Two old trickle-down conservatives come out against Donald Trump’s economic plan. Those supporting Trump more so than ever are being hoodwinked into voting against their interest as the rhetoric is diametrically opposing his economic policy.
Donald Trump’s economic policy specifically hurts his supporters
Donald Trump purports to be a populist supporting those forgotten by the Democratic party, yet his economic plan is a danger for his most avid supporters.
Conservative economist and author Ben Stein appeared on Fox Business and likely shocked many. Inasmuch, as Stein is a conservative, over the past few years, he has come to his senses and began telling the truth about taxation. He said the following on Fox Business.
Well I don’t think Mr. Trump’s plan is going to work very well. I don’t think we need that tax cut when we’re running deficits the size we are running. I think the evidence that tax cuts stimulate business in any kind of meaningful way at least, not to sufficient to overcome the tax revenue loss is extremely poor to put it mildly. I think the idea of cutting taxes on the rich in a time when there is so much concern about inequality is not a good idea.
Reagan domestic policy advisor Bruce Bartlett wrote an op-ed in the New York Times titled “Trump’s Misguided Embrace of Tax Cuts” that is a must-read. One should remember that in a 2012 article in The American Conservative titled “Revenge of the Reality-Based Community,” Bartlett explains that after conducting research for one of his books, he “came to the annoying conclusion that Keynes had been 100 percent right in the 1930s,” and that “we needed Keynesian policies again.” Shockingly he said that “no one has been more correct in his analysis and prescriptions for the economy’s problems than Paul Krugman,” a prominent Keynesian economist. He busted a lot of Conservative economics myths in the New York times article. Bartlett wrote the following.
It is G.O.P. dogma that the Reagan tax cut set off an economic boom. Every Republican presidential nominee since the 1980s has promised big tax cuts and another economic surge. Tax increases, Republicans believe, are the kiss of death for the economy. While Mr. Trump has been unafraid to differ with Republican doctrine on many issues, such as Iraq and trade, he is embracing party orthodoxy on taxes. But the Reagan tax cut is not the medicine the economy needs.
He then made his case.
In short, taxes were too high in 1981 and needed to be cut — including for the rich. The tax rates above 50 percent were not bringing in much revenue because wealthy people were likely to invest in tax shelters. But the Reagan tax cut played only a secondary role in the 1980s boom, which wasn’t really much of a boom. Real G.D.P. grew 37.9 percent in the 1970s, compared with 36.1 percent in the 1980s. The economy felt better because inflation came down extraordinarily quickly, far more quickly than economists in 1980 thought was possible. But this was primarily a result of the Federal Reserve’s tight money policy, not taxes.
He pointed out that Reagan raised taxes when sanity needed to prevail.
What many Republicans also forget is that Reagan cared about deficits and supported 11 different tax increases from 1982 to 1988 that collectively took back half of the 1981 tax cut. Although many conservative economists predicted doom from the 1982 tax increase, which equaled 1 percent of G.D.P., the beginning of the boom coincided with its enactment. These economists also predicted catastrophe from the 1993 tax increase enacted under President Bill Clinton and from the expiration of many of President George W. Bush’s tax cuts in 2013. But in each case financial markets and the economy grew sharply afterward. By contrast, the economy tanked during the Bush years despite numerous large tax cuts.
And then the message that will make many Conservatives cringe.
The final proof that tax cuts are not the be-all and end-all of growth policy is the Tax Reform Act of 1986, which dropped the top income-tax rate to 28 percent. Conservative doctrine predicted an economic boom, but I don’t remember one, nor can I find one in the data. Those economists who claim to be following Reagan’s policies by supporting Mr. Trump’s large tax-cut proposal are guilty of one-size-fits-all economics. There is far more evidence from the last 35 years showing that tax increases do more to stimulate growth than tax cuts.
It is clear that poor and middle-class America needs a growing economy. Donald Trump’s proposals would decimate growth and continue the wealth extraction from the poor and middle-class by the rich if not intentionally, by policy. Those that support him the most are the ones that will be hurt further. It is time for all to speak up and gently educate out friends, families, and acquaintances that these policies will simply decimate their personal economics.