Lost in all the noisy drama and aftermath of Attorney General William Barr’s release of his controversial four-page “summary” of the Mueller report was news that the U.S. in February recorded its largest monthly budget deficit in the history of recording such figures. According to Bloomberg, the budget gap for February was $234 billion, exceeding the previous record of $231.7 billion registered seven years ago when the nation was still recovering from the Great Recession.
This news represents an important revelation for assessing exactly where President Trump’s economic policies are leading us as a nation and what the economy’s trajectory portends for the ordinary citizens, those of the 99 percent, living in the United States.
In short, Trump’s policies aren’t helping, and the prospects aren’t looking good.
So much for trickle-down economics and the ever-recycled myth that tax cuts pay for themselves.
A large driver of this deficit are, perhaps not surprisingly to anyone not clinging stubbornly to the myth of trickle-down economics, the 2017 Trump tax cuts. The month of February witnessed a 20 percent decline in corporate tax revenue. In 2017, before the tax cuts went into effect, corporate tax receipts at this point in year totaled $87.4 billion, compared to $59.2 billion to date this year, a 33 percent decline.
Reducing the corporate tax rate from 35 to 21 percent, saving corporations some $13 billion in taxes, was to spur economic growth, create more jobs, and induce companies to raise wages. While Treasury Secretary Steve Mnuchin trumpeted that 90 percent of working adults would experience an increase in pay tied directly to the tax cuts, in fact only 4.3 percent of workers in Fortune 500 companies have received either a one-time bonus or an increase in wages. Businesses have reaped nine times more in tax cuts than what they have passed on to workers.
And regardless of the tax benefits they receive, corporations not operating efficiently will continue to shutter plants, as GM did with its Lordstown plant, demonstrating again that corporate windfalls don’t create jobs, don’t trickle down, and don’t help workers.
In the meantime, the failed promises and increased deficits become the very fodder the GOP needs to fuel its ongoing quest to assault ordinary Americans by slashing entitlements.
The ballooning deficit resulting from the Trump tax-cuts, for example, cultivated a fertile context for Paul Ryan and Mitch McConnell to loudly renew their insistence that cuts to Medicare and Social Security are necessary to address the out-of-control deficit their own policies immediately exacerbated. Far from benefitting workers, these tax cuts, which were supposedly to trickle down, just keep cutting workers and increasing economic precarity, not prosperity. How about we measure that?
Last December, heading into the government shutdown, Trump sought to freeze the pay of federal workers. Recently he proposed slashing the salary and benefits of postal workers.
These measures do not seem to index a world growing prosperous because enormous tax cuts pay for themselves and generate prosperity.
Indeed, Trump’s proposed 2020 budget calls for significant cuts to education and services, even though we know, for example, that investing in education promises to serve the health of the economy overall as well as helping individuals increase their earnings over the course of their lives, thus also creating more tax revenue. In short, these cuts are harmful to ordinary citizens as well as the overall health of the economy.
Moreover, despite Trump’s claims to the contrary, ordinary citizens are not experiencing tax relief because of the Trump tax cuts. Only one in five taxpayers are reporting they are paying less, while 29 percent indicate their tax bills have increased.
So while “the economy” might seem to be humming along with Trump touting record-low unemployment rates and booming corporate profits, we need to recognize, of course, that those metrics used to gauge the health of “the economy” in no way measure the well-being and security of the American worker or the degree to which the working class shares in the fruits of their labors manifested in the “success” of the overall economy. Indeed, shares of GM’s stock surged some 9 percent after the announcement of layoffs last November, underscoring the diametrical disconnect between corporate and shareholder interests and those of the mass of Americans overall.
The Trump administration claims that the current budget deficits are due to accelerated benefits of the recent tax cuts and that the cuts will pay for themselves with future growth.
As Jason Easley has reported, though, in the pages of PoliticusUsa, the economic forecasts are expecting growth to slow continually over the next few years, declining to as low as 1.1 percent in 2020.
So, the record budget deficit set in February does not bode well for the average American, and this budget deficit is just the most recent manifestation of the consequences of Trump’s tax policies and budget proposals.
And, as is typical under Republican rule, the more Republicans grow the deficit, the more they call for slashing spending.
Once again, the same same dangerous script is unfolding.
Tim Libretti is a professor of U.S. literature and culture at a state university in Chicago. A long-time progressive voice, he has published many academic and journalistic articles on culture, class, race, gender, and politics, for which he has received awards from the Working Class Studies Association, the International Labor Communications Association, the National Federation of Press Women, and the Illinois Woman’s Press Association.