'Trumponomics has utterly failed': Paul Krugman details why the GOP's economic worldview has collapsed
It's often taken for granted that, whatever else you might say about President Donald Trump, he has at least been good for the U.S. economy. That, many argue, is the fact that may lead to his re-election in 2020.
Except this uncritically accepted pearl of conventional wisdom is quite dubious, as many experts in economics would tell you.
One of those experts, Trump-appointed Fed Chair Jerome Powell, even announced a cut to interest rates this week in light of weak business investment in the economy and the uncertainty caused by the president's trade wars.
Another expert is economist Paul Krugman, who wrote in a new piece for the New York Times Thursday: "Obviously Powell couldn’t say in so many words that Trumponomics has been a big flop, but that was the subtext of his remarks. And Trump’s frantic efforts to bully the Fed into bigger cuts are an implicit admission of the same thing."
He noted that the economy has actually been kept afloat somewhat by something the Republican Party says it hates: deficit spending. But the party's promises of an economic resurgence under Trump are falling apart.
Start with the 2017 GOP Tax Cuts and Jobs Act.
"Republican faith in the magic of tax cuts — and, correspondingly, belief that tax increases will doom the economy — is the ultimate policy zombie, a view that should have been killed by evidence decades ago but keeps shambling along, eating G.O.P. brains," he said. "The record is actually awesomely consistent."
Bill Clinton’s tax hike didn’t cause a depression, George W. Bush’s tax cuts didn’t deliver a boom, Jerry Brown’s California tax increase wasn’t “economic suicide,” Sam Brownback’s Kansas tax-cut “experiment” (his term) was a failure.
Nevertheless, Republicans persist. This time around, the centerpiece of the tax cut was a huge break for corporations, which was supposed to induce companies to bring back the money they’ve invested overseas and put the money to work here. Instead, they basically used the tax savings to buy back their own stock.
And on the trade front, Trump's tariffs — which the GOP has grudging if pathetically accepted — aren't doing much for the economy, despite the president's claims.
"And there’s a good case to be made that Trump’s tariffs have actually hurt U.S. manufacturing. For one thing, many of them have hit 'intermediate goods,' that is, stuff American companies use in their production processes, so the tariffs have raised costs," Krugman wrote. "Beyond that, the uncertainty created by Trump’s policy by whim — nobody knows what he’ll hit next — has surely deterred investment."
Thankfully, he noted, "while Trumponomics has utterly failed to deliver on its promises, it’s not bad enough to do enormous damage."
Krugman concluded that, given Trump's failures on the economic front, the president will likely run for re-election on racism.
But it's worth being really clear about this. If, as Krugman and others have argued, Trump's economic success is illusory, what's the GOP case for keeping him in office?
The president doesn't have a lot going for him. Unemployment is low, and the economy is growing at a decent pace, so he will scream from the rooftops that he's a policy genius. But when it comes down to it, there's really not much reason for the American people to keep him around.