supreme Court ruled for the first time that that workers may not band together to challenge violations of federal labor laws.
· In another anti-middle class act, Trump signed other union-busting executive orders, including those that limit the amount of time federal employees can spend on union duties to no more than 25 percent, require the federal government to start charging union members rent for using space in federal buildings, and imposes more aggressive negotiation for union contracts.
· An additional anti-union order from Trump’s National Labor Relations Board facilitates a “death by lawsuit” philosophy, ordering staff to pursue charges against unions for “negligent” behavior such as losing an employees’ complaint or not returning phone calls when the worker has questions.
· Trump introduced a rule allowing restaurant owners to keep employees’ tips for themselves. The Economic Policy Institute estimated that almost $6 billion would be taken from workers and “pocketed by employers.” The inspector general investigated reports about Trump’s Labor Department trying to “hush up” an internal analysis finding that the rule could cost tipped workers billions each year. (Editor’s note: In 2020, the inspector general found that the Trump rule “did not demonstrate it followed a sound process” in proposing that rule.
· Thanks to Trump’s government shutdown, not only did federal workers suffer, but so did all of the small businesses that rely on those workers, such as restaurants and cafes.
Lack of Understanding of Economics
· Trump named Larry Kudlow, a fellow television personality, as his top economic advisor. Kudlow has a “well-known history of making some shockingly wrong financial predictions.” Writer Ian Salisbury noted five times when Kudlow “has been spectacularly wrong about the economy.”
· Further, Trump’s chair of the White House Council of Economic Advisers, Kevin Hassett, regularly tried to boost Trump’s decisions by promoting “alternative findings on wages, inflation, poverty, and deficits at odds with data produced by the Congressional Budget Office, Bureau of Labor Statistics, and Census Bureau.”
· Showing an utter lack of understanding of economics, Trump told the White House National Economic Council director Gary Cohn to “just run the presses — print money.” Cohn was reportedly “astounded at Trump’s lack of basic understanding.”
International & Immigration-Related Economic Blunders
· Trump unilaterally pulled out of an international accord related to Iranian negotiations and imposed sanctions on Iran. In response, oil prices shot up, increasing gas prices not only for Americans, but for many in the EU.
· Trump continued targeting H-1B visas, which allows skilled foreign workers to obtain a US visa. This has had a major impact on business as Trump tried to disallow spouses of H-1B visa holders from remaining in the U.S. and limit the length of the visas.
· Trump created more harm among immigrant entrepreneurs by delaying the startup visa program, creating, as one person put it, “another nail in the coffin for immigrants here in the U.S.” In the meantime, entrepreneurs from around the world are moving to other countries to start their businesses where they believe they’ll have a greater chance of success.
Trade War Games
· Trump implemented tariffs on many industries, which all economists warned was a bad idea and could end any economic advancement. In fact, more than 1,000 economists warned that Trump was repeating one of the biggest mistakes of the Great Depression, the Smoot-Hawley tariffs.
· This caused other countries to implement tariffs of their own on American goods, creating trade wars.
· In response to Trump’s irresponsible tariffs, China imposed tariffs on 128 US products worth $60 billion, including corn, soybeans, wine, pork, and steel pipes.
· Since China buys 60 percent of all US soybean exports, US soybean farmers, who supported Trump overwhelmingly, got screwed, losing their biggest market. The National Milk Producers Federation also talked about being harmed by the tariffs.
· Chickpea producers also saw a 30 to 40 percent drop in revenue due to Trump’s trade wars.
· Iowa’s Agriculture Secretary stated early on that China canceled orders on products — particularly soybeans — that it usually imports from the state, leaving Iowa farmers out to dry.
· And in Ohio, one soybean farmer stated, “The effect of the trade war has been very devastating on soybean farmers here. We’ve taken a 20 percent drop in price” when Ohio farmers had nowhere to sell their crops.
· In an attempt to appease farmers who he screwed, Trump established a plan to give them $12 billion taxpayer dollars in aid. Even those bailout funds couldn’t help much due red tape and long waiting periods, resulting in few payouts. Many farmers mocked Trump’s plan and wondered why he even bothered.
· The number of family farm bankruptcies doubled from the tariffs.
· In response to China’s response to Trump’s tariffs, “like a blundering toddler doing the same thing over and over again and expecting a different result,” as write Bess Levin eloquently described, Trump issued $200 Billion MORE tariffs on China.
· Also in response, the European Union imposed tariffs on $3.3 Billion worth of American goods before the US and the EU finally agreed to discuss a bilateral trade deal.
· In addition, Canada imposed tariffs on $12.8 Billion worth of American goods.
· Canada also reshuffled its cabinet to prioritize trade diversification to establish new trade deals after it deems USA to be an unreliable trade partner due to Trump’s trade wars.
· Writer Rick Noack documented how Trump alienated all of our allies and raised the stakes of a conflict that worried world leaders by starting a trade war.
· All other members of the G-7 criticized Trump’s trade wars, further isolating US allies.
· Economists found evidence of negative and harmful employment impacts from Trump’s trade wars, some of which are detailed by writer Stuart Anderson.
· The first recorded loss of jobs resulting from Trump’s trade wars were at Mid-Continent Nail, America’s largest nail manufacturer. In fact, precisely because of Trump’s tariffs the company is considering moving to Mexico.
· The company that Trump used as an example of how he’ll impact jobs, Carrier Corp., implemented several rounds of lay-offs in 2018.
· Trump’s tariffs on foreign steel and aluminum caused problems in several industries, including that of beer brewers. They estimated that over a year, the tariffs could increase the cost of beer production by $347 million.
· The tariffs also caused Coca-Cola to raise its prices on its products.
· In fact, all major retailers, including WalMart, Target, Macy’s, Office Depot, Gap, Honest Co., Fossil Group, Michael’s, and Jo-ann, said that they’d have to raise prices because of Trump’s tariffs. The National Retail Federation’s CEO Matthew Shay said, “Achieving better trade deals is an important priority, but there is nothing better about it when American families are forced to pay higher prices for everyday purchases.”
· Trump’s tariffs caused the company Electrolux to put on hold a $250 million investment in Tennessee. Although they planned to go ahead with the investment a year later, they still closed the Memphis factory.
· General Motors warned that the tariffs could force the company to cut jobs and raise the price of cars, perhaps by thousands of dollars. By midyear, GM projected to lose $1 Billion because of Trump’s tariffs. And by the end of the year, the company laid off 15 percent of its workforce and closed five plants in North America.
· After Trump tweeted that his tariffs meant that Ford could move back to the US, Ford said it was abandoning plans to move production of the Focus Active from China to the US. Ford also projected losing $1 billion in profits and planning layoffs because of the tariffs.
· In another example, in New York, Niagara Transformer Corp were severely impacted by Trump’s tariffs on steel due to the company’s suppliers and customers being in Canada. The president of the company said, “It makes me a lot less competitive. Essentially it makes my product 50 percent more expensive than that of a Canadian supplier.”
· Element Electronics, the last TV factory in the US, also closed because of Trump’s tariffs.
· While Trump was causing trade wars, the rest of the world moved forward with sensible economic policy without the United States. Eleven countries signed the Trans-Pacific Partnership after Trump withdrew the US.
· The Chamber of Commerce estimated that Trump’s trade wars could cost Americans 2.6 million jobs.
· And the World Bank warned that Trump’s trade wars could reduce trade to levels similar to the 2008 financial crisis. (Spoiler alert: Trump’s trade war costs are proving “more widespread, deeper, and longer-lasting than previously believed.”)
· Ignoring it all, Trump doubled down and introduced the United States Fair and Reciprocal Tariff Act, which would have abandoned the World Trade Organization and provided Trump a license to raise U.S. tariffs at will, without congressional consent and without regard to international rules. (Thankfully, that bill died in committee in 2019.)
· All of this confirmed what most people already knew: Trump was bad for the stock market (despite the nonsensical tweets from Trump claiming that Democrats’ “harassment” of Trump was hurting the market).
· In just one example, the market plunged when Trump tweeted confusing mixed signals about the future of the Federal Reserve and its leaders.
· Research also confirmed that counties that voted overwhelmingly for Trump “continue to fall further behind the rest of the country economically,” especially compared to counties that voted for Clinton.
· Rural America — who overwhelmingly voted for Trump — have overall been left behind economically because of Trump.
The next article will cover Trump’s impacts on the military and defense.
