Aiexpress – Former President Donald Trump made a pledge to utilize his business acumen in order to bolster the U.S. economy during his time in the White House. While some view his first-term accomplishments as a fulfillment of this promise, others believe that it resulted in an exacerbation of financial inequality.
Chris Tilly, an economist and professor at UCLA’s Luskin School of Public Affairs, told UPI that people often forget how important a president and their policies are to the health of the economy.
The U.S. economy is just one part of the world economy as a whole. War, unfavorable weather, stalemate in other nations’ governments, and once-in-a-lifetime occurrences like the COVID-19 pandemic can all contribute to it.
“We tend to give presidents too much credit or blame,” Tilly stated. There are a lot of things going on in business that the president can’t change. When it comes to political players in the U.S., the Federal Reserve usually has a lot more power than the president.
It’s also not easy to figure out what a healthy business looks like. Unemployment, the gross domestic product, and inflation are some of the most talked-about headline indicators. These indicators can give you a sense of how the economy is doing right now.
In the long run, though, strategy can change the economy in many ways. Spending money on education and improving infrastructure can aid in long-term productivity and growth.
In many important ways, Trump did not make the country stronger than it was before he took office.
“Unemployment was low and going down.” This was a good time for business, and inflation was low, according to Joshua Gotbaum, an economist at the Brookings Institution.
Unemployment went down and stayed low, averaging 4.7% under President Barack Obama. There were more than 8.9 million new jobs, which is the sixth most of any president.
The United States got back on its feet after the Great Recession, and the inflation rate was lower than it had been during seven of the eight previous presidents.
Tax Cuts and Job Creation
Trump’s first and maybe most important move was to back and sign the Tax Cuts and Jobs Act in 2017.
Trump said that the tax reform plan would free up $3.2 trillion in tax money for “American families.” He said that the average family of four making $75,000 a year would get a tax cut of at least $2,000. This was possible in part because child tax credits were being raised.
Corporate tax rates went down by more than 10% because of the law. Trump told stories that made it sound like the tax cut for corporations would help middle-class workers because the rich would hire more people and grow their businesses.
“On the one hand, it made the country grow.” From what I know, the tax cuts did benefit the richest people more than others,” Tilly said. “That does make things less fair. The spread of things like infrastructure is better.”
Tilly also says that economists’ research isn’t clear-cut and that there isn’t a single way that everyone agrees on to show what caused or made inequality worse.
“I am making an argument based on simple economic principles,” he stated. “My logic is that since the largest benefits of the tax cuts go to wealthier individuals, the first-order effects therefore tend to increase inequality.”
To find out how unequal things are, economists use the Gini Index, also written as the Gini Coefficient. It’s a way to figure out how unequal income and wealth are around the world. A value of 0% means that there is perfect equality, and a value of 100% means that there is perfect inequality.
The World Bank says that after the tax cuts, the Gini Index for the United States slowly went up. In 2019, it hit a high point of 41.5%, the highest level since 1963. This was about a half-point more than in 2016.
After taking inflation into account, the average amount of money each person had available to spend went down under Trump, and the average rate of unemployment hit the fifth highest level, at more than 6%. In 2018, the rate of poverty went down by 0.5%, but it had gone down for three years in a row before that.
The Congressional Budget Office released a study in October that said the Tax Cuts and Jobs Act hurt revenue by a large amount.
In the past, both unemployment and the national debt went through periods of growth and loss. After Trump’s tax reform law was signed into law, that relationship changed. Now, the debt is growing faster than the unemployment rate.
“Idiosyncratic factors can raise or lower deficits in any given year, much as capital gains realizations lowered deficits last year,” the study states. “But beyond these one-offs, the structural deficit is clearly higher now due to the 2017 tax cuts.”
Trade With China
During the Trump administration, trade ties between the U.S. and China were shaky, as shown by the fact that both countries put tariffs on each other.
Trump said in the summer of 2018 that he was going to put taxes on $50 billion worth of Chinese goods. Trump said China was wrong because it stole intellectual property from the US, among other things. He also wanted to cut down on the U.S. trade imbalance and make things fair for U.S. manufacturers.
In response, China imposed duties on goods from the United States. Trump then asked for a 10% tax on $200 billion worth of goods from China. In the end, the taxes went up to 25%.
“If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods,” Trump stated in a statement. “The trade relationship between the United States and China must be much more equitable.”
Trump has said over and over that the tariffs were good for the U.S. economy. He says that the tariffs paid for the $28 billion in farmer subsidies that were passed while he was president.
In 2020, Trump talked up the first part of a major trade deal with China. He said that China would buy at least $200 billion more worth of U.S. goods than it did in 2017.
When the deal was signed, Trump said, “They’re going to spend a lot more than $200 billion over the next two years, including up to $50 billion just on agriculture.”
The news pretty much meant the end of a costly trade war that cost 245,000 U.S. jobs, according to the U.S.-China Business Council. But the plan to buy more things never came together.
The COVID-19 pandemic slowed down trade and industry around the world. Businesses in all fields, including industry, slowed down or stopped working because of lockdowns.
China bought about $12 billion less in U.S. goods than it did in 2017, which means it didn’t buy any of the extra $200 billion in exports it promised.
COVID-19 relief
How to handle the COVID-19 pandemic was Trump’s last economic policy choice before he was removed from office.
More than two months after COVID-19 was first discovered in the US, in March 2020, Trump signed a $2 trillion aid package to help with the financial problems caused by the pandemic.
The plan came with one-time stimulus payments to taxpayers worth $300 billion. A lot of people got $1,200 stimulus checks.
It also created the Paycheck Protection Program, which helps companies keep workers on the job and paid by giving them $935 billion in business loans.
Another $500 billion was set aside for loans to businesses, and hundreds of billions more were given to state and local governments.
Nikki Haley, the former U.N. ambassador who is running against Trump for the GOP presidential ticket, has been one of Trump’s critics of how much the government spends.
Tilly says that the unpredictable nature of the COVID-19 pandemic meant that Trump and Congress had to agree to the unexpected relief plan.
“COVID increased the deficit because you had a very sharp and sudden contraction of economic activity,” Tilly stated. “What Congress did with the COVID relief measures was the right thing to do to keep people going.” People had to stay alive. If they didn’t have it, people would die of hunger.
The pandemic hurt the economy a lot during Trump’s last year in office.
More than 14% of people lost their jobs. Because of a brief interruption in production due to public health regulations, global supply lines were months behind demand. Inflation has been very high since then, and this partly caused it.
The stop in production is something Tilly says can never be made up for.
“When we lose a certain set of economic activity, in some sense, you never get it back,” he stated. There were people who quit their jobs in the U.S. and other countries, and some of them didn’t come back. That’s more of a loss of resources that can be used to make things.
