Donald Trump makes the rich richer

President Trump, cartoon by Angelo Lopez

By Patrick Martin in the USA:

Trump speech in Detroit: Tax cuts for the wealthy combined with nationalist demagogy

10 August 2016

In his speech Monday to the Economic Club of Detroit, Republican presidential candidate Donald Trump embraced traditional right-wing nostrums about cutting taxes for the wealthy and slashing regulations on big business, claiming that the American economy would boom if only the wealthy were allowed to have their way completely.

Trump’s speech was a travesty of analysis, as he simply did not address the overriding economic issue confronting world capitalism: the deep economic slump triggered by the 2008 Wall Street crash, from which the world economy has yet to emerge. He said nothing about the financial collapse, the trillion-dollar bailout of the banks that followed, or the long-term consequences of that financial heart attack for world capitalism as a whole.

Remarkably, in a speech about economic policy delivered in Detroit, Trump made no mention of the auto industry bailout pushed through by the Obama administration, centered on the slashing of wages by 50 percent for new hires.

He did refer to the appalling social conditions in the city where he gave his speech, while indicting the Democratic Party as responsible. But he was silent on the most recent catastrophe, the bankruptcy of Detroit, which led to wage cuts, mass layoffs and the destruction of pensions and health benefits, in which politicians of both big-business parties—the Republican governor and state legislature and the Democratic mayor and city council—played major roles.

The Republican candidate rattled off a string of figures about the dismal state of the US economy, prepared by his speechwriters, demonstrating that labor force participation, median household income and economic growth rates are down, while food stamp use, poverty and black youth unemployment are up.

His “solutions,” however, consisted of a combination of right-wing Republican boilerplate—cut taxes on business and the rich, slash regulations, end all restrictions on oil drilling and coal mining—and strident economic nationalism.

In effect, he was addressing two audiences. For the businessmen and right-wing political operatives who filled the seats at the invitation-only meeting, Trump offered trillions in tax breaks plus deregulation. For manufacturing workers and the unemployed, a major target of his election campaign, he offered tub-thumping and completely empty pledges to revive American steel, automobile, coal-mining and other heavy industries by excluding foreign imports and waging trade war against economic rivals of American capitalism.

It was notable that his business audience applauded loudly for the promised tax cuts, but largely sat on their hands when Trump declared his opposition to NAFTA and other trade deals, and pledged that “Americanism, not globalism” would be the watchword of a Trump administration. The giant Detroit-based General Motors and Ford, like their corporate counterparts elsewhere, operate globally, pitting workers in every country against each other in a race to the bottom for wages, benefits and working conditions.

There is little doubt that were Trump to enter the White House, he would do nothing to curtail the overseas operations of giant US corporations, while he would move rapidly to cut their taxes, along with the taxes of wealthy families and the estate taxes that only a tiny fraction of the super-rich (the top 0.2 percent) actually pay.

There were relatively few policy details in the hour-long speech, but Trump did indicate that he was shelving the tax cut proposals he made during the campaign for the Republican nomination in favor of the plan adopted by House Republicans, which calls for reducing income tax brackets to three and cutting the top tax rate from 39.6 percent to 33 percent.

The direct impact of these cuts would be a bonanza for the wealthiest families, while taxes would decline only marginally or not at all for middle-class and working-class families. According to the Tax Foundation, families in the top one percent would see a 5.3 percent increase in after-tax income, while middle-income families would gain 0.2 percent, and families in the bottom 40 percent would gain nothing at all.

Trump proposed the complete abolition of the estate tax, which has gradually eroded over the years as bipartisan congressional action has raised the amount of estates that are exempt from tax from $1.35 million for a couple in 2001 to $11 million today. Only 52,000 estates paid the tax in 2000, but this has dropped to one-tenth that number, only 5,000 estates, in 2013. One major beneficiary of abolishing the “death tax,” as Trump labeled it, would be his own children, since they would be able to inherit his fortune (assuming it exists) tax-free.

The only specific measure Trump proposed for Americans who are not rich was a tax break for childcare expenses. Even this would benefit primarily the upper layers of the middle class, since it would be structured as a tax deduction rather than a tax credit, meaning the nearly 70 percent of the population who do not itemize deductions on their tax returns would gain nothing.

For those who could claim it, the benefit would be heavily skewed to higher-income families. By one calculation, a family making $500,000 and spending $10,000 a year on childcare would net nearly $4,000. A family making $50,000, with the same childcare expenses, would get back only $1,500, even though they would need the money more.

Dwarfing even the impact of his tax cuts for the wealthy and abolition of the estate tax is Trump’s proposal to cut the corporate income tax rate from its current (purely nominal) rate of 35 percent to only 15 percent. This would funnel trillions into the coffers of giant corporations.

Moreover, those companies that have parked some $2 trillion in profits in offshore accounts awaiting more favorable tax treatment in the US would be allowed to pay a rate of only 10 percent if they repatriated the funds to the United States. This one tax break would be worth $500 billion to a handful of corporate giants like Apple, Cisco Systems and General Electric.

Accompanying his Detroit economic speech was Trump’s naming of an economic advisory team consisting largely of fellow billionaires, including oil man Harold Hamm, hedge fund boss John A. Paulson, real estate mogul Steven Roth, and Steven Feinberg, cofounder of the private equity firm Cerberus.

Two names on this list bear special note, given Trump’s repeated efforts to present himself as the advocate of manufacturing workers: Dan DiMicco, former president and CEO of Nucor Corporation, the leading operator of US “mini-mills,” the pioneer in the campaign to slash steelworkers’ wages and benefits; and Wilbur Ross, the financial speculator and asset-stripper who took much of the US steel industry through bankruptcy, reaping billions in the process, and pillaging workers’ pension funds.

Carl Icahn, the notorious corporate raider and union-buster of the 1980s, was only left off the list of advisers because he has launched a “super PAC” on behalf of Trump, and claimed that for legal reasons he could not be formally associated with the campaign.

Trump’s policies and list of corporate advisers and backers demonstrates that his claim to defend the interests of US manufacturing workers is so much hot air. …

It was notable that during the week leading up to Trump’s speech on the economy, the Clinton campaign staged a series of events attacking him from the right, claiming that his economic nationalism was bogus because Trump-branded products were being manufactured in many foreign countries and not in the United States.

In her remarks on economic issues, Clinton made it clear that her so-called jobs plan would not include a single job to be created by the federal government, by launching a public works program. All spending and “job creation” would be routed through the private sector. In other words, Clinton, like Trump, rejects any interference with the capitalist market except to prop up various industries and business through tax credits and federal contracts.

The world’s wealthiest 200 billionaires increased their net worth by $237 billion in 2016, taking their total wealth to $4.4 trillion as of the close of trading on Tuesday, an overall increase for the year of 5.7 percent, according to calculations by Bloomberg: here.

As CEO compensation soars to new heights. Fifty-one million US households cannot afford “survival budget”: here.

43 thoughts on “Donald Trump makes the rich richer

    > What would Donald Trump say if he quit the presidential race?
    > In a turn of events that shocked the political world and threw the presidential race into unprecedented turmoil, Donald J. Trump announced yesterday that he is quitting the race and endorsing Hillary Clinton.
    > Trump said the only point of his campaign was to show how stupid and gullible many Republican voters are.
    > “I’ve been a Democrat all of my adult life,” Trump told a packed and boisterous news conference. “But I knew if I ran as a Republican and said increasingly ridiculous, idiotic, racist and sexist things that I would get a lot of votes.”
    > But he said he had no idea he would be able to win the Republican nomination and poll 40 percent or better in a national race against Clinton.
    > “Did people really believe that I could build a wall between the U.S. and Mexico and get the Mexicans to pay for it?” Trump asked, “and that we could deport 11 million illegal aliens? That’s ridiculous. How could we possibly do that?”
    > Trump said he wanted to show just how gullible the far-right wing was and how weak-kneed Republican leaders were.
    > “Even after I made racist statements about that judge and attacked a Gold Star family, the Republican leadership continued to endorse me,” Trump said. “Man, what does it take to get tossed out of the Republican Party?”
    > He also pointed out that he had offered no real solutions to any of the country’s problems and nobody, even the news media, took much notice that “there was no there there in my campaign,” he said.
    > House Speaker Paul Ryan, while expressing shock at Trump’s announcement, said, “After I thought about it a bit, I realized this made a lot more sense then the campaign he was running. The joke’s on us.”
    > Fifty-one Republicans immediately announced their candidacy to replace Trump on the ballot.
    > Asked if he felt any remorse about fooling so many people, Trump answered in typical Trumpian style: “No. They’re all losers.”


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    > Will Trump’s policies lead to more inequality in America?
    > With his Cabinet of billionaires and trickle-down CEOs, President-elect Donald Trump has set the stage for the second “Revolt of the Bosses,” ignoring that the first Revolt of the Bosses produced the gaping economic inequalities that plague America today and ignited his own working-class base.
    > The timing is terrible. One new economic study documents the cost of the first revolt – 115 million adults, the lower half of the income ladder, got next to “zero growth” in real income from 1980 to 2014. Another new study finds that only 41 percent of 30-something males today earn as much as their fathers at the same age.
    > That yawning economic gap opened up after corporate America captured Washington in the late 1970s, mobilized by a largely unknown call to arms by Lewis Powell, then a highly influential corporate attorney and soon to become a Supreme Court justice.
    > In a confidential manifesto circulated secretly in late 1971 by the U.S. Chamber of Commerce, Powell told U.S. business leaders that our free enterprise system was under “massive assault” from middle-class power – strong labor unions, a women’s movement pushing for equal pay, consumer and environmental movements demanding protective laws, and a civil rights movement demanding opportunity for African Americans.
    > To stem the tide, Powell laid out an action blueprint, urging business leaders to mobilize their resources for a long-term power struggle and to fight “aggressively and with determination” to take over the policy high ground in Washington.
    > The response was immediate. Major corporate CEOs formed the Business Roundtable, now the most potent lobbying arm of U.S. multinationals. Hundreds of businesses rushed to open lobbying offices in Washington. The number shot up from 175 in 1971 to 2,445 a decade later. By 1980, there were 9,000 registered business lobbyists and 50,000 more people working for business trade associations.
    > President Jimmy Carter was the first to feel the muscle of Powell’s army. Business lobbyists turned Carter’s proposed corporate tax increase into a tax cut, helped the wealthy by cutting the personal capital gains tax from 48 percent to 28 percent, changing corporate bankruptcy laws, and winning deregulation of trucking and telecommunications.
    > Under President Ronald Reagan, corporate power scored huge gains – deregulation of more industries, greatly eased rules for banking, the shift from employer-funded pensions to largely employee-funded 401(k) plans and the bonanza of Reagan tax cuts in 1981.
    > While the Reagan years saw another 16.1 million jobs added , the middle class stagnated. Economists calculate that the Reagan tax cuts added $1 trillion to the wealth of America’s richest 1 percent in each decade since the 1980s, and the tax cuts of President George W. Bush in 2001 added another $1 trillion – $4 trillion in all, while the lower half was stuck with zero growth and America’s income divide grew canyon-wide.
    > Today, again, President-elect Trump proposes massive tax cuts for business and the wealthy, plus whacking deregulation for business and he is putting some of America’s fiercest corporate downsizers and cost-cutters in charge – Wilbur Ross as secretary of commerce, Andrew Puzder as secretary of labor, and Steven Mnuchin as secretary of the treasury.
    > Ross became a billionaire by pursuing what Wall Street calls “distressed investing” – preying on companies sinking into bankruptcy, buying them at fire sale prices, shucking off their contract obligations to their workforce and retirees, and selling off the amputated torso at a huge profit.
    > Ten years ago, after Ross bought LTV Steel for $325 million as it fell into bankruptcy with $2.5 billion in assets, I asked Ross about the jobs of LTV’s steel workers. Ross said he was “creating jobs,” but only for part of LTV’s workforce. And, he indicated, there was a hooker: “We were able to work out with the United Steelworkers of America a radically new labor agreement.”
    > Translation: The steelworkers union, stripped of bargaining power by the bankruptcy law pushed through Congress by the Revolt of the Bosses in 1978, was forced to accept lower wages and lower benefits in order to save a fraction of LTV’s jobs.
    > Ross went on to buy four more troubled steel companies, rolled them all together and sold them for a profit of more than $2 billion, while thousands of employees were laid off or took lower pay or saw their retirement pay cut in half.
    > Instead of offsetting a pro-business secretary of commerce with a pro-worker secretary of labor, Trump chose another cost-cutting, trickle-down corporate chieftain for the Labor Department – Puzder, CEO of CKE Restaurants that runs fast food chains, Hardee’s and Carl’s Jr. Puzder adamantly opposes raising the federal minimum wage and maintaining new federal overtime rules that make 4 million more workers eligible for time-and-a-half pay
    > At his chains, pay scales for cashiers and short order cooks run below McDonald’s, Subway and Wendy’s. In an interview this year, Puzder touted automation over human workers, observing that machines are “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”
    > At treasury, Trump has tapped Mnuchin, a hedge fund manager and former Goldman Sachs banker. Like Ross, Mnuchin made a huge financial killing by catching California’s IndyMac bank in its death throes, buying it with a syndicate of wealthy investors for a bargain price of $1.6 billion, rebuilding it and selling it off for nearly double the cost.
    > One of his bank’s strategies was driving stiff foreclosure terms with beleaguered middle-class homeowners – among them, one 90-year-old woman faulted for a 27-cent payment error. Mnuchin’s home in the Bel Air area of Los Angeles became a target of protesters.
    > Taxes are Mnuchin’s bailiwick. Trump’s website calls for a whopping cut in corporate taxes from 35 percent to 15 percent, an ever lower 10 percent rate on $2.3 trillion in corporate profits held overseas, and trimming the top rate for the rich from 39.6 percent to 33 percent. Mnuchin says Trump will deliver “a big tax cut for the middle class, but any tax cuts we have for the upper class will be offset by less deductions that pay for it.”
    > Independent tax experts at the Tax Policy Center and the Tax Foundation are skeptical. They calculate that Trump’s formula will deliver skimpy tax cuts to the middle class, while the 1 percent will get cuts worth up to $1.1 million apiece. If so, that would be the fanfare for the second Revolt of the Bosses and a new wave of ballooning economic inequalities.


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