'The Tax Cut Is Utterly Failing to Deliver': Paul Krugman Warns Trump's Economic Policy Could Lead to 'Maximum Self-Harm'

While President Donald Trump continues to praise himself for the strength of the economy, his main economic policy success seems to be a dud at best — and from all appearances, it looks like he's trying to make things worse.


Economist Paul Krugman explained in a new column Monday how Trump and the Republicans' tax plan has completely failed, even by their own standards. The idea behind the legislation was that by cutting corporate tax rates, businesses would begin massive investments of capital, giving the economy a jolt.

But that didn't happen.

"Corporations have gotten a really big tax cut: The tax take on corporate profits has fallen off a cliff since the tax cut was enacted," Krugman explained. "But they’re using the extra money for stock buybacks and higher dividends, not investment."

At the same time, Trump is heading straight for a trade war, and there's no indication that he plans to back down.

Krugman explains: "In fact, it looks as if the trade war is in general going to hurt Trump’s supporters more than his opponents. Meanwhile, Trump’s trade war will benefit some unexpected parties. Was making Brazil great again part of his agenda?"

However, Krugman worries that the press might be tricked by seemingly positive numbers. Because of global shifts in the market for soybeans, he observes, the U.S. economy probably got a significant boost in this year's second quarter — and the White House is certain to make a mountain of a molehill. Some credulous reporters might go along with them.

But in the long run, there's no indication that Trump's policies are strengthening Americans' economic fortunes. And many people may find themselves much worse off because of Trump — even those that voted for him.

Enjoy this piece?

… then let us make a small request. AlterNet’s journalists work tirelessly to counter the traditional corporate media narrative. We’re here seven days a week, 365 days a year. And we’re proud to say that we’ve been bringing you the real, unfiltered news for 20 years—longer than any other progressive news site on the Internet.

It’s through the generosity of our supporters that we’re able to share with you all the underreported news you need to know. Independent journalism is increasingly imperiled; ads alone can’t pay our bills. AlterNet counts on readers like you to support our coverage. Did you enjoy content from David Cay Johnston, Common Dreams, Raw Story and Robert Reich? Opinion from Salon and Jim Hightower? Analysis by The Conversation? Then join the hundreds of readers who have supported AlterNet this year.

Every reader contribution, whatever the amount, makes a tremendous difference. Help ensure AlterNet remains independent long into the future. Support progressive journalism with a one-time contribution to AlterNet, or click here to become a subscriber. Thank you. Click here to donate by check.

DonateDonate by credit card

Close

Don't Sit on the Sidelines of History. Join Alternet All Access and Go Ad-Free. Support Honest Journalism.