Sen. Rob Portman had a column in the Gazette July 9 arguing that President Trump’s tax reform is making a real difference. He says economic growth is much better than over the past decade. The tax reform kicked in the beginning of 2018, and the half year doesn’t tell you much. Portman makes interesting points about small business. He doesn’t mention agriculture: corn, soybeans, pork. In fact, what he doesn’t say is much more important. Nowhere does he mention that the top 1 percent of the economy got 50 percent of the benefits — huge permanent tax cuts, while the rest of us got minor tax cuts, however welcome, that are not permanent. Nor that many of the big companies at home, and those returning profits from abroad, are buying back stock and giving it to stockholders and management rather than making investments that would lead to hiring more workers at higher wages.
Let’s look at the decade that Portman denigrates. It began in 2008 with the economy under President Bush crashing into the worst recession since the Great Depression. The nonpartisan OECD Economic Survey wrote in June 2018 that the upward expansion Obama put in place in 2009 has been one of the longest on record and that “robust job growth has helped bring people back into employment and has reduced the unemployment rate.” Although he will never admit it, President Trump benefited from and has continued to benefit from this expansion.
The question is will it last? The tax cut Portman praises is based on the usual Republican theory of supply side economics, which has resulted in a history of boom and bust. It claims that cutting regulations and providing tax cuts for the rich will produce huge growth that will pay for the cuts through investment, jobs and wage increases. George H.W. Bush called this “voodoo economics.”
Reagan’s policy of supply side economics ended in scandal and recession. In 1980, the year he was elected, the bottom half of workers earned $16,371 a year on average, but by his last year in office, they got by on $16,268. In 2000, George W. Bush inherited a budget surplus from Bill Clinton, cut regulations and taxes especially for business and the elites, started and conducted a war in Iraq that he put on the U.S. charge card bringing huge deficits, and drove the country into recession. The average income of the bottom half of Americans went from $17,827 to $17,473. Fooled us once, fooled us twice, and now Trump is fooling us again? What the heck is with us?
Trump was lucky to inherit a robust economy. But with bank deregulation, a huge increase in the deficit from the tax cut, and the dangers of a rapidly escalating trade war, the economic future looks highly uncertain.