Donald Trump described his economic policy agenda — “Trumponomics” — in his Detroit Economic Club speech on Monday. His remarks, rife with falsehoods, inaccuracies, and deliberate misinterpretations of both policies and facts, are subject to rebuttal by HRC in the same city tomorrow, on a range of points laid out below.
Trumponomics, as enunciated on Monday, is presented here with a focus on identifying the most inviting points of rebuttal offered by Trump’s speech and settling the score on some of the most egregious incorrect and manipulative statements in the speech.
For those of you that received this message earlier, it is only cosmetically, not substantively, different.
• Trickle-Down Theory
Trump’s basic economic theory: Boiling it down, Trumponomics as an economic agenda appears closer a refashioned form of trickle-down economics than anything else. Several extremist and populist proposals were mentioned but the core of Trump’s economic policy — expressed in his budget policy, the chief economic policy lever at the President’s disposal — is a traditional Republican approach, embodied most recently in the Bush II and Romney plans –– gives tax breaks to businesses and the wealthy and assumes the benefits will eventually reach middle America. This approach has been tried and it failed. Americans will recognize it soon enough and reject it.
• Fair Share or a Win for the Wealthy?
Tax burden shifted further away from corporations to individuals: Trump claims his plan will result in all Americans paying their fair share but the projected results of his proposals suggest otherwise. Corporate taxes already contribute only 11 percent of total federal revenues. With an enormous cut in the top marginal corporate tax rate — from 35 to 15 percent — corporations will face an even smaller tax burden. Under Trump, individual taxpayers would be forced to pay a greater share of the tax burden. Middle America would lose, and lose big, under a Trump presidency.
• Brackets Undefined
Vague tax brackets result in problematic uncertainty. It remains difficult to quantify the costs of Trump’s economic agenda, given the persistent lack of specifics in his plan. Trump has adjusted his three tax bracket levels to match Speaker Paul Ryan’s proposal but had failed to define the brackets sufficiently to calculate exactly how large the deficit increase would be.
• Jobs, Final Score: HRC 10, DJT -3
Trump’s bad math on jobs: Trump made several incorrect claims on regarding labor statistics, including calling the 5 percent unemployment rate “one of the biggest hoaxes” in American politics. The Bureau of Labor Statistics, by the most commonly used U-3 rate, which quantifies the proportion of people actively seeking jobs that are unable to find one, has calculated the current unemployment rate at 4.9 percent. Trump also implied that under President Obama, 14 million people left the labor force. In fact, the labor force has increased by 5 million people since 2009. While the number of people outside the labor force has increased by 14 million, this number is due primarily to a combination of an increase in baby boomer retirees and weakness in employment prospects and wages.
In the battle between HRC and Trump’s economic plans regarding job creation, according to analyses published by Moody’s Analytics in the last month, the final score in terms of projected millions of jobs created or lost is HRC 10, DJT -3.
• Infrastructure Score
— Trump’s false infrastructure claims. Trump has stressed his pending infrastructure plan would be worth at least “double” HRC’s proposed investment, suggesting at least a half a trillion be invested in improving America’s infrastructure. An investment of $500 billion would in fact equal the value of HRC’s infrastructure plan, a point the media has failed to recognize. Furthermore, HRC’s proposal is vastly more specific, while Trump’s was merely mentioned off the cuff in radio remarks.
— HRC’s infrastructure math: To settle this score, HRC’s initial public funds committed to infrastructure would equal $275 billion, with $250 billion for direct public investment and $25 billion for an infrastructure bank. However, the $25 billion originally allotted to the bank would be leveraged to support up to an additional $225 billion in direct loans, loan guarantees, and other forms of credit enhancement.
— Copycat on infrastructure: Thus, HRC’s infrastructure plan would in fact result in up to $500 billion in federally supported investment. Trump’s proposal, rather than exceeding HRC’s intended investment, equals it at best, in a poor attempt to copy HRC’s agenda. [By not addressing this gross inaccuracy by Trump in claiming to “double” HRC’s investment, the campaign has left money on the table, and should have been more proactive in taking on this low-hanging fruit.]
• Galloping deficits: Trump’s policy advisors (half of whom answer to “Steve”) claim his revised taxation plan would result in an increase in loss of revenues of $3 trillion over a decade, rather than the $10 trillion expected from his original proposals. While the decrease in $7 trillion is significant, an increase of $3 trillion is still a huge rise in overall debt, comparable only to historical instances requiring a strong response to major crises like wars and depressions. Is Trump trying to prepare our country for an upcoming war? Is there an economic depression on the horizon? The last time the deficit increased to such a degree over a ten-year period occurred during the second Bush presidency to prosecute the wars in Iraq and Afghanistan.
• Tax Policy: a Friends and Family Plan
— Tax relief for the wealthy: Trump claims his “across-the-board income tax reduction” would largely favor middle-class families. His plan, based on the few available details, would in fact give the wealthiest Americans the majority of the resulting tax relief. His tax proposals are by and large a “family and friends plan” for the rich.
— Swapping carried interest for pass-through relief: Trump has called for closing the loophole on carried interest, a proposal favored by many Democrats. But he takes with one hand here and gives with the other. He also supports a reduction in the top marginal corporate tax rate to 15 percent, much lower than the current rate of 35 percent. Because this cut is also available for pass-through organizations, which are currently taxed at the various individual rates, Trump would encourage wealthy Americans to avoid taxes by reclassifying their income from wage and salary to pass-throughs. More than two-thirds of all pass-through business income flows to the top one percent of tax filers. This policy would effectively make a closure of the carried interest loophole meaningless – with one hand Trump ends the carried interest deduction, while with the other he establishes an even larger loophole for the richest Americans. It bears noting that several of Trump’s companies are classified as pass-through organizations.
— Estate tax relief for wealthy: Trump also claims to save American workers money by eliminating the estate tax. In reality, few families ever have to pay the estate tax, as all estates under $5.45 million for individuals, and $10.9 million for couples, are exempt from the tax. Only the estates of the wealthiest 0.2 percent of Americans – roughly 2 out of every 1,000 people who die – owe any estate tax at all. Fewer than 5,000 taxable estate tax returns were filed in 2013. Again, his tax plan favors only the wealthiest in the U.S.
• “I Am Your Voice”
Not the voice of average American: Trump said to his army of disaffected, distrustful working Americans angrily confronting the crony class in a rigged political and economic system, “I will be your voice,” at the RNC. Based on his tax plan, Trump sounds like the voice of Wall Street, if not of the gang of 13 plutocrats who designed his plan. (And looking at his new economics policy team, he’s apparently the voice of at least six people named Steve)
• Childcare assistance for the wealthy: One of Trump’s few specific details in his economic plan was a childcare tax deduction equal to the average cost of childcare spending. This proposal, like much of his tax plan, would greatly favor upper middle class and wealthy Americans, who can afford to spend more money on childcare. As lower and moderate income families often do not file itemized taxes, most would be unable to benefit from a childcare deduction. Though basing this deduction on the average cost is surprisingly progressive, this benefit would not reach those families that truly need it. Furthermore, this deduction would do next to nothing for people with little or no tax liability, and gives the most to people in the highest tax brackets. Once again, tax relief under Trump would largely go to the richest Americans.
• Score on Detroit and Michigan
Duel over Detroit: In his efforts to discredit trade deals like NAFTA, Trump faulted HRC for the loss of almost 125,000 autoworkers in Michigan, stressing that “Detroit is still waiting for Hillary Clinton’s apology.” Attributing the economic decline in Detroit to HRC is absurd and unfounded. Much of the reduction in manufacturing jobs in the U.S. is due to a rise in productivity rather than new trade agreements. Regarding the auto industry, HRC voted in favor of bailouts to the automotive industry during her time in the Senate, while Trump has been vocal in criticizing the bailouts, saying in 2015 that it would have been better for the industry to “go bankrupt, and rebuild itself.”