Saturday marked the 10-year anniversary of the historic bankruptcy of Lehman Brothers, when the entire global economy appeared to be on the brink of disaster and capitalism looked to be self-destructing before our very eyes. A decade after the financial crisis almost brought us another great depression, however, the economy seems to be doing quite well by a number of different measures. The stock market is booming, the unemployment rate is near an 18-year low, and the GDP experienced 4.2% growth in the second quarter of 2018.
Not surprisingly, then, both the current president and his predecessor have been boasting about the economy and taking credit for the recovery — and, in the former’s case, telling blatant lies to make the economy seem even better. Last Monday, for example, the president falsely claimed that the GDP rate was higher than the unemployment rate for the first time in 100 years (actually, this has happened plenty of times), and a few days earlier he declared that Medicare and Social Security have grown stronger and that Democrats want to destroy both programs. Like many things that come out of Trump’s mouth, the opposite is true: both programs have grown financially weaker over the past year, in no small part because of the Republican tax bill, which cut taxes on Social Security benefits and repealed Obamacare’s individual mandate, leading to more uninsured Americans.
Still, even with Trump’s obvious falsehoods, there is no denying that the economy has been growing steadily throughout his first term. On the other hand, there is legitimate doubt as to whether the current president deserves much of any credit for these trends, especially considering the current growth is an extension of the recovery that began during the Obama years (the president’s power over the economy is widely exaggerated, and if anything he or she has more of a longterm impact through legislation — i.e. deregulation, tax cuts, etc — that is felt years later).
President Obama correctly pointed this out in a speech on Friday, remarking that the economic growth that Trump loves to brag about started years before he became president. “When you hear about this economic miracle that’s been going on, when the job numbers come out, monthly job numbers, suddenly Republicans are saying it’s a miracle,” quipped Obama. “I have to kind of remind them, actually, those job numbers are the same as they were in 2015 and 2016.”
Obama is correct, of course, and if Hillary Clinton was in the White House today Republicans would probably be casting doubt on unemployment numbers, warning about the impending hyperinflation, and pointing to other economic trends that paint a much less rosy picture.
Which leads us to the truth about the economy and the political rhetoric that we inevitably hear from the ruling party. There has been recovery, yes, and there has been growth, but the question that these leaders don’t like to ask is who exactly has benefited from this recovery? One suspects that neither Obama nor Trump would like to take credit for other economic trends that have been consistent over the past decade, like the massive levels of income and wealth inequality that continue to grow worse every year.
Ironically, if the current president deserves credit for any of these economic trends, it is for exacerbating inequality. The president’s most notable policy achievement during his first year in office was the aforementioned tax bill, which gave generous tax cuts to the richest one percent of earners (four out of five of the tax cut dollars went to those in the one percent). The $1.5 trillion in tax cuts provided by this bill “overwhelmingly benefited the wealthy and worsened inequality,” according to a United Nations report from June.
For almost five decades, the report continues, “the overall policy response [to poverty and inequality] has been neglectful at best, but the policies pursued over the past year seem deliberately designed to remove basic protections from the poorest, punish those who are not in employment and make even basic health care into a privilege to be earned rather than a right of citizenship.”
According to the study’s author, the GOP tax legislation will ensure that the United States remains the most unequal society in the developed world, which will make the political system “even more vulnerable to capture by wealthy elites.”
This pretty much sums up the economy under President Trump so far. It has been wonderful for corporate America and those in the top one percent (or the top 0.1 percent), who have been the main beneficiaries of the tax cuts and stock market boom, while poor people and working class Americans have continued to suffer the consequences of trickle-down economics. Wages have continued stagnating or declining for the majority of people, while billionaires like Jeff Bezos have seen their wealth balloon to obscene levels. And as the Trump administration has continued the Republican Party’s assault on organized labor, it has also considered a big capital gains tax cut that would save the wealthiest Americans billions of more dollars (as if last year’s cut wasn’t enough).
President Trump’s policies clearly show that he is more concerned with making his millionaire and billionaire friends at Mar-a-Lago richer than he is with standing up for the working class people who helped put him in office.
For most of the president’s critics this was all too predictable, but many of the voters who bought into his populist rhetoric genuinely expected him to be different from past Republicans on the economy. He was going to transform the GOP into a “workers’ party,” drain the swamp, and take on the corporate elite, whether it was bankers in Goldman Sachs or the Koch brothers in Wichita. Instead, he brought Goldman Sachs alumni into his cabinet (though most have already jumped ship) and made the Koch brothers even “richer” with his tax bill, as he proclaimed in a July tweet.
The Trump administration’s supply-side agenda should put an end to the notion of right-wing economic populism. The idea that the GOP could become a “workers’ party” was always laughable, especially when we recall that Republicans have led the assault on labor unions and the poor over the past fifty years. That Republicans were able to convince working class people that they had their best interests at heart, however, should make Democrats stop and think what they did wrong.
It doesn’t require much thought, of course. Republicans may have led the assault on working people in America over the past several decades, but Democratic leaders were happy to follow their lead if it seemed like the pragmatic thing to do (which it was in the 1990s). Ronald Reagan launched the era of neoliberalism, but Bill Clinton achieved more in terms of financial deregulation and economic liberalization than any Republican president could have ever dreamed of (and would have likely privatized Social Security had it not been for the Lewinsky scandal).
Republicans like Trump, then, were able to promote themselves as economic populists because Democrats like Hillary Clinton had lost credibility with voters. Democrats failed to put forward an economic platform that confronted the systemic inequalities in our current economy, and were seen (not unreasonably) as representing the status quo. Trump never planned on really changing that status quo, and now that he is in office he is touting the same unemployment rate that he disputed in 2016 (and that Democrats hyped). In power, Republicans are continuing their longtime war on labor and making the Wall Street elites very happy, while promoting the same recovery that Democrats advertised before 2016.
Whether Trump and his allies in Congress can still convince voters that that they are for the “people” and against the “establishment” will depend in large part on whether the Democrats can offer a truly populist alternative and expose the Republican Party’s supply-side agenda. Ten years after the financial crisis revealed the greed, corruption and fraud that pervades our economy, it’s about time one party does something about it — and the GOP sure as hell won’t.