Opinion: Greed versus Need: Coronavirus Only Magnifies Ongoing Struggle over American Morality Tale

The inspirational mantras we hear multiple times a day remind us repeatedly that “we’re all in this together” and “we’ll get through this together.”

It’s such a powerful and commonplace expression these days, seemingly rolling off the tongues of every commentator, commercial spokesperson, and social media user, that one would almost think Hillary Clinton had, in fact, actually been elected back in 2016, when her defining campaigning slogan urged us to see ourselves as “stronger together.”  Everybody’s saying it. read more

Trump Lied To Justify Not Invoking Defense Production Act — GM, Ford Are Not Making Ventilators

Trump says coronavirus will wash away by July or August

Over the past week, President Donald Trump had claimed he was planning to invoke Defense Production Act powers that would allow his administration to compel private businesses to create products currently on short supply due to the coronavirus crisis.

But Trump reneged on that promise, telling reporters over the weekend that it wasn’t necessary as private enterprises were already doing so without his demanding of it.

“General Motors, Ford, so many companies — I had three calls yesterday directly, without having to institute like: ‘You will do this’ — these companies are making them right now,” Trump said on Saturday during a White House press briefing.

It turns out, when Trump means “right now,” what he really means is not at all — and possibly not ever.

According to a report from Michigan-based MLive, neither company is currently in the process of making ventilators or other necessary products to help with the fight against COVID-19.

MLive reporter Bob Johnson explained:

“No automaker is anywhere close to making medical gear such as ventilators and remain months away — if not longer.”

The report also stated that it may not even be possible to transform the auto plants into ventilator-making production sites at all, at least without the federal government ordering such a transition to take place.

GM announced on Friday it would work with a ventilator production company to help increase the numbers, but said it’s help is limited to logistics and purchasing — the company “stopped short of saying it would make ventilators in its own factories,” MLive added.

When President Trump tweeted on Sunday that he had given automakers the “go ahead” to start producing ventilators and other equipment desperately needed in the coronavirus pandemic, no one seemed to know what the pronouncement meant https://t.co/f437zjsNkb read more

Opinion: American Lives Depend on Telling True Story of Trump’s Life-Destroying Economy

What is the story of the U.S. economy?

Not unlike the proverbial elephant subject to scrutiny by a band of blind men, the nation’s economy is subject to multiple narrative descriptions depending on which component of the beast, whether our economy or an elephant, the blind man massages.

Some media pundits have argued that the historically low unemployment rates combined with record stock market performances attest to a strong economy that would propel Trump to victory in 2020 if only he were disciplined enough to stay on point about the economy, stupid.

Others claim focusing on these numbers is akin to grasping the trunk and the tail of the elephant, missing the bigger and much more accurate picture of an economy that has not just failed but actively assaulted the vast majority of Americans.  MSNBC’s Stephanie Ruhle, for example, has been unrelenting in fleshing out this more comprehensive narrative, insisting, among other points, that the stock market and the overall economy are not the same thing.

It may very well be the more compelling storyteller, or the storyteller who gets access to the most air time, who tilts the 2020 election.

Robert Shiller’s recent splashy book Narrative Economics underscores this point in a general way, arguing that the popular and viral narratives purveyed about the economy don’t so much describe the economy but drive the economic events themselves, regardless of the truth value of the story itself.

As the Yale University professor and Nobel-prize winning economist told CNBC, “It may not be so logical. It may be more, as I said, of animal spirits. This is an emotion that you feel at a certain time that you sense you see in other people. So when you see other people feeling confident about the market, you feel more confident yourself.”

He attributes recent market strength, for example, to Trump’s storytelling prowess: “He’s a motivational speaker. We’ve never had a motivational speaker president before. He knows how to create animal spirits.”

What cannot be emphasized enough, however, is the importance of a crafting an economic narrative that aligns as closely as possible with our economic reality, generating the most effective understanding of the dynamics and performance of the economy–for good decision-making by voters and good policy-making by legislators.

How we tell this story is vital to lives of the American majority, which is why Shiller’s applause for Trump’s motivational stirring of animal spirits is absolutely misplaced and damaging to American lives.

As we get a hold of the entire elephant of the Trump economy, we find an economy on a sugar high, thriving on taxpayer debt, enriching even further the already wealthy, and heading for a crash.

As we limn this elephant, let’s start with the national debt and deficit. Trump inherited a strong economy, and it is typically during healthy economic times that the government pays down the national debt. But both the deficit and debt have grown under Trump’s administration, largely because of his tax cuts that served largely the wealthy.

Reports indicated that in October the federal government’s budget deficit ballooned 34% from a year earlier to $134.5 billion, projecting that the annual deficit will top $1 trillion for the first time in eight years.

The national debt, meanwhile, has surged beyond $22 trillion.

Hmmm. If the economy is booming, shouldn’t the federal government’s coffers be filling up and not depleting?

We can certainly understand how in a time of recession the government would need to provide economic stimulus and thus run a deficit, but when the economy is supposedly experiencing record performance?

When Trump slashed corporate tax rates from 35 to 21 percent, we were told, as usual, that these tax cuts would pay for themselves, create an economy that enriches us all.

Basically, Trump is using the credit of the American worker to enrich corporate America and the wealthiest of Americans. It’s as if, for most Americans, someone maxed out their credit cards and yet they got none of the benefit of the goods and services purchased.

These tax cuts benefited the wealthy and did not trickle down, despite Trump’s promises that companies would invest in workers and not cut jobs. Companies like AT&T, Wells Fargo, and General Motors lobbied for them, promising to re-invest their tax savings in their workers and companies to the benefit off the nation as a whole. And yet all of these companies have engaged in massive layoffs or plant closings. AT&T has eliminated over 23,000 jobs since the tax cuts went into effect, despite receiving a $21 billion windfall from the tax cuts with the prospect of cashing in an additional $3 billion annually in tax savings. In November 2018, GM announced it would be closing five plants, eliminating 14,000 jobs in communities across Ohio, Maryland, Michigan, and Ontario, Canada, while buying back $10 billion in stock and earning a net profit of $8 billion on which the company paid no federal tax. Other automakers have also slashed thousands of jobs, saving billions of dollars.Wells Fargo did raise the minimum wage of its employees, though the tax savings for the company were 47 times larger than the cost of that pay raise to the company; and the company announced its plans in September 2018 to eliminate 26,000 jobs, at the same time that it has raised health insurance costs for its employees.

Meanwhile,

homelessness in the U.S. read more

Opinion: Trump May Try to Fool Voters with Another Mirage Middle-Class Tax Cut

Trump’s top economic advisor Larry Kudlow has hinted that another supposed middle-class tax cut may be in the works, a “Tax Cut 2.0” to be delivered—Surprise! Surprise!—in time for the 2020 election season, an bare naked ploy to try to convince average Americans he really cares about and their economic interests.

As the saying goes, “Buyer beware!”

Or, as George W. Bush famously put it, “Fool me once, shame on—shame on you. Fool me—you can’t get fooled again.”

Remember the Tax Cuts and Job Act of 2017? While most Americans did, it turns out, very likely receive some tax benefit, they didn’t even feel its effect for the most part. Why?  Well, 60 percent of the total savings of the legislation went to the top 20 percent of earners, while the top 1 percent were gifted 17 percent of all the tax cut dollars.  These numbers don’t even account for the enormous dollars dropped on corporations when their tax rate was slashed from 35 to 21 percent, a cut that further benefited the very wealthy disproportionately since they own the most stock.

What was left? The middle fifth of income earners paid about $780 less in taxes, less than $70 per month, and an even smaller and not-so-noticeable amount per paycheck.

Was there a larger benefit, though? Did the tax cut lead, as promised, to economic growth?

The short answer: Nope.

In fact, the United States lost more tax revenue than any other nation in the Organisation for Economic Co-operation and Development, as the nation’s tax-to-GDP ratio fell 2.5 percent from 2017 to 2018.

These tax cuts benefited the wealthy and did not trickle down, despite Trump’s promises that companies would invest in workers and not cut jobs. Companies like AT&T, Wells Fargo, and General Motors lobbied for them, promising to re-invest their tax savings in their workers and companies to the benefit off the nation as a whole. And yet all of these companies have engaged in massive layoffs or plant closings. AT&T has eliminated over 23,000 jobs since the tax cuts went into effect, despite receiving a $21 billion windfall from the tax cuts with the prospect of cashing in an additional $3 billion annually in tax savings. In November 2018, GM announced it would be closing five plants, eliminating 14,000 jobs in communities across Ohio, Maryland, Michigan, and Ontario, Canada, while buying back $10 billion in stock and earning a net profit of $8 billion on which the company paid no federal tax. Wells Fargo did raise the minimum wage of its employees, though the tax savings for the company were 47 times larger than the cost of that pay raise to the company; and the company announced its plans in September 2018 to eliminate 26,000 jobs, at the same time that it has raised health insurance costs for its employees.

Reducing the corporate tax rate from 35 to 21 percent and saving corporations some $13 billion in taxes was supposedly to spur economic growth, create more jobs, and induce companies to raise wages. While Treasury Secretary

Steve Mnuchin read more

As Wealth Tax Debate Heats Up, What Does it Mean to Invest in America?

Elizabeth Warren’s wealth tax proposal has certainly sparked debates not just about basic questions of fairness, of morality, but also about the economic effectiveness and very meaning of taxation.

The debate raises the question of what it means to invest in America.

Beto O’Rourke, in the last debate, jumped on the Warren-bashing bandwagon, accusing Warren’s policies of being “more focused on being punitive or pitting one part of the country against the other instead of lifting people up.”

Elaborating O’Rourke’s critique in terms of the impact of the proposed tax on the economy, Lawrence Summers, Treasury secretary under President Bill Clinton, and law professor Natasha Sarin argued in a paper they wrote that a wealth tax would “undermine business confidence, reduce investment, degrade economic efficiency and punish success in ways unlikely to be good for the country or even to be appealing to most Americans.”

While we tend to hear in the media from billionaires like Bill Gates and Leon Cooperman and not the 99/9% of households that would not pay more taxes under Warren’s proposal, polls directly contradict Summer’s and Sarin’s claim, showing overwhelming public support for a wealth tax.

But let’s assess Summer’s and Sarin’s claims that the tax would “undermine business confidence, reduce investment, and degrade economic efficiency.”

In short, let’s explore the question of what it means to invest in America and whether a wealth tax would really constitute a reduction of investment in America.

First, let’s just reflect intuitively on whether a tax on just .1 percent of American households seems likely to “undermine business confidence” and “reduce investment.”  Consumer spending makes up roughly 2/3 of the U.S. economy, so it stands to reason that policies geared toward fostering a consistently robust consumer and encouraging consumer confidence in the 99.9% of households just might be a more effective approach to stimulating economic activity and ensuring the long-term economic health. Just saying.

For example, a recent study from the Illinois Economic Policy Institute highlights the many ways raising the minimum wage would significantly improve Illinois’ economy. The study contends, “By raising the minimum wage, Illinois can boost worker incomes, reduce income inequality, increase consumer spending, grow the economy, generate tax revenues, and decrease taxpayer costs for government assistance programs.”

In a nutshell, raising the minimum wage to $15 would both save taxpayers money by decreasing the need for public assistance for the working poor (saving $87 million alone in food stamp outlays, according to the study), increase the revenue the state brings in from income and sales tax (generating, the study says, $380 million in new state tax revenue), and overall generate $19 billion in economic activity. read more

Experts Say GM Layoffs Are ‘Just the Start’ of Fallout From Trumponomics

When running for president, Donald Trump vowed that no American auto plants would close.

“If I’m elected, you won’t lose one plant. You’ll have plants coming into this country,” he said at a campaign rally in Michigan in October of 2016. “You’re going to have jobs again, you won’t lose one plant. I promise you. I promise you.”

This week’s news that GM is closing plants and laying off nearly 15,000 people as it discontinues several models of car in preparation for the transition to autonomous vehicles has brought those broken promises to the forefront.

But, according to a new NBC News report, these closings are only the beginning as GM alone has lost $1 billion because of Trump’s tariffs on steel and aluminum.

“They can read the crystal ball and see what’s coming,” said Robert E. Scott, a senior economist at the Economic Policy Institute. “This is the chickens coming home to roost on the broader Trump economic policies.”

According to Scott, Trump’s trade policies make no sense and  his tax cuts have been counterproductive. “The tax cuts are raising the country’s deficits while do nothing to spur investment,” he said.

“It was counter-productive. All this happy talk about investment is just that,” Scott added, “most companies have used money from the tax cuts to increase dividend payments to shareholders and buy back stocks. If nothing is done to address the problems created by Trump’s budget and failed trade policies, the problem is going to get worse.” read more