Will The Economy Save The GOP In November?
Last week, Trump and his supporters were ecstatic because GDP clocked in at 4.1% for the second quarter. Unfortunately, this is probably just a one time thing and is unlikely to be replicated again anytime soon. The consensus forecast is for 2% GDP growth for the foreseeable future.
There is nothing unprecedented about this development. There were eight quarters of 3 percent growth or faster scattered across the Obama presidency, including four of 4 percent or faster and one of 5.2 percent.
And this GDP performance was pretty weak when you compare it to previous presidents. A figure of 4.1% growth for GDP would have been:
- The fifth best quarter under Obama.
- Tied for the fifth best under George W. Bush.
- Tied for the 13th best under Bill Clinton.
- Tied for the fifth best under George H.W. Bush.
- The 14th best under Reagan.
Unfortunately, other leading economic indicators aren’t so favorable. Real hourly compensation has actually fallen since the passage of the Trump/GOP tax cuts:
At the same time, Trump and the Republicans in Congress have doubled the annual deficits they inherited from President Obama. Paul Ryan became Speaker of the House weeks after fiscal year 2015 ended with a deficit of $439 billion. The Trump OMB deficit projection for this year is $890 billion. And for next year it is $1,085 billion. After that, it is annual $1 trillion deficits as far as the eye can see.
And this forecast of $1 trillion annual deficits is the best case scenario. When we have a recession — not if — deficits will explode to $2 trillion per year. This current economic expansion has lasted over eight years and the average economic expansion in the U.S. is around eight years.
The factor that could tip the economy into recession is Trump’s disastrous and misguided trade wars. Already, farmers, consumer and companies are getting rocked. Here in Nebraska soybean prices are at a 10 year low and have declined 20% since the Trump trade war began.
The industrial front is also getting hit hard. Harley Davidson is shutting down factories in the U.S. and moving them overseas. The steel tariffs have put the country’s largest nail manufacturer on the brink. Mid-Continent Nail of Poplar Bluff, Missouri will soon either move to Mexico or go out of business.
Consumers are already seeing a ripple of price hikes due to the Trump/GOP tariffs. Coca Cola is raising prices due to aluminum tariffs. Expect the price of beer to go up soon as well.
The Administration’s only “response” so far to the harm they are inflicting on Americans is an announcement that they will soon be providing $12 billion in payments to farmers who are hemorrhaging money due to lost markets. The Administration claims they can provide this assistance in borrowed money to farmers without an appropriation from Congress. (Remember when the GOP accused Obama of abusing his executive powers?)
This plan to provide $12 billion in assistance to the troubled ag sector was blasted by farmers and elected officials in both parties. One Illinois farmer who voted for Trump called the aide: “A pacifier. I’d rather not have it.”
On Capitol Hill, Senator Bob Corker correctly asserted that farmers were being put on “welfare.” Senator Ron Johnson went so far as to compare the Administration’s plan to Soviet era economics: “This is becoming more and more like a Soviet type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits.”
The conventional wisdom on the right and in the mainstream media is that the GOP can win the 2018 elections based upon the economy and the Trump/GOP tax bill. Already, that conventional wisdom has been thrown into a cocked hat. In off year elections in Virginia in 2017 and Pennsylvania CD18 in 2018, the GOP initially ran on the tax cuts. When that issue failed to resonate with the voters, the GOP dropped it and ran on immigration. The GOP was routed.
The reality is that most Americans are losing ground under the Trump economy. Only the wealthy few are seeing any benefits. History demonstrates that trickle down economics and trade wars simply don’t work.
We need an economy that works for everybody — not just the wealthy few. That’s why we need to elect more Democrats in 2018 and 2020. The economy invariably does better under Democratic presidents. Now let’s go out and win this election! Let’s get it done!