News & Politics

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

"Thanks to the looming trade war, U.S. soybean prices have plummeted, and the farmers of Iowa are facing a rude awakening."

Photo Credit: Bloomberg YouTube screencap

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.

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"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.

Cody Fenwick is a reporter and editor. Follow him on Twitter @codytfenwick.