The Economic Policy Disaster

There was something missing in the coverage of the most recent presidential campaign—policy. The major networks, ABC, CBS, and NBC devoted only 32 minutes of airtime to policy issues from the start of 2016 until late October according to the Tyndall Report:

No trade, no healthcare, no climate change, no drugs, no poverty, no guns, no infrastructure, no deficits. To the extent that these issues have been mentioned, it has been on the candidates’ terms, not on the networks’ initiative.

One reason President Trump won the election is that people thought he could fix the economy and bring jobs back. It is no wonder that workers are frustrated. From 1979 to 2013 real wages have decreased for low-wage workers by 5 percent and increase by only 6 percent for middle-wage workers. For every dollar middle-wage workers made in 2013, they now have six cents more than they had in 1973 while lower-wage workers have five cents less.

Unfortunately, Trump’s economic policies—or at least what I can discern to be his policies–have not worked in the past and are likely to be spectacular failures in the future.

On tax policy Trump is proposing massive tax cuts with most of the benefits going to the wealthy. “If you look at the most wealthy, the top 1 percent would get about half of the benefits of his tax cuts, and a millionaire, for example, would get an average tax cut of $317,000,” says “Lily Batchelder, a law professor at New York University and visiting fellow at the Tax Policy Center.”

Trump also wants to dismantle Dodd-Frank, the law that was passed in response to the financial crisis in 2008.

Trump’s policies of lower taxes and less regulation are similar to the policies under Pres. George W. Bush. These policies led to the second worst economic downturn in the history of this country, and the worst average yearly job growth of any president from Carter through Obama. States that have lowered taxes to boost the economy have not fared well, and some are considering raising taxes to pay for necessary services.

Wage growth is also likely to be anemic because Trump is addressing the wrong issue, immigration, and ignoring health-care. Health care’s effect on wages will be discussed shortly.

Gerald Friedman, a labor economist at University of Massachusetts at Amherst, has studied immigration and concluded that immigration has no effect on wages, except perhaps in a few border area. Friedman says, “Immigration has had little net effect on wages, raising wages for some, reducing them for some, but little overall effect outside of a few localities and occupations with particularly high immigration levels.”

However, rising health care costs have had a devastating effect on wages according to Friedman. For the period from 1997-2011, if hourly wages had kept up with productivity growth, they would have risen by 43 percent. Instead wages only rose by 10 percent, for a shortfall of about $2.42 per hour. The hourly cost of health insurance rose by $1.22 devouring more than half of the wage increase that workers would have received in those 14 years.

History and evidence do not matter when you live in an alternative-fact world, and that will cost us dearly.

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