Speaking of Donald Trump and his troubled and disastrous two years in office, the question is what has been really accomplished. Well, he was able to appoint two Justices to the Supreme Court who will probably sustain his anti-environment, misogynist, anti-Choice, and anti-union policies. The other triumph of his first term was his tax cut, which was economically skewed to the top income brackets, the corporations and away from the Blue States which contribute the largest amount of money into the US Treasury. In 2016, American corporations paid the lowest percentage of revenue to the US Treasury in the 105 year history of the graduated income tax, enabled by the 16th Amendment to the Constitution. Within a year of the Trump tax cut, corporate contributions, already at their lowest level in that 105 year period, dropped another 40%. What then was the result of the tax cut? Yes, there were jobs created, but interestingly, there were fewer jobs created in 2017 and 2018 than in 2015 and 2016. In the first three months of 2018, the average jobs that were created were 220,000. This year, that average fell to 180,000. A drop of 18%. By the way, during the Obama years, unemployment which hit 10.6% as a result of the Great Recession, authored by his predecessor, declined to 4.7%. Thus during the Obama eight years, there were over 15 million jobs clawed back, a net gain of 11 million and the DJIA, which bottomed in June of 2009 at 6600, reached 20,000.
The promised growth rate, of anywhere from 4 to 6%, grew at 2.9% and the annual deficit went from $585 billion in 2016 to an estimated $984 in 2019. How did those deficits effect the National Debt? It soared $2.4 trillion! Along with the growing deficits, where was the repatriation of trillions of US Dollars parked overseas? What happened to those “tax-sheltered” monies? Meanwhile, the Treasury Department said this week,(March 4th) that the U.S. government’s deficit for the first four months of this budget year rose to $310.3 billion — a full $134.6 billion dollars more than the deficit during the same period last year. This is in spite of the government reporting a budget surplus amounting to $8.7 billion in January.
Experts say the higher deficit indicates increased public expenditures for social security, defense and the national debt as the government grapples with the consequences of the Trump administration’s Tax Cuts and Jobs Act. The law, which Congress approved in 2017, reduced taxes for individuals and corporations by a massive $1.5 trillion.
But, what of trade and the tariff war that Trump promised? So with that strategy in mind, what happened to our international balance of trade deficit? The U.S. trade deficit surged to a 10-year high in 2018, with the politically sensitive shortfall with China hitting a record peak, despite the Trump administration slapping tariffs on a range of imported goods in an effort to shrink the gap.
The Commerce Department said on Wednesday that an 18.8 percent jump in the trade deficit in December had contributed to the $621.0 billion shortfall last year. The 2018 deficit was the largest since 2008 and followed a $552.3 billion gap in 2017. The trade deficit has deteriorated despite the White House’s protectionist trade policy, which President Donald Trump said is needed to shield U.S. manufacturers from what he says is unfair foreign competition. In February, 2019, we had the largest trade deficit in one month in our history, $234 billion. In fact, during the first five months of the 2019 fiscal year (starting in October, 2018) the deficit hit $544 billion, up 40% form the same period of the 2018 fiscal year.
President Trump’s supporters would point to the quarterly figures on gross domestic product and crow about how his brilliant economic leadership had fulfilled his promise of growth of 3.5% or more. In February, the government released its preliminary GDP figure for 2018. It’s not 3.5% or more. It’s 2.9%. That may seem like much of a shortfall, but it points to the difficulty Trump has faced in reaching his promised goal on a sustained basis.
Moreover, the 2018 growth figure is beginning to look like a high point for his presidency. Growth for the fourth quarter came in at an annualized 2.6%, a sharp retreat from the 3.4% in the third quarter. (The figures are inflation-adjusted.) In fact, with all the growth of the GDP, 2017’s growth was 2.2%. But, let us understand that the comparison that Trump made is somewhat misleading. President Trump compared annual GDP growth in the Obama era to quarterly GDP growth in a three month period. And quarterly GDP often isn’t a good indicator for how much an economy will produce over the year, with quarterly GDP growth often differing significantly from the year’s overall GDP growth.
Take the Obama era for example. Between 2009 and 2016, GDP growth reached at or above 3% on a quarterly basis about eight times. But, let us not forget, that the first 2 years of the Obama Administration, unemployment had to come down from 10.5% in June of 2009, as a result of the effects of the Great Recession. Also, let us not forget, that every recovery from Recessions, after WWII, were led by housing. This one was caused by housing, which as a result, left millions of homes unsold.
The United States last year imposed tariffs on $250 billion worth of goods imported from China, with Beijing hitting back with tariffs on $110 billion worth of American products, including soybeans and other commodities. Trump has delayed tariffs on $200 billion worth of Chinese imports as negotiations to resolve the eight-month trade war continue. The United States has also slapped duties on imported steel, aluminum, solar panels and washing machines. The goods trade deficit with China increased 11.6 percent to an all-time high of $419.2 billion in 2018. The bottom line, is that with this tariff effort, the export of agricultural products (our largest export commodity) has declined and the American government is subsidizing soy bean farmers to the tune of billions. The government faces three high-cost years for farm subsidies, beginning with $5.8 billion for this year, says the Congressional Budget Office (CBO), as low commodity prices drive up the cost of programs that stabilize crop revenue. In its latest budget baseline, CBO forecasts that crop subsidies will cost a total of $22 billion for fiscal 2016, 2017, and 2018. That’s a 9% increase from the estimate it made a year ago of $20.1 billion for the period.
Trump has the dubious distinction of being the first leader among the Group of Seven (Canada, France, Germany, Italy, Japan, U.K., US.) to see the deficit widen on his watch as a percentage of gross domestic product during a synchronized global expansion. It ballooned from 2.2 percent in February 2016 to 4.3 percent in November 2018, the most precipitous deterioration since 2008 when the financial crisis triggered the worst recession since the Great Depression. This measure, which tracks the relationship of deficits and growth, had improved more under Obama than any president since 1980, and only Clinton saw perennial deficits transformed into annual surpluses. Under Trump’s $1.5 trillion tax cuts — the biggest rewrite of the Internal Revenue Service code in 30 years by the Republican Congress — the trend is reversing amid lower-than-forecast tax receipts, less-than-anticipated wage gains, a declining birth rate and an aging workforce. During the past year, when gross domestic product growth accelerated and unemployment reached an 18-year low — an achievement unmatched in the slower-growing G7 — federal revenues from corporate, payroll and personal income taxes fell by 2.7 percent, or $83 billion, from 2017. The last time U.S. growth approached 3 percent, in 2015, tax revenues increased 7 percent. If growth falters, as many economists predict, Trump will be the first president to preside over perennial deficits exceeding $1 trillion.
Now, let’s talk about wages, the official numbers aren’t out for 2018 yet, but the Census Bureau’s surveys show that real median household income increased by about 1.8 percent from 2016 to 2017. That’s not nothing, but it’s not particularly rapid, especially given the robust overall expansion of the economy in that year, and the fact that income only recently caught up to the level that prevailed before the Great Recession. Private surveys, meanwhile, show continued small increases in the first half of 2018. So it appears that while Trump’s presidency has continued to benefit from the economic expansion that began under his predecessor, the benefits to average American households have been modest. And since this data became available, Trump has ramped up his trade wars and forced a lengthy government shutdown — delaying paychecks — while the corporate bond market has begun to look shaky. So even those modest gains may now be in danger.
Trump promised an economic turnaround in the four Rust Belt states that flipped red in 2016 — Ohio, Michigan, Pennsylvania and Wisconsin. It hasn’t materialized. The unemployment rate in all four states was already low; it has since fallen somewhat, just as it has for the country as a whole. Yet there are still no signs of a pickup in the labor force, with the combined labor force in all four states only up slightly over the past two years. While we don’t have the data at the state level, for the country as a whole whatever pickup in labor force growth we’ve seen seems more concentrated with women than men. The cyclical improvement in the labor market that began under Obama have continued in the first two years of the Trump administration, and that’s welcome news. But Trump supporters had hoped for more than a continuation of the Obama recovery. It’s still hard to find evidence of that in the data.
Trump vowed to get U.S. multinational corporations to bring back their foreign cash piles. That was one of the goals of his tax reform package. But, as is his wont, Trump wildly exaggerated the amount of cash the reform would bring back by allowing companies to pay a one-time, 15.5 percent tax on profits they’d hoarded overseas. “We expect to have in excess of $4 trillion brought back very shortly,” he said in August. There was never so much to start with. The overseas cash pile of U.S. public corporations was estimated at $1.4 trillion at the end of 2017. Even adding in non-cash assets purchased with the overseas profits, $2.5 trillion would have been a more plausible number. Even less money than that has come back — a total of $557.1 billion in the first three quarters of 2018.Data for the fourth quarter aren’t available yet, but the negative trend shows that companies are gradually running out of cash they’d like to repatriate. Their foreign subsidiaries need cash, too — and certain jurisdictions and schemes still offer companies better terms than Trump’s tax reform. Besides, companies have been having trouble getting refunds from the government on repatriation taxes they’ve overpaid.
Let us review the foreign policy accomplishments in the first two years and into 2019. After a number of months of saber-rattling with the North Korean dictator Kim Jong Un, Trump announced that after 75+ years, of many earlier administrations’ inability to solve the regional crisis involving the Korean Peninsula, Trump had found the magic formula. He announced that he would meet with Kim, end the Korean War, de-nuclearize the Korean Peninsula, and remove the threat of North Korean intercontinental missiles. But, after promising Kim the lifting of sanctions, the growth of tourism through first class hotels, and the development of his beaches, Kim said, “No deal,” and is now re-building his missile launching sites. What happened? Of course, in between this glorious triumph and tragedy with Kim, who denied the responsibility of causing the eventual death of Otto Warmbier.
Aside from tariff wars with China, a love fest with Kim and Putin, Trump went on a campaign to not only criticize our Western allies, but to undercut the mission of NATO and to accept Putin’s excuses regarding Russian interference with our elections and cyberspace hacking. Aside from that, Trump basically ignored the death of the Washington Post columnist, Jamal Khashoggi at the probably hands of Saudi’s real strongman, Mohammed bin Salmon. Again, even after our Intelligence Agencies basically stated that MBS, as he is known, was responsible, Trump ignored their evaluation. Of course, this has been a pattern of Trump ignoring our own intelligence agencies and taking the word of Putin, Kim and Mohammed bin Salmon.
Then again, Trump has been disregarding the independent advice of everyone in, and out, of his government, including our generals, admirals and the Joint Chiefs. Without consultation with the Defense Department, Trump announced, unilaterally, the withdrawal of our troops from Syria and Iraq. Of course, this action would undermine our Kurdish allies and the Syrian Opposition forces aligned against the Syrian strong \man, Bashir Assad. Of course, he inevitably had to walk back on that promise, and now that announced policy change has been completely reversed.
Now, let us look at our policies in our own hemisphere. We seem to be under pressure regarding regimes in Central America, which are causing massive migration to our southern border. What has been done with regards to Guatemala, Honduras and El Salvador? Do we have a diplomatic presence there? Are we dealing with those governments? Shouldn’t someone ask? But it seems that Trump’s vision of a resurgent America apparently excludes some of our closest neighbors. Instead of erecting bridges, he seems intent on erecting walls—not only against Mexico, but now against Cuba, Puerto Rico and possibly Central America as well. Are we going back to Gunboat Diplomacy? So Trump is now being rejected by Congress regarding his call for a huge, incredibly expensive wall. Aside from the boondoggle wall, what has this administration done about its policy of separating and kidnapping children from their parents, who are seeking asylum from the threats from Central American gangs?
Of course, there are all sorts of debates on how to handle immigration, but what has he done about the close to 700,000 DACA children? Does he really want to deport these children who know no other life but America? In other words, he has no real plan, except to use these children as pawns!
Aside from foreign policy and the border, what about problems here in America which transcend the 3% of our population who are considered illegal residents? What has he done about the Affordable Act (ACA-Obamacare) which he promised to dismantle? He called it a disaster, but where is its replacement? He had promised a much better plan, which would be less expensive and do all the things that the ACA cannot accomplish? Where are his promises to Veterans? His Mission Act is basically the enabling legislation to cut the VA Budget and work to privatize it. How is that to help the veterans and deal with the growing crisis of CTE and PSTD? What has he done about the Opioid Crisis? What has he done about our infrastructure and the growing income inequality in America over the past two years? What has he done about an epidemic of mass shootings?
Of course, the Trump Administration is big on Executive Orders, which he, of course, decried about the Obama Administration? With that in mind, what has his record been on the environment, regarding clean air and water? It’s been a disaster! What has it been on fracking, deregulation, regarding the coal industry polluters, off-shore drilling, which is opposed by almost every single coastal state governor? His proposed policies have been the worst for the environment in decades! What is his position renewable energy? Even though it has been growing remarkably in America. It is very clear, the Trump administration was poised in 2019 to ask Congress for deep budget cuts to the Energy Department’s renewable energy and energy efficiency programs/ This action has thus far generated less outrage than the White House’s abandonment of the Paris Climate Treaty, but has the potential to be far more damaging to efforts to respond to climate change. In fact, all of his vocal and incendiary rhetoric is focused on denying Climate Change, against the advice of 99% of the world’s scientists and climatologists.
According to documents obtained by the Washington Post, the White House is seeking to slash the budgets by 72% in fiscal year 2019, which would cut research in fuel efficient vehicles by 82%, bioenergy technologies by 82%, advanced manufacturing by 75%, and solar energy technology by 78%.
Let’s discuss health care in America! There was a fairly long list of reasons to overhaul the nation’s health care system, but the principal goal of the Affordable Care Act’s advocates was to bring down the nation’s uninsured rate. On this front, the law’s proponents have been able to brag about the ACA’s results: in the years following the implementation of “Obamacare,” the United States’ uninsured rate dropped to the lowest point on record. Over the last couple of years, that rate has moved in a discouraging direction. Gallup reported this morning:
The U.S. adult uninsured rate stood at 13.7% in the fourth quarter of 2018, according to Americans’ reports of their own health insurance coverage, its highest level since the first quarter of 2014. While still below the 18% high point recorded before implementation of the Affordable Care Act’s individual health insurance mandate in 2014, today’s level is the highest in more than four years, and well above the low point of 10.9% reached in 2016. The 2.8-percentage-point increase since that low represents a net increase of about seven million adults without health insurance. At a certain level, an increase of 2.8% may seem quite minor. But as we discussed a year ago, if you or people close to you are among those who’ve lost coverage, the uptick in the uninsured rate probably doesn’t look that small.
During the first few years of Obamacare, premium increases mainly were the result of health insurance companies underestimating the costs their new customers would generate. The companies made up for this by charging more in subsequent years. The market began to stabilize in 2015 and 2016, even though prices remained high, and it appeared that large annual rate hikes might cease.
Instead, the Trump administration has taken a number of steps that have had the effect of further driving up premiums for exchange customers and those who buy policies directly from insurers or through brokers…. Since his first day in office, Trump has directed and overseen policies that undermine the health insurance exchanges.
While the market has consistently gained under Trump, the gains (over the first 10 months) haven’t been record-setting. From inauguration day on January 20 through October 27, the S&P 500 shows a 15.38% annualized rate of return. That’s less than the annualized percentages achieved under five other presidents.
Harry Truman, Dwight Eisenhower, Gerald Ford, Bill Clinton and Barack Obama all did better over the course of their terms. The top returns were achieved under a pair a pair of Democrats for whom Trump has expressed disdain–Bill Clinton at a 17.49% total return per year and Barack Obama at 16.25%.
Dow Jones Gains Since FDR:
Dow Jones Gains Since FDR:
Bush 41 41%
Trump 19% (23 months)
Bush 43 -24%
The Dow Jones industrial average rose 5,632.09 points, or 42.78 percent, during Obama’s first 741 days in office. Trump: The Dow Jones industrial average rose 7,219.45 points or 28 percent during Trump’s first 741 days in office.