Tuesday, March 7, 2017

Trump's Fiscal Policy Is NOT For HIs Base

Trump has been generous to his base in typical Republican fashion.  He promises to make them safer from the fears that he has amplified.  He does that through his immigration policies and by an increase in military spending.  He also attack's liberals by spreading conspiracy theories and telling his base he will get rid of them by "draining the swamp".  He better hope that that keeps them happy.
His fiscal policy is not for his base.  It is heavily skewed towards the donor class that has always been the beneficiary of Republican fiscal policies.  The donor class gets the tax cuts that they expect from Republicans in return for their generosity.  Trump's base gets to cheer for Trump as he takes on their enemies with verbal assaults against liberal social and cultural policies.

Trump's tax policy is pretty easy to understand.  He will cut taxes for everyone, but 50% of the tax cuts are targeted from the top 1%.  The bottom 99% will have to share the other 50% of his tax cuts.

One might ask how Trump can cut taxes primarily for the rich, and increase military spending by $54 billion without producing budget deficits and increasing our debt to GDP ratio?  The answer to that question is easy.  Just pull out Ronald Reagan's fairy tale that is readily believed because it gets repeated constantly by Republican politicians.  The tax cuts will stimulate economic growth and faster economic growth will increase tax revenue.  There is no need to worry about budget deficits. Few of his supporters know that Reagan's tax cuts produced huge budget deficits as did George W. Bush's tax cuts.  

When the Trump tax cuts fail to produce the promised growth in GDP there is a fall back policy.  Trump will get government off of our backs by cutting spending on non-military programs that are helpful to low income families that include a large part of his base. His base will have to wait for Trump's trade policies to return the manufacturing jobs that have been lost.  That will be accomplished by eliminating trade plans like NAFTA,  TPP and the WTO.  The only problem with that plan is that manufacturing jobs began their decline well before those trade policies were implemented.  Eliminating them does not deal with the most of the other reasons for the loss of manufacturing jobs.  Automation and the increase in global competition for manufactured products, as the rest of the world caught up to the US, are a major factor in the loss of manufacturing jobs. Trump will have to feed his base more fear and give them more to cheer about from his attacks on their dreaded enemy: liberalism.  That might work as long as Trump gets his base to avoid getting their information from the liberal media.  Breitbart News and talk radio may do the job.


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