Did you detect any irony with the sight of the representatives of the cash strapped US Government going cap in hand to the White House to cobble together a temporary cash relief fix – then a few days later, watching some of the same politicians applaud President Donald Trump signing off the proposed reduction of 1.5 trillion dollars from the tax take. Wasn’t that the same tax which was already insufficient for the year about to end. I hope the GOP were making the most of what was left of their Merry Christmas!
Yes, there have been some spectacular changes under President Trump, but not always clearly for the better. We probably all remember the Trump gun violence declaration: “the carnage stops here, right now!” This was at least a crystal clear Inauguration promise. Now that certainly would have the stamp of greatness if the promise had any substance. And what happened? Not only is the US still leading the way for gun violence amongst developed nations …. there was actually a 12 % increase in deaths and injuries from gun violence in the first 200 days of Trump.
While I am certain that Donald Trump is under the impression that he has been making America great again, a significant number of internationally respected commentators outside the US (eg from BBC and world leading academic institutions), a majority of American citizens (as measured in all the leading polls) and a vast number of non Americans observing events from afar seem absolutely convinced that the opposite is true.
It is true that one of Mr Trump’s favourite public promises is that he will be remembered for promising to make America safe again by stopping those new immigrant Islamic Jihadists who currently threaten the US public. Perhaps no-one has told him the average number of US gun deaths in America for last two years from right wing extremists (9) far exceeded the deaths from Islamic Jihadists (2) and is in turn far behind the deaths caused by armed toddlers (32), and of course, as that other highly intelligent US dignitary (Kim Kardashian) was able to tweet to her President, a worse threat is that of lawn-mowers (69 deaths). If we follow through Mr Trump’s logic surely an embargo on lawn-mowers would then seem to offer more protection.
But that in turn is mere bagatelle when it comes to US citizens killed by fellow Americans (almost 12000). If it is true safety that is concerning Mr Trump, surely turning back fellow Americans at the border has much more to commend it than stopping immigrants from usurping fellow Americans’ potential shooting rights on the ground that they might possibly be from countries that include Islamic Jihadists.
Well then – how do other nations view the US under Trump?The recent avalanche of opposing votes in the UN showing an overwhelming international rejection of Mr Trump’s judgment on the US policy in naming Jerusalem the capital city of Israel may only represent one aspect of a decreasing support but is far from the only concern. A much more serious dimension to the same issue was that when the UN vote went against President Trump he had directed the US Ambassador to the UN to respond with overt threats and bullying tactics. This was given substance when Mr Trump reduced the US contribution to the UN a few days later directly attributing the reduction to the substance behind his threat.. Should we be surprised that those actions have generated outrage? When I read for example that a recent Saturday’s editorial of one of New Zealand’s leading daily Newspapers (the New Zealand Herald) was headlined “Trump rains disgrace on the Presidency”, I would have to say that seems very much in line with the majority of headlines on the same topic throughout much of the Western World.
While no-one is likely to ask for my opinion I would have thought that the Israeli government view that Mr Trump should be rewarded by naming a railway station in Jerusalem after Mr Trump is not a decision that most non American visitors to Israel would applaud. My best guess is that such an action is a way of setting up that station as a potential target for protests. If I ever find myself in Jerusalem in the near future I will be asking my travel agent to make sure my travel plans avoided the afore mentioned Trump station!!
Don’t forget anti US reactions were demonstrated earlier in 2017 when Mr Trump signaled he was taking the US out of the Climate Change accord. That the US has not even rated an invitation to the next conference on that topic should register as a warning flag.
Then there was Trump telling the eleven other nations in the proposed TPP who were intent on setting up a free trade cooperative organization that the US would pull out to organize its own trade deals. This may have seemed a good pro-American action at the time – but also assumed the other members would then pull out to focus on individual deals with the US. This has not happened. On the other hand China, barred from becoming part of the TPP while the US was involved, appears to be taking the place of the US. Making America great? – not in the TPP partners eyes – but making China great? – now there’s a thought.
On the American home front there are other hazards on the horizon. Even if Donald Trump’s self proclaimed assessment of his abilities being that of a stable genius doesn’t quite include basic math, it is to be hoped that someone in his myopic Twitter world might draw his attention to some awkward statistics which look likely to spoil his coming year.
I am assuming that President Trump is taking it for granted that he will gain admirers as a consequence of his most substantial (and possibly only) clear victory to date – namely his apparent success with the Tax Reduction Bill. While I would agree with most commentators that Tax reform is well overdue in the US, I am assuming that until such a reform is tested in practice it is very premature to assume this is the long awaited answer to the current weaknesses in the economy.
From my own limited understanding of economics I would have thought that such a simplification of tax in no way should include ignoring what the economists call the Pareto Principle. Pareto efficiency, also known as “Pareto optimality,” is an best solution economic state where resources are allocated in the most efficient manner, and is produced with the intention of minimizing the damage. In particular such a correction is needed when a distribution strategy is devised where one party’s situation cannot be improved without making another party’s situation worse. Signing up to a tax rearrangement where some (in this case the rich) are the clear beneficiaries without first attending to the resulting damage to those who were previously dependent on the tax funded services provided appears foolish in the extreme.
Remember I am not an economist, but I can at least follow something of what the economists are saying and note that in one recent study from Chicago, when 38 economists were asked by those setting up a study on the current Tax Bill for their reactions, they drew attention to the following.
First those countries where such measures have been taken have almost without exception been countries where the economy was showing weakness rather than the relatively robust economy shown by the US at present.
From experimentation with economies in the past we do know reduction of taxes on businesses does free up money and can strengthen businesses in that strong companies can benefit shareholders as well as increase production. However when this same “Trickle Down” legislation was tried at State level in Kansas, when the rich were given their tax relief, the results weren’t as predicted — growth lagged, tax revenues fell and the state had to cut spending on education and infrastructure projects. The State legislature finally had to reverse course and raise taxes.
The freeing up of the money evidently strengthens the dollar but it also makes it harder for exporters. This in turn acts against the current expressed Trump aim of helping balance exports and imports.
Another problem is likely to be introducing this particular tax bill where the proposed measures have been rushed together in haste and as a consequence do not take into account what has happened when other nations went down the same path. For example when the Thatcher government attempted the same overall aim of sorting the tax structure to introduce efficiencies, unintended consequences included increasing unemployment, increasing the gap between rich and poor and the weakening of the Unions.
The Irish model was more carefully targeted than the current US proposal and for example gave foreign based business better tax relief than was the case for local industries. In the late 1970s, Ireland’s economy was struggling. So they decided to cut business taxes dramatically while also increasing individual taxes including taxes on the middle class. The idea was that stronger businesses would benefit everyone.
“For the following 25 years, they had really rapid economic growth and went from being the poorest country in Europe to one of the richest. It really did help everybody,” but as economist James Hines a tax specialist at the University of Michigan pointed out the United States isn’t Ireland 40 years ago. Hines further commented Ireland had coupled their tax reform with a lot of sensible policies that they enacted at the same time.” Heines was unable to find anything close to this type of methodical and targeted policymaking in the current Republican tax proposals.
“It seems that a lot was cobbled together just to try to get passage,” said Hines.
Here are some further points to ponder.
According to the polls of the order of 55% of voters say they are objecting to Trump’s tax bill. If the same voters are still around come the mid terms I would not have thought that is a recipe for Republican success.
The economists seem generally agreed that 83% of the undoubted benefits of the current Tax Bill are destined to benefit the top 1% of rich and super rich (cf the Trump family …just to take the name of a typical rich family at random) The much smaller share of benefits go to the middle wage earners and the pathetic or non existent remainder is there for the relief of the rather larger group of the poor and disadvantaged. While it is true that some will finish with more cash in their pocket, the tax take had been designed to pay for essential services which turn out to be much more expensive when directly paid for by the individual. No doubt Mr Trump believes the majority won’t notice that this Bill is not there for their benefit.
Could it be the Bill slipped through under the wrong name. Perhaps a more cautionary title should have been something like “the taking less money from rich people so that the Government can pay for fewer services for the majority unless money is borrowed from future generations Bill”.
The complicating issue is that the President who is introducing the Bill has gone out of his way to alienate people he now needs as allies. The catch with insulting people is only apparent when those insulted become essential for subsequent critical actions of cooperation. As is typical towards the end of the year just passed, the Government was once again running out of money and needed to shut down unless extra money was found. Tax pays for Government sponsored services so essential to the poor and disadvantaged.
Tax also pays for walls with neighbours…. um… Well, ahem, now I come to think of it. I wrote an article last January pointing out that Mr Trump’s then current estimation of the likely cost of the wall was going to be much higher than the $10 billion he said it was actually going to cost. Whereas Mr Trump was presumably able to use what he terms his very high and stable intelligence to work out his figure, as I tried to point out at the time, the construction engineers had already estimated the minimum figure to be more than twice his figure when he announced the wall’s cost to the US public.Perhaps he has got a little wiser in the interim because he is now in the process of asking almost twice the original Trump figure from his budget officials. Might I suggest that this is just one item Mr Trump may have forgotten when he claimed far less tax was needed.
…Nancy Pelosi may have given Mr Trump a temporary stay of execution but is also hinting the Democrats may pull the plug in the New Year.
When the Tax Bill is enacted, what then? Surely removing a huge chunk of this Government income by going easy on those who happen to afford taxes means fewer services for the majority. Ah well, there goes the diminishing Obama care, hopes of a good education for all, maintain structurally sound rail bridges and providing patches for holes in the roads. With any luck there will still be enough left in the household budget to buy those essential assault rifles the NRA thinks the disenchanted should have the right to carry.
Government borrowing to make up the now increased deficit in basic services is doomed if the current tax take is significantly reduced because borrowing costs more than conventional tax revenue. Borrowing through the sale of Government bonds has already reached a dangerous level and borrowed money needs an attractive rate of interest for the lender. As the Government already runs out of money each year and has to struggle to find the difference, we live in hope that the GOP can explain why borrowing more is going to end well.
The real puzzle is the question of why Mr Trump has assumed that those who are not political supporters of the current President are safe to marginalize. The popular vote last election showed that at that time there were fractionally more supporters for Hillary Clinton than for Donald Trump. Previously President Obama had enjoyed more popularity than his opponents for President. I would have thought one way of guaranteeing a subsequent fall off in potential support for Mr Trump is to stress to such potential opponents they are stupid and wrong. Certainly the large number of polls conducted since the last election all appear to have reflected a growing number disenchanted with the Trump leadership. I would have thought it likely that the vitriol in the Tweets aimed at popular members of the community may be a factor in the dropping support..
The same reasoning applies on the international stage. Insulting and threatening leaders of other nations eg Pakistan has become a characteristic of the Trump phenomenon. If that had been done behind closed doors the strongest partner (ie Trump) might have had sufficient clout to threaten or bribe an opponent to persuade them to change course. On the other hand, if on the other hand he insults an opponent very publically they can no longer back down without conveying to their supporters they are weak. When coincidentally other nations are vying to take the place of the strongest party – eg China is currently offering to take the US position by becoming the principal aid donor to Pakistan, it would appear that the tweet merely accelerates the handing over control to a key rival. The Pakistani leadership as well as expressing fury for Trump’s recent insults have just announced that they intend denying the US their supply routes to their military engagement in Afghanistan, will no longer allow the US permission to attack their ISIS and Al Qaeda enemies by drone attacks over Pakistani territory near the Pakistan and see no reason to continue diplomatic negotiations with the US. To independent observers it is hard to detect in these measures an increasing Pakistani admiration for America as a response towards Trump’s twitter diplomacy.
There are numerous lessons from history showing what a large percentage of the population can do when they believe their masters are deliberately ignoring their plight. Perhaps Mr Trump has heard of George Washington reacting to the English …or the French revolution …or since Mr Trump finds so much to admire about Russia what about the Russian revolution ?
If US protestors could eventually shut down an unpopular war in Vietnam, or change legislation about discrimination in the deep South, surely they can make life a little difficult for a leader who comes across to them as an arrogant rich dude who wants to make the widening gap between the rich and poor even greater.
If Mr Trump is lucky, some of the angry self perceived down-trodden lot will content themselves with mere processions of placards, scratching their protests on the paintwork of the limousines owned by the wealthy, breaking the windows of Trump luxury apartments and leaving slogans in weed-killer on some well-known golf courses.
Unfortunately as Mr Trump is already beginning to discover, abusing highly skilled intelligence personnel (eg the FBI) is very different to abusing someone whose main threat is to carry a placard in a procession of protest. Those who genuinely know how to organize eavesdropping or hack into sophisticated computer systems are not necessarily the safest to abuse. The same goes for publically humiliating those senior staff who have passed use-by date. The difference between failed candidates for the reality show: “the Apprentice” and the appointed staff in the White House, is that the latter, who may well know some embarrassing secrets, have no reason to accept their fate without question.
So is Mr Trump actually making America great again? Polls provide the independent measure. Since greatness is based on perception I suspect that the answer depends on those we ask. The US based polls show a declining but significant proportion of loyal Trump supporters still convinced that their President is delivery on promises for the sort of America they would like to see. However, regardless of whose side we are on, we can all see for ourselves that Mr Trump’s support has declined at home. On the other hand international polls indicate a much more significant erosion of support and even if we think the other nations have got it wrong we should be concerned that there is decreasing admiration for America. True that many in places like Israel, the Philippines, South Africa, Saudi Arabia and Russia there are clearly those who still believe the US is worthy of respect, it is an inescapable fact that the vast majority in most other places are showing a loss of confidence.(c.f. the Pew Polls)
Remembering that Mr Trump is still relatively new to his position and acknowledging that political popularity is dependent on traditionally fickle support perhaps it is too early to guess what historians of the future are likely to conclude. The signs are not particularly hopeful.