A Trump Presidency Would Tank the Economy and Blow up the Deficit
July 5, 2016
Since the Republicans instituted supply side or trickle down economics
during the Reagan Presidency, we’ve seen a recurring pattern where a Republican President sends the economy into a recession and blows up the deficit. Once a Democratic President is inaugurated, the Republicans do nothing but obstruct, offer nothing and tell us it is time for a change. It is deeply cynical, destructive and arrogant. The Republicans create the problem and then they run against the solution.
We saw this pattern begin in 1993 when President Clinton inherited a
slow growth economy emerging from a recession and a then record budget deficit. Presidents Reagan and Bush41 had quadrupled the national debt during their twelve years in office. Once President Clinton took office, the
Republicans suddenly became “concerned” about the deficit and
demanded that Clinton reduce the deficits they ran up.
To clean up the mess he inherited, Clinton proposed to raise taxes on
the wealthy and cut spending. Not one Republican voted for the 1993
Clinton budget. Instead, every Republican predicted that Clinton’s
economic program would cause a recession and increase the deficit. For
example, John Kasich (then a Republican congressman from Ohio, now that
state’s governor) contended that: “I feel bad for the people who really
are the working people in this country, people in my family, who are going to
get the penalties from people who don’t want to invest more, take any more
risks. They’re going to lose their jobs, and that’s the tragedy of this
program. We’re going to come back here next year, there will be higher
deficits, there will be more spending, we’ll continue to have a very slow
economy, people aren’t going to go to work.”
Just how did those Republican predictions of doom and gloom play out?
As we know, they were dead wrong. What followed the passage of the 1993
Clinton budget package was the greatest peacetime economic boom in U.S.
history. During the Clinton Presidency, 22 million new jobs were created,
unemployment declined from 7% to 4%, median family income rose, and poverty declined to its lowest rate in 20 years. The Clinton budget also
converted what was then the largest budget deficit in American history to a
projected surplus of $5.6 trillion over the next ten years.
The 2000 election contest was about what to do with this record
surplus. Al Gore proposed that we use the surplus to pay off the national debt.
If we had followed Gore’s plan, the national debt would have been paid
off by 2012. Moreover, the elimination of the national debt would have
allowed us to easily finance the retirement of the baby boom generation.
This was the much ridiculed “lock box” to protect Social
Security and Medicare.
The results of the 2000 election turned out to be disastrous (in part)
due to the Ralph Nader candidacy. Al Gore won the popular vote with 48.5%
to Bush’s 48%. Nader ended up with 2.7% of the popular vote. If
Nader hadn’t been on the ballot, Gore would have carried Florida and New
Hampshire — and won the electoral vote by a 298 to 240 margin. Even
though the two Progressive candidates won by a 51% to 48% margin, we ended up with eight years of George W. Bush.
The 43rd President had different plans for Clinton’s hard earned
surplus. Bush and the then GOP controlled Congress squandered the
surplus on two tax cuts for the wealthy and two wars. As John Kasich said
about the Republicans who controlled D.C. during the Bush
Administration: “They blew a $5 trillion surplus. The projected
annual surpluses were quickly spent, unfortunately by Republicans.”
When President Obama took office in January 2009, he inherited an
annual deficit of $1.3 trillion or 9.8% of GDP. Moreover, the economy had
collapsed and was shedding an alarming 800,000 jobs per month. Bush bequeathed to Obama the most desperate situation any President had inherited from a predecessor since Lincoln in 1861 and Franklin Roosevelt in 1933. As noted historian Jean Edward Smith wrote: “Rarely in the history of the U.S. has the nation been so ill-served as during the presidency of George W. Bush.”
Our current President immediately got to work and passed the Recovery
Act by February 17, 2009. It is the consensus of economists that Recovery
Act ended the deepest economic downturn since the 1930s and began the current recovery. President Obama and the Democratic led Congress followed up the Recovery Act by passing the Ledbetter Act, the Affordable Care Act and the Dodd-Frank Act. The first two years of the Obama Presidency was the most productive legislative output since the LBJ Presidency between 1964–66.
Thanks to the leadership of President Obama and the Democrats in
Congress, the country has enjoyed 75 consecutive months of job growth.
The economy has created 14 million jobs since 2010 and the unemployment
rate has been reduced from 10% to 4.7%. It is the best record of job
creation since President Clinton’s second term.
Contrary to what you may hear from the GOP and the right wing media,
these are good jobs. After accounting for inflation, middle
class incomes rose 3.9 percent in 2015 to $48,768 — the strongest annual
gain since 1998. According to Emmanuel Saez, an economics professor
at the University of California, Berkeley: “It is indeed the best growth
year for the bottom 90 percent and bottom 99 percent since the late
The country has experienced similar progress on the budget deficit.
Since President Obama has taken office, the deficit has been reduced from
9.8% of GDP to 2.5% of GDP. (As a point of comparison, the federal
deficit was 3% of GDP during the eighth year of the Reagan Presidency.)
This is the fastest rate of deficit reduction since the late 1940s.
I like to say this is the greatest story never told!
All of this hard won and significant progress would be put in serious
jeopardy by a Trump Presidency. According to the non-partisan Committee
For A Responsible Budget, Trump’s tax cuts, military buildup and wars would add $11.5 trillion to the national debt over the next ten years. According to
this report, Trump’s policies would swiftly push the national debt to its
highest level in history.
Trump’s economic agenda would be similarly destructive. The
orange hued mogul has promised a $9 trillion tax cut for the wealthy, the
deportation of 11 million aspiring Americans and a trade war with Mexico and China. Trump’s threat to slap huge tariffs on imports would increase
inflation and cause our trading partners to retaliate and set off a destructive
trade war. According to a recent report from Moody’s, Trump’s policies
would cause the economy to suffer a “lengthy recession” and the
economy would be “smaller at the end of his four-year term than when he
There does seem to be a pattern. Democratic presidents over the last
35 years have inherited a huge mess of problems from their GOP predecessors. After that, Presidents Clinton and Obama cleaned up the Republicans’ messes and put us back on the right track. The issue this year is stark: Are we going to hand over our country once again to the people and policies that crashed our economy and blew up the deficit before and that will shred the progress that we’ve made? I’m confident that once the voters get the
facts, the Democratic Party will have a good cycle this year. Let’s get it done!