Financial writer explains why Trump’s proposed federal budget would be an ‘economic calamity’ — possibly pushing the US to ‘the brink of a recession’
Whoever the Democratic Party ends up nominating for the 2020 presidential election — whether it’s Sen. Bernie Sanders of Vermont, former New York City Mayor Mike Bloomberg or someone else — President Donald Trump will no doubt be campaigning aggressively on the state of the U.S. economy, claiming that a second Trump term would be synonymous with prosperity and economic growth. But liberal/progressive writer Michael Linden, in a February 20 op-ed for CNN Business’ website, offers a long list of reasons why he believes that the federal budget Trump is proposing would be an “economic calamity.”
Trump’s proposed budget, according to Linden, is “full of outdated ideas that would instantly weaken the economy and undermine our ability to grow and prosper over time.” For example, Linden notes, Trump “proposes massive immediate cuts to the kinds of public services, protections and health care that help propel short-term economic growth by supporting demand for goods and services.”
“Just last quarter,” Linden observes, “the government was contributing the most to GDP than at any other point since the end of the Great Recession. President Trump’s budget would reverse that, withdrawing critical support at a time when growth has already slowed. The cuts are so deep, so massive and so poorly targeted that they could be large enough to even push us to the brink of a recession.”
The CNN Business contributor goes on to point out that “overall economic activity grew by only 2.1% over the last year. Well, Trump’s budget includes roughly $958 billion in total cuts in the first four years. That amounts to about 1% shaved off of total gross domestic product right there.”
Deep cuts to social programs, Linden emphasizes, don’t promote economic growth — they harm it.
“Programs like Medicaid, food stamps and tax credits for low-income families tend to permeate throughout local economies most effectively, and those are exactly the resources that President Trump’s budget envisions cutting to the tune of about $335 billion in the next four years,” Linden explains. “These cuts could reduce overall economic activity by another .3% to .4%. Put it all together, and Trump’s plan would slash the overall economic growth rate down to well under 1% over the next few years — putting us right on the edge of outright economic contraction.”
One of the things liberal presidents of the past understood — including President Franklin Delano Roosevelt in the 1930s and 1940s and President Lyndon B. Johnson in the 1960s — is that when the American middle class prospers and has more money to spend, that money goes into the U.S. economy. 2020 presidential hopefuls Sanders and Sen. Elizabeth Warren clearly understand those principles of New Deal and Great Society economics.
Trump’s proposed federal budget, Linden contends, fails to recognize the vital role that “workers and consumers” play in the economy.
“Workers and consumers are what drive growth and prosperity,” Linden asserts. “When workers have the support and investment they need to do their best work, they innovate, create and do more with less time and fewer resources. When consumers have money in their pockets, they drive demand for goods and services and induce businesses to invest in the future…. Trump’s budget slashes at those very foundations: education, health care, research and development.”